Application for parenting orders dismissed for want of jurisdiction – Held that while the jurisdictional thresholds in s 69E(1)(b) to (d) were satisfied s 111CD (to be read in conjunction with the Hague Child Protection Convention) prevailed – Child found to be “habitually resident” not in Australia within the meaning of s 111CD but in a non-convention country 

In Chandra [2017] FCCA 451 (10 March 2017) Judge Small heard the wife’s parenting application regarding an only child (“X”) who lived with her in India. While the parties were both born in India, they were Australian citizens and married in Australia. Born in Australia, X was also an Australian citizen. The parties “travelled to India” on 13 January 2016 but separated on 25 January 2016, the child living in India ever since ([10]). The husband returned to live in Australia. The mother filed an application for parenting and property orders in the Federal Circuit Court on 4 May 2016.

On 24 May 2016 Judge Small made interim parenting orders and appointed an ICL, who submitted that the Court lacked jurisdiction to hear the case. The father opposed that submission. On 8 December 2016 the Court dismissed all parenting applications for want of jurisdiction, suspending the order pending judgment on the issue of jurisdiction.

Judge Small said (from [20]):

“The husband’s submission is that the court’s jurisdiction is found in section 69E of the Act and he sets out subsections (1)(b), 1(c) and (1)(d) which read as follows:

(1)       Proceedings may be instituted under this Act in relation to a child only if:

(b)       the child is an Australian citizen, or is ordinarily resident in Australia, on the relevant day; or

(c)       a parent of the child is an Australian citizen, is ordinarily resident in Australia, or is present in Australia, on the relevant day; or

(d)       a party to the proceedings is an Australian citizen, is ordinarily resident in Australia, or is present in Australia and the relevant day;

[21]     The husband submits that as X is an Australian citizen, and both parties were present in Australia on the relevant day (which is defined in section 69E(2) as ‘the day on which the application is filed’), and both parties are Australian citizens, the court has jurisdiction to make parenting orders about X despite the fact that X herself was not in Australia on the relevant day.

[22]     That particular submission is accepted by the independent children’s lawyer and there is little doubt as to its force.

[23]     However, the independent children’s lawyer submits that the jurisdiction conferred by section 69E is ‘constrained’ by Division 4 of Part XIIIAA of the Act which deals with ‘International protection of children’.

[24]     That submission is supported by the note which follows section 69E(2) which states:

‘Division 4 of Part XIIIAA (International protection of children) has effect despite this section.’

[25]     Further support for that contention is found in Alfarsi & Elhage [2016] FamCA 428 … where Foster J stated that ‘s 69E must be read subject to the provisions of ss 111CC and 111CD of the Act that provide a “series of qualifying connections” that must apply before this court can exercise jurisdiction’ …

[26]     [Section] 111CC states … under the heading ‘APPLICATION OF THIS SUBDIVISION’:

‘This subdivision applies only if an issue under this Act is whether a court, as opposed to any of the following authorities, has jurisdiction to take measures directed to the protection of the person of the child:

(a)       a central authority or competent authority of a Convention country;

(b)       a competent authority of a non-Convention country.’

[27]     [Section] 111CD, under the heading ‘JURISDICTION RELATING TO THE PERSON OF A CHILD’ states as …relevant:

‘(1)      A court may exercise jurisdiction for a Commonwealth personal protection measure only in relation to:

(a)       a child who is present and habitually resident in Australia; or

(b)       a child who is present in an non-Convention country, if:

(i)        the child is habitually resident in Australia; and

(ii)       any of paragraphs 69E(1)(b) to (e) applies to the child.’

[28]     A ‘Commonwealth personal protection measure’ is defined in s 111CA as:

‘ … a measure (within the meaning of the Child Protection Convention) under this Act that is directed to the protection of the person of the child’.

( … )

[31]     There is no doubt that India is a non-Convention country as it is not a signatory to the Hague Convention on [Jurisdiction, Applicable Law, Recognition, Enforcement and Co-operation in respect of Parental Responsibility and Measures for the Protection of Children (‘the Child Protection Convention’)].

[32]     Therefore, when all of that legislation is read together, this court can only find that it has jurisdiction to make a parenting order in relation to X if she is ‘habitually resident in Australia’ and any of paragraphs s 69E(1)(b) to (e) applies to her situation.

[33]     I accept the submission of the husband, supported by that of the independent children’s lawyer, that s 69E(1)(b), (c) and (d) do apply to X’s situation.

[34]     Therefore, in order to found jurisdiction in this matter, I must find that X is ‘habitually resident in Australia’ within the meaning of s111CD, which, as set out above, must be read in conjunction with the terms of the Child Protection Convention.

[35]     In Bunyon & Lewis (No.3) [2013] FamCA 888 (“Bunyon”) Bennett J noted that ‘the concept of habitual residence is pivotal to the operation of the 1996 Convention’.

[36]     Nevertheless, neither the term ‘habitual residence’ nor ‘habitually resident’ is defined either in the Child Protection Convention or the Act.

[37]     In Bunyon, Bennett J pointed out that the language of s 111CD ‘requires [a] finding as to habitual residence contemporaneously with the court exercising its jurisdiction’.

[38]     That is, Her Honour found, the question is whether a child is ‘habitually resident’ in Australia at the time the matter comes before the court, rather than whether a child has previously been ‘habitually resident’ in Australia over an historical period.

[39]     Her Honour distinguished the requirements for satisfaction of the term ‘habitually resident’ in the Child Protection Convention from those in the Hague Convention, where the term is usually approached from an historical perspective.

[40]     It is usual in cases where jurisdiction is an issue that the proceedings arise from one party having unilaterally removed a child to another country.

[41]     In this case, X was taken to India by her parents when their marriage was intact, albeit less than a fortnight before they separated. There is scant evidence in any of the affidavits filed in these proceedings as to whether the parties intended X to remain in India, and while their separate returns to Australia without her could be interpreted as meaning that they did, it is difficult to know in retrospect.

[42]     In Bunyon Bennett J referred to a Handbook in relation to habitual residence where it is noted that ‘where a move is open ended, or potentially open-ended, the habitual residence at the time of the move may also be lost and a new one acquired relatively quickly’ …

[43]     The lack of clarity about whether the parties intended to return X to Australia leads me to find, on balance, that their travel to India was ‘potentially open-ended’.”

The Court concluded (from [44]):

“Overall, taking the facts of this case and applying the law as set out above to those facts, I find that at all relevant times to this Court’s proceedings (those being the date on which the wife filed her application, the relevant dates when this particular matter was considered by this court, and today), X has been habitually resident in India.

( … )

[48]     I therefore find that this court has no jurisdiction to hear any application for parenting orders in relation to X …”

Ex parte injunction freezing bank accounts  

In Chang & Yao and Anor [2010] FamCA 1071 (16 November 2010) Barry J granted an ex parte injunction freezing accounts where there was evidence that the first respondent had transferred money from the parties’ joint account to the second respondent.

Children – Interim hearing – Unhelpful affidavits – Inconsistent allegations of child abuse and family violence – Mother not required to return to Sydney after her unilateral relocation to Adelaide 

In Chapa [2012] FMCAfam 1420 (18 December 2012) the mother unilaterally relocated from Sydney to Adelaide with two young children, alleging abuse of the children by the father and family violence on his part. The father alleged that the mother was mentally unstable (producing a suicide note written by her (paras 39-43)) and was guilty of child abuse. As to the state of the evidence filed, Halligan FM said (para 2):

“Most of the pertinent facts in this matter are in dispute. As is usual in an interim matter there has been no cross-examination of any witness. As is less usual in a matter of this kind, there has been a large number of affidavits not only by each of the parties themselves but also by supporting witnesses that has resulted in a significant protraction of this interim hearing without adding any real benefit or casting any greater light than might have come from one comprehensive and coherent affidavit from each party.”

As to the court’s approach to conflicting allegations at an interim hearing, Halligan FM said at para 24:

“ … as I have said these are interim proceedings and the Court is not, without cross-examination, entitled to simply find that these parties cannot be believed at all. Having said that, I note that there are difficulties with the evidence of both parties containing internal inconsistencies and a number of them are quite troubling because they go to significant matters. The inconsistencies arise both directly in relation to inconsistent statements and also inconsistencies apparent between the allegations and the consequent actions or inactions of the parties following those alleged incidents.”

As to allegations at an interim hearing of abuse and family violence, Halligan FM said at paras 26-31:

“What concerns me in relation to the mother’s evidence is her total inaction to secure the safety of the children. The only evidence that she gives was on that occasion arguing very loudly, in fact shouting at the father, to seek to stop him doing what she alleges he was doing to the child. That is, she engaged in a loud argument with the father at the time, running the risk of further traumatising the child, assuming that what the mother alleges in fact occurred.

I cannot at this stage say it did not, but I am troubled by the fact that despite the mother’s assertion that this was not an isolated incident, she at no stage removed the children from the place of danger, she at no stage reported these matters to anyone, and although the parties separated on a number of occasions, she subsequently, including as recently as July this year, returned with the children to the father.

So far as the father’s case is concerned, at one point he said that the mother never disciplined the children. Then, faced with the allegation by the mother about his heavy-handed physical discipline of the children, responded that in fact the mother generally used time out with the children but when she got angry with them would shout at them and on at least one occasion threw them across the room. That would inherently be a highly dangerous manoeuvre for a young child, yet there is no evidence that the father did anything to secure the safety of the children from the risk to life and limb that would come from being thrown bodily across a room.

To say that I am troubled by the glaring inconsistency between the seriousness of the allegations each parent makes against the other and their total failure to act to secure the safety of these children would be a gross understatement. It is possible that the parties are exaggerating. It is possible they are simply lying. It is possible that they did not appreciate the need to afford these children a place of safety and therefore failed them at the most fundamental level in meeting their responsibilities as a parent.

Which it might be, at this stage, I cannot determine, but it leaves both parties, in my view, in a very poor light and the allegations are probably as telling against the party making the allegation as they are against the parent subject to the allegation.

In those circumstances, where each of these parties makes such serious allegations, where neither of them has taken steps in the past to protect these children from what must be an obvious serious risk of physical harm, it makes somewhat meaningless the second of the primary considerations which I am meant to give priority to, the need to protect children from physical or psychological harm. Where neither parent apparently, if I am to accept their evidence is true, has bothered to do so in the past and I am left with the choice of leaving these children to a greater or lesser extent with each of the parents, it would seem I have no option available to me at the present time to protect these children from the risks that both parents allege that the children are subjected to with the other parent.”

As to the mother’s unilateral relocation, Halligan FM said at paras 66-68:

“ … as I have said, the mother unilaterally relocated these children to South Australia in October. Her evidence is that she was doing so, in effect, to escape family violence and child abuse. The difficulty is that she is long on allegation and short on evidence as to these matters.

I am not in a position, even though the father denies the allegation, to reject and disregard the mother’s evidence of what she alleges occurred on the day of separation and I therefore must proceed upon the basis, at this stage, that what she said might be true. It might also be false but at that stage, I am not prepared to make a finding that there is no foundation upon which I could be satisfied that the reason the mother advances is untrue. Put another way, it is possible, on the evidence, that the mother was the victim of physical family violence on the date of separation, and in those circumstances she can argue, if that were true, that to relocate to Adelaide with these children was not unreasonable, even though it made any involvement between the children and their father problematic in the extreme, not least because the mother did not disclose her whereabouts.

So far as the distance the mother travelled to escape a violent relationship, as she would put it, I am satisfied that if the mother’s allegation is true, where she went was not inappropriate. The father’s own evidence is that the mother had difficulty establishing close friendships in Sydney. The mother’s family is all in Adelaide. Certainly, she has a dysfunctional and poor relationship with her sister and, it would seem, has great resistance to her children mixing with her sister’s children and those children are not infrequently at the maternal grandmother’s home, creating arguably some difficulty in relation to the mother accessing support within the grandmother’s home that she did immediately after the overdose in September 2009.”

After considering the likely effect of relocation on the children’s relationship with the father, Halligan FM concluded at paras 73-76:

“On the other hand, I am concerned about the potential adverse effect upon the mother and, through her upon the children, of ordering a relocation back to Sydney. The father’s case, as I say, is that the mother has difficulties. He has suggested an undisclosed mental condition and the evidence clearly demonstrates that she does have significant issues with anxiety. If the Court were to order the mother to return to Sydney, the Court would be ordering the mother to come back to a situation that she says she has fled in fear, leaving behind her family supports, and leaving behind the other support mechanisms that she has begun to engage with through the domestic violence service that she engaged with upon arriving in Adelaide in October.

As I say, the father’s own evidence is that the mother has difficulty making friends in Sydney. There is no other maternal family in Sydney. The father’s sister and the person described in the father’s case as [Y]’s godmother have previously, even on the mother’s admission, provided some limited support to the mother in the care of the children, but they are now clearly aligned with the father. They are witnesses in his case against the mother, and the mother has disputed extensive aspects of their evidence. To suggest that these people could remain supports for the mother is simply impractical.

In those circumstances, what I am asked to do in the father’s case and by the Independent Children’s Lawyer is to order the mother back into a situation where she would be separated from whatever support networks she has, where she clearly suffers and has been treated over some significant period of time, including with medication on prescription, for at least anxiety, and where the father says these matters impact adversely upon her ability to care for the children. To my mind, it becomes something of a self-fulfilling prophecy to accede to the application that the mother be required to return to Sydney. On the father’s own case, that would seem to be highly likely, if not designed, to compromise significantly the mother’s ability to parent these children, whether they are living with the father and spending time with her or primarily living with her and spending time with the father. That cannot be in these children’s best interests where, as I have said, I am satisfied the children would look to the mother as their primary carer and with whom they would have their primary bond. In my view, this is a very significant consideration in this particular case.

While it is the case that the children could spend more limited time with the father if they remain in Adelaide, nonetheless it is still practical for the children to be spending time with their father on a fortnightly basis. He has in the past, as I have indicated, when he was in Sydney and the family was in Adelaide, gone down on an alternate weekend basis and that apparently was seen by him at that time as an appropriate means of maintaining his involvement with his sons.”

It was ordered that the children live with the mother and the mother was permitted to remain living in Adelaide.

Interim order – Sexual abuse alleged – Suspension of father’s time with child  

In Chapman & Cousins [2010] FamCA 403 (4 May 2010) the parties were locked in litigation which had lasted throughout their 11-year-old daughter’s life. The court had previously made findings damning against the mother for raising false allegations of child abuse (and voiced serious concerns as to the child welfare department’s investigation into the matter). Orders had also been made “to protect the child from further intrusion into her life and further exposure to a form of institutional abuse of her” (para 3).

This was an interim application by the father for the resumption of time with the child, again blocked by the mother on similar grounds. A psychologist’s report referred to the child as being under stress.

Burr J held at para 23 that the legislation required a cautious approach and “the need to shield N presently from the stress imposed upon her by the litigation and by the intensely bitter dispute between her parents”. Burr J at para 25 also said this:

“There is…some prima facie evidence that the father may lack the capacity to exhibit appropriate sexual boundaries with his 11½ year old daughter. The evidence may well not ultimately support that but at the present moment, harsh as it may be for the father, it is necessary to decline his application in that regard.”

Orders were made for the child to attend counselling and an injunction was made “restraining the parties from permitting the child to be engaged in any counselling or therapy prefaced on the assumption that she has been the victim of sexual or other abuse”.

Editor’s note – See Vance [2010] FamCA 414 where in such a case involving children of 6, 8 and 10 years Bennett J made an interim order for the father’s time with the children to be supervised.

Family Court of WA considers whether property orders were final and could be enforced after it had set aside an order that vested a trust (on the ground that the trustee had not been accorded procedural fairness) – Held that the property orders were final but could not be enforced as (without the early vesting order) they did not finally determine the property dispute

In Charisteas [2015] FCWA 15 (10 February 2015) Walters J considered a number of disputed issues that followed the Full Court’s decision of AC & Ors v VC & Anor [2013] FamCAFC 60, our summary of which is in our archived “case notes – property” under the catchwords “property – trustee may be required under Part VIIIAA FLA to bring forward vesting date of trust fund for purposes of valuing and distributing entitlements to share in the fund that were fixed and irrevocable (due to the unusual absence of an appointor)”.

Crisford J at first instance made a s 79 adjustment order in respect of non-superannuation property 38:62 in favour of the husband (para 62) and a corporate trustee (“[XYZ] of the [XYZ Trust]”) ordered under s 90AF to exercise its power under a trust deed to bring forward the vesting date for the trust from June 2064 to 30 June 2010, the trustee being directed to then distribute the trust fund amongst the named beneficiaries in accordance with their respective interests in the trust. Following the use of s 90AF to vest the trust “two fifths of the net value of the Trust (after deducting $338,000, to be allocated to the husband’s mother … )” was included in the non-superannuation asset pool.

The Full Court found that the husband’s mother was “‘presently the controller’ of [XYZ] and the Trust”, the trust not having had an appointor or guardian since the husband resigned in 1997 (para 21); that Part VIIIAA could be “used to require a trustee (including a third party trustee) to bring forward the vesting date of a trust fund for … the … purposes of valuing an irrevocable entitlement to … share in the trust fund and of distributing that share to the party entitled” (para 82); but that the court at first instance had made the early vesting order without according the trustee procedural fairness pursuant to s 90AF(3)(c) or satisfying itself that the order was “reasonably necessary, or reasonably appropriate and adapted, to effect a division of property between the parties to the marriage” pursuant to subsection (3)(a) (para 83).

Upon setting aside the s 90AF order for the vesting of the trust, the Full Court suggested “that one course open to the spouses would be to make an application to Crisford J, or to another judge at first instance, under s 79A(1)(b) for a variation of the property orders, or for the setting aside and the redetermination of the property settlement proceedings” (para 103).

The husband and third parties brought an application for enforcement of the first instance order, arguing that “the proper application of the law and the Family Law Rules 2004, as well as public policy and the interests of all those involved in this long-running and … staggeringly expensive litigation, demand that the proceedings be brought to an end as soon as practicable” (para 101).

Walters J said (from para 106):

“…     … I am not dealing with an appeal from the property orders; much less am I dealing with an appeal from the orders made by the Full Court … I am, instead, being asked to turn my mind to the nature and scope of the power conferred by s 79 of the Act and the nature and effect of orders made in the exercise of that power: ( … )

( … )

[114]  As I will shortly explain, the reality is that the property orders were eviscerated by the striking down of the early vesting orders. What was left was very different from the scheme or structure contemplated by Crisford J.

( … )

[129]  It is apparent from the 2013 appeal judgment that the only orders challenged in the appeal were those contained in paragraphs 2, 3 and 4 of the property orders, being the early vesting orders. It follows, of course, that paragraph 1 of the property orders was not challenged: see, for example, the 2013 appeal judgment at [12]. The terms of that order bear repeating:

‘The net assets of the parties (excluding superannuation) as set out in the schedule contained at paragraph 346 of these reasons be divided between the wife and the husband as to 38% to the wife and 62% to the husband. (Emphasis added.)’

[130]  The highlighted words make it clear that the property of the spouses to be divided in the indicated proportions was the property of the spouses as Crisford J had found it to be and not, for example –

a)      the property of the spouses as determined by the Full Court (assuming the Full Court had found the spouses’ property to be something different); or

b)      the property of the spouses as set out in paragraph 346 of the trial judgment minus the spouses’ entitlement to a share of the corpus of the Trust; or

c)      the property of the spouses as asserted from time to time by the parties or any of them.

( … )

[135]  The Full Court disavowed any suggestion that Crisford J had ‘created’ property; the entitlement ‘already existed and what her Honour had to do was try to value it and then to distribute it between the spouses’: see the 2013 appeal judgment at [84].

( … )

[138]  In my opinion, paragraph 1 of the property orders is a substantive order pursuant to s 79 – albeit that it does not, in itself, direct how the indicated division of the spouses’ property should be effected. It is no less a substantive order under s 79 than, say, an order which directs the sale of a former matrimonial home and the division between the parties to the litigation of the net proceeds of sale in certain specified proportions. That the paragraph does not or arguably cannot stand alone is irrelevant. It was never intended to be anything other than one provision in a suite of provisions.

[139]  The purpose of paragraphs 2, 3 and 4, being the early vesting orders, was to assist in the implementation of paragraph 1. As indicated above, the paragraphs were included to bring the spouses’ entitlements to the specified share of the corpus of the Trust ‘into a tangible form’. Clearly, the early vesting orders no longer exist. To that extent, their purpose has been frustrated.

( … )

[150]  It is immediately apparent that the property orders do not contain a provision to the effect that all extant applications for property settlement otherwise be dismissed. Such a provision is not essential in property settlement orders, but its presence would ordinarily be regarded as indicative of an intention on the part of the Court to bring the proceedings to a close and to regard itself as functus officio.

[151]  It is also apparent that the property orders do not specify which particular assets (including, for example, chattels) were to be reflected or included within the specified percentages allocated to each spouse. As well, the total value of the ‘pool’ of property available for distribution between the spouses was uncertain – and recognised to be uncertain – at the time of the making of the property orders: see, by way of example only, my previous reference to the trial judgment at [254]. Further, and as I have said, the precise manner in which the net proceeds of sale of the former matrimonial home were to be dealt with was left open.

[152]  The above analysis reveals that the property orders did not finally dispose of or determine the property settlement dispute between the spouses. Further orders had to be made to conclude the proceedings. That does not mean, however, that the property orders, as a suite of orders, were not made pursuant to the Court’s powers under s 79. Indeed, and as I have indicated, the Full Court itself categorised the property orders as being ‘orders with respect to property settlement proceedings under [the Act]’: see the 2013 appeal judgment at [1].

[153]  Put another way, the above analysis demonstrates that the Court’s powers under s 79 have not been exhausted or ‘spent’.

[154]  This is even more apparent when focus is directed to the paragraphs of the property orders that have been struck down. … The striking down of the early vesting orders means, quite simply, that the spouses’ specified share of the corpus of the Trust remains, to all intents and purposes, outside that ‘pool’ of property – and untouched by any order under s 79. It remains property of the spouses with respect to which orders by way of alteration of interests of property could be but have not yet been made, and the Court’s power to make orders altering the spouses’ interests in that property has not been exhausted or ‘spent’. In those circumstances, it is impossible to treat the remaining paragraphs of the property order as comprehensive or ‘final’. Even if they could be implemented in the manner urged upon the Court by the husband and the third parties, the spouses’ share of the corpus of the Trust remains vulnerable to the making of further orders under s 79. …”

Concluding that “there is no reason in law why the wife cannot continue her application relating to the vesting of the Trust” (para 159), Walters J also considered s 79A(1)(b) saying “in the event that I am wrong in concluding that the power of the Court to make orders under s 79 has not been exhausted or ‘spent’, I am satisfied that s 79A(1)(b) would indeed apply in the manner suggested by the Full Court” (para 163) and that “impracticability arises (at least in part)” (para 176).

The enforcement application was dismissed and all parties were directed to file a minute of proposed procedural orders sought relating to the further conduct of the substantive proceedings.

 

Full Court finds no error in court’s refusal to notionally add back net losses caused by husband’s suspension of mortgage payments or his share trading losses 

In Charles [2017] FamCAFC 3 (12 January 2017) the Full Court (Bryant CJ, Thackray & Bennett JJ) heard the wife’s appeal against Judge Stewart’s property adjustment orders made after a 10 year marriage. The husband (41) was a financial services professional earning $110,000 a year. The wife (37) was primary carer of the parties’ two children (5 and 3), living off Centrelink benefits and child support. The net non-superannuation pool was $1,665,665 and the superannuation pool $209,755.

At first instance, the husband received a 60:40 contribution weighting in his favour (of non-superannuation), Judge Stewart finding that while contributions throughout the marriage were equal, the husband’s initial contributions were about $390,000 while the wife’s about $70,000 ([31]-[34]). The Court then made a 15 per cent s 75(2) adjustment in favour of the wife, such that there was a 55:45 division in favour of the wife of the non-superannuation pool, superannuation to be divided equally.

The wife’s appeal included grounds that the Court erred in dismissing her arguments for two notional add-backs – the first being a $40,000 to $50,000 loss that the wife said was a result of “risky share trading” by the husband ([21]); the second being loss caused by the husband suspending mortgage payments such that there was “$20,000 less property available for distribution than there would otherwise have been” ([22]).

As to the $20,000 mortgage loss, Bryant CJ & Bennett J said (at para 47):

“The primary judge seems to have accepted that there was a loss of capital of $20,000. However, her Honour describes this figure, apparently accurately as … :

‘… The wife has calculated, and I accept that the net effect of this would have been approximately a $20,000 saving on the mortgage. In other words, had the mortgage been refinanced the mortgage balance at trial would have been approximately $20,000 lower … ’

[48]  Counsel for the wife conceded, however, that this was not the actual loss which, according to counsel, was around the $7,000 to $8,000 mark. As we have pointed out, in the wife’s outline of case document, the difference between the mortgage balance at July 2013 and at trial was $8,187.66. The wife’s $20,000 was calculated as being the asserted potential saving had the mortgage been refinanced, not the actual reduction in the amount owing on the mortgage. The wife’s case relied upon the husband’s unreasonable refusal to refinance in July 2013 as leading to there being approximately $20,000 less property available for division. Counsel for the wife submitted that her Honour failed to consider the question of wastage and wrongly found herself bound by Stanford in not accepting this figure as an ‘add back’ to the pool.

[49]  The submission that her Honour did not properly consider the principles arising from Kowaliw cannot be sustained …

[50]  In addition, we do not consider that her Honour fell into any error in failing to find that the husband had ‘recklessly, negligently or wantonly’ caused a diminution in the pool of assets available for distribution (Kowaliw) because in our view his actions do not have that character. As her Honour says, the circumstances in which dissipated property may be included notionally in the pool available for asset division are reasonably limited (see Townsend and Townsend [1994] FamCA 144 … in respect of what could be described as waste, and Chorn and Hopkins [2004] FamCA 633 … in respect of the circumstances in which paid or pending legal fees are or are not added back to the pool of assets).

[51]  In Kowaliw Baker J enunciated the general rule that financial losses incurred by the parties throughout the course of the marriage, whether jointly or otherwise should be shared by them, although not necessarily equally. Adding back is the exception, not the rule and the exception arises where a party, has by a ‘deliberate act or by economic recklessness reduced the value of assets available for distribution’ (at 76,644-5).

( … )

[53]  The Full Court in Omacini and Omacini [2005] FamCA 195 accepted Baker J’s analysis and, in addition, noted the court’s discretion to add back necessarily extends to circumstances where there has been a premature, although not always wanton or negligent distribution of marital assets.

[54]  Clearly, her Honour did not consider that the husband had been wanton, negligent or reckless in his failure to renegotiate the mortgage payments and that finding was open to her.”

As to the “risky share trading” losses, Bryant CJ & Bennett J said (at [66]-[67]):

“… [A]s her Honour found (and there is no challenge to this finding) the husband had not acted recklessly, negligently, or wantonly with the parties’ money or embarked on a course of conduct designed to reduce or minimise their wealth. Rather, her Honour regarded him as a competent investor, and she was therefore, in our view, not in error in refusing to take the losses into account as a negative contribution offsetting the husband’s initial contribution. This is consistent with what the Full Court observed in Browne & Greene [1999] FamCA 1483 … where they said:

“ … There can be little doubt that had the [investment] succeeded the wife would have sought to share in the fruits of that success, and there would seem to be no reason why she would not have been entitled to do so. It is this last-mentioned consideration, being that parties generally expect to share the economic profits of a marriage, which, in our view, requires that there should be good and substantial reasons for departing from the principle that where there are economic losses incurred in a marriage, those losses should be shared, absent any negligence, recklessness or deliberate dissipation of assets by one party …

Her Honour’s findings were, in our view, consistent with accepted authority and do not constitute an appealable error.”

Thackray J agreed that the appeal should be dismissed, saying (at [99]):

“ … [T]he trial judge did not have the benefit of the decision in Vass & Vass [2015] FamCAFC 51 … which was delivered soon after she handed down her decision. The Full Court in that matter made clear that, notwithstanding what had been said about Stanford, there is no error in principle when a court adjusts property interests by notionally ‘adding back’ money or assets which have been dissipated by one of the parties. It is unnecessary to consider whether the trial judge’s passing reference to Stanford is inconsistent with anything that was said in Vass, since examination of the judgment demonstrates that her Honour’s understanding of Stanford ultimately formed no part of her reasoning.”

The wife also unsuccessfully challenged the contribution and s 75(2) weightings.

Her appeal was dismissed with costs.

Property – Cross-vesting legislation – Accrued jurisdiction – Intervener granted transfer of case to Supreme Court of NSW where proceedings were pending

In Cheiban [2010] FamCA 1075 (9 November 2010) Collier J granted leave to intervene to E Pty Ltd, the plaintiff seeking equitable relief in parallel proceedings in the Supreme Court of NSW to which the husband and related companies were parties. Collier J said at para 22 that “whilst the Family Court cannot have cross-vested to it the jurisdiction of a State Supreme Court, the Family Court does have an accrued jurisdiction”, Collier J referring to Warby (2002) FLC 93-091 in which the Full Court discussed the basis of that jurisdiction. 

Collier J at para 21 said:

“I am satisfied, however, having regard to [the High Court’s ruling in Re Wakem ex parte McNally (1998) 198 CLR 511] and to the Jurisdiction of Courts Legislation Amendment Act 2000 (Cth) that the cross-vesting scheme still permits the cross-vesting of the jurisdiction of the Family Court to the Supreme Court of a State. In this case I am, therefore, satisfied that I have the power, should I choose to exercise it, to transfer or cross-vest the matter to the Supreme Court of New South Wales. Of course the Supreme Court is already seized of some part of the matter … ”

After expressing the view at para 24 that “it [was] highly desirable that all outstanding issues be heard and determined in the one trial”, Collier J reviewed the competing factors at paras 25-34 and decided to transfer the Family Court proceedings to the Supreme Court of NSW.

Child support – Effect of “dramatic” change of care arrangement on a binding child support agreement – Agreement set aside under s 136(2) of the Child Support (Assessment) Act – Whether change of legislation amounts to “exceptional circumstances”

In Cheyne & Masters & Anor (SSAT Appeal) [2014] FCCA 856 (19 May 2014) Judge Terry considered a case where the father “was paying $239.66 per week” in child support for his son (para 40) under a binding child support agreement when the child’s living arrangements changed from spending time with the father for “five nights per fortnight and for half of the school holidays” (para 36) to “living six nights per week with the father and one with the mother” (para 41). The change of care was “instigated suddenly by the mother” (para 145) who had moved interstate (para 146).

Judge Terry said (at para 43):

“The mother confirmed to the CSA that the change had occurred and on 30 April 2012 the CSA advised the parties that:

i)       the mother was no longer an eligible parent for the purposes of child support as she had less than 35% care … and the binding child support agreement would no longer be treated as active;

ii)       the mother would become the paying parent under a formula assessment from 23 April 2012.”

The Court said it “was common ground at the hearing that [the child] had only spent six nights with the mother between January 2013 and July 2013 and in her affidavit filed on 12 August 2013 the mother conceded that she and [the child] were currently estranged” (para 55).

Judge Terry continued (from para 69):

“…       … there is no terminating event in s 12 [of the Child Support (Assessment) Act 1989 (Cth)] applicable to the agreement except for the termination date specified in the agreement which has not yet arrived. However s 12 was amended effective 6 January 2009 and on 31 July 2008 it contained s 12(2)(b) which provided that one parent ceasing to be an eligible carer was a child support terminating event.

[70]     “Eligible carer” is defined in s 7B of the Act as a person who has at least shared care of the child and s 5(3) of the Act provides that a person is taken to have shared care if they have at least 35% and not more than 65% care of a child.

[71]     The mother’s care of [X] dropped to about 16% on 23 April 2012 and if s 12 had not been amended the reduction in [X]’s time with the mother on 23 April 2012 would have terminated the agreement.

[72]     Counsel for the Child Support Registrar submitted that it was clear beyond doubt that s 12 as it stood on 23 April 2012 and not as it stood at the time the agreement was signed applied to the agreement because Item 29 of the amending legislation provided that the amendments applied in relation to child support terminating events which happened on or after the amendments.

( … )

[74]     I accept that the current version of s 12 applies to the agreement.

[75]     The final relevant matter to note is that the 2006 amendments which created binding child support agreements made it deliberately difficult for a party to escape from such an agreement because of a change of circumstances.”

The Court concluded there was no error in the SSAT’s decision (that the agreement remained operative and that the initial decision based upon the mother ceasing to be an eligible carer was not correct given the amendment of s 12 of the Act and its applying to the agreement irrespective of its having been signed pre-amendment).

The Court then considered the father’s application to set the agreement aside, saying (at para 124):

“…       The father’s case turns on whether s 136(2)(d) is enlivened and in order to determine an application pursuant to s 136(2)(d) the court must consider:

i.       Whether since the agreement was signed circumstances of an exceptional nature have arisen relating to a party to the agreement or a child in respect of whom the agreement is made;

ii.      Whether as a result the applicant or child will suffer hardship if the agreement is not set aside;

iii.     If so whether in the exercise of its discretion the court should set the agreement aside.

( … )

[136]    The issue of what constitutes exceptional circumstances for the purpose of s 136 (2) (d) has been considered in many first instance decisions.

( … )

[142]    For a number of reasons I do not accept the mother’s arguments and am satisfied that exceptional circumstances have arisen since the agreement was signed and first arose on 23 April 2012.

[143]    I accept that a change in the care arrangements for a child after an agreement is signed is foreseeable, but that alone does not mean that such a change can never amount to exceptional circumstances.

[144]    The change in care arrangements for [X] in April 2012 did not amount to a change of one or two nights but to a radical revision in his care arrangements. The mother’s percentage care of him dropped to 16% on 23 April 2012 and since January 2013 has been 2%.

[145]    The change did not come about because of any behaviour by the father to inveigle [X] out of the mother’s care, let alone any undermining behaviour by him designed to impact on his child support obligations. The change was instigated suddenly by the mother.

[146]    It was the mother who moved interstate in September 2012 without making any arrangements with the father before she went to spend fixed and regular time with [X]. Her relocation was the catalyst for a further dramatic reduction in her time with [X].

( … )

[150]    The effect of the change which occurred in this case has to be considered in the context of the child support legislation and it was so dramatic that unless the agreement is set aside the financial arrangements for [X] will be completely out of kilter with the objects and principles of the Assessment Act.

( … )

[153]    If the agreement is not set aside then even allowing for a small financial contribution by the mother if [X] spends time with her in the future the father will be providing almost 100% of the financial support for [X] and almost 100% of the care, and yet instead of the mother paying child support to the father as the objects and principles of the Assessment Act together with her income suggest would ordinarily occur the father will be required to pay the mother $236.63 per week for 2.8 years, equating to $30,000.00, in circumstances where she had made only a trifling outlay to the costs of supporting [X].

[154]    I also consider it relevant that the legislation changed after the agreement was signed.

[155]    There is a difference of opinion in the first instance cases about whether the fact that amendments to the Assessment Act which came into force on 1 July 2006 and turned certain then existing child support agreements into binding child support agreements and thus made them much more difficult to change is relevant to determining whether exceptional circumstances have arisen since the agreement was signed.

[156]    In Daley & Daley [2009] FMCAfam 398] Judge Brown held that a retrospective legislative change could, when taken with other matters, combine to constitute exceptional circumstances. ( … )

[157]    In Keane & Keane [[2013] FamCA 332] Watts J disagreed with this approach ( … )

[158]    I have to consider a different legislative change namely the removal of s 12(2)(b) from the Assessment Act after an agreement was signed but the same principles ought to apply in determining whether the change in legislation is something I can take into account in determining whether exceptional circumstances have occurred, and I prefer the reasoning of Judge Brown in this instance.

[159]    There can be no doubt that legislative change is a change of circumstances. The drafters of the Family Law (Family Violence) Amendment Act accepted this and made the following provision in that legislation to forestall applications to vary or discharge parenting orders made prior to the amendments:

  • The amendments made by this Schedule are taken not to constitute changed circumstances that would justify making an order to discharge or vary, or to suspend or revive the operation of, some or all of a parenting order that was made before commencement.

[160]    I accept that the legislative draftsman deliberately chose not to preserve s 12(2)(b) for existing child support agreements when the legislation changed on 6 January 2009 but I am not satisfied that this means that the change of legislation cannot be taken into account when considering whether exceptional circumstances have arisen. There is nothing to indicate that the legislative draftsman made a deliberate choice about how to deal with the situation and it is possible, if the draftsman turned his mind to it at all, that he considered that the ‘out’ of exceptional circumstances would deal with the issue in any particular case.”

Judge Terry also found that the applicant would suffer hardship if the agreement was not set aside and that in the exercise of its discretion it should set the agreement aside. 

Child support – Full Court finds that the SSAT has power to make a departure determination in terms (including as to child support periods) not sought in the departure application 

In Child Support Registrar & Ahern and Anor [2014] FamCAFC 105 (23 June 2014) the Full Court (Bryant CJ, Finn & Strickland JJ) considered a matter where the father had originally applied to the SSAT for a review of a decision by the Registrar concerning the annual rate of child support payable … in the period from 1 May to 29 July 2010 (para 7). The SSAT set aside the Registrar’s decision and substituted its own decision as to the annual rate of child support in respect of the periods from 1 May to 30 June 2010 and 1 July 2010 to 30 June 2013 (para 8).

At first instance, Judge Scarlett of the Federal Circuit Court “concluded that the SSAT had no jurisdiction to make a determination of the father’s liability for the period of 1 July 2010 to 30 June 2013 because the father’s application for review had only been in relation to the period 1 May to 29 July 2010” (para 9).

The Full Court said (at para 33):

“Having accepted the father’s submission that the SSAT ‘cannot go outside the decision that was the subject of the objection process” … and rejected the Registrar’s submission that “nothing in the legislation compels the conclusion that the SSAT’s jurisdiction is confined by the terms of the actual decision made on the objection (let alone the terms of the application for departure determination)”, his Honour observed:

‘103. It cannot be the case that, on a review of a decision by the Child Support Registrar on an objection, the Social Security Appeals Tribunal’s jurisdiction is entirely at large. If it were so, an applicant who wished to review a decision would have cause for apprehension about opening a “Pandora’s box”, because, if the Registrar is correct, the Tribunal would have the power to make decisions about matters that were not in issue between the parties.’”

The Full Court continued (from para 38):

“…     … the question raised by this appeal is whether the SSAT can, when reviewing a decision of the Registrar on an objection to a departure decision for a particular period, make a decision with respect to a period other than the period to which the Registrar’s decision related. … the Registrar contends that this question should be answered in the affirmative (as did Riethmuller FM in Kindree [Kindree & Child Support Registrar & Anor (SSAT Appeal) [2010] FMCAfam 357]), while the father contends it should be answered in the negative (as [was held] in the present case).

( … )

[50]    … In support of the Registrar’s contention … senior counsel for the Registrar placed particular reliance on the apparently wide powers conferred on the SSAT not only under s 103S(1)(b) to ‘vary’ the decision under review, but also under s 103S(1)(c)(i) to set aside that decision and to ‘substitute a new decision’.

( … )

[55]    … the Registrar … relied on the following conclusion reached by Riethmuller FM in Kindree (which was rejected by [the Court at first instance] in the present case):

‘[20]   Section 98S(2) of the [Assessment Act] states that the power of the Registrar to vary an annual rate of child support is “not limited by the terms of the application”. Section 103T(1) of the [Collection Act] confers on the tribunal “all the powers and discretions that are conferred by this Act and the Assessment Act on the Registrar” As a result, the tribunal stands in the shoes of the Registrar and therefore has the power to vary an annual rate of child support beyond the period referred to in the application.’”

The Full Court concluded (from para 66):

“…     … where an application is made to the Registrar under Part 6A of the Assessment Act for a departure from an administrative assessment, the Registrar is not limited by the terms of the application as to the determinations which can be made on the application (s 98S(2)), and … the determination may cover, and make different provision for, different child support periods (s 98S(3)). Thus even at the initial stage of the departure application, the ‘Pandora’s box’ which was of concern to [the trial judge] will have been opened …

[67]    … s 103T(1) of the Collection Act provides that when the SSAT reviews an objection decision made in relation to an original decision of the Registrar, the SSAT may for the purpose of reviewing that decision exercise all the powers and discretions that are conferred on the Registrar not only by the Collection Act, but also by the Assessment Act.

[68]    It must be accepted having regard to authorities … and even more importantly, having regard to the language of s 103T(1), that in order to determine what powers of the Registrar can be exercised by the SSAT in a review of a particular objection decision, that the decision, which is the subject of the review, be identified.

( … )

[72]    We … conclude that in reviewing the objection decision made in relation to the original departure decision the SSAT had by virtue of s 103T(1) of the Collection Act all the powers of the Registrar under Part 6A of the Assessment Act, including the powers in s 98S to make a departure determination in terms not sought in the application for the departure. Moreover, the SSAT also had the power under s 103S(1) of the Collection Act to set aside the decision which was subject to the review and to substitute a new decision (subject always to procedural fairness considerations).

[73]    We are thus in agreement with the views expressed by Riethmuller FM in Kindree …

[74]    We are also in agreement with the submissions made on behalf of the Registrar in opposition to the submissions made on behalf of the father to the effect that the legislation did not permit the SSAT to make the decision, which it did make in this case, because that would result in there being no merits review of the new decision made by the SSAT. It must be remembered in this context that the SSAT is empowered under s 103S(1) of the Collection Act to make ‘a new decision’. That new decision will become the new administrative assessment, which can be the subject of a new departure application if the grounds for such an application are available.”

Contravention application by Child Support Registrar – Sanctions for failure to comply with order 

In Child Support Registrar & Balzano (No. 2) [2011] FMCAfam 578 (8 June 2011) the respondent was found by Scarlett FM to have contravened a 2005 order of the Local Court (Family Matters) to pay $61,000 and to be in breach of a bond in the sum of $2,000 on which he had been placed in 2009. The applicant argued for imprisonment. 

Holding that the respondent’s payment of $10,000 was “a mitigating factor” and that “a sentence of imprisonment is a last resort”, Scarlett FM imposed a fine of $1,000 under s 112AD(2)(c) of the Family Law Act. 

An order was also made for payment of the applicant’s fixed costs; for the breach of bond to be reported to Donald FM who imposed it; that until payment of the child support debt the respondent transfer to the applicant his shareholding and entitlements in [Balzano] Pty Ltd and be restrained from receiving any funds from his former wife except to apply them in reduction of his debt.