Children – Unified parents’ joint opposition to grandmother spending interim time with children as an incident of their parental responsibility does not displace judicial scrutiny as to the children’s best interests

In Chandler & Bonner [2022] FedCFamC1A 210 (14 December 2022) Tree J, sitting in the appellate jurisdiction of the Federal Circuit and Family Court of Australia, considered an appeal of unified parents against interim parenting orders made by the Magistrates Court of Western Australia for bimonthly, professionally supervised time between the parents’ four children and their maternal grandmother.

The grandmother had previously successfully appealed the dismissal of her interim application for time with the children in Bonner & Chandler [2021] FedCFamC1A 81 (8 December 2021) (our summary of which is at “archive”, “children” and the “Non-parents (including grandparents)” link.

The parents argued that the Court had erred, including by not applying s 43 of the Act, which provides that the Court must have regard to “the need to preserve and protect the institution of marriage as the union of 2 people to the exclusion of all others voluntarily entered into for life” and “the need to give the widest possible protection and assistance to the family as the natural and fundamental group unit of society, particularly while it is responsible for the care and education of dependent children” ([14]).

Tree J said (from [17]):

“Plainly neither s 43 nor s 69ZN of the Act operate to displace the paramountcy of children’s best interests established by s 60CA of the Act, nor the considerations (and weight to be given to them) which s 60CC requires to be taken into account in determining those best interests. Rather, as the section headings of both s 43 and s 69ZN suggest, they respectively articulate general principles to which regard must be had in all proceedings under the Act (s 43) and to which effect must be given in conducting child-related proceedings (s 69ZN).

[18] Interesting issues are thrown up by s 43 including what the (undefined) term ‘family’ means … It is also unclear exactly what the vague phrase ‘widest possible protection and assistance to the family’ means…

[19] … [N]o matter what the section requires, even though he made no reference to them, the primary magistrate did not implicitly disregard either s 43 or s 69ZN of the Act. That is because he expressly considered the potential impact on the parents and the children of time with the grandmother resuming, and therefore implicitly recognised the desirability of minimising that impact, if that could be done consistently with the children’s best interests. …

( … )

[23] Insofar as it was sought to be argued … that the impact on the parties’ marriage of the resumption of time was a mandatory consideration, a fundamental difficulty for the parents is that there was no direct evidence that, if that occurred, to use the language of s 43 (and assuming it has direct application to every individual, although only nuclear, family before the court) their marriage needed protection or that the family needed protection or assistance. …

[24] At the hearing … there were assertions in the parents’ material … that, given the grandmother’s alleged conduct in the past, they would be stressed if the children spent time with the grandmother, but there is no reason to think the primary magistrate failed to have regard to that…

[25] … [I]t cannot be overlooked that the time the children were to spend with the grandmother was sparse, suspended during school holidays and special occasions … and … denigration of a party, or discussing the proceedings in the presence of the children was prohibited … [E]nforcing those prohibitions was the main reason for the grandmother’s time with the children being supervised.”

Rejecting the parents’ further argument that the Court erred in finding time with the grandmother was in the children’s best interests, Tree J said (from [34]):

“The absence of a positive finding of a benefit to the children in having a relationship with the grandmother was … acknowledged by his Honour; the interim orders merely enabled any relationship to be, in a very limited way, facilitated at least until final orders were made. The primary magistrate did not err in doing so…

[35] … [T]he grandmother’s extant significance to the children was not an essential pre-condition to the interim orders made … [T]he grandmother’s historical involvement in the children’s lives was hotly contested, and therefore unable to be determined by the primary magistrate. On no view, however, did that inability preclude orders being made in the grandmother’s favour.

( … )

[38] … [T]he primary magistrate was well aware that the children had little recent involvement with the grandmother … and had last spent time with her over a year earlier … His Honour likewise must be taken to be well aware of the parents’ opposition to the grandmother having anything to do with the children …

( … )

[41] … [I]t is clear … that the reason why, on an interim basis, the primary magistrate considered that the children should spend time with the grandmother, was the possibility of them deriving benefit from that relationship. That is an adequate exposure of his reasoning.”

The parents’ appeal was dismissed.

Property – No denial of procedural fairness or error in consent orders made between wife and husband’s trustee in bankruptcy, without husband’s consent

In Faldyn & Badenoch (No 2) [2022] FedCFamC1A 204 (8 December 2022) Aldridge J, sitting in the appellate jurisdiction of the Federal Circuit and Family Court of Australia, heard an appeal from final property orders made by Judge Taglieri.

The orders were made by consent between the wife, her father and the husband’s trustee in bankruptcy, in the husband’s absence. The orders pertained to a short marriage and about $200,000 of sale proceeds.

The orders were made at a case management hearing, at which all parties (including the husband) appeared. The matter was stood down to facilitate property settlement discussions, where the husband was invited to attend when the matter resumed at 3pm. The husband failed to appear upon resumption and orders were made in his absence.

The husband appealed, arguing that he was denied procedural fairness as to the orders; and further argued that he had a right to be heard in respect of “concealed assets” that he said were not disclosed by the wife.

As to procedural fairness, Aldridge J said (from [29]):

“The appellant could have been under no doubt that the purpose of the matter being stood down was so that not only could settlement discussions take place, but it was also anticipated that they would be successful and consent orders could be placed before the Court later that day.

[30] At the conclusion of the parenting matter, her Honour addressed the appellant and said:

… if you wish to participate, you just use the same dial-in link at 3 pm today…

The appellant did not take up that invitation to appear at the resumed hearing of the property proceedings.

[31] In Kioa v West [1985] HCA 81 … Mason J said at 582:

It is a fundamental rule of the common law doctrine of natural justice … that, generally speaking, when an order is to be made which will deprive a person of some right or interest or the legitimate expectation of a benefit, he is entitled to know the case sought to be made against him and to be given an opportunity of replying to it …

[32] Again, in Aon Risk Services Australia Ltd v Australian National University [2009] HCA 27, the significance of the opportunity to put forward a party’s case was identified (at [94]).

[33] The appellant was afforded the opportunity to present his case at the time the consent orders were made. He knew such orders were in contemplation.

[34] There was no denial of procedural fairness and this ground does not succeed.”

As to the husband’s right to be heard, Aldridge J said (from [44]):

“Both s 79(11)(c) and s 79(11)(d) applied in this matter. Therefore, the appellant was not entitled to ‘make a submission to the court in connection with any vested bankruptcy’ without the leave of the court (s 79(12)). Such leave is to be given only in exceptional circumstances (s 79(13)).

[45] The phrase ‘vested bankruptcy property’ is a reference to property that has vested in the trustee under the Bankruptcy Act (s 4 of the Act).

[46] The effect of these provisions is that unless there is some property of the bankrupt that has not vested in the trustee, the bankrupt party cannot, in the absence of leave, make any submissions at all: he or she has no right to be heard at all.

[47] The division of property that takes place in relation to the vested bankruptcy property is the division of that property along with the other property of the non-bankrupt party. The bankrupt has no interest in the outcome of those proceedings. It follows that s 79(12) of the Act prevents the bankrupt party from making submissions unless he or she has leave or unless there is property of the bankrupt that has not vested, or at the least, there is non-divisible property that can be retained by the bankrupt pursuant to s 116 of the Bankruptcy Act.

[48] There is no suggestion of any such property here, so that the only division of property that can occur is that between the respondents and the Trustee, on which the appellant, absent leave, has no right to be heard. That includes any issue of ‘concealed property’.

[49] It is implicit in the appellant’s submissions that he has retained a right to seek orders against non-vested property, namely, other property owned by the first respondent or as he particularly put it, her ‘concealed property’. That is not correct.

[50] The bankrupt’s right to seek orders, that is, where proceedings have commenced, which includes seeking property orders by way of a response, is prescribed by s 60(2) of the Bankruptcy Act. The decision to maintain the proceedings is for the trustee in bankruptcy to determine, not the bankrupt.

[51] The bankrupt contended that his right to commence proceedings did not vest in the Trustee and that it followed he had a right to pursue the ‘concealed property’. The first point is correct (see Sloan & Sloan [2018] FamCA 610 (“Sloan”)) but the second is not.

( … )

[54] The appellant placed great reliance on Sloan. That was a different case because there was a superannuation interest which was not divisible amongst creditors pursuant to s 116 of the Bankruptcy Act and was regarded as non-vested bankruptcy property in which the bankrupt party retained an interest. Thus the right under s 79 of the Act was coupled with property in which the bankrupt had an interest.

( … )

[56] The effect of such a finding is that the bankrupt party would be entitled to seek orders in relation to the superannuation and make submissions in the s 79 hearing which would otherwise take place between the other party and the trustee in bankruptcy. There would not be two such hearings with one as to superannuation and another as to the balance of the property.

[57] Here there is no property in which the bankrupt has retained an interest and his right under s 79 is entirely devoid of content.

[58] It follows that Sloan does not assist the appellant.

[59] … [O]n the facts of this case, there is no basis whatsoever, for the appellant to pursue a claim under s 79 of the Act against any concealed assets. Further, the power under s 79 has been has been fully exercised.”

The appeal was dismissed and the appellant ordered to pay costs.

Children – Dismissal of mother’s application as to youngest children as Rice & Asplund not satisfied, but a finding that Rice & Asplund was satisfied in respect of oldest child

In Hood & Weaver (No 2) [2022] FedCFamC1A 205 (8 December 2022) Aldridge J, sitting in the appellate jurisdiction of the Federal Circuit and Family Court of Australia, heard an appeal from parenting orders made by Judge Kearney in respect of three children – the youngest two being children of the relationship aged 7 and 4 (“Y” and “Z”); and the older child (“X”) being 11 and a child of the mother’s previous relationship.

After a contested trial and at a time when Y and Z were living with the father while X lived with the mother, final orders were made in February 2022 that all 3 children live with the father ([2]).

On the day that order was made, X informed the NSW Police that the father had assaulted him, leading to charges being laid against the father, which were ultimately dismissed ([5]). A temporary family violence order was also made.

When hearing the mother’s parenting application in which she sought to vary the final orders, the Court was not satisfied that the rule in Rice & Asplund was satisfied in respect of the youngest children (Y and Z) but found it was satisfied in respect of X, ordering X to live with the mother and spend no time with the father ([8]-[9]).

Dismissing the mother’s appeal, Aldridge J said (from [17]):

“The primary judge referred to the relevant principles as to the reconsideration of parenting orders as discussed in Rice & Asplund [1978] FamCAFC 128 … Marsden & Winch [2009] FamCAFC 152 … ; SPS and PLS [2008] FamCAFC 16 and Carriel & Lendrum [2015] FamCAFC 43 … in a manner that was not the subject of criticism…

[18] Thus her Honour proceeded on the basis that the question was whether there had been such a change in circumstances as would warrant reconsideration of the existing orders, taking the mother’s evidence at its highest.

( … )

[30] It must be recalled that X’s allegations referred mainly to assaults on him. …

[31] Y and Z have lived primarily with the father since April 2020. In the 10 February 2022 reasons, the father was found not to have posed a risk of harm to either child … Y and Z have made no relevant allegations since they were taken into the care of the mother.

[32] It is plain enough that the primary judge looked into X’s allegations, which largely did not involve the other two children.

[33] … [H]er Honour took into account many factors that were relevant to the likelihood of the final orders being varied, some of which have already been noted above, but also included:

any of the allegations relied on by the mother, other than those raised by X, were rehashings of complaints already dealt with … ;

The evidence established that Y and Z will more likely experience consistency and structure in the father’s home … ;

The children have already been interviewed by an expert witness and Independent Children’s Lawyer and further interviews are undesirable … ; and

The parties have a propensity to take the children inappropriately to the police and report the children’s expressions or behaviour to support the allegations which will continue ‘unless this chapter of the litigation is closed’ …

[34] Importantly, her Honour found that if Y and Z remained living with the father, ‘their lived experience will be unchanged’ …

( … )

[36] … The findings made by the primary judge, having regard to all of the matters that were identified by her, were open to be made.

( … )

[43] … [P]ursuant to the 10 February 2022 orders, little changed for Y and Z apart from X coming to live with them and the father. X wished to live with his siblings and the expert evidence supported that course. As explained, the re-unity in the care of the father however did not take place.

[44] The question was whether the benefit of reuniting the children was such that the Court should reconsider the orders that Y and Z live with the father. The … primary judge considered that the existing order was unlikely to change. The status quo outweighed the benefit of resuming a full time sibling relationship. The children were still to spend time with each other.

[45] I was not taken to any evidence that the effect of the children continuing to live in separate households would be profound and change the nature of the sibling relationship. It would simply remain as it had.

( … )

[47] Taking into account the above, I am not persuaded that the primary judge failed to take the sibling relationship into account.”

The mother’s appeal was dismissed.

Property – No error in 60:40 contribution weighting for a $4.5 million asset pool in long relationship where de facto wife’s father provided $1,250,000 and interest free loans

In Bokin & Wild [2022] FedCFamC1A 209 (13 December 2022) the Full Court (Alstergren CJ, Rees & Altobelli JJ) heard an appeal from a decision of Brasch J in respect of a de facto relationship of between 17 and 21 years, which produced five children aged between 8 and 16 ([1], [6]). The wife also had an adult child of a previous relationship ([6]).

The findings at first instance included that the net asset pool was $4,500,000 ([1]); contributions were assessed at 60:40 ([12]); with a 5 per cent s 90SF(3) adjustment in favour of the de facto wife such that the division was 65:35 in favour of the de facto wife overall ([8]).

In its assessment, the de facto wife’s contributions were an “initial contribution of $175,000” while the de facto husband’s were “minimal”. The de facto wife’s father had “from 1999 until 2019 (a period of 20 years)” provided “between $50,000 to $60,000 per annum … some $1,100,000”. The de facto wife’s father also transferred a property to the parties for “$120,000 less than its value”, provided a number of interest free loans “including $100,000, $700,000, $2,200,000 and $830,000”, gave $30,000 for a swimming pool and paid stamp duty for the parties ([23]).

The de facto husband argued on appeal that the Court erred in its assessment as to contributions and further erred by offsetting his contribution to the de facto wife’s child against the de facto wife’s father’s contributions.

The Full Court said (from [16]):

“The question of whether the assessment of contribution was plainly wrong, not open and exceeded the reasonable exercise of discretion must be answered in light of the established principles with respect to the making of an order under s 90SM or s 79 of the … Act … The Court does not adopt a precise, mathematical approach to the exercise of discretion as the various matters taken into account under s 79 are not all capable of precise calculation (Kessey and Kessey [1994] FamCA 162 … ). Some considerations involve value judgments or are matters of impression (Lovine & Connor [2012] FamCAFC 168 … ).

[17] The findings of the primary judge are the result of a detailed and holistic assessment of a myriad of contributions in a long marriage.

( … )

[21] The primary judge also identified the differential created by her assessment of contribution of $914,696.75 at [152] of the reasons.

( … )

[24] … [T]he respondent’s father’s quantified contributions were some $1,250,000 and his unquantified contributions, particularly the provision of interest free loans, were substantial and in addition to the quantified contributions.

[25] The primary judge’s assessment of contributions as favouring the respondent by 20 per cent or $914,696.75 is readily explained by a proper analysis of the respondent’s father’s contributions.

( … )

[27] In this case the primary judge’s reasons are adequate. Her Honour’s reasoning is well able to be ascertained. … [W]e are satisfied that the inevitable ‘leap’ from words to the figure of 60 per cent by the primary judge does not invite appellate intervention …”

As to the de facto husband’s contributions to the de facto wife’s child, the Full Court said (from [43]):

“At trial the appellant raised … Robb and Robb [1994] FamCA 136 [Robb & Robb] … owing to his assistance with the care of Ms B the respondent’s first child from an earlier relationship (‘Ms B’). This ground … challenges the five per cent s 90SF(3) adjustment.

( … )

[49] Not only did the appellant fail to quantify his purported Robb & Robb claim, he expressly renounced it as a s 90SF(3) consideration.

[50] In so far as the appellant contends that the primary judge double counted the contributions of the respondent’s father in his provision of financial support for the family by also taking that fact into account in her Honour’s consideration of this issue, we reject that submission. The evidence of the respondent’s father’s contributions is relevant to negate the appellant’s contention … that he provided financial support for Ms B.

[51] If the appellant sought to pursue a claim based on Robb & Robb it was incumbent upon him to adduce evidence which was sufficient for the primary judge to assess and weigh that claim. He did not.”

The appeal was dismissed. The de facto husband was ordered to pay costs of $18,500.

Children – Indefinite severance of children’s relationship with their mother disproportionate to identified unacceptable risk of ongoing emotional harm

In Bielen & Kozma [2022] FedCFamC1A 221 (20 December 2022) the Full Court (McClelland DCJ, Henderson & Harper JJ) heard an appeal from orders where 6 and 4 year old children changed from living with the mother to living with the father.

At first instance, the Court found that the children had been exposed to the mother’s ongoing false narrative that they had been sexually abused by the father, posing an unacceptable risk of ongoing emotional harm in her care. The Court ordered that the mother have no time nor communication with the children, save for the provision of cards on special occasions.

On appeal, the mother did not challenge the sole parental responsibility order in favour of the father, nor the findings of unacceptable risk and change of residence, but argued that the Court erred by failing to consider the likely effect or impact of its orders upon the children.

In particular, the mother argued that the Court erred where it specifically found that as the mother posed an unacceptable welfare risk “it is unnecessary to explore the remaining primary consideration and additional considerations contained in section 60CC” ([40]).

The Full Court said (from [27]):

“In Masson v Parsons [2019] HCA 21 … in their joint judgment, their Honours Kiefel CJ, Bell, Gageler, Keane, Nettle, and Gordon JJ noted that the focus of the objects was on ’ensuring that children have the benefit of both of their parents having a meaningful involvement in their lives, to the maximum extent consistent with the best interests of the child’ …

[28] Section 60CA of the Act provides that, in deciding whether to make a particular parenting order in relation to the children, the Court must regard the best interests of the children as the paramount consideration. This is also confirmed in s 65DAA of the Act. This means that the focus of parenting proceedings should be on ‘the effect on the child’ of the parties’ respective proposals (Fairfield & Hoffman [2021] FamCAFC 151 … at [71]).

( … )

[30] While used on several occasions in the Act, there is no definition of the ’welfare’ of the child. We are of the view … that consideration of matters impacting upon the welfare of the child necessarily involves focusing upon the immediate, medium and long-term impact of proposed orders upon the child’s physical, emotional and psychological safety, security and well-being.

[31] In undertaking that important task, s 60CC of the Act sets out the list of matters that the Court ’must consider’ in determining what is in the children’s best interests. …

( … )

[37] For reasons which we subsequently explain, we are of the opinion that the primary judge was in error in failing to consider s 60CC(2)(a) and any factor contained within s 60CC(3), particularly s 60CC(3)(d).

( … )

[39] It is often the case that a trial judge will specifically note, in the body of the judgment, that they have considered relevant statutory provisions but have not specifically referred to them because they have not regarded the consideration or considerations as being relevant or, more accurately, sufficiently relevant to the issues to be determined in the proceedings. Such an approach is entirely appropriate. … Equally, it may be apparent from the reasons for judgment of a trial judge, that they have considered a relevant statutory criteria even though they have not made specific reference to it. …

[40] However, neither of those scenarios occurred in this case. …

( … )

[42] … The fact that [the primary judge] … failed to give ‘proper, genuine and realistic consideration’ in a manner that was consistent with the objects of Part VII of the Act … is apparent from the judgment. Nowhere in the body of the judgment does the primary judge set out her assessment of the consequences for these young children of losing the benefit of a meaningful relationship with their mother. In our view, [the finding as to it being unnecessary to explore the remaining primary consideration] … can only sensibly be construed as a statement by the primary judge that she consciously failed to consider s 60CC(2)(a) and s 60CC(3) because she viewed her conclusions regarding s 60CC(2)(b) as determinative. This constitutes appellable error.”

Considering the issue of proportionality, the Full Court said (from [51]):

“In Helbig & Rowe [2016] FamCAFC 117, the Full Court explained … (citing A v A [1998] FamCA 25 … ), that where a case is conducted on the basis of it being contended that there is an unacceptable risk of harm to a child in the care of one parent, ’[t]he first enquiry is whether there is objectively an unacceptable risk. If there is the Court must take steps proportionate to the degree of risk’ ….

( … )

[55] Having determined that the children were at an unacceptable risk of harm in remaining in the primary care of the mother, it was incumbent upon the primary judge to consider whether that risk could be mitigated in a manner that was consistent with the objects to Part VII to which we have referred. … [I]n this case, that included the possibility of the children spending supervised time with their mother …

( … )

[62] … [T]he primary judge found that the mother’s allegations were malicious. Even so, there was no articulation by the Family Report writer or the primary judge as to why, as a matter of logic, supervision of the children’s time with the mother would be effective to mitigate against risk in the event of the mother’s allegations against the father being misguided, but the same supervision would be ineffective in circumstances where it was found that the mother’s allegations were made with malicious intent.

[63] There was no explanation by the primary judge as to why a professional supervisor would be able to effectively monitor and, if necessary, terminate inappropriate communication between the mother and the children in the first scenario but not in the second scenario. …

[64] Given the potential impact upon the children of orders terminating their relationship with their mother for an indefinite period, it was incumbent upon the primary judge to explain why … there was such a difference in the prospective effectiveness of supervision in either of the scenarios to which we have referred. The … failure to do so resulted in orders terminating the children’s relationship with their mother. That order was, in our view and in the circumstances of this case, disproportionate to the risk to be mitigated.”

The Court allowed the appeal in part and ordered a rehearing on the discrete issue of whether and how the children would communicate with and spend time with the mother.

Property – No “de facto relationship” notwithstanding two children – Paucity of applicant’s evidence prevented a finding that parties were a couple living together on a genuine domestic basis

In Swinbank & Stein [2022] FedCFamC1F 682 (14 September 2022) Jarrett J heard an application by Mr Swinback (“applicant”) for a declaration under s 90RD that he and Ms Stein (“respondent”) were in a de facto relationship.

The parties were in a relationship from 2014 and had two children together, aged 6 and 7 years. The relationship ended in 2019. From 2014 to 2019 the applicant was a “fly in fly out worker”. The respondent characterised their relationship as a “casual sexual relationship”. She said that they never lived together in the same residence, the respondent visiting her two to three times per year [26].

After a comprehensive review of the evidence of the parties, Jarrett J said (from [90]):

“… Parties might have a relationship between them of some sort, but nonetheless not be in a de facto relationship: Fairbairn v Radecki [2022] HCA 18 … The matters to which attention is directed by s 4AA(2) of the Act are neither mandatory nor exhaustive: Onslow & Onslow [2016] FamCAFC 7 at [91].

[91] Moreover, whilst the perception of the parties about the nature of their relationship is a relevant matter, it is not determinative: Sinclair & Whittaker [2013] FamCAFC 129 at [65]. That is especially so when the parties or one of them, such as the applicant here, merely swears to the issue. The phrase de facto relationship will mean different things to different people and that meaning may change depending upon the context in which the phrase is being used. Unless the basis for a party’s opinion about the nature of the relationship is explained by reference to the facts, acts and other circumstances of the actual relationship between the parties concerned, the opinion will generally be of no probative value. What might be found to be a de facto relationship between two particular people might lack many of the indicia that many other de facto relationships exhibit: cf. Onslow & Onslow at [97]-[104].

[92] The parties commenced a relationship with each other in 2014. Over time, the nature of that relationship has changed. At first, it was a relationship whereby the parties would see each other occasionally and engage in sexual relations. They soon became parents and their relationship changed. They remain parents of two children and so, in that respect at least, they remain in a relationship. I am satisfied that their intimate relationship ceased in January, 2019. …

[95] I am not satisfied that the parties did share a common residence between early 2014 until mid- 2020 as the applicant contends. I am satisfied that whilst he would from time to time stay at the respondent’s home … when it suited him, it was not his residence. Questions of the difference between a postal address and a residential address to one side, his representations to banks and others, including the Department of Transport, the Australian Taxation Office and his employers are, on the balance of probabilities, a more accurate and reliable indication of his place of residence than his assertions in these proceedings. That he may have had some deliveries made to the respondent’s address indicates that he may have been present at times, as I am satisfied he was, but I am not satisfied that it demonstrates that it was his place of residence.

( … )

[97] I have set out the nature of the parties’ sexual relationship above. The respondent took the view that the applicant was attending to various repairs and the like to ‘get into [her] pants’. Her evidence was that she was content for that to happen while he continued to provide benefits to her. The evidence also establishes that she desired a more secure and permanent relationship with the applicant but that, I am satisfied, he would not commit to it. I accept her evidence about asking the applicant to go to counselling following X’s birth so as to improve their relationship. I accept that he refused to do so.

[98] There was no financial interdependence between the parties, despite the assertions of the applicant to the contrary. Aside from meeting some very minor expenses for the respondent, the payments made by him to her were to discharge his obligations to support his children with her. There is nothing in the evidence to suggest that the slightly more than $70,000 he has paid her over the years exceeded what would otherwise have been his child support obligations.

( … )

[100] The only evidence of knowledge by one of the parties about the finances of the other is the message sent by the respondent to the applicant in mid-2017 regarding his tax refund, and the respondent’s evidence that the applicant would complain to her that he was not paid regularly and was always chasing his pay. In my view, that single message and those discussions do not provide evidence of any intermingling of the parties’ finances or financial interdependence between them.

[101] The parties owned no property together, real or personal. Nor did they contemplate acquiring any property together. There were discussions between the parties about the fact that the applicant had obtained a contract to sell his L Town property and he told her why he was selling it. …

( … )

[103] The parties did not share the use of property save for the applicant staying with the respondent from time to time as I have discussed elsewhere. He kept some minor possessions at her residence, but those were incidental to his visits and not indicative of any long-term residence. …

[104] There is no evidence suggesting or consistent with there being a commitment between them to a shared life together. They share only their children and they have each supported those children (at least until mid-2020). The respondent has always been the children’s primary carer and provided the lion’s share of financial support for them. Since separation, the applicant has taken no substantial steps to spend any time with them.  …

( … )

[107] For the reasons I have expressed above, I am not satisfied on the balance of probabilities … that the applicant and the respondent were in a de facto relationship within the meaning of that term as defined by s 4AA(1) of the Act at any time. They may have been in a relationship, but the relationship did not involve the parties living together on a genuine domestic basis. Whilst they may have been a couple in the sense that they enjoyed a physically intimate relationship and were the parents of two children, I am not satisfied that their relationship with each other was such that it could be said that they were living together on a genuine domestic basis. That should not be read as the Court requiring them to demonstrate that they lived in the same household – that is clearly not the law. But the characteristics of the relationship that I have identified above lead me to conclude that they were not living together on a genuine domestic basis.”

Property – Tax debt exceeded value of asset pool – Just and equitable that entire pool ($3 million) be divided between ATO and child support registrar and that husband and wife receive nothing

In Cao & Trong [2022] FedCFamC1F 754 (4 October 2022) Wilson J heard an application for property settlement where the debt to the Australian Tax Office (“ATO”) exceeded the value of the asset pool.

The parties met in 2002, cohabited from 2003, married in 2010 and separated in either 2015 or 2016. There were 3 children of the relationship. The husband was a successful businessman and during the marriage the parties lived a “very opulent lifestyle” ([6]).  The husband’s liability for income and other tax was about $7 million at the time of trial ([7]). The child support registrar (“CSR”) asserted that the debt due to the CSR was $256,416.89  pursuant to a binding child support agreement (“BCSA”) and penalties ([26]).

Pursuant to interim orders, the parties sold the matrimonial home (“the G Street property”) in early 2019 and the net proceeds of sale available for distribution were $3,099,868. The wife sought that she receive the proceeds. The husband sought that the ATO receive the proceeds. The ATO and the CSR sought that each should receive a rateable distribution of the proceeds.

The husband also sought that the BCSA be set aside for unconscionability.

Considering the husband’s arguments regarding the BCSA, Wilson J said (from [33]):

“… [Section] 136(1) provides that a party to an agreement prescribed by that section may apply to set aside the agreement. Under s 136(2), if a party has applied under sub-section (1), the court is empowered to set aside the agreement if the court is satisfied that (moving to s 136(2)(b)(ii)) another party to the agreement or someone acting for another party ‘engaged in unconscionable’ or other conduct. No party in this case relied on the words ‘or other conduct’.  [Counsel for the husband] advanced his contentions by arguing that the relevant agreement should be set aside according to principles of statutory unconscionable conduct. Conversely, counsel for the wife contended that the word ‘unconscionable’ in s 136(2)(b)(ii) had the meaning ascribed to it in equity and that on the facts of this case, the criteria of special disadvantage and the exploitation of any such special disadvantage had not been made out.

( … )

[61] … [I]n this case I am of the view that –

  • if the requirement of special disadvantage and the exploitation of that special disadvantage apply to s 136(2)(b)(ii) of the Child Support (Assessment) Act, they were not demonstrated on the facts of this case; and
  • if ‘unconscionable’ conduct in that section requires the proscribed conduct to be so far outside of societal norms of acceptable behaviour as to warrant condemnation as conduct that is offensive to conscience, then again the conduct in this case was not properly so characterised.

[62] In my view the contention that the relevant agreement should be set aside for being the product of unconscionable conduct fails.”

Wilson J continued (from [90]):

“The Commissioner contended that the wife’s claim to any interest in the G Street property is without merit and should be rejected.

[91] … [T]he Commissioner argued that parties to a marriage who share in good economic times to generate an asset pool should also generally share in poor economic times. …

[92] The Commissioner argued that the wife knew about the husband’s tax issues from 2008. The Commissioner also argued that the husband and the wife enjoyed a lavish lifestyle especially at a time when a significant amount for tax was owing. They lived in one of Melbourne’s most expensive suburbs, their children attended Victoria’s most exclusive and expensive private schools, they regularly travelled overseas, they drove expensive cars and retained live-in nannies. In addition, the husband spent an amount somewhere between $150,000 and $200,000 on paintings … and the husband spent about $300,000 on jewellery for the wife. He wore a $20,000 Rolex watch.

[93] The Commissioner submitted and the husband conceded that the lifestyle of the husband and the wife was funded by unpaid taxes that ought to have been paid directly to the Commissioner. ( … )

( … )

[95] The wife argued that the concept of her being required to take the good with the bad is of limited application to her for the simple reason that she will be left far worse off than the husband if the entirety of the proceeds of sale of the G Street property is applied towards discharging the tax debt.

[96] I reject the wife’s assertion in that regard. The evidence demonstrated on the balance of probabilities that she enjoyed the benefit of an opulent lifestyle at a time when the debt due to the Commissioner should have been paid.  …

( … )

[105] It must not be overlooked that the wife was the registered proprietor of the G Street property and therefore the holder of an indefeasible fee simple interest in the legal estate in that parcel of real property. Ordinarily such an interest would confer upon the holder a title superior to the holder of a subsequent legal interest or the holder of an equitable interest. In this case the Commissioner submitted that the husband’s alienation of his interest as the registered proprietor of the G Street property in favour of the wife was void under s 172 of the Property Law Act 1958 (Vic). The Commissioner submitted that a declaration should be made to that effect, with the consequence that the husband and wife are restored to their registered proprietorship of the G Street property in equal shares.  ( … )

[106] The Commissioner submitted that the wife had enjoyed the benefit of a total sum of $662,940.52 in partial property settlement orders as well as the sum of $300,000 as the value of jewellery purchased for her by the husband.  The Commissioner submitted that all money available for distribution ought to be applied in discharging the husband’s taxation liability.”

Wilson J concluded (from [170]):

“ … [The husband’s counsel] submitted, correctly in my view, that the indebtedness to the Commissioner is of such a magnitude that it is likely to be defeated if the orders sought by the wife are granted.

( … )

[178] The Commissioner contended, correctly in my view, that it would be incongruous for me to take into account non-financial contributions to the marriage by the wife while concurrently relieving her of any liability for the tax debt.  ( … )

( … )

[179] There is considerable force in the submission made by [the husband’s counsel] that it will be incongruous for wife to successfully demonstrate contributions under any one or more subsections of s 75(2) in circumstances where she has personally benefitted from non-payment of tax while living a most opulent lifestyle. I take the view that such a result is very far from being just and equitable. [The husband’s counsel] is correct when contending that the justice and the equity of the circumstances of this case must prevail not only as between the husband and the wife but also as between the husband and the wife along with the Commissioner and CSR.

( … )

[182] … I take the view that it is just and equitable for the whole of the sum presently held in the controlled money account ($3,099,868) to be applied rateably as between CSR and the Commissioner. It is not just and equitable for the husband or the wife to receive any distribution from that sum.”

Financial agreements – No jurisdiction to set aside s 90C financial agreement where proceedings issued after death of party to agreement

In Makrolis & NSW Trustee & Guardian [2022] FedCFamC1F 688 (14 September 2022), Altobelli J heard an application to set aside a financial agreement where proceedings were commenced after the death of the applicant’s wife.

The applicant and his wife cohabited from 2004 and married in 2006. They separated on 1 October 2018 and entered into a s 90C financial agreement on 29 May 2019, dividing their assets 61 per cent to the wife and 39 per cent to the husband. They divorced in mid 2019.

The wife died intestate in late 2019. The 3 children of the relationship lived with the applicant following his wife’s death. Proceedings were commenced in 2021, naming the NSW Trustee and Guardian as the respondent.

The applicant sought access to the estate of his late ex-wife which was held on trust for the children of the relationship. To do this he needed to set aside the financial agreement.

The applicant relied on ss 90K(1)(d) and 80(1)(k) of the Family Law Act ([7]-[10]). Considering those arguments, Altobelli J said (from [11]):

“The Court observes that both provisions … empower the Court to do certain things but assume, rather than confer, jurisdiction.

( … )

[16] … [T]here is no conferral of jurisdiction on a court to hear a dispute between the applicant and the respondent, a trustee of Ms Makrolis’ estate …

( … )

[17] The respondent pragmatically conceded that if the Court had jurisdiction, the Court would be satisfied for the purposes of s 90K(1)(d) that there had been a material change in circumstances. The respondent did not concede that the applicant would suffer hardship, but the Court may well have found this to be the case.

[18] The main argument on behalf of the respondent was that, whilst the Court had power, it lacked jurisdiction. At the time of death of Ms Makrolis in late 2019, the parties had both entered into a binding financial agreement and had been divorced. There were no proceedings on foot between them at the time. The respondent submitted that the Court did not have jurisdiction in these circumstances because no proceedings were on foot, and the other party to the financial agreement had already died. Thus, according to the respondent, s 44(3B) did not assist, as it did not confer jurisdiction after the death of Ms Makrolis. The respondent did concede that s 90H conferred jurisdiction, but only in the context of enforcing an agreement, and not setting it aside.

[19] The respondent further contended that, even if the Court did have power to set aside the financial agreement, it would not have power under s 79 to make an order altering property interests, again for the reason that Ms Makrolis died at a time when no proceedings were on foot.

( … )

[22] That may appear to be a conferral of jurisdiction on the Court to set aside the financial agreement, but, as the respondent contended, that does not necessarily mean the Court is conferred with jurisdiction to then make a s 79 order.

( … )

[24] Section 44(3B) does not assist the applicant because of s 79(8). The Court’s jurisdiction depends on the terms of any legislative grant of jurisdiction. There is no statutory grant of jurisdiction providing for an application for leave to institute proceedings to be excluded from the principle that Ms Makrolis’ death prevented those proceedings from being instituted. For all practical purposes, the right to seek any property settlement abated when Ms Makrolis died. Section 44(3B) takes the matter no further (see, e.g., Radney & Radney [2022] FedCFamC2F 53 citing Simonds (Deceased) & Coyle [2019] FamCAFC 47)

[25] The Court lacks jurisdiction. It must follow that the application is dismissed.”

Procedure – Section 79(5) of the Family Law Act – Court refuses adjournment sought by wife where insufficient evidence of likely future significant increase in value of husband’s business

In Macvean & Manton (No 2) [2022] FedCFamC1F 689 (14 September 2022), Berman J, as part of an application for property settlement and child support departure order, heard a wife’s application to adjourn property proceedings to a date no earlier than 1 September 2024.

The husband and wife were aged 53 and 43 years respectively. They had a 12 year relationship and two children. Parenting orders were made by consent on 16 December 2021. The husband was a self-employed business owner and the wife worked part time as a medical professional ([24]-[25]).

The husband adopted the single expert’s business valuation figure of $2,930,764. The wife’s shadow expert valued the business at $4,545,865. ([48]). The wife sought an adjournment of the proceedings on the basis that if one of the products produced by the husband’s business gained significant market penetration then the value would “exponentially increase” ([81]).

Berman J said (from [82]):

“It is not controversial that the husband has invested a significant sum … in the research and development of the P1 Service product. … [T]he husband has a strong belief in the utility and efficacy of the product …

[83] … [I]f there is a significant increase in revenue as a result of the successful marketing distribution and sale of P1 Service, the single expert concedes this would have a positive impact upon the value of the P Pty Ltd business.

[84] The application to adjourn proceedings pursuant to s 79(5) of the Act may at first consideration be attractive. It is difficult to foretell the future, particularly in the volatile climate of software development marketing and sale. …

( … )

[87] … [I]f an adjournment of the proceedings was granted, then there would need to be a reconsideration of all of the assets and liabilities of the parties at that time. … [T]he parties have incurred a total of about $3,000,000 in legal costs and disbursements. … [T]he potential for future costs incurred could well overwhelm the proceedings and diminish the assets available for distribution between the parties.

( … )

[91] In Grace v Grace [1997] FamCA 59 the Full Court considered the history and purpose of s 79(5) of the Act, as a power that may be required to overcome a problem arising from superannuation entitlements and also future vested interests pursuant to family trusts.

[92] … [T]he Full Court considered that whilst the circumstance which may justify the exercise of discretion to adjourn proceedings is not limited or curtailed, nonetheless:-

… [I]t is apparent that the exercise of the discretion to adjourn pursuant to s 79(5) has very serious consequences for the actual subject matter of the dispute and does not just relate to the conduct of the hearing. It is therefore a different type of ‘adjournment’ to that which is often the subject of discussion in those authorities that suggest that appellate courts should be reluctant to interfere with the exercise of discretion by a trial judge as to whether to grant an adjournment or otherwise.

[93] Their Honours considered that certain preconditions would assist in determining when to exercise the discretion … as follows:-

  • that there is likely to be a change in financial circumstances;
  • that the likely change is a significant one;
  • that having regard to the likely and significant change, it is reasonable to adjourn the proceedings; and
  • that an order made if that significant change occurs is more likely to do justice as between the parties than an immediate order.

[94] In Pratt & Pratt [2012] FamCAFC 81 the Court considered that a hope of a significant change in value of a rural property was not sufficient for the discretion to adjourn to be exercised.

[95] Section 79(5) of the Act requires a consideration that the change in the financial circumstances of the parties be both significant and likely. If so, then a further consideration is necessary as to whether it is reasonable to adjourn the proceedings and that an adjournment is likely to do justice between the parties.

[96] The husband concedes that he hopes the P1 Service product will gain significant market penetration. …

( … )

[98] It is not certain that the P1 Service product will launch in the way that would be necessary to add value to the P Pty Ltd business. P Pty Ltd is engaged in hopeful negotiations … but that is only a first step and does not guarantee that the marketing and sale of the product will be successful.”

His Honour continued (from [101]):

“The difficulty is the lack of evidence that would support a finding of a likely significant change in financial circumstances in support of an adjournment of the proceedings pursuant to s 79(5) of the Act. That is not to say that it is impossible, or will not occur, but the evidence falls short of being able to find that a beneficial outcome is likely to eventuate if the proceedings are adjourned.

[102] There is no evidence as to the potential value to be added to P Pty Ltd depending upon possible future sales. Further, the costs likely to be incurred by the parties if these proceedings were adjourned, is a relevant consideration taking into account the history of the matter and the concession of the parties, that the costs to date are outrageous.

[103] … I do not consider that the evidence presented would enable the discretion to be exercised and the proceedings adjourned as sought by the wife.”

Refusing to exercise discretion to adjourn the proceedings, Berman J proceeded to determine the property and child support applications on a final basis.

Children – Reversal of care due to unacceptable risk to child living with mother – Order for unsupervised contact with mother a non sequitur given that finding of risk

In Hickson & Matthew [2022] FedCFamC1A 161 (11 October 2022) McClelland DCJ, sitting in the appellate jurisdiction of the Federal Circuit and Family Court of Australia, heard a mother’s appeal from parenting orders for a reversal of care for the child to live with the father.

The parties separated 3 weeks after the child’s birth in 2018 after the father allegedly perpetrated family violence. The child X had been in the primary care of the mother since birth. The child spent time with the father from November 2018 to January 2019 on 6 occasions. The mother then ceased time. After the father issued proceedings in February 2019 and numerous court hearings, a variety of interim orders were made, gradually increasing the father’s time with the child.

The mother had been the victim of both physical and sexual abuse as a child which had adversely affected her mental health. She had suffered episodes of mental illness, engaged in substance abuse and prior to the child’s birth committed acts of violence, including several assaults against her father, who was the perpetrator of the physical abuse she suffered as a child.

The trial judge found that the child was exposed to an unacceptable risk of harm living with the mother and made orders for the child to live with the father and spend unsupervised time every second weekend with the mother.

The mother appealed, arguing a non sequitur between a finding of unacceptable risk with the child living with her and orders for the child to spend unsupervised overnight time each alternate weekend with her.

McClelland DCJ said (from [30]):

“The reasons clearly state that the primary judge ordered there be a change of residence as a result of her Honour’s finding that the child faced an unacceptable risk of harm in the mother’s care. …

( … )

[37] The relevant principles in assessing whether a child would be exposed to an unacceptable risk of psychological and/or physical harm were recently considered by the Full Court in Isles & Nelissen [2022] FedCFamC1A 97; who agreed with and adopted Austin J’s dissenting judgment in Fitzwater & Fitzwater [2019] FamCAFC 251 being the correct statement of the law. ( … )

[38] … [I]t can be seen that determining the issue of risk essentially involves applying a risk matrix, whereby it is necessary to assess the potential seriousness of the harm in the context of the probability of its occurrence. That is, there is an obligation on a trial judge to evaluate not only the extent, magnitude and nature of the harm that might befall the child if there is a future act of abuse or harmful conduct, but also to evaluate the prospect or probability of such an act or conduct occurring that would cause such harm to the child: see N v S [1995] FamCA 139 … cited with approval in Napier & Hepburn [2006] FamCA 1316; Nikolakis & Nikolakis [2010] FamCAFC 52 … and Deiter & Deiter [2011] FamCAFC 82 …

( … )

[44] In finding that there was an unacceptable risk of the child being exposed to ‘serious domestic violence’ … [t]he reasons do not reveal … several significant aspects of the evidence presented in the proceedings.

[45] Firstly, the primary judge did not refer to the unchallenged evidence of the appellant that Mr E, who was the perpetrator of the violence that had occurred in March 2021, was in prison … and that the mother had not had any contact or relationship with him ‘since the day he bashed [her]’ …

[46] Second, in finding a risk because … the mother may have ‘serious cognitive difficulties’, the primary judge failed to refer to the oral evidence of Dr D that:

…despite the relationship difficulties that I’m aware of, that sort of behaviour has not been ongoing. Certainly in the last five years I’m not aware of any of it. … [T]he mother’s behaviour, despite the stresses and relationship difficulties, has been relatively stable from that point of view.”

…

[47] Third, in finding the potential for the mother to return to a pattern of alcohol and substance abuse if she became stressed, the primary judge did not refer to the evidence of Dr D …

[48] … [I]t was incumbent upon the primary judge to identify that she was aware of and had taken into consideration that evidence in determining that there was a risk that the mother’s cognitive capacity may become compromised and, in the event of the mother being confronted by a situation of high stress, she may engage in violence and substance abuse. The primary judge erred in failing to do so.

[49] In the absence of referring to that evidence, it is not possible to identify how the violent assault to which the mother was subject on 8 March 2021 provided a logical bridge to connect the mother’s pre-2015 conduct to the more optimistic prognosis referred to in the oral evidence of Dr D … Clearly, that required explanation in evaluating the list of cumulative factors considered by the primary judge as giving rise to what she determined to be an unacceptable risk of the mother regressing and engaging in the concerning behaviour that she had engaged in during the period prior to 2015.”

His Honour continued (from [51]):

“ … [T]here is, on the face of the orders … a non sequitur between her Honour’s finding of the child being exposed to an unacceptable risk of harm in the mother’s care such that a change of residence is required while, at the same time, making orders that provide for the child to spend regular overnight time with the mother on an unsupervised basis.

[52] … [H]aving identified those matters which the primary judge found to cumulatively result in the existence of unacceptable risk, the primary judge failed to explain why there was a need to remove the child from the mother’s primary care and place her in the primary care of her father, in circumstances where it is a necessary inference from the findings of the primary judge that she considered the child did not face an unacceptable risk of harm in the mother’s care for at least three nights per fortnight and, after the child commences school, for half of the school holidays.”

The appeal was allowed and the matter was remitted for rehearing. Costs certificates were ordered.