Declaration that farm was held by third party on trust for wife’s company due to an inter-family agreement was in error – Trial judge had insufficient regard to the authorities as to an intention to create contractual relations – Scope of Family Court of Western Australia’s federal jurisdiction

In Camden Pty Ltd & Laue and Ors [2018] FamCAFC 91 (15 May 2018) the Full Court (Strickland, Murphy & Kent JJ) heard an appeal by a company (“Camden”) operated by the husband’s mother against an order made by Walters J of the Family Court of Western Australia (“FCWA”). Camden owned a farm (“Property B”) which the wife alleged belonged to her trust (“Barkers”) by virtue of an agreement made between the husband’s father (now deceased), the husband (now deceased), the husband’s mother (“Mrs Laue Snr”) and the wife in 2005.

As a preliminary issue, Walters J determined that an enforceable agreement had been made between family members as to the transfer of the property and declared pursuant to s 78 of the Family Law Act that the property was held on bare trust for Barkers. Camden appealed, arguing that the FCWA lacked jurisdiction and power to make the orders under contract law and that the determination as to the existence of an enforceable agreement between Camden and Barkers was in error.

The Full Court said (from [44]):

“The wife alleged, and his Honour found … that in March 2005 an agreement was entered into in respect of the sale of Property B and its business which agreement his Honour found to be between the husband, the wife, Mrs Laue Snr, Camden and Barkers. The agreement was found to have been formed partly orally and partly by conduct and was found to have transferred Property B to Barkers.

[45]   … [A transfer] was signed but not registered … In exchange for the transfer by Camden, Mrs Laue Snr (who controlled it) was to receive a monthly stipend for life and the husband was to pay liabilities otherwise to be met from the husband’s father’s estate.

( … )

[49]   It is contended that his Honour erred in finding that there was an enforceable agreement because it was not open to his Honour to conclude on the evidence that:

  • there was an intention to create legal relations, such actions as were taken by the parties subsequent to the date of agreement were in consequence of informal familial arrangements;
  • the terms of the agreement were sufficiently certain, there being no certainty, in particular, about the stipend that was to be provided (so as to provide ‘reasonable comfort’ to Mrs Laue Snr) and the expenses to be met by Barkers (in particular because the husband’s father’s will specifically provided for the payment of the expenses in any event);
  • that the wife was a party to the agreement, there being no evidence of any oral statements made by or to her that signified that she was a party or agreed to any agreement.

( … )

[53]   It is clear that:

‘ …the search for the “intention to create contractual relations” requires an objective assessment of the state of affairs between the parties (as distinct from the identification of any uncommunicated subjective reservation or intention that either may harbour) … Although the word “intention” is used in this context, it is used in the same sense as it is used in other contractual contexts. It describes what it is that would objectively be conveyed by what was said or done, having regard to the circumstances in which those statements and actions happened. It is not a search for the uncommunicated subjective motives or intentions of the parties.’(Ermogenous v Greek Orthodox Community of SA Inc  [2002] HCA 8 at [25])

(Footnotes omitted)

[54]   If the parties’ intention is equivocal, evidence of subsequent conduct may be adduced to establish whether an agreement was concluded (Secola v McCann (No 2)  [2011] WASC 342 at [18].

[55]   The appellant contended before this Court that the following factors weighed against his Honour’s finding that the parties intended to create legal relations:

  • That any arrangement or agreement between the parties was never reduced to writing in any format;
  • The husband always considered he had a moral obligation to maintain his mother following his father’s death;
  • The parties’ businesses had historically been operated independently of one another and only became entwined following the death of the husband’s father;
  • That the agreement said to have been reached was reached in a social context and did not apparently involve any lengthy or serious discussions; and
  • That Property B was the only substantial income-producing asset held by Camden and the agreement, as found, resulted in that asset being transferred outside of Camden.

[56]   We find merit in these contentions. For reasons which follow we consider that reference to the reasons for judgment does not establish that the trial judge had any, or any sufficient regard, to the matters identified in the authorities in determining the issue of intention to create legal relations.

( … )

[59]   [His Honour] … does not … make any ‘objective assessment of the state of affairs between the parties’ at this time, and nor does his Honour particularise any conversation or statements which led his Honour to reach that conclusion. His Honour does not address the family context in which the alleged agreement was reached. That assumes particular significance in circumstances where Mrs Laue Snr/Camden advanced the case that there was an agreement for the husband and wife to use Property B … but no agreement for transfer of title.

( … )

[65]   The reasons for judgment do not illuminate how it could be said that the terms of the stipend were sufficiently certain to be enforceable.

( … )

[70]   The reasons for judgment contain no precise findings about when and between whom discussions occurred, the detail of such discussions, and the fundamental terms agreed as being intended by all necessary and relevant parties to create a binding legal agreement, sufficient to support the conclusion of the trial judge about the existence and terms of the Property B Agreement.

( … )

[72]   The appellant contends that the finding of the trial judge … that the wife was a party to the Property B Agreement is stated as a conclusion but unsupported by any fact upon which the conclusion could be based.

[73]   As we have already observed, his Honour did not make any finding as to the existence of, or content of, any particular conversation or conversations between all parties to the contended agreement to which the wife was also a party. Nor did his Honour find agency between the husband and wife. The conclusion that the wife was a party is unsupported by any, or any sufficient, findings. We therefore find merit in the appellant’s contention.”

The Court allowed the appeal but rejected the appellant’s contention that the FCWA lacked jurisdiction to determine contractual matters, saying (from [173]):

“… [O]nce a matter is within the federal jurisdiction of a court, ‘Commonwealth and State laws, together with the common law of Australia, comprise a ‘single though composite body of law’ to be applied” … [Windeyer J in Felton v Mulligan [1971] HCA 39].

( … )

[177]  The remedies to which the wife could have recourse were not restricted to Part VIIIAA of the Act; those provisions refer to proceedings for a specific matrimonial cause (proceedings for settlement of property under s 79 of the Act) with particular remedies associated therewith. Part VIIIAA and its remedies are not directed to different causes of actions which can be heard because they are part of the one matter.

( … )

[182]  If the contractual claim in respect of the Property B Agreement was part of a single justiciable controversy, the FCWA could have recourse to ‘Commonwealth and State laws, together with the common law of Australia’ ‘as the matter in question requires’ …

( … )

[184]  Here, if there is a single justiciable controversy, the consequence is that the FCWA is exercising federal jurisdiction to quell all controversies joined in the matter, including a contractual claim in which, if the contract is held to be valid, equitable remedies are sought.”

The Full Court found no error with the Court’s determination that there was a single justiciable controversy. The appeal was allowed and the order discharged without remitter, the issues in the s 79 proceedings remaining to be determined by the trial judge at the final hearing.

After a final parenting order an issue not previously dealt with does not involve the rule in Rice & Asplund – Court had jurisdiction and power to make orders as to child’s enrolment in an overseas exchange program

In Cameron & Brook [2018] FamCAFC 175 (13 September 2018) the parties had equal shared parental responsibility for their child K under a final parenting order made by consent when K was 11. When asked to sign an application for K’s selection in an overseas student exchange program in which her school participated the father refused. He also failed to attend family dispute resolution which the mother arranged as required by the order.

The mother’s application for an urgent interim order that the father sign the form, failing which she be granted sole parental responsibility for doing so (filed as part of an initiating application for a final order in the same terms) came before Judge Coates on the eve of selection interviews. The Court agreed with the father’s argument that the Court lacked jurisdiction and dismissed the application, whereupon the mother appealed (the appeal hearing coming on before the extended deadline for interviews of 18 September).

On appeal the Full Court (Strickland, Murphy & Kent JJ) said (from [25]):

“One of the principles underlying the objects of Part VII … is that ‘parents should agree about the future parenting of their children’ (s 60B(2)(d)). Section 65DAC(1)(b) … underscores the same by obliging parents who share parental responsibility (whether equally or not) to reach a decision about ‘major long-term issue[s]’ jointly and to consult and make a genuine effort to come to a joint decision about the relevant issue. The s 4 definition of ‘major long-term issues’ includes ‘changes to the child’s living arrangements that make it significantly more difficult for the child to spend time with a parent’ (subparagraph (e)).

[26]   Plainly, however, neither s 60B nor s 65DAC … seek to limit the power of the Court to make parenting orders in the event that the desired agreement is not possible.

[27]   Relevantly, jurisdiction is conferred on the Federal Circuit Court … in relation to matters arising under Part VII of the Act (which deals with children) (s 69H(4)). That Court is given powers in the exercise of the jurisdiction so granted. … The principal relevant power is the power to make parenting orders found in s 65D. …

[28]   Section 64B(1) … defines ‘parenting order’ as an order that deals with any of the matters specified within s 64B(2). Important to the instant issues, a parenting order is defined in s 64B(1)(b) to include an order under Part VII ‘discharging, varying, suspending or reviving an order, or part of an order described in paragraph (a)’. Sub-paragraph (a) of that section defines a parenting order as ‘an order under [Part VII] (including an order until further order) dealing with a matter mentioned in subsection (2)’ (emphasis added).

[29]   The matters in s 64B(2) include, relevantly, ‘the person or persons with whom a child is to live’; ‘the time a child is to spend with another person or other persons’; ‘the allocation of parental responsibility for a child” and ‘any aspect of the care, welfare or development of the child or any other aspect of parental responsibility for a child’

(emphasis added).

[30]   Section 65D(2) grants specific power to make a parenting order that ‘discharges, varies, suspends or revives some or all of an earlier parenting order’ (emphasis added).

[31]   Thus, a judge of the Federal Circuit Court has both jurisdiction and power to make orders, including orders until further order, relating to any aspect of the ‘duties, powers, responsibilities and authority’ which parents have by law in relation to their children (s 61B of the Act).

[32]   By reason of a consent final order made in 2015, K’s parents have, by law, equal shared ‘duties, powers, responsibilities and authority’ for K (and her siblings). If the Federal Circuit Court’s jurisdiction has been properly invoked (as it was here) the judge at first instance had power to make any order in respect of the same, including the power to, again relevantly, make an interim order varying any aspect of the existing order for equal shared parental responsibility. The equal shared authority to determine whether K could apply to live and study overseas … is an aspect of parental responsibility. Ultimately, the authority to determine whether K can participate in the relevant programme overseas, and can leave Australia in order to do so is, too, an aspect of parental responsibility.

[33]   Those aspects of parental responsibility are the subject of an existing order. However there is a present dispute about those aspects arising some three years after those orders were made. The mother seeks to vary an aspect of the relevant order. The Court has both jurisdiction and power to determine that question if the parties cannot agree upon it for themselves.

[34]   The effect of the submissions on behalf of the father both below and before this Court is that once an order for equal shared parental responsibility is made (query any order for parental responsibility) any disputes about major long-term issues is left to one party’s will suborning that of the other with no role for the Court. …

[35]   The essence of the Court’s jurisdiction and the powers given to it within that jurisdiction is to avoid that very situation. Indeed it is obliged to do so by reason of its jurisdiction being properly invoked. … It is, of course, entirely desirable that parents should reach agreement about issues – all issues – affecting their children. … However when parents cannot or will not do that which they should, and which the Act obliges them to do, the Court’s powers are not excluded but, rather, enlivened, if its jurisdiction is properly invoked.

[36]   In addition, and importantly, parenting orders (whether made by consent or otherwise) differ from orders made in the civil jurisdiction of other courts. It is well-recognised that although finality of litigation is desirable in all cases final orders made in relation to the parenting of children are not final in the same sense as orders made, for example, relating to property settlement. …

[37]   We are not persuaded that the situation here is analogous to a case invoking the application of the ‘rule in Rice & Asplund’. … There is here no attempt to reagitate issues previously agitated or issues addressed and settled by the consent orders that were made three years previously. The instant application involves a new question relating to an aspect of parental responsibility … that was not at all in the contemplation of the parties at the time of the original consent orders.”

The appeal was allowed and an order made that the mother have sole parental responsibility for the enrolment. The father was also ordered to pay the mother’s costs fixed at $11,192 as he had made “erroneous contentions in respect of fundamental legal propositions” both at first instance and on appeal. 

Divorce – Parties did not “separate” after husband left home – Application dismissed

In Campbell & Cade [2012] FMCAfam 508 (5 June 2012) the husband applied for divorce in December 2011, claiming that the parties separated in July 2009 when he moved out of the house. The wife filed a Response disputing that the parties had been separated for 12 months when the application was filed. She deposed to her belief that the marriage was continuing even though she and her husband were living in separate homes. The wife’s evidence was that she and her husband continued a sexual relationship, socialised together and operated a joint bank account (for “child maintenance” according to the husband). Scarlett FM referred at paras 21-22 to the importance of establishing a separation of at least 12 months under s 48 FLA and (at para 23) to the Act’s definition of “separation” in s 49, continuing at paras 24-41:

“Physical separation is neither a necessary nor a sufficient condition to establish a separation for the purposes of s 48(2). The parties to a marriage may regard themselves as being married even though they are living apart for a period of time.

There are three elements which constitute a finding that separation has occurred:

a.      An intention to separate;

b.      Action upon that intention; and

c.      Communication of that intention to the other party.

In Todd and Todd (No 2) [(1976) FLC 90-008] Watson J held:

‘Separation can only occur in the sense used by the Act where one or both of the spouses form the intention to sever or not to resume the marital relationship and act on that intention; or, alternatively, act as if the marital relationship has been severed.’

The Full Court of the Family Court of Australia has made it clear that there is also a need to communicate the intention to separate to the other party. That communication can be spoken or unspoken (see Falk and Falk [(1977) FLC 90-247).

The law is unclear about the extent to which the breakdown of the marital relationship must be communicated to other people. In Fenech and Fenech [(1976) FLC 90-035] Evatt CJ held:

‘To comply with the Act there must be some overt separation, some evidence that there are two households, not one… ’

The fact that parties engage in acts of sexual intercourse after separation is an important but not a decisive factor in deciding whether the marital relationship, or consortium vitae, has ended.

In Bell and Bell [(1979) FLC 90-662] Baker J held:

‘Sexual intercourse is only one of a number of elements which cumulatively make up the consortium vitae. It cannot be said that sexual intercourse between partners is the sole basis of a marriage. Once cohabitation has ceased and one of the partners has by his conduct rejected the marital relationship sexual intercourse between the husband and the wife will not in my view of itself have the effect of a resumption of cohabitation.’

This passage was expressly approved by the Full Court (Evatt CJ, Fogarty and Maxwell JJ) in Spanos and Spanos [(1980) FLC 90-111].

Conclusions

It is incumbent on the Applicant to prove that the parties have separated and lived separately and apart for a period of twelve months “immediately preceding the date of the filing of the application for the divorce order” (s 48(2)). It is not sufficient to show that the parties have been separated for a period of twelve months prior to the date of the hearing. If the parties were not separated for twelve months, the matter cannot be cured by an adjournment.

In this case, the Court must look at the date the Application for Divorce was filed, which was 2nd December 2011. Thus, the Applicant must show that the parties had separated and had lived separately and apart for a continuous period from at least 1st December 2010.

The evidence does not allow that finding to be made. It is common ground that the Husband moved out of the former matrimonial home on 25th July 2009. However, it is the Wife’s evidence that she wanted the marriage to continue at that stage.

It is common ground that the parties continued to have regular sexual relations at least until 13th November 2011 and they held themselves out to the world as a couple by attending various social functions together, again, at least until 13th November 2011.

It is the Wife’s evidence, but denied by the Husband, that he did not raise the question of divorce until September 2011.

The parties operated a joint bank account, mainly for the purpose of providing child support or child maintenance for their youngest daughter until 22nd March 2012.

By March 2012, however, it is clear that the Wife intended to end the marital relationship, as she instructed (omitted), the solicitor, to commence property proceedings.

It is not necessary for the Wife, who is the Respondent, to establish a date of separation. It is necessary for the Applicant to establish that the parties lived separately and apart for a period of twelve months prior to the date of filing of the Application for Divorce, on 2nd December 2011.

In my view, the parties were still acting as if they were a married couple at least until November 2011, by:

a.      maintaining a regular sexual relationship;

b.      attending social functions together;

c.      staying in hotel rooms together; and

d.      operating a joint bank account.

In all the circumstances, the Husband has failed to show that the parties lived separately and apart for the requisite period of twelve months. Accordingly, the requirements of s 48(2) of the Act have not been met and the Application for Divorce must be dismissed.”

Federal Court finds invalidity pension under Military Superannuation Benefits Scheme to be superannuation, but an accumulation interest not a defined benefit interest – Burge [2015] FamCA 178 distinguished as not determining the issue

In Campbell v Superannuation Complaints Tribunal [2016] FCA 808 (15 July 2016) Logan J of the Federal Court of Australia heard an appeal brought under s 46 of the Superannuation (Resolution of Complaints) Act 1993 (Cth) by Mr Campbell, a former member of the Australian Defence Force who was in receipt of an invalidity pension, against a determination made by the Superannuation Complaints Tribunal in respect of a complaint made by him in which he sought a retraction of the information provided by the Commonwealth Superannuation Corporation to which he had applied under s 90MZB for information about his superannuation interest under the Military Superannuation Benefit Scheme (“MSBS) to provide him with information as to his interest pursuant to s90MZB of the Family Law Act.

The trustee of MSBS provided two responses, one in respect of Mr Campbell’s preserved interest in the growth phase, the other in respect of his invalidity pension which was in payment phase. Mr Campbell’s complaint was that the MSBS should not have provided him with the second response in respect of his pension, arguing that it was not a superannuation interest at all. The questions on appeal were whether the invalidity pension was a superannuation interest as defined in s90MD of the Family Law Act and, if so, whether the trustee of the MSBS was obliged to provide information which valued that interest as a “defined benefit interest” or an “accumulation interest”.

The Court said (from [19]):

“[19}   … whether an obligation arose under s 90MZB(3) to furnish information with respect to Mr Campbell’s invalidity benefit is not to be decided intuitively, divorced by the regime in the Family Law Act and the FLSR [Family Law (Superannuation) Regulations 2001].

[20]    Section 90MD of the Family Law Act contains the following definitions pertinent to s 90MZB(3):

• eligible superannuation plan means any of the following:

a)         a superannuation fund within the meaning of the SIS Act;

b)         an approved deposit fund;

c)         an RSA;

d)         an account within the meaning of the Small Superannuation Accounts Act 1995;

e)         a superannuation annuity (within the meaning of the Income Tax Assessment Act 1997).

• interest includes a prospective or contingent interest, and also includes an expectancy.

• member, in relation to an eligible superannuation plan, includes a beneficiary (including a contingent or prospective beneficiary).

• superannuation interest means an interest that a person has as a member of an eligible superannuation plan, but does not include a reversionary interest.

[21]    What is clear from these definitions is that what amounts to an eligible superannuation plan and an interest as a member in such a plan has not been left just to general concepts. If, for example, the MSBS Fund is a superannuation fund within the meaning of the Superannuation Industry (Supervision) Act 1993 (Cth) (SIS Act), a member’s interest under the Deed in that fund will be a superannuation interest as defined even though the Deed provides for death and invalidity as well as age retirement benefits. If the result seems counter-intuitive in comparison with the general concept of superannuation … that is nothing more than the result of a parliamentary value judgment, which result must be respected.

[22]    CSC submits that, definitionally, the MSBS is an ‘eligible superannuation plan’ as it is a superannuation fund for the purposes of the SIS Act. …

( … )

[26]    ( … ) [Mr Campbell’s] position is that, if his entitlement to be paid his invalidity pension is not a ‘defined benefit interest’, as defined by reg 5 of the FLSR, it is not a superannuation interest at all.

[27]    It is convenient first to consider whether Mr Campbell has a defined benefit interest.

[28]    … The term ‘defined benefit interest’ is defined for the purposes of the FLSR by reg 5:

5 Meaning of defined benefit interest

(1)       Subject to subregulation (2), for these Regulations, a defined benefit interest is:

(a)           a superannuation interest that a member spouse has in an eligible superannuation plan, being an interest in respect of the whole of which the member spouse is entitled, when benefits in respect of the interest become payable, to be paid a benefit that is, or may be, defined by reference to one or more of the amounts or factors mentioned in subregulation (1A); or

(b)           a component of a superannuation interest that a member spouse has in an eligible superannuation plan, being a component in respect of which the member spouse is entitled, when benefits in respect of the interest become payable, to be paid a benefit that is, or may be, defined by reference to one or more of the amounts or factors mentioned in subregulation (1A).

(1A) For subregulation (1), the amounts and factors are as follows:

(a)           the amount of:

(i)         the member spouse’s salary at the date of the termination of the member spouse’s employment, the date of the member spouse’s retirement, or another date; or

(ii)       the member spouse’s salary averaged over a period;

(b)           the amount of salary, or allowance in the nature of salary, payable to another person (for example, a judicial officer, a member of the Commonwealth or a State Parliament, a member of the Legislative Assembly of a Territory);

(c)           a specified amount;

(d)           specified conversion factors.

(2)       A superannuation interest, or a component of a superannuation interest, is not a defined benefit interest for these Regulations if the only benefits payable in respect of the interest, or the component, that are defined by reference to the amounts or factors mentioned in subregulation (1A) are benefits payable on death or invalidity.

( … )

[30]    In support of the construction of the FLSR which he promoted Mr Campbell made reference to a case decided last year in the Family Court, Burge & Burge [2015] FamCA 178 (Kent J). ( … )

[31]    Burge & Burge is consistent with the construction promoted by Mr Campbell but its authority for present purposes is very much diminished by the absence of any need, in light of the agreement reached [by the parties in that case], for Kent J to express any concluded view as to whether an invalidity benefit was a superannuation interest under Pt VIIIB of the Family Law Act or, for that matter, a ‘defined benefit interest’ under the FLSR.

( … )

[36]    An examination of Family Court authority discloses a line of cases in the original and appellate jurisdiction in which that court has grappled with questions as to what is a just and equitable allocation of property where the matrimonial assets include an entitlement to be paid an invalidity benefit from an occupational superannuation fund. This line of authority proceeds from the acceptance that an entitlement to be paid an invalidity pension from an occupational superannuation fund constitutes a ‘superannuation interest’ for the purposes of Pt VIIIB of the Family Law Act. ( … )

[37]    In none of these cases though has the Family Court been called upon to determine the meaning of ‘defined benefit scheme’ in reg 5 of the FLSR. I include Burge & Burge in that category ( … )

[38]    It is as well to begin with the text of reg 5 of the FLSR definition.

[39]    As a matter of construction, the exception found in reg 5(2) is premised on an invalidity payment being capable of falling within the definition in s 90MD of the Family Law Act of ‘superannuation interest’. As already noted, in defining ‘superannuation interest’, parliament has not been content to leave what constitutes ‘superannuation’ just to a general concept of an amount in respect of age based retirement from the workforce paid from a fund maintained for that purpose.

[40] It follows from this premise that, but for reg 5(2), an amount covered by that subregulation would otherwise fall within reg 5(1). ( … )

( … )

[43]    It is … possible, in my view, to read the sentence in reg 5(1)(a) and its ‘component cognate’ in reg 5(1)(b) … as applying both to an interest giving rise to an entitlement represented by a present payment or one which will be paid in the future if certain requirements are fulfilled. If so, but for the exception in reg 5(2), an invalidity pension presently being paid would fall within reg 5(1). On this construction, reg 5(2) would remove Mr Campbell’s invalidity pension from the scope of reg 5(1), because that pension is ‘only payable on invalidity’.

( … )

[45]    A to reg 5(1) only … construction also accords with the construction adopted by the Tribunal. I agree with the observation concerning reg 5(1) of the FLSR, made by the Tribunal … that its role is to capture as a defined benefit interest a superannuation interest that has or may have a defined benefit character. Where I disagree with the view expressed by the Tribunal of reg 5 of the FLSR … is in respect of the statement, ‘if the only benefit outcomes under the broad design of the superannuation interest that have a defined benefit character are death or invalidity benefits, then the superannuation interest won’t be regarded as a defined benefit interest’. ….

( … )

[49]    A conclusion that reg 5(2) operated to exclude Mr Campbell’s vested entitlement to an invalidity pension benefit from the class of ‘defined benefit interests’ necessarily means [it] …

[50]    is, for the purposes of the FLSR an ‘accumulation interest’. This is because reg 3 defines such an interest to mean ‘a superannuation interest, or a component of a superannuation interest, that is not a defined benefit interest or a small superannuation accounts interest’. …

[54]    Because Mr Campbell’s invalidity pension entitlement under the MSBS was a superannuation interest it necessarily followed that [the trustee] … was obliged by s 90MZB(3) to furnish him with information about that interest. … By virtue of an error of law with respect to the FLSR … [Mr Campbell] was provided with information purportedly in accordance with those regulations, which valued that particular interest on the basis that it was a ‘defined benefit interest’. Instead, the effect of the regulations was that it ought to have been valued on the footing that it was an ‘accumulation interest’.”

Parenting order – Mother’s drug use – Self-executing order to apply a regime of drug testing 

In Cannon [2010] FMCAfam 681 (16 July 2010) Neville FM in a final parenting order made a self-executing order applying a regime of drug testing to be complied with by the mother for 18 months.

The Court summarised the order at [103]-[107]: 

“Drug Testing Regime: Ms Cannon’s drug testing regime is to be as follows: each month, she is to undergo urinalysis. In relation to this test, she can choose the date and time. In addition, every second month, for a period of 18 months, she is to be subject to a random drug test, to be initiated by a nominated representative of the ARCK (or similar) [post-separation parenting] program. That test is to be completed within 48 hours of the request. The results of all drug screens are to be provided to her solicitor within 48 hours of them becoming available, and that person is to provide them to Mr Cannon’s solicitors within 24 hours of their receipt. 

Further, nine (9) months after the date of these orders, Ms Cannon is to undergo hair follicle testing and to provide the results of that testing in accordance with the directions in the previous paragraph. Then, in 18 months from the date of these orders, she is to undergo the same hair follicle testing regime, and provide the results as previously indicated.

In the event that Ms Cannon provides two positive drug test results within a three month period, the period of her drug testing regime will automatically recommence. 

If there is a second instance of two positive drug tests within a three month period, a self-executing order will come into effect whereby sole parental responsibility for [X] will vest in Mr Cannon.

If there is a third instance of two positive drug tests within a three month period, a further self-executing order will come into effect whereby [X] will live with his father and spend time with his mother, that time to be supervised, until she provides 12 months of uninterrupted, clean drug test results.”

 

Change of assessment over 18 months old – Applicant’s delay – Hardship to payee

In Cantrell & Jennings [2009] FMCAfam 229 (23 March 2009), the application by a father, who owed $33,000 in arrears and $11,000 in penalties, for a departure order (for a nil assessment) relating to child support dating back five years was dismissed by Baker FM as:

  • the court was not satisfied that he had explained the delay in applying (his claim that he could not afford to take action was rejected); and
  • the balance of hardship favoured the mother, the father being financially stronger (having been able to afford recent loan commitments, the cost of renovations and white goods). He had also failed to make full disclosure. 

Application to vary injunctions that required husband’s consent to wife’s business and personal drawings over $1,000 – Limit increased to $10,000 per payment and $15,000 monthly respectively – Each party permitted to draw up to $200,000 for their legal costs 

In Cao & Hong [2015] FamCA 884 (22 October 2015) Forrest J heard an application by the wife to vary injunctions made by Judge Coates before the case was transferred from the Federal Circuit Court to the Family Court. It was agreed that the parties’ assets were worth at least $200 million, of which at least $27 million was the value of property in Australia ([8]), their wealth being held via numerous structures in Australia and overseas. The wife managed the Australian investments and the husband managed their assets overseas.

Forrest J said (at [19]-[21]:

“The wife seeks variation of the existing restraints because every payment made in the management of the Australian companies over $1,000 requires written consent of the husband without there being any exception in respect of payments made in the ordinary course of business or in respect of her reasonable living expenses.

The evidence adduced by the wife demonstrated to my satisfaction that she was having difficulty getting the husband to even consider her requests, as well as difficulty getting him to agree to payment for her personal expenses. At the same time, the husband was not subject to any similar constraint or restraint in respect of his management of their Country D interests and his ability to access money there as he needed it.

The wife deposed to the Australian companies having regular monthly payments of ordinary business expenses that well exceed the $1,000 limit and she sought exception be provided for expenses incurred in the ordinary course of business of those entities. At the same time, she deposed to having personal expenses of around $20,000 per month which, in the past, she has caused to be paid from the accounts of the entities which have, she says, been treated by the company accountants as ‘wages’ paid to her.”

The Court continued (from [27]):

“…     … in circumstances where it is not disputed that the parties’ property interests in Australia and Country D are valued at in excess of AUD $200 million, and where the husband, through his counsel, conceded that there was no question about the husband’s capacity or the capacity of the parties’ capital as such, in all the circumstances, to provide for the wife and their children financially as she seeks, there is apparently little need to take a particularly parsimonious approach to the determination of the matters before the Court. This view, in my judgment, is reinforced by the clearly apparent fact that over many years prior to the recent separation of the parties, the husband has clearly acquiesced [in] circumstances where the wife has caused her personal and household expenses, including expenses related to the support of their adult children, to be paid by drawings out of the Australian companies’ accounts with the treatment of those drawings being determined in conjunction with the companies’ accountants.

[28]    The submission of counsel for the husband was that the question of the wife’s entitlement to access the funds as she sought was to be determined pursuant to the spousal maintenance provisions of ss 72, 74 and 75 of the Family Law Act (Cth) (‘the Act’). Principally, counsel for the husband submitted that the wife did not get over the threshold of establishing that she was unable to support herself adequately … [and] that the Court could not be satisfied that the wife was being truthful when she deposed to not being able to meet her household expenses without reasonable access to the Australian companies’ accounts. Furthermore, for the husband it was submitted that the wife could not include in expenses she sought access to funds to be able to pay, any expenses relating to the parties’ adult children.

[29]    There would, I am satisfied, be merit in the last part of that submission if the orders the wife seeks are to be made pursuant to the spousal maintenance provisions of the Act. With respect, I do not consider that they are.

[30]    The wife is a director of the relevant Australian companies of the parties. The power to grant the injunctions that Judge Coates put in place in August this year that restricted her and the husband’s access, as directors, to the accounts of the Australian companies had to have been sourced in s 114(3) of the Act, granted on an interim basis to protect the property of the parties pending finalisation of the substantive property adjustment proceedings between them commenced by the wife.

[31]    That power was said by the Full Court in Mullen and De Bry [2006] FamCA 1380; (2006) FLC 93-293 at [46] to be ‘simply described’ as the power ‘to grant an injunction … in any case in which it is just or convenient to do so’. Such injunctions can be granted ‘either unconditionally or upon such terms and conditions as the Court considers appropriate’.

[32]    As such, I do not consider this application of the wife for variation to those injunctions, so as to allow the wife access to reasonable funds for her support and the support of her household in circumstances where she deposes to having no access to other funds of her own, to be an application for spousal maintenance pursuant to the provisions of s 72 to s 75 of the Act.

[33]    Rather, I consider that the wife’s application is for yet another consideration and assessment of ‘a number of factors to determine the just or convenient result’ in respect to the granting of interim injunctions that were initially granted to preserve property of the parties pending trial, as observed by the Full Court in Mullen and De Bry at [47].

[34]    I do not consider it a case where the wife is seeking orders that the husband pay her spousal maintenance. I do not consider her application, involving as it does an application for variation to the injunctions that were granted so that she can have access to funds to pay her reasonable legal fees in these proceedings, to be an application for the husband to pay her legal fees pursuant to the costs power or the spousal maintenance power. The wife’s application in this case, in so far as it relates to her getting access to funds for the payment of legal fees, I consider looks to the property adjustment powers of s 79 and, more particularly, the power in s 114(3) to grant ancillary injunctions, as the source of the Court’s power to grant it.

[35]    In the circumstances of this case, I am satisfied that the injunctions granted by Judge Coates in August this year have, respectfully, imposed consequences upon the wife that are neither just nor convenient. I intend to vary them – effectively by discharging them and granting fresh injunctions that I consider are just and convenient and that include terms and conditions that I consider appropriate.

( … )

[37]    … I will grant injunctions that I consider restrain each of the parties, (it being just, convenient and appropriate in my judgment to impose similar obligations on each of the parties) from withdrawing funds from any personal accounts or accounts of the Australian companies or the Country D companies in excess of the amount of $10,000 as opposed to the much smaller sum of $1,000 previously provided for, without the consent of the other party or order of this Court, subject to exceptions in respect to drawings made in the ordinary course of business; to meet already existing contractual obligations; for the wife to be able to meet personal and household expenses of up to $15,000 per month; and for each party to pay legal expenses in these proceedings up to a limit of $200,000.

[38]    I considered the evidence of the wife … and the submissions of counsel … and I am satisfied that the monthly ceiling at an amount of $20,000 sought to be accessed by the wife to meet personal and household expenses is excessive, unreasonable and more than is appropriate in the circumstances. For example, I consider that an amount of $6,500 per month for groceries and food for her and the two adult university students is unreasonably excessive. I consider the amount of $1,500 per month for twice yearly flights to Country D for the wife is unreasonably excessive. I consider that the wife has double counted some motor vehicle expenses, some cleaning and pool maintenance expenses and household supplies expenses.” 

Full Court considers the Hague Child Protection Convention for the first time – Rewords an order that the mother provide an undertaking to return a child to Australia in the event that the father’s appeal against an international relocation order is successful

In Cape [2013] FamCAFC 114 the court at first instance made an order to allow the parties’ only child to return with the mother to Germany. The father then sought a stay of the relocation order pending the Full Court determining his appeal, which was dismissed.

In refusing to grant the stay, Crisford J placed “considerable reliance” upon a psychologist’s report that therapy between the father and child would be “harmful” and that the “safest” option was returning the child to Germany. Crisford J also directed the mother to register an undertaking in the Family Court of Australia and the equivalent Court in Germany, providing that the child would be returned, should the father’s appeal of the relocation order be successful.

The father appealed the dismissal of his stay application to the Full Court, arguing that the child leaving the country in the meantime meant his appeal of the relocation order was nugatory.

When considering the order as to the mother’s registering an undertaking in Germany, the Full Court said at para 4:

“This appeal… raises for consideration by the Full Court for the first time… the operation of the instrument which Crisford J referred to in her order as ‘the 1996 Hague Protection Convention’. The full title of that Convention is the Convention on Jurisdiction, Applicable Law, Recognition, Enforcement and Co-operation in respect of Parental Responsibility and Measures for the Protection of Children. It was signed at The Hague on 19 October 1996, and is implemented in Australia by Division 4 of Part XIIIAA of the Family Law Act 1975 (Cth) (“the Act”).”

and went on to quote the Convention, including:-

“Article 23: (1) The measures taken by the authorities of a Contracting State shall be recognised by operation of law in all other Contracting States.”

“Article 24: Without prejudice to Article 23, paragraph 1, any interested person may request from the competent authorities of a Contracting State that they decide on the recognition or non-recognition of a measure taken in another Contracting State. The procedure is governed by the law of the requested State.”

“Article 26: (1) If measures taken in one Contracting State and enforceable there require enforcement in another Contracting State, they shall, upon request by an interested party, be declared enforceable or registered for the purpose of enforcement in that other State according to the procedure provided in the law of the latter State.”

“Article 28: Measures taken in one Contracting State and declared enforceable, or registered for the purpose of enforcement, in another Contracting State shall be enforced in the latter State as if they had been taken by the authorities of that State. Enforcement takes place in accordance with the law of the requested State to the extent provided by such law, taking into consideration the best interests of the child.”

Applying those provisions, the Full Court said at paras 73-77:

“There has to date been virtually no experience in this country, or indeed to the best of our knowledge, in any country, with the operation of the Child Protection Convention, and in particular, its provisions for the recognition and enforcement of the orders of one Convention country in another. However, that is not a reason for not permitting it to be relied upon in the present case subject to safeguards.

We have earlier concluded that it would be in the best interests of the child who is the subject of this case, to be able to go to Germany with his mother as soon as possible. It therefore seems a particularly suitable case in which to rely on the Child Protection Convention, but subject to safeguards.

The Court of Appeal of England and Wales has recently determined that an undertaking given to a court is a ‘measure of protection’ for the purposes of the Child Protection Convention (Re Y (a child) [2013] EWCA Civil 129). However, notwithstanding that decision, we would, on reflection, prefer not to rely on an undertaking in this case, but rather base the safeguards on orders of this Court.

We consider also that the mother ought to have the option of seeking ‘advance recognition’ of our orders and of Crisford J’s of 11 April 2013 pursuant to Article 24 of the Child Protection Convention rather than registration… since it may be arguable that ‘registration’ under Article 26 is an option that becomes available only when the protective measure ‘require[s] enforcement’, which it would not until there is a breach of the Australian orders. It will be seen that Article 26 also provides for declarations of enforceability apparently as an alternative to registration. Out of an abundance of caution we will also provide for that option to be available to the mother.

Accordingly, we propose to discharge Crisford J’s orders of 5 July 2013 and… replace those orders with orders to the effect that:

  • The mother will return the child to Australia in the event that the appeal by the father against the orders of 11 April 2013 is successful and an order is made for the return of the child, either by the Full Court or by a court to which the parenting and relocation proceedings may be remitted for re-hearing.
  • Upon the mother serving on the father and the Independent Children’s Lawyer documentary proof that she has obtained from a German court advance recognition or a declaration of enforceability in Germany of the orders of 11 April 2013 and of these orders, or registration in a German court of the orders of 11 April 2013 and of these orders, and also filing in the Family Court of Western Australia such documentary proof, together with proof of service of such documentary proof on the other parties, she will be entitled to remove the child from Australia at the expiration of 7 days from the date of such filing in the Family Court of Western Australia.
  • The father’s application for a stay would then be otherwise dismissed.”

Refusal of stay sought by deceased party’s executor pending State application for family provision  

In Capelinski & Patton [2010] FamCA 1243 (7 December 2010) O’Reilly J refused an application by the executor of the deceased de facto husband’s estate that Ms Capelinski’s property proceedings be stayed pending the outcome of a family provision application by the deceased’s son and the executor’s own potential proceedings as to interpretation of the deceased’s will. 

O’Reilly J said at para 29:

“Ms [C] submitted that until the two family provision proceedings … have been heard and determined, the Court here cannot know the size of the pool, as was the case in Prince [(1984) FLC 91-501]. I reject that argument. Rather, the contrary is true, in that until Ms Capelinski’s proceedings have been determined here, that is, it be determined what, if any, property she should have, and what, if any, the deceased’s estate should have, the Supreme Court of Queensland cannot know the size of the deceased’s estate in order to adjudge whether, having regard to it and other bequests, there was inadequate provision for the claimants.” 

SSAT appeal – Payer’s expenses – SSAT’s rejection of father’s decision to forego half his salary so as to share the care of his children set aside  

In Carlson & Acuff (SSAT Appeal) [2010] FMCAfam 677 (30 June 2010) Riethmuller FM heard an appeal from a decision of the Social Security Appeals Tribunal which found that the father’s decision to forego $30,000, being half of his salary, to share the care of his children was not justified as child care was available that would allow for full-time employment. 

In allowing the appeal, Riethmuller FM at paras 73-75 said:

“[T]he Tribunal concluded that the appellant ‘would have ample funds…from which to meet the costs of reasonable care for the children while they were in [his] care.’

However, the costs of child care…are never quantified or estimated. As a result, the Tribunal failed to have regard to the costs of child care (after school care) if the appellant was working full time when making its calculations. The costs are a necessary part of the expense of the appellant working full time: just as a full time income was imputed to the appellant, in doing so the Tribunal also had to impute the additional expenses involved in earning such an income, which sounded in child care expenses in this case. This is an error of reasoning on the part of the Tribunal.

Another additional expense is the extra taxation that the appellant would have to pay. Nowhere in the decision is there consideration of the additional tax that would be payable by the appellant if working full time. The marginal rate of taxation relevant in this case was 30¢ per dollar. This is a necessary expense that must be taken into account.

The additional taxation (without regard to the medicare levy) was at least $9,000: almost all of the surplus that the tribunal identified in its reasons.”