3 year marriage – Asset by asset approach – Order reinstating parties with their own pre-marital properties with adjustment for money paid by husband towards wife’s house, holidays and other joint expenses  

In Edgar & Faines [2009] FamCAFC 22 (19 February 2009) Warnick J upheld Spelleken FM’s approach to reinstate the parties to a 3-year marriage with their respective pre-marital properties, with an adjustment to allow for money paid by the husband towards the wife’s house, holidays and other joint expenses.

Property – Wife’s application for injunction restraining husband from continuing to retain his solicitor who had acted for both parties in a commercial matter dismissed – Wife unable to explain her failure to complain for eight months – Her apprehension of detriment not alleged

In Edgecombe [2010] FMCAfam 894 (19 August 2010) the wife applied for an injunction restraining the husband’s solicitors from acting for him as they were acting for both parties in a commercial matter the subject matter of which was part of their asset pool in the family law proceedings. 

McGuire FM reviewed the relevant authorities, saying at para 11:

“ … the authorities recognise the need for some objectivity and limits on even the broader approach to this issue and specifically the notion of ‘reasonableness. In McMillan [(2000) FLC 93-048] at [87,735] their Honours, after reviewing the case law, cited Justice Lindenmayer from the unreported decision of Stewart [17 April 1997] thus:

‘All that is necessary is that the wife swears that she has conveyed confidential information to the solicitors and that she believes, not unreasonably, that the information may be used against her, or at least to her disadvantage, in these current proceedings.’”

In dismissing the application, McGuire FM said at paras 13-15:

“The wife was unable to give any explanation or reasonable explanation for not bringing a complaint as to conflict during the preceding eight months since negotiations have continued. The factual platform such as it is, leading to her alleged apprehension must have been apparent to her from January 2010 when negotiations commenced.

The onus is on the wife as the applicant to show that she has, on reasonable grounds, an apprehension that information is available to the husband’s solicitors which could be used in the proceedings to her detriment. ( … )

No particulars of the wife’s alleged apprehension are set out in her affidavit material over and above the bland statement that [the husband’s solicitors] acted for her in a conveyancing transaction. In my view it is incumbent on the [applicant] to sufficiently particularise her complaint to show her apprehension to be ‘reasonable’. She has not done so.”

Conflict of interest – Solicitor was client’s brother – Confidences conveyed socially are irrelevant – Conflict found where solicitor had acted for both parties in the preparation of their wills

In Edgley [2013] FCCA 2024 (29 November 2013) Judge Halligan considered an application by the de facto wife (“the wife”) for an injunction restraining the solicitor for the de facto husband (“the husband”) from acting for the husband (paras 31 and 40). The Court said (at para 14):

“ … early in the parties’ romantic relationship, the solicitor … prepared wills, powers of attorney and deeds of enduring guardianship for both parties. There is no issue that a relationship of solicitor and client arose between the wife and the solicitor in relation to the preparation of each of those documents for her.”

The Court also said that contemporaneously “with preparation of those documents a trust deed was prepared naming the husband as trustee and the wife as beneficiary. The wife said she believed that the solicitor was acting for her in relation to the trust deed”. (para 17). The deed included a provision as to the wife advancing $200,000 to the husband. Although the husband’s solicitor gave the wife a letter advising that he did not act for her and that she should obtain independent advice as to the deed, the Court said it was “not satisfied that the solicitor advised the wife he did not act for her until after a decision had been taken as to the way the wife’s interests consequent on her advance were to be secured … [and] the trust deed to protect those interests had been drafted and settled” (para 27).

The Court said (at para 28) that in “January 2009 the solicitor prepared new wills for both parties. The solicitor said he took instructions from the wife to amend her will. The wife ultimately did not proceed with this will prepared by the solicitor. …”.

The Court referred to the Full Court’s decision of McMillan [2000] FamCA 1046 and said (at para 45):

“ … the former client need only prove “a prima facie case as to confidential material, the disclosure or use of which by the solicitors in the course of the conduct of the current proceedings for the present client would be prejudicial to the applicant” (quoting the words of Mullane J in Griffis & Griffis (1991) FLC 92-233). All that is required is that there be at least a theoretical possibility that confidential information could be used against the former client if the solicitor continued to act (McMillan, at [42]).

The Court made the following observations about the evidence (from para 58):

“…     ( … )

d)      There was extensive social interaction of the husband and wife with the solicitor and his wife during the parties’ relationship, as would be expected as the solicitor and the husband are brothers. Confidences conveyed purely socially and not in the context of a solicitor client relationship between the wife and the solicitor are irrelevant to the current application. …

[59]    ( … ) The solicitor agreed that when acting for the wife he received confidential information from her and that in the course of taking instructions for her wills he sought information about the wife’s financial affairs. These are property settlement proceedings.

[60]    It was submitted on behalf of the husband that as the solicitor prepared virtually mutual wills for both parties contemporaneously on both occasions he prepared a will for the wife any information the wife may have provided to the solicitor was not confidential as between the parties. However … I am satisfied that the wife provided information to the solicitor for the preparation of her will in the absence of the husband. And the will, which was sent by the solicitor to the wife via the husband, is unlikely to contain all the confidential information given to the solicitor by the wife to enable the solicitor to draft the will.

[61]    It was submitted on behalf of the husband that as these are property settlement proceedings in which the wife has a duty of full and frank financial disclosure any matters disclosed to the solicitor about her financial affairs would have to be disclosed by her. I infer the point of this submission was to suggest that there could be no prejudice to the wife if the husband’s solicitor used confidential information provided by the wife to him as her solicitor.

[62]    I do not accept this submission. The potential scope of matters concerning the wife’s financial affairs in early 2008 and again in early 2009, when the two wills were prepared, may be far broader than matters disclosure of which is required in property settlement proceedings. And the potential mischief in this argument is that it tends towards an examination of what confidences were in fact disclosed, the very matter Mills [Mills v Day Dawn Block Gold Mining Co Ltd (1882) QLD 62] and McMillan say must be avoided … lest it cause the mischief the remedy is designed to prevent. Further, the duty of financial disclosure is the wife’s, not her former solicitor’s. ( … )

[63]    I am satisfied that, at least in relation to the preparation of the wife’s wills, the wife has established a prima facie case that she provided the solicitor with confidential information about her financial affairs, the disclosure or use of which by the solicitors in the course of the conduct of the current proceedings for the husband may be prejudicial to her or to her disadvantage. I am satisfied that there is a risk of that information being so used if the solicitor continues to act for the husband. In my view, that is sufficient to satisfy the test to enliven the relief the wife seeks, subject to the consideration of matters going to the exercise of the discretion to grant or refuse that relief.”

The Court continued from para 68:

“…     … It was submitted on behalf of the husband that because of the wife’s delay in applying to restrain the solicitor from acting, and given the advanced stage of the litigation, the costs the husband had already incurred, and the delay and added expense the husband would endure if he had to retain new solicitors, the court in the exercise of discretion should refuse the wife’s application.

[69]    However, there was no delay whatever in the wife objecting to the solicitor acting for the husband. She did so through her solicitors in June 2011, four months before the solicitor commenced these proceedings on behalf of the husband. There is no evidence that the solicitor replied to that letter. The evidence before me suggests the solicitor did not respond to the by then three written communications from the wife’s solicitor objecting to him acting for the husband until after he had instituted proceedings. ( … )

[70]    This may be contrasted to the situation in both McGillivray [McGillivray & Mitchell [1998] FamCA 96] … and Fowler [Fowler & Liddle & Anor [2012] FamCA 450] …, where the objection to the solicitor acting was not taken at all until the proceedings were on foot. Unlike the facts in McGillivray, the wife in this case did not remain mute in the face of the solicitor who had previously acted for her now acting for her former husband, keeping the right to object as a tactical weapon to be used at the time of her choosing to cause the husband delay and expense. She objected before any proceedings in which she could use such a weapon were instituted.”

An injunction was made restraining the husband’s solicitor from continuing to act for the husband.

Father successfully applies under FCCR 16.05 for the setting aside of a parenting order made in his absence – While the order had prohibited any paternal time, reinstatement of the case required the children’s relationship with the father to be promoted

In Edmonds & Whyte & Anor [2017] FCCA 2733 (13 November 2017) Judge Burchardt heard the father’s application under Rule 16.05 of the Federal Circuit Court Rules for an order setting aside a final parenting order made in his absence in respect of the parties’ children of 8 and 6 years of age. The order prohibited his spending time with the children. The application was opposed by the mother, the maternal grandmother and the independent children’s lawyer.

The Court said (from [3]):

“Rule 16.05 has been authoritatively considered… by the Full Court of the Family Court. …

( … )

[9]     … [T]he Court [in Barbey & Tuttle [2013] FamCAFC 44 at [90]] recorded its conclusions as follows:

‘The discretion to set aside orders made in default of a party’s appearance is unfettered. Regard should be given to the explanation for a failure to appear, the possibility of a different result, and prejudice to the other party (and how this may be addressed). ( … )’

( … )

[12]   The original application in this case was filed as long ago as 25 May 2015 by the maternal grandmother. She sought that the two children … be restored to the care of their mother. …

[13]   … [T]he father filed his response on 10 September 2015. His affidavit filed contemporaneously noted that he sought the children to live with him in the long term ( … )

( … )

[15]   The affidavit deposed that in 2011 the father served about 12 months in jail … The affidavit indicated that following final orders in February 2013 … the father started serving a jail time for assault related offences, which lasted from February 2013 to May 2013.

[16]   The father rarely saw the children thereafter and relocated to Western Australia in February 2014 for work and to make a new start.

( … )

[18]   He deposed to having not spent a lot of time with the boys over the previous two years and indicated an intention to relocate to Victoria to re-establish a relationship with Y and X.

[19]   In his next affidavit, filed 23 November 2015, the father deposed to having relocated to Victoria. ( … )

[20]   The affidavit went on to assert that he had addressed his issues with drugs or alcohol and undergone mental health assessment and was in full-time work.

[21] The father’s next affidavit, filed 26 April 2016, noted that the father had taken steps to progress his case, including conducting an intake interview on 4 April 2016 in (omitted) with the children’s contact service. …

( … )

[33]   On 25 July 2017, Family Life Australia provided a family report to the Court. It noted that there had been a schedule of 14 visits, of which two had been cancelled by the grandmother and four by the father and   one by a combination of the centre itself and the father. ( … )

( … )

[46]   … The Court does not … know with certainty whether [the father] Mr Edmonds was informed or not of the [first day of trial, at which he did not appear] …

( … )

[50]   … [I]t would appear [that the father’s] application … may have been filed no later than 28 August 2017, approximately four weeks after the court hearing. …

[51]   I do not think that the explanation for delay is adequately explained. ( … )

[52]   … I do not think that the application has been brought with the kind of speed that one would have expected to see had the matter been as critically important to Mr Edmonds as he might now wish to assert. I would have expected him to be banging on the Court’s door the day after he became aware of the Court’s orders made against him. In my view, these are significant matters. …

[53]   … The fact is that the father has sought to reintroduce himself to the children’s lives. He has, to an extent, succeeded in doing so. While not devoid of criticism, the materials suggest that the father’s time at the contact centre proceeded at least reasonably well and that the children enjoyed it. Whether the father has any credible chance of achieving the orders he nominally seeks (namely, that the children ultimately live with him) is very debatable in the face of the materials as they presently stand. I would not regard this as being a proposition … with real prospects of success, at the present time.

[54]   Nonetheless, the Court cannot ignore the practical outcome that would emerge were the application in a case to be dismissed. The net effect would be to remove the children’s relationship with their father forever. The extant orders do not provide for time even as agreed but, rather, specifically prohibit any time at all with the father. Although counsel for the father put the matter much higher … the fact is the children do have some sort of a relationship with their father, and to cease it in its entirety now would be a significant matter. …

[55]   There is, of course, prejudice to the other parties in the event that the application is reinstated. While [the mother and grandmother] Ms Whyte and Ms McGee are self represented and there is no actual cost impost, the stress of re-litigating the matter will, obviously, be a relevant consideration. The stress of litigation is an identified and relevant consideration. …

[56]   This matter is in some respects finely balanced. The father’s non-appearance on the original trial date is consistent with his at times feckless behaviour with the family contact centre. There will clearly be prejudice to the other parties in the event that the application is reinstated. It needs to be borne in mind that the discretion is unfettered and must be exercised judicially. Notwithstanding the matters militating against reinstatement, in my view, the proper exercise of the discretion in the particular circumstances of this case, noting the total exclusion of the father that will occur if matters are not further revisited, and the resultant denial of any benefit to the children of a relationship with their father, leads to the conclusion that the application should succeed. …”

Leave to proceed – Long separation – Full Court finds error where Court refused wife leave to bring property application 6 years out of time – Wife explained delay by referring to an oral agreement between the parties at separation

In Edmunds [2018] FamCAFC 121 (6 July 2018) the Full Court (Ryan, Aldridge & Watts JJ) heard the wife’s appeal from Judge Obradovic’s dismissal of the wife’s application for leave to bring property proceedings six years out of time. The parties, who had been married for 15 years and separated for 10 years. had three children, the youngest of whom was 17. The wife had primarily cared for the children since separation.

When assessing whether the wife had a prima facie case, the court at first instance found that the net asset pool was between $1,472,560 and $1,612,560, as to which 31.2 to 32.9 per cent was already owned by the wife. In dismissing her application for leave, the court at first instance said that the wife ‘ha[d] not established [a] prima facie case in respect of her application as presently couched’, her application being for an adjustment of between 57 and 61 per cent of the pool.

The Full Court said (from [70]):

“What the primary judge did not consider was whether there was a real probability or a prima facie case that the wife would receive a property division that was somewhere between the 31.2 per cent to 32.9 per cent that she presently held and the 57 per cent to 61 per cent outcome for which she was contending.

[71]   Section 79 of the Act empowers the Court to make such orders as it considers appropriate, providing that they are just and equitable. The Court is not limited to considering whether or not to make the particular orders contended for by each of the parties and no other. Commonly the orders that are ultimately made fall between the proposals of the parties but that is not always the case. Subject to requirements of procedural fairness the Court can formulate orders for itself which may be outside the bounds of the parties’ proposed orders.

[72]   In our opinion, the primary judge erred by not considering whether the wife had a prima facie case for, or a real probability of, obtaining a property settlement order that may well have fallen short of the outcome sought by her but nonetheless would see her obtain a greater share of the property available for division than the 31.2 to 32.9 per cent currently held by her.

[73]   Further, in making her finding that ‘it is not apparent that the applicant would receive any money or property by way of a property settlement once all of these factors are considered’ her Honour expressly took into account ‘the increase in the respondent’s superannuation of some $480,000 over the 10 years post separation as a result of his continued employment and contributions’ (at [75(b)]).

[74]   On the evidence, this finding was not available.

( … )

[77]   … [T]he only inference that is readily available is that the significant increase in the value of the husband’s superannuation arose not from his contributions after separation but from growth in the fund. Given that the effect of her Honour’s finding at [75(2)(b)] is that the husband alone had contributed $480,000 to an asset pool in the range of $1,472,000 – $1,612,000, this error is material. At least at a prima facie level on the evidence that was before the Court, there was a basis for finding that because most of the contributions to the superannuation fund occurred prior to separation, the wife should be taken to have made non-financial contributions to it.”

Re-exercising the discretion as to leave, the Full Court said (from [102]):

“There was no dispute between the parties that shortly after separation they reached an oral agreement as to the disposition and use of their property. The parties did, however, disagree about the terms of that agreement.

( … )

[134]  The wife’s present entitlement to the property of the parties … is between 31.2 per cent and 32.9 per cent. As the primary judge found, the husband made a considerably greater financial contribution during the course of the relationship by means of the contribution of the property he owned at the time of cohabitation and the inheritance he received during the relationship. Her Honour also found that the wife made a greater non-financial contribution to that property and to the welfare of the family.

[135]  Since separation the wife has had the care and support of the three children of the marriage including paying their school fees. She has done so without the benefit of child support from the husband since 2008. The husband has paid the rates and insurance on Property B.

[136]  It is true that the wife had the benefit of residing in Property B with the three children cost-free, but against that it must be said that she was responsible for the care and support of the children with limited financial assistance from the husband. …

[137]  It is also relevant to consider the husband’s redundancy payment and superannuation. It is clear that as the husband was employed by the same employer throughout the relationship and until the termination of his employment in 2009, the wife made considerable indirect contributions to both his entitlements on termination and to the contributions to his superannuation fund.

[138]  The wife also has the care of a 17 year old child.

[139]  Taking these matters into account, we are of the view that there is a prima facie case or a real probability that the wife will obtain a property settlement order that will give her a significantly greater benefit than the 31.2 per cent to 32.9 per cent to which she is currently entitled.

( … )

[140]  We consider that if leave to commence proceedings is granted it is likely that there will be a relatively short and straightforward property settlement hearing. …

[141]  The wife does not earn a significant amount of money and owes debts to her parents and to a family friend for funds that she has borrowed to pay the children’s school fees. Her ability to rehouse herself will improve if she does not have to only rely upon her present legal entitlements.

[142]  We are satisfied that the wife would suffer hardship if leave was not granted.

( … )

[143]  It is apparent from what we have already discussed that we consider that the wife has given an adequate explanation for the delay. The point is not whether or not there was an agreement in place between the parties or the terms of that agreement but, rather, whether the wife reasonably believed that she had such an agreement with the husband so that it was not necessary for her to approach the Court for an order for property settlement.

[144]  Such an agreement provides a ready explanation as to why the wife did not either commence property proceedings or otherwise take steps to protect her position – it is clear she thought it was sufficiently protected by the agreement. When she became aware that her understanding as to the agreement was challenged, she promptly sought leave.”

The wife’s appeal was allowed and she was granted leave to issue property proceedings.

Court lacks jurisdiction to declare overseas marriage as valid where wife was under age – Authorisation for a person between the ages of 16 and 18 to marry under s 12 of the Marriage Act only applies to prospective marriages

In Eldaleh [2016] FamCA 1103 (21 December 2016) McClelland J heard the husband’s application for a declaration that his overseas marriage was valid pursuant to s 88D of the Marriage Act 1961 (Cth). The parties were married in the Middle East in mid-2016. The wife was 16 years old at the time of marriage and 17 years old at the time of the hearing.

The Court said (from [3]):

“Section 88D of the Marriage Act appears within Part VA of the Marriage Act, which deals with the recognition of foreign marriages. Section 88D is concerned with the validity of marriages and sub-s (2) relevantly provides:

(2)   A marriage to which this Part applies shall not be recognised as valid in accordance with subsection (1) if:

…

(b)   where one of the parties was, at the time of the marriage, domiciled in Australia–either of the parties was not of marriageable age within the meaning of Part II;

[4]   Under Part II of the Marriage Act, s 11 of the Act provides that, subject to s 12, ‘a person is of marriageable age if the person has attained the age of 18 years’.

[5]   Paragraph (b) of s 88D(2) refers to ‘where one of the parties was, at the time of the marriage, domiciled in Australia’ … ‘Domiciled’ takes its meaning from the Domicile Act 1982 (Cth) … which, at s 10, relevantly provides:

‘The intention that a person must have in order to acquire a domicile of choice in a country is the intention to make his home indefinitely in that country.

( … )

[7]   Although the courtship and marriage of the applicant and Ms Eldaleh took place in the Middle East, it was acknowledged that the applicant was, at the time of the marriage, domiciled in Australia.

[8]   As a result of the applicant being domiciled in Australia, s 88D(2)(b) of the Marriage Act applies and the marriage is not valid if either of the parties was not of marriageable age, that is 18 years of age.”

The Court continued (from [10]):

“Section 12 of the Marriage Act provides that in certain circumstances, a court may authorise the marriage of a person under the age of 18 years. The section provides:

‘(1)   A person who has attained the age of 16 years but has not attained the age of 18 years may apply to a judge or magistrate in a State or Territory for an order authorising him or her to marry a particular person of marriageable age despite the fact that the applicant has not attained the age of 18 years.’

[11]  However, it is clear that the section is directed toward a prospective marriage, rather than facilitating any retrospective authorisation or validation of a marriage.

[12]  As such, no mechanism is available under the Marriage Act by which the Court can validate the extant marriage between the applicant and Ms Eldaleh that took place in accordance with the relevant law in the Middle East.”

The Court then considered a submission on behalf of the husband that as s 12 of the Marriage Act envisaged an application for authorisation of marriage by a person who was between 16 to 18 years the case should be adjourned and the wife joined as a party to bring that application. The Court said (at [16]-[18]):

“The application foreshadowed on behalf of Ms Eldaleh would be fundamentally inconsistent with the current application before the Court for determination. As noted, the application currently before the Court is for a declaration validating the marriage between the applicant and Ms Eldaleh pursuant to s 88D of the Marriage Act. An application by Ms Eldaleh, as foreshadowed in the written submissions, would be pursuant to s 12 of the Marriage Act. Such an application is predicated on the basis that Ms Eldaleh has not previously been married (see s 13(1) of the Marriage Act).

Accordingly, in circumstances where the Court is without jurisdiction to make the orders sought in the current application before the Court, that application must be dismissed.

This outcome does not, however, preclude the applicant or Ms Eldaleh from making such other applications before the Court, or a State court alternatively, as they deem appropriate in light of further legal advice concerning their circumstances.”

The application was dismissed.

Maintenance – Interim order – Respondent required funds to renew her real estate licence – Court erred in considering the appellant’s property but not his liabilities and in disregarding his support of his new de facto partner and her children – Paras (d) and (e) of ss 75(2) and 90SF(3) FLA explained  

In Elei & Dodt [2018] FamCAFC 92 (17 May 2018) Ryan J (sitting in the appellate jurisdiction of the Family Court of Australia) heard Mr Elei’s appeal against an interim order made by Judge Boyle that he pay his former de facto partner maintenance of $1,450 per week; her private health insurance premiums and a $2,000 lump sum to cover medical treatment.

The respondent, who had worked for years as a real estate agent, had been out of the workforce for five years since undertaking IVF treatment (with the appellant’s support). The appellant argued on appeal that the Court had overlooked the failure by the respondent to attempt to re-join the workforce and, further, erred in finding that he had a capacity to pay maintenance.

Ryan J said (from [10]):

“The matters to be taken into consideration in relation to a claim by a party to a de facto relationship for … maintenance pursuant to s 90SF mirror those which, pursuant to s 72 of the Act, apply to a claim for spousal maintenance by a party to a marriage. In relation to the operation of s 72, in Saxena & Saxena [2006] FamCA 588 … Coleman J explained that whether an order for spousal maintenance should be made requires a four step process as follows:

  • Can the applicant support himself or herself adequately?
  • If not, what are the applicant’s reasonable needs?
  • What capacity does the respondent have to meet those needs?
  • What order is reasonable having regard to s 75(2)?

( … )

[12]   … [T]here can be no liability to pay … maintenance unless an applicant has first established that he/she ‘is unable to support herself or himself adequately’ because of the matters identified in s 90SF(1)(b)(i)-(iii). …

[13]   In relation to this threshold question, the primary judge found the respondent:

  • Receives Centrelink benefits in the amount of $550 per fortnight;
  • Has been out of the paid workforce since September 2012;
  • Sold a car some 12 months prior to the hearing and applied the sale proceeds to her living expenses;
  • Had $286 in the bank and was impecunious;
  • Cannot afford many essentials including the cost of necessary medical treatment and medical insurance;
  • Now lived with her parents and wished to but could not afford to establish a home of her own; and
  • Has been required to borrow money from friends and family to assist her.

( … )

[17]   … It was … uncontroversial that following separation the respondent had not sought employment in the real estate industry or at all. According to the appellant, pursuant to s 90SF(1)(b)(ii) of the Act, this ought to have resulted in the application for maintenance being dismissed.

[18]   This submission ignores that s 90SF(1)(b) is tripartite and that the use of the word ‘or’ enabled the primary judge to be satisfied that the respondent was unable to support herself adequately ‘for any other reason’ (s 90SF(1)(b)(iii)). On a fair reading of the trial reasons … the primary judge determined the question of whether the respondent established that she was unable to support herself adequately by reference to the totality of the respondent’s circumstances and not the narrower ground upon which the appellant sought to rely. These ‘other reasons’ included the respondent’s absence from the paid workforce for five years, that she had been attending a psychologist and had the personal difficulties outlined in … the reasons and required further surgery to her hand … Further, the primary judge accepted that the respondent was impecunious, wished to return to work but required funds in order to renew her real estate licence … however needed to ‘get her life in order, so that she is able to re-enter the workforce and deal with the matters ahead of her’ …

[19]   It can be inferred that the primary judge proceeded on the basis that the respondent’s evidence that she would need assistance to secure employment was not unreasonable. …

[20]   It is thus apparent that the primary judge was not persuaded that at this stage the respondent needed to put herself through the stress of applying for work in a field in which she had considerable experience but which the respondent knew she would not secure. Similarly, it is evident that the primary judge accepted that in an application for interim maintenance, it was reasonable for the respondent to attempt to place herself in a position to obtain work in her chosen field and to not be required to look for work that bore no relationship to the type of work and standard of living she engaged in while the parties lived together. Such an approach was entirely reasonable.”

As to the appellant’s capacity to pay maintenance, Ryan J said (from [33]):

“… [T]he capacity to meet an order to pay periodic maintenance is not confined to income (Maroney & Maroney [2009] FamCAFC 45 at [56] (“Maroney”)). But in order to determine capacity to pay by reference to property it was incumbent upon the primary judge to consider the appellant’s liabilities and not just his assets. This was not done and, for example, the primary judge did not consider that the home in which the appellant lived was subject to a mortgage in the amount of $1.28 million, that capital gains tax estimated in the amount of $169,000 was due on 30 April 2018 and he carried a business loan in the amount of $273,953.

[34]   In Maroney it was apparent that the payer had assets under his control which could be realised and an obvious ability to service additional borrowings. Here, if the primary judge intended to rely on the appellant’s capacity to produce funds by realising capital it was necessary to consider, even briefly, how this might be possible. The fact that this exercise was not undertaken reinforces the notion that the finding as to capacity to pay is based on income and not realisation of capital.

[35]   It is accepted that in an application for interim de facto spousal maintenance it is permissible to take a reasonably broad brush approach and it is unnecessary to address each and every item of expense claimed by an applicant or respondent (Wilson & Wilson [1989] FamCA 34 …). However, where that approach is adopted (as occurred here) the reasons need to demonstrate the basis upon which the court was satisfied capacity to pay has been established.

[36]   Furthermore, it is accepted that the primary judge’s approach to the question of the appellant’s support of his partner and her children was erroneous. This expense was disregarded on the basis that the appellant provides support ‘to people he has no obligation to support’. The primary judge’s expression suggests that she may have mistakenly blurred s 90SF(3)(d) and (e). These provisions provide that the matters to be taken into account in determining a maintenance application include the:

(d)     commitments of each of the parties that are necessary to enable the party to support:

(i)      himself or herself; and

(ii)     a child or another person that the party has a duty to maintain; and

(e)     the responsibilities of either party to support any other person

[37]   The words ‘obligation to support’ used in the trial reasons resonate with s 90SF(3)(d)(ii) and the “duty to maintain”. However, s 90SF(3)(e) is not so limited and is a provision expressed in the broadest terms. Section 90SF(3)(e) is the equivalent of s 75(2)(e) of the Act which has been interpreted as requiring the court to consider, in a realistic way, the fact that a party has assumed responsibility to support another person: see Soblusky & Soblusky (1976) FLC 90-124; Axtell & Axtell [1982] FamCA 10 … (‘Axtell’).

[38]   As was explained in Axtell, the proper approach to s 75(2)(e) and, by analogy to s 90SF(3)(e), is that there is no principle of general application that financial support given to a subsequent partner must be subjugated to the responsibility of the partner to his or her spouse [or de facto spouse]. ( … )

[39]   Although it was open to the primary judge to give greater weight to the respondent’s claim to financial support by the appellant than to the appellant’s financial contribution to his partner and her children … this issue could not be approached on the basis that when determining the respondent’s capacity to pay, s 90SF(3) operated so as to require that those expenses be disregarded.”

The appeal was allowed in part, the order being set aside except as to the lump sum payable towards medical treatment.

Full Court finds no error with the treatment of husband’s lottery win as a contribution by him, the winning ticket having been bought for his own “individual purposes” – Parties “largely led separate financial lives”

In Elford [2016] FamCAFC 45 (29 March 2016) the Full Court (Bryant CJ, Murphy & Cronin JJ) heard the wife’s appeal against a property order made by Judge Roberts that the husband pay the wife $51,000, an amount which combined with the net value of a mortgaged home bought by the wife after separation equalled about 10 per cent of the $1.4 million asset pool.

The husband (who was 22 years older than the wife who had three children of a previous relationship who lived with the parties) had won $622,842 in a lottery 12 months into their 10 year cohabitation and invested it (with savings of his) in a term deposit of $650,000 in his own name, which still existed at trial. The parties were found to have “largely led separate financial lives” ([3]). The husband inherited $190,000 from his mother’s estate in the year of the parties’ marriage which he also kept “quite separate” ([13]).

The Full Court said at [5]:

“The second specific issue was that the husband suffered a stroke in 2011, approximately 12 months prior to separation. It left him blind and unable to drive or read. He currently requires kidney dialysis three times per week and paid carers assist him with household tasks on a daily basis.”

The Full Court said (from [9]):

“…     The trial judge (correctly) included the husband’s savings and investments in the parties’ divisible property. This first challenge [by the appellant wife] concerns his Honour’s approach to treating the lottery win of $622,842 as a contribution by the husband. The wife argued the lottery money should be treated as a joint contribution by the parties.

[10]    … She acknowledged the husband had bought the ticket and that the proceeds of the win were deposited into his account. … When cross-examined, the wife acknowledged that the husband had used the same ticket numbers since 1995, that he had purchased the ticket without her assistance and she had not contributed to it. When asked in cross-examination why she thought the win was a ‘joint contribution’ she replied ‘because we were also in a relationship’. The wife also acknowledged in that same cross-examination that she had maintained separate bank accounts from the husband because ‘that was what he wanted’.

[11]    The nub of the wife’s argument at trial and repeated on appeal can be seen in her counsel’s submission to the trial judge as follows:

‘ … Your Honour, this marriage relationship was almost ten years duration. This was a marriage that they entered into as husband and wife. They did things jointly. This was a joint enterprise. This was something they both went into … ( … )’

[12]    It was submitted by the wife before us that the trial judge inappropriately applied the decisions of Zyk and Zyk (1995) FLC 92- 644 and Eufrosin & Eufrosin [2014] FamCAFC 191 by giving ‘undue weight to the financial aspects of the purchase’ of the ticket and the financial relationship of the parties rather than the ‘joint endeavour’.

[13]    In addition to noting that the lottery money had been retained separately along with a further $190,000 the husband received in 2007 through an inheritance from his mother’s estate, his Honour said:

‘31.      The parties clearly kept their assets quite separate and it is also clear that, to a very large degree, they kept their finances quite separate. They maintained separate bank accounts and they did not ever have any joint bank accounts. Indeed, when the wife was cross-examined, she said: “that was always his request; what accounts he had were his” and “he never wanted to have a joint account”.’

( … )

[15]    His Honour also found that the husband never intended the weekly purchase of a lottery ticket to be a ‘joint matrimonial purpose’ [47] and said ‘[i]n this case, the husband did not “hand all his money to the wife”, nor did she have “practical control of the family finances”’ [50].

[16]    In Zyk and Zyk (above), the parties had been married for two years when the husband had a lottery win of about $95,000. He had been in a syndicate before the marriage and the wife had no involvement in the lottery ticket purchase but the winnings were used by the parties for joint purposes. The trial judge found that it was ‘part of the husband’s general practice’ to hand all of his money to the wife who had ‘practical control of the family finances’ and the lottery tickets were purchased by the husband from money that he had from time to time. The trial judge found that upon the husband handing the money to the wife, she applied it (as the Full Court described it) ‘so that it formed part of their joint property’.

[17]    The Full Court said (at 82,511) that it was preferable to approach the issue as one of ‘contribution’ rather than as a ‘windfall’ because the latter tended to isolate the asset into a special category outside of the traditional approach adopted in s 79 proceedings. The Full Court went on to say (at 82,515):

‘In our view, the critical question in such cases is – by whom is that contribution made? In the ordinary run of marriages a ticket is purchased by one or other of the parties from money which he or she happens to have at that particular time. That fact should not determine the issue. Where both parties are in receipt of income and where their marriage is predicated upon the basis of each contributing their income towards the joint partnership constituted by their marriage, the purchase of the ticket would be regarded as a purchase from joint funds in the same way as any other purchase within that context and would be treated accordingly … Where one party is working and the other is not the same conclusion would ordinarily apply because that is the mode of partnership selected by the parties … ’

(Emphasis added)

[18]    But the Court then said by way of caution:

‘There may be cases where the parties have so conducted their affairs and/or so expressed their intentions that this would not be the appropriate conclusion, but in the generality of cases with which this Court would normally deal this appears to us to be the correct approach and the correct outcome.’

[19]    The Full Court in Eufrosin & Eufrosin (above) adopted a similar approach. There, the wife purchased a winning lottery ticket six months after separation. The winnings were $6,000,000, of which the wife gave her sister $1,000,000 and retained the remaining $5,000,000.

( … )

[21]    Picking up the point made in Zyk (above) and addressing a ‘community of property’ concept to which we shall return, the Full Court said:

‘11.      As this Court in Zyk made clear, the source of funds should not “determine the issue” of how a lottery win should be treated for s 79 purposes. What is relevant, in our view, is the nature of the parties’ relationship at the time the lottery ticket was purchased. In our view, the authorities just cited, together with what was said by the High Court in Stanford regarding the “common use” of property, is sufficient to dispose of the husband’s contention that her Honour erred in failing to find that he contributed to the wife’s lottery win. At the time the wife purchased the ticket, regardless of the source of the funds, the “joint endeavour” that had been the parties’ marriage had dissolved; there was no longer a “common use” of property. Rather, the parties were applying funds for their respective individual purposes.’

( … )

[23]    His Honour found that the purchase was initiated by the husband independently of the wife consistent with a lengthy practice of the husband’s alone that pre-dated the relationship by about eight years. Rather than share or utilise any of the proceeds with the wife, he continued to treat his property as his own. The wife conceded that was the husband’s intention even if she was unhappy about it. The husband’s contribution was therefore appropriately recognised by the trial judge consistent with the approach outlined by authority.”

The wife’s appeal was dismissed.

Judge’s refusal to adjourn trial where a lengthy single expert valuation was provided on the eve of the hearing held not to be in error – Property order in which tax consequences were not allowed for set aside

In Elgin [2015] FamCAFC 155 (7 August 2015) the Full Court (May, Thackray & Ryan JJ) heard the husband’s appeal in a property case involving a pool of $44 million and a 49 year marriage in which the parties had adopted traditional “breadwinner” and “homemaking/parenting” roles throughout their marriage. After a successful manufacturing business venture, the parties began property development on the Gold Coast, their group structure including 33 companies and other entities including trusts (at [7]). A 374 page single expert report as to the value of the group was delivered to the parties the day before trial. The report ([11]) contained a disclaimer that the expert had not considered “the effect of future Capital Gains Tax (CGT) income tax or Goods and Services Tax (GST) on the realisation” of the parties’ interests and also said that “tax consequences and any other realisation costs must be considered prior to the finalisation of any orders”.

The husband unsuccessfully sought an adjournment of the trial, the trial judge Forrest J ultimately ordering an equal division. In refusing to adjourn the trial, the trial judge found that the husband was directly “involved and responsible for” the delay of the single expert report and that any prejudice the husband would suffer by the trial proceeding could be remedied by cross-examination of the single expert. Forrest J added ([18]) that any prejudice could be addressed by a report of the husband’s accountant (“Mr HY”) which had been prepared quickly in response to the single expert report.

The husband appealed from the trial judge’s refusal to allow the adjournment and failure to deduct tax liabilities or consider capital gains tax liability.

As to the refusal to grant an adjournment, May J said (from para 90):

“…     A decision of a trial judge in granting an adjournment is generally regarding as falling within the category of ‘practice and procedure’. In Bloch v Bloch [1981] HCA 56 … Wilson J said at 395:

‘The decision whether to grant or refuse an adjournment lies in the discretion of the trial judge, and it is indeed seldom that an appellate court will feel justified in reviewing such a decision.’

[91]    In Sali v SPC Limited [1993] HCA 47 … the High Court in the context of considering the proper approach to the refusal by an intermediate state court of appeal to allow an adjournment, discussed whether a judge is entitled to consider the effect of an adjournment on court resources and other litigants. Of this their Honours Brennan, Deane and McHugh JJ said at 843 after referring to an English Court of Appeal decision Maxwell v Keun [1928] 1 KB 645 at 650 for the general principle that:

‘ … [A]lthough an appellate court will be slow to interfere with the discretion of a trial judge to refuse an adjournment, it will do so if the refusal will result in a denial of justice to the applicant and the adjournment will not result in any injustice to any other party. That proposition has since become firmly established and has been applied by appellate courts on many occasions.’

[92]    Reference was then made to a further proposition contained in the English decision that ‘an adjournment which, if refused would result in a serious injustice to the applicant should only be refused if that is the only way that justice can be done to another party in the action’. …

( … )

[97]    … the matters taken into account by the trial judge were correct. …

( … )

[107] It has not been demonstrated that the trial judge erred in his discretion to refuse the adjournment. It is apparent that the husband was not solely responsible for the delay and some fault lay with Mr HN. The husband’s inaction certainly contributed to the problems faced on the first day. The wife made no contribution to the difficulties.”

Thackray & Ryan JJ said (from para 242):

“…     We accept the wife’s submission that refusal of the adjournment must be seen in the context not only of events occurring after the hearing … but also in light of the prior history of the litigation. Consideration of that history persuades us that it was open to the trial judge to find that the husband had contributed to the delay in the valuations, which in turn contributed to the single expert’s report being published so late.

( … )

[244] We also accept that part of what the single expert described as the ‘nightmare’ with which she was presented so close to the commencement of the trial arose from instructions given by the husband’s delegate.

( … )

[251] We do not consider his Honour erred in opining that any prejudice to the husband as a result of late provision of the report could be addressed by cross-examination and by giving leave to the husband to call (non-expert) evidence.

( … )

[261] Ultimately, the decision to refuse an adjournment was a matter of practice and procedure and was made by the judicial officer who had close familiarity with the history of the litigation. An appellate court will always be loath to interfere with the exercise of discretion by the primary judge in such matters. …”

As to the indemnity of the wife by the husband with respect to tax consequences of the property division, May J said (from para 152):

“…     Counsel for the husband argued in his oral submissions that it was not the sole responsibility of the husband to draw the issue of taxation to the judge’s attention. Counsel suggested it was the ‘judge’s responsibility’ and that he had an obligation to make an order that was just and equitable.

( … )

[155]  While it must be acknowledged that the judgment was delivered after a significant delay, it must also be remembered that the husband was represented by a sophisticated legal team and is obviously an astute business person. It is therefore difficult to understand how he could not have at least anticipated taxation consequences would need to be considered and had ample opportunity to make an application to address this issue. Further, the initial significant contribution of the husband in not assisting [the single expert] in finalising the report at an earlier time, a finding of the trial judge, cannot be ignored.

[156]  Despite the well-articulated arguments on behalf of the wife, and the apparent failures of the husband to conduct his case, it cannot be regarded as just and equitable to uphold orders that do not take into account such a serious misstep as failing to allow for taxation consequences of a significant sum and ordering the husband to be responsible for the payment. Such an order cannot be said to be just and equitable. It must be in the interests of justice to remit the matter for re-hearing at least on this issue. There is merit in this ground of appeal.”

Thackray & Ryan JJ said (from para 197):

“…     It was submitted on behalf of the wife that the trial judge had no obligation to consider the tax consequences of his orders unless asked to do so, since otherwise his Honour would be ‘intruding upon or making assumptions about decisions made by the parties and their representatives with respect to how their respective cases are to be conducted’. It was argued that as counsel had not referred to the issue, and as the husband had not sought orders about tax, it was not open to him to criticise the trial judge for overlooking the issue.

[198]  Senior counsel for the husband submitted that the failure of counsel at trial to draw attention to the caveat in the single expert’s report was ‘an inevitable consequence’ of the late receipt of the report. This proposition lacks merit, given the closing submissions were provided in writing, and there was ample opportunity for those advising the husband not only to draw attention to the caveat, but also to formulate a means by which tax might be taken into account.

[199]  Senior counsel for the husband further submitted that it was the trial judge’s obligation to be satisfied that all of his orders, including the taxation indemnity, were just and equitable. In effect, counsel argued that the trial judge could not be so satisfied when faced with the unchallenged and unequivocal statement of the single expert that the taxation consequences ‘must be considered’.

[200]  Although it would have been highly desirable for those representing the husband to have emphasised to the trial judge the significance of the single expert’s caveat, and proposed a form of order to deal with it, we nevertheless consider there is merit in the submission now made by the husband that the trial judge erred in failing to take account of the unequivocal warning of the expert.

[201]  ( … ) We find further support for our view in the fact that it was not contended that there was any way the husband would be able to satisfy the wife’s entitlements without extracting funds from companies, which would have inevitable tax consequences.

[202]  Although, as was pointed out from the bench, it was the husband who wanted to retain the corporate structure, we do not accept that this means it was for him to agitate for the tax consequences to be considered. It could equally be argued that it was the wife who sought to be free of entanglement with the corporate structure, and to be indemnified against at least some tax liabilities, and that it was therefore incumbent on her to persuade the Court of the merit of her claim. This is especially so where she had not challenged the statement of the expert that the tax consequences ‘must’ be taken into account.

[203]  In the absence of evidence about the amount of the tax; in the absence of submissions relating to the tax; and in the absence of any reason for leaving the husband responsible for all the tax, we consider it was impossible for his Honour to be satisfied that his orders were just and equitable. Given the unfortunate way the matter had been conducted, we consider it was essential for the parties to have been given an opportunity to make submissions about the proposed form of orders, and the way in which the taxation burden would be shared, in order to bring about the intended equal division of the assets.

[204]  For these reasons, appellate intervention is warranted. ( … )”

While May J ordered that the matter be remitted, Thackray & Ryan JJ varied the orders at first instance so that tax liabilities were shared by the parties with liberty to counsel to make submissions as to the precise form of the order.

Procedure – Court dismisses wife’s application to access and copy the husband’s computer hard drive that had been seized by police – Application treated as though the wife had issued a subpoena

In Elias [2014] FCCA 457 (12 March 2014) Judge Monahan considered a property and parenting case where the mother sought permission to “have access to a digital copy of a computer hard drive that the husband allegedly used for business and personal purposes” which had been “taken into possession by the New South Wales Police in relation to certain investigations into the husband” (para 3).

The husband did “not deny that the relevant hard drive may contain documents relevant to property he owns or controlled” but “is concerned … that the hard drive is likely to also contain documents, photographs, music and related material that would not be relevant to these proceedings and/or contain information or material relevant to third parties (such as members of his family or clients of his business)” (para 23).

The wife complained that the husband was yet to provide full and frank disclosure but the Court said there was merit in the husband’s position that “it would have been difficult for him to provide the necessary documentation given his asserted belief that much of that documentation is contained on the relevant hard drive which has not been in his possession since separation” (para 25).

Judge Monahan said (from para 32):

“…     There is merit in approaching the access issue by reference to the principles that would apply had the computer hard drive been the subject of a contested subpoena to produce. In other words, had the computer hard drive been produced to the Court under subpoena, should such a subpoena be set aside given the circumstances of this case or would there be merit in granting the parties access and copying privileges (restricted or otherwise)?

[33]    There are numerous reasons or grounds why a Court may order that a subpoena be set aside. These grounds have been discussed in a number of cases in this Court, the Family Court and in other courts. These grounds include where:

•        there is an absence of sufficient particularity in the description of the documents sought in the subpoena;

•        the subpoena in the width of its requirements is oppressive;

•        the documents are not in the possession, custody or control of that person;

•        the documents or material is privileged or confidential;

•        the subpoena is an abuse of process;

•        it is inappropriate to issue a subpoena to another party in the proceedings instead of the normal process of disclosure (except in exceptional circumstances);

•        the subpoena has been issued for a collateral purpose (such as to harass a party); and/or

•        the evidence or documents are not relevant (although the material need not be admissible at the final hearing and it is sufficient if a genuine forensic interest is demonstrated or it is likely to be of aid in the preparation of the case or its overall investigation).

[34]    Had the computer hard drive been the subject of a subpoena to produce, it is likely that a number of the above grounds may have been argued. Of course, the digital copy of the relevant hard drive has found its way to this Court because of an external investigation conducted by the NSW Police and by the agreement of the parties. There is no question, therefore, that the contents of the hard drive are likely to be disposed of.

[35]    However, given that the disclosure by the husband of relevant documents may have been hindered by the seizure of [his] computer, the disclosure process must be allowed to proceed before the Court will consider the merits of allowing unrestricted access.

[36]    Consequently, the Court agrees with the submission of [counsel for the husband] that there is no prejudice to the wife at this early stage of the proceedings if she is not given access to the relevant hard drive. The husband is under a positive obligation to comply with his duty of disclosure. Should the court be satisfied that the husband has been remiss in complying with his disclosure obligations, then the Court can revisit the issue of general access to the hard drive, the integrity of which has been preserved by having a digital copy held at the Court by agreement.”