Children – Transport worker in the armed forces permitted to relocate 11 and 9 year old children to wherever he was posted within Australia

In Tassell & Bannister [2023] FedCFamC2F 688 (9 June 2023) Judge Jenkins considered competing applications regarding the parties’ 11 and 9 year old children (“X” and “Y”). The eldest child suffered from “high functioning Autism Spectrum Disorder” (“ASD”) ([9]).

The father was a transport worker in the armed forces living in “City C”, Western Australia. The mother ran a retail business in “City B”, Victoria which sold “substances of dependence” ([55]).

Before the proceedings, the parents had successfully negotiated parenting arrangements for seven and a half years ([32]). These arrangements included the children living with the mother and spending time with the father, when she had relocated “several hundred kilometres” away (before she ultimately moved back to City B). The arrangements also included the parents implementing an arrangement where the children lived with the father and spent time with the mother.

The litigation commenced after the father moved with the children to Western Australia, when the mother refused to return them to the father at the conclusion of their previously agreed maternal time. From that time until trial, the children remained living with the mother in Victoria.

After noting that equal shared parental responsibility was agreed, the Court said (from [55]):

“ … [T]he mother has historically been involved in running retail businesses which sell substances of dependence … Part of her business was selling illegal substances of dependence or “Q” which attracted a certain kind of clientele, namely drug affected customers. It is not in dispute that the children were exposed to an incident … in which the mother was approached by a drug affected customer who threatened to stab her with a knife …

( … )

[60] … [T]he father’s case is that his concerns were not so high as to say the children ought not spend three weeks with the mother at Christmas and substantial time in each of the term holidays. It appears to me the concerns go more to the issue of whether the mother is able to meet the children’s needs rather than an unacceptable risk of harm.

( … )

[66] Prior to the Trial the Independent Children’s Lawyer (“the ICL”) spoke with the children who reported wanting to stay living with the mother.

( … )

[69] … [T]he children are young and X, although high functioning and quite confident, has ASD. In addition the children are potentially caught in a loyalty bind between the parents and at the time they were spoken to by the ICL had not seen the father for about two months.

[70] Accordingly, the wishes of the children will only have limited weight in this matter.

( … )

[79] … [T]he father does not dispute that upon graduating from Armed Forces training in mid-2023 he will be reposted interstate, although the father has applied for further training which if he is accepted would see him remain in City C for a further 6 to 12 months prior to the reposting. Any reposting is likely to be for a period of 3 to 4 years …

[80] … [T]he father’s case is that the children are unlikely to be significantly affected by such moves. He argues the children have experienced a number of changes in their lives and have proven to be resilient …

( … )

[85] The flight from Melbourne to City C is approximately 4 hours plus the drive to and from the airport to City B. The travel time will be even longer if the father is reposted to City W or City Z.

[86] To his credit the father has offered to pay for the trips in each of the holidays, regardless of which orders are made. He may also be able to afford to fly to Victoria from time to time on weekends if the children reside in Victoria.

( … )

[95] [Dr E conducted a psychiatric assessment of both parties and diagnosed that] … the mother suffered from depression and many mental health conditions. …

[96] Dr E was concerned that because of the mother’s diagnosis that she would struggle to be on her own.

( … )

[119] The Armed Forces have provided the father with confirmation that X has been recognised as a ‘dependent with special needs’ and the father has provided evidence of the budget allocated for this purpose. Whilst the budget does not outline exactly what the funds are to be allocated for the mother did not dispute that X’s needs could and would be met by the armed forces. In addition, the father has identified a paediatrician, counselling services, occupational therapists and speech therapists in his area and confirmed their availability.

( … )

[141] … [B]alancing all the considerations and taking into account the advantages to the children and the disadvantages to them of the competing proposals, I am satisfied that it is in the children’s best interests to live with the father and his partner Ms H in such location as the Armed Forces may post the father from time to time provided that location is within Australia. I accept that pursuant to the Full Court in Wendland & Wendland [2017] FamCAFC 244 this will effectively be issuing the father with a ‘blank cheque’ in terms of relocation, however this will not extend to overseas. Without knowing the specific destination it is not possible to assess whether such a move would be in the children’s best interests …

[142] Whilst the move and any future moves will necessarily cause instability for the children, I accept on the evidence that the father and Ms H are better able to meet the needs of the children and provide day to day stability than the mother, including ensuring the children attend school and their allied health professionals. This will also minimise the time the children are at risk of being left unsupervised or exposed to drug affected persons at the business, although this remains a concern. In coming to this decision, I have considered the reality that the children are likely to be frequently cared for by their step-mother rather than a parent but for all of the reasons I have already mentioned, I find this to nonetheless be in the best interests of the children.”

The Court ordered that the children live with the father and that relocation be permitted to wherever the father was posted by the Armed Forces, provided that the location was in Australia.

Child support – Division 5 of Part 7 of the Child Support (Assessment) Act 1989 (Cth) empowers a non-periodic child support order that goes beyond the periodic amount – Lightfoot & Hampson [1996] FamCA 8 followed

In Yanda & Jacome [2023] FedCFamC1A 116 (18 July 2023) Riethmuller J heard a father’s appeal from a decision of Judge Taglieri that had affirmed orders made by a Judicial Registrar. The parties had two children (13 and 14 years). The father was a medical practitioner. The mother worked in administration.

The order required the father to pay private school fees of $1,044 per week, without credit of those payments against the periodic assessment of $481 per week.

The father appealed and argued that a decision of Ryan [1994] FamCA 175 should be preferred over Lightfoot & Hampson [1996] FamCA 8, the former case limiting a non-periodic order to an amount no greater than the periodic assessment ([8]). The father also said that his tax debt had not been taken into account in the Court’s assessment of his capacity to pay school fees.

Riethmuller J said (from [5]):

“The majority of the Full Court in Lightfoot & Hampson [1996] FamCA 8 (as followed in Ivanovic & Ivanovic [1996] FamCA 41) found that orders can be made for non-periodic child support even if there is no corresponding credit against the periodic rate of child support. It is not disputed that the primary judge applied the reasoning of the Full Court in Lightfoot & Hampson, as her Honour was obliged to do …

( … )

[8] The husband argues that the form of the legislative scheme requires that any change to the overall rate of child support must be undertaken through the periodic assessment process (with such departures as are appropriate pursuant to s 117 of the Act) and that any non-periodic payments must be in substitution for all or part of the periodic rate, relying upon the narrow interpretation set out in Ryan. The effect of this interpretation would be to limit a non-periodic order to an amount no greater than an amount that could be credited against the periodic rate. However, s 125 of the Act expressly provides for a discretion to determine ‘whether’ the non-periodic child support should ‘be credited against’ the periodic child support obligation. When this discretion is exercised in a way that does not result in crediting of the non-periodic support against the periodic amount, the total child support is necessarily greater than the periodic rate alone. Thus, the interpretation set out in Ryan … is inconsistent with the discretion in s 125 of the Act … and must be rejected.

[9] The husband also argues, relying upon the reasoning in Lightfoot & Hampson … that Div 5 of Pt 7 of the Act is ‘not an independent source of power to make a child support order’, and thus there is no power to make an order that is not credited against the periodic child support (effectively limiting the provisions to purely substitution orders). However, it is apparent from the wording of s 125 of the Act that Div 5 of Pt 7 of the Act does provide a power to make a non-periodic child support order that goes beyond the periodic amount, as was accepted by the Court in both Lightfoot & Hampson and Ivanovic.

[10] The statement in Lightfoot & Hampson that the provision is ‘not an independent source of power’ must be understood in the context of the facts of that case. There the trial judge had declined to increase the periodic rate of child support (pursuant to s 117 of the Act) despite the differing asset positions of the parties, but then made a lump sum order based upon that asset disparity. In Lightfoot & Hampson, the trial judge had, in substance, exercised the power to make a non-periodic child support order inconsistently with his findings with respect to the periodic rate of child support pursuant to s 117 of the Act. It is in this sense that the power to make non-periodic child support orders is not a power that can be exercised ‘independently’, that is, independently of any consideration of the periodic child support rate.

[11] Rather than being too broad, it is arguable that the decision in Lightfoot & Hampson may be too narrow … however that is not an issue that arises in this appeal.

[12] I am not persuaded that Lightfoot & Hampson should be departed from in favour of the narrow approach in Ryan. As a result, Ground 4 is without merit.”

Considering the Court’s approach to the father’s tax debt, Riethmuller J said (from [16]):

“The primary judge considered the husband’s income, finding that he had an income of around $7,000 per week, and thus a surplus of income over expenses of $1,600 … In this analysis, the primary judge did not take into account the husband’s obligation to pay the remaining taxation debt of $118,896.65 when assessing his capacity to meet the private school fees…

[17] The primary judge’s reasons do not disclose why the husband’s tax debt was not taken into account. If the tax debt is taken into account, it appears that the husband has no present capacity to meet the school fees.

[18] As a result, the husband has established that the primary judge failed to take into account a relevant consideration pursuant to s 124 of the Act.”

The appeal was allowed and the case was remitted for rehearing. Costs certificates were issued.

Financial agreements – Order for rectification set aside – No clear and convincing proof of common intention as required for rectification – Concern as to whether rectification is available at all to correct binding financial agreements

In Birdwood & Gravino [2023] FedCFamC1A 114 (14 July 2023) Aldridge J heard a wife’s appeal against orders that had rectified a post-separation financial agreement made pursuant to s 90C of the Act.

The financial agreement (“BFA”) originally provided that the wife would transfer 75 per cent of her interest in a Brisbane property (“Suburb B”) to the husband, that the wife live in the property, that the husband pay particular outgoings for the property, but that the property ultimately be sold and the sale proceeds divided equally between the parties. The agreement also contained a clause that described the parties as retaining 50 per cent of the property ([37]).

The husband was “an experienced family lawyer” ([49]). The agreement was initially prepared by a law firm that he had retained, but was thereafter amended by the husband six times. Each party obtained independent legal advice as to the agreement. After three years, the property was sold, but disagreement ensued as the husband said that the sale proceeds were to be divided 75:25 in his favour. He sought rectification of the agreement.

At first instance, the Court was not persuaded that “there was a common intention of the parties as to the fate of the proceeds of the Suburb B property” but then found that a document (referred to as “MG11”) sent by the wife to the husband 12 months after the sale contained an admission by the wife, which satisfied the Court that there was a common intention to divide the sale proceeds 75:25 in favour of the husband ([44]).

Considering rectification in the context of financial agreements, Aldridge J said (from [2]):

“… I have concerns as to whether rectification is available at all to correct binding financial agreements.

( … )

[5] It would be odd, given the words ‘if and only if’ in s 90K, that s 90KA could be read as expanding the grounds on which a financial agreement could be set aside beyond those provided for in [s 90K] … Rather … [the] task [of s 90KA] is to give flesh to [the] bones of s 90K by expanding upon, for example, the words  ‘fraud’,  ‘void’, ‘voidable or unenforceable’. It is therefore arguable that s 90KA is subservient to s 90K.

[6] In terms, s 90KA applies when there is a question as to whether a financial agreement is valid, enforceable or effective. None of those immediately encompasses rectification, unless the rectification is necessary to save such an agreement from invalidity (rectification can be available where there is a doubt that there is a contract at all (Sindel v Georgiou [1984] HCA 58). However, that rectification is a remedy the High Court might grant, and there question of whether all of the powers of the High Court in relation to contracts are picked up or only those that relate to the validity, enforcement and effect of contracts. I incline to the latter because that is what the s 90KA clearly states.

[7] Therefore, in order for rectification to be available under s 90KA, it must fall within the issue as to whether the agreement is effective or as part of the  ‘effect of contracts’. I have concerns as to whether that is so in this appeal.

( … )

[11] There is a further and, perhaps, more important difficulty which arises from s 90G of the Act. A financial agreement is only binding where each party has received the advice set out in s 90G(1)(b) and written statements to that effect are provided from each practitioner (s 90G(1)(c) and s 90G(1)(ca)).

[12] The effect of rectification is to amend the terms of a document to accord with the actual intention of the parties. Thus, rectification changes the binding financial agreement so as to accord with that intention which it has failed to record. Yet, the requisite advice and certificate was based on the original and unrectified version. There would be no advice and certificate on the binding financial agreement as rectified, which is a precondition to its enforceability.

( … )

[14] … [O]n either view, there is a difficulty as to how compliance with s 90G is achieved when a document is rectified some time later. Justice Collier noted this very difficulty in Black and Black [2008] FamCAFC 7 …

[15] Nonetheless, there is Full Court authority as to the ability of the court to rectify binding financial agreements.

[16] In Senior & Anderson [2011] FamCAFC 129 … Strickland J, with the agreement of Murphy J on this point, found that s 90K extended to include rectification … The above points were not, however, canvased.

( … )

[19] Senior was followed by a subsequent Full Court without any elaboration: Graham & Squibb [2019] FamCAFC 33 … at [63].

( … )

[21] None of the above issues was raised in this appeal so any consideration of them must await another day. It is not necessary to do so for the determination of this appeal.”

As to common intention being necessary to establish rectification, Aldridge J said (from [39]):

“ … [T]he proof of the common intention must be ‘clear and convincing’ so that the common intention of the parties is completely clear. Any ambiguity in what was intended falls short of the requisite standard.

( … )

[48] … [H]is Honour found that the evidence, with exception of “MG11”, fell short of establishing a clear common intention. …

( … )

[68] [The “MG11” document] … was written one year after the agreement was executed. Unless it can be construed as an admission by the [wife] … that at the time of execution, her intention was that there be a 75/25 per cent split, it carries no probative value whatsoever.

[69] It is obvious that the document is a proposal to settle the then differences between the parties. That, of course, does not mean that it could not contain relevant admissions. However, care must be taken to distinguish between proposals for the future and statements expressing the [wife’s] … state of mind at the time of entry into the BFA.

( … )

[74] … [T]he statement [of the wife] is not an admission against interest as to the [husband’s] intention at the time the BFA was executed but a proposal to acquire the recalculated equity from the [husband]…

[75] As it is not such an admission, it is not evidence which can be taken into account.

[76] There is a further difficulty … “MG11” is ambiguous. As such it cannot be the  ‘clear and convincing proof’ required for rectification.

( … )

[81] It follows that the BFA must take effect according to its actual terms. The appeal will be allowed and the application seeking rectification dismissed.”

The husband was ordered to pay the wife’s fixed costs of $20,000.

Property – Kennon – Court failed to explain how the impact of husband’s violent conduct warranted a 60:40 contribution weighting for wife, where an unencumbered home acquired from husband’s initial contributions made up 73 per cent of asset pool

In Gadhavi [2023] FedCFamC1A 117 (21 July 2023) the Full Court (McClelland DCJ, Tree & Hartnett JJ) heard a husband’s appeal against property adjustment orders made by Henderson J that provided for a 55:45 division of a $24,230,275 asset pool in favour of the wife.

The husband worked in the financial sector and was “highly successful” ([8]). The wife was a medical professional in the public health sector. Their 20 year marriage produced two adult children.

At the commencement of their 20 year marriage, the husband owned assets of $2,716,236, while the wife owned $375,000. Within 12 months of their marriage and cohabitation, the husband sold a property which primarily sourced the purchase of an unencumbered property for $2,050,000. That property was still owned at trial and was worth $14,500,000, which was 73 per cent of the non-superannuation net asset pool ([34]).

Allegations of violence by the husband towards the wife “featured prominently in the substantive hearing” ([10]). The Court at first instance said the “husband did make a superior initial contribution” but also that the wife’s contributions had been made significantly more arduous by the husband’s conduct, which involved a final apprehended domestic violence order and charges of assault, stalking and intimidation ([12]).

At first instance, the Court assessed contributions as 60:40 in favour of the wife with a 5 per cent adjustment to the husband for s 75(2), such that the overall division was 55:45 overall. The husband appealed.

The Full Court said (from [25]):

“The primary judge accepted the husband’s evidence that, at the commencement of the parties’ relationship, he had assets and superannuation totalling approximately $2,716,236. …

[26] Significantly, the primary judge also accepted that ‘the husband did make a superior initial financial contribution to the initial acquisition of assets, given his wealth at cohabitation was more some six times the wife’s’ …

[27] It is accepted that the ratio of the husband’s initial financial contributions as compared to those of the wife, which were found to be approximately $375,000, was in fact 7.2 times greater than the wife’s at the commencement of cohabitation.

( … )

[31] … [I]n Pierce v Pierce [1998] FamCA 74 … (“Pierce”), the Full Court stated at [28]:

…It is necessary to weigh the initial contributions by a party with all other relevant contributions of both the husband and the wife. In considering the weight to be attached to the initial contribution, in this case of the husband, regard must be had to the use made by the parties of that contribution.

(Emphasis added)

[32] To similar effect, in Cabbell & Cabbell [2009] FamCAFC 205, the Full Court stated … that in considering the parties’ contributions, it is necessary to trace the use of those assets and consider the foundation that they laid for the subsequent accumulation of wealth by the parties.

[33] That is, in evaluating the parties’ contributions, it was necessary for the primary judge to have regard to the context of the husband’s initial contribution and specifically, to the opportunity that initial contribution created and the impact of that initial contribution on the subsequent wealth of the parties as at the date of the hearing.

[34] The primary judge acknowledged that a significant portion of the husband’s wealth that existed as an initial contribution at the commencement of the parties’ relationship, being the net proceeds of sale of a property that he owned in Suburb H of approximately $1.275 million, was applied ‘with some funds from the wife’ to purchase the Suburb H property unencumbered … It was accepted that the Suburb H property was, as at the date of the trial, valued at $14,500,000 and represents 73 per cent of the asset pool.

[35] The primary judge otherwise found that the parties’ financial contributions during their marriage were equal … and that there was ‘little difference’ in the contributions the parties respectively made during the course of the parties’ marriage as a parent and homemaker …

( … )

[37] No challenge has been made to the detailed and comprehensive analysis of the evidence undertaken by the primary judge and her Honour’s findings of fact, based on that analysis, that the father had engaged in a pattern of coercive and controlling behaviour towards the wife and the children, including incidents of actual physical violence that separately and cumulatively made the wife’s contributions significantly more arduous in terms of the principles adumbrated in Kennon. Further, there was no dispute that a contribution based entitlement in the wife’s favour was required as a result.

( … )

[41] … [I]t is to be appreciated that the exercise of the broad discretion bestowed upon the Court pursuant to s 79 of the Act ‘inevitably involves value judgments and matters of impression’, and accordingly it cannot be treated as ‘a mathematical exercise’ … It is often stated that there is an inevitable ‘leap’ from the evaluation of the parties’ contributions to declaring the ‘quantitative reflection of such an evaluation’ …

( … )

[45] … [S]enior counsel for the wife is … quite right in noting that authorities of the Full Court caution against a trial judge adopting a segmented or compartmentalised approach to the assessment of parties’ respective contributions. Further, it is not open to a trial judge to simply carry forward an original contribution as a mathematical proportion of that party’s total contributions …

[46] However, there will also be cases where the leap from words to figures is ‘so great, and so unheralded by the discussion which precedes it’ so as to either or both; ‘render the reasoning process defective’ … or result in the conclusion that the ultimate assessment by a trial judge of the parties’ respective contributions is one that is outside the reasonable ambit of discretion and will, as a result, constitute appealable error … We are of the view that this is such a case.

[47] … [O]n the facts of this particular case, the primary judge was required to explain why the husband’s substantial initial contribution was subsumed by the wife’s contributions such that it was not only wholly negated, but that her contribution based entitlement exceeded his by a differential of 20 per cent.

[48] In summary … the primary judge has failed to weigh or, more accurately, explain how she has weighed the impact of the husband’s conduct upon the wife’s contributions as against what was acknowledged to be a very significant initial financial contribution made by the husband including, specifically, the significance of the application of that initial contribution to the accumulation of the parties’ assets. That initial contribution was more than seven times greater than that of the wife’s initial contribution and has been foundational to the accumulation of the parties’ current wealth.

[49] In short, we cannot reconcile the determination of a 60/40 division of the parties’ property in favour of the wife pursuant to those factors set out in ss 79(4)(a)–(c) of the Act with the fact that the husband made such a significant initial contribution. In that respect it was noted that, in dollar terms, the resulting 20 per cent differential between the parties, as a result of those findings in respect to contributions, equated to the sum of $4,846,055. Unfortunately, our inability to reconcile the respective weighting of the husband’s initial financial contribution as against subsequent contributions made by the wife cannot be resolved by reference to the reasons provided by the primary judge. … ”

The appeal was allowed and the case remitted for rehearing.

Spousal maintenance – Husband erroneously ordered to pay arrears of maintenance under an interim order that was discharged when the proceedings were dismissed – Arrears varied on appeal under s 36(1) of the FCFCA Act

In King (No 2) [2023] FedCFamC1A 100 (28 June 2023) the Full Court (Austin, Williams & McNab JJ) heard a husband’s appeal against property adjustment orders of Baumann J.

Litigation between the spouses commenced in 2011. Interim spousal maintenance orders were made in favour of the wife in November 2011. In March 2012, the Court ordered that “all financial applications” were “struck out and the wife shall have a right to reinstate those applications upon certifying that those applications were ready to proceed”, but if such certification did not occur by 27 March 2014, “the applications stand dismissed” ([46]).

The wife did not certify that the applications were ready to proceed within the required timeframe, so the applications were dismissed. The wife commenced proceedings again via an application filed in July 2014 ([6]).

When ordering a 60:40 property division in favour of the wife, the Court calculated a cash adjustment amount payable to the wife, which included spousal maintenance arrears from the date of the interim order. The husband appealed.

The Full Court cited the earlier interlocutory decision in the appeal of Austin J (King [2023] FedCFamC1A 36) (from [46]):

“… An order striking out an application is not the dismissal of that application – merely the removal of the cause from the list of cases awaiting trial before the Court (Tudor & Tudor [1991] FamCA 89 … ).

However, the wife failed to exercise her right to re-instate the proceedings by 27 March 2014 and so, according to the self-executing terms of the orders, the financial cause was then formally dismissed. Upon dismissal of the proceedings, the interim spousal maintenance order was ipso facto discharged because interlocutory orders cannot subsist beyond the currency of the cause (Sadasivam & Seshan [2019] FamCAFC 76 … at [26]).

( … )

[47] The interim spousal maintenance order made against the husband in November 2011 was discharged when the financial cause between the parties was dismissed in March 2014 pursuant to the self-executing order. The interim order was not revived when proceedings were re-commenced several months later … The wife ultimately conceded the interim spousal maintenance order was not revived and recanted the contrary submission within her Summary of Argument, for which she had cited no authority. Consequently, the wife conceded the appeal had to succeed on this ground.

[48] The primary judge was in error to assume the interim spousal maintenance order subsisted without interruption from the time it was made in November 2011 until the time of trial in February 2023. As a consequence of the error, his Honour wrongly found the husband was indebted to the wife for $74,100 for three years of arrears accrued under the order. The error infected the calculation of the cash sum of $436,000 payable by the husband to the wife for the privilege of retaining sole ownership of the Victorian property. To do so, he needed to pay her less (subject to mathematical correction of the error as to the net value of assets).

( … )

[51] The appeal only succeeds for the solitary error about the arrears of spousal maintenance, which affected the quantum of the sum payable by the husband to the wife to satisfy the otherwise just and equitable orders adjusting the parties’ property interests. ( … ) ”

The original orders were varied under s 36(1) of the FCFCA Act (at [54]) to reduce the amount payable to the wife. Each party was ordered to bear their own costs.

Property – No property order made after 15 year childless de facto relationship – Unstated assumption by parties not to intermingle their financial affairs – Court’s approach conformed to the principles in Stanford [2012] HCA 52 and Bevan [2013] FamCAFC 116

In Cosola & Moretto [2023] FedCFamC1A 61 (8 May 2023) the Full Court (McClelland DCJ, Austin & Campton JJ) heard a de facto wife’s appeal from Schonell J’s dismissal of her application for a property adjustment.

The de facto husband was a tradesman. The de facto wife worked in retail.

The parties had each been married previously with children from those marriages. At the time of cohabitation, the de facto wife moved into the de facto husband’s property (“Suburb D”) and leased her property (“Suburb G”).

The de facto husband set up a company in order to trade. He was the sole director and both parties were shareholders. The de facto wife accessed the company’s bank account and did banking and administrative roles for the company ([9]-[10]). In one particular year she received payments from the company, but the company had been wound up before separation.

There were no joint bank accounts or joint loans ([15]). The de facto wife did not directly contribute to the costs or outgoings of Suburb D and the de facto husband did not directly contribute to the costs or outgoings of Suburb G.

At first instance, the Court found that the unstated assumptions of the parties were that they were each free to deal with their assets as they chose and that they did not intermingle their financial affairs. The Court was not satisfied that it was just and equitable to make a property adjustment order ([17]).

The Full Court cited Stanford [2012] HCA 52 and Bevan [2013] FamCAFC 116 and said (from [28]):

“Those decisions are instructive for trial judges in their application of s 90SM. As was identified by the primary judge, in Stanford, the plurality considered the obligation on the Court not to make an order for property settlement unless it is satisfied that it is just and equitable to do so …

[29] … [The] ‘three fundamental propositions’ outlined by the High Court were, firstly, that there is a need to identify the existing legal and equitable interests of the parties, secondly that any alteration of those interests must involve a principled application of judicial discretion, and:

Thirdly, whether making a property settlement order is ‘just and equitable’ is not to be answered by beginning from the assumption that one or other party has the right to have the property of the parties divided between them or has the right to an interest in marital property which is fixed by reference to the various matters (including financial and other contributions) set out in s 79(4). The power to make a property settlement order must be exercised ‘in accordance with legal principles, including the principles which the Act itself lays down’ (30). To conclude that making an order is ‘just and equitable’ only because of and by reference to various matters in s 79(4), without a separate consideration of s 79(2), would be to conflate the statutory requirements and ignore the principles laid down by the Act.

(Emphasis added)

( … )

[31] (… ) It was accepted by the appellant that the primary judge set out to undertake a ‘preliminary’ enquiry … by asking whether, after making findings as to the legal and equitable interests of the parties’ property, it was just and equitable to alter those legal and equitable interests by considering and weighing a range of relevant factors, many of which fit squarely within the remit of s 90SM(4). In doing so, the primary judge conformed entirely with the reasoning in Stanford and in Bevan.

[32] It was conceded by the appellant that had the primary judge quantitatively assessed the s 90SM(4) factors ‘in percentage or monetary terms’ as part of the s 90SM(3) enquiry, he would have impermissibly conflated those two issues in the manner envisaged by the High Court in Stanford.

[33] Having accepted that the primary judge did exactly what he was instructed to do by the High Court in Stanford and Full Court in Bevan, it became apparent during the hearing of the appeal that Ground 1 could only achieve success by contending that either of those decisions require revisiting. …

( … )

[39] It was further argued by the appellant … that if the Full Court’s decision in Chapman [ed. full citation: Chapman [2014] FamCAFC 91] is correct such that the Court is not obliged to consider the s 90SM(4) factors as part of a s 90SM(3) enquiry, the fact that s 90SM(4) is cast in mandatory language necessitates that those factors be considered separately, outside of the s 90SM(3) paradigm. Insofar as the [de facto wife] … sought to rely on Chapman as a crux for this contention to support Ground 1 … that submission is made on shaky ground.

( … )

[41] The appellant contended, and we accept, that Chapman stands for the proposition that it is permissible for a trial judge to consider the s 90SM(4) factors when answering the s 90SM(3) question, but it is not mandatory that they do so. ( … )

[42] … [I]t is permissible to consider the matters arising by way of s 90SM(4) when answering the s 90SM(3) question. It may be that in most cases, a consideration of those matters will be informative of the s 90SM(3) enquiry.

[43] Insofar as the plurality in Chapman purported … to lay down principle, it may be that they have impermissibly extended what the High Court said (or more accurately, what it did not say) in Stanford. However, it is unnecessary to determine that question in the context of this appeal. That is because the issue that confronts the [de facto wife] … is that the primary judge did consider the s 90SM(4) factors and was informed by those considerations as part of the s 90SM(3) enquiry, in conformity with the principles identified by the Full Court in Bevan.”

The appeal was dismissed. The de facto wife was ordered to pay fixed costs of $12,180.

Financial Agreements – Subpoena – Husband waived legal professional privilege to documents on his solicitors file by deposing to the instructions he gave to his solicitor when drafting agreement

In Gonsalves (No 2) [2023] FedCFamC1F 449 (1 June 2023) Christie J heard an application where a wife sought enforcement of a financial agreement on the basis that it included an equal division of the husband’s superannuation.

The husband disagreed that the agreement included a provision for a superannuation split or that the parties ever agreed to a split. He sought a declaration that the agreement had already been implemented in full.

In the husband’s affidavit, he swore: “Between May and June 2016, I gave precise instructions (verbally) to my Solicitor to not include the superannuation in the agreement” and “I also instructed [Mr E] that I would not be signing any Financial Agreement if the superannuation was to be split 50% each” ([18]).

The wife subpoenaed the husband’s solicitors file (“Mr E”). The husband objected and claimed legal professional privilege. He said he had not waived privilege.

Christie J said (from [10]):

“The issue for determination in this case is whether the husband’s conduct, or the case he is prosecuting, are inconsistent with maintenance of legal professional privilege.

[11] Mann v Carnell [1999] HCA 66 … sets out the test for waiver of privilege at common law. Relevantly, the High Court at [29] say:

Waiver may be express or implied. Disputes as to implied waiver usually arise from the need to decide whether particular conduct is inconsistent with the maintenance of the confidentiality which the privilege is intended to protect. When an affirmative answer is given to such a question, it is sometimes said that waiver is ‘imputed by operation of law’. This means that the law recognises the inconsistency and determines its consequences, even though such consequences may not reflect the subjective intention of the party who has lost the privilege. … What brings about the waiver is the inconsistency, which the courts, where necessary informed by considerations of fairness, perceive, between the conduct of the client and maintenance of the confidentiality; not some overriding principle of fairness operating at large.

[12] In Osland v Secretary, Department of Justice [2008] HCA 37, the High Court stated that the assessment of whether there is an inconsistency between the conduct of the privilege holder and the confidentiality which the privilege is meant to protect is:

… to be made in the context and circumstances of the case, and in light of any considerations of fairness arising from that context of those circumstances …

…

49 … questions of waiver are matters of fact and degree.

( … )

[24] I accept that sometimes privilege may be waived in circumstances where the interests of justice require it. However, I am not confident that the evidence supports that in this case at this stage. Those types of cases in which privilege is waived because the interests of justice require same, are ones where the Court would otherwise be misled. The wife has not indicated that there are specific documents which exist in the period after June 2016 which, if the Court were to be denied copies of same, would cause the Court to be misled. Accordingly, what I propose to do is a hybrid of what I raised with counsel. I propose to that, since the evidence the husband has given in the paragraphs of his affidavit are inconsistent with the maintenance of the privilege he seeks to maintain in respect of May and June, those documents should be produced and may be inspected.

[25] The contents of the file which led to the concluded agreement between the parties, which the wife seeks to enforce, is central to the resolution of the matter before the Court in circumstances where both parties to the litigation assert that the instructions provided to their respective solicitors will support the relief which they seek.

[26] Accordingly, I propose to grant first access to the respondent’s solicitor’s to inspect the documents and to divide them into three categories. Category number one will be documents before May 2016. They should be placed in a sealed envelope marked with the letter A.

[27] Documents which were generated in May and June of 2016 should be separated and placed in an unsealed envelope which is marked B.

[28] Documents from July 2016 to date should be placed in a third envelope and marked C.

[29] I intend to provide seven days to the respondent husband to do same, after which I will grant leave to the applicant to inspect the documents in envelope B.”

Property – Review of arbitral award under s 13J is identical to an appeal from an order of the court – Application for review to be filed within 28 days of the date of registration

In McLaughlin (No. 2) [2023] FedCFamC1F 516 (27 June 2023) Campton J heard a wife’s application for review of an arbitral award that was issued on 11 April 2023 and registered by consent on 12 May 2023.

The wife filed an application for review of that award within 27 days of its registration, on 1 June 2023. As part of her application, she sought a stay of the award pending the review, the award otherwise providing for her to vacate a property within six weeks of the husband paying her $367,000.

On the day the application for review was filed, the husband paid the $367,000 that he owed to the wife pursuant to the award.

The husband argued the wife had not filed her application for review “within time”, where although filed 27 days after registration, it was filed 58 days after the issue of the award.

Campton J said (from [26]):

“… Two questions therefore arise:

(a) Does the legislation prescribe a timeframe in which an application to review an award must be filed?

(b) If yes, then from what date does the time limit commence – either the date of the award or the date of its registration?

[27] Neither the Act, the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) (‘the Rules’), nor the Family Law Regulations 1984 (Cth) (‘the Regulations’) explicitly prescribe a time limitation as to when an application to review an arbitral award must be filed with the Court. During the hearing before me, each of the parties said that it was their understanding that applications for review must be made within 28 days of an arbitral award being registered. They could not identify the source of their understanding in the legislation.

[28] In the absence of an express provision, whether a limitation for filing exists is a matter of construing the sections of the legislation which permit a review of an award to be pursued.

( … )

[31] Section 13J of the Act provides a pathway for review of an arbitral award that is not dissimilar to the appeal pathway for orders of the Court – that is, where the basis of the review is that the decision maker fell into error. Challenges to orders made by a Court on the basis of error are required to be made by an appellant filing a Notice of Appeal within 28 days of the order appealed from being made (r 13.03 of the Rules).

[32] Section 13K of the Act closely mirrors in many respects s 79A (or s 90SN) of the Act, which permit the Court to set aside a determination which has been infected, not by error of the decision maker, but by some other element (including fraud, non-disclosure or where the decision is void, voidable or impractical to carry out). An exception to this analogy is found in s 13K(2)(d), which permits a Court to make a decree affirming, reversing or varying an award where the arbitration was ‘affected by bias’, or there was a lack of procedural fairness in the conduct of the arbitration. There is no time limit imposed on the filing of applications made pursuant to s 79A, s 90SN or s 13K of the Act. This is because those sections are engaged where there has been a corruption to the integrity of the process, such as fraud, which may not be known for some time. A possible exception to this circumstance may exist in the event an application for review of an award is grounded from s 13K(2)(d) of the Act. It is not necessary to consider this issue for the purpose of these reasons.

( … )

[33] If a challenge to an award pursuant to s 13J of the Act mirrors the challenge to an order of a court by way of the appeal process, it would be appropriate that the rules of Court that apply to the hearing of an appeal also apply to the hearing of a review (given the omissions in the legislation, and the conclusion expressed at [29(b)] above that awards are to be treated, procedurally, as if they were orders of the Court). It is therefore necessary to consider the nature of the review envisaged by s 13J of the Act.

( … )

[35] The word ‘review’ is not defined by the legislation. …

[36] … [T]he nature of arbitral awards differ from exercises of delegated power by Court registrars. It would be a mistake to treat reviews from each as if they were the same.

( … )

[38] … An agreement to arbitrate is not an agreement to delegate judicial power. It is an agreement to have a third party to conduct what otherwise would have been the role of the Court in determining the issues in dispute in a way that is final and binding. Importantly, arbitration is a consensual process and is not unilaterally imposed on parties. Seen in this way, arbitration is a process in substitution of the Court’s processes to achieve finality. It is not an opportunity to obtain a quote, and to then resort to the Court for a final determination.

[39] There has been some discussion in reasons of other judges of this Court … as to what, if not a hearing de novo, is required of the Court in reviewing an award pursuant to s 13J. It has been observed that the section does not specify that an applicant must establish an ‘error of law’ (see Paviello & Paviello [2022] FedCFamC1F 592 at [19] (‘Paviello’); Griffiths & Griffiths [2022] FedCFamC1F 219 (‘Griffiths’) at [12], [51] and [52]; Braddon & Braddon [2018] FCCA 1845 (‘Braddon’) at [51]). The section is instead concerned with a ‘review of the award, on questions of law’. In my view, it is correct to observe that:

… It would, however, be nonsensical to suggest that an Award would be reviewed on the basis of anything but an error of law.

…

A review of ‘questions of law’ without seeking to impugn the integrity of the Award by suggested error would be contrary to [the object of Pt IIB of the Act] and mischievous….

(Braddon, as per the original)

( … )

[43] … I am satisfied that the nature of enquiry to be undertaken by a court in considering an application to review an arbitral award is identical to that undertaken by the Court exercising appellate jurisdiction in accordance with the Act in considering an appeal from an order of a court.

[44] This conclusion is buttressed by the following observations:

(a) There exists parallels in the legislative pathways as identified above, between s 13J of the Act and the appellate process, and s 13K of the Act and the processes for setting aside orders pursuant to s 79A and s 90SN of the Act.

(b) Undue significance should not be placed on the use of the word ‘review’ as opposed to ‘appeal’ in s 13J of the Act. Elsewhere in the Act, ‘appeal’ is used to describe the challenge of a decree, judgment or order of a court to a superior court exercising appellate jurisdiction. … Plainly, an award is not a ‘decree’ or ‘judgment’ as contemplated by the FCFCOA Act in that it is not made by a court. The use of the word ‘review’ in the context of s 13J of the Act is therefore unsurprising.

(c) Similarly, unwarranted concern should not be placed on the use of the phrase ‘question of law’ in the section. … [T]he use of the phrase ‘question of law’ in s 13J of the Act does not import some other unidentified standard of review, not used anywhere else in the Act nor in other contexts … as was seemingly envisaged in Paviello … It does not excuse a court of the need to establish error. It does not require the parties to specifically identify in the form of ‘questions’ what the Court ought to consider upon review. Grounds, as ordinarily understood in an appellate context, are sufficient. In my view, the inclusion of the phrase does little more than to confirm that a court on review of an award must not engage in the fact finding enquiry afresh, as it would if were conducting a de novo hearing.

[45] I accept my conclusion is contrary to the gravamen of the reasons of Wilson J in Paviello and Griffiths. In those circumstances, this issue may be an appropriate matter for consideration by the Full Court or for further legislative guidance (including by way of clarifications to the Act, the Rules or the Regulations).

( … )

[46] Having regard to the above reasoning, I conclude that a ‘review’ of an arbitral award as contemplated by s 13J of the Act ought to be:

(a) Conducted in accordance with the procedures for conducting appeals, as set out in ch 13 of the Rules; and

(b) Determined consistently with established appellate principles.

[47] Rule 13.03(1) requires that a Notice of Appeal be filed within 28 days from the date of the order appealed from was made. …

[48] … [U]nder the current legislative regime it is the process of registering the award that enlivens its treatment as an order of the Court: until it is registered, the award is not enforceable in this Court using the procedures otherwise available for enforcement of court orders … There would be no need for a litigant to apply to a court to review an award, if the award was not yet enforceable. … [I]t is appropriate that the time limit within which an application for review must be filed commence from the date of registration.

( … )

[50] The wife’s Application … was sent to the Court within 27 days of the date of the award being registered, and hence was filed in time. …”

Dismissing the wife’s stay application, the Court held that the wife vacating the property in accordance with the award did not make her application for review nugatory. Costs were reserved to the hearing of the application for review.

Property – Court correctly adopted “value to owner” approach to wife’s business – Business value calculated with reference to future maintainable earnings did not mean that considering the wife’s income was “double counting”

In Gare & Farlow [2023] FedCFamC1A 98 (23 June 2023), Austin J sitting in the appellate division of the Federal Circuit and Family Court of Australia, considered a decision of Judge Forbes where a “value to owner” approach of the wife’s business (of $429,500) was preferred to a “fair market value” approach valuation (of $56,948).

The wife’s business was purchased for $50,000 by the wife and her friend Ms O in 1998. The business operated out of leased premises owned by the wife’s father. Ms O subsequently sold her share of the business to the wife in 2002 for $75,000. There was no lease but the Court at first instance accepted that it was likely that the wife’s father would grant a lease (see our summary of Gare & Farlow [2023] FedCFamC2F 109 at our member’s archive of case notes at “property” at the “valuation” link).

No orders had been made for a single expert valuation and each party relied on their own expert.

Considering the wife’s appeal against the Court’s acceptance of the $429,500 value, Austin J said (from [38]):

“As the primary judge correctly recognised … the experts’ opinion evidence was given in the context of indisputable facts. Nearly 20 years before, the wife paid her sister $75,000 to acquire the other 50 percent shareholding in the corporation which owned the business, suggesting the wife believed the business was then worth $150,000. No one had any reason to believe the business was worth less at the time of trial because it was no less profitable. The business operates from commercial premises owned by the wife’s father, albeit without the security of a formal lease. Nevertheless, not long before trial, the wife used $105,000 of business revenue to renovate the premises, suggesting she believes the business has security of tenure in the premises …

( … )

[46] Neither legal principle nor logic precluded the primary judge from rejecting the wife’s father’s unconditional denial of his willingness to grant a lease. His Honour was entitled to infer the wife’s father would grant a lease so she can later sell the business, if she elects to do so. It was rational to infer the wife and her father would act to maximise the value of the business in such circumstances by the grant of a lease, but counter-intuitive to conclude they would instead sabotage the prospect of future sale by withholding a lease. An inferential probability may be deduced from a number of pieces of evidence, without any individual piece rising above the level of possibility, so long as the inference is reasonably drawn (Seltsam Pty Ltd v McGuiness & Anor (2000) 49 NSWLR 262 … Carr v Baker [1936] NSWStRp 20 … ). It was reasonable to draw the inference when the business had continuously operated in the premises for some 25 years, the wife had recently paid $105,000 to renovate the premises for future use, and the wife was on good terms with her father.

( … )

[48] The wife did not identify any error of legal principle by the primary judge …

[50] The primary judge undertook and fulfilled that task. Because the business was long-standing, secure, profitable, and attractive enough for the wife to want to retain, his Honour accepted the husband’s expert’s opinion evidence about applying a multiple of 2.75 to the future annual maintainable earnings of $156,082, yielding a value rounded to $429,500 …

[51] In Samper & Samper [2021] FamCAFC 140 … the Full Court said an appellate court will not upset a valuation finding made at first-instance unless satisfied the primary judge acted on a wrong principle of law or that the valuation finding was entirely erroneous. Neither of those alternatives was demonstrated here. The wife’s assertions of legal, factual and discretionary errors do not identify any errors – only her dissatisfaction with the valuation finding.”

Austin J also rejected the wife’s argument that the Court erred by double-counting when including the business valuation based on future maintainable earnings, but also considering the wife’s income from the business at s 75(2). Austin J said (from [68]):

“The wife’s submissions in the appeal do not demonstrate any error by ‘double-counting’ her future income after having already valued the business at $429,500. … The business was valued at an amount which represented its value to her as its owner, based on her expected earnings into the future. When taking into account the parties’ respective future income-earning capacity for the purpose of s 79(4)(e) and s 75(2) of the Act, it would have been oddly inconsistent to ignore the wife’s likely future income and pretend she would have none just because her future income was a co-efficient in the equation used to value the business.

[69] The business is an asset of the corporation, which in turn is an asset of the wife by reason of her exclusive shareholding in the corporation. The shareholding is an alienable asset with a capital value, which fact is not open to dispute. There is only room for dispute about the value ascribed to the asset. It was common ground the business could not be sold by the wife as a going concern without a lease in place, but the business was valuable to the wife even without a lease and would be a valuable asset to sell with a lease, which the primary judge found the wife’s father would be willing to grant if necessary. The findings reflected the reality that the wife controlled a valuable business, generating her annual income, which could be sold to a willing purchaser (with a lease). Whilst ever she retained the business, she had an income.

[70] Contrary to the wife’s submissions, the task of valuing the alienable asset (being the business in its incorporated form) was not a comparable exercise to the actuarial valuation of an inalienable defined-benefit pension, which methodology capitalises a dependable future income stream to produce a notional current value of the superannuation interest for the exclusive purpose of subjecting it to a superannuation splitting order. In that situation, one must certainly avoid double-counting the income stream as both the notional asset and future income (Preston & Preston [2022] FedCFamC1A 157 … ).”

The wife’s appeal was dismissed. She was ordered to pay the husband’s costs of $18,000.

Property – Court erred by holding a deed of settlement that resolved District Court proceedings created an estoppel by deed but correctly applied principles in Stanford [2012] HCA 52 to conclude that it was not just and equitable to make a property adjustment order

In Spalla [2023] FedCFamC1A 87 (8 June 2023), Christie J heard a husband’s appeal against a decision of Judge Neville, where in District Court proceedings an insurer had obtained a judgment debt against the husband for $100,620. The husband, wife and insurer entered into a tri-party deed to resolve the claim.

The deed referred to the parties as married but separated; that the wife would pay $50,000 towards the claim; and that the husband and wife would later enter into a financial agreement to conclude their rights against each other. No such financial agreement was ever signed (see our summary of Spalla (No. 2) [2022] FedCFamC2F 1723 at our member’s archive of case notes at “property” at the “Stanford” link).

At first instance, the Court held that the tri-party deed created an estoppel by deed such that the husband was prevented from making any further claim against the wife. The Court found in the alternate that there was no case to make a further adjustment of property per Stanford [2012] HCA 52.

Christie J said ([27]):

“The primary judge noted that the parties did not address him on the legal principles relating to estoppel by deed as a barrier to relief under Part VIII of the Act in either oral or written submissions. Accordingly, the primary judge set out the law, as he understood it, relating to the operation of doctrine of equitable estoppel and in particular estoppel by deed.”

After citing Woodcock [1997] FamCA 5, Woodland v Todd [2005] FamCA 161 and Bevan [2013] FamCAFC 116, Christie J said (from [31]):

“His Honour did not have the benefit of submissions on the application of the principles in the authorities set out above. In broad terms the authorities provide:

(a) It is only possible to oust the jurisdiction of the Court by final order or a qualifying financial agreement (and previously by approved maintenance agreement);

(b) An agreement other than a financial agreement will be relevant as evidence of what the parties intended and of the financial arrangements in place at the time and subsequently;

(c) In that sense any agreement is relevant but not in and of itself determinative.

[32] Accordingly, to the extent that the primary judge found that the terms of the Deed necessitated the dismissal of the appellant’s application, he was in error. However, the primary judge went on to undertake further consideration of the merits of the claim and for this reason while error has been shown, as discussed below, the appeal will nonetheless fail.

[33] It is only where an error of law is material to the extent it causes a miscarriage of justice that it will lead to a new trial: Conway v R [2002] HCA 203 Lane v Nichols [2016] FamCAFC 234 …

( … )

[36] Here the appellant cannot demonstrate appellable error because his Honour went on to consider and apply the principles in Stanford v Stanford [2012] HCA 52 … leading to the conclusion that it was not just and equitable to adjust the parties’ interests in property. As the effect of his Honour’s alternate pathway is the same – dismissal of the husband’s application, the error did not result in a miscarriage of justice.

( … )

[38] It is not controversial that the appellant received the benefit of the Deed in so far as $50,000 was raised and applied to his indebtedness to Insurer E. Thereafter the respondent dealt with the Suburb U property without reference to the appellant, selling it, via a power of attorney and acquiring a new property which has been her home. The evidence before the primary judge was to the effect that, apart from some limited occasions when the appellant has stayed at the home of the respondent, he has occupied separate premises including with subsequent romantic partners and has spent time overseas (as has the respondent). The factors which may ordinarily speak to the appropriateness of adjusting the parties’ interests in assets – namely the making of post-separation financial and non-financial contributions by the parties – are not available on the facts of this case, supporting the correctness of the primary judge’s alternate determination.”

The appeal was dismissed. The husband was ordered to pay the wife’s costs, fixed at $17,216.14.