Property – Contributions assessment of 65 per cent in favour of the wife contained error, where although the husband had exited the parties’ business, trailing commissions remained a joint contribution

In Candle & Falkner [2021] FedCFamC1A 102 (23 December 2021), the Full Court (McClelland DCJ, Berman & Harper JJ) heard an appeal from a decision of Foster J in a case involving a 13 year marriage where the parties established and operated a residential home lending business (C Pty Ltd). After litigation, in 2010 the husband received a payout from a third party on the condition that he resign as director, after which the wife was sole director and conducted operations of the company.

It was “common ground that the average life of a trailing commission was five to six years after secured home loans were entered into and drawn down” ([7]).

At first instance, the Court assessed the wife’s contributions at 65 per cent, finding that from 2010 onwards, the wife had “overwhelmingly contributed to the evolution of the current asset pool through her ongoing management of C Pty Ltd” ([38]). The husband appealed.

The Full Court said (from [82]):

“We are … persuaded that the primary judge failed to take account of relevant contributions of the husband.

[83] It was common ground that C Pty Ltd was a joint enterprise of the parties from inception until March 2010, when the husband ceased to be a director. The husband’s first point was that the business of C Pty Ltd produced an income stream for the benefit of the parties from trailing commissions, which continued for an average of five to six years. It followed that some trailing commissions continued past 2010, and thus some of the income produced by C Pty Ltd post-2010 must be seen as the result of the parties’ joint efforts in the business before 2010 …

( … )

[88] In considering these arguments, and in particular the reasons … it is important to remember that it was undisputed that C Pty Ltd provided initial capital of $70,000 in 2010, and continued to provide funds for operational expenses and purchases, staff pay and management fees. …

( … )

[90] The husband argued that the ultimate result of 65 per cent to the wife could only be justified by ignoring the husband’s contributions to the business of C Pty Ltd … after December 2010. … [T]he husband really argued that his Honour … must be taken in truth to have ignored them or given them no weight.

( … )

[92] … [H]is Honour assessed contributions by reference to his detailed findings about the course of contributions … The problem is that nowhere in those paragraphs is there any mention of specific contributions by the husband to C Pty Ltd … after 2010. Consequently, we are unable to conclude his Honour took those contributions into account, despite, or even because of, the reference to [the husband’s] ‘minimal contributions’ in … the reasons. …

[93] Once it is accepted that the primary judge failed to take account of contributions by the husband to C Pty Ltd … even if more modest than those of the wife, the percentage assessment of 65 per cent in favour of the wife is unsafe and cannot stand.

[94] … As a result, the appeal must be allowed.”

Children – Hague Child Abduction Convention – Order for production of solicitor’s file set aside, given its irrelevance to child’s habitual residence

In Sterling [2022] FedCFamC1A 3 (27 January 2022), the Full Court (Austin, Berman & Harper JJ) heard an appeal from a decision of Williams J, where a mother had travelled to Germany with the parties’ 2 year old daughter for a holiday, but then communicated to the father that she would not return to Australia and unsuccessfully sought parenting orders in a German Court.

The German Court applied the Hague Convention on the Civil Aspects of International Child Abduction (“the Hague Convention”) and found that the daughter was habitually resident in Australia and that Australian courts had exclusive jurisdiction. The father then successfully applied for orders for the return of the child, for which the father engaged a German lawyer.

Immediately before the child’s return, the father issued parenting proceedings in Australia, where the Court scheduled a discrete hearing as to whether the Court had jurisdiction pursuant to s 111CD of the Act.

In those proceedings, the mother contended that the father had waived privilege to his German solicitors’ file, whereas Williams J ordered that it be produced. The father appealed, to which the Full Court said (from [23]):

“The application of ss 111CD(1)(a), 111CD(1)(b) or 111CD(1)(f) depends upon whether or not the child is habitually resident in either Australia or Germany, as the parties accept it could not be anywhere else.

( … )

[25] Given the singular contentious issue affecting the exercise of Australian jurisdiction was the identification of the child’s place of habitual residence, it begged the question of how the file of the father’s German lawyer could be relevant – it not being in doubt that the determination of the child’s place of habitual residence is an entirely factual question (LK v Director-General, Department of Community Services [2009] HCA 9 (“LK”)).

[26] The mother submitted … that the file was likely to be relevant to, and probative of, the father’s acquiescence to the German jurisdiction …

[27] … [I]t does not matter whether the father acquiesced to German jurisdiction. It had no bearing upon the application of s 111CD of the Act …

( … )

[31] … [T]he mother’s application for access to the file of the father’s German lawyer was entirely misconceived, unless made upon the premise that the content of the file was likely to be relevant to, and probative of, the solitary dispute over the place of the child’s habitual residence, which premise was neither asserted nor established.

[32] As an entirely factual question, the determination of the child’s place of habitual residence could not conceivably be materially influenced by any communication between the father and his German lawyer concerning the prior German proceedings. No opinion expressed by the German lawyer, nor any belief held and expressed by the father when instructing the lawyer, could be construed as admissions to help prove where the child habitually resided, since their opinions and beliefs could be completely misguided.

[33] At the outer-most limits of possibility, the father’s German lawyer might have recorded an instruction given by the father that he intended the child should instead live with the mother in Germany, which record would then be relevant because the father’s intentions for the child are liable to influence the determination of the child’s place of habitual residence (LK at 592–596 and 601). However, it is highly unlikely the father would have made any such admission, as it would be repugnant to the object of the proceedings he instigated in Germany for the child’s enforced return to Australia and also the proceedings he then started in Australia to restrain the child’s removal back to Germany. In any event, it was neither argued at first-instance or in the appeal that the German lawyer’s file was liable to reveal some admission or instruction which would bear specifically upon the factual question of the child’s place of habitual residence.

[34] Regardless of whether the father waived his legal professional privilege by his conduct, which is another issue by which the parties were distracted, there was no need to compel his surrender of the confidentiality he reposed in the lawyer/client communications.”

The appeal was allowed and the order for production of the father’s solicitors’ file was set aside.

Property – De facto relationship existed despite both parties’ infidelities and de facto husband’s FIFO work

In Bahan & Pinder [2021] FedCFamC2F 347 (11 November 2021) Judge Taglieri considered whether a de facto relationship existed at a threshold hearing. The applicant contended that she and the respondent lived together in Tasmania as a de facto couple from March 2012 to June 2019, while the respondent contended that the relationship was a casual boyfriend/girlfriend, save for a few months.

The applicant was a 31 year old administration assistant, while the respondent was a 29 year old tradesman, his FIFO work being such that he would spend 28 days interstate and then 7 days back in Tasmania ([16]).

The applicant said that the parties did not separate in 2014 when she “had a sexual encounter with Mr D” ([27]) but did separate for a few months in 2016 when she “discovered that the respondent was secretly seeing and having sex with her best friend” ([21]).

The applicant’s evidence included that the respondent’s real property was transferred from her father, who assisted financially with the purchase, and the contention that it would have been transferred to both of them if the respondent had not convinced her that she would be able to “seek a government grant for a future purchase of property” ([19]).

The applicant also said the parties maintained separate bank accounts, but shared joint expenses, albeit unequally where the respondent earned a higher income ([24]).

After citing Jonah & White [2011] FamCA 221 and Crowley & Pappas [2013] FamCA 783, the Court said (from [13]):

“Whether a de facto relationship existed and, if so, when it commenced and ended is a matter for determination on the facts, although the perceptions of the parties may be relevant to this … The fact finding required is somewhat complicated when the parties have different perceptions and their perceptions may be motivated by a desire to achieve particular outcomes.

( … )

[18] The applicant says that throughout the relationship right up until 2019, the parties had a sexual relationship, sharing a bedroom for the entire time, even when their relationship was tested due to infidelity. …

( … )

[28] It is clear from evidence before the Court that the sexual encounter between the applicant and Mr D was a source of the grievance for the respondent. There was evidence that in 2015 the respondent wounded Mr D, faced criminal charges concerning that offence, and both parties sought restraint orders against Mr D.

( … )

[31] The text messages [in evidence] … relate to the period 7 August 2018 to 14 June 2019 when the respondent was doing FIFO work. They can only be described as prolific and very frequent communications between the parties, relating to normal issues arising in day-to-day life when persons share a joint domestic life as a couple. For example: referring to break down or malfunction of equipment on the property, feeding/caring for animals, what the parties would be doing during the day, the applicant’s health and treatments and paying for this, the respondent’s work and what he was doing, flight times and arranging his collection from the airport. The messages also included some expressions of love.

( … )

[37] During cross examination, the applicant agreed that she had access to the respondent’s credit card up until 2016, but not after that time. When it was put to the applicant that the parties had not had much of a shared life after 2016, with the respondent away a lot and each having sexual relations with others, the applicant maintained that she only learnt about the respondent’s other affairs later and that she had only slept with one person after they reconciled in 2016, being Mr H.

( … )

[54] Under cross-examination, the respondent stated that the conversation that they were not reconciling occurred on each occasion they had sex after October 2016. His evidence was that they remained single and were both free to pursue other relationships.

( … )

[59] Several documents from the criminal proceedings during 2015 which contain references to the applicant as the respondent’s partner … were put to the respondent in cross-examination. The respondent stated that the documents were not written by him, and that he had identified the applicant to the authors as his girlfriend. …

[60] The respondent was also taken to the Statutory Declaration … in support of the application for Restraint Order against Mr D … in which the applicant is referred to by him as his ‘partner’. His evidence was that the parties discussed seeking restraint orders and that he paid the lawyer who drafted the documents. From this it can be inferred that the respondent gave instructions as to the content of the documents and approved of them.

( … )

[70] Counsel for the applicant questioned the respondent about his messages with Mr H during May 2017 … It was put to him that they were having a conversation about the applicant cheating on the respondent with Mr H and there could only be ‘cheating’ if the applicant and the respondent were in a relationship. The respondent denied this.

( … )

[77] Ultimately, based on my assessment of the parties’ evidence, I have no hesitation in concluding that where the evidence of the applicant and respondent conflicts, I ought to prefer the evidence of the applicant. In arriving at this conclusion, I have carefully considered the often cited statements at [165] to [167] in Carlson & Fluvium [2012] FamCA 32.

[78] In addition, there are a number of documents before the Court in which respondent uses or adopts the description of the applicant as his partner. I believe as contemporaneous records of occurrences in time, they reflect what is on the evidence a relationship as a couple on a bone fide domestic basis and not that they were in a casual boyfriend/girlfriend relationship.

[79] The respondent’s evidence that he regarded the parties to be in a casual boyfriend/girlfriend relationship is a subjective perception and I give it very little weight as the objective hallmark features of a de facto relationship are established on the evidence.

[80] Preferring the reliability of the applicant’s evidence where it conflicts with that of the respondent, I make the following findings of fact concerning the section 4AA(2) considerations:

(a) The parties were in a relationship and shared all facets of day to day life together … from late 2014 to June 2019, although this period was briefly interrupted by very short periods of separation on two occasions and then reconciliations;

(b) During the period referred to above at (a), the parties resided commonly at the … property, which was owned by the applicant’s father initially but then purchased by the respondent in 2016 in his name for the parties’ joint use as a home. When the respondent was absent doing FIFO work, he still maintained it as his home with the applicant and she undertook chores and housework for his benefit;

(c) The parties had a sexual relationship throughout the period 2014 to 2019, although it was not a continuously exclusive sexual relationship, as each of them had sexual encounters with others;

(d) The parties earned income and provided financially for themselves to a degree, but the respondent provided financial support to the applicant who was financially dependent on him;

(e) During the period referred to above at (a), the parties expressed love for each other at various times throughout as would be commonly expected of a couple in a committed relationship as a couple;

(f) The parties each referred to the other as their ‘partner’; and

(g) They socialised as a couple and were regarded as such by the witnesses called by the applicant. It is notable that the respondent did not call friends or associates to rebut this evidence. …

( … )

[82] Although the parties had tumultuous periods involving infidelity and short separations, they persisted together as a couple and cohabited on a bona fide domestic basis at the B Street, Town C property. This persistence in the face of infidelities that each felt and expressed, demonstrated a mutual commitment to a shared life. …”

The Court declared that a relationship existed between 2014 and 2019 and for a period of at least 4 years and 6 months.

Other routine procedures – Mother’s delay in raising recusal application waived her right to argue disqualification of judge for apprehended bias

In Markwell & Solberg [2021] FedCFamC1A 80 (9 December 2021) Aldridge J, sitting in the appellate jurisdiction of the Federal Circuit and Family Court of Australia, heard a mother’s appeal from Judge Hughes’ refusal to recuse herself, where the mother alleged apprehended bias.

After the trial of the mother’s application to relocate with her children of two separate relationships (each father being separate respondents), but prior to judgment being delivered, the mother filed three applications in a case, which included a recusal application and property orders.

Judgment was delivered on 30 June 2020, which included findings against the credibility of the mother. The applications in a case were listed on 20 July 2020, where the mother withdrew her application for recusal, but then appealed contending error by the judge by proceeding to deliver judgment without first considering the application for recusal.

Multiple applications were filed and considered by the Court afterwards.

The Court said (from [31]):

“It is well-established that a litigant may lose, or ‘waive’, the right to raise the issue of disqualification by failing to do so within a reasonable time of any application arising. …

[32] However, the principle is not inflexible in operation …

[33] In her amended application … the mother relied upon comments [of the judge] in the reasons for judgment of 30 June 2020 [as to the mother’s credibility] and comments made on 20 July, 3 August and 7 August 2020. On 20 July 2020 the mother consented to the primary judge determining further interim applications …

( … )

[36] … There is therefore much to be said for the proposition that the mother had waived her claim of recusal by failing to bring an application within a reasonable time …

[37] In her Notice of Appeal the mother also refers to comments made in the course of the hearing on 11 March 2021. The mother made no complaint based on them at the time. …

( … )

[42] … [T]he matters relied on by the mother could and should have been raised earlier. The primary judge found that by her delay the mother had waived her right to object … In my opinion, she was correct to do so.

[43] The test for apprehended bias is that a judge is disqualified ‘if a fair-minded lay observer might reasonably apprehend that the judge might not bring an impartial mind to the resolution of the question the judge is required to decide’ (Ebner v Official Trustee in Bankruptcy [2000] HCA 63 … (‘Ebner’) at [6]).

( … )

[45] The identification of what might be said to give rise to the apprehension of bias is easy in this matter. As the primary judge herself recognised … the earlier adverse comments as to the creditworthiness of the mother’s evidence, were something that could give rise to an appearance of bias. That is the first step.

[46] Before turning to the second step, it is essential to identify the question that the primary judge was required to decide. …

( … )

[49] The mother did not explain to the primary judge, or to me, how the mother’s creditworthiness bore on issues of whether [the] Orders … should be discharged. The mother submitted that the primary judge ‘has a fixed mindset that the [mother] is “not credible” in every instance as there is no jurisdictional fact to sustain the validity of the order’ …

( … )

[51] It is not at all apparent to me how the mother’s creditworthiness bore on [the controversial orders] … As the mother has not explained the link and as none is apparent to me, the grounds of appeal relating to the recusal must fail.”

The appeal was dismissed.

Children – Treating unified parents’ joint opposition to grandmother spending time with the children as an incident of their parental responsibility such as to prevent judicial scrutiny in error

In Bonner & Chandler [2021] FedCFamC1A 81 (8 December 2021) Austin J, sitting in the appellate jurisdiction of the Federal Circuit and Family Court of Australia, heard an appeal from a decision of the Magistrates Court of Western Australia, which dismissed a maternal grandmother’s interim application for time with her four grandchildren and for the appointment of a single expert family report writer.

The parents (whose marriage was intact) jointly sought the dismissal of the grandmother’s application. They had prevented the grandmother’s time with the children since February 2018, due to animosity between the mother and grandmother regarding intra-family litigation in the State Administrative Tribunal.

Dismissing the grandmother’s interim application but otherwise making directions for trial, the Court at first instance made findings that “the respondents have made a parental decision… [s]uch decision falls under the umbrella of parental responsibility”; that “[where] the parents [are] in an intact family making a parental decision which they have the authority of law to make… this Court should be cautious in peering over the shoulder of functional parents…”; and that “[t]he children’s parents have made a parental decision that is theirs to make” and that another order would “usurp the role of functional parents” ([20]).

After dismissing the appeal as to the family report on the basis that the Court’s decision to reject that application “was merely an order in the nature of a procedural ruling within the substantive proceedings” ([17]), Austin J said (from [22]):

“The magistrate’s reliance upon the cited portion of Church [ed. full citation: Church & Overton and Anor [2008] FamCA 965] was indeed misplaced because that part of Benjamin J’s judgment was later expressly disavowed by the Full Court in Valentine & Lacerra & Anor [2013] FamCAFC 53 at [42]–[43].

[23] The Full Court has repeatedly affirmed that, in child-related proceedings, the parents of the subject children do not enjoy superiority over any other person who is keenly interested in the children’s welfare, though the status of parenthood does require careful consideration in the application of s 60CC of the Act because some factors pertain only to parents (Maldera v Orbel  [2014] FamCAFC 135 at [79]–[81]; Valentine & Lacerra at [42]–[43]; Aldridge & Keaton [2009] FamCAFC 229 at [42]–[61], [75]–[81] and [83]).

( … )

[25] In this instance, the magistrate’s reasons reveal the appellant’s application was dismissed essentially because the respondents jointly opposed the children spending any time with the appellant. The magistrate considered the respondents were entitled to make that decision as an incident of their parental responsibility for the children and strongly implied the legitimacy of their decision need not be scrutinised, much less countermanded. Deciding the dispute in that way improperly elevated the importance of the respondents’ parental authority over, and their responsibility for, the children in a way which was inconsistent with the law, as explained by the Full Court in Maldera v Orbel, Valentine & Lacerra, and Aldridge & Keaton. The appellant undoubtedly had standing under the Act to bring the proceedings (ss 65C(ba) and 69C(2)(c)) and so her application ought have been considered on merit; not dismissed just because the respondents opposed it.

[26] … [T]he magistrate observed the children seemed not to have ‘affectionate and loving’ relationships with the appellant, which seemed ‘strained and underdeveloped’, which had relevance to the application of s 60CC(3)(b)(ii) of the Act, but there is no doubting the primacy ascribed to the controlling power supposedly wielded by the respondents simply on account of their parenthood.

[27] It seems apparent from the evidence before the magistrate that other factors affecting the children’s best interests were pertinent and ought to have been considered. For example: the parties’ attitudes and their relative capacities to adequately provide for the children’s emotional needs in the midst of their personal conflict (ss 60CC(3)(f) and 60CC(3)(i)); the children are each happy, healthy and making sound academic progress in the respondents’ care despite the appellant’s limited involvement in their lives (s 60CC(3)(m)); and whether the appellant’s forced re-introduction to and continuing engagement with the children is liable to have any deleterious emotional affect upon them (s 60CC(3)(d)).

[28] It could be that, even if the Act is applied correctly, the same result would ensue, but it cannot be said with certainty that the magistrate’s error of law had no influence upon the result. Accordingly, the error cannot be disregarded and so Ground 1 must succeed.”

The appeal was allowed in part and dismissal orders set aside.

Property – No error in equal contributions weighting together with s 75(2) adjustment of 5 per cent to reflect husband’s post-separation access of superannuation

In Basara & Wasen [2021] FedCFamC1A 83 (14 December 2021) Tree, Rees and Riethmuller JJ, heard an appeal from a decision of Judge Kemp where after a 38 year marriage and a relationship that produced three adult children, contributions to a $2,157,853 net asset pool were assessed as equal, with a 5% adjustment to the wife for s 75(2) factors.

The adjustment reflected the parties’ post-separation dealings, where the wife withdrew $234,200 from the parties’ home loan and deposited that sum into a term deposit, such that the husband paid additional interest on the loan; and the husband had separately dealt with his superannuation such that his super balance had reduced from $872,397 to $106,327.

The husband appealed both as to the contribution assessment and the adjustment. The Full Court said (from [13]):

“ … [T]he husband argued that the extent to which his direct financial contributions exceeded those of the wife, was greater than the extent to which the wife’s non-financial contributions exceeded those of the husband, and that the primary judge had failed to make findings quantifying this difference. To analyse contributions in such a manner would depart from the required holistic approach (Jabour & Jabour [2019] FamCAFC 78 …) and effectively result in a ‘taking of accounts’ of all of the things that each party did in a long marriage, many of which cannot easily be compared. The approach proposed by the husband would also risk greater weight being given to his direct financial contributions without appropriate account being taken of the importance of the wife’s indirect contributions in supporting the husband and family whilst he obtained his qualifications and pursued his career. It would also fail to account for the inevitable impact of the wife’s role as primary carer of the children and homemaker on the wife’s earning capacity, over 38 years of marriage.

[14] Correctly, the primary judge considered the contributions of the parties holistically, rather than attempting to assign values to different forms of contributions under ss 79(4)(b) and (c) of the Act so as to directly compare them in monetary values to contributions under s 79(4)(a). …

( … )

[17] … [T]he husband points to the fact that the children had left home long before the separation of the parties, in order to argue that the wife’s s 79(4)(c) contributions would have been minimal in that period. However, this would inappropriately restrict the considerations under s 79(4)(c) to that of child rearing and ignore the valuable contributions to family that are made even after children are living independently. More, it continues to ignore the contribution which the wife made during the marriage to the husband’s superior earning capacity. It was only after considering the very wide range of facts and circumstances in this case that his Honour concluded that ‘[w]eighing all of the factors relating to contributions, both financial and non-financial, the Court assesses the parties’ contribution entitlement as being, in the overall circumstances, equal’ …

( … )

[20] … The finding, that overall the parties’ contributions were equal, was well open to the primary judge.

( … )

[27] [As to the s 75(2) adjustment] … the husband also argued that it was incumbent upon the primary judge to identify which ‘parts of the husband’s withdrawals [of superannuation] should attract an adjustment’. The precise details of the use of the funds was uniquely within the husband’s knowledge, but not addressed in detail in his evidence. Nor was any evidence given as to the amount of any loss of return on investment of the funds over the period from when the husband dealt with them (save for the reduction in superannuation value due to the COVID-19 economic downturn). …

[28] In making these submissions the husband attempts to place the burden upon the primary judge to provide an explanation for the husband’s use of funds, when he had not given the evidence necessary to support such detailed findings. The wife had established that funds were used by the husband and that he had (throughout the marriage and following separation) utilised more funds than was explained by the assets included in the pool at trial. The husband had not established where all of the funds were applied.

[29] Hence in the circumstances of the present proceedings, it is not open to the husband to complain that the primary judge’s approach to this factor was at a greater level of generality than may have been the case had the husband provided the evidence necessary for detailed findings tracing the use he had made of the various funds. The primary judge’s findings, to the effect that significant drawings from the husband’s superannuation account were not adequately explained, were well open to him on the evidence, and hence formed a proper basis for making an adjustment in favour of the wife.”

The husband’s appeal was dismissed with costs.

Children – Section 68B injunctions that restrained father from contacting mother and children were within power – Machinery personal protection order that mimicked state order set aside

In Hedlund [2021] FedCFamC1A 84 (15 December 2021) the Full Court (Aldridge, Austin & Gill JJ) heard an appeal from orders of Judge B Smith in respect of children of 10 (“X”) and 8 (“Y”) who both suffered from autism, where X also had an intellectual disability, behavioural and developmental problems.

At first instance, the mother was granted sole parental responsibility and the father was to have no time with the children, where the Court found the father responsible for encouraging X to engage in behaviour that included assault of the mother and the child absconding multiple times.

The Court also made injunctions under s 68B that prevented the father from contacting the mother and children, but separately set out a further suite of orders described as a “Personal Protection Order”. That Order mimicked a state family violence order. It described itself as an indefinite final order and contended that any breach of its terms would amount to an offence, enforceable by either State or Federal Police (“PPO”).

The father appealed, contending both the s 68B injunctions and the PPO were made without power, particularly where the orders contained no time limit such that they would continue when the children were adults.

The Full Court said (from [96]):

“The PPO has difficulties which require it being set aside regardless of the view taken of the injunctive relief …

( … )

[99] … [T]he PPO does not reflect the various injunctions imposed … as it incorporates additional restraints upon the father. For example, the terms of the injunctions are directed to contacting or approaching the mother or children, whilst the PPO, apparently reflective of State orders, additionally deals with destruction of property, and assaults. It asserts that breach of the orders referred to in it, even those that go beyond the injunctions that were actually made by the trial judge, is a criminal offence.

( … )

[102] It is unclear what the PPO is meant to be. The PPO is expressed to be an order of the Court. It is expressed in a manner designed for it to be relied upon and enforced as an order of the Court by a relevant police force. It seems quite possible that his Honour considered that the parties or, possibly, the police might be assisted by a document that seems, on its face, to be a State protection or non-intervention order but that is no warrant for producing a document that confusing, mimics a State order when the Court is exercising federal jurisdiction and is frankly misleading. It is a course that should not be followed.

[103] The terms of the injunction are properly recorded in the orders themselves and require no repetition in a further document, or further set of orders.

[104] At face value the PPO is intended to be an operative and binding declaration of the rights between the parties. As such it fits within the notion of ‘judgment’ at s 26 of the FCFCOA Act. It is amenable to correction.

[105] The PPO fails to do what it is asserted to do in the notation, being to reflect the injunction contained in the body of the orders. Insofar as it was intended as some sort of machinery order designed to support the injunctions … it does not, and as accepted by all of the parties it should be set aside.”

Considering the injunctions, the Full Court said (from [106]):

“ … [The father argues that] … the injunctions are beyond power as they extend beyond the children becoming adults, that they are manifestly unreasonable to so exclude the father, and that they are manifestly unreasonable because they contain no inbuilt discharge mechanism.

( … )

[108] That contention fails where … the orders mandate no time for the children with the father, premised upon the finding of unacceptable risk occasioned by contact with the father. Those orders already exclude the father from coming into contact with the children. … [T]he injunctions are reasonably in aid of protection of the children and support of the orders. It cannot be said that they are not appropriate for the welfare of the children and they cannot readily be described as manifestly unreasonable or unjust, unless the underlying orders are likewise manifestly unreasonable or unjust.

[109] To the extent that the complaint was reliant on the idea that there is not an inbuilt mechanism for amendment of the injunction, the mere lack of such a mechanism does not necessarily lead to manifest unreasonableness. …

[110] It should also be observed that should there be a change of circumstances sufficient to allow the revisiting of the orders, and should those circumstances justify a change in the no time position, then they will also justify a change in the injunctions. The capacity to make further applications pursuant to the principles contained in Rice and Asplund [1978] FamCAFC 128 in respect of the parenting arrangements means that there is an appropriate mechanism for the amendment of the injunctions in the event that the circumstances warrant it, whether or not such a mechanism is built into the orders.

( … )

[120] Although the injunctions are not expressed as specifically ending on the children each attaining their adulthood, there is good reason to consider that such an effect should be necessarily implied in construing the orders.

( … )

[123] The s 68B orders are here made in respect of the children the subject of the parenting orders and, consequentially their mother. They are made in aid of the orders that provide for no contact with the father. The parenting orders that the injunctions are in aid of will cease to operate on the children becoming adult, pursuant to s 65H of the Act. The necessary implication is that the s 68B orders, made for the welfare of the children, and made in aid of the parenting orders, also lapse in the same manner.”

The Full Court found that the injunctions were not beyond power, set aside the PPO and otherwise dismissed the appeal.

Property – Full Court holds that non-commutable disability income insurance payment is not “property” but a financial resource – Watts J in dissent

In Tomaras & Tomaras [2021] FedCFamC1A 82 (13 December 2021) the Full Court (Ainslie-Wallace, Aldridge & Watts JJ) heard an appeal from Judge Purdon-Sully’s decision in Tomaras & Tomaras & Anor (No. 2) [2019] FCCA 2830 (a summary of which is at our archived case notes – property under “property or financial resource”).

At first instance, the Court dismissed the wife’s application for a property adjustment where there was no property other than the husband’s total and permanent disability insurance policy (“TPD policy”), which the Court held was not property, where the husband’s monthly payment under the policy was contingent upon his establishing an entitlement to payment each month.

The policy entitled the husband to $150,000 per year (adjusted for CPI) in respect of a wrist injury.

It was common ground that the premiums were paid from monies earned during the marriage.

Considering whether the TPD policy was property or a financial resource, Ainslie-Wallace & Aldridge JJ cited Crapp [1979] FamCA 17, Mullane v Mullane [1983] HCA 4, Marchant [2012] FamCAFC 181 and Pates [2018] FamCAFC 171 and said (from [80]):

“ … [T]he capitalised value of the pension is not property capable of division because no such property exists in that sum … The pension can only be regarded as a financial resource or income. … [T]here is no more than a right to receive the next payment provided the relevant disability continues, but that may be no more than to have a right to ensure that the insurer will act within the terms of the relevant policy, so as to make that payment in the absence of a determination that the insured no longer meets the relevant criteria for continued payment.

( … )

[82] A particular difficulty arises in this case because there was no other property to be divided. If there was such property, then of course, the expected receipt of the payments could properly be taken into account as a financial resource in any property division under s 79 of the Act so as to allow the other party to receive more of that other property.

[83] The appellant submitted that as the TPD policy could be commuted and the respondent’s entitlements assigned, this case could be distinguished from those just discussed.

[84] The first is clearly correct, but such a course would require the respondent and the insurer to agree. The respondent’s position was that he would never agree. The evidence indicated that the insurer was amenable to such a course, but no doubt, it would only agree if it saw a commercial benefit in doing so. However, as the respondent’s position was that he would never agree to such a course, there is no possibility of commutation.

( … )

[87] … [T]he insurer is permitted to alter the benefits provided for in the contract of insurance, and the TPD policy is not a continuous disability policy for the purposes of the Life Insurance Act and is not assignable under it.

( … )

[91] Although we accept that there may be rights of assignment of the insurance payments when they are received, it does not persuade us that we should depart from the above authorities which have consistently said that continuous payments are income.

[92] The word ‘interest’ like the word ‘property’ is a word of many potential meanings and the word must take its meaning from the specific context in which it is used (Commissioner of Stamp Duties (Qld) v Livingston [1964] HCA 54 at 712-713; Re Hemming (dec’d); Raymond Saul & Co (a firm) v Holden [2009] Ch 313 at [55]).

[93] Therefore, we think that the husband’s insurance payments, when considered in light of the meaning of ‘property’ under the Act, should best be categorised as income.”

Watts J in dissent said (from [162]):

“ … The distinction between the husband’s rights as the owner of the Policy and the amounts paid from time to time under the Policy, which is a product of those rights, is key in the determination of this appeal.

( … )

[179] … [There is] a clear distinction between property which potentially produces an income stream on the one hand and the income stream on the other. That point is nicely illustrated by the well-known metaphor of the ‘tree’ and the ‘fruit’ used by Kitto J in Shepherd v Commissioner of Taxation (Cth) (“Shepherd”) [ed. full citation: Shepherd v Commissioner of Taxation (Cth) [1965] HCA 70 ] …

[180] The restrictive approach in Crapp was to treat ‘a tree’ which may or may not produce future fruit not as ‘property’, but as a ‘financial resource’.

( … )

[187] Whilst Marchant accurately describes the development of the jurisprudence after Crapp, it is difficult to see how this approach survives the reminder by the High Court in Stanford, namely, that the consideration of s 79(1)(a) begins by identifying … the existing legal and equitable interests of the parties in property. Which are then to be decided according to the same scheme of legal titles and equitable principles which govern the rights of any two persons who are not spouses.

( … )

[200] It can be readily accepted that an earning capacity from personal exertion is properly to be called a right to income not to property. But many types of property produce income and are valued on the basis of that income (for example: commercial and industrial real estate; and the value of a business based upon the capitalisation of net maintainable earnings).

[201] It is axiomatic that income which is not yet in existence (future ‘fruit’) cannot be existing property. However, a proprietary right which shall provide that produce (the ‘tree’) is existing property.

[202] Likewise, there are ample examples which satisfy the definition of ‘financial resources’ which are not property of both or one of the parties. Most commonly this is property genuinely held by a third party which provides a source of financial support for one of the parties.

[203] A mere expectancy or the possibility of becoming entitled in the future to a proprietary right is not an existing chose in action. …

( … )

[223] The following syllogism applies; a chose in action is a species of personal proprietary right and is property both at common law and in equity … A legal right to be paid money in the future and a right to sue for a sum of money is a chose in action … It follows that rights to sue for a sum of money under a contract are property at both common law and in equity.

( … )

[226] In Pope & Pope [ed. full citation: Pope [2012] FamCA 204] … Ryan J found that the husband’s contractual right to receive future royalty streams was property and not just a financial resource, notwithstanding the contingent nature of that future income. In Donovan v Department of Family and Community Services [ed. full citation: Donovan v Department of Family and Community Services [2003] FCA 438] … Finn J observed ‘the proprietary character of life insurance policies is, in my view, not open to doubt’.

( … )

[270] The primary judge should have found the Policy was property within the meaning of s 4(1) of the Act because the husband had a chose in action, being a right under a contract, which gave him particular entitlements if certain contingencies were met.”

The majority dismissed the appeal with no order as to costs.

Spousal maintenance – Consent order (made as part of property orders) that husband pay wife’s mortgage could only be a maintenance order, such that it ceased to have effect upon her remarriage pursuant to s 82(4) of the Family Law Act

In Thorpe & Stirling [2021] FedCFamC1A 86 (15 December 2021) the Full Court (Aldridge, McEvoy & Altobelli JJ) heard an appeal from a decision of Judge Kemp where a final consent order required the wife to sell a property and provided that she receive $430,000 of the sale proceeds on the basis that the husband would be guarantor and pay mortgage payments on a future loan of up to $500,000, when the wife next purchased real estate.

The order provided that the husband would continue to pay the mortgage until its loan balance was discharged, however, the husband refused to pay after the wife re-married, contending that the order was a spousal maintenance order that had no effect upon re-marriage per s 82(4) of the Act.

The wife contended that the order was a property settlement order and sought enforcement.

At first instance, the Court rejected the husband’s contentions as to spousal maintenance and made a suite of enforcement orders. The husband appealed.

Considering the wording of the order (referred to as “Order 36”), the Full Court said (from [19]):

“ … [The order] … is said to stay in place regardless of any change in the needs of the wife or the wife’s and the husband’s capacity to earn income. That, to some extent, suggests that the order may not have been made pursuant to the power granted for orders for spousal maintenance.

[20] It can also be seen that the husband’s liability under the mortgage remains until it is paid out. … [T]hat liability could well exceed what the husband otherwise received under the consent orders, essentially resulting in him paying more to the wife than he received under the remaining orders.

( … )

[24] In Mullane v Mullane [1983] HCA 4; (‘Mullane’) at 445 the High Court said:

‘In our opinion … s. 79 on its proper construction refers only to orders which work an alteration of the legal or equitable interests in the property of the parties or either of them.’

[25] For Order 36 to be an order under s 79 of the Act, it therefore requires the order work such an alteration.

[26] It is plain that property, as defined, is limited to existing property, whatever it may be (Stanford v Stanford [2012] HCA 52; … at [37]), and does not extend to property that might be received in the future even where that interest could be described as a financial resource. Thus, whilst financial resources which might be available to a person, but which do not constitute property or future income, cannot be the subject of division under s 79 of the Act they may be taken into account when determining what division of the property is appropriate. Further, the section does not empower the Court to make an order against property which does not presently exist but could be brought into existence by the exercise of borrowing capacity …

( … )

[28] … [T]he point to be drawn … is that such orders, whatever they may be, are based on a division of the existing capital interests.

( … )

[33] The extent of the husband’s obligation under Order 36 was not and could not have been known at the time the orders were made. In that circumstance, it is difficult to see how the Court could come to a view that the orders were just and equitable because the final distribution of property was unknown, if the mortgage payments were indeed part of that consideration.

( … )

[35] … Order 36 had the effect of creating a liability of a greater value than the existing property which is a course that cannot be followed under s 79 …

[36] … [H]is Honour found … the husband’s obligations under Order 36 ‘were likely to be paid out of the husband’s future income stream including his receipt of any anticipated bonus payments’. Each of those was a financial resource. Each could be taken into account to justify the wife receiving a greater share of the existing … but not … to enlarge the pool of property available for division. The continuing obligation to pay the mortgage (and to act as guarantor) is so akin to him being required to borrow funds to enlarge the property pool as to attract the same principle.

[37] Order 36 does not work an alteration of the interests of the parties in their property but rather creates an obligation which is separate to the division of that property.

[38] We consider, therefore, that Order 36 could not be an order made under s 79 of the Act because that section does not empower the making of such an order. On the binary choice put to the Court, the only remaining possibility is that it is a maintenance order …

( … )

[45] … Order 36 can be seen as being made as a spousal maintenance order. It is an order for the payment of money for the support of the wife. Whether that power was correctly used to make the order is not a question raised by this appeal.

( … )

[56] … [W]e are satisfied that his Honour erred in characterising Order 36 as a property settlement order and in making a series of enforcement orders. The appeal will be allowed and those orders set aside. The consequence is that the enforcement application must be dismissed.”

  

Restriction on publication of court proceedings – Leave granted pursuant to rule 6.04 of the Family Law Rules for husband to rely on affidavits in criminal proceedings – Publication otherwise permitted by section 121(9)(a) FLA

In Adair [2021] FedCFamC2F 333 (27 October 2021) Judge Betts heard a husband’s application that he be permitted to use family law affidavits filed by him and the wife in his criminal proceedings, in which the wife was the victim. The husband had been charged with multiple counts of assault occasioning bodily harm and intimidation.

The parties’ property proceedings was finalised by consent in August 2021. As part of those proceedings, the wife filed material making allegations of family violence perpetrated by the husband against her. The husband claimed there were inconsistencies between the wife’s evidence in the family law proceedings and her record of police interview.

The wife argued that the husband’s application was unnecessary as he could have used the filed affidavit material in his criminal proceedings as of right.

The Court said (from [8]):

“The real question in the case is whether or not the husband in fact needed to bring the application. … [T]he wife … claims that the Application is not one that was strictly required by reference to the relevant law. … [T]he debate was very much a legal one rather than a factual one.

( … )

[14] On a plain reading of section 121(9)(a), I do not consider it necessary for me to make any specific order pursuant to section 121(9)(g). In my view, the use by the husband in the Local Court of the documents he seeks permission to publish is in every respect a ‘publication’ that is authorised by section 121(9)(a).

[15] To that extent, the husband’s application under section 121 need not have been made.”

The Court continued (from [16]):

“ … [The] more difficult question, [is] whether it was necessary for the husband to seek leave to publish the documents pursuant to the Court’s rules. This arises on account of the fact that the publication of such documents in the Local Court is said to breach the implied Undertaking given by parties to the court.

[17] This implied Undertaking is referred to in the English decision of Harman v Secretary of State for the Home Department [1983] 1 AC 280, and more recently re-stated by the High Court of Australia in Hearne & Street [2008] HCA 36.

[18] The husband’s Application in a Case was filed on 1 September 2021, so it seems to me that … the application ought to be determined by reference to rule 6.04 of the Federal Circuit and Family Court of Australia Rules. …

( … )

[21] Rule 6.04 is, in effect, a restatement of the Harman, or perhaps more accurately, Hearne & Street obligation, for the purposes of proceedings in this Court.

[22] [Counsel for the wife] contends that Rule 6.04 has no application to affidavits, as distinct from documents produced under subpoena or otherwise by way of disclosure. She refers specifically to the fact that Rule 6.04 appears within Chapter 6 of the FCFCOA Rules, entitled ‘Disclosure and Subpoenas’. She also points to Chapter 8, Part 8.2 of the FCFCOA Rules which relates to ‘Evidence’ and specifically contains various provisions concerning giving of evidence by affidavit.

[23] [Counsel for the wife] draws a distinction between a ‘document’ falling within Chapter 6, and an ‘affidavit’ falling within Chapter 8, Part 8.2 of the rules.

[24] … I am unable to accept that submission. As the High Court made clear in Hearne & Street, the ordinary obligation the subject of the implied undertaking can include documents that are not only discoverable but also affidavits. Affidavits are an express category of document covered by the implied undertaking being discussed here. … I also note that a party who brings an application such as the husband’s property settlement application, is obliged to file a supporting affidavit. … [T]he Court’s process … compelled the parties to file affidavits. In that sense I consider that although the affidavits are not strictly ‘discoverable’ documents per se, that they nonetheless fall within the purview of FCFCOA Rule 6.04, particularly given the extremely broad wording of the rule.

( … )

[26] It is somewhat curious that FCFCOA Rule 6.04 appears within Chapter 6, but in my view it is a Rule that has application to affidavits; it is not limited to documents that fall within specific categories set out in Chapter 6. …

( … )

[28] Superficially there appears to be an inconsistency between the operation of s 121(9)(a) and the implied undertaking. But on further consideration, it is apparent that section 121 creates as specific statutory offence of publication, and then goes on to create specific exceptions. Section 121 sits side by side with the so-called implied undertaking, and … no real incompatibility arises.

( … )

[29] Assuming the affidavits do in fact fall within the ambit of rule 6.04 …, another question that arises is whether the implied undertaking no longer applies on the basis of what the High Court said in Esso Australia Resources Limited v Plowman [1995] HCA 19 … that the implied undertaking is subject to the qualification that once material is ‘adduced’ in evidence in court proceedings, then … the material becomes part of the public domain (thus relieving the parties from the implied undertaking).

[30] The question is whether the mere filing of the affidavit by the wife itself constitutes the admission of the document into evidence, or more precisely, it having been ‘received into evidence’ to borrow the expression of Hayne, Heydon and Crennan JJ in Hearne & Street?

( … )

[38] I have no evidence before me which would demonstrate that the [relevant affidavits] have, in fact, been adduced in evidence in the earlier property settlement proceedings. ( … )

( … )

[41] In the circumstances, I am of the view that the husband does in fact need leave pursuant to FCFCOA Rule 6.04 to release or publish the affidavits for the purposes of the Local Court proceedings, notwithstanding his entitlement to do so pursuant to section 121(9)(a) of the Family Law Act.”

The Court concluded (from [45]):

“ … The public interest in ensuring that criminal justice is administered in a way as to ensure that no innocent person is convicted … is such that disclosure is appropriate for the purposes of the Local Court proceedings. ( … )

( … )

[47] … I am of the view that the documents could be said to be reasonably required for the purpose of doing justice between the parties, there is a clear connection between the allegations made in this case and in that case, and that in all of the circumstances, the Court should exercise its discretion in favour of the husband.”