Application to set aside agreement dismissed – Payer’s taxable income had “plummeted’ since the agreement from $233,690 to $6,850

In Cogswell & Calvery [2010] FMCAfam 172 (1 March 2010) at paras 42-72 Altobelli FM held that a child support agreement made in 2001 was a binding (not a limited) agreement “because it was expressed to conclude when each of the children…attained…18 and makes no provision for any other terminating event”. The court then dismissed the father’s application to set it aside on the ground of exceptional circumstances since the making of the agreement by the father, whose taxable income was noted to have “plummeted” from $233,690 in the year 2004 to $6,850 in 2007.

Wife’s entitlement to sale proceeds under property order granted priority over creditor’s charge by guarantee given by husband 

In Coldham & Anor [2014] FCCA 2377 (24 October 2014) Judge Terry considered a matter where a husband provided a guarantee in which he granted a creditor “an equitable charge over all of his real property” in February 2012 (para 4). The husband was then a party to a property order made in July 2012 which provided for the sale of the parties’ jointly owned home. The order provided for the wife to receive “the first $100,000.00 plus interest from the sale” (para 3). Between October 2012 and December 2012 the creditor supplied $52,000 worth of goods that were not paid (para 5). The property sale proceeded in November 2013, both the wife and the creditor claiming a right to the net sale proceeds of $45,901 (para 1). The creditor argued that its equitable charge took priority as it pre-dated the order (para 6).

The wife argued that the guarantee should be set aside under s 106B, the husband signing “the guarantee … a year after the parties separated and four months after the wife filed an application for property settlement” (para 46). The Court rejected the s 106B argument (citing authority), saying at para 54:

“The husband’s action in signing the guarantee and granting the charge to obtain credit for a trading company have all the hallmarks of an ordinary business transaction. There was nothing to suggest that a reasonable person would have supposed in February 2012 that the husband’s action would be likely to defeat an order for property settlement which might in future be made in favour of the wife.”

Judge Terry continued (at para 55):

“In any event the wife’s entitlement pursuant to the consent orders has not been defeated or impacted upon because the husband granted the charge per se, rather it has been impacted on or defeated by a combination of supervening events, including the husband’s inability to obtain finance after the consent orders were made, his ceasing to pay the mortgage after he was unsuccessful in obtaining finance, [and] the failure of the … company after the orders were signed …”

The Court added (para 56):

“There is nothing to suggest that in February 2012 a reasonable person would have considered that it was more than 50% likely or very likely at all that the husband granting a charge in support of an application for credit would have the effect which it ultimately will have if [the creditor] … is accorded priority.”

The Court (at para 80) cited Clark v Raymor (Brisbane) Pty Limited (No. 2) (1982) Qd R 790 as to priorities, in which Thomas J said in the appeal judgment (the court there dismissing the company’s appeal):

“In the end the contest comes down to this. On the one hand we have a general equitable charge fairly well hidden in the middle of a commercial guarantee and held somewhere in the office of a (business omitted) supplier. The property to which it is said to give a prior claim was not named or identified. Apparently nothing was done to dissuade the owner from dealing with it. Such a charge could not validly have been taken from a company without registration being effected (s 100 of the Companies Act). However equity still recognises such a charge when taken from an individual, even though it be kept under lock and key and is unable to be found by the most diligent searcher. Although these factors do not affect the intrinsic validity of the interest, they are relevant to the standard of conduct to be expected from the holder of such an interest if he wishes to use it to upset other specific dealings with the relevant property. The chargee, of course, failed to get in the deeds. This is hardly surprising, as the property was not even referred to let alone described in the guarantee. In consequence, it left the owner, or the owner’s mortgagee, or the two of them in combination, in a position to deal with the property without inhibition. It lodged no caveat to warn third parties that they could deal with such land only subject to the interest of the chargee. It failed to contact the registered mortgagee or notify it of its interest. Had it done so, the registered mortgagee would upon redemption have been obliged to hold the certificate of title or balance proceeds of sale for the chargee (s 80(5) Property Law Act 1974; compare Dearle v Hall (1828) 3 Russ 1).

On the other hand the purchaser did nothing unusual. It entered into a contract in the usual form, and searched the title before paying the balance purchase monies. It obtained the appropriate documents including the duplicate certificate of title, and promptly lodged them for registration. It was not capable of doing anything more. In particular there was nothing it could have done to have discovered the chargee’s interest.

The equities between these two parties simply are not equal. In my opinion there is no need to resort to the maxim of last resort — Qui prior est tempore, potior est iure. I would dismiss the chargee’s appeal.”

Judge Terry continued (from para 81):

“…       This provides the solution to the matter.

[82]     It was the wife’s unchallenged evidence that after separation in February 2011 the husband excluded her from the businesses they had operated during the marriage …

[83]     The husband signed a guarantee in … February 2012 but [the creditor] did not lodge a caveat until 15 February 2013. It was under no obligation to caveat but the result of it not doing so was that the wife could not have discovered the existence of the equitable charge by conducting a search prior to signing the consent orders in July 2012.

[84]     The only way the wife could have discovered the existence of the charge before signing the consent orders would have been by asking the husband questions during the negotiation process prior to the consent orders being signed and receiving truthful answers. [The creditor’s] solicitor did not however submit that the wife had failed to make reasonable inquiries of the husband before signing the orders and did not seek to cross-examine the wife.

[85]     … The consent orders which were eventually signed made no reference to ‘all encumbrances’ and provided only for the mortgage to be paid from the proceeds of sale …

[86]     I am also mindful of the fact that although the equitable charge was granted prior to the making of the consent orders the husband’s liability … is for the supply of goods commencing on a date some months after the consent orders were made.

[87]     The wife settled her property claim in July 2012 and relinquished her right to certain assets in exchange for receiving others. She agreed to certain time frames for settlement and she made her decision based on there being no evidence of a charge … She agreed to the husband retaining the company and continuing to trade, unaware of the fact that the husband had granted a charge which could in the future if the husband or the company ceased to pay their bills impact on her entitlement. She could not have found out about the charge by doing a public search.

[88]     Just as in Clark & Raymor (Brisbane) Pty Limited (No.2), this is a case where the equities between the parties are not equal. The wife’s claim should take priority over the claim of the equitable chargee. It follows that the wife is entitled to the whole of the money in trust.” 

Unilateral relocation 75 km away in response to job offer at short notice allowed

In Collins & Lawrence [2010] FMCAfam 893 (20 August 2010) Brown FM allowed the mother and her two children to unilaterally relocate 75 km away in response to a job offer made at short notice, saying this at paras 132-135:

“Having considered the applicable section 60CC factors, I have come to the conclusions that [X] and [Y]’s interests will be best served if they live in the predominant care of their mother. It is impracticable for Ms Lawrence to move back to [K] in the short term. She has no means to support herself financially in the township. In addition, she has made a reasonable proposal as to how the children may maintain their relationship with their father.

It was foolish of the mother to act in the way she did, knowing the father’s likely reaction. However, the distance between [K] and [B] is not extreme. In particular, the distance is not so great that it will inevitably deprive the children of having a significant level of relationship with their father.

At this stage, I do not think it is reasonably feasible for the mother and children to live in [K] and for the six/eight nights per fortnight regime to be re-implemented. This can only occur if the court completely abrogates Ms Lawrence’s entitlement to pursue the career opportunities of her choosing.

In addition, I do not think it would serve the best interests of [X] and [Y]. Such an outcome is likely to lead to the children being exposed to more rather than less conflict between their parents. I am satisfied that there are some worrying indications that [X] is currently not coping well with this stress.”

Entire $200,000 pool came from husband – Yet wife, who had been treated like a slave in parties’ market garden business throughout their 10 year marriage, awarded 60% for contributions and another 15% under s 75(2)  

In Columbia [2009] FamCA 311 (8 April 2009) where a $200,000 asset pool came entirely from the husband, Bell J assessed the contributions of the wife (who had two children to him and also worked and was treated like a slave in their market garden business throughout their 10-year marriage) was awarded 60% for her contributions under s 79(4) of the Family Law Act and another 15% under s 75(2) for the provision of support and a home for the family.  

Court documents released by administrative staff to ATO which argued its coercive powers – Implied obligation not to make use of such documents other than for purposes of the proceedings – Full Court allowed ATO to use the documents for specific audit purposes

In Commissioner of Taxation & Darling [2014] FamCAFC 59 (4 April 2014) the Full Court (Thackray, Strickland & Murphy JJ) in proceedings in which the Commissioner of Taxation was not a party considered an appeal by the Commissioner from Macmillan J’s dismissal of its application to be released from an implied obligation not to make use of affidavits he had obtained from the court file under FLR 24.13(1)(c) for purposes other than those of the proceedings”, being the purpose of an audit into the husband’s affairs being conducted by the Australian Taxation Office (“ATO”) (paras 1-24).

The Full Court said (at para 4) that the appeal concerned “… the scope of an obligation articulated in these terms by the High Court in Hearne v Street (2008) 235 CLR 125 at [96]:

“Where one party to litigation is compelled, either by reason of a rule of court, or by reason of a specific order of the court, or otherwise, to disclose documents or information, the party obtaining the disclosure cannot, without the leave of the court, use it for any purpose other than that for which it was given unless it is received into evidence.”

The ATO had attended the Melbourne Registry with permission from the Registry Services Manager to examine the file without notice to the parties and had “tagged” documents of interest (paras 10-11). The ATO then wrote to the Court seeking permission to copy those documents, seeking access again under s 263 of the Income Tax Assessment Act 1936. The Registry Manager “after consultation with the Case Management Judge” consented (para 18). After obtaining copies, the Commissioner applied to the Family Court for leave to intervene and an order releasing him from the implied obligation not to make use of the documents for purposes other than those of the proceedings (para 23).

The Full Court considered the basis on which the ATO were granted access to the documents, saying (at paras 78-79):

“…       With respect to the primary judge, we consider the better view is that access to the file was sought from, and granted by, members of the court’s administrative staff, and that access was permitted only because of the invocation by the ATO of its coercive powers. We have formed this view for these reasons:

1.      The first tranche of the documents was inspected in December 2009, when ATO officers attended at the Court, having received no response to earlier correspondence. There is no suggestion that any judge (or even a registrar) had any involvement. Given later correspondence, a possible inference is that the ATO used its s 263 powers to obtain access, especially as the names of the parties were not disclosed in the earlier correspondence and no reasons had been advanced to show what ‘proper interest’ the Commissioner had in seeking access to the file.

2.      The request the ATO subsequently made for access to the file and copying of documents pursuant to r 24.13(1)(c) was denied.

3.      The letter of 20 May 2010 did not say the decision had been made by the Case Management Judge. It said that, after consulting with the Case Management Judge, ‘we now consent to the Australian Taxation Office inspecting the file …’

4.      Apart from stating the obvious point that the file had already been inspected (the request now was to make copies of documents), a number of observations can be made about the letter of 20 May 2010:

•        there is no indication of who “we” was intended to encompass. It could scarcely be thought to include a judge, who may give leave or permission or make orders, but who does not “consent”;

•        it is entirely unclear what the Case Management Judge was asked or what he said in response, but there can be no real suggestion that his involvement was anything other than informal and/or advisory;

•        no order was extracted and we were not taken to any document on which the Case Management Judge had made any notation, which would be the regular way in which a judicial officer would signify a formal direction, instruction or order made in chambers;

•        while it is true, as the primary judge noted, there was no ‘appeal’, the question might be asked, ‘appeal against what?’. The parties were not even aware the ATO had made a ‘request’. They were unaware that the file had been inspected. They were unaware of any involvement of a judge. Even had they inspected the file they would not have been entitled to see correspondence passing between the Court and the ATO – see r 24.13(4).

( … )

…        We will therefore determine the appeal on the basis that:

•        permission was not given by a judge, but rather by administrative staff;

•        permission was not given pursuant to r 24.13, rather it was refused; and

•        access was obtained by use of the Commissioner’s coercive powers.”

Considering the implied obligation to only use documents for the purpose of proceedings, the Full Court said (from para 89):

“…       The Commissioner argued that he was not subject to the obligation because he was a stranger to the proceedings, and had (allegedly) obtained the documents with the Court’s permission. It was submitted that it was implicit in the alleged grant of permission that the Commissioner could use the documents in performing his duties, since otherwise the permission was of no utility.

( … )

[101]    The plurality in Hearne v Street accepted that the implied obligation extends not only to parties, but to ‘anyone else’ into whose hands documents come, provided they knew the material was generated in legal proceedings. The same view had been expressed by the majority in the NSW Court of Appeal, whose decision was upheld by the High Court (see Hearne v Street at [92]).

[102]    As the plurality in Hearne v Street said, at [103]:

‘[The obligation] would be of very limited protection if it were only personal to the litigant … For that reason the authorities recognise a broader principle by which persons who, knowing that material was generated in legal proceedings, use it for purposes other than those of the proceedings are in contempt of court.’

( … )

[107]    … when regard is had to the underlying purpose of the obligation, we see no reason to treat a stranger to the litigation any differently to someone with a direct connection (provided the stranger is aware the documents were generated in, or for the purposes of, litigation). The primary purpose of the principle is to protect privacy and encourage frank disclosure in litigation. This purpose would not be fostered by reading down the principle.”

The Full Court then considered the implied obligation in the context of legislation, saying (from para 135):

“…       Senior counsel for the Commissioner was wise to eschew any suggestion that the implied obligation must give way to ss 263 and 264 of the [Income Tax] Assessment Act, since that proposition could not stand following the decision of the High Court in Daniel’s Corporation [Daniels Corporation International Pty Ltd v Australian Competition and Consumer Commission (2002) 213 CLR 543] ( … )

[136]    Daniel’s Corporation dealt with the scope of powers conferred on the Australian Competition and Consumer Commission by s 155 of the Trade Practices Act 1974 (Cth), which we accept as being essentially equivalent to those conferred by s 263 of the Assessment Act. The High Court held that the power under s 155 to issue notices for production of documents did not authorise production of documents to which legal professional privilege attached. This is, therefore, an important illustration of the application of the ‘principle of legality’, which appears to have had its earliest expression in Australia in Potter v Minahan [1908] HCA 63; (1908) 7 CLR 277 at 304, where O’Connor J quoted Maxwell On Statutes:

‘It is in the last degree improbable that the legislature would overthrow fundamental principles, infringe rights, or depart from the general system of law, without expressing its intention with irresistible clearness; and to give any such effect to general words, simply because they have that meaning in their widest, or usual, or natural sense, would be to give them a meaning which they were not really used.’

[137]    We accept, as was submitted for the Commissioner, that the implied obligation is an obligation to the Court which is imposed by law and therefore does not constitute a right that attaches to the individual producing the documents: Bourns v Raychem Corporation [No 3] [1999] 1 All ER 908 at [16], cited with approval in Hearne v Street at [106]. Nevertheless, the principle underlying the obligation is a fundamental one, and is based on acceptance of the fact that:

‘The use of discovery involves an inroad, in the interests of achieving justice, upon the right of the individual to keep his own documents to himself; it is an inroad that calls for safeguards against abuse … (Harman v Secretary of State for Home Department [1983] 1 AC 280 at 300 per Lord Diplock cited with approval in Hearne v Street at [107]).’

[138]    One of those safeguards is the application of the principle of legality, which ensures that the implied obligation will not be abrogated by statute unless that abrogation is brought about by words of irresistible clarity.

( … )

[140]    … we consider the principle of legality should be applied just as firmly in the case of a statutory provision imposing a duty on a public officer as it is in the case of a statutory provision giving a power to a public officer. We do not consider it is logical to accept (as senior counsel for the Commissioner did) that the obligation is a limitation on the Commissioner’s powers to access buildings and documents, but to then assert that the obligation is not a limitation when he is carrying out his duty to make an assessment by making use of documents obtained by use of those powers.

( … )

[142]    We proceed on the basis that if the Commissioner’s powers of coercion do not extend to demanding documents from a court file, the purported use of those powers for that purpose prima facie constitutes contempt. To then make use of the documents obtained by such means would seem to us to aggravate the contempt. …

[143]    We are unable to find anything in the text of s 166 and 167 of the Assessment Act which could be construed as ‘clear words’ relieving the Commissioner from compliance with the implied obligation. Nor is there anything in the legislation which would provide a basis for concluding there is a ‘necessary implication’ that he has been relieved from compliance. Using the phrase employed in Daniels Corporation, at [32], it is far from obvious that application of the obligation to the Commissioner would significantly impair the performance of his duties. Indeed, his own manual suggests the contrary.”

Having found that the ATO was obliged to comply with the implied obligation, the Full Court allowed the appeal to the extent of granting leave to the ATO so that it could use the documents obtained from the Court file for other, defined, purposes, saying (from para 198):

“…       … we consider the discretion should be exercised in favour of the Commissioner for the following reasons:

1.      The Commissioner is performing an important public duty. There is no reason to doubt the opinion of his officers that having access to the documents will assist in the conduct of the audit. The public interest is advanced by ensuring all taxpayers pay their fair share of tax. (Deputy Commissioner of Taxation v Karas [2012] VSC 143 at [59]).

2.      The Commissioner is engaged in a substantial, targeted audit. It is not a ‘random audit’ of the type discussed in Industrial Equity Ltd v Deputy Commissioner of Taxation and Crawley [1990] HCA 46; (1990) 170 CLR 649 (and even then the audit was sanctioned by the High Court, albeit in the context of a s 264(1) notice).

3.      Although many of the annexures to the affidavits may be available to the Commissioner from other sources, the parties’ own assertions about the history of acquisition of assets would be available only to the Commissioner by interview with the parties in which they may have an incentive not to be frank. Furthermore, it is common ground, as examination of “JSS-11” would in any event suggest, that many of the assets are held outside the jurisdiction ( … )

 ( … )

6.      There are restrictions on the way in which the Commissioner can use the information obtained from the court file which would ensure that the documents do not venture into the public arena, thus ensuring there is no breach of s 121 of the Family Law Act: Bailey v Australian Broadcasting Corporation at 490 [[1995] 1 Qd R 476].

7.      The affidavits and financial statements were not given in discovery or obtained under a warrant but were sworn by the parties for the purposes of the proceedings and therefore in the expectation that they might be read in open court. Having served the documents, the decision as to whether the documents would pass into the public domain moved from the control of the party who filed them. Whilst in no way determinative, this factor is of significance: Moage Ltd (in liq) v Jagelam [2002] NSWSC 953; (2002) 43 ACSR 173 at [22].

( … )

[199]    In our view the most important consideration is whether or not granting the Commissioner relief from the obligation is likely to discourage litigants from making a frank disclosure. There is already a heavy obligation on litigants in Family Court proceedings to make such a disclosure, and they are required to provide a written undertaking to the court that they have done so. See Chapter 13 of the Rules and authorities too numerous to mention.

[200]    Most importantly, it is vital to recognise that there is already a disincentive to litigants to be frank with the Family Court about tax evasion because it is (or should be) well-known that the Court can and does refer such matters to the authorities for investigation.”

The Full Court then said “it should not be thought that we condone the conduct of the ATO officers who obtained access to the file by use of coercive powers in circumstances which arguably constituted a contempt of court. In being prepared, for present purposes, to overlook this interference with the processes of the court, we have taken into account the fact that the Commissioner did not seek to use the documents without first approaching the Court to obtain release from the implied obligation” (para 202). The Full Court added that it “should also not be thought that we condone the making of decisions by court staff about access to the court file or the making of decisions without notice to the parties” which “should be the exception rather than the rule” and that ordinarily, “notice ought to be given to the parties to allow them to be heard as to whether the requesting party has established a ‘proper interest’ [under FLR 24.13(1)(c)] and also whether the requesting party ought to be released from the implied obligation, or whether conditions should be imposed” (para 203). 

ATO intervention in family law case – Husband’s tax liability was well in excess of the parties’ assets – Sections 79(2) and 75(2)(ha) – Found that husband was “on a frolic of his own” – Proceeds of sale of home to be divided equally between ATO and wife

In Commissioner of Taxation & Worsnop [2009] FamCAFC 4 (16 January 2009), a case where the husband had a tax liability well in excess of the parties’ assets, the Australian Taxation Office (ATO) joined the parties’ property proceedings in the Family Court as an intervenor.

The Full Court dismissed ATO’s appeal from the judgment of the trial judge Rose J that the proceeds of sale of the family home be divided equally between the wife and ATO, rejecting ATO’s claim that it should receive the whole proceeds as the wife had benefited from the husband’s tax evasion, knowing that the home was bought with funds on which tax had not been paid.

Rose J preferred the wife’s account that the husband did not inform her of his non-disclosure of income for tax purposes to the husband’s evidence that he did. The wife knew the home was bought in her name because the husband was having trouble with creditors, but it had not been put to her that she knew the purchase money should have been paid to meet the husband’s tax debt.

The Full Court at para 54 noted Rose J’s reference to the Full Court’s ruling in Biltoft [[1995] FamCA 45] that debts should be allowed as deductions from the asset pool except where “ … the circumstances of the incurring of the liability ought in justice and equity be wholly or partly disregarded” and (para 55) the following passage from Biltoft:

“There is no requirement that the rights of an unsecured creditor or a claim by a third party must be considered and dealt with prior to the court making an order under s 79, nor is there a rule of priority as between a creditor claimant and a spouse. Those rights, however, cannot be ignored. They must be recognised, taken into account and balanced against the rights of a spouse. (emphasis added)”

The Full Court said at paras 79-82:

“[Counsel for the ATO] also referred to … s 90AE(3)(d) of the Act, which is one of the conditions which must be met if an order is made changing a third party’s rights under the preceding subsections. Sub-paragraph (d) requires that the Court be satisfied that in all the circumstances, it is just and equitable to make the order. However, this requirement is in respect of the Court’s direct interference with a third party’s rights, for example, in respect of a creditor, rights relating to the person from whom recovery may be sought. In contrast, the aspect of a creditor’s position to which the Court must have regard under s 75(2)(ha) are not rights to recovery but the practical prospects of recovery from a debtor spouse’s property.

For example, one might imagine a circumstance where one spouse’s initial contributions and the shortness of the marriage might mean that the great bulk of property existing at the time of a property settlement trial had belonged to, and does belong to, that spouse and that position ought not be altered under s 79. In the meantime, a creditor might have lent, perhaps unwisely, to the other spouse, who lost the borrowed money and could not repay from his or her own assets. As we have said, we do not think that in such circumstances, either s 79(2) or s 75(2)(ha) has the result that the creditor has some opportunity, on the basis of justice and equity, of improving the position that the creditor would have been in had he pursued the debtor spouse alone. In other words, the creditor who becomes a party does not step up in status to become entitled to greater ‘justice and equity’ than the non-party creditor.

This does not mean that the principles of fairness, justice and equity to a creditor ought not be addressed, where there is in prospect a reduction in the property of the debtor spouse, for the purpose of satisfying the s 79 claim of the other spouse, which reduction might adversely effect the prospects of recovery of the creditor, but this position does not arise because of the application of s 79(2).

In our view Rose J did not err in principle in the manner in which he applied s 75(2)(ha) of the Act.”

The Full Court concluded at para 94:

“ … Rose J effectively found that the husband was on ‘a frolic of his own’. As to whether this was contrary to the wife’s express wishes, that could hardly be a fair question where the wife was, as Rose J found, kept uninformed. … ”

 

Central Authority successfully appeals dismissal of its return order application – Parents’ residence in Finland for 9 months was sufficient to establish the children’s “habitual residence” there

In Commonwealth Central Authority & Cavanaugh [2015] FamCAFC 233 (11 December 2015) the Full Court (May, Strickland & Aldridge JJ) heard the Central Authority’s appeal against Faulks DCJ’s dismissal of its application for three children to be returned to Finland pursuant to the Family Law (Child Abduction Convention) Regulations 1986 (i.e. the Hague Abduction Convention). The court below found that the parents had taken the children to live in Finland in June 2014 with a common intention to live there for at least a year, holding that in doing so the parents “abandoned habitual residence in Australia” and that “at the time of the children’s retention in Australia [in March 2015] they were not habitually resident in Finland” ([4]) so that the Convention did not apply.

The mother was “a citizen of both Australia and Finland”; the father an Australian citizen; the parties were married in Finland, their first child having been born there; the parties lived in Australia from November 2002 to June 2014 (their two younger children having been born in Australia); upon deciding to live in Finland for at least a year they travelled there on one way tickets; the parties kept their home in Australia but rented it out; the father retained his employment in Australia but took a year’s leave (the children’s enrolment in an Australian school being deferred for a year). In Finland the parents acquired a residence, the wife obtained employment there, the children attended Finnish schools, “were engaged in extracurricular activities and had made friends” and the family became members of the Finnish National Health Insurance Scheme and received benefits from the Finnish Government ([6]-[12]). In March 2015 the parents and children returned to Australia to attend the father’s brother’s wedding, the parties separating that month and the father then retaining the children’s passports so that the children could not leave the country ([16]).

The Full Court said (from [23]):

“…     The only issue before the trial judge was whether, at the time of the father’s retention of the children in Australia, the children were habitually resident in Finland. If not, reg 16 of the Regulations, and thus the Abduction Convention, had no operation.

[24]    The concept of habitual residence, for the purposes of that regulation, was extensively discussed by the High Court in LK v Director-General, Department of Community Services [2009] HCA 9; … At 593, the High Court found that the use of the term ‘habitual residence’ amounted to a rejection of domicile as the relevant connecting factor between a person and a particular municipal system of law. This was, the court said, significant because, ‘…in considering acquisition of a domicile of choice, questions of intention loomed large, and the relevant intention had to have a particular temporal quality (an intention to reside permanently or at least indefinitely)’.

( … )

[26]    As his Honour observed on more than one occasion, domicile is not the question. That being so, there was no need to discuss it. As appears later in these reasons, however, the concept of domicile seems, nonetheless to have played a role in his Honour’s determination of whether or not the children were habitually resident in Finland.

[27]    Returning to LK, the court found at 594 that a person ‘ … may abandon a place as the place of that person’s habitual residence without at once becoming habitually resident in some other place …’ but that the purpose of the Regulations ‘ … may tend in favour of finding that a child does have a place of habitual residence … ’. 

The High Court then said [at [25]]:

‘ … So, for example, a person may abandon a place as the place of that person’s habitual residence without at once becoming habitually resident in some other place; a person may lead such a nomadic life as not to have a place of habitual residence.’

( … )

[35]    We have already referred to the authorities that indicate a court should be slow to find that children do not have an habitual place of residence.

[36]    The trial judge does not refer to this consideration. In this case it was a matter of some relevance. Nonetheless, as is also made clear by the authorities, it is quite possible for children not to have an habitual place of residence. It all depends on the facts to which we shall now turn in considering the next challenge.

( … )

[39]    … the trial judge thought that there was a dichotomy between living in Finland permanently or indefinitely, or for a year.

[40]    This … does not identify the relevant enquiry. As indicated by the High Court in LK at 598, in adopting what was said by Waite J in Re B (Minors: Abduction) (No 2) [1993] 1 FLR (UK) 993 at 995, the relevant inquiry is whether there is an ‘abode in a particular place or country which they have adopted voluntarily and for settled purposes as part of the regular order of their life for the time being, whether of short or of long duration’ and that ‘[a]ll that the law requires for a “settled purpose” is that the parents’ shared intentions in living where they do should have a sufficient degree of continuity about them to be properly described as settled’ (original emphasis).

[41]    The trial judge said [at [50]]:

‘In my opinion, it could not be said that there was a settled purpose or intention on the part of both parents to live indefinitely in Finland. There is no doubt that that could have been something which happened in the future, perhaps at the end of one year. It was not however the settled purpose of both the parents at any time either before they left Australia or while they were living in Finland … ’

( … )

[43]    These findings seem to flow from the inquiry that the trial judge undertook as to intention which was directed to the parents’ intention as to where the family would live after one year in Finland.

[44]    There are two difficulties with this. First, as we have said this gives excessive weight to the lack of a common purpose or intention to reside in Finland permanently or indefinitely and has overtones of a consideration of domicile.

[45]    Secondly, it ignores whether in moving to Finland for a period of 12 months with a common settled purpose of doing so, of itself, was sufficient to acquire habitual residence for the children. The trial judge seems to have posed the question as a dichotomy between living for 12 months on the one hand and permanently or indefinitely on the other. That dichotomy is based solely on the trial judge’s finding of intention and entirely ignores the possibility that in the circumstance of this case there could have been habitual residence acquired by less than 12 months residence taking into account a common settled purpose of the parents of residing in Finland for that time.

[46]    There is force in the submission of the Commonwealth Central Authority that the trial judge gave at least excessive weight to the parents’ lack of settled common intention to stay in Finland beyond one year and insufficient weight given to the common intention of the parents to live in Finland for at least a year.

[47]    We are satisfied that the trial judge erred in the manner asserted by the Commonwealth Central Authority …

( … )

[52]    The parents’ shared intention was to live in Finland for at least a year. In travelling to Finland they ceased to be habitually resident in Australia (a finding made by the trial judge and not challenged). This is significant and we bear in mind that a court should be slow to find that children have no habitual place of residence. This is the effect, however, of his Honour’s findings.

[53]    By the time of their retention in Australia, the children had lived in Finland for nine months. They attended school, at which they were progressing well, and engaged in extra-curricular activities. They made friends. Benefits and allowances for them were received from the Finnish Government.

[54]    The parents had established a home. The mother had a job. The mother had friends and relatives living nearby. The family was enrolled in the local health scheme and received treatment under it.

[55]    A finding that the children were habitually resident in Finland at the time of the retention could be drawn from these facts. That finding could be drawn more readily when the loss of habitual residence in Australia is taken into account. It was therefore a relevant consideration which the trial judge did not take into account.”

The appeal was allowed.

Pending Hague Convention proceedings – Interim orders – Anti-suit injunction – Costs  

In Condor [2011] FamCA 121 (3 March 2011) the wife took a three year old child from Sydney to Germany “ostensibly for a holiday” (para 19). The husband followed three months later and after some months there negotiated an agreement that the wife would return to Sydney with the child by a certain date. An order was made in the Stuttgart Local Court, Germany upon the husband’s application “presumably, in conjunction with the Central Authority for the return of the child to Australia in implementation of the Hague Convention” in which the agreement was “implicitly approved by the Court” (para 21). In breach of the agreement the wife did not return the child on the agreed date.

The husband applied to the Family Court for an injunction for the return of the child, delivery of the child into his care upon the wife’s return, an injunction against any relief being sought by the wife except in the Family Court or in the Hague Convention proceedings, and costs. Rose J noted (para 23) that the agreement stipulated that if the child were not returned on the due date the Family Court would determine the matter.

In awarding sole interim parental responsibility to the husband, Rose J said this at paras 27-29:

“So far as the issues of parental responsibility for the child and return of the child by the wife to Sydney, Australia, I have concluded that it is in the best interests of the child on an interim basis for the husband to have sole parental responsibility for him.

In that regard, I find that the presumption of equal shared parental responsibility as set forth in s 61DA of the [Family Law] Act has been rebutted in that it is in the best interests of the child for the husband to have sole parental responsibility for him.

On the evidence before me, the wife unilaterally decided to retain the child with her in Germany notwithstanding the clear terms of the agreement recorded in the orders made on 19 November 2010. There is no evidence before me that the husband agreed to that course of action by the wife. It was an irresponsible decision by the wife and in making that decision she implicitly ignored the husband’s legal rights to participate equally with the wife in relation to an important issue affecting the child, that is the place of residence of the child.”

As to the care of the child, Rose J said this at paras 32-33:

“The child has been in the primary care of the wife since the parties separated. The child is very young.

I have concluded that it is in the best interests of the child to remain in the primary care of the wife as I am not satisfied on the evidence before me that the potential emotional impact upon the child of being moved from the primary care of the wife to the husband is in the child’s best interests. Consequently, an interim order will be made for the child to remain in the primary care of the wife.”

Upon a review of the issues at paras 34-45, Rose J granted the anti-suit injunction sought saying this at para 41:

“I have also given significant weight to the information responsibly provided to the Court by Mr Boers of the wife having instituted or intending to institute parenting proceedings in relation to the child in a German court, notwithstanding that both she and her German lawyers have been on notice of the pending parenting proceedings in this Court since at least 1 February 2011. An inference is drawn by me of forum shopping which has been criticised by various courts in different countries over many years. I am unable to find on the evidence as to whether this is a case of the wife having been poorly advised or whether the wife has taken the action of her own volition.”

Rose J also awarded the husband costs, saying this at paras 47-49:

“Section 117(1) of the [Family Law] Act provides the general principle that each party to proceedings under the Act bears his or her own costs.

However, s 117(2) provides a discretionary power to make an order for costs should there be “circumstances that justify it in doing so” having regard to s 117(2A).

I am satisfied that there is a circumstance that justifies a possible order for costs. The circumstance is that the husband has been compelled to make an application to the Court for orders due to the wife’s breach of the agreement.”

Interim order – Father’s time with child aged 23 months included one overnight stay per week

In Cook & Aiken [2011] FMCAfam 1465 (21 September 2011) the parties agreed that their 23 month old daughter should live with the mother and spend time with the father but could not agree as to whether that time should extend overnight. It was submitted on behalf of the mother that the court should take a cautious approach, it being “too early to experiment” with overnight time. It was said that the child had never spent any overnight time solely in her father’s care, had been distressed at changeovers and that any overnight time should be limited to two overnight periods followed by a further Child Dispute Conference as suggested by the family consultant (paras 21-22). 

Scarlett FM said at paras 25-27:

“Further, it was submitted that these are interim proceedings and the Court has a difficulty in making findings of fact. What is not in issue, however is that:

a.      There has been a history of close involvement with [X] by both parents;

b.      From the age of eight months the child commenced attending day care. She has flourished in day care. Both parties reported that [X] was in the habit of settling with a bottle. Breast feeding is not an issue. The parties have built [X]’s life around their professional commitment. Day care will continue on both parents’ proposals. On at least fifteen occasions the child has been left in the care of the father;

c.      There are no concerns about safety, mental health or drug and alcohol issues. This is not a risk case.

Mr Kearney [counsel for the father] submitted that the family consultant said that [X] appeared to have been provided a level of care which has enabled her to develop an attachment to both parents. The father wants more time with the child than the mother wants him to have. However, there is a common parenting approach and a common routine for the child.

The Court was being asked to make findings about primary attachments, which it cannot do in an interim hearing. However, the Court can find that [X] has a strong attachment to each parent.”

Scarlett FM said at paras 42-45:

“The child already spends substantial and significant time with her mother. She spends frequent time with her father.

‘Substantial and significant time’ is defined by subsection 65DAA(3) of the Act. It includes days that fall on weekends and holidays and days that do not. That part of the definition is rather academic when the Court is considering a child who is well below school age.

However, s 65DAA(3)(b) refers to time that the child spends with the parent that allows the parent to be involved in:

i.       the child’s daily routine; and

ii.       occasions and events that are of particular significance to the child.

This must clearly be applicable to overnight time when one is dealing with a child as young as this child is.”

Scarlett FM proceeded to review the s 60CC factors, concluding at para 56:

“In my view, it is in the best interests of this child to commence spending overnight time with her father. The tentative approach suggested by the family consultant of two instances of one night each followed by a review Child Dispute Conference [CDC] appears to be appropriate.”

An interim order was made that the child spend from 1.30pm each Monday until 8.00am on Tuesday with the father and several hours with him each Wednesday, Thursday and Saturday. The parties were ordered to attend a further CDC with a family consultant under s 11F FLA for a review of the child’s adjustment to spending overnight time with the father after the child had spent at least two nights in the care of the father. As provided by s 11C, the CDC was to be reportable.

Financial agreement – Agreement in anticipation of Part VIIIAB held to be binding

In Cording & Oster [2010] FamCA 511 (26 May 2010) Cronin J declared an agreement made between a de facto couple before but in anticipation of the commencement of Part VIIIAB of the Family Law Act to be a valid financial agreement under the Act.

It was an agreement between parties with no children to forego any claim to the other’s defined assets and superannuation benefits, but to equally share their joint property defined as all subsequently acquired property, subject to specified exceptions.

Cronin J held at para 44 that the agreement was not void for uncertainty and complied with Kostres [2009] FamCAFC 222 at para 129 where the Full Court said:

“While, for the purpose of construing the agreement a court should, as in the context of a commercial agreement, apply an objective test of a reasonable bystander to the construction of an agreement, it cannot give meaning to an agreement whose terms are so imprecise or ambiguous the parties’ intent cannot be discerned.”

On the question whether there is an obligation upon a party to make comprehensive disclosure, it was conceded by counsel that no such obligation is contained in Part VIIIAB. Cronin J at para 58 referred to the Full Court in Kostres as “focussing on the importance of parties getting legal advice prior to the execution of the agreement because the advice would be expected to cover a myriad of issues”.

Cronin J went on to refer to the court’s power under s 90UM to set aside a financial agreement upon the “non-disclosure of a material matter in the sense of a fraud upon the party”, adding this at para 60:

“To reach the standard of a fraud, the non-disclosure must amount to a misrepresentation whether it is intended or otherwise. That is because the recipient of the information is entering into the agreement on the basis of the representations. To prove a misrepresentation of a material fact, one of the parties to the agreement must be able to show that he or she was contracting about something other than that referred to in the contract and in the circumstances, it would be unconscionable for the agreement to stand.”

The court found that there had been no such fraud and that the parties had received the benefit of legal advice.

As to whether the agreement was a financial agreement under the Act, Cronin J at paras 62-74 was satisfied that the agreement was one made under a preserved law of an earlier participating jurisdiction (Victoria) and, as such, the agreement was one to which Item 88 of the transitional provisions of the Family Law Amendment (De Facto Financial Matters and Other Measures) Act 2008 applied.

On the question whether a particular item of property (a hyperbaric chamber owned by a company of which a party was the shareholder) was covered by the agreement, Cronin J found that it was, referring at para 77 to his earlier finding that the parties’ property including their “interests in various corporate entities [had been] sufficiently clearly defined in the agreement”.