Property – Costs order set aside where each party enjoyed nearly the same degree of success in substantive proceedings – Whether a party is “wholly unsuccessful” pursuant to s 117(2A)(e) of the Family Law Act focuses on the overall result, rather than the failure of a property application

In Marvis [2023] FedCFamC1A 34 (21 March 2023) Austin J, sitting in the appellate jurisdiction of the Federal Circuit and Family Court of Australia, heard a husband’s appeal from a costs order made following a decision in contested property proceedings.

At first instance the wife made a costs application on the basis that the husband had been “wholly unsuccessful” in the proceedings because he sought the dismissal of her property settlement application and failed, whereas she enjoyed some measure of success ([9]).

The trial judge ordered that the husband pay the wife’s costs from 4 November 2021 which was the date she properly particularised the relief sought. The husband appealed.

Austin J said (from [14]):

“The respondent commenced the proceedings in May 2021, filing an application for property settlement relief, the nature of which evolved as the proceedings progressed.

[15] The respondent initially sought an unquantified lump sum payment from the appellant. In June 2021, the appellant responded by seeking that the respondent’s application be dismissed. His position did not change throughout the litigation.

[16] At mediation in November 2021, the respondent quantified her claim at between 12.5 and 15.5 per cent of the parties’ aggregated net assets, but the appellant still maintained the parties should retain their individual assets and liabilities without any adjustment order. The parties did not compromise, so the dispute progressed to trial.

[17] The trial was heard in June 2022. At that time, while the respondent had not amended her Initiating Application filed in May 2021, she did file an Outline of Case document and a Minute of Orders for which she applied. She contended the parties’ net assets were worth about $1.7 million and she wanted 15 per cent of them. Given the assets retained by her, she applied for an order compelling the appellant to pay her an extra $129,000. Ultimately, the primary judge ordered the appellant to pay the respondent $77,650.

[18] Essentially then, the respondent wanted $129,000 from the appellant, he resisted having to pay her any amount, but he was ordered to pay her $77,650. Obviously enough, both parties enjoyed a measure of success, though the result was slightly closer to the outcome for which the respondent had advocated.”

Referring to section 117(2A)(e) of the Family Law Act 1975, the Court continued (from [21]):

“Clearly enough, the provision invites consideration of whether a party has been wholly unsuccessful in the proceedings; not whether a party has been wholly unsuccessful in prosecuting his or her particular application (Anison & Anison [2019] FamCAFC 108 … ; Franklyn & Franklyn (No.2) [2021] FamCAFC 160 … )

[22] The respondent’s submissions to the contrary are rejected. She incorrectly focussed upon the failure of the appellant’s application, rather than upon the overall result he achieved in the proceedings …

( … )

[25] Here, the ‘proceedings’ comprised a cause of action for property settlement relief under Pt VIII of the Act. The respondent sought an order that the appellant pay her $129,000, but he successfully confined the relief granted to her to little more than one-half of the sum she claimed. He was therefore certainly not ‘wholly unsuccessful’ in the proceedings. While his specific application was unsuccessful, so was the respondent’s. In fact, he enjoyed nearly the same degree of success as her in the substantive cause.”

Both parties’ applications for costs of the trial were dismissed and procedural orders were made for the filing of submissions in relation to the costs of the appeal.

Children – Court failed to determine how its order for supervision and anger management courses would ameliorate the risk of harm the father was found to pose due to his violence and lack of insight

In Darmadi & Binjori [2023] FedCFamC1A 29 (23 March 2023) Tree J, sitting in the appellate jurisdiction of the Federal Circuit and Family Court of Australia, heard a mother’s appeal from a decision of Judge Myers in a parenting case involving two children aged 9 and 10 years.

The parents were in a relationship from 2009 which ended in March 2018 after an incident of family violence resulting in an Apprehended Domestic Violence Order against the father. At the time of trial in October 2022 the children had not spent any time with the father since 2018.

At trial, the mother sought sole parental responsibility for the children, that the children live with her and spend no time with the father. The independent children’s lawyer (ICL) supported the mother’s application. The father ultimately agreed that the mother have sole parental responsibility.

Orders were made for the father to complete a 20 week men’s behaviour change program, 12 weeks of anger management counselling and that, once the father had completed half of each course, the children commence spending two hours per week with him supervised at a contact service. Once the father had completed the courses, had a report from the supervisor that time had gone well and had at least six months of unsupervised time, time would progress to unsupervised time on alternate weekends and ultimately include half the school holidays.

The mother appealed. Her grounds of appeal centred around the father’s lack of insight into and acknowledgement of family violence and the impact of his behaviour on the children and the mother. She contended that “the father lacked insight into the likely impact of his family violence on the children, such that the risk of harm which he posed to them was an unacceptable one.” ([13]). The ICL supported the appeal ([2]).

Tree J said (from [18]):

“ … [T]he focus of the submissions of both the mother and the ICL had as their starting point the implicit acceptance by the primary judge that the father posed a risk of harm from family violence to the children, which could only be ameliorated by the preconditions recited above, namely that the risk to the children, even of professionally supervised time, required his substantial attendance of the course and counselling, and the risks of unsupervised time required their completion, the effluxion of six months of supervised time, and the relevant supervisor’s report. That much appears unarguable, even though the primary judge did not himself use terminology such as ‘unacceptable risk’ in discussing the preconditions.

[19] Next, the mother and ICL focussed on the issue of the father’s lack of insight, which, although central to the mother’s case, was not directly, and perhaps not even indirectly, addressed by the primary judge. The reasons why the father’s insight was critical (leaving aside the obvious reason that it to some degree predicts a repetition of such conduct) in this case was because the father denied in cross-examination that he needed anger management counselling …

( … )

[22] The criticisms which the mother and ICL advanced by reference to that evidence were twofold. Firstly, that absent insight as to a need to change – denied by the father as set out above – the prognosis for change was poor; secondly, that it was only possible, not probable, that participation in such courses may produce insight.

[23] It was further said that, given that evidence, and the implicit acknowledgment by the primary judge that, at the time the orders were made, the father otherwise presented as an unacceptable risk of harm, at the very least the primary judge’s reasons were deficient as the reasoning for the decision is not able to be ascertained, nor is justice (to the mother’s case) seen to have been done (Bennett and Bennett [1990] FamCA 148 … ).

[24] One necessarily asks, by what chain of reasoning was the primary judge satisfied that the two sets of preconditions sufficiently ameliorated an unacceptable risk to the point where it was acceptable, especially given the evidence discussed above? Absent an answer being evident – and none was advanced by the father – at least Ground 3 must succeed.

[25] … [I]t is clear that the primary judge therefore failed to properly engage with the central issue in the mother’s case of the father’s lack of insight about the impact of his violence and anger, which failure is in the nature of jurisdictional error (Resource Pacific Pty Ltd v Wilkinson [2013] NSWCA 33) …

( … )

[28] The primary judge did not undertake any assessment of the likelihood of the father again demonstrating family violence and anger, or the prospect and magnitude of harm to the children should he do so. However equally significant is the absence of any reworking of the risk assessment factoring in the effect of the two sets of preconditions. In this case it was essential, in order for a proper risk assessment to be undertaken, to grasp the nettle and engage directly with how – if at all – the two sets of preconditions sufficiently ameliorated the relevant risk, here, seemingly being the likelihood of the father again demonstrating family violence and anger, rather than the prospect and magnitude of harm to the children should he do so.”

The mother’s appeal was allowed, the case was remitted for rehearing by another judge and cost certificates were ordered in favour of both parties and the ICL.

 

Property – Court validly extended previously ordered deadlines following an unsuccessful appeal – Stay was such that time pursuant to the appealed order did not run until the appeal was dismissed

In Goldsmith & Stinson (No 2) [2023] FedCFamC1A 25 (15 March 2023) the Full Court (McClelland DCJ, Riethmuller & Strum JJ) heard a wife’s appeal against a decision of Carew J that varied parts of final property orders (‘the final orders’).

The final orders required the wife to transfer a jointly owned property to the husband and for him to refinance the mortgage into his sole name and pay the wife $602,415 by 21 September 2021. In preparation for his compliance with the final orders the husband sold two investment properties and made arrangements to borrow funds to pay the wife.

The wife filed an appeal from the final orders on 20 August 2021 but did not serve her notice of appeal on the husband until 1 September 2021.

The husband filed an application to stay part of the final orders and requested an urgent hearing date. The application was heard and on 8 October 2021 the parties consented to a stay of the relevant parts of the final orders pending the outcome of the wife’s appeal (‘the stay orders’). The stay orders also required the husband to pay the wife $100,000.

After the wife’s appeal was dismissed on 30 June 2022 the husband sought to arrange settlement with the wife and the wife enquired whether the husband’s finance had been approved. The husband advised that he would be ready to settle on 15 July 2022.  The wife subsequently sought to invoke the default provisions of the final orders which would result in the transfer of real properties to the wife and for her to pay the husband $447,585.

In July 2022, the parties filed competing enforcement applications. In the alternative the husband sought an extension of time to comply with the final orders. The husband argued that his proposed amendments were machinery provisions and the wife argued the orders sought would vary the substantive provisions of the final order. Carew J heard and determined the competing applications, extending the time in which the husband had to comply with the final order to 14 days from 22 July 2022. The wife appealed.

McClelland DCJ & Strum J said (from [60]):

“ … [T]he extent of the amendments made by the primary judge in the July 2022 orders … simply imposed new dates to give effect to her Honour’s decree but did not impose completely different rights and obligations on the parties. … [I]n issue here is whether those were impermissible amendments to a substantive order or permissible amendments to a machinery or consequential order.

( … )

[92] Given, in particular … her Honour’s reference … to a retention by the husband of the farming properties better achieving the aims of the Act to finalise the parties’ financial relationship and avoiding the prospect of further litigation or dispute, together with the specific reservation of liberty to apply in relation to the ‘implementation’ of the final order, we are of the view that, when considered in this context, the 60 day timeframes may be consequential or machinery provisions, capable of subsequent amendment. Certainly, there was no suggestion that the husband could not fund his financial obligations under the final order.

[93] For the reasons which follow, it is not strictly necessary for us to determine this issue. However, we are troubled by the prospect that, but for the husband’s Notice of Contention and our conclusion in relation thereto, he may have been shut out of relief in the circumstances of this case, including the wife’s conduct, if the default provisions of the final orders were incapable of variation.”

As to the stay and the wife’s contention that her rights to the property in default of payment had been impacted by the variation, McClelland DCJ & Strum J said (at [113]):

“… [T]he effect of the stay of the operation (as opposed to the execution) of … the final order is that, of necessity, it operated retrospectively. Whilst the husband contends that it operated retrospectively from the date of the appeal, we are of the better view that it operated nunc pro tunc from the date of the final order, including because r 13.12(1) provides that the filing of a Notice of Appeal does not stay the operation or enforcement of the order appealed from. However, the practical effect is no different. If the stay order operated nunc pro tunc from the date of the final order, then, by reason thereof, the period of 60 days for the husband to do the acts required of him … did not commence to run until the dismissal of the wife’s second appeal …”

Delivering a separate judgment, Riethmuller J did not agree that the timeframe was a consequential or machinery provision and therefore capable of amendment by the trial judge ([141]), however given the stay order he concluded that the orders made were within the ambit of the trial judge’s discretion.

The application for leave to appeal was dismissed. The wife was ordered to pay the husband’s costs fixed at $30,987.24.

Children – Summary dismissal of contempt application was in error as the court conflated two different legal tests – Despite error, dismissal plainly correct and not disturbed

In Fierro (No 7) [2023] FedCFamC1A 24 (14 March 2023) the Full Court (Austin, Williams & Howard JJ) considered Smith J’s decision to summarily dismiss two contempt applications of the paternal half-brother of the subject child of the proceedings.

Consent orders between the half-brother and the child’s parents were made on 21 May 2021 for the child to live with the parents and that they have parental responsibility for her. The child had expressed a desire to spend no time with the half-brother. The half-brother was restrained from communicating with the child unless initiated by the child or unless the parents agreed. The orders permitted the half-brother to send gifts to the child on special occasions ([8]).

The half-brother had made numerous applications in relation to the child, including an application for special leave to the High Court.

The half-brother filed contempt and contravention applications but ultimately withdrew the contravention application. On appeal, the half-brother argued that Smith J erred when summarily dismissing the contempt applications by conflating the summary dismissal test with the contempt test ([34]).

The Full Court said (from [35]):

“There can be little doubt the primary judge conflated two different legal tests when dismissing the contempt applications. His Honour began by reciting the principles which apply to the summary dismissal of civil suits … but then went on to examine each count of contempt, though by applying the criminal standard of proof to some of them as if substantively determining those particular counts …

( … )

[38] Prosecutions of ‘offences’, which nomenclature is apt to include allegations of contempt (Re Colina; Ex parte Torney [1999] HCA 57 … ), are not typically amenable to summary dismissal pursuant to the same principles which apply in conventional civil proceedings, requiring demonstration that the civil suit does not enjoy any reasonable prospect of success (Spencer v The Commonwealth [2010] HCA 28 … ). Instead, incompetent prosecutions are met by one of two defence submissions.

[39] First, an accused person may demur to the validity of the charge or indictment before the criminal prosecution formally commences, alleging defects in it … , which procedure similarly applies at common law in respect of contempt proceedings (Coward v Stapleton [1953] HCA 48 … ). It is unclear whether the respondents demurred to the contempt counts by expressly asserting they were all an abuse of process (r 10.09(1)(c) of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) (‘the Rules’), but even if they did, the primary judge did not determine the proceedings on that basis.

[40] Secondly, an accused person may submit there is ‘no case to answer’ at the close of the prosecution case, asserting the prosecution cannot be sustained on the evidence adduced by the prosecutor. At that point in time, the legal question for the court is whether the accused could be convicted on the evidence adduced; not the factual question of whether the accused should be convicted on the evidence (May v O’Sullivan [1955] HCA 38 … ; Zanetti v Hill [1962] HCA 62 … ) If the defence submission is successful, the prosecution is terminated by dismissal at that stage of the substantive hearing. The primary judge did not do that here either.

[41] Conversely, ‘no case to answer’ submissions are not usually apposite in civil proceedings … The summary dismissal procedure is preferable in ordinary civil proceedings (Australian Securities and Investments Commission v Healey [2011] FCA 717 … ).

[42] The dismissal of a prosecution because the accused has no case to answer amounts to a judgment on the merits, whereas the determination of a summary dismissal application only requires a ‘practical assessment’ of the civil suit’s prospects of success without the complete factual matrix and full argument (Spencer v The Commonwealth … ; Kowalski v MMAL Staff Superannuation Fund Pty Ltd [2009] FCAFC 117 … ).

[43] The parties did not cite any authority to either support or rebut the validity of applying summary dismissal principles to contempt proceedings in the same way as they apply in ordinary civil proceedings. Before the primary judge, the parties proceeded as if the summary dismissal procedure was valid … Absent the citation of binding or persuasive authority saying otherwise, the quasi-criminal nature of contempt applications warrants their differential treatment from conventional civil suits: they may be dismissed if the counts are inherently defective (and hence it would be an abuse of process to prosecute them) or if there is no case for the respondent to answer, but should not be dismissed because the counts ostensibly lack reasonable prospects of success. The proper procedure is recognised within rr 10.09(1)(c), 11.70(2), 11.71(6) and 11.71(7) of the Rules.

[44] …. [T]he primary judge examined each and every count of contempt. Most were dismissed because there was no reasonable likelihood of success … but some were dismissed because the evidence was insufficient to establish the count to the requisite criminal standard of proof … [T]he appellant’s grievance is only with the primary judge’s application of the criminal standard of proof, but not with his Honour’s application of the civil test for summary dismissal.”

The Full Court continued (from [47]):

“The question necessarily arises as to what, if any, miscarriage of justice occurred by the primary judge falling into error by both applying the wrong test and conflating two different tests?

[48] The appellant’s unchallenged evidence, taken at its highest, could not possibly attain any greater probative value than it already possessed, regardless of whether the counts of contempt were heard substantively or summarily. He cannot have suffered any injustice because, if the counts of contempt could not be established beyond reasonable doubt on the totality of the unchallenged evidence he chose to lead, the prosecution of those counts ought properly have been terminated. No conceivable advantage could have accrued to the appellant by delaying the pronouncement of the inevitable result, in which case he was denied nothing.

[49] Neither did the appellant suffer any injustice by the primary judge applying the civil summary dismissal test to the remainder of the contempt counts, because all were defective in any event …

( … )

[57] If an error of law causes no miscarriage of justice there is no need to upset the judgment (Conway v The Queen [2002] HCA 2 … ). The contempt counts would all necessarily be dismissed if re-heard according to law, in which event this ground fails to sustain the appeal. There would be no utility in remitting the proceedings for re-hearing.”

Children – Mother ordered to return children to South Australia after unilaterally relocating to Victoria

In Westcott & Larson [2022] FedCFamC2F 1782 (20 December 2022), Judge Brown heard a father’s application for recovery orders in respect of 9 and 3 year old children (“X” and “Y” respectively) who had lived with the mother and spent alternate weekends with the father since separation in November 2020 (at [16]).

The parents and children all lived in South Australia.

In September 2022, the mother told the father she wished to move interstate, the father replying that he did not agree, via e-mail. The children were in the father’s care for multiple weeks in September and October 2022, but after delivering them back to the mother, he received an e-mail from her that read “We have moved interstate. The kids are happy and safe. I will let you be able to call them a couple of times a week” ([21]).

The father sought an urgent listing and recovery order. At the first hearing, the mother said she had “a fantastic job, and an amazing opportunity which enabled her to be closer to her family” and at the adjourned hearing, she alleged that X was terrified of his father due to family violence and that the father had stalked her ([54]). She said she had nowhere to live in South Australia and no ability to pay for accommodation ([87]).

The Court said (from [11]):

“Relocation cases are hard. On the one hand, Australia is a free country whose citizens are entitled to live wherever they want. On the other hand, under the Act, children have a right to know and be cared for by both their parents and to spend meaningful amounts of time with each of them.

[12] … The High Court … has said each relocation case is unique and requires careful and idiosyncratic consideration.

[13] Such a detailed inquiry is simply not possible at the interim stage, and as such, it may be preferable to go back to the care arrangements which were in place prior to the unilateral relocation of a child or children.

[14] This has important public policy considerations because the Court cannot condone the actions of a parent who takes things into his or her own hands. In addition, at the final hearing stage, when all the evidence is available, it would be fundamentally unfair if one parent has an advantage because he or she has been able to skew the hearing to his or her favour by an act of self-help.

( … )

[48] Significantly to me, [the mother] … indicated that Y loved her father but X had decided he no longer wanted to see him. …

( … )

[54] [The mother’s] … position can be summarised as follows.

  • The father has a history of drug, alcohol and gambling addiction.
  • X is frightened of his father because the father hits him. As a consequence, X does not want to see his father.
  • The father had been tracking and stalking her through childcare and school apps and had come to her home and entered it illegally.
  • The father had not been a consistent part of the children’s lives. In all these circumstances, she felt unsafe and watched in South Australia by the father.
  • The father does not provide her with financial support.
  • The paternal grandparents do not support her in any way, including financially.
  • These factors made her job in South Australia untenable.

( … )

[75] … The issues raised by the mother in respect of X are serious. He appears to be a child with some special needs who is acutely aware of the conflict between the parties. He is placed in an invidious position.

[76] As I have indicated, he was privy to the decision that he was going to be moving interstate but was told not to tell his father about it. It is not usually helpful for a child to be the keeper of parental secrets. …

[77] On the other hand, if he is frightened and traumatised by what has happened in his paternal home that is a matter of grave concern. But at the same time, it seems incongruent that the mother would voluntarily place the children with … [the father] … in September. …

[78] In addition, it is significant that the mother has indicted that the father has never assaulted her physically, but she is frightened of him because she feels controlled. …

( … )

[81] Overlying these issues is the mother’s concession made in response to questions I put to her that she had secured an amazing job in Victoria with her brother and Y adores her father. In my view, it is also telling that the mother has done nothing to support the children’s relationship with their father since she moved them. They have had no phone calls, no video calls, no proposals for the exchange of Christmas gifts, nothing.

[82] In addition, although X naively said the mother was going to take the father to a judge, she has done nothing about bringing her concerns to the authorities of a Court and bringing an application to justify her actions.

( … )

[84] In all these circumstances, I am gravely concerned at the implications of [the mother’s] move from the perspective of the children’s entitlement to the benefits of having a meaningful level of relationship with their father. At the present time, the mother’s actions have effectively severed that relationship.

( … )

[89] I acknowledge the difficulty, particularly the difficulty to the mother, in respect of returning the children to live in South Australia. However, in my view, the difficulties which confront the mother should not preclude the Court from reaching the following conclusions:

  • Firstly, the circumstances facing the mother in October of 2022 were not of such gravity to justify her relocation of the children in the face of the father’s stringent opposition.
  • Secondly, at this point, I do not consider the mother’s allegations of family violence are of sufficient moment that it would represent an unacceptable risk to X and Y if they returned to live in Adelaide pending the outcome of this case. The mother can seek a family violence order. Other orders can be made to protect her. The parenting relationship between the parties can be regulated by a proper regime.
  • Thirdly, the proper forum to sort out the dispute between the parties is this Court in South Australia, and it would be contrary to public policy if the Court was, in effect, to endorse the mother’s unilateral action, which would be likely to make any final hearing about the issue of relocation otiose or redundant.

[90] In my view, these factors necessitate the return of the children to Adelaide pending final hearing. I will give the mother time to return to Adelaide, and in this regard, I think a period of 21 days is appropriate. …

( … )

[92] If the mother does not return the children by the date specified, which is 12 January 2023, the father will be authorised to apply for a recovery order without further reference to the mother, that is, the recovery order will be made and the police will be engaged to bring the father and the children to South Australia.”

Property – A tri-party deed of settlement to resolve District Court proceedings signed by husband, wife and insurer created an estoppel by deed

In Spalla (No. 2) [2022] FedCFamC2F 1723 (15 December 2022) Judge Neville heard a case where parties who married in 1978 could not agree when they separated, the wife saying August 2012 and the husband saying November 2019.

The wife relied on a deed of settlement that had resolved a District Court claim relating to a stolen motor vehicle. Insurer “E” had obtained judgment against the husband for $100,620. The deed was dated 31 January 2014. It stated that the husband and wife “are married but separated” and that the wife would pay $50,000 towards the debt.

The deed also said that the parties would enter into a binding financial agreement within 28 days and otherwise concluded their rights against each other on a final basis; and that each spouse had obtained independent legal advice.

The husband argued that where no binding financial agreement was signed, the deed did not bind the Court. He argued that the effect of the deed was limited to the District Court proceedings. He also argued that he had limited English skills and had not received legal advice in respect of the deed. The wife argued that there was no case to make a further adjustment of property per Stanford [2012] HCA 52.

The Court said (from [171]):

“… [T]he most complete summaries regarding the operation of Deeds, including detailed discussion of relevant case law, remain Seddon on Deeds (Second Edition) (‘Seddon’), and Estoppel by Conduct and Election (Second Edition) (‘Handley’), especially “Chapter 7: Estoppel by Deed.” …

[172] … [T]hose standard texts refer to, for example, the House of Lords decision in Greer v Kettle [full citation: Greer v Kettle [1938] AC 156], where Lord Maugham stated (at 170 – 171): …

The recital must relate to specific facts … be certain, clear, and unambiguous. … Estoppel by deed is a rule of evidence founded on the principle that a solemn and unambiguous statement … in a deed must be taken as binding between parties and privies, and therefore as not admitting any contradictory proof … This is a rule of common law.

[173] Of this decision, Seddon simply states that there is a form of estoppel ‘that is special to deeds … [which provides] that factual statements in the recitals to a deed are taken to be supposedly immutable as between the parties.’ … There follows in Seddon a lively discussion of this principle, including its application, by reference to a number of very recent decisions, notably but not only in the Supreme Court of New South Wales.

[174] Handley, with characteristic precision, supported by wide authority, comments: …

The party invoking an estoppel by deed does not have to prove that he relied on the statement and changed his position apart from entering the deed. Such an estoppel cannot be based on an implication and must relate to what on its face is an existing fact.

[175] … [I]n the very recent Court of Appeal (NSW) decision in Thumbiran v Silver Chef Rentals Pty Ltd [full citation: Thumbiran v Silver Chef Rentals Pty Ltd [2022] NSWCA 148] … the Court said: …

So long as the deed remains in place, those recitals are admissions ( … ) They were also apt to give rise to a common law estoppel to prevent him denying either matter see Franklins Pty Ltd v Metcash Trading Ltd [2009] NSWCA 407 ( … )

[179] … [I]n my view, it is plain that there was actual legal advice provided to the Husband, and equally that he had ample opportunity to obtain same otherwise. Thus, a central plank of the Husband’s argument about the so-called flaw with the Deed (i.e. the alleged lack of independent legal advice) has no basis at all, either as a matter of evidence, or as a matter of law. …

[180] It follows from this that, in accordance with the authorities noted earlier, the following findings are open to, and are made by, the Court: (a) the Deed … is valid, and (b) the Husband is estopped from denying the basal facts set out in the recitals, notably that, as at late January 2014, the parties were married but separated …

[181] On the basis of the authorities cited above, it follows that, in accordance with the clear terms of … the Deed, the Husband must be, and is, estopped from making any further claim, after the date of the Deed (January 2014), against the Respondent Wife … [B]y virtue of the terms of the [valid] Deed, the Husband is estopped from making any claim against the H Street, Town J property, or against ‘other marital property … ’

( … )

[183] In the course of a lengthy, detailed discussion of principle … Lindsay J said [in Labracon Pty Ltd v Cuturich [2013] NSWSC 97] … regarding the operation of ‘estoppel by deed’:

The essential idea of estoppel by deed is that a party who, by entry into a deed, expresses a solemn intention to be bound by a particular proposition will, in proceedings against a party entitled to the benefit of the deed, be precluded (ie, stopped), by reason of entry into the deed, from denying the truth, or at least the operation, of that proposition …

[184] … [T]he principles outlined by Lindsay J apply generally to the facts and circumstances here.

[185] In my view, generally speaking, in the context of the whole of it, the Recitals, and the operative parts, of the Deed … are ‘precise, clear and unambiguous.’ The Husband cannot now be permitted, effectively to ‘walk away’ from what he signed on that date. …

[186] For these reasons alone, the Application must be dismissed. …”

Property – Contributions made prior to a de facto relationship can be considered pursuant to s 90SM, provided that the parties subsequently enter into a de facto relationship that brings them within the jurisdiction of the court

In MacKinnon & Talbot [2022] FedCFamC2F 1738 (16 December 2022) Judge Morley heard an application for a de facto property adjustment where the applicant de facto husband was a 62 year old construction worker and the de facto wife was a 60 year old medical professional. There were no children of the relationship, but the de facto wife had a child from a previous relationship (“D”).

Although the parties cohabited between 2009 to 2015 such that it was agreed that there was a 6 year de facto relationship, the de facto husband’s case included contributions based on his being a “regular, he says daily, visitor” to the de facto wife’s home since 2005 ([39]).

The de facto husband’s pre-cohabitation contributions included painting, oiling floors, cleaning bathrooms, kitchens and windows; as well as carrying out renovations ultimately found by the Court as not being “any major structural repair or alteration” but rather “detailing improvements” ([56]).

The de facto husband also relied on day to day parenting in respect of D, his dropping D to and from school, looking after him on weekends while the de facto wife worked, taking him to sports training and sports events, attending school functions and assisting with school projects, all from 2005 ([131]-[136]).

The Court said (from [186]):

“When examining the authorities dealing with the relevance of contributions prior to commencement of cohabitation, the court is also assisted by a consideration of the authorities dealing with contributions made during a de facto relationship that at some point becomes a marriage…

[187] Those earlier authorities … make it plain that the contributions made during the de facto relationship prior to marriage can be relevant contributions jurisdiction was confined to marital relationships.

( … )

[191] In the unreported decision of the Full Court (Fogarty, Baker and McCall JJ) of Lozanov & Lozanov [1994] FamCA 60, a ground of appeal before the Court was that the trial Judge erred in holding that payments made by the Respondent for the wedding ceremonies were contributions under section 79(4) because the contributions were made prior to any cohabitation and the expenses did not have a sufficiently relevant connection with the subsequent marriage.

[192] The court held that:

… Contributions made by parties prior to their marriage, whether or not they are cohabiting, can be treated as coming within s. 79 provided that the parties subsequently marry and provided that the matters in question have a sufficiently relevant connection with the marriage to be treated in that way.

[193] The same must of course apply to contributions made by parties prior to commencement of their de facto relationship provided that the parties subsequently enter into a de facto relationship that brings them within the jurisdiction of the court under section 90SM.

( … )

[195] In Hamilton & Thomas [2008] FamCAFC 8 the Full Court referred to a statement made by the trial judge Le Poer Trench J after citing cases referred to above:

The clear conclusion arising from the above referred to cases is that cohabitation is not a necessary ingredient in order to consider pre-marriage contributions.

[196] Finally, and of course most authoritatively, the decision of the High Court of Australia in Hsiao v Fazarri [2020] HCA 35 makes it plain that contributions made prior to marriage or a de facto relationship may also be taken into account, approving Cronin J’s finding in the trial phase of the matter that a gift of a portion of real property made by one party to the other in April 2014, where the parties married in August 2016 and did not form a de facto relationship prior to the marriage, was properly treated as a financial contribution to the acquisition of the real property.”

After finding the net asset pool was $1,372,449 (including superannuation), the Court said (from [215]):

“Though the evidence on each side is conflicting and I have found I should be cautious in relation to the evidence of both parties, it is plain on the evidence that the Applicant made some contribution to the Respondent’s [properties] … prior to commencement of cohabitation and thereafter until its sale…

( … )

[217] I also find that the Applicant involved himself in the day-to-day parenting of Mr D, not to the full extent that he deposes, but certainly to an extent beyond that to which the Respondent deposed. Whilst this is not a contribution for consideration under section 90SM(4)(c) … it is a matter that the court can take into account under section 90SM(4)(e) when considering the matters in section 90SF(3) …

( … )

[231] In relation to the available asset pool, I find that the contributions of the parties favour the Respondent as to 87.5%, the Applicant’s contributions being 12.5%.

( … )

[255] I do not consider that the Applicant’s engagement with the parenting of Mr D in the period from 2005 until commencement of the cohabitation around mid-2009 should be a component of assessment of appropriate adjustment for this consideration, as I consider that during that period his actions were in line with those of a person in a non-cohabiting romantic relationship with a child’s parents who forms a relationship with a child and assists with the child’s parenting and occasional financial support, particularly in relation to outings and regular attendance at extracurricular activities, and that such does not have the necessary relevance in connection to the subsequent de facto relationship to be so considered.

[256] The Applicant’s participation in Mr D’s parenting and support during the six years of the de facto relationship is a matter that finds in favour of an adjustment in his favour.

[257] Overall I find that an adjustment in favour of the Applicant of 5% is appropriate in relation to the relevant considerations in section 90SF(3), and that such adjustment should be applied to both pools.

[258] Accordingly, [the] Applicant’s share of the net relationship pool on an alteration of the parties’ interests in the property is 17.5% [and] … the Respondent’s share is 82.5%.”

Property – Order that the parties do all things necessary to declare a deemed dividend could not be enforced by means of a third party debt notice nor s 106A

In Aitken (No. 6) [2022] FedCFamC1F 996 (14 December 2022) Wilson J heard an urgent application for enforcement of a final order that provided for the husband and wife to do all things necessary to cause their company (“D Pty Ltd”) to declare a fully franked dividend to cause a cash payment to the wife of $8,693,345.66.

D Pty Ltd was “controlled equally by both the husband and the wife” ([6]).

Although the husband argued that he intended to appeal the order, no notice of appeal had been filed, nor stay sought in respect of the order.

Relying on the existing order, the wife sought a third party debt notice issue against D Pty Ltd and orders that the Registrar “execute the necessary documentation to cause [D Pty Ltd] … to declare” the dividend ([11]).

After noting that the third party debt notice procedure is set out in rule 11 of the Federal Circuit & Family Court of Australia (Family Law) Rules 2021, the Court said (from [15]):

“The third party debt notice in the rules had its genesis in the Family Law Rules 2004 although not in identical terms. The 2004 third party debt notice rules more closely resembled rules of common law courts relating to the garnishee of a person’s wages or an attachment of debts, especially rules 20.30 to 20.41. The 2021 rules are more elaborate.

[16] … [T]he third party debt notice provisions are in division 11.1.4 of the 2021 rules which is expressed to apply to any one of three sets of circumstances. The first is money deposited in a financial institution that is payable to a ‘payer’ on call or on notice. …

[17] The second circumstance to which rule 11.32 applies is where a third party is required to pay money to a person (described as ‘the payer’) from the date when the enforcement order is served on the third party. …

[18] The third circumstance to which rule 11.32 applies is earnings payable to a payer. …

( … )

[23] A ‘payer’ is defined to mean a person who has an obligation to pay money to a payee under, relevantly, an order. A ‘payee’ is defined to mean a person who is entitled to take action against a payer to enforce an obligation to pay money created (relevantly) by an order with which the payer has not complied. A ‘third party debtor’ means a person from whom a payee claims that a debt is owed to the payer.

( … )

[25] According to ordinary parlance, D Pty Ltd was not a ‘debtor’ of the wife nor is the sum to be paid to the wife ‘a debt’ owed and, in the configuration of entities presently relevant, the wife is not the ‘payer’. She may be a payee. She is receiving a payment of money. …

[26] … [T]he relevant wording was ‘ … to cause [D Pty Ltd] to declare a fully franked dividend so as to cause a cash payment to the wife in the sum of $8,693,345.66.’ At face value it would seem peculiar to construe [that] paragraph … as involving a positive requirement on D Pty Ltd to pay the wife a specific sum. The order is not expressed in such manner that D Pty Ltd must pay the wife the specific sum stated or on a particular date. …

( … )

[28] [That] paragraph … is to be construed as the outcome of a s 79 application in which property interests of the parties have been altered in such manner that the sum of $8,693,345.66 is to be transferred to the wife. To contend that a ‘debt’ is thereby created seems to me to strain the concept of an action for debt … If the dividend were not declared, did the wife have a debt that she could pursue? In my view, she did not. [The solicitor for the husband] … submitted that, in this case, any obligation upon D Pty Ltd to pay the wife the sum specified … was conditional upon the declaration of the fully franked dividend and that unless and until such a dividend was declared, no obligation fell upon D Pty Ltd to pay the wife any amount. There is force in that submission. … ”

As to s 106A and the wife’s application for the Registrar to “execute the necessary documentation” to declare the dividend, the Court said (from [34]):

“[The solicitor for the husband] … submitted that the final order … did not direct any party specifically to execute an identified deed or instrument. That was true. The order said no such thing. The draft … was prepared by the wife’s counsel. It was expressed in the passive tense of ‘causing’ an event to occur and it did not identify that a particular person was directed to execute a deed or instrument. It seemed to me that [the solicitor for the husband] … was correct in his contention that the threshold requirement for the invocation of s 106A had not been engaged in this case.

( … )

[35] … Under no construction of paragraph 16 could it be said that the paragraph was an ‘order’ by which a person was ‘directed to execute a deed or instrument’ as s 106A stipulates. … [T]hat disposed of the s 106A application.

( … )

[38] One of the largest impediments to the grant of relief the wife seeks in this application is the fact that no order has yet been made requiring the husband to execute a specific document.

[39] In those circumstances, I direct the husband to execute forthwith the resolution marked ‘A’ to these reasons.

[40] If the husband fails or refuses to execute that resolution … then I order that a registrar of this court executes that resolution in the husband’s name … in pursuance of s 106A of the Family Law Act. A similar approach was adopted by Austin J in paragraph 4 of his Honour’s reasons in Woodhurst & Rubbens [full citation: Woodhurst & Rubbens (No 2) [2016] FamCA 786] …”

The Court also ordered that the wife (as director of D Pty Ltd) have authority to pay $8,693,345.66 from D Pty Ltd’s bank accounts to her own accounts, in reliance on “rule 11.07(e) as the jurisdictional foundation for the making of that order” ([40]).

Property – Trial judge (who referred to the parties’ relationship as “romantic” and for whom the absence of a mutual commitment to a shared life was determinative) applied the wrong test in determining whether a de facto relationship existed – “Unnecessary and erroneous” to attempt to define the different categories or labels for a relationship that does not meet the statutory test prescribed by s 4AA(1)

In Denys & Kellett [2022] FedCFamC1A 223 (23 December 2022), the Full Court (Austin, Rees & Kari JJ) heard an appeal from a decision of Judge Harland where the applicant sought the declaration of a de facto relationship, but the respondent argued that while the parties had lived together for 5 years, the applicant was a “renter” and that they were “friends with benefits” ([9]).

The applicant said that the parties were in a de facto relationship for 7 and a half years, 5 of which they lived together ([8]).

At first instance, the Court rejected that they were “friends with benefits” and found that there was a “romantic relationship”, but concluded the applicant had not established a de facto relationship due to a “lack of evidence of there being a mutual degree of commitment to a shared life” ([28]).

On appeal, the Full Court said (from [11]):

“The primary judge … properly focussed her enquiry on the various factors set out in s 4AA(2).

( … )

[28] … [T]he primary judge found that while satisfied the parties lived together for five years, there was a ‘lack of evidence of there being a mutual degree of commitment to a shared life’.

[29] However, the test to which the primary judge should have had regard, was that prescribed by s 4AA(1)(c), namely whether in having regard to all the circumstances of the relationship, the parties were ‘living together on a genuine domestic basis’, of which the mutual degree of commitment to a shared life was but one of the relevant considerations (s 4AA(2)(f)).

[30] While it might be observed that the primary judge addressed the relevant factors set out in s 4AA(2), the primary judge’s focus on only two of those factors … (living together and mutual degree of commitment to a shared life), appears to elevate the ‘mutual degree of commitment to a shared life’ to the status of being determinative of the seminal question.

[31] The authorities … make it clear that no single factor prescribed by s 4AA(2) is necessarily determinative.”

The Full Court noted that the primary judge had found various facts such as that the parties shared a bed and bedroom; their sexual relationship; that the applicant had “made regular modest payments to the respondent while they lived together”; that they went on “various outings together”; that the appellant had “visited him in hospital for almost two weeks”; that they “went to family events together for each other’s family” and that they “held themselves out to being in a “romantic relationship” ([32]).

The Full Court said (from [33]):

“It is not apparent to us how those factors weighed into the ultimate determination that the parties were not living together on a genuine domestic basis, and thus not in a de facto relationship. The solitary finding about the absence of a mutual degree of commitment to a share life is not only difficult to fathom in the face of the other findings, but also seems to have been used to outflank the other findings made by the primary judge.

[34] It is for this reason that we consider that the primary judge applied the wrong test in determining whether a de facto relationship existed between the parties.

( … )

[35] … [T]he primary judge found that the relationship of the parties was a ‘romantic relationship’ …

[36] The term ‘romantic relationship’ is not one to which any reference is made in s 4AA. Nor is it one that the primary judge sought to define in the reasons; even if it is capable of definition.

( … )

[38] While it might have been open on the evidence for the primary judge, having weighed all of the factors in s 4AA(2), to ultimately conclude that the relationship between the parties was something less than a de facto relationship, we consider that it is unnecessary and erroneous to attempt to define the different categories or labels that might be put on any relationship that does not meet the statutory test prescribed by s 4AA(1).

[39] Put more simply, the findings made when considering those factors in s 4AA(2) either support the ultimate finding that the parties are living together on a genuine domestic basis, and thus in a de facto relationship, or they do not.

[40] We are of the view that by focussing on a characterisation of the relationship between the parties, rather than addressing the seminal question, the primary judge was drawn into error.”

The proceedings were remitted for rehearing. Costs certificates were issued to the applicant.

Property – Incontrovertible facts demonstrated that de facto husband and wife held properties on trust for his parents, irrespective of findings that witnesses were “unreliable”

In Davis & Peterson [2023] FedCFamC1A 13 (17 February 2023), the Full Court (Tree, Christie & Schonell JJ) heard an appeal from a decision of Campton J where parents of a de facto husband owned two properties in New South Wales.

After owning those properties for more than 5 years, the parents fell into financial difficulty and made arrangements with their son (the de facto husband) and the de facto wife, whereby the couple paid out the parents’ mortgage and the properties were transferred into their joint names.

While the properties were valued at $825,000, the de facto husband and wife only paid the mortgage amount ($686,000). Stamp duty was paid by the parents. All rental income in respect of the properties continued to be paid to the parents, notwithstanding the transfer ([11]).

The parents alleged that there was an agreement that the properties would ultimately be transferred back to them at their request and the de facto husband and wife held the properties on trust for them, via a bare trust or via a common intention constructive trust ([15]).

The de facto husband agreed with his parents’ position. The de facto wife disputed that there was any trust, seeking property adjustment orders to which the parents were joined as parties.

At first instance, the Court found that the parents’ and son’s evidence was “unreliable” ([37]) and adverse inferences were drawn as to the failure to call witnesses ([39]). The Court rejected that there was a trust.

On appeal, the Full Court said (from [34]):

“Senior counsel for the appellants pointed to the complete absence of any evidence in the [de facto wife’s] … affidavit to establish a purchase of the properties. Rather, her affidavit demonstrated that she and the [de facto husband] … had done no more than take a mere transfer of the properties; they had not effected a purchase. The appellants relied upon the … [de facto wife’s] … admission in cross-examination that she had never asked what the ‘purchase price’ of the properties was. The appellants submitted that there was no evidence of a Contract for Sale and Purchase of Land and that the use of a Real Property Act transfer did not evidence a purchase; it being the only method by which a transfer of land can occur short of a transmission application following death. There were no monies paid by the [de facto husband and wife] … other than the monies obtained under the mortgage and there was no subsequent dealing by them with the properties consistent with ownership. Put simply, the appellants say there was no evidence to support the idea of a purchase.

[35] … Senior counsel submitted correctly that no party had suggested that the properties or part of the equity were gifted nor did the primary judge make any such finding. He submitted that the idea of a gift of equity of approximately $200,000 in light of the dire financial circumstances of the appellants was illogical.

( … )

[39] The judgment makes clear that the primary judge was not satisfied that the appellants had discharged the onus of proof to establish a trust. Such conclusion was based primarily on credit findings but also upon adverse inferences drawn from the failure to call witnesses, documents that were said to be inconsistent with a trust, the absence of documents evidencing a trust and what was said to be the implausibility of a trust arrangement. …

( … )

[44] We accept the submissions of the appellants’ senior counsel that there was no evidence that the first and second respondents purchased the properties. There was no contract to purchase, no discussion of a purchase price nor any payment of monies being the difference between the sum borrowed and value of the properties or the sum stated in the transfers. It was illogical that persons in the dire financial predicament facing the appellants would gift approximately $200,000 to one of their three sons and the [de facto wife] … A purchase … is inconsistent with the appellants paying the balance of the stamp duty on the transfer. Following the transfers, the [de facto husband and wife] … did not assume occupation, receive the rent or make a payment towards any loan payments or the outgoings. There was no evidence that the [de facto husband and wife] … ever acted consistently with the acquisition of a beneficial interest. … Their entire conduct was consistent with that of a bare trustee.

[45] In those circumstances there was only one other alternative available on the incontrovertible facts, that of a trust.

[46] The incontrovertible facts demonstrated that the appellants acted at all times consistently with the retention of a beneficial interest in the properties. …

[47] We are satisfied that the primary judge, notwithstanding the at times irreconcilable morass of evidence before him, including the credibility issues, did not deal with the incontrovertible facts. In failing to do so the primary judge erred. The common intention inferred from the conduct of the parties evidenced by the incontrovertible facts, irrespective of the credibility of the parties, led inescapably to only one conclusion, namely that the properties were held by the [de facto husband and wife] … on trust for the appellants.

[48] A trust arrangement was not implausible, rather it was the only logical and plausible conclusion consistent with the incontrovertible facts. The incontrovertible facts are sufficient to establish a common intention trust or in the alternative to justify the imposition of a remedial constructive trust of the kind identified by their Honours in Muschinski v Dodds [1985] HCA 78 … ”

The Court declared that the de facto husband and wife held the properties on trust for the parents. The de facto wife and her trustee in bankruptcy were ordered to pay fixed costs of $98,683.51.