Significant and noteworthy judgments

In 2018–19, judges of the Family Court of Australia handed down judgments at both first instance and appellate levels. The decisions reflect the Court’s expansive jurisdiction, the wide variety of issues that it addresses and its position as a superior specialist federal court that deals with the most complex and serious family law cases.

A selection of significant and noteworthy judgments are published in this report.

The Court recognises that the accessibility of its judgments to the public is important. It commits the resources required to ensure that every final judgment delivered is anonymised and published consistent with s 121 of the Family Law Act 1975 (Cth) (the Act). This policy has enabled the Court to better respond to community interest and concerns about particular cases highlighted in the media and demonstrates the commitment of the Court to being open and accountable for its decisions.

Virtually all judgments, after anonymisation, are published in full text on the Australasian Legal Information Institute (AustLII) website. There is a link to the AustLII site from the Court’s website at www.familycourt.gov.au.

The Court’s website provides links to recent decisions: links to Full Court decisions are provided for two months and links to first instance decisions are provided for one month.

In 2018–19, the Court published links to 874 first instance and 250 Full Court judgments.

JABOUR & JABOUR

[2019] FamCAFC 78 (Alstergren CJ, Ryan & Aldridge JJ)

Appeal—Property—Contribution-based entitlements—Property to be divided was rezoned and increased in value—Approach to the apportionment of the increase in value of the assets initially contributed discussed

This case concerned a property that was brought to the marriage by the husband, yet significantly increased in value when it was rezoned to allow for residential use many years later. The parties were married for 23 years and brought up three children.

The wife filed a Notice of Appeal in relation to property orders made, where the primary judge’s determination of contribution-based entitlements relating to non-superannuation property was 66 per cent for the husband and 34 per cent for the wife. The discrepancy in the apportionment was mostly attributable to the primary judge’s finding that the husband made a significant contribution to the marriage in the form of a property located at Suburb A (property A).

For context, the husband initially acquired a half interest in three blocks of land and later made an agreement with the co-owner to essentially divide the blocks between them. In the duration of the marriage, the parties decided to sell the husband’s allocated block and use the proceeds to acquire the co-owner’s share in the remaining block. The parties also decided to delay selling the newly acquired block in the hope that it may be rezoned and significantly increase in value, which occurred some nine years later.

The wife argued that the primary judge misdirected herself by seeking to find a nexus between contributions and a particular item of property when assessing the contributions holistically across the long marriage. The Full Court accepted this submission.

At trial, the husband relied on Williams & Williams,¹ which relied on Kardos & Sarbutt,² in submitting the proposition that if an asset that is brought into the marriage is still intact, failure to reference the latter value of the asset would in effect undervalue the contribution. The Full Court found that this proposition as articulated by Brereton J in Kardos & Sarbutt, was not discussed unreservedly by the Court in Williams & Williams. In fact, the Court referred to Bilous v Mudaliar,³ where the Court commented that Brereton J appears to have stated a rule to the effect that any increase in value in assets that were initially contributed by one party should be regarded as entirely that party’s contribution, which if accurate, should not be allowed. The Court also referred to Basten JA’s comments in Baker v Towle,⁴ where the particular part in Kardos & Sarbutt that the husband sought to rely on was discussed as inconsistent with the statutory scheme of the Act, and ought not to be followed. The Full Court therefore concluded that the husband’s submission was ultimately ‘wrong and misleading’.⁵

The Full Court referred to the consistent reliance on the approach that ensures that the ‘myriad of other contributions’ are weighed and assessed, as stated by the Court in Wallis & Manning.⁶ In confirming this approach, the Full Court referred to Dickons v Dickons⁷ where the Court rejected the proposition that a relationship between contributions and what they produced in terms of property must exist.

The Full Court determined that the primary judge appeared to search for a nexus between property A and its current value, and the nexus found was based on the fact that the husband had brought the property into the relationship. The primary judge then went on to weigh the myriad of contributions against the contribution of property A, made by the husband, rather than treating property A as one of the contributions as part of the myriad.

The primary judge treated the decision jointly made by the parties to sell the husband’s block and use the proceeds to purchase the co-owner’s share in the final block as the ‘reorganisation’ of property A. Conversely, the Full Court held that this decision, and the fact it was made at the time that it was, could be seen as constituting a significant contribution. The wife’s evidence was that the parties jointly decided to delay sale of the property for five years, in the hope of rezoning permission being granted (a possibility which they had not previously been aware of) so that they might realise a significant profit. This decision resulted in the parties living ‘a modest lifestyle’ in anticipation of the sale. The Full Court held that these considerations were overlooked in the primary judge’s approach and thereby, the myriad of other contributions made throughout the marriage were in effect minimised.

The Full Court also concluded that the sudden increase in value caused by rezoning or in other circumstances (such as a lottery win) should be considered as a contribution made by both parties in line with the authority on this point.⁸ Their Honours attributed the husband’s contribution as ‘merely the springboard for its later value’, in contrast to the primary judge’s decision that appeared to give the husband credit for the fortuitous revaluation of the property.

Ultimately, the primary judge erred in separating property A from the myriad of all other contributions and weighing it against those remaining contributions as such. The Full Court concluded that an appropriate division would be in favour of the husband by 53 per cent and 47 per cent for the wife.

SIMONDS (DECEASED) & COYLE

[2019] FamCAFC 47 (Strickland, Murphy & Kent JJ)

Appeal—De facto wife filed her Initiating Application for property adjustment orders after the standard application period without first obtaining leave—De facto wife filed an amended Initiating Application seeking leave to institute proceedings out of time and after the death of the de facto husband

In this matter, the de facto wife filed an Initiating Application seeking property orders and the de facto husband failed to file any response in time, before passing away a short while later. After his death, the solicitors for the de facto husband filed a Response out of time, asserting that the parties’ relationship ended in 2013, rather than 2015 as claimed by the de facto wife, and therefore the Initiating Application was not filed within two years of the parties’ separation.

An order was made for the solicitors to substitute the de facto husband in the proceedings. A hearing commenced and the primary judge heard evidence and argument in relation to the alleged date of separation. The primary judge ultimately found that the year of separation as asserted by the solicitors for the de facto husband (2013) was correct. However, his Honour went on to make orders in respect to the de facto wife’s amended Initiating Application which was filed after the primary judge adjourned the proceedings to allow the de facto wife an opportunity to seek legal advice. This amended Initiating Application later filed by the de facto wife sought leave pursuant to s 44(6) of the Family Law Act 1975 (Cth) to institute property proceedings.

The issue on appeal was whether the primary judge had jurisdiction to entertain the de facto wife’s amended Initiating Application. The Full Court discussed the fact that the amended Initiating Application was filed after the de facto husband’s death, in circumstances where there were no valid or competent proceedings for property settlement on foot. The original Initiating Application filed by the de facto wife seeking property orders was rendered void, as leave to file it had not been given.

The Full Court referred to s 39B(1) of the Family Law Act 1975 (Cth), which confers jurisdiction onto the Federal Circuit Court of Australia ‘with respect to matters arising under [the] Act in respect of which de facto financial causes are instituted under [the] Act’.⁹ No de facto financial cause had been instituted prior to the de facto husband’s death. The Full Court held that such cause could not be instituted following the husband’s death, irrespective of the fact that leave was granted for the solicitors to substitute the de facto husband in responding to the de facto wife’s action.

Whilst s 90SM(8) of the Family Law Act 1975 (Cth) allows for property proceedings that are incomplete at the date of a parties’ death to be continued in certain circumstances, this provision was not applicable in this case as it could not be said that proceedings were on foot at the date of the de facto husband’s death, given the necessary leave had not been given in order to institute such proceedings.

The Full Court held that the primary judge did not have jurisdiction under s 39B(1) of the Family Law Act 1975 (Cth) to entertain the de facto wife’s amended Initiating Application, because no such de facto financial cause existed at the time. Further, the primary judge failed to deal with the question of whether he had jurisdiction in his reasons.

PHE & LENG

(2019) FamCAFC 17; [2019] FamCAFC 17 (Alstergren CJ, Strickland & Watts JJ)

Appeal—Property—Whether the primary judge erred by failing to rule that evidence supporting the existence of a loan was a privileged communication and therefore inadmissible pursuant to s 131(1) of the Evidence Act 1995 (Cth)

This was an appeal from the wife against final property orders made by the Family Court of Australia, including whether a $145,000 advance from the husband’s father was in fact a loan to the parties or the husband’s debt alone.

Both parties were unrepresented throughout the hearing, where the primary judge made final orders for property settlement, to the effect that the wife would receive 80 per cent of the parties’ net assets and the husband would receive the balance.

The husband’s evidence was that the asset pool included an advance in the amount of $145,000 which the father had loaned to the parties, to assist them in purchasing the matrimonial home. The wife’s evidence was that no such loan was deposited into the parties’ bank account. The wife argued that the husband’s father instead deposited the amount into the husband’s bank account and therefore, it was solely the husband’s debt and not a joint debt. The evidence before the Court in relation to this dispute included evidence of a joint bank account between the husband and the father, bank statements and payment records which appeared to support the husband’s case.

The primary judge did not rely on the financial evidence but instead relied on a text message exchange adduced into evidence by the husband, which contained a text message sent by the wife to the husband’s sister stating that she would ‘return’ the money to the husband’s parents if her child ‘can come back to Sydney’. The primary judge determined that this evidence contradicted the wife’s case and established that she had previously acknowledged that the amount was a loan for which the parties were jointly liable.

On appeal, the wife argued that the text message exchange was a privileged communication and therefore inadmissible pursuant to s 131(1) of the Evidence Act 1995 (NSW) which provides that evidence of communications made in relation to an attempt to negotiate a settlement of a dispute cannot be adduced. The wife claimed that the intention of the message was to try and persuade the husband’s family in Taiwan to return their eldest child to Australia. As such, it should be treated as a privileged communication as it was a statement made in connection with the attempt to negotiate a settlement of the dispute between the husband and wife. The wife also complained that the primary judge failed to warn her, as a unrepresented litigant that she was entitled to a possible claim of privilege. The Full Court disagreed with both arguments.

The Full Court considered two competing interpretations to the s 131(1) exception contained in s 131(2)(g), being a ‘broad’ or ‘narrow’ view. The broad view is that ‘where the existence or the contents of otherwise privileged communication contradicts or qualifies existing evidence or an inference from that evidence and the Court is otherwise likely to be misled unless the communication is adduced.’ Alternatively, the narrow view of the provision should only apply to cases ‘where the privilege in s 131(1) could enable a party to mislead the Court about the course of an attempt to settle a dispute where that matter was an issue in the proceedings and the privileged communication contradicted or qualified evidence which had been admitted about that issue.’

If the broader view was preferred, the text message was admissible. If the narrow view was preferred the text message was privileged. The broader view was ultimately adopted, the Court finding that the text message was admissible and excluded from any possible claim of privilege.

It was accepted that parties should be free to negotiate genuinely when attempting to resolve disputes but noted that ‘it is not sound public policy to permit a party to assert something is ‘white’ when attempting to negotiate a settlement and then give sworn evidence that it is ‘black’, without the court knowing the witness had previously said that it was ‘white’ and the witness being exposed to being tested upon the assertion made during the settlement negotiations.’

HENDY & PENNINGH

(2018) FamCAFC 257 (Ainslie-Wallace, Ryan & Austin JJ)

Appeal—Relocation—Balancing the advantages and disadvantages of relocation—Family Violence—Erroneous finding that the mother stepped back and abandoned allegations of family violence—Misuse of documents in cross-examination to establish inconsistency in the mother’s evidence

This was an appeal by the mother against the dismissal of her application to relocate with the children. For context, both parties were civil engineers. They met through their work and moved around on projects before settling in Town F. They have two children together aged five and four at the time of the final hearing, the mother had another child, Z, from a previous relationship who was a teenager at the time of the trial and no longer lived with the family.

The relationship between the parties was riddled with family violence. Both parties had difficult childhoods, particularly the mother who spent time in foster care, left school and lived on her step father’s farm. The father stated that the mother told him that the stepfather sexually assaulted the mother throughout her childhood and adolescence, and is possibly the father of her child Z.

There were difficulties in the father’s relationship with Z and because of concerns that Z was being mistreated by the father, the Department of Family and Community Services, Police and/or school counsellors became involved with the family.

The mother had always been the children’s primary carer, and following separation, the father relocated to Sydney. At the time of the trial, the father was spending alternate weekends with the children in Town F, with the handover professionally supervised, pursuant to interim orders made in 2016 and varied in 2017 following an incident of family violence. Up until 2018, the children had never spent overnight time with the father.

The mother had no family in Town F, and her friends, including her partner, lived in City K. The mother’s work contract in Town F was about to expire.

At the trial, the mother sought orders for sole parental responsibility, for the father to spend supervised time with the children and for her to be able to relocate with the children to City K. The mother gave evidence of her ability to attain appropriate housing for the children and for her to find work in City K, as her contract in Town F was about to expire. The father proposed orders for equal shared parental responsibility and opposed the mother’s relocation application.

The primary judge made some preliminary findings about each of the parties’ cases. In relation to the mother’s position that the father could spend slowly increasing amounts of unsupervised time with the children, the primary judge found this suggestion to indicate that the mother had ‘stepped back’ from her original claims that the father was a risk to the children.

Both parties accused the other of perpetrating family violence. The mother made allegations of the father hurting the children, and Z made allegations of being physically abused by the father. The primary judge appeared to discount both parties’ allegations of violence, except in regards to the April 2017 incident, which was prominent at the hearing. Effectively, the mother withheld the children from seeing the father due to concerns, which the primary judge deemed to be unreasonable. Sometime during this day, the parties happened to be on the same stretch of road on a highway near Town F, with the children in the mother’s car. The father pulled in front of the mother and slammed on the brakes, which almost resulted in her rear-ending the father’s car. The parties then had a verbal altercation on the road, with the children becoming increasingly distressed, at some point in which the father lifted the child from the car seat and reached in and took the mother’s keys, damaging them in the process. Other road users intervened, the father returned the child and left the scene. Police attended the scene and the father was convicted of malicious damage as well as intimidation, resulting in an interim ADVO being put in place for the protection of the mother.

Ultimately, the primary judge restrained the mother from relocating. The primary judge criticised the mother’s evidence for not establishing compelling reasons to justify relocation. Orders were made against her, restraining her from relocating to City K and for the parties to have equal-shared parental responsibility for the children, despite the presumption being rebutted.

The mother appealed, contending that she did not abandon her case concerning the father’s potential for violence or the risk to the children. Further, the mother argued that the trial judge misstated various facts and failed to balance the advantages and disadvantages of the proposed relocation in the manner required.

The Full Court found that the primary judge erred in concluding that the mother ‘stepped back’ from and abandoned allegations of family violence when she amended the parenting orders she sought. The Full Court determined that the primary judge misunderstood a critical integer of the mother’s case.

The Full Court found that many of the primary judge’s findings as to family violence was flawed. The approach to the evidence given by the mother, including under cross-examination, was that unless, when she or Z first spoke about family violence they gave a comprehensive account (including dates and times) of all that occurred, anything disclosed later was viewed with suspicion. Indeed anything said after the initial disclosure that was not included in the initial disclosure was treated as inconsistent with that disclosure. Inconsistency having thus been established, the totality of the evidence as to family violence was then evaluated as unreliable. No attempt was made to identify a core consistency in what she said.

The Full Court found that the trial judge failed to balance the advantages and disadvantages of relocation in the manner required and that the mother was not required to establish compelling reasons to justify relocation. There were mistakes of fact as to consequences of relocation on time the children could spend with the father. Their Honour’s speculated that the primary judge overlooked the fact that the mother’s contract of employment in Town F would shortly end and thought she was planning to leave secure employment for something less certain. Had the balancing exercise been properly undertaken, the primary judge would have realised that the mother in fact presented a very strong case for relocation.

KEATING & KEATING

[2019] FamCAFC 46 (Ainslie-Wallace, Ryan & Austin JJ)

Appeal—Property—Family Violence—the wife sought an adjustment under the Kennon principles—Discussion of Spagnardi & Spagnardi [2003] FamCA 905

The Full Court considered the wife’s appeal from final property orders made by the Federal Circuit Court of Australia, including where the wife sought an adjustment arising from family violence perpetrated by the husband both during and after their relationship. The primary judge declined to make the adjustment sought.

The majority of the Full Court (Ainslie-Wallace & Ryan JJ) held that there must be an evidentiary nexus between the conduct complained of and the capacity (and or effort expended) to make the relevant contributions, but it is not necessary to prove the quantification of the effect of the violence on the contributions. It is important to look at the inferences that might properly be drawn from any such evidence.

The husband was a tradesman who conducted a business through a complex corporate and trust structure (the Group). The value of the husband’s interest in this group and the ‘dramatic increase in the husband’s director loan account’ to the group were central issues at trial.

The primary judge evaluated the parties’ property in two pools. Pool one comprised non-superannuation assets and property and liabilities, and pool two consisted of superannuation. The non-superannuation pool, after taking into account the husband’s loan, gave a net shortfall of $804,805.00. A 70/30 division of the non-superannuation assets in favour of the husband left the wife with her personal items, her bank account and a motor vehicle. The husband retained the Group with a turnover annually of $4 million and ‘substantial franking credits’. Their contributions to superannuation were assessed as equal.

The wife had given evidence of extensive family violence, including that the husband broke her nose, beat her until she passed out and that she had suffered serious bruising and broken ribs. In relation to this evidence, the primary judge stated that ‘the husband did not suggest there were not tensions in the relationship or that he was a perfect partner’ and that the husband had admitted that ‘an assault on the wife by him … resulted in charges against him, and that the wife suffered a broken wrist’.¹⁰

The primary judge dealt with this evidence by reference to Spagnardi & Spagnardi,¹¹ stating ‘I am not able to be satisfied that the circumstances of this case, on the current law, fit within the small number of cases where the Court can be satisfied that the wife’s contributions during the course of the relationship were made more onerous in a Kennon sense’.¹² Therefore, no adjustment was made pursuant to s 75(2) of the Family Law Act 1975 (Cth) in either pool.

Upon application by the wife, who was impecunious, the appeal was undertaken without the trial transcript. The wife was unrepresented and argued several grounds of appeal. In relation to the determination of the value of the assets of the parties personally and in the Group, she challenged the adequacy of reasons and pointed to the lack of engagement with the evidence and consideration of her case. In relation to family violence, she contended that the primary judge erred by failing to make a Kennon type adjustment despite her evidence of a significant history of family violence.

The Full Court held that the primary judge failed to engage with the wife’s case on material matters concerning the value of the assets, which resulted in an error of law. The primary judge accepted evidence of an expert witness who was appointed to value the Group. The expert gave evidence that a director loan of $1,648,440 was advanced to the husband and made clear that no such loan was advanced to the wife. However, the loan had reduced the net value of the Group. The wife challenged this evidence and contended that his Honour should have considered ‘whether and how the loan account might be repaid and/or brought to account’.¹³ Ainslie-Wallace and Ryan JJ found that the primary judge failed to give consideration to this ‘important integer of her case’.¹⁴

Further, in relation to the husband’s failed investment, the wife had given evidence at the trial that she knew of the husband’s proposed entry into the venture but did not support it and argued that she should bear no responsibility for the debt resulting from the scheme. Of this, Ainslie-Wallace and Ryan JJ said that the primary judge’s mere finding that the wife was ‘aware’ of the failed investment failed to engage with the wife’s case that she should not be jointly responsible for the debt. Appealable error was established on this ground, nonetheless, the Court proceeded to discuss the wife’s claim for an adjustment arising from family violence.

The Full Court set out the principles which emerge from Kennon and Spagnardi, noting that it is well established that a party does not require his or her evidence to be corroborated before evidence of family violence can be accepted, as domestic violence often occurs in circumstances where there are no witnesses other than the parties and possibly the children.

In Kennon, the Full Court found that family violence was of relevance to property settlement proceedings within the assessment of contributions. In Spagnardi, the Court upheld Kennon as the authority for the need to provide evidence to establish:

• the incidence of domestic violence
• the effect of domestic violence, and
• evidence to enable the Court to quantify the effect of that violence upon the parties’ capacity to ‘contribute’ as defined by s 79(4).

Ainslie-Wallace and Ryan JJ determined that the reference to ‘quantification’ in the decision of Spagnardi appeared to provide that in order to establish the ‘discernible impact’ of the conduct complained of and its effect on the party’s ability to make contributions, expert or actuarial evidence of the effect of the violence was required.

Their Honours noted that the wife had given evidence at trial about a course of significant family violence which was prolonged, had a significant adverse effect on her and undermined her parenting and her ability to contribute. The majority of the Full Court said that his Honour erred in his approach to the issue of family violence by misdirecting his attention from the ‘discernible impact’ of the husband’s violence on the wife’s capacity to make contributions, focusing instead on there being no evidence allowing ‘quantification’ of that effect.

Further, their Honours found that the primary judge gave no consideration to the inferences that might properly be drawn from the wife’s albeit limited evidence as to the effect on her of the husband’s violence taken in conjunction with her evidence of the severity of the violence.

Their Honours went on to confirm it is well settled that a party does not require corroborative evidence before evidence of family violence can be accepted and referenced Amador & Amador as the authority for this proposition.¹⁵

In a separate judgment, Austin J commented that when allegations of family violence are made, ‘the veracity of their contentious allegations must be tested and evaluated by the same forensic techniques as apply to all other contested issues of facts’.¹⁶ And that ‘in the adversarial process, procedural fairness demands that such allegations are not insulated from challenge’.¹⁷ His Honour concluded that the wife was required to do more than ‘allege her victimisation by the husband and express her distress about it before her contributions could have been accorded greater weight under Part VIII of the Act’.¹⁸

Ultimately, the Court could not conclude that the primary judge erred by failing to make a Kennon adjustment due to the absence of the transcript. Nonetheless, the appeal was allowed and the matter remitted for rehearing.

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