Jaswinder (Jas) Sekhon, Author at Goldman Law - Page 2 of 15

Failure to Provide Full Disclosure Confirmed as a Ground for Setting Aside Property Consent Orders

Keywords: Consent orders; full and frank disclosure; informed consent; miscarriage of justice; section 79A; property orders; disclosure.

The case of Pearce & Pearce [2016] FamCAFC 14 (11 February 2016) was an appeal brought by the husband against the orders of Justice Dawe (“trial judge”) of the Family Court of Australia made 12 December 2014.  The appeal was dismissed by the Court and costs were awarded against the husband.

Background

In July 2005 the husband and wife both signed consent orders to settle property proceedings between them in the Family Court of Australia (“Family Court”).  The consent orders provided that the wife receive payment of $185,000 and one property and the husband receive two properties and his share in an unprofitable business.

The consent orders also contained a notation that the husband was negotiating to obtain a 50% share in a company (“E”) and the value of the acquisition if successful would be $200,000.  In the parties’ joint application for consent orders, it stated E made a profit of $50,408 in 2004 and there was no expectation of a significant increase in income over the next few years.  Around the time of signing the consent orders, the husband was finalising his purchase of a 50% share in E, with the estimated value in fact being $500,000.  This was not disclosed to the wife.  Further, it transpired that E had earnings of $757,144 and a net profit of $623,000 for the financial year up to 31 January 2005.  This was not disclosed to the wife.

The parties did not have any professional valuations completed on their properties and they both agreed upon estimates.  Around the time of signing the consent orders, the husband estimated the value of a property “D” at $550,000.  However, he also made separate representations when seeking finance that property D was worth $700,000.  This was not disclosed to the wife.

The trial judge concluded that the husband failed to disclose significant information concerning the negotiations and acquisition of company E and he failed to disclose that he had made representations that property D was worth $700,000.  As a result, the trial judge found there was a miscarriage of justice under section 79A of the Family Law Act 1975.  Section 79A allows a court to set aside previous orders where there has been a miscarriage of justice.  The trial judge found that had the wife been aware of the information about property D and company E she would have made further inquiries as to their true value.  As a result, a miscarriage of justice occurred and the trial judge made an award in the wife’s favour.

The Appeal

Judges Murphy, Aldridge, and Forrest from the Family Court heard the appeal. The husband appealed on 21 grounds.  The primary grounds of appeal were that:

  • the retrospective valuation of the properties was erroneous and any difference in value did not result in a miscarriage of justice;
  • evidence of the retrospective valuation of company E was carried out by a person lacking expertise;
  • the value of company E did not amount to a miscarriage of justice and any other decision was an error of discretion, fact and principle; and
  • there was no miscarriage of justice.

Retrospective Valuation of Properties

The husband claimed that the difference between the values used in 2005 and the retrospective valuation of the properties did not amount to a miscarriage of justice.  In the trial proceedings, the trial judge decided that had the wife been aware of the husband’s representations that D property was worth $700,000 and not the claimed $500,000 she would have made further inquiries and this was a miscarriage of justice under section 79A of the Act.

The Court upheld the trial judge’s decision on grounds that the wife’s consent was not fully informed, stating consent orders demand full and frank disclosure.

Company E Shareholdings

The husband claimed the retrospective valuation of company E was unreliable as the accountant who valued the company lacked skill.  The Court found that the trial judge’s decision was not about the value of the company in 2005 but the lack of disclosure of the negotiations and proposals for the husband’s acquisition of 50% of the company.  This amounted to a miscarriage of justice as the wife is aware of the true circumstances could have made inquiries into the actual value of the company.  The Court dismissed this part of the husband’s appeal.

 Miscarriage of Justice

The husband claimed there was no miscarriage of justice as he did not have knowledge of the value of the D property nor was he sure about the future income from E company.

In considering miscarriage of justice under section 79A of the Act, the Court stated that a miscarriage of justice comes about because a party’s consent is not free or informed.  This can occur where another party fails to disclose relevant information.

The Court considered that based on the evidence, the husband knew of the possibility that the value of the D property was higher than the value used by the wife.  In considering the E company, the Court found that the husband knew that it was likely his income from the company would increase significantly around the time he signed the consent orders and he did not disclose this to the wife.  As a result, the Court found there was a miscarriage of justice.  The Court dismissed the husband’s appeal and awarded costs against the husband.

Conclusion

In this case the husband knew information about a joint property and a business he was negotiating to acquire which would have been relevant if disclosed to the wife about the value of the property and business.  Had the wife known about the information she would have made further inquiries revealing a higher value.

A key requirement of the Act in relation to property settlement is that parties provide full and frank disclosure.  Full and frank disclosure includes information that would suggest an asset, business, or income is a different value from prior representations.  Where full and frank disclosure does not occur it may amount to a miscarriage of justice.  Where miscarriage of justice does occur a Court may vary a previous property settlement under section 79A of the Family Law Act 1975 to take into account relevant information that was not disclosed.

Read More

Family Court Upholds an Appeal That Children Were Habitually Resident in Finland and Should Be Returned

The case of Commonwealth Central Authority & Cavanaugh [2015] FamCAFC 233 (11 December 2015) was an appeal brought by the Commonwealth Central Authority against the orders of Deputy Chief Justice Faulks (“trial judge”) of the Family Court of Australia.

The trial judge had to determine whether children should be returned to Finland under international child abduction laws.  The key question was whether the children were habitually resident in Finland or not.  If they were, they would need to be returned to Finland, otherwise, they would remain in Australia.  The trial judge found the children were not habitually resident in Finland.

On appeal, the Court overturned the trial judge’s decision and found the children were habitually resident in Finland and should be returned to Finland.

Background

The mother in this matter was a dual citizen of both Australia and Finland.  The father was an Australian citizen.  They had 3 children together between the ages of 14 and 8.  The parties married in 1996 and moved to the United Kingdom and stayed there for 8 years.  In 2002 they moved to Finland for two months and then from November 2002 they lived in Australia.  On 16 June 2014 the family traveled to Finland to live for a year.  In March 2015 they temporarily returned to Australia for a wedding.  While in Australia the father and mother separated.  The children stayed with the mother.  The father took the children’s passports and refused to let the children return to Finland.

Opposing Applications for Child Recovery and Parental Responsibility of the Children

On 31 March 2015, the father filed an application with the Federal Circuit Court of Australia to have the children placed on the Airport Watch List.  Further, on 8 April 2015, the father sought a recovery order for the children and had the proceedings transferred to the Family Court of Australia.

Meanwhile, on 3 April 2015, the mother filed proceedings in the Helsinki District Court of Finland to have an order made in her favour for interim sole custody (parental responsibility) of the children.

Return of Children to Finland

Having received the mother’s application for interim sole custody, the Finnish Authorities made a request on 12 May 2015 to the Commonwealth Central Authority for the children to be returned to Finland.  The Commonwealth Central Authority brought proceedings against the father.  The matter proceeded to trial for determination.

Trial Proceedings

On 6 July 2015, the trial judge considered whether the children should be returned to Finland under The Hague Convention on the Civil Aspects of International Child Abduction (“Hague Child Abduction Convention”).  The Hague Child Abduction Convention applies in Australia through the Family Law (Child Abduction Convention) Regulations 1986 (Cth) (“Child Abduction Convention Regulations”).

The primary consideration was regulation 16 of the Child Abduction Convention Regulations.  This regulation provides that a return order can be made where the removal or retention of a child was wrongful, the child is 16 years of age, the parent has a right to custody and the child was habitually resident in a Hague Child Abduction Convention country immediately before removal. In his deliberation, the trial judge found the parent’s agreement to remain in Finland for 1 year amounted did not amount to habitual residence.  As a result, the return order application failed.

Appellate Proceedings

The Commonwealth Central Authority appealed on three grounds being:

  1. the trial judge did not give sufficient weight to regulation 1A(2)(a) and (b) of the Child Abduction Convention Regulations;
  2. the trial judge gave:
    1. too much weight to the absence of a settled common intention to live in Finland for more than 1 year; and
    2. too little weight to the settled common intention of the parents to remain in Finland for at least 1 year.
  3. the trial judge failed to take into account all of the circumstances of the parents and children’s ties to Finland.

The Court determined that the primary consideration is whether the parents have a shared common intention that the children live in a particular place.  After this, a broad-based inquiry of all other relevant circumstances should be made.  The Court determined that the regulations favour a determination of habitual residence as opposed to a finding of no habitual residence.  Where there is no finding of habitual residence then no child abduction protection exists under the Child Abduction Convention Regulations.

Based on this information the Court determined the grounds of appeal of the Commonwealth Central Authority as follows:

  1. The trial judge gave too much weight to the absence of a settled common intention for the children to live in Finland. The Court considered that the children were in school in Finland, the mother was employed, the parents had established a residence, the children had relatives in Finland and the mother and father were receiving benefits from the central government including health benefits.
  2. The trial judge made an error in his determination that a common settled intention to live in Finland for 1 year did not amount to habitual residence. A common intention to reside in a country for less than 12 months can amount to habitual residence.
  3. The Court found that there was no evidence that the trial judge ignored the circumstances of the parent’s and children’s ties to Finland. The trial judge made a thorough investigation.

As the Court found the first two grounds of the Appeal proven, it found that the children were habitually resident in Finland.  As such regulation 16 of the Child Abduction Convention Regulations applied and the return order for the children to be returned to Finland was granted.

Conclusion

In this case, the parents and children left Australia to live in Finland for a year.  They returned to Australia after 9 months for a wedding.  After the parents separated while in Australia, the father refused to allow the children to return to Finland.  The Finnish Authorities requested the children be returned to Finland under the Hague Child Abduction Convention.

The primary determination was under regulation 16 of the Child Abduction Convention Regulations which requires that children be habitually resident in a country before they can be returned to that country.  The primary consideration in answering these questions is whether the parents have or had a shared common intention to live in the country.  Having considered this, the secondary consideration includes all other relevant matters that show ties to the country of claimed habitual residence.  While a finding of no habitual residence can be made, Courts will prefer a finding that habitual residence does exist between country members to the Hague Child Abduction Convention; otherwise, no child abduction protection may be available.

Read More

Full Court of Family Court Confirms There Can Be Two Types of Financial Agreement in One Document

Key Words

Financial agreements; de facto partners; Part VIIIA and Part VIIIAB financial agreement; the validity of the certificate of legal advice

Introduction

In Piper & Mueller [2015] FamCAFC 241 (18 December 2015) the Full Court of the Family Court (Ryan, Murphy & Aldridge JJ) heard an appeal against Judge Willis’ decision in Piper & Mueller [2014] FCCA 2659.

This appeal addressed the issue of having two separate agreements co-exist within one document. It was put forward by Piper that a de facto agreement pursuant to s 90UC o the Family Law Act 1975 could not exist within the same document as an agreement upon marriage pursuant to s 90B. Ryan & Aldridge JJ provided detailed reasoning to the contrary for dismissing Mr. Piper’s appeal. They found that whilst both agreements could be found to co-exist in the same document, it was clarified that only one agreement would have an operative effect at any given time, therefore, upon marriage the de facto agreement would cease to have an effect.

The reasoning at First Instance

At first instance, it was held that an agreement made under both s 90UC and s 90B of the Family Law Act 1975  binding under s 90UJ (1A). Mr Piper unsuccessfully argued that the agreement could not have been validly made pursuant to both sections of the Act, therefore, the agreement was defective as the certified legal advice referred to the “advantages or otherwise” of the agreement as opposed to “the advantages and disadvantages” of entering into the agreement required by s 90UJ.

The reasoning at the Appeal

Ryan & Aldridge JJ expressed that there was no apparent issue between people being in a de facto relationship and also contemplating marriage.  Subject to certain provisions of the Family Law Act it was possible to have a single agreement deal with the distribution of their assets upon the breakdown of their de facto relationship or the ending of their subsequent marriage.  Both judges were, however, of the view that financial agreements under Parts VIIIA and VIIIAB are different.

It was evident in this case the parties were in a de facto relationship and accordingly entitled to enter into a financial agreement under s 90UC. In addition to this, they were contemplating marriage which further entitled them to enter into a binding financial agreement pursuant to s 90B. The pivotal fact in relation to these circumstances is that the two financial agreements can exist concurrently and in one document.

This was reinforced by the fact that only one of these financial agreements could have an operative effect at any one time. This is demonstrated as the s 90B financial agreement would operate in the event of a marriage breakdown in accordance with s 90B (2) (a), which requires a prior marriage to have existed.

Alternatively, an agreement under s 90UC ceases to be binding on parties getting married in accordance with s 90UJ (3). Ryan & Aldridge JJ expressed the view that it is possible for both agreements to co-exist, however, upon entering in to a marriage, the operation of the de facto agreement pursuant to s 90UC becomes null and void, leaving the s 90B financial agreement operational. This indicates that the two agreements are complementary as opposed to exclusionary as both may be binding on parties at the time of execution, however, only one can have an operative effect at any given time.

Decision at the Full Court

Ryan & Aldridge JJ further addressed the issue of providing different types of advice in accordance with each agreement. They were both of the views that there was no reason why both types of advice could not be given to a party prior to signing a document containing both s 90UC and s 90B agreements. Murphy J delivered different reasoning but agreed that “nothing within the legislation precludes a financial agreement from including both s 90B and s 90UC agreements”. On this basis, the appeal was dismissed with costs.

Read More

Family Court Allows Appeal for Property Settlement Application Out of Time

Key Words

Family law, property settlement; out of time; section 44, hardship, leave for out of time application.

The case of Slocomb v Hedgewood [2015] FamCAFC 219 (12 November 2015) was a Family Court of Australia (“FCA”) Full Court hearing to determine to leave to appeal a decision made by the Federal Circuit Court of Australia (“FCC”). The matter was heard by Judges May, Ainslie-Wallace & Johnston.

The Wife in the case had submitted an application for property settlement. The Application was 18 years outside of the statutory time limit. The Wife’s application was refused by the FCC as she did not provide an adequate explanation for lodging outside of the time limit. The Wife sought leave to appeal the FCC decision to the FCA.

Background

The Husband and Wife commenced living together and married in 1989. After about 5 years the parties separated in 1994. During the period they were married they had 3 children together. At the time of separation, the children were 4, 3 and 1 years of age. In September 1995 the parties divorced.

At separation, the main property available for the division was the family home with equity of $15,000, furniture worth $10,000 and a car worth $12,000. When the parties separated the Wife took the car. In 1994 the Wife’s solicitor wrote a letter to the husband proposing terms of settlement and arrangements for the children. This letter stipulated that the Wife would take the car and some items of furniture and in return the Wife would transfer her interest in the family home to the Husband. In addition, it stated that the Wife would have sole care (then referred to as custody) of the parties’ children. The Husband did not agree with the care arrangements for the children and settlement did not occur.

Out of Time Application

When asked why her Application was brought 18 years out of time, the Wife stated she was not aware of the time limit. The Primary Judge considered the parties’ circumstances including that the Wife had taken the children into her care after separation, she had made no contribution to the mortgage on the home, she received the car at separation and some items of furniture. The Husband had paid child support for the children and he had paid the mortgage on the parties’ home and improved the property.

In considering if leave should be granted for property settlement outside of the statutory time limit, the Primary Judge referred to section 44 of the Act. Section 44(3) stops proceedings being brought outside 12 months from the date of divorce. However, leave can be granted under section 44(4) to bring an application for settlement outside of the time limit where hardship can be established. The Primary Judge found that hardship could be established. This was because while the Wife could pursue her property rights through State courts, her post-separation contribution would not be considered by State courts.

Despite hardship being found, the Primary Judge concluded that leave should not be granted. The grounds of refusal being that the Wife did not have an adequate explanation for bringing her Application 18 years out of time and allowing her to proceed would prejudice the husband.

Principles for Out of Time Applications

The Wife submitted an Application to the FCA for leave to appeal the FCC’s decision. In considering the Wife’s application for leave to Appeals the Court considered the case of McDonald and McDonald (1977) FLC 90-317. This case determined that in order to bring an out of time application an applicant must establish:

1. that a case for relief exists;

2. that denial of the claim would cause hardship; and

3. an adequate explanation for the delay.

In considering these principles, the Court established that the first two principles had been met. The Wife had a case for property settlement and she would be in hardship if her Application was denied.

The Court considered the Wife’s explanation for bringing her Application out of time. The Wife’s stated she was not aware of the time limit. The Court took into account that the Wife engaged a lawyer after a separation and the time limit was stated on paperwork for her divorce.

The Court referred to the case of Althaus and Althaus (1982) FLC 91-233; (1979) 8 Fam L R 196 where it was found that the degree of hardship experienced by an applicant may outweigh an inadequate explanation for bringing an out of time application.

The Court then stated that while considering the three principles in McDonald and McDonald, it also had to consider any prejudice to the other party. The Court considered the case of Sharp and Sharp [2011] FamCAFC 150; (2011) 50 Fam LR 567 where that Court stated there is a presumption of prejudice to a party where an application is brought out of time. However, the Court determined the Husband had not pursued his settlement rights until 2012 and this should be taken into account.

The Court using the principles above decided that the Primary Judge had made an error of law in the original finding. The Court granted the Wife’s leave for appeal and determined that the matter should be reheard. The primary reason was that it would be unjust to both the Husband and Wife if their legal position with regard to their property were to remain as is. While the parties could pursue their property rights in State court this would not ameliorate the Wife’s hardship and this outweighed the Wife’s inadequate reason for bringing her Application out of time and any prejudice caused to the Husband.

Conclusion

In this case, the Wife brought an Application for property settlement 18 years after the expiration of the statutory time limit found under section 44 of the Act. However, section 44(3) allows the court to accept an application outside of the statutory time limit but only where a case for the relief sought exists, denying the claim would cause hardship and an adequate reason for the delay has been provided. Other factors a court will take into account include prejudice to the other party for allowing an out-of-time application.

In this case, the Court decided that it would be unjust to both parties to leave property matters between them unsettled. The Court granted leave to appeal and determined the matter was to be reheard.

Read More

Court Confirms That Income from a Loan Agreement Is Income for Child Support Assessment Purposes

Key Words

Child Support; Social Security Appeals Tribunal; unreasonableness, WednesburyUnreasonableness, financial resources

In Baylden & Anor [2015] FCCA 2886 (29 October 2015), the father appealed against a Social Security Appeals Tribunal (“SSAT”) decision on various grounds, one of which was that the SSAT made an erroneous finding that its decision was unreasonable and/or an offence to logic.

The father was self-employed and received $15,000 per month by way of repayment of loans to him under a loan agreement. As such, the Child Support Registrar reflected the father’s income with the receipt of loans for the purpose of child support assessment.

Decision at the SSAT

The Tribunal found that Mr. Baylden had an annual resource being the terms of a loan of $180,000 per annum tax-free, or $287,000 grossed up. Although the loan agreement may be acceptable to the Commissioner of Taxation, the benefits under the loan have a different treatment for the purposes of child support.

According to the Tribunal, it could not be argued that Mr. Baylden was receiving $15,000 per month under a ‘loan’ contract yet not receiving any wages despite the fact that he was responsible for the operation of the business. Furthermore, evidence from Mr. Baylden that he cannot be paid a salary whilst the business was in its growth stages was unconvincing, especially given that he employed 10 staff and the company turnover was in the vicinity of $2 million per annum.

Reason for Decision

Counsel for the Child Support Registrar argued that it was reasonable for the Tribunal to find that the money that was received under the loan agreement was a financial resource as it was clearly a financial benefit that enhanced the Appellant’s capacity to provide the proper level of financial support to his children.

Furthermore, the SSAT’s decision was not ‘unreasonable’ to the extent of being an error of law because there is no error of law in making a wrong finding of fact, as stated in Tasman & Tisdall (SSAT APPEAL) [2010] FMCAfam 425.

Mr Baylden argued that the tribunal’s decision was so unreasonable that no reasonable decision-maker could have reached it. This is known as the Wednesbury unreasonableness test (Associated Provincial Picture houses Limited v Wednesbury Corporation [1947] EWCA Civ 1; [1948] 1 KB 223 at 230). However, Katzmann J stated that the tribunal’s decision was not unreasonable, let alone so unreasonable that no reasonable decision-maker could have reached it.

As such, the Court agreed with the submission that the Tribunal was entitled to find from the Appellant’s evidence at the hearing that he received $15,000 per month from the business. The Court was not satisfied that it was unreasonable of the Tribunal to make the finding that it did, which was that the Appellant’s annual income and financial resources should be used in the child support formula set out in the Child Support (Assessment) Act. As such, the father’s appeal was subsequently dismissed.

Read More

Full Court Finds No Error In An Interim Injunction To Preserve Assets Pending Determination Of Jurisdiction

Key Words

 Interim Injunctions;  Jurisdiction, Binding Financial Agreements; Family Law Act 1975 (Cth)

Background

In Teh & Muir [2015] FamCAFC 224 (2 December 2015), the Full Court heard an appeal by a 36-year-old Ms. Tey against an interim asset prevention order that was made by Dawe J.

The appellant and her son moved to Australia in January 2010 on a temporary visa and lived with the 85-year-old respondent’s, Mr Muir’s, home. On 19 February 2014, both parties purportedly entered into a financial agreement under section 90UC of the Family Law Act 1975 (Cth) that provided that upon the breakdown of the parties’ relationship, all properties shall be divided equally regardless of whose party’s name is on the title of the assets.

The respondent subsequently moved into a nursing home and on 29 May 2014, Ms. Tey issued proceedings to enforce the financial agreement whereby the respondent filed his response by case guardian (his daughter). The respondent argued that he had never been in a de facto relationship at the time of the financial agreement and that he did not have the mental capacity at that time to make the said agreement. As such, he sought an order that the agreement be set aside and the net proceeds of the sale of his home are paid to him.

At First Instance

In the first instance, Dawe J made interim orders that half of the proceeds be paid to the respondent and the other half be held in his solicitor’s trust account. The appellant, Ms. Tey, was also to disclose statements for bank accounts in her and her son’s name and be restrained from dealing with or disposing of any funds held in any bank account except for day-to-day needs.

As a result, Ms. Tey appealed and argued that because of the binding financial agreement that was in place, the judge had no jurisdiction to make the aforementioned orders.

At the Appeal

The issue at hand on appeal was whether or not a de facto relationship ever existed between the respondent and the appellant. If there was no such relationship, there would be no jurisdiction in a court exercising jurisdiction under the Family Law Act to determine the dispute between the parties.

On the other hand, if there was a de facto relationship in existence and the respondent continued to challenge the validity of the allegedly binding financial agreement, the question for the court was whether the jurisdiction of the Court to make orders concerning the financial matters of the parties would be excluded until the status of the agreement had been determined.

Finn & Strickland JJ said that it was appropriate for the Family Court to preserve the sale of the proceeds that were in dispute by granting an interlocutory injunction while the Family Court determined whether or not it has jurisdiction to hear the matter. As such, the judge in the first instance did not err in making the order that would preserve the disputed funds pending determination of issues concerning the jurisdiction of the Court to make orders concerning those funds.

Ryan J agreed with Finn & Strickland JJ but gave different reasons for his decision.

Section 31(1)(aa) of the Family Law Act states that the Court has original jurisdiction to determine matters that arise under the Act in respect of de facto financial causes, which includes proceedings to a financial agreement. As such, the primary judge was invested with jurisdiction to determine the various challenges made by the respondent to the validity of the binding financial agreement.

Furthermore, the restriction to the applicant’s access to her accounts and the proceeds of the sale of the property are interlocutory asset preservation orders that are designed to ensure that the property in dispute is preserved pending final orders. As such, the applicant’s challenge to the interlocutory orders made by the primary judge failed.

It was held that because section 34 of the Family Law Act 1975 confers general power to the Court to make orders (including interlocutory injunctions) provided that the Court has jurisdiction (which it has as explained in the previous paragraphs), hence the appeal was dismissed with costs.

Read More

Family Court Confirms the Need for Clear Terms in Property Consent Orders which Particularise Parties’ Intentions

Key Words

Property settlement; consent orders; interpreting consent orders; construction of consent orders; consent orders evincing an intention; interpreting a contract.

The case of Dace & The Estate of the Late A Dace [2015] FamCAFC 215 (12 November 2015) was a Family Court of Australia (“FCA”) appeal heard by Judge May.  In this case, the Appellant Husband appealed to the FCA asking it to reverse an earlier decision made by the Federal Circuit Court of Australia (“FCC”).

Background

The Husband and Wife separated and on 23 December 2010, the Wife commenced proceedings for property settlement orders in the FCC.  The parties came to an agreement for the settlement of property by way of consent orders which were made on 26 September 2011.

The parties agreed that their net assets which included a number of parcels of land came to $2,000,000.  Out of this, the Wife would be entitled to 48% being $960,000 and the Husband 52% being $1,040,000.  The Wife was to receive an initial payment of $75,000 from the Husband and the remaining settlement was to be paid to the Wife upon sale of the various parcels of land.  If the land sold for less than expected the Husband was to make up any shortfall so the Wife would receive $960,000.

In late 2011 the Wife passed away and thereafter the property settlement was to be paid to the Wife’s Estate.  The Estate was paid various sums of money but was left short by $245,198.  On 27 October 2013, the Estate started enforcement proceedings against the Husband to recover the outstanding balance.

The Husband opposed the enforcement application on the grounds that he had incurred costs for outgoings relating to the land.  The Husband argued these costs should be split between himself and the Estate.

Evincing an Intention against Joint Liability for Costs

The Court considered the case of Muschinski v Dodds [1985] HCA 78; (1985) 160 CLR 583 where it was found that a right of contrition would normally apply so that parties would be jointly liable for costs.  However, in reviewing the parties’ consent orders the Court found that while they did not explicitly say who would be liable for costs they did evince an intention that the Husband was liable.

In the case of Coulls v, Bagot’s Executor & Trustee Co Ltd [1967] HCA 3; (1967) 119 CLR 460 the Court found that where parties’ evince an intention to change the default position of joint liabilities it should be interpreted as such.

The court stated the intention to change the default joint liability in the consent orders could be found by:

  1. The use of the term “net assets” which signified that the settlement amount was after the payment of liabilities.
  2. The consent orders stated the Wife was to receive “assets” but not “assets and liabilities”.
  3. The condition that if the land sold for less than expected the Wife would still receive the same settlement amount.

The Judge found for the Estate and the Husband was ordered to pay the outstanding balance.

Appeal

The Husband appealed to the FCA stating that the FCC Judge had made orders that were not just and equitable, had made a mistake as to the facts and law, and had applied the wrong legal principles.

The Husband argued that the consent orders did not say he was liable for the costs of outgoings.

Interpreting Consent Orders

The Appellate Court looked at the case of I Limited & Chester (2010) FLC 93-456 which considered authorities dealing with consent orders interpretation.  The authorities stated that consent orders should be interpreted by considering the surrounding circumstances but not the intentions of the parties.  The Appellate Court then considered the High Court case of Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd & Ors [2004] HCA 52; (2004) 219 CLR 165 as authority that the terms of a contractual document are interpreted by “what a reasonable person would have understood them to mean”.

Appellate Court’s Findings

The Appellate Court agreed with the FCC decision.  The correct and proper interpretation of the consent orders showed an intention by the parties that the Wife would not be liable for costs.

Conclusion

In this case, the Husband and Wife entered into consent orders for the division of property between them.  Part of the settlement was to be paid after the sale of land.  The consent orders did not explicitly say who was liable for costs relating to the land or what should happen if the land took longer to sell than expected.  The Husband incurred considerable costs relating to the land before all of the lands were sold.

The court has interpreted the consent orders found they evinced an intention that the Husband was liable for costs.  This case shows the importance of ensuring consent orders are precise, clear, considering contingencies, and particularise a party’s full intentions.

Read More

Mother’s Appeal Against the Return of Her Child to Norway Dismissed Despite her Anxiety and Depression

Key Words

Children – Hague Convention – grave risk – mother’s anxiety – depression – abduction

Introduction

In Hilton & Department of Family and Community Services [2015] FamCAFC 223 (26 November 2015), the Full Court heard the mother’s appeal against an order that was made earlier by McClelland J to return her son to Norway pursuant to the Family Law (Child Abduction Convention) Regulations 1986. At first instance, the mother argued that if her son was returned to Norway, he would be exposed to a great risk of physical harm and psychological harm due to her anxiety and depression which was supported by psychological reports that showed her treatment of depression and suicidal thoughts.

Although McClelland J was satisfied that there was a risk of psychological harm to the child as a result of the mother’s mental illness, he was not satisfied that the risk was sufficiently grave enough to invoke a regulation 16(3)(b) defence to the return of the child and as such, an order to return the child was made.

The reasoning at First Instance

It was found that although the mother was depressed, she did not exhibit symptoms of being acutely suicidal. Although she suffered from thoughts about death every day, she did not have a serious psychotic illness or was clinically depressed.

The reasoning at the Appeal

The Full Court stated that McClelland J made an error on the summary of the law. His Honour used the case of Director-General, Department of Families, Youth and Community Care & Bennett in order to conclude that regulation 16(3)(b) was to be narrowly construed. As such, the exception that a child does not need to be returned to a country that Australia has entered into the Child Abduction Convention with can only be used if a ‘grave risk’ of harm to the child is present.

However, the ‘narrow construction’ of this exception was rejected by the High Court in DP v Commonwealth Central Authority [2001] HCA 39; (2001) 206 LR 401. Although there must be ‘grave risk’ associated with the defence listed in regulation 16(3)(b), the assessment of this requires some prediction of what may happen if the child was returned. In this prediction, certainty is not required. This means that the risk that is relevant is not only limited to harm that will actually occur, but also to a risk that the return would expose the child. Despite the prediction, the Court will still need clear and compelling evidence that this is likely to happen. Once a risk is found to exist, the risk must be assessed as to whether it warrants the qualitative description ‘grave’.

In the appeal, the Full Court took into account whether the mother’s evidence had been excluded as a result of a ‘narrow construction’ of regulation 16(3)(b). In doing so, it heard the argument that McClelland J failed to consider the risk that would be subjected to the child if the mother were to take her own life. Although the risk was slight, the consequences for the child would be grave. However, the Court did not find evidence to support that this was remotely possible. As such, McClelland J made no error in failing to consider what was merely speculation. Furthermore, His Honour took into consideration the fact that the mother would continue to have access to appropriate health services in Norway to treat her depression.

The decision of the Full Court

As such, the Full Court held that McClelland J was correct in his finding that the mother had failed to establish that there was a grave risk of psychological harm to the child on a return to Norway, which was entirely supported by evidence.

Although His Honour incorrectly referred to authorities that supported his approach, the Full Court was not satisfied that he followed it. As a result, the appeal was subsequently dismissed.

Read More

Court Considers Late Lodgement of Tax Returns Bars Departure from Child Support Obligations

Key Words: Child Support; Child Support (Assessment) Act 1989; administrative assessment; departure order; child support liability; failure to lodge tax returns; deemed income

The case of Dalton & Munro & Anor [2015] FCCA 2945 (24 June 2015) was a Federal Circuit Court of Australia case heard by Judge Scarlett.  In this case, the Applicant Father asked the Court for a departure order to reduce the Child Support Agency’s administrative assessment of his child support liability.

As the Applicant had not lodged 3 years’ worth of tax returns, the administrative assessment was based on a deemed (estimated) income.  After the Applicant lodged his tax returns it was determined that his taxable income was lower than the deemed income used to calculate the administrative assessment.  Had the Applicant lodged his tax returns on time his child support liability would have been less.  For the reasons that follow, the Court denied the Applicant’s request for a reduction in his child support liability.

Background

The Applicant’s child support liability commenced in 1997 at the time of the birth of the Applicant’s son.  The son was in the mother’s care and the Applicant was assessed to pay child support.  In September 2010 the mother contacted the Child Support Agency and asked them to commence collection of child support payments on her behalf.

The Applicant claimed that he was never contacted by the Child Support Agency and was unaware of the requirement to pay child support.  As the Applicant did not lodge tax returns for the financial years 2011, 2012, and 2013 the Child Support Agency under section 58 of the Child Support Actcalculated a deemed income for the administrative assessment based on the Applicant’s last available tax assessment.

Child Support Commenced Proceedings

As the Child Support Agency was unable to collect child support from the Applicant for the period 10 October 2012 to 19 June 2014 a debt accumulated for $27,394.53.  After continued attempts to contact the Applicant without success, the Child Support Agency commenced court proceedings to enforce payment of the debt owed.

Application Seeking Departure Order

After the Applicant received notice of the Child Support Agency’s enforcement action, the Applicant submitted an Application to the Court seeking a stay of the Child Support Agency’s enforcement action and a departure order under Part 6A of the Child Support Actto retrospectively reduce the child support assessment for the period 10 October 2012 to 19 June 2014.

In his Application, the Applicant claimed that he was not aware the Child Support Agency was seeking child support payments.  Further, the Applicant explained that he had not submitted his tax returns because his bookkeeper had left and he had difficulty finding a suitable replacement.

Upon submitting his tax returns for the 2011, 2012, and 2013 financial years the Applicant’s taxable income was less than the deemed income that was used for his administrative assessment.  Had the Applicant submitted his tax returns in a timely manner his administrative assessment would have been less?

Court’s Refusal to Depart from the Administrative Assessment

The Court refused the Applicant’s application to reduce the Child Support Agency’s administrative assessment.  When a court considers a departure order from an administrative assessment it must be satisfied under section 117 of the Child Support Act that there are grounds to do so.  These grounds include consideration of whether either parent’s capacity to provide financial support is significantly reduced because of:

(i)                  their duty to maintain any other child or another person;

(ii)                their duty to maintain any other child or another person that has special needs; or

(iii)               their need to support themselves.

The Applicant did not provide any evidence that would meet the section 117 test for a departure order.  Further, consideration of the mother’s circumstance revealed that she was only receiving a disability support pension and that she had been deprived of financial support with raising the son by the Applicant not paying child support.

The Court also considered the Applicant’s reason for not lodging his tax returns and decided the reason was inadequate.  Judge Scarlett cited the case of Registrar & Rawlings [2013] FCCA 730 as grounds that “repeated and continuing failure to lodge income tax returns will lead to adverse consequences, for which parties can expect to receive little sympathy from the Court”.  Further Judge Scarlett cited the case of Harcherl & Berrios [2010] FMCA fam 668 stating that if a payer of child support does not lodge tax returns and comes to the court without reasonable excuse the payer would not be granted relief.

Judge Scarlett also considered the timing of the Applicant’s application for a departure order.  As the application for a departure order was only made after the Child Support Agency’s commencement of enforcement proceedings it was considered “highly undesirable” to allow the departure order citing the case of Bauer & Becker [2009] FMCA fam 480.

Conclusion

In this case, the Applicant’s father was unable to provide evidence that would have allowed the Court to grant a departure order from his child support administrative assessment.  There was evidence to the contrary that to do so would put the mother in further hardship.

The Court also considered that had the Applicant lodged his tax return in a timely manner he could have avoided the deemed (estimated) rate of child support and the higher debt that accumulated because of the deemed rate.  The Court considered that as the Applicant did not provide reasonable grounds for late lodgment of 3 years’ worth of tax return the Applicant would not be granted any relief.

Read More

Counseling Sessions Revealing Possible Child Abuse and Family Violence Deemed Admissible Evidence By Family Court

The case of Douglas & Mauldon [2015] FCCA 2217 (17 August 2015) was a Federal Circuit Court of Australia case about parenting matters between the Applicant wife and Respondent husband.  The case involved objections to documents requested by way of subpoena.  The subpoena requested information from The Benevolent Society about counselling services that they provided to the wife and children.  Both The Benevolent Society and the wife objected to the documents and information being made available to the husband.

Relative Law

Family Law Act 1975 (Cth) (“Act”)

Federal Circuit Court Rules 2001 (Cth) (“FCC Rules”)

Evidence Act 1995 (NSW) (“NSW Evidence Act”)

Evidence Act 1995 (Cth) (“CTH Evidence Act”)

Background

The wife was seeking sole parental responsibility for the couple’s two children and for the children to have no contact with the husband.  The husband had been convicted of criminal offences and jailed.  These offences included crimes against children below the age of 16 years.  Some of the offences were perpetrated against the couple’s children.  As a result of the husband’s crimes, the Department of Immigration revoked his residency visa.  When the husband was released from jail he was placed into immigration detention.

Subpoena of Information

An Independent Children’s Lawyer (“ICL”) was assigned to represent the children’s best interests under section 68L of the Family Law Act 1975 (Cth) (the “Act”).  The subpoena originated from the ICL and was directed towards The Benevolent Society.  The subpoena requested information about counselling services that the Benevolent Society provided to the wife and children and included a request for information about what was discussed during counselling.

Objections to Subpoena

Both the wife and The Benevolent Society had objected to the subpoena.  The Benevolent Society objected on the grounds that the counselling for the wife and children was made in confidence and was for child welfare services.  The wife objected on the grounds that the documents produced were likely to contain allegations made against the husband which were made in confidence.  The wife asked that the documents not be shown to the husband or the husband’s legal representative as this would affect the well-being of the wife and children.

Subpoena Rules and Objections

In considering the objections the Court looked at the Federal Circuit Court Rules (“FCC Rules”), Part 15A relating to subpoenas.  Rule 15A.13(2) provides that a person must object to a subpoena under rule 15A.14 by the date the subpoenaed information is due.  The objections to the ICL’s subpoena were made within the time limit.  The Court stated it could set aside a subpoena or part of a subpoena under rule 15A.09 subject to the rules of evidence and due process.

The Court noted that there were no grounds for a claim of privilege under section 126A of the NSW Evidence Act for professional confidential relationship privilege.  The Court then looked at the duties owed by the parties to make the information requested by subpoena available to the Court.

Admissibility of Evidence and Disclosure Requirements

The Court was concerned that the wife and The Benevolent Society were attempting to withhold information that revealed allegations of child abuse or family violence.  These allegations could meet the definition of the section 4 interpretation of child abuse and section 4AB definition of family violence under the Act.  Following on from this are sections 67Z and 67BA of the Act which apply if an interested person makes allegations of child abuse.  In such a case the interested person must file a Notice of Risk to the Court under Part 22A of the FCC Rules.  In such a case the Court must abide by section 67ZBB of the Act.  This section requires the Court to consider making interim or procedural orders to enable evidence about allegations of abuse or family violence to be gathered and to protect the child.

The Court stated that the wife has obligations under the FCC Rules, the Act and common law to provide evidence about allegations of child abuse or family violence.  The wife’s objection to the production of the subpoenaed information was contrary to her obligations.

The Court then looked at the confidentiality protection provisions for family counselling available under section 10D of the Act.  The Court found that the counselling provided by The Benevolent Society did not meet the definition of family counselling under the Act.

The Court considered that the information subject to the subpoena was directly relevant to the question of the risk of child abuse or family violence.  It was therefore relevant evidence under section 55(1) of the Commonwealth’s Evidence Act and was admissible to the proceeding.

Based on the above considerations the Court found that the subpoenaed information should be made available to all parties involved in the case.  However, the objections as far as the information that would disclose the location of the wife or children or any other identifying information was upheld.  As such the Court allowed the redaction of any identifying information before the husband could view The Benevolent Societies’ documents.

Conclusion

This case shows that parties may subpoena relevant evidence which relates to either child abuse or family violence.  Unless subpoenaed information is covered by legal professional privilege, or there is an exception under applicable legislation (including the Act), the subpoenaed information is admissible.  This can include confidential information such as in this case relating to counselling services and what was discussed during counselling.

Read More

Book your legal strategy information meeting now with a senior lawyer

Fill in the form below to book a 30-minute no-obligation consulting session. 

I will reply within 24 hours.