Family Court Case Notes – December 2022

Property – High Court overturns declaration of a resulting trust – Presumption of advancement between husband and wife upheld

In Bosanac v Commissioner of Taxation [2022] HCA 34 (12 October 2022) the High Court of Australia (Kiefel CJ, Gageler, Gordon, Edelman and Gleeson JJ) heard a wife’s appeal against a decision which held that she owned 50 per cent of a property on trust for her husband.

The Commissioner of Taxation was a creditor of the husband and sought a declaration of resulting trust over half of the wife’s property (“the Dalkeith property”). The wife argued that there was no basis to infer that the husband intended to have a beneficial interest in the property.

Kiefel CJ and Gleeson J said (from [35]):

“There was a history of Ms and Mr Bosanac holding their substantial real and other property in their own names. Consistently … it was evidently the desire of Ms Bosanac to purchase the Dalkeith property and have it registered in her name alone. … These facts alone are sufficient to rebut any presumption that her interest in the property was attributable to the relationship of husband and wife …

( … )

[39] There was a history of the use of the properties held by each of Ms and Mr Bosanac in their own names as security for joint loans. … There was no evidence of the use of joint loans to acquire property which was then jointly held.

( … )

[41] … The history of the spouses’ dealings … might suggest a use of property to secure joint loans which might benefit either or both of them, but it does not support an inference that either intended that property be held jointly. …

[42] The finding … that Mr Bosanac was a sophisticated businessman … [who] appreciated the significance of property being held in Ms Bosanac’s name is not unimportant. His Honour was correct to conclude that that understanding did not support an inference that Mr Bosanac intended to have a beneficial interest in the Dalkeith property”

Gordon and Edelman JJ provided a separate judgement as did Gageler J, all agreeing with the orders proposed by Kiefel CJ and Gleeson J. The High Court granted the appeal and set aside the declaration of a trust.

Property – Error in treating non-commutable military pension as capitalised asset rather than an income stream – Double counting of pension as asset and future income

In Preston [2022] FedCFamC1A 157 (5 October 2022) the Full Court (Alstergren CJ, McClelland DCJ & Austin J) heard a husband’s appeal from final property orders made by a judge of Division 2 of the Federal Circuit and Family Court of Australia.

The trial judge ordered a 58.5:41.5 division in favour of the husband, treating the husband’s military pension as a capitalised asset.

The Full Court said (from [11]):

“It was impossible to commute the military pension … and neither party ultimately sought a superannuation-splitting order in respect of it … so the expert opinion evidence of it having a capitalised value of $638,109 … lost its utility.

[12] … [T]he primary judge counted it as an asset at the capitalised value … even though she acknowledged neither party sought superannuation-splitting orders. …

( … )

[14] … [H]er Honour concluded the husband had a significantly higher income-earning capacity than the wife … which in part stemmed from his indefinite receipt of the military pension …

[15] There was no need to ascribe a capitalised value to the military pension when no splitting order was sought in respect of it …

( … )

[17] Having been notionally counted as an asset in the balance sheet … the primary judge’s findings necessarily meant that the husband’s 58.5 per cent share of the assets and superannuation incorporates the military pension at its capitalised value of $638,109, even though he does not and never will have that capitalised sum available for his use.

( … )

[20] The primary judge’s methodology caused the military pension to be impermissibly counted twice – first as an asset and then as a source of constant income. …”

The appeal was allowed; the final order set aside, the court re-exercising its discretion ordering a 50:50 division of the asset pool; and costs certificates ordered for both parties.

Maintenance – Urgent spousal maintenance order discharged where considerable uncertainty as to husband’s capacity to pay maintenance

In Holman & Bates [2022] FedCFamC1A 141 (8 September 2022) Tree J heard a wife’s application for leave to appeal the discharge of an earlier, urgent spousal maintenance order.

The wife was diagnosed with a terminal illness in November 2021 and had been undergoing palliative care at the time of the hearing.

On 27 January 2022 the magistrate made an order for urgent spousal maintenance of $800 per week pending the interim hearing. At the interim hearing, the magistrate dismissed the urgent spousal maintenance order and transferred the proceedings to the Family Court of Western Australia.

Tree J said (from [14]):

“Although the … magistrate did not make a stand alone order dismissing the wife’s interim application for periodic spousal maintenance … it is evident his Honour intended to determine the wife’s application ( … )

( … )

[24] It seems clear that the … magistrate was not persuaded that the husband had capacity to pay spousal maintenance, but nonetheless went on to say that s 75(2) considerations would persuade him not to have made an order for spousal maintenance in any event. So construed, there was no conflation of ss 72, 74 and 75(2)(o) of the Act.

( … )

[39] … [T]here was considerable uncertainty as to the husband’s capacity to meet an order for spousal maintenance, particularly given that both his income and expenses were expressly said to be estimates …

[40] It was for the wife to satisfy the primary magistrate of the husband’s capacity to pay, and the state of the evidence was sufficiently unclear that it was certainly open to the primary magistrate to conclude as he did, namely that he could not ‘make definitive findings as to what surplus, if any, the husband has over income and expenditure’ …”

The wife’s application for leave to appeal was refused; her Notice of Appeal dismissed; and she was ordered to pay the husband’s costs fixed at $5,000.

Procedure – Husband’s failure to adduce evidence-in-chief should not have precluded him from cross-examining wife and was a denial of natural justice

In Morgan & Valverde [2022] FedCFamC1A 133 (31 August 2022) Austin J heard a de facto husband’s appeal from property orders after a childless de facto relationship of 9 years.

The appellant failed to file and serve any evidence before the trial and the only evidence at trial was that of the respondent. Orders were made for a division 57.5:42.5 in favour of the appellant.

On appeal, the de facto husband argued that he was denied natural justice and procedural fairness.

Austin J said (from [18]):

“… [T]he appellant [has no] … reasonable complaint about the trial progressing without his evidence, given his protracted failure to file and serve [his evidence] … He was not merely late filing evidence. He did not file any evidence at all …

[19] … [D]uring the discussion which ensued about the need for the trial to proceed without further delay, the primary judge told the appellant he would not be able to cross-examine the respondent. Ostensibly, that was only because he failed … to file and serve his evidence-in-chief. …

( … )

[35] The appellant had no absolute right to cross-examine the respondent – only an absolute right to a fair trial. However … it would be a rare case in which the refusal of a party’s request to cross-examine a material witness at final trial would not manifest the deprivation of procedural fairness (Naparus & Frankham [2020] FamCAFC 32 …).

( … )

[37] Although the appellant did not specifically ask to cross-examine the respondent, he had already been told he would not be allowed to do so and, absent legal representation, he meekly did not contest the ruling. Denying the appellant the chance to cross-examine the respondent, at least without any adequate explanation for why and without giving him the chance to be heard about the ruling, denied him natural justice and was an error of law.

( … )

[40] Had the appellant cross-examined the respondent, it might have made no difference at all, but that is not the test. … It follows that the error was material and there is no option but to remit the proceedings for re-hearing.”

Property – Full Court sets aside property order in short, childless de facto relationship

In Grunseth & Wighton [2022] FedCFamC1A 132 (26 August 2022) the Full Court (Alstergren CJ, Aldridge & Brasch JJ) allowed a de facto wife’s appeal in a case involving a childless de facto relationship that lasted for “just under three years”.

The parties purchased a property (“the B town property”), the de facto wife contributing 70% of the purchase price and the husband 30%. The parties registered the B town property 70:30 in favour of the wife ([5]).

The de facto husband paid $160,000 to the de facto wife. The parties agreed that the intention of the payment was such that the B town property would be registered 50:50 between them.

As first instance, the Court ordered a division of 52.5% to the de facto husband and 47.5% to the de facto wife. The Full Court said (from [37]):

“ … [W]e cannot reconcile the ultimate determination … with the … fact that the [de facto wife] … contributed over 52.5 per cent of the … assets and with assets to which the [de facto husband] … made no contribution to at all. … ( … )

[74] … [T]here is much to be said for the proposition that the parties should … receive the property owned by them … particularly so when the ownership of the B Town property was … structured … to reflect the parties’ contributions … ( … )

[76] … The … payment of $160,000 … was paid by the [de facto husband] … to gain an increased share of the B Town property … [A]n allowance must be made in [his] … favour for at least that sum. ( … )

[88] … [T]he order will provide for the sale of the … property and the division of the proceeds 70 per cent to the [de facto wife] … and 30 per cent to the [de facto husband] … [and] for the payment of $160,000 by the [de facto wife] … to the [de facto husband] … ”

Property – Court erred by making enforcement orders that substantively varied the parties’ rights pursuant to a registered arbitral award

In Lasso & Malaka [2022] FedCFamC1A 130 (23 August 2022) the Full Court (Austin, Tree & Williams JJ) allowed a husband’s appeal from orders of Wilson J in respect of an arbitral award that was registered pursuant to s 13H of the Act.

The award provided for the husband to transfer his interest in the home to the wife; and within 90 days the wife refinance a mortgage on an investment property. If the wife was unable to refinance within 90 days, the husband had opportunity to pay the wife $325,000 and retain the property.

The wife obtained finance approval and provided notice to her lawyer, but not the husband. On the expiration of the 90 day period, the husband paid $325,000 to the wife and said the property vested in him.

The wife filed an application for enforcement.

At first instance, the Court found that the “award should be given effect but in accordance with new dates” ([23]), ordering the wife to return the $325,000 to the husband; and that the husband transfer the property.

The Full Court said (from [30]):

“Counsel for the [wife] submitted, subject to … exceptions, once perfected … an order finalising a proceeding is beyond recall (Gamser v Nominal Defendant [1977] HCA 7 … There is no reason why the same conclusion should not apply to an arbitral award …

[31] Exceptions to the principle … include matters where the orders sought to be varied are consequential or machinery orders … ( … )

[40] … The [first instance] … orders … substantially varied the terms of the decree … ( … )

[42] It was incumbent on the … judge to raise with the parties the orders he proposed to make … The failure … to do so is a denial of procedural fairness. ( … )

[60] Not only did the … judge fail to identify the source of power he … exercised to make the … orders, the orders could not have been made pursuant to s 13K or s 105 of the Act, nor … the general power … ”

Children – Covid-19 – Risks of 9 year old being vaccinated or remaining unvaccinated favored neither party’s case – Anticipated social and indirect benefits of vaccination

In McGowan & Brennan [2022] FedCFamC2F 1082 (17 August 2022), Judge Eldershaw determined that a 9 year old child (“X”) should be vaccinated against Covid-19, where the father sought orders permitting vaccination and the mother sought restraints against vaccination.

The mother relied on adversarial expert Dr B, whose evidence included a conclusion that “there is a statistically or virtually nil risk of serious COVID-19 in general affecting children aged 5 to 11 years … ” ([60]).

The father sought to rely on recommendations of the Australian Technical Advisory Group on Immunisation (“ATAGI”).

The Court said (from [56]):

“ … [T]he existence of the health advice is common knowledge. … [T]he purpose upon which the father relies on the advice pertains to the accuracy or correctness of its substance. The substance of the advice is that of an opinion. ( … )

[59] That said;

(a) There is no dispute that the advice of ATAGI and government health advisors is admissible in the proceedings;

(b) Pursuant to s 183 of the Evidence Act, I can infer that the documents that have been prepared by … persons who are appropriately qualified …

(c) … [I]t is not necessarily essential, that the information from ATAGI be before the Court through an expert witness; and

(d) This matter concerns an evaluation of risk to a child, for which as much information as possible would assist me in making a decision. … ( … )

[92] Dr B cites no benefit to X in obtaining the vaccine …

[93] ATAGI cites benefits of the vaccine which include the corollary of avoiding the risk of the disease and other wider social and/or indirect benefits.

[98] …[T]he risks to X from receiving … and … of not receiving the vaccine, favour neither party’s case, a point of contrast can be identified by reference to the anticipated social and/or indirect benefit to X in being vaccinated. … It is in his best interests that he … avail himself of it. ( … )”

Evidence – Trial judge’s enforcement of direction for single, consolidated affidavit material procedurally unfair where subsequent direction permitted reliance on multiple affidavits

In Krupin [2022] FedCFamC1A 136 (1 September 2022) Tree J (sitting in the appellate jurisdiction of the Federal Circuit and Family Court of Australia) allowed an appeal from a decision of Judge Young in a property case.

After the trial dates were vacated trial directions were made on 6 November 2020 that included an order that the parties file consolidated affidavits of evidence in chief and that no party was permitted to rely on more than one consolidated affidavit ([27]).

Those directions scheduled a trial that was also vacated. Trial directions were made on 7 September 2021 which permitted the parties to rely on all affidavits previously filed in the proceedings.

When the trial commenced, the primary judge insisted on compliance with the 2020 directions, notwithstanding that the husband’s case outline sought to rely on 11 affidavits; and the wife’s outline sought to rely on 13 ([33]).

Tree J said (from [35]):

“ … [T]he trial proceeded with each party only being permitted to rely on one affidavit of evidence-in-chief, together with [an] … ‘updating’ affidavit … ( … )

[37] Procedural fairness requires each party to be given an adequate opportunity to be heard, and to present their cases (Kioa v West [1985] HCA 81 … ). ( … )

[39] … [T]he … 2021 orders specifically permitted the parties to rely upon more than just one consolidated affidavit. …

[40] … [B]etween 7 September and 24 November 2021, all parties believed, and prepared their cases on the … basis, that they could rely upon all past affidavits, yet [at trial] … that was turned on its head, and … a significant restriction on the material they could rely upon was imposed upon them. That was procedurally unfair. … ( … )

[45] … Whilst the … judge understandably recoiled in a degree of horror at the sheer volume of material which that order permitted to be relied upon, … that is no answer to the unfairness which the peremptory withdrawal of the right to rely on that material gave rise to.”

Craig Nicol

Editor, The Family Law Book

craig@thefamilylawbook.com.au

Keleigh Robinson

Co-Editor, The Family Law Book
Accredited (in Qld and Vic respectively) as specialists in family law.