family law sydney

Family Law 101

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Table of Contents

FAMILY LAW TOPICS

FAMILY DISPUTE RESOLUTION & ETHICS FOR FAMILY LAWYERS

Dispute resolution in family law

Family lawyers and professional ethics

PROPERTY ON RELATIONSHIP 

Property under FLA

Property and the rights of third parties

Discretion and process in matrimonial property disputes under FLA

Kane & Kane

MAINTENANCE AND PRIVATE ORDERING

Maintenance

Private ordering of property distribution and maintenance

DISPUTE RESOLUTION IN FAMILY LAW

IMPORTANCE OF DISPUTE RESOLUTION 257

FAMILY RELATIONSHIP CENTERS (FRC) 261

FAMILY DISPUTE RESOLUTION (FDR) 268

  • Mediation
  • Assessment of suitability
  • Advantages
  • Disadvantages
  • Confidentiality of mediation 276
  • Child inclusive mediation 278
  • Lawyers presence
  • Mandatory mediation

DISPUTE RESOLUTION BEFORE FILING OF COURT APPLICATION  281

DISPUTE RESOLUTION AFTER FILING A COURT APPLICATION 289

ADJUDICATION 290

  • LESS ADVERSARIAL TRIALS FOR CHILDREN’S CASES 291

 

FAMILY LAWYERS AND PROFESSIONAL ETHICS 301
FAMILY LAW AND THE LEGAL PROFESSION 301

  • Dispute resolution in Aus

COLLABORATIVE LAW 303

THE ETHICAL PRACTICE OF FL 305

  • The duty to the client
  • Duty to the court
  • Cost of legal advice
  • Acting for parties with conflicting interests

ETHICAL ISSUES INVOLVING OTHERS  322

  • Acting against a former client
  • Confidentiality
  • Best Practice Guidelines for lawyers doing FL work

 

MAINTENANCE 477

INTRO TO SPOUSAL MAINTENANCE UNDER FLA 478

EXTENT OF SP IN AUS 478

FUNCTIONS AND PURPOSE OF SP 480

APPROACH TO SPOUSAL MAINTENANCE APPLICATIONS 485

  • Threshold Requirement 485
  • Considerations in making a spousal maintenance order 488
  • Personal Circumstances 75(2)
  • Obligations to Others 75(2)
  • Past circ of marriage 75(2)
  • Conduct/fault in maintenance proceedings 75(2)

ORDERS 495

  • Lump Sum Payments:
  • Urgent spousal maintenance 499
  • Cessation of SM Orders 500
  • Variation of SM Orders 501

 

CH 15 PRIVATE ORDERING OF PROPERTY DISTRIBUTION AND MAINTENANCE

INFORMAL AGREEMENT 506

CONSENT ORDERS 510

BINDING FINANCIAL AGREEMENTS 515

ROLE OF LAWYERS IN ADVISING CLIENTS ABOUT AGREEMENTS 527

 

 

PROPERTY UNDER FLA 529

PROPERTY RIGHTS DURING MARRIAGE AND COHABITATION 530

DECLARATIONS OF PROPERTY INTERESTS UNDER FLA 531

JURISDICTION WITH RESPECT TO RELATIONSHIP PROPERTY 532

THE MEANING OF PROPERTY UNDER FLA S79 538

  • The requirement of Assignability 541
  • Discretionary trusts
  • Superannuation entitlements

INJUNCTIONS IN RELATION TO MARITAL PROPERTY 533

  • Exclusive occupation orders s 114(1)(b) and (f) 533
  • Injunctions restraining disposition of property

FINANCIAL RESOURCES 553

VALUATION OF FAMILY PROPERTY 556

THE REQUIREMENT OF FULL DISCLOSURE 558

 

DISCRETION AMD PROCESS IN MATRIMONAL PROPERTY DISPUTES 561

STEPS IN THE EXERCISE OF THE COURTS DISCRETION TO ALTER PROPERTY INTERESTS 562

ASSESSING CONTRIBUTIONS 565

  • Approaches
  • Weighing contributions p570
  • Contributions by or on behalf of a party to the marriage s 79(4)(a) and (b)

FINANCIAL CONTRIBUTIONS 574

  • Assets brought into marriage 582
  • Gifts
  • Lottery wins
  • Inheritances

Damages award 580

NON FINANCIAL CONTRIBUTIONS 587

CONTRIBUTIONS TO WELFARE OF FAMILY 589

  • Justification for considering homemaker contributions 79(4)(c)
  • Valuing homemaker and parenting contributions
  • Homemaker contributions as contributions to business assets

CONTRIBUTIONS MADE DURING PRE-MARITAL COHABITATION & POST-SEPARATION 602

  • Relevance of domestic violence 603

OTHER ISSUES ABOUT CONDUCT AND WASTE – LOSSES 606

FUTURE NEEDS & S 75(2) FACTORS 607

SUPERANNUATION 611

OTHER FACTORS 622

EMPIRICAL EVIDENCED ON OUTCOMES OF PROPERTY 623

BARGAINING IN THE SHADOW OF THE LAW 629

 

PROPERTY INTERESTS OF THIRD PARTIES 635

GENERAL PRINCIPLES RELATING TO 3RD PARTY PROPERTY RIGHTS 636

DISCRETIONARY TRUSTS 642

TRANSACTIONS TO DEFEAT CLAIMS 652

THE CLAIMS OF 3RD PARTY CREDITORS 658

BANKRUPTCY 663

CLAIMS BY CHILDREN IN S79 PROCEEDINGS 669

 

 

DISPUTE RESOLUTION IN FAMILY LAW

    
   

Many cases settle here: run out of legal aid/money, know they will lose, just give up, pushed into accepting result

 
  1. Re-hearing
  2. Appeal
  3. Judgment (only 7% of filed matters)
  4. Settle during Trial
  5. Settle before Trial
  6. Settle at case conference/formal mediation
  7. Settle before Hearing date set or any Ct event (75% of filed matters end here)
  8. Proceedings filed (only 4% of matters)
  9. Settle with help of lawyer – no proceedings filed.
  10. Settle without lawyers – with/out legal advice.

 

IMPORTANCE OF DISPUTE RESOLUTION 257

  • strong focus in FL system on resolving disputes w/o need for adjudication
  • at various points of litigation parties are required to engage in dispute resolution processes with view to facilitating settlements
  • emphasis on Alternate Dispute Resolution
  • preference for title Primary Dispute Resolution
  • advantages of avoiding traditional litigation in FL matters (Mnookin and Kornhauser 1979)
    • financial savings
    • less painful and stressful
    • children benefit when parents agree on custodial arrangements
    • avoid risks and uncertainties of litigation
    • saves time as avoids court delays
    • consensual solution more likely to be in line with each persons preference
  • different forms of dispute resolution in FL disputes (Cooper and Brandon 2007)
    • advisory processes
    • facillitative processes

 

 

FAMILY RELATIONSHIP CENTERS (FRC) 261

  • originally envisaged to Offer free mediation to everyone but budget changes altered this
  • funded by gov and operate in accordance with gov guidelines
  • Have early intervention initiative to help parents work out post separation parenting arrangements (Parkinson 2006)
  • Roles – aim to provide (Parkinson 2006)
    • Info, advice and referral to services which can strengthen r’ships
    • Provision of seminars, individual advice and free mediation when parents separate
    • Assistance in resolving ongoing disputes about post separation parenting arrangements
    • Assistance to grandparents
    • Help in resolving child support issues
    • Supporting intact r’ships – dealing with issues of post separation parenting and developing positive identity within local communities where people can get info and resources to support them
    • Supporting parents following separation – ID parents needs, helping to access relevant services, negotiating workable agreements after separation

 

FAMILY DISPUTE RESOLUTION (FDR) 268

  • Mediation
    • process (other than judicial process) in which a family dispute resolution practitioner helps people affected by separation or divorce to resolve some or all of their disputes with eachother AND in which practitioner is independent of all parties involved in process s10F FLA
  • Assessment of suitability
    • not suitable for everyone
    • under Family Law (FDR Practitioners) Regulations 2008 (Cth), FDR practitioners must assess suitability of parties for the process s25
  • Advantages
    • Parties have control over their dispute and outcome – more negotiating power BUT must be able to rep their own interests adequately and must understand their own rights, express themselves clearly/assertively
    • Cheaper/faster for clients and Ct
    • Agreement more likely to work/be followed – parents worked it out themselves (not just Ct imposing)
    • More reflective of “no fault” approach
    • Protect relationships –promoting cooperation
    • Parties know more about child’s needs (than Ct) – what is best and will work out
    • Allows for emotional concerns to be solved.
    • Avoiding pain of formal adversarial proceeding – stressful, uncertain
    • Avoid risks/uncertainties of litigation
    • Confidentiality à no disclosure of comm. unless it is required
  • Disadvantages
    • May delay a matter that ultimately can’t be agreed to.
    • Too emotional – some parties just can’t think for the children’s interests (too focused on self)
    • Inequality of bargaining power – 1 party may be dominant/submissive
    • Information differential – 1 party may have less information (weaker) and get unreasonable outcome.
    • No public/Ct scrutiny of agreement/outcome – could be unfair/wrong.
    • No precedent value
    • Violence – may involve threats, insults (damaging to self esteem of parties)
    • Requires ability of parties to rep their interests adequately – know their rights, info of financial matters, = access to info, expressing themselves clearly OTHERWISE it may result in unfair outcome
    • Not appropriate where g. child abuse, child abduction, parenting incapacity AND violence *** which:
      • creates substantial imbalance in power r’ship between parties and can make it difficult for target of violence to negotiate for their own needs and interests
      • Direct/indirect threats outside mediation may motivate capitalization of unfair agreement
      • Desire to end r’ship/violence may motivate agreement to unjust settlement
      • Target may not challenge info to avoid antagonizing perpetrator
      • Agreements may be unfair/dangerous if mediator doesn’t know of violence e.g. providing for husband to collect children from wife may expose her to further danger
      • Being in the same room may cause fear and compromise ability to negotiate
    • Confidentiality of mediation 276
      • s10H a FDR Practitioner must not disclosure a communication…
      • s10J evidence of anything said or any admission made in company of FDR Practitioner…is not admissible…
    • Child inclusive mediation 278
      • Children are assessed by child consultant (different person from mediator who works with adults). He feeds info back to parents about children’s feelings and reactions to family conflict with view to helping parents reach a
      • Create environment that supports disputing parents in actively considering needs of each child
      • Facilitate parenting agreement that preserves significant r’ships and supports children’s psychological adjustment to separation
      • Support parents to leave dispute resolution forum on higher ground
      • Ensure ongoing mediation and agreements on decisions reflect psycho-developmental needs of child
      • Consult with children in supportive manner about their experiences
      • Ensure style of consultation avoids burden of child decision making
      • Understand and formulate child’s core experience with developmental framework
      • Validate children’s experiences and provide basic info that may assist their present coping
    • Lawyers presence
      • Advantages
        • can recommend settlement offers to their clients and provide legal advice to their clients
        • Useful in clarifying facts or assisting with inarticulate or stressed persons who are parties to mediation
        • Help the parties in drafting the terms of an agreement especially where a party has cognitive disability
        • provide disputants with assessments of the likely outcome, or range of outcomes, if a matter is litigated, thus giving parties information they need in order to assess offers to settle in mediation
        • “rational and unemotionally attached to the conflict”
        • may assist in redressing power imbalance situations and help parties negotiate from a position of knowledge
      • Disadvantages
        • inhibit the open discussions that may take place during mediation
        • disempower individuals and prevent them from resolving their own issues
        • create a power imbalance if one party does not have or cannot afford a lawyer
        • lead, in some cases, to the lawyer dominating the proceedings
        • impede the reaching of settlement in civil claims because of the adversarial approach of lawyers
        • impact adversely on the informality that is considered a positive feature of mediation proceedings
      • Mandatory mediation
        • Advantages
          • it is good for getting issues aired – it helps parties to focus on issues and perhaps realise that legal action is pointless and it may put some disputes off the legal course;29
          • in disputes where parties have come to firmly entrenched positions, the parties sometimes welcome being forced into mediation
        • Disadvantages
          • participation in mediation must be voluntary to be effective
          • voluntariness “ensures that parties mediate in good faith and have “ownership” of the outcomes of the mediation and conflict management process
          • possibility that compulsory mediation at CJCs might appear to be forcing people into “second class justice”
          • possibility that courts dealing with heavy workloads could be tempted to refer cases to CJCs that might not necessarily be appropriate for mediation
          • possible impact on CJC performance of cases of a type that have not previously been dealt with by CJCs

DISPUTE RESOLUTION BEFORE FILING OF COURT APPLICATION  281

  • Parents need to engage in FDR before applying to court unless exempted
  • Genuine effort – req. to attempt to resolve dispute by FDR before applying for parenting order. It involves
    • Attending FDR
    • Willing to consider options put forward by the other party or FD practitioner – willing to consider compromise
    • Willing to consider putting forward options for resolution of dispute
    • Willing to focus on needs and interest of children to best of parents ability
  • S60I(9) – Exceptions to FDR

                     (a)  orders by consent or cross application is on foot

                     (b)  child abuse or violence or risk of either

                     (c)  specific issue and orders made within last 12 months and is a contravention application.

                     (d)  urgency; or

                     (e)  1+ parties is unable to participate effectively

                      (f)  other circumstances

DISPUTE RESOLUTION AFTER FILING A COURT APPLICATION 289

ADJUDICATION 290

  • If case goes to trial the process that is used to resolve the dispute is likely to vary depending on which court its heard and nature of proceedings

 

  • LESS ADVERSARIAL TRIALS FOR CHILDREN’S CASES 291
  • Children’s cases program (CCP) à mainstreamed
    • Began in 2004 (better approach for children) – reduce adversarial nature of children’s cases.
    • Use of questionnaires to get basic info at beginning.
    • Judge swearing parties in at beginning (everything then onwards is evidence).
    • At beginning, each party has opportunity to explain dispute
    • Encourage parties to speak for themselves directly to judge.
    • Judge then aim to resolve by agreement.
    • If go to adjudication – Judge decide what evidence adduced
    • CCP study McIntosh, Bryant and Murray 2008
      • Examined experiences and outcomes for 2 groups of parents who completed resolution of parenting process
      • 4 months post-court parents who went through CCP were significantly more likely to report better management of conflict, less damage to co-parental r’ship, greater satisfaction of parents and children with their living arrangements and improved children’s adjustment
      • Also reports of lower levels of overall conflict particularly verbal conflict, angry disagreements…
      • BUT: samples were all volunteers and had much easier issues to resolve.
    • Child responsive program (CRP)
      • Service in which all parents participate in as their first contact with family court
      • They are assigned Family and Child Consultant who provides early education, prelim family assessment and child inclusive dispute resolution
      • If adjudication is necessary– FCC helps parties and Judge through trial
      • CRP study McIntosh, Bryant and Murray 2008
        • 4 months post-involvement majority of settlements remained in place, majority of mothers were satisfied with outcomes BUT fathers were less positive about decisions reached
        • Overall cooperation between parents increased and majority improved protection of children from their conflict
        • 76% reported improved r’ship with their children
      • Less adversarial trial (LAT)
      • Adversarial system – initiation/control of proceedings by parties. Judge doesn’t conduct independent inquiry (just ensure procedure followed and make decision based on law – who has better argument).
        • Judge has more control– reads affidavits, decide way to proceed, can prevent parties calling unhelpful evidence
        • Family Consultants have far greater role as do Independent Children’s Lawyers (ICL still rare – only if Ct sees a need for it). Both are supported by legal aid.
        • Any children matter can be compelled to go to LAT
        • Principles for judges: s69ZN
          • Should consider needs of children and impact of proceedings
          • Should ACTIVELY direct, control and manage
          • Safeguard children against family violence, abuse, neglect; and parties against family violence.
          • Should promote cooperative and child focused parenting by parties
          • Should proceed without undue delay, formality, and technicality.
        • Duties of Ct: s69ZQ
          • Must decide which issue require full investigation/hearing
          • Must decide order in which issues are to be decided;
          • Give directions/orders re timing of steps in proceedings;
          • In deciding steps – consider benefits and costs;
          • Make use of technology
          • If appropriate – encourage parties to use family dispute resolution or counseling;
          • Deal with as many aspects of matter in single occasion;
          • Deal with matter (if appropriate) without requiring parties’ physical appearance in Ct.
        • Rules of evidence:
          • Most rules don’t apply unless Ct decides they should.
          • Judges can disregard or attach min weight to things excluded à additional powers to control evidence
  •  

FAMILY LAWYERS AND PROFESSIONAL ETHICS 301

 

FAMILY LAW AND THE LEGAL PROFESSION 301

-Dispute resolution in Aus: Astor and Chinkin 2002

  • significant proportion of family disputes are resolved by negotiation
  • sometimes lawyers assist with negotiation & great majority of people wanting divorce consult a lawyer at some point
  • number of people negotiate family disputes w/o professional assistance
  • given the role that lawyers play in such a substantial number of divorces and separations, the skill and sensitivity with which they approach family disputes is of considerable importance

 

COLLABORATIVE LAW 303

-Collaborative practice in FL:  FL Council

  • CL is a method of dispute resolution whereby the parties and their lawyers contract to settle a matter w/o involving the court
  • Parting wishing to engage in this must each retain a lawyer to represent their respective interests
  • Must be prepared to participate actively in process of open negotiations, aimed exclusely at settlement
  • Distinguishing features: collaborative contract, four-way meetings, interest-based negotiations

 

THE ETHICAL PRACTICE OF FL 305

-The duty to the client

  • Formal position: advice on matters falling within retainer and obey instructions
  • Reality: some clients may be reliant
  • Lawyers differ in the extent they wish to dominate to produce the outcomes they personally see as preferable
  • Davis, Cretney & Collins: observers of the lawyer client relo comment on the extent which legal adviser may seek to emphasie the professional/business side whilst client develops an empathetic sub-text
  • Lawyers don’t only take instructions, they shape them
  • King: based on empirical study of family lawyers, explores how they establish a normative framework for post-separation parenting. In some cases lawyers persuade clients to adapt their preferred outcome to that normative framework based upon ‘the law’
  • In the marriage of Anderson 1982 judge held its necessary and proper part of function of lawyers to subject their clients to considerable pressure to compromise litigation

-Duty to the court

  • There is also a duty to the court, alongside client
  • Ethical obligations flow from this
  • Altobelli & Seriser: if info is relevant it must be disclosed and included in affidavit, even if adverse to client

 

-Cost of legal advice

  • One deterrent to pursuing legal remedies is the perceived cost of litigation
  • Prof Hunter 2002:
    • study explored the costs of litigation in Aus for a group of legally-aided clients and self-funded clients and how funding issues impacted on people’s sense of fairness about the outcome of their case
    • experiences of FL litigation vary by the funding status when it comes to resources available, amount of funds spent and the resources available to the other party to spend on their case
  • Strategies to reduce costs (Prof Hunter et al. 2000)
    • unbundled services – disaggregating the discrete tasks involved in legal representation
    • pro bono work – mostly unfunded cases on legal aid work
    • legal fees are sometimes discounted
  • Costs of litigation can have a profound impact on the parties and can affect the outcomes that ppl have sought to achieve thru the litigations
  • The legal costs of relocation disputes (Parkinson, Cashmore, Single)

-Acting for parties with conflicting interests

  • Its common for 2 parties to approach lawyer and ask to act for them both
  • Parties believe they have agreed on outcome and want 1 lawyer to put it into effect
  • Trust lawyer to fairly deal with incidental disagreements
  • In practice this is fraught with difficulties
  • In Marriage of Simmons 1991

ETHICAL ISSUES INVOLVING OTHERS  322

-Acting against a former client

  • Conflict of duty and issue of confidentiality can arise
  • Note: not fiduciary obligation as this is concerned with simultaneous representation not successive representation: House of Lords in Prince Jerfi Bolkiah v KPMG
  • Leading FL authority on the risk of disclosure of confidential info is FCs decision in McMillan 2000 which concerned the movement btwn law firms of a law clerk

Confidentiality

  • legal/client professional privilege
  • is device where confidentiality is maintained even in face of subpoena or other legal order to divulge
  • also extends to documents
  • there are exceptions eg communications in furtherance of fraud or crime R v Cox and Railton (Shirvington)
  • Re Bell; Ex parte Lees: question if lawyer should be compelled to disclose the whereabouts of his client, who had breached an interim custody order and disappeared with the child

-Best Practice Guidelines for lawyers doing FL work

  • Prepared by FL Council and FL section of the Law Council of Aus

 

 

maintenance 477

INTRO TO SPOUSAL MAINTENANCE UNDER FLA 478

  • Don’t need to be separated to apply for SM (c.f. DFs)
  • Provisions are ‘gender-neutral’
  • FC may order SM s74 – DeFacto is 90SE (provided they meet relationship requirements s90SB)
  • Time Limits:
  • Must be commenced within 1 yr of marriage s44(3A) dissolving/annulment: s44(3)
  • s44(4)(a)&(b): The court shall not grant leave under subsection (3) or (3A) unless it is satisfied:
    • That hardship would be caused to a party to the relevant marriage or a child if leave were not granted; or
    • In the case of proceedings in relation to the maintenance of a party to a marriage–that, at the end of the period within which the proceedings could have been instituted without the leave of the court, the circumstances of the applicant were such that the applicant would have been unable to support himself or herself without an income tested pension, allowance or benefit.

 

EXTENT OF SPOUSAL MAINTENANCE IN AUS 478

  • Plays limited role in modern aus family law – found to be rare, minimal and brief
  • Mostly where it is sought is on interim basis pending final property settlement
  • data 1990s from Aus Divorce Transitions Project p479
    • Vast majority of payers male and recievers female
    • Share 2 characteristics: used formal legal processes to settle property matters and been in long term marriages at least 10 yrs

FUNCTIONS AND PURPOSE OF SM 480

  • Purpose
  • Rehabilitative model: SM only available if W unable to work due to Child or ill health
  • Compensatory model: SM is what W entitled to. Compensate for W’s economic disadvantage from responsibilities during marriage. Thus, if W homemaker without C à no compensation
  • Practicality: most separating couples don’t have financial means to meet all needs of family members.

APPROACH TO SPOUSAL MAINTENANCE APPLICATIONS 485

  • In marriage of Bevan (1995) ***
  1. Threshold finding under s72
  2. Consideration of s74 & s75(2)
  3. At both stages, you have to consider s75(2) factors Mitchell and Mitchell (1995)

No fettering (binding) principle that pre-separation standard of living must automatically be awarded where respondents means permit

  1. Discretion exercised in accordance with s74, with “reasonableness in circumstances” as guiding principle.
  • In determining if payee able to support self and payer able to pay à consider proposed prop orders and their effect: In Marriage of Bevan [1995]
  • There may be need for urgent SM pending determination of prop proceedings: In Marriage of Little ]1990]

Threshold Requirement 485

FAMILY LAW ACT 1975 – SECT 72 – DF: s90SF; s90SF(3) for s75(2)

Right of spouse to maintenance

(1)     A party to a marriage is liable to maintain the other party, to the extent that the first‑mentioned party is reasonably able to do so, if, and only if, that other party is unable to support herself or himself adequately whether:

(a)     by reason of having care and control of child of marriage < 18 years;

(b)     by reason of age or physical or mental incapacity for appropriate gainful employment; or

(c)     for any other adequate reason;

having regard to any relevant matter referred to in ss 75(2).

  • To determine, Ct can consider ANY s75(2) matter (not just income, prop and financial resources): Kiesinger v Paget [2008]
  • Must be measured against ability to pay.
  • In Marriage of Nutting [1978]: H was said to be liable to support W only to extent that she was incapable of supporting herself adequately, and “adequately” was said to import standard of living which was reasonable in circumstances, including circumstance that parties were no longer H and W AND that assets formerly available to both in common had to be divided between them
  • Court Found In Marriage of Evans [1978] “adequately” means more than bare necessity, the standard of living to which a party was accustomed is clearly a matter to which the court must refer in determining whether a figure is adequate
  • In Marriage of Bevan [1995] W got $155K in property settlement + Part Time job = $379 p/w – Trial judge found it still below her needs (founf she needed $409/pw). H (high earner) argue no SM – W should use $155K to support self. Court found ‘upon a strict mathematical basis this would appear to justify an award of $30/wk (379 + 30 = 409). W should not deplete (reduce) already comparatively meager (insufficient) capital sum ($155K) where H has much higher earnings to avoid obligation of maintaining a former spouse… (page 486)
  • In Marriage of Mitchell [1995]
    • TRIAL: no SM – W didn’t persuade Ct that she had made proper efforts to increase her income
    • APPEAL: SM
      • W in mid 50s, out of work for long periods since 30 yrs ago, caused by commitment to Child, home etc
      • Significant gap between theory and reality of employment: ppl in middle age, lacking experience/confidence, out of skilled workforce for many years, current context of high unemployment à Ct must be realistic!
    • Keach and Keach (2011)
      • W had primary care of one primary school-aged child and one pre-school child. She sought an order that the husband pay her spousal maintenance of $1,350 per week.
      • The trial judge accepted that when comparing the wife’s income with her expenditure, she had a need for maintenance. However, he did not accept that it is a need that arises by “reason of her having the care and control of a child of the marriage: or her “age” or “incapacity for appropriate gainful employment”, or “for any adequate reason”.
      • The fact that the applicant has the care of the children under 18 is not sufficient reason for saying that she cannot support herself adequately.
      • The wife placed the children in full-time care with the consequences that she had the time to work, even on a casual or part time basis, but she had chosen not to. She had embarked on a course of study, but that was by correspondence, and her evidence was that she attended to that study at night and early morning.

Considerations in making a spousal maintenance order 488

 

FAMILY LAW ACT 1975 – SECT 74

Power of court in spousal maintenance proceedings

(1)  In proceedings with respect to the maintenance of a party to a marriage, the court may make such order as it considers proper for the provision of maintenance in accordance with this Part.

  • To consider what is “proper”, shall take into account s75(2) matters: s75(1)

 

Personal Circumstances 75(2)

  • (a): Age/health of parties:
    • middle aged W – not reasonable expect to seek paid work after lifetime of homemaking.
    • Health of parties doesn’t need to be linked to marriage.
  • (b): income/prop/financial resource of each party + physical/mental capacity for appropriate gainful employment:
    • Financial Resources takes into accn – future entitlement to super, beneficial interest under discretionary trust prospective inheritance from terminally ill person.
    • In Marriage of Best [1993]:
      • FACT: H very high income, but little existing prop. W little earning capacity + 4 children.
      • HELD: SM – where minimal assets, on one side significant needs and other side sig future earning capacity à SM is appropriate.
      • In such circumstance, power to order lump sum maintenance, which may be met by annual payments over a period of years against that income or savings from it, may be an appropriate course
      • Also, provided that the requirements of the Act are otherwise satisfied, it may be a mistake to conclude that where there are few assets they should be divided and that that is the end of the matter other than for periodic maintenance
  • Prospective of re-marriage: may be taken into acct if on statistical/firm evidence: In Marriage of Rouse [1982]
  • (d): commitments necessary for self support or support of any Child or other person that they have duty to maintain.
    • Necessary self support
    • Legal duty to support C or another dependent person
  • (f): eligibility for social security or super pension/allowance/benefit:
    • Subject to s75(3): Ct disregard Applicant’s (not payer’s) entitlement to any income-tested social security.
    • Policy reasons – to relieve State
    • Payer’s entitlement to social security IS relevant
  • (g): standard of living that is (in all circs) reasonable:
    • Where W enjoyed high SOL and H has resources à Ct may order: In Marriage of Evans [1978]
    • CF: In Marriage of Wilson [1989]: H (millionaire) à Ct ordered reasonable sum, not earlier lavish lifestyle.
  • (h): extent that SM may improve earning capacity:
    • Rehabilitative function of SM
    • In Marriage of Hope [1977]: W got SM to enable her to finish training course to make her self-supporting in 2yrs.
  • (k) duration of marriage and extent to which it has affected earning capacity of party under consideration
  • (m): if applicant is cohabiting with another person – the financial circ of that cohabitation.
    • Re F [1982]
      • FACT: W and Mr T de facto after separation – T live with W every wkd and in holiday. T makes no financial contribution to W or household. W claim SM from former husband.
      • HELD: no SM – (m) considers not only actual financial circ, but potential financial circ.
        • Although actual financial circ – T makes no contribution
        • Potential financial circ – T is able to make contribution
        • H should not pay SM to W or to supporting Mr T.

 

Obligations to Others 75(2)

  • (c): if either party has care/control of C of marriage (<18yrs):
    • May have substantial extra needs or restricted in paying SM bcos of C
    • Must be C of the marriage.
    • Care/control does not require legal Ct order.
  • (e): if either party has responsibility to support another person.
    • Covers obligations beyond legal duties in (d)
  • (ha): effect of SM on ability of 3rd party cred to recover debt
  • (l): need to protect a party’s parental role (continue being parent):
    • Means less scrutiny on Applicant in threshold test.
    • In Marriage of Nixon [1992]
      • FACT: W unable to support self cos 2C (4, 5 yrs). H argue threshold not met – could do paid work and get C babysitter.
      • HELD: SM – must consider (l).
        • If parent has alternative of paid work and childcare – may choose to be full time parent and in circ, may be held to be unable to support self.
      • (n): terms of any prop order
      • (na): child support liability:
        • CS payer will have less resources to pay SM
        • CS payee will be in better position under CS scheme.

 

Past circ of marriage 75(2)

  • (j): contributions of Applicant to income, earning capacity, prop and financial resources of other party:
    • Limited by s72 threshold
    • Only prov that looks back on contributions.
    • 1 partner pay the other’s way thru education
  • (k): duration of marriage and impact on earning capacity:
    • Limited by s72 threshold

Conduct/fault in maintenance proceedings 75(2)

  • (o): other circ required by justice
    • Does not include circ re marital history (eg. W nagged, violent, took car, controlled his income, got the house) but looks at facts/circ of a broadly financial nature: In Marriage of Soblusky [1976]
    • May consider non-financial conduct (eg. domestic violence): In Marriage of Kennon [1997]

 

 

ORDERS 495

  • Court may make such order for SM as it cosniders proper s74
  • Types of orders in following provision

FAMILY LAW ACT 1975 – s 80 General powers of court – orders

(1)      The court, in exercising its powers under this Part, may do any or all of the following:

(a)            order payment of a lump sum, whether in one amount or by instalments;

(b)           order payment of a weekly, monthly, yearly or other periodic sum;

(ba)  order that a specified transfer or settlement of property be made by way of maintenance for a    party to a marriage;

(c)            order that payment of any sum ordered to be paid be wholly or partly secured in such manner as the court directs;

(d)           order that any necessary deed or instrument be executed and that such documents of title be produced or such other things be done as are necessary to enable an order to be carried out effectively or to provide security for the due performance of an order;

(e)            appoint or remove trustees;

(f)             order that payments be made direct to a party to the marriage, to a trustee to be appointed or into court or to a public authority for the benefit of a party to the marriage;

(g)           make a permanent order, an order pending the disposal of proceedings or an order for a fixed term or for a life or during joint lives or until further order;

(h)           impose terms and conditions;

(i)             make an order by consent;

(j)             make any other order (whether or not of the same nature as those mentioned in the preceding paragraphs of this section), which it thinks it is necessary to make to do justice; and

(l)  subject to this Act and the applicable Rules of Court, make an order under this Part at any time before or after the making of a decree under another Part.

 

Lump Sum Payments:

  • In Marriage of Clauson [1995]
  • Periodic maintenance should be considered before lump sum.
  • Lump sum = capitalize total of periodic SM over long time.
  • Lump sum – exercise cautiously – uncertainty about future events (eg. remarriage)
  • Lump sum – rarely justified where no genuine concern about capacity/preparedness of payer to regularly comply.
  • Vautin v Vautin [1998]
  • FACT: Prop orders (1990): W got home and SM of $2K/mth for W and 4C. W now with 2C (18, 20yrs), unable to work (ill health). H substantial income/assets. W claim lump sum for maintenance of house furnishings etc.
  • HELD: lump sum $30K.
    • Lump sum may be appropriate where – need to meet non-periodic expenses, where established need and capacity to pay
    • Lump sum not limited to where capacity/willingness of payer is issue
    • Discretionary judgment – but in circ (W’s inevitable need for non-periodic but reasonable expenses) à should give lump sum.

If lump sum (or prop orders) made:

  • Must express order to be a s77A order: s77A(1)(c)
  • Specify portion of payment/value of portion of prop – that is to SM: s77A(1)(d)
    • If fail à will not be a SM order: s77A(2)

 

FAMILY LAW ACT 1975 – s 77A – Specification in orders of payments etc. for spouse maintenance purposes

(1)           Where:

(a)            a court makes an order under this Act (whether or not the order is made in proceedings in relation to the maintenance of a party to a marriage, is made by consent or varies an earlier order), and the order has the effect of requiring:

(i)                 payment of a lump sum, whether in one amount or by instalments; or

(ii)                the transfer or settlement of property; and

(b)           the purpose, or one of the purposes, of the payment, transfer or settlement is to make provision for the maintenance of a party to a marriage; the court shall:

(c)            express the order to be an order to which this section applies; and

(d)           specify the portion of the payment, or the value of the portion of the property, attributable to the provision of maintenance for the party.

(2)           Where:

(a)            a court makes an order of a kind referred to in paragraph (1)(a); and

(b)           the order:

(i)                 is not expressed to be an order to which this section applies; or

(ii)                is expressed to be an order to which this section applies, but does not comply with paragraph (1)(d);

any payment, transfer or settlement of a kind referred to in paragraph (1)(a), that the order has the effect of requiring, shall be taken not to make provision for the maintenance of a party to the relevant marriage.

 

Urgent spousal maintenance 499

 

FAMILY LAW ACT 1975 – SECT 77 Urgent spousal maintenance cases

Where, in proceedings with respect to the maintenance of a party to a marriage, it appears to the court that the party is in immediate need of financial assistance, but it is not practicable in the circumstances to determine immediately what order, if any, should be made, the court may order the payment, pending the disposal of the proceedings, of such periodic sum or other sums as the court considers reasonable.

 

Cessation of SM Orders 500

  • Upon death of either payee or payer: s82(1) and (2)
    • Does not cease on death of payer if: expressed to be in force for life of payee, or for period longer à order binding of legal personal rep of dec payer: s82(3)
  • Upon re-marriage (NOT de facto) of payee unless in special circ: s82(4)
    • Payee must inform without delay the payer: s82(6)
    • Any payment made after re-marriage may be recoverable: s82(7)
  • Can always recover arrears of SM: s82(8)

FAMILY LAW ACT 1975 – SECT 82

Cessation of spousal maintenance orders

(1)     An order with respect to the maintenance of a party to a marriage ceases to have effect upon the death of the party.

(2)     Subject to subsection (3), an order with respect to the maintenance of a party to a marriage ceases to have effect upon the death of the person liable to make payments under the order.

(3)     Subsection (2) does not apply in relation to an order made before the date of commencement of section 38 of the Family Law Amendment Act 1983 if the order is expressed to continue in force throughout the life of the person for whose benefit the order was made or for a period that had not expired at the time of the death of the person liable to make payments under the order and, in that case, the order is binding upon the legal personal representative of the deceased person.

(4)     An order with respect to the maintenance of a party to a marriage ceases to have effect upon the remarriage of the party unless in special circumstances a court having jurisdiction under this Act otherwise orders.

(5)     ………

(6)     Where a re-marriage referred to in subsection (4) takes place, it is the duty of the person for whose benefit the order was made to inform without delay the person liable to make payments under the order of the date of the re-marriage.

(7)     Any moneys paid in respect of a period after the event referred to in subsection (4) may be recovered in a court having jurisdiction under this Act.

(8)     Nothing in this section affects the recovery of arrears due under an order at the time when the order ceased to have effect.

 

 

Variation of SM Orders 501

  • Much easier than prop orders.

FAMILY LAW ACT 1975 – SECT 83 – Modification of spousal maintenance orders

(1)  If there is in force an order (whether made before or after the commencement of this Act) with respect to the maintenance of a party to a marriage:

 (a)  made by the court; or

 (b)  made by another court and registered in the first‑mentioned court in accordance with the applicable Rules of Court;

the court may, subject to section 111AA:

 (c)  discharge the order if there is any just cause for so doing;

 (d)  suspend its operation wholly or in part and either until further order or until a fixed time or the happening of some future event;

 (e)  revive wholly or in part an order suspended under paragraph (d); or

 (f)  subject to subsection (2), vary the order so as to increase or decrease any amount ordered to be paid or in any other manner.

(1A)  The court’s jurisdiction under subsection (1) may be exercised:

(a)      in any case–in proceedings with respect to the maintenance of a party to the marriage; or

(b)     if there is a bankrupt party to the marriage–on the application of the bankruptcy trustee; or

(c)      if a party to the marriage is a debtor subject to a personal insolvency agreement–on the application of the trustee of the agreement.

(2)  The court shall not make an order increasing or decreasing an amount ordered to be paid by an order unless it is satisfied:

 (a)  that, since the order was made or last varied:

(i)        the circumstances of a person for whose benefit the order was made have so changed (including the person entering into a stable and continuing de facto relationship);

(ii)      the circumstances of the person liable to make payments under the order have so changed; or

(iii)    in the case of an order that operates in favour of, or is binding on, a legal personal representative–the circumstances of the estate are such as to justify its so doing;

 (b)  that, since the order was made, or last varied, the cost of living has changed to such an extent as to justify its so doing;

 (ba)  in a case where the order was made by consent–that the amount ordered to be paid is not proper or adequate;

 (c)  that material facts were withheld from the court that made the order or from a court that varied the order or material evidence previously given before such a court was false.

(3)  Subsection (2) does not prevent the court from making an order varying an order made before the date of commencement of this Act if the first‑mentioned order is made for the purpose of giving effect to this Part.

(4)  In satisfying itself for the purposes of paragraph (2)(b), the court shall have regard to any changes that have occurred in the Consumer Price Index published by the Australian Statistician.

(5)  The court shall not, in considering the variation of an order, have regard to a change in the cost of living unless at least 12 months have elapsed since the order was made or was last varied having regard to a change in the cost of living.

(5A)  In satisfying itself for the purposes of paragraph (2)(ba), the court shall have regard to any payments, and any transfer or settlement of property, previously made by a party to the marriage, or by the bankruptcy trustee of a party to the marriage, to:

                     (a)  the other party; or

                     (b)  any other person for the benefit of the other party.

(6)  An order decreasing the amount of a periodic sum payable under an order or discharging an order may be expressed to be retrospective to such date as the court considers appropriate.

(6A)  …(6B)  …

(7)  For the purposes of this section, the court shall have regard to the provisions of sections 72 and 75.

 

 

PRIVATE ORDERING OF PROPERTY DISTRIBUTION AND MAINTENANCE

Three methods of PO in relation to property

  • Informal agreements
  • Financial agreements
  • Consent orders under s79

INFORMAL AGREEMENT 506

  • No need to have a formal agreement under FLA
  • Minton v Minton [1979] Lord Scarman at 608: “law now encourages spouses to avoid bitterness after family breakdown and to settle their money and property problems. An object of modern law is to encourage each to put the past behind them and begin a new life which is not overshadowed by the relationship which had broken down”
  • In cases where there’s little property or parties are able to support themselves (no need for spousal maintenance or social security) parties can decide to divide property and walk away BUT
    • Risks that parties may make agreement without knowledge of FLA rights.
    • Agreement about disposition of RP won’t be enforceable unless in writing (modern equivalents of Statute of Frauds)
    • Cannot oust jurisdiction of Court i.e. can’t exclude court’s statutory alteration powers under FLA
    • Only finality is from s44 FLA – aims to give effect to important principle in original design of FLA that spouses be able to settle their disputes and move on –clean break principle

FLA 1975 – s 44 – Institution of proceedings – within 12 months 507

(3)  Where:

                     (a)  divorce order has taken effect; or

                     (b)  decree of nullity of marriage has been made;

proceedings of matrimonial cause shall not be instituted, except by leave of court OR consent of both parties, 12 months after:

                     (c)  in divorce case — date on which divorce order took effect; or

                     (d) in nullity case — date of making of decree

(4)  Court shall not grant leave under ss. (3) or (3A) unless satisfied – exceptions

(a)     that hardship would be caused to party to marriage OR child or

(b)     in cases re: spousal maintenance — that, within period when proceedings could have been instituted without leave of court, circumstances were such that applicant would have been unable to support himself without social benefits

(5) DF couples – must bring proceedings within 24 months of end of relationship (same exceptions apply).

  • Richardson and Richardson [2008] 507
    • Facts
      • App brought proceedings for property div/maintenance 16 yrs after separation (married for 20 yrs) – in latter part of marriage wife suffered from ill health. They had 3 teenage children.
      • 1991 – Parties divorced. No significant assets. Neither brought proceedings within 12 months of divorce.
      • 1992 -1997 – wife was living at nursing home and received sickness benefits and small income from work she did around nursing home.
      • 1997 – F won $3 million in lottery. M moved into home owned by F, on which he met all expenses.
      • Dispute arose after downturn in his fortunes when he indicated she could no longer occupy property.
    • Trial – Moore J
      • Allowed M to apply out of time for property division and maintenance.
      • Explained “hardship test” in s 44(4) stating that unless hardship is established, app. for leave to institute proceedings out of time, must be dismissed BUT even if hardship is est., discretion remains.
      • Factors to consider inc. length of delay, adequacy of explanation for delay, prejudice occasioned to respondent by reason of delay and strengths of app. case and degree of hardship that would be suffered unless leave is granted.
    • Appeal
      • Issue was whether H should be granted leave to appeal
      • Confirmed Moore J’s confirmation of grant for leave to W
      • Exercise in discretion to grant leave should be exercised with great care ***
      • Affirmed Moore J decision that as applicant was on sickness benefits for 1 year after divorce, she was at that time unable to support herself without income tested pension, allowance or benefit within meaning of s 44(4)(b), and had a statutory right to apply for spousal maintenance

CONSENT ORDERS 510

  • Many financial cases are settled by consent orders – taking your agreement to court to have it enforced
  • Consent orders is maintenance agreement s4 which must be approved by court s87(2)
  • Details of financial circumstances don’t need to be provided to court – if parties had independent legal advice
  • Harris v Caladine (1991) ***
    • CO are not automatic – court must scrutinize them
    • It is not necessary to conduct inquiry into each factor in s79(4)
    • To determine if CO is “proper” – can look at material before court re: s79(4) factors AND advice available to parties and consent that they gave to making of order
    • Usually – if parties seem aware of s 79(4) factors (in making their consent) à consent order will be “proper”
    • When app for CO is made, there’s discretion to be exercised with respect to financial matters

FLA 1975 – s 79 – Alteration of property interests

(4)  In considering what order should be made under in property settlement proceedings, court shall take into account:

(a)     financial contribution made directly/indirectly by party to marriage OR child of marriage to acquisition, conservation or improvement of any of property, whether or not that property has, since making of contribution, ceased to be property of parties to marriage; and

(b)     contribution (other than financial) made directly or indirectly by party to marriage OR child of marriage to acquisition, conservation or improvement of any of property of parties, whether or not that property has, since making of contribution, ceased to be property of parties; and

(c)     contribution made by party to marriage to welfare of family inc. contribution made in capacity of homemaker/parent; and

(d)     effect of any proposed order upon earning capacity of either party to marriage; and

(e)     matters referred to in ss 75(2) so far as they are relevant; and

(f)      any other order made under this Act affecting a party to marriage OR child; and

(g)     any child support  under the Child Support (Assessment) Act 1989 that party to marriage has provided, is to provide, or might be liable to provide for child of marriage

 

FLA 1975 – s 75 – Matters to be taken into consideration in relation to spousal maintenance     

(2)  Matters to be taken into account are:

       (a)  age and state of health of each party; and

       (b)  income, property and financial resources of each party and physical/mental capacity for app. gainful employment; and

       (c)  whether either party has care or control of a child of marriage < 18 yrs; and

       (d)  commitments of each party that are necessary to enable party to support:

                    (i)  himself; and

                    (ii)  child or another person that party has a duty to maintain; and

       (e)  responsibilities of either party to support any other person; and

       (f)  subject to ss (3), eligibility of either party for a pension, allowance or benefit and rate of any such benefit; and

       (g)  where parties have separated or divorced, standard of living that in all circumstances is reasonable; and

       (h)  extent to which payment of maintenance to party under consideration would increase earning capacity of that party by   

               enabling them to undertake course of education OR to establish themselves in business

        (ha)  effect of any proposed order on ability of creditor of party to recover their debt, so far as that effect is relevant; and

        (j)  extent to which party whose maintenance is under consideration has contributed to income, earning capacity, property and

               financial resources of other party; and

        (k)  duration of marriage and extent to which it has affected earning capacity of party under consideration; and

        (l)  need to protect a party who wishes to continue their role as a parent; and

        (m)  if either party is cohabiting with another person– financial circumstances relating to cohabitation; and

        (n)  terms of any order made or proposed to be made under s 79 in relation to:

                      (i)  property of parties; or

                      (ii)  vested bankruptcy property in relation to bankrupt party; and

        (naa)  terms of any order or declaration made, or proposed to be made, under Part VIIIAB in relation to:

                      (i)  a party to marriage; or

                      (ii)  a person who is a party to DF relationship with a party to marriage; or

                      (iii)  property of a person covered by sub para (i) and of a person covered by sub para (ii), or of either of them; or

                      (iv)  vested bankruptcy property in relation to a person covered by subparagraph (i) or (ii); and

        (na)  any child support that party to marriage has provided, is to provide, or might be liable to provide for child of marriage; and

        (o)  any fact or circumstance which, in opinion of court, justice of case requires to be taken into account; and

        (p)   terms of any financial agreement that is binding on parties to marriage; and

        (q)  terms of any Part VIIIAB financial agreement that is binding on a party to marriage.

Setting aside orders – harder than informal agreements

  • s 79 orders are final, subject to provisions of s 79A
  • Note: for DF couples à same – s90SN
  • parties affected by order can APPLY (with consent of all parties) to vary/set aside/substitute orders

FLA 1975 – s 79A – Setting aside of orders altering property interests

 (1)  Court can set aside/vary/substitute consent orders if satisfied that:

(a)      there has been miscarriage of justice (fraud, duress, suppression of evidence, failure to disclose relevant info e.g. financial statement, giving of false evidence) or

(b)     circumstances have arisen to make order impracticable to be carried out; or

(c)      person has defaulted in carrying out obligation of order and as a result, it is just and equitable to vary order; or

(d)     exceptional circumstances have arisen since making of order re: care, welfare and development of a child of marriage OR where child or applicant will suffer hardship if court does not vary or set order aside

(e)      proceeds of crime order made over property of parties to marriage

 (1A)  Court may, on application by person affected by order made under s 79 in property settlement proceedings, and with consent of all parties to proceedings in which order was made, vary or set order aside and, if it considers appropriate, make another order under s 79 in substitution

 (1AA)  For purposes of para (1)(d), person has caring responsibility for a child if:

(a)      person is a parent of child with whom child lives; or

(b)     a parenting order provides that:

a)       child is to live with person; or

b)       person has parental responsibility for child

*** 90SN exact same provision for DF couples

 

Cases

In Marriage of Gebert (1990) *** 513

  • Facts – H wanted to end marriage – discussed settlement in which he would receive some money under savings account. W sol drafted s79 consent orders and letter to H advising him to seek legal advice + requesting him to sign relevant forms. H signed without legal advice. Consent Orders made by court – H got 10K, W got 112K. H regretted this and sought to set orders aside under s79A alleging “miscarriage of justice”
  • Held
    • H sought consequential orders to receive 40% of net proceeds of sale of former matrimonial home and 50% of remaining assets, totalling about $53,000.
    • Had there been trial of issue of property settlement, H would have received 40% of assets, amounting to about $49,000 BUT there was a rational explanation:
      • H main motivation in agreeing to Order was to make it clear to W that marriage was finished (prepared to pay financial price)
      • H was well aware of effect of consent Order and resulting distribution of assets
      • Though there was emotional stress at the time, this did not invalidate consent.
      • H was given chance to seek legal advice but deliberately chose not to
      • W acted entirely properly and went out of way to suggest H get legal advice
    • Miscarriage of justice
      • Fact that consent order was unfair to H did not, of itself, provide reason for setting aside order under s 79A on basis of miscarriage of justice (MOJ)
      • MOJ shouldn’t be given restrictive meaning – just duress, fraud etc.

In Marriage of Suiker [1993]

  • Consent order may be set aside where 1 party has not made a full and frank disclosure to other of his financial circumstances, or any relevant changes in those circumstances, prior to making of consent orders

Morrison [1995]

  • Consent order may be set aside where there is a failure to disclose true reasonable value of an asset

In Marriage of Pelerman [2000]

  • W sought to set aside consent order on basis that she did not have disclosure of H financial circumstances, although she had asked for this, through her solicitors, on a number of occasions.
  • Trial judge dismissed application summarily
  • Appeal (FC) – H failure to provide statement of financial circumstances might lead to conclusion that there had been miscarriage of justice within meaning of s 79A

BINDING FINANCIAL AGREEMENTS 515

  • Consists of what is commonly known as prenuptial and postnuptial agreements
  • Can be made before/during/after marriage à equivalent provisions for DF couples: ss 90UB (before), 90UC (during), 90UD (after)
  • If made validly under FLA, can prevent court intervention re: alteration of property or spousal maintenance s71A
  • Rationale – helps parties from missing out on certain entitlements, reduces costs (no legal proceedings), protecting children from 1st marriage, when 1 party has more assets, control and greater choice over property division, reduces conflict

FLA 1975 – s 90B – Financial agreements before marriage *** most prevalent BUT most dangerous

(1)      Agreement is financial agreement if:

(a)      people who are contemplating marriage with each other make written agreement with respect to any matter in ss (2); and

(aa)  at time of making of agreement, people are not spouse parties to other binding agreement re: those matters; and

(b)     agreement is expressed to be made under this section;

(2)  Matters referred to in para (1)(a) are:

(a)      how, in event of breakdown of marriage, property or financial resources of spouse parties is to be dealt with;

(b)     maintenance of either of spouse parties:

                                                              i.            during marriage; or

                                                            ii.            after divorce; or

                                                          iii.            both during marriage and after divorce

 (3)  Financial agreement made as mentioned in ss (1) may also contain:

(a)      matters incidental or ancillary to those mentioned in ss (2); and

(b)     other matters

 (4)  Financial agreement (new agreement) made as mentioned in ss (1) may terminate previous financial agreement (however made) if all of parties to previous agreement are parties to new agreement.

 

FLA 1975 – s 90C- Financial agreements during marriage

 (1) Agreement is financial agreement if:

                     (a)  parties to marriage make written agreement with respect to matters in ss (2); and

                    (aa)  at time of making of agreement, parties are not spouse parties to any other binding agreement re: those matters; and

                     (b)  agreement is expressed to be made under this section;

 (2)  Matters referred to in para (1)(a) are the following:

                     (a)  how in event of breakdown of marriage, property or financial resources of spouse parties is to be dealt with;

                     (b)  maintenance of either of spouse parties:

                              (i)  during marriage; or

                             (ii)  after divorce; or

                            (iii)  both during marriage and after divorce

 (2A)  For avoidance of doubt, financial agreement under this s may be made before or after marriage has broken down.

 (3)  Financial agreement made as mentioned in ss (1) may also contain:

                     (a)  matters incidental or ancillary to those mentioned in subsection (2); and

                     (b)  other matters

 (4)  Financial agreement (new agreement) made as mentioned in ss (1) may terminate previous financial agreement (however made) if all of parties to previous agreement are parties to new agreement.

 

FLA 1975 – s 90D – Financial agreements after divorce order is made

 (1) Agreement is financial agreement if: 

           (a) after divorce order is made, parties to former marriage make written agreement with respect to matters in ss (2); and

         (aa) at time of making of agreement, parties are not spouse parties to any other binding agreement re: those matters; and

           (b) agreement is expressed to be made under this section

(2)  Matters referred to in para (1)(a) are the following:

                     (a)  how property or financial resources acquired by spouse parties during former marriage is to be dealt with;

                     (b)  maintenance of either of spouse parties:

(3)  Financial agreement made as mentioned in ss (1) may also contain:

                     (a)  matters incidental or ancillary to those mentioned in subsection (2); and

                     (b)  other matters

 (4) Financial agreement (new agreement) made as mentioned in ss (1) may terminate previous financial agreement (however made) if all of parties to previous agreement are parties to new agreement.

 

  • Agreement is only binding in respect to matters ID in sections so lifestyle clauses such as agreements about division of household tasks, birth control measures or other personal matters cannot be subject of binding financial agreements.
  • Binding financial agreement which is also in form of deed has advantage that provisions that are not enforceable under provisions of FLA may be enforceable independently of FLA under general law concerning obligations contained in deeds
  • s 90DA provides for separation declaration before agreement can come into effect – this amendment was introduced to deal with binding financial agreements made with intention of keeping property from creditors

 

 

FLA 1975 – s 90DA – Need for separation declaration for certain provisions of financial agreement to take effect

 (1)  Financial agreement that is binding on parties, to extent to which it deals with how, in event of breakdown of marriage, property or financial resources of either or both of spouse parties:

                     (a)  at time when agreement is made; or

                     (b)  at later time and before termination of marriage by divorce;

are to be dealt with, is of no force or effect until separation declaration is made

Note: Before separation declaration is made, financial agreement will be effect re: other matters (except matters in 90DB)

 (1A)  Ss (1) ceases to apply if:

(a)      spouse parties divorce; or

(b)     either or both of them die

Note:  This means financial agreement will be of force and effect re: matters mentioned in ss (1) from time of divorce or death(s).

 (2)  Separation declaration is written declaration that complies with ss (3) and (4), and may be inc. in financial agreement

 (3)  Declaration must be signed by at least one spouse to financial agreement.

 (4)  Declaration must state that:

(a)      spouse parties have separated and are living separately and apart at declaration time; and

(b)     in opinion of spouse parties making declaration, there is no reasonable likelihood of cohabitation being resumed

 (5)  In this section:

“declaration time” means time when declaration was signed by a spouse party to financial agreement

“separated” has same meaning as in s 48 (as affected by s 49)

*** This section must be read in light of s 90F which provides that no provision of financial agreement excludes or limits power of court to make order re: maintenance of party to marriage if court is satisfied that, when agreement was made, circumstances of party were such that, taking into account terms and effect of agreement, party would have been unable to support themselves without income-tested pension, allowance or benefit.

 

 

 

FLA 1975 – s 90G – When financial agreements are binding

(1) Subject to ss (1A), a financial agreement is binding on parties to agreement if, and only if:

(a) agreement is signed by all parties; and

(b) before signing agreement, each spouse party was provided with independent legal advice about effect of agreement on their rights and advantages and disadvantages of making agreement; and

(c) either before or after signing agreement, each spouse party was provided with signed statement by legal practitioner stating that advice referred to in para (b) was provided to that party and

(ca) copy of statement in para (c) that was provided is also given to other spouse party or their legal practitioner; and

(d) agreement has not been terminated and set aside by a court

(1A)  Financial agreement is binding on parties to agreement if:

(a)      agreement is signed by all parties; and

(b)     one or more of para (1)(b), (c) and (ca) are not satisfied in relation to agreement; and

(c)       court is satisfied that it would be unjust and inequitable if agreement were not binding on spouse parties; and

(d)       court makes order under ss (1B) declaring that agreement is binding on parties to agreement; and

(e)       agreement has not been terminated and set aside by a court

 (2)  Court may make such orders for enforcement of financial agreement that is binding on parties as it thinks necessary.

 

SETTING ASIDE FINANCIAL AGREEMENT 521

  • Issues
    • Law must endeavor to Balance freedom of contract with protecting people (vulnerable at time agreement made or disadvantaged by events during marriage)
    • Marriage contract is NOT normal contract (limited in time)
  • Has effect 30 yrs after it is first made + in circ diff from when you married
  • Affects not only prop brought INTO marriage, but all property later acquired!
  • Effect – void, voidable, unenforceable à rescinded for:
    • Operative mistake
    • Misrepresentation
    • Duress
    • Undue influence
    • Unconscionable
    • Uncertainty
    • Fraud
      • Fraudulent motivation for entering marriage, deception or non-disclosure
      • Deniz v Deniz (1977)fraud to induce marriage is sufficient to invalidate pre-nuptial agreement – needs to show nexus btw fraud purpose and prenuptial (motivation for marriage was to secure benefit through terms of prenuptial + no intention to stay in marriage once got benefit)

 

*** Court may now declare FA binding even if some statutory pre-requisites are not met if it would be unjust and inequitable if agreement wasn’t binding on spouse parties to agreement

 

FLA 1975 – s 90K – Circumstances in which court may set aside a financial agreement or termination agreement ***

 (1)  Court may make order setting aside financial agreement or a termination agreement if, and only if, court is satisfied that:

                     (a)  agreement was obtained by fraud (inc. non disclosure of material matter); or

                    (aa)  party to agreement entered into agreement:

                                                                     i.             for purpose of defrauding of a creditor; or

                                                                   ii.             with reckless disregard of interests of creditor; or

                    (ab)  party to agreement entered into agreement:

                                                                     i.            for purpose of defrauding another person who is party to DF relationship with spouse party; or

                                                                   ii.            for purpose of defeating interests of that other person in relation to any possible or pending application for an order under s 90SM, or declaration under s 90SL, in relation to DF relationship; or

                                                                 iii.            with reckless disregard of those interests of that other person; or

                     (b)  agreement is void, voidable or unenforceable; or

                     (c)  in circumstances that arose since agreement was made it is impracticable for agreement to be carried out; or

                     (d)  since making of agreement, material change in circumstances occurred (re: care, welfare and development of a child 

                             of marriage) and, as a result of change, child or, if applicant has caring responsibility for child, a party to agreement

                              will suffer hardship if court does not set the agreement aside; or

                     (e)  in respect of making of financial agreement–a party to agreement engaged in conduct that unconscionable; or

                     (f)  payment flag is operating under Part VIIIB on superannuation interest covered by agreement and there is no

                             reasonable likelihood that operation of flag will be terminated by a flag lifting agreement under that Part; or

                     (g)  agreement covers at least one superannuation interest that is an un-split table interest for purposes of Part VIIIB

(1A) For purposes of para (1)(aa), creditor , in relation to party to agreement, includes a person who could reasonably have been foreseen by party as being reasonably likely to become a creditor of party.

(2) For purposes of para (1)(d), person has caring responsibility for a child if:

(a) person is parent of child with whom child lives; or

(b) parenting order provides that:

(i) child is to live with person; or

(ii) person has parental responsibility for child

 

ROLE OF LAWYERS IN ADVISING CLIENTS ABOUT AGREEMENTS 527

  • Very important to advise/draft agreements.
  • Divorcing parties can make bad settlements – than if they went for s79
  • Divorce à vulnerable/emotional – may give away rights due to guilt, depression, desire to get it all over with.
  • May not appreciate what is in their best interests and their legal entitlements
  • Interaction btwn solicitor and client which leads to adoption of position, which is preferred outcome, tho not necessarily final outcome

90J – terminating FA by mutual agreement

90K – standard contract grounds

90KA – shouldn’t be enforced as a contract

 

 

PROPERTY UNDER FLA 529

 

PROPERTY RIGHTS DURING MARRIAGE AND COHABITATION 530

  • shared ownership of property doesn’t arise automatically from the fact of marriage
  • whilst there may be joint bank accounts or houses, no co-ownership arises by the fact of marriage alone
  • making determination of property rights under s79 Alteration of property interests
  • court has broad powers to alter property rights in the exercise of its discretion
  • absence of property rights arising from marriage is important
    • where other spouse has sizeable debts owed to creditors
    • where a spouse in an intact marriage wants to leave property acquired in the course of the marriage by will to other family members
    • in the period btwn separation and the resolution of a final property settlement

DECLARATIONS OF PROPERTY INTERESTS UNDER FLA 531

  • s78 gives the courts power to make declarations concerning the equitable interests of the parties

JURISDICTION WITH RESPECT TO RELATIONSHIP PROPERTY 532

 

THE MEANING OF PROPERTY UNDER FLA S79 538

  • Includes property before/during/after separation
  • s 79 and s 75(2) makes important distinction b/w 3 sources of wealth:
  • Income
  • Financial resources – anything apart from property – e.g. super (initially no power to distribute super)
  • Property à anything that could be divided – only property can be subject matter of order under s 79. Only property which spouse has legal control of may be subject of orders. However, 1 party may be given large percentage of existing property to take account of fact that other has substantial financial resources g. interest under discretionary trust.
  • Definition
  • S4 FLA – ‘in relation to parties to marriage or either of them–means property to which those parties are, or that party is, as the case may be, entitled, whether in possession or reversion
  • Entitlement to property in future will be property within FLA if entitlement is est. and only date of receipt is in future. It constitutes chose in action which is presently assignable in equity: Shepherd v FCT (1965)
  • In Marriage of Duff [1977]
    • H appealed against orders made in W application for property settlement.
    • H argues trial judge wrongly determined that some assets of parties, particularly referring to shares held by each party in family company, were ‘property’ within meaning of s 4.
    • FC found it was sufficient to say ‘property’ means property, both real and personal, and includes choses in action.
    • Shares held by H and W in company of which they were sole SH was property within meaning of FLA.
    • Court applied definition from Jones v Skinner (1835) Langdale MR said, ‘property is most comprehensive of all terms which can be used in as much as it is indicative and descriptive of every possible interest which party can have’

 

The requirement of Assignability 541

  • Only assets which can be assignable may be subject of orders of family courts – debt is also considered property
  • Carvill [1984] – Chose in action arising from proprietary estoppel could be transferred from H to W à W given right to litigate matter for herself and her H, against H father
  • In Marriage of Zorbas [1990] – bare right to litigate is not assignable as it is a right of personal nature (H gave up litigation for damages for personal injury after warrant was issued for his arrest due to abduction of his children)
  • In Marriage of Best [1993]
    • Partnership interest in law firm was property even though doc contained number of limitations on partners’ rights to assign their interests and there were difficulties in valuing it and making it subject to order under s79
    • Assignability is not always essential characteristic of property
    • Present interest is not one of expectation of future income but is right to a presently existing share in partnership. It cannot be said that H interest is chose in action rep by notional sum as he has direct proprietary or interest which has an ascertainable value and will be protected and enforced.

 

Rights of parties under Discretionary trusts 545

  • Kennon v Spry (2008) HC
    • H created Trust with himself and his siblings, their spouses and their children as beneficiaries. He was sole trustee BUT no beneficiary (land tax reasons). When his marriage was in difficulty, he varied trust to exclude himself and his W as beneficiaries. H and W divided income and capital of trust between 4 trusts he set up for his daughters. Parties then divorced
    • W then applied to FC for orders for property settlement and maintenance. Strickland J found contributions to couple’s assets, including trust assets, were 52% by H and 48% by W, and that H was entitled to $5,105,435 and W $4,712,709. Taking account of assets W already had, Strickland J ordered H to pay W $2,182,302. Strickland J found steps taken re: Trust were designed to keep property away from his wife and he set variation aside
    • FC of Family Court dismissed H appeal and upheld Strickland’s J order for H to pay W $2,182,302.
    • Without variation and dispositions, W would have right to due administration and consideration as a beneficiary.
    • HC – where H is trustee of DT and W is one of objects of trust, then this is “property of parties to marriage”, within meaning of s 79

Characterization of Superannuation entitlements 551

  • 90MC (inserted after 2001 reforms) à superannuation interest is to be treated as property for purposes of paragraph (ca) of definition of matrimonial causes in s4 à prior to this treated as mere financial resource
  • In Marriage of Hickery [2003] – FC held expression “treated as property” should be understood as meaning “treated as if it were property even though it is not, for purposes of s 79
  • Coghlan v Coghlan [2005] – overturned Hickery ***
    • In s79 proceedings, court may also make orders re: superannuation
    • Superannuation interests are another species of asset which is different from property as defined in s 4(1)

 

INJUNCTIONS IN RELATION TO MARITAL PROPERTY 533

  • S114 gives court extensive powers to grant injunctions
  • We examine the power of court to grant an injunction with respect to property of parties

FLA 1975 – s 114 – Injunctions 533

(1)  In proceedings of kind referred to in para (e) of definition of matrimonial cause in ss 4(1), court may make such order or grant such injunction as it considers proper with respect to matter to which proceedings relate, including:

(a)            injunction for personal protection of a party to marriage;

(b)           injunction restraining a party to marriage from entering or remaining in matrimonial home or premises in which other party to marriage resides, or restraining a party to marriage from entering specified area of matrimonial home

(c)            injunction restraining a party to marriage from entering place of work of other party to marriage;

(d)           injunction for protection of marital relationship;

(e)            injunction in relation to property of a party to marriage; or

(f)             injunction relating to use or occupancy of matrimonial home

(2) In exercising its powers under ss (1), court may make order relieving a party to marriage from any obligation to perform marital services or render conjugal rights.

(2A) – relates to DF couples (same as (1))

(3)  Court exercising jurisdiction may grant injunction, by interlocutory order or otherwise, in any case in which it appears to court to be just or convenient to do so and either unconditionally or upon such T/C as court considers appropriate.

(4) If a party to a marriage is bankrupt, court may, on application of other party, by interlocutory order, grant injunction under ss (3) restraining bankruptcy trustee from declaring and distributing dividends amongst bankrupt’s creditors.

Exclusive occupation orders  s 114(1)(b) and (f) 533

  • these sections provide for exclusion orders (or ouster orders)
  • In the Marriage of Davis (1976)
    • W did not find Narwee unit particularly convenient and preferred to return to matrimonial home at Randwick where child K always lived. K had a friend that lived close by as well as regular baby sitter. H owned unit and wished to keep it. During proceedings he offered W rent-free a unit in Paddington. She did not regard that offer as satisfactory. Both parties worked and W did not seek weekly maintenance.
    • Trial – no real reason H could not go to Paddington unit and leave Randwick unit to Wife. Decision was based mainly on benefits which would flow to child –fact it was child’s home, he understood surroundings, security of known room, objects and other children – Psychological importance to child.
    • Appeal
      • Child needs are relevant but must be given proper weight and balanced with other factors. Order would effectively exclude H from home in favor of W and C
      • Decision of this nature should not depend merely on balance of convenience issues.
      • Order made had no cogent reasons and on its face was unfair to H, appeal allowed.
      • Court stated criteria for exercise of power under s 114(1) is court may make such order as it thinks proper. Matters that should be considered include – means/needs of parties, children’s needs, hardship to parties/children, conduct of 1 party which may justify other party leaving home or asking for expulsion from home

Injunctions restraining disposition of property

  • R v Dovey; Ex Parte Ross (1979)
    • S 114 was used by W to restrain H from exercising his voting rights so as to cause sale of matrimonial home which was owned by family company under his control.
    • Grant of injunction protected her pending claims to exclusive occupation of home.
  • Waugh and Waugh (2000)
    • H appealed against interlocutory injunctions under s 114(3) which obliged him to deal with certain funds under his control in specific ways and requiring him to give W advanced notice.
    • Trial – Justified these restrictions because H business was “potentially hazardous business activity” and had already been close to financial disaster. Aim of orders was to preserve sufficient assets to satisfy W claim but permit H to trade with minimum inconvenience
    • Appeal – allowed à it was incorrect to start from premise that W was entitled to proper security over property of H unless extraordinary circumstances existed to persuade court that injunction was not necessary. Trial judge erred in failing to consider fundamental question of whether there was any evidence of any intention by H to dispose of any assets pursuant to any scheme to defeat any
  • Mullens v De Bry (2006)
    • H sought interim injunction that W retain $200,000 from sale of former matrimonial home and invest amount pending finalization of property settlement because W was located overseas and any property settlement order in his favor could be defeated by W disposing of sale proceeds offshore
    • FC – focus should not be on whether there was evidence of any intention to dispose of assets in order to defeat orders of court, but rather whether there was, overall, a risk that such orders might be defeated
    • FM – dismissed H application on basis that there was no evidence on W part of scheme to defeat judgment by asset disposition
    • Appeal – allowed
      • Each case will involve overall assessment of number of factors to determine just or convenient result – judged on its merits
      • In some cases, possibility (based on some evidence) of intention or scheme may, with other factors, be sufficient to establish probability of objective risk of disposal with intent to defeat an order.
      • No need to prove scheme to defeat judgment by asset disposition. Magistrate erred as he:
        • did not consider degree of prejudice to W if an order was made
        • did not consider residence outside jurisdiction of W as risk that order in substantive proceedings would be defeated
        • did not consider fact that W position in substantive proceedings was that H receive nothing from sale proceeds
        • considered ‘delay’ only as evidence going to H subjective view of risk and presumably therefore to objective view of risk, without addressing whether any prejudice to W resulted from delay
        • focused unduly on whether evidence established scheme of W to remove assets to defeat order in the substantive proceedings

FINANCIAL RESOURCES 553

  • If a source of wealth is not property within meaning of FLA it may nonetheless be a financial resource.
  • Court may take account of such financial resources under s 75(2), but only to extent that other party may gain greater percentage of other property which is available for distribution.
  • In determining whether something is financial resource it may depend on degree of control
  • These can be funds or assets over which party has influence or control or prospective entitlements.
  • In Marriage of Kelly (No 2) [1981]definition of financial resource
    • Trial judge found assets of family company and family trust to be under DF control of H and thus forming part of his ‘financial resources’ within meaning of s 75(2)(b) FLA. He concluded total ‘property and financial resources’ of H to be approximately $124m.
    • H appealed, issue being whether assets of co and trust, being property of 3rd party, could be regarded as financial resource of H, and further whether evidence est. that he held DF control over them, and whether his Honor erred in adding assets of co and trust as ‘financial resources’ to assets of H as if they were part of his total assets
    • There are circumstances in which property of a third party can be taken into consideration as financial resource of a party to a marriage. Extent to which party can control property at issue is relevant to this question. Here, there was ample material before trial judge to support conclusion that H had control over assets and income of co and trust, and that he should take those assets and income into account in determining orders made
    • Court accepted that financial resources of H was not capital asset value of co and trust, but financial benefit he derived from those assets in whatever form, either to relieve him of obligation or to supply some want or deficiency which he would otherwise have to meet from his own funds. Appeal was dismissed.

 

 

VALUATION OF FAMILY PROPERTY 556

 

  • Before courts can exercise discretion in adjusting rights re property under s79, first must obtain valuation for various items of property
  • May not be necessary where property such as matrimonial home will need to be sold, since court can specify % of proceeds to go to each party
  • Valuation normally taken at hearing date, unless special circumstances eg. Very long gap btwn date of separation & hearing justify early valuation date Marriage of Wardman & Hudson 1978
  • Lenehan 557
    • Issue of value of home
    • Trial judge valued house midway btwn 2 figures of expert valuers
    • Wife appealed and upheld

 

THE REQUIREMENT OF FULL DISCLOSURE 558

  • When filing for application for property alteration under FLA
  • Parties must make a full disclosure of their income, property and financial resources by tendering a statement of financial circumstances and superannuation info form
  • Failure to make full disclosure or evidence they’ve lied may result in an exercise of discretion by court which is adverse to them
  • Weir indicates court may make estimate of undisclosed amount & make orders requiring portion if it paid to other party

DISCRETION AMD PROCESS IN MATRIMONAL PROPERTY DISPUTES 561

 

STEPS IN THE EXERCISE OF THE COURTS DISCRETION TO ALTER PROPERTY INTERESTS 562

4 Stages involved in an assessment under s79
In marriage of Hickey [2003]

1.       Identify assets/liabilities: ID/value property, liabilities, financial resources at time of hearing (both joint and individual)

2.       Assess contributions: ID/assess contributions in s79(4)(a-c) à assess contribution entitlements as % of net prop of parties.

3.       Assess needs: ID/assess needs in s79 (4)(d-g) inc. 75(2)à adjust contribution entitlements accordingly

4.       Result: Ct consider if CO is just/equitable: s79(2)

FLA 1975 – s 79 – Alteration of property interests  563

(1) In property settlement proceedings, court may make such order as it considers appropriate:

       (a) re: proceedings to property of parties to marriagealtering parties interests; or

       (b) re: proceedings of vested bankruptcy property re: bankrupt party to marriagealtering interests of bankruptcy   

                    trustee

including:

       (c) order for a settlement of property in substitution for any interest in property; and

       (d) order requiring:

                (i) either or both of parties to marriage; or

               (ii) relevant bankruptcy trustee (if any);

to make, for benefit of either or both parties, such settlement or transfer of property as court determines. …

(2) Court shall not make order under unless satisfied that, in all circumstances; it is just and equitable to make the order.

(4) In considering what order (if any) should be made under, court shall take into account: ***

       (a) financial contribution made directly or indirectly by or on behalf of party/child of marriage to acquisition, conservation or improvement of any property of parties; and

        (b) contribution (other than financial) made directly or indirectly by or on behalf of party to the marriage or a child to acquisition, conservation or improvement of any of property; and

        (c) contribution made by party to the marriage to welfare of family constituted by parties to marriage and any children, including any contribution made in capacity of homemaker or parent; and

        (d) effect of any proposed order upon earning capacity of either party to marriage; and

        (e) matters referred to in ss 75(2) so far as they are relevant; and

        (f) any other order made under this Act affecting a party to the marriage or a child of the marriage; and

        (g) any child support that party has provided, is to provide, or might be liable to provide in future, for child of marriage

 

ASSESSING CONTRIBUTIONS 565

Approaches

  • there are 2 approaches:
    • Asset by asset approach – Involves determination of parties interests in individual items of property on asset by asset basis. Court first determines various contributions each party made to particular items of property to extent that this is possible and reasonable in circumstances AND then forms opinion of respective overall contribution each party made to property in general à appropriate where marriage is of short duration and during marriage parties have strictly divided and kept their own assets separate from each other McMahon v McMahon (1995)
    • Global approach – division of parties’ assets is based on determination of the overall contributions that each party made to totality of their past and present property.
      • Allows the court to assess contributions in an overall way by considering parties contributions as a whole
      • This approach is generally more convenient as it allows court to more easily deal with and give proper recognition to parties’ financial and non-financial contributions
      • The global approach is the only “realistic”, that is, convenient, means of arriving at the entitlements of the parties- depends on circumstances of case even though in most cases global approach found more convenient and court entitled to prescribe its adoption as a guideline in the majority of cases- Norbis v Norbis (1986) Mason/Deane JJ(pg 566 par2)
  • Norbis v Norbis (1986)
    • HC held that either approach is legitimate and there is no binding principle of law controlling exercise of discretion in division of property
    • There is ordinarily a need to know the circumstances in which assets were acquireds and the general extent of each party’s contribution to them – Mason and Deane JJ (pg 566 para.1)
    • Convenience depends on circumstances of particular case and neither alternative is more just and equitable than the other. Outcome should be same regardless of approach taken.
    • Family Court right in criticizing the practice of giving over-zealous attention to ascertainment of party’s contributions when deciding party’s entitlements.
    • Asset-asset approach does not of itself amount to error in law- Full Court was not entitled to set aside court order made by trial judge on ground that he erred in law in failing to apply global approach
  • In marriage of ZYK (1995)
    • Global approach enables court to assess contributions in overall way by considering parties’ contributions to property as a whole and allows court to more easily deal with and giving proper recognition to parties’ financial and non financial contributions
    • Asset by asset approach is less preferred because it can at times be artificial exercise and create difficulties in proper evaluation of contributions

 

  • Stanford v Stanford (2012) *** considering property when parties are still married
    • FactsH and W were married for 40 yrs. In 2008, W suffered a stroke and moved into FT residential care and was later diagnosed with dementia. H continued to provide for her care and set aside money in bank account to meet costs of her medical needs and he also continued to live in matrimonial home. In 2009, W (by one of her daughters as case guardian) applied for s79 orders
    • First instance – Mag. Ordered H to pay W $612,931 (her contribution to matrimonial assets)
    • FC of FCA – husband appealed
      • Before final orders were made, W died and her daughters continued proceedings as her legal representatives. Under FLA, if party dies before conclusion of proceedings, court may make property settlement order if it would have made an order had the party been alive and if it is still appropriate despite party’s death to make an order 79(8)
      • Although courts have powers to make property settlements in cases of physical separation, Mag. had not sufficiently considered effect of orders on H or fact that marriage was still intact
      • $612,931 to be paid to W legal personal representatives upon H death to reflect her contributions to marriage and H moral obligations to her. By special leave, H appealed to HC
    • Appeal – HC – allowed
      • There was no basis to conclude that it would have been just and equitable to make a property settlement order had W been alive as she had not expressed a wish to divide property. If property settlement order was made, H would have to sell matrimonial home, in which he still lived and W needs were being met or could be met by a maintenance order.
      • Mere fact of physical separation, particularly if it is involuntary, does not give Family Law Courts power to consider property settlement between parties. To enliven court’s jurisdiction to consider property division, there needs to be more than mere physical separation.
    • Approach to s79
      • Look at parties’ existing legal and equitable interests in property
        • Consider individual int. rather than “property of parties” referred to in ss 79(1)(4)
        • Majority referred to definition of “property” re: s 79 cases which inc property to which parties to marriage are or may be entitled to, whether in possession or reversion
        • Pre Stanford practice was to list only assets legally owned by parties and their “financial resources” BUT now also need to ID:
          • Equitable interests g. CT, resulting trusts and estoppel interests
          • Part performance of contracts may also be relevant
          • Legal interests (as opposed to legal ownership of assets) which may include contractual and tortuous claims
        • Decide under s 79(2) whether it is just and equitable to make order altering those interests
          • If parties are already separated s 79(2) requirement will be “readily satisfied” as parties no longer have mutual use of property
          • If parties are not separated, s 79(2) requirement will need more attention
          • Court must now first consider whether it’s just/equitable to make order rather than consider whether order is just/equitable
          • Must not begin from the assumption that 1 other party has the right to interest in marital property
        • Examine matters in s 79(4) including factors in s 75(2)

*** had jurisdiction to make order BUT not if DF

In short marriages, it would stop there – not just and equitable

Weighing contributions p570

 

Contributions by or on behalf of a party to the marriage s 79(4)(a) and (b)

  • g. W father who, out of love for his daughter, uses his skill as a builder to construct a home for parties without charge for his labour may be said to be making a non-financial contribution, on behalf of his daughter, to property.
  • Contribution by child of marriage is to be taken into account as well Dougherty v Dougherty (1987)
  • Marriage of Wardman and Hudson (Formerly Wardman) [1978] – stated equality is equity approach
    • If marriage was of reasonable duration and assets were built up by joint efforts and used for joint purposes, starting point of equal division was taken
    • Court then determined whether there was any reason to treat contributions as unequal à s 75(2) factors
    • Balancing approach was used to achieve equality – rather than measuring contributions – financial/domestic contribution should balance out if each spouse plays their role in relationship satisfactorily
    • Substantial initial contributions were offset by later contributions
    • Result à each spouse entitled to equal share in domestic assets due to “equally valuable” contributions in relationship. Once account was taken of future needs factors, property adjustments would often be 60:40 to W
    • Basis was that marriage is intimate concept of different but equally valuable contributions made for mutual benefit of parties and their family BUT:
      • Equality is equity approach was only a starting point
      • It did not take into account substantial variations in contributions – not fair
      • It did not take account of future needs factors *** post divorce needs are very important e.g. in family with stay at home mother, equal division not fair because W would have to return to workforce at lower wage
      • It only applied to so called “domestic” assets: on homemaker contributions to “business”
      • Balancing approach was not applied (and equal contributions did not result) when
        • couple had not raised children
        • when marriage was short lived
        • where there was a breach of partnership g. violence/child abuse
        • where wealthy bus run by 1 partner à significant wealth à different treatment
  • Mallet v Mallet (1984) HC disapproved of idea of equality as starting point ***
    • Facts – FCFCA made orders giving W approximately 1/2 of total assets of marriage, including joint property and assets in H/W name. H appealed allowing HC to consider relevance of ‘presumption of equality’ in property cases
    • Held
      • Gibbs CJ
        • Even if it was assumed that contribution of 1 party to home/family equated to financial contributions made by other, it wouldn’t necessarily follow that equal division of property should be made
        • Parliament has not provided that contributions of 1 party as homemaker/parent and financial contributions by other are deemed to be equal OR that there should on divorce be equal division of property OR that equality of division should be starting point for exercise of court’s discretion
        • To say that in some circumstances equality should be normal starting point is to require courts to act on a presumption which is unauthorised by legislation
      • Mason J
        • FLA does not require home maker contributions to be equal to financial – in fact it intends W contribution as homemaker to be recognised in substantial and not token way as the housewife by her attention to home and children, frees her husband to earn income and acquire assets
        • Proposition that equality is convenient starting point proceeds upon misconception of s79 which contemplates that order will not be made unless court is satisfied it is just and equitable to do so
        • Requirement that court “shall take into account” factors in s79(4)(a)-(c) imposes a duty on court to evaluate respective contributions of both parties
        • Equal division of property obscures need to make evaluation of respective contributions of H/W by arbitrarily equating financial contribution to that of homemaker/parent
      • Dawson J
        • It is misleading to say that where H is breadwinner and W has accepted role of homemaker/parent, it is just and equitable basis for order to be made under s 79 and give equal entitlement of H and W to property acquired during existence of that relationship.
      • Norbis v Norbis (1986) Mason and Deane – courts can follow guidelines – p. 566 *** extract
        • Guidelines aim to streamline decision making process according to sound practice BUT fall short of constituting a binding rule. They are a development which has promoted consistency in decision making and diminished risks of arbitrary and capricious adjudication. It also provides litigants/legal profession with some level of certainty re: discretionary rules
        • Represents an implicit retreat from Mallet by giving Full Ct authority to provide judiciary principles to guide them in exercising their discretion whereas in Mallet, the court said judges should be allowed discretion

 

  • Lewers, Rhoades & Swain (2007) – approaches to contributions and property
    • Authorized approach requires judges to assess relative worth of parties’ contributions before deciding whether to adjust entitlements for any disparities in their future resources and involves examining financial contributions made by each partner as well as contributions made ‘to welfare of family . . . in capacity of homemaker or parent’
    • Each case has to be considered within context of its own circumstances
    • Research project
  1. Examined similarity of judicial approaches to family property ownership through Fam Court decisions
  • Despite HC ruling in Mallet, which prohibits judges from presuming parties made equal contributions, sample of judgments indicates that equality continues to be popular in contributions assessments – spouses treated as having performed equally valuable roles/responsibilities
  1. Conducted interviews with couples in intact family relationships – views on app. Approach to property division
  • Couples initially drawn to idea of equal division BUT quickly qualified their position re:
    • Duration of marriage – if short, equal sharing wouldn’t be fair.
    • Parties should keep property they owned separately before they met BUT eventually over time, all property should be equally owned
    • Any property allocation must ensure child is properly provided for
    • Majority approach to assessing contributions was to suggest equality à paying the bills and bringing money in is exactly the same as doing dishes or picking up kids
    • Matrimonial fault g. domestic violence/infidelity/gambling à losses should be relevant

FINANCIAL CONTRIBUTIONS 574

 

Assets brought into marriage 582

  • All property is distributable under FLA no matter when acquired and how it is acquired
  • In Marriage of Money [1994] erosion principle
    • Lindenmayer J expressed view that contribution of 1 spouse during marriage can only be regarded as offsetting contribution to initial contribution by other spouse to extent that contribution made by first spouse during marriage exceeds contribution made by other spouse – OFF SETTING PRINCIPLE
    • Fogarty J said “in appropriate case, initial substantial contribution by 1 party may be ‘eroded’ to greater or lesser extent by later contributions of other even though those later contributions do not necessarily at any particular point outstrip those of other party” – EROSION PRINCIPLE
    • Full Court considered this again in In Marriage of Bremmer– endorsed view of Fogarty J
  • In Marriage of Pierce [1999] ‘weighing’ approach *** – most frequent 583
    • Facts – parties cohabited for 10 yrs, 2 children (living with H). Initial contribution was H (260K) and W (11.5K). contribution to matrimonial home was H (200K) and W (10 K)
    • Trial – 55:45 to H (greater initial contribution, contribution of taking care of children post separation). H appealed arguing he ought to have received greater recognition and sought 70% of the current assets
    • Appeal – 75:25 to H (70:50 for contributions and 5% for needs)
      • But for H greater initial contribution, parties would not have been able to acquire matrimonial home –
      • Must give significant weight to substantial initial contribution – H had significant assets, made sig fin contributions, continuously worked, made non fin contributions to home, minor contributions as parent à W cont minimal (primarily in domestic tasks and caring for child)
    • Alekovski (1996) balancing approach

Gifts 574

  • Significance of funds from family sources received early in marriage for assessment of contributions will vary depending on number of factors including ultimate duration of marriage and whether counter-balancing contributions erode impact of early gift
  • Where marriage is of short duration, funds received in early years as gifts may be given considerable weight. Where relevant gift is received late in marriage or even after separation it is usually very difficult for other party to be able to claim a share of that asset based on contribution
  • In Marriage of Gosper [1987]
    • Case involved questions as to division of land given by W parents to H and W jointly. Land remained vacant and no substantial contribution to it was made by either party.
    • Decision from earlier case, Marriage of Cleary (1976), suggested strict approach should be taken. Land was gifted jointly and so contribution of 2 recipients should be regarded as equal.
    • Fogarty J found where relative of 1 party gives property to both parties to marriage it is open to court to treat that as contribution made on behalf of spouse whose relative has made gift. Thus, where gift was made only because of relationship and was in reality a means of benefiting relative, contribution should be regarded as on behalf of that spouse
    • Gosper principle has been applied where W mother contributed large sum of money to effect improvements to matrimonial home so that she could live there until her death
  • In Marriage of Kessey [1994] ***
    • Full Court went beyond statement of principle enunciated in Gosper and held that principle is that contribution by parent of party to marriage to property of marriage will be taken to be contribution made by or on behalf of party who is child of parent unless there is evidence which establishes that it was not intention of parent to benefit only their child.
    • This principle does not only apply to gifts but to ‘all cases where there has been an advance of money or property by a parent (or even some other relative) of one of parties, to one or both of parties (or to their property), and circumstances of advance cannot be categorized as a loan, or as any other recognised commercial transaction
  • In Marriage of Rickaby [1995]
    • Gosper principle applied to provision of rent-free accommodation by W parents as a significant contribution to welfare of family on behalf of W
  • AB and ZB (2003)
    • provision of child care by grandparents could not be counted as contribution made on behalf of a spouse for purposes of s 79(4)(c) BUT may be counted to credit of spouse who is their child under s 75(2)(o): In Marriage of Aleksovski [1996]
  • Schirmer v Sharpe (2005)
    • FC upheld 90% contribution assessment to W. 9 year marriage, 4 kids. Rent free accommodation provided by W parents through marriage plus gift of 55-6-k from W mother. W inherited property valued at 560k after separation. 8 yrs between separation and trial H paid little child support for children

Lottery wins 575

  • In Marriage of Zyk (1995) lottery during marriage = counted as joint contribution
    • Where both parties are in receipt of income and where their marriage is predicated upon basis of each contributing their income towards joint partnership constituted by their marriage, purchase of ticket would be regarded as a purchase from joint funds in same way as any other purchase within that context would be treated accordingly. Where one party is working and other party is not same conclusion would ordinarily apply because that is mode of partnership selected by parties. Income of working member is treated as joint in same way as domestic activities of non-working partner are regarded as being for their joint benefit.
    • It was concluded that ticket was purchased by joint funds and contribution of prize would be seen as contribution by parties equally. There may however be cases where parties have conducted their affairs and/or so expressed their intentions that this would not be the appropriate conclusion, but in the generality of cases equal contribution is correct outcome.
  • In Marriage of Brease [1998] lottery before cohabitation = W contribution only
    • Lottery ticket was purchased before parties began to cohabit. According to finding of court, couple did not commence cohabitation until after W won lottery.
    • CL principles were applied and lottery win was treated as a contribution by her
  • Farmer and Bramley [2000] lottery after separation BUT before divorce = W got 15%
    • Parties were married for 12 years, had children from previous relationships and 1 child of marriage. During relationship financial circumstances of parties were extremely modest. H suffered from drug related problems in early years of marriage and was supported financially and emotionally by W during this period. After separation, child of marriage lived with H for 2 years and at all other times they lived with W.
    • In 1996, after couple separated but before they were divorced, H had won $5m in lottery.
    • Trial in 12 years parties were together W made very considerable contribution as “life cannot have been all roses throughout marriage”. Principal concern was s 75(2): “I intend to award W 15% ($750,000) recognizing larger basic property amount available for allocation.
    • H appealed contending that trial judge failed to provide adequate reasons for reaching his decision to award wife $750,000 and failed to properly assess parties’ contributions during relationship.
    • Full Court was divided sharply.
      • Finn J upheld award of trial judge as being within range of discretion.
      • Kay J treated issue as one mainly of contribution, arguing that W contributions made during time they were living together could justify 12% ($625,000) share on basis of contribution even though there was no connection between that contribution and lottery win. He gave her another 2.5% ($125,000) taking account of the s 75(2) factors, giving her a total of $750,000. In does so he reached same conclusion as trial judge but by a different route
      • Guest J gave a strong dissent. Kay J’s approach was contrary to long line of cases which indicate that to justify a share of property acquired after separation on basis of contribution, there must be a nexus between contributions claimed and acquisition of asset
      • 2 approaches
        • Nexus approach – Guest J – property and contribution must both occupy same time and space – have parallel contemporaniety – must est. connection between asset acquired post separation and contributions made by non owner spouse
        • Balancing approach – Kay J – courts task is to evaluate all contributions from time of commencement of parties relationship until time of hearing and give such weight to such contributions as court think is appropriate in circumstances
      • In Marriage of Wall [2002] lottery after separation = W got 15%
        • court had to consider significance of inheritance of more than $1.3m received long after separation
        • It held that W made no contribution to acquisition of inheritance. Inheritance was however, relevant to assessment of s 75(2) factors

Inheritances 578

  • In Marriage of Bonnici (1992)
    • H and W commenced cohabitation in 1969 and separated in 1990. H inherited $20,000 from his uncle’s estate in June 1987 and a half interest in a restaurant business and freehold premises from mother’s estate in Feb 1989.
    • Trial judge found parties’ contribution was equal and all property should be equally divided
    • On appeal question was weight to be given to 2 inheritances
    • Property does not fall into ‘protected category’ merely because it was inheritance
    • Depends on circumstances of case
      • If no other assets than H inheritance but W contributed a lot – gets %
      • If ample funds to make appropriate property settlement – no/little %
      • If inheritance is late/after separation – no % unless unusual circumstances

Damages award 580

  • Awards of damages for personal injury are treated in same way as any other property for the purposes under s 79
  • Generally treated as contribution to assets of parties and available for distribution Marriage of Williams
  • Zubcic demonstrates how one party to a marriage may ‘contribute’ to a damages award received by the other as the wife nursed and assisted the husband after an industrial incident for which he received damages and insurance payment which was seen as a contribution

 

NON FINANCIAL CONTRIBUTIONS 587

  • Court is required to take into account direct/indirect non-financial contributions to property g. homemaking/parenting
  • In Marriage of Whitely (1992)considered W contribution to marriage and H success
    • H was famous artist. W worked as his model in his earlier pieces of work and also performed many reception and secretarial functions. As the enterprise began to grow tax returns were continuing role for W who also worked for a short period as under buyer in London and antique dealer in NY. W was also a homemaker and mother
    • Rowlands J
      • Found that W performed creditably as home maker throughout period parties lived together. She had substantial caring role for their child and was generally responsible for domestic tasks.
      • Accepted that on balance of probabilities W was indeed her H artistic inspiration and that her influence flowed to H work upon canvas. W role as a critic and artistic confidante for H was also est. on evidence.
      • In looking to overall contribution it was clear that H because of his special skill as artist had made major contribution to substantial assets parties have. W contribution has been unusually helpful to him in process BUT it was H industry and talent which is more significant of 2 – unfair
      • Contribution was held to be 70:30 in favour of H – unfair as W contribution undervalued –court failed to recognise her contribution to welfare of family due to H special skill

CONTRIBUTIONS TO WELFARE OF FAMILY 589

  • Court is only required to take into account contributions to “family… and children of marriage”
    • In Marriage of Mehmet (1987) – Nygh J – interpretation of word “family” must be seen in context of legislation as a whole, particularly within context of words in para (c), namely “including any contribution made in capacity of homemaker or parent”. It must also be seen in light of principles in s 43 s 43(b) which speaks of need to give widest possible protection and assistance to family as neutral and fundamental group unit of society, particularly while it is responsible for care and education of dependent children. In my view this is clearly reference to what has been described as nuclear family.
    • In Marriage of Molen (1993) – Cohen J – considered interpretation of “children of marriage” in context of argument about whether W contributions towards care of 2 handicapped children from H previous marriage should be recognised under s79 – Term is statutorily undefined. Phrase “children of marriage” is a term of art referring to “any child, provided child has been treated generally by parties as though it is their child, that is, a member of their family unit, whether or not one or both parties also recognised it as child of another and, in specific respect treated it as a child of other

 

Justification for considering homemaker contributions 79(4)(c) 590

  • Has a relationship to earnings of other spouse because it freed that person to concentrate on earning activities
  • To recognise significance of homemaker contribution in overall socio-economic partnership and to ensure that W were not disadvantaged by their role specialization
  • Indirect contribution to acquisition, maintenance and improvement of property
  • Rolfe and Rolfe (1977) – Evatt CJ – Ensures equitable treatment of W who has not earned income during marriage, but who contributed as homemaker/parent. H is free to earn income so long as W assumes responsibility for home and children. Because of this responsibility she may earn no income, but provided she makes her contribution to home and family, her contribution should be recognised not in a token way but in substantial way

 

Valuing homemaker and parenting contributions 592

  • There is no objective value that is placed upon homemaker and parenting contributions, since the principle is that marriage should be seen as a socio-economic partnership.
  • Court does not examine what homemaker and parenting services would have cost in market place and reach a figure on that basis. Rather, value placed upon homemaker contribution varies with wealth of parties
  • Contribution of spouse as homemaker and parent is unaffected by fact that much of work was performed by domestic staff: In Marriage of Kennon [1997]
  • Homemaker contribution is assessed in comparative exercise with financial contributions of parties in accumulating wealth which is available to be divided
  • In Marriage of Waters and Jurek [1995] Fogarty J – in most marriages; there is a division of roles, duties and responsibilities between parties. As part of their union, parties choose to live in a way which will advance their interests – as individuals and as partnership. Parties make different contributions to marriage which law recognizes cannot simply be assessed in monetary terms or to extent that they have financial consequences. Homemaker contributions are to be given as much weight as those of primary breadwinner.

Homemaker contributions as contributions to business assets 593

  • View was that homemaker spouse should receive smaller % of these assets particularly where she did not play any role in bus OR where assets were acquired as result of particular entrepreneurial skill by one spouse
  • Doctrine of special contribution à outside normal range due to party’s special skill. It doesn’t only apply to cases involving great wealth (although that has been the trend) AND is not limited to financial contribution
  • Aroney (1979) – equality is equity principle (now discarded) is of no use where W was never involved in H bus
  • In Marriage of W (1980)
    • H was a solicitor. He had partnership interest in firms in Canberra and Sydney. Court had no problems in respect of W contributions to home and started from position of 50% share in that. Main issue was what share she was to get of bus assets
    • Nygh J – granted ranted 30% of H partnership interest
      • W made little or no direct contribution to practice.
      • Evidence suggests she wanted to keep the practice out of the house
      • She did not take active role in affairs of firm itself except on occasional “duty functions”
      • Any contribution made to value of H bus interests is only indirect in that she kept house and looked after children for him. This contribution should be recognised in substantial way, but it can only be treated as distinctly minority contribution
    • In marriage of Ferraro (1993) ***** very important
      • Parties married for 27 yrs, 3 children and fortune of $12 million acquired in course of marriage.
      • Trial – W awarded 30% of total assets as H increased value of property almost without assistance from W. According to judge, equalizing parties’ contributions was like comparing contribution of creator of Sissinghurst Gardens to gardener who assisted with tilling and weeding.
      • Appeal – successful – 5 – 62.5 (fact that 1% of asset pool was almost $100,000 à W getting $4.5 m)
        • H brought outstanding entrepreneurial skill to building up of bus which justifies court finding that his contribution is above normal range or as “special contribution”
        • No doubt that in last decade of marriage, H by his special skill and endeavor greatly increased assets of parties à those special skills are entitled to recognition as special contribution
        • W case was a strong as her contributions over 3 decades were outstanding. She virtually conducted homemaker and parent responsibilities without assistance from H, other than financial, particularly in later years
        • Consistently with cases to this time, especially Mallet, overall contributions of H to property should be assessed as greater than those of W à Parliament had not provided that W homemaker contribution and H financial contribution are deemed to be equal. Contributions must be evaluated in each individual case
      • In Marriage of McLay (1996)
        • Reference to “normal range” is not return to presumption of equality as starting point BUT a practical recognition of circumstances that in many marriages each party contributes in “normal ways” and that in any qualitative evaluation of those matters likely outcome is one of equality
      • In Marriage of Stay (1997) Full Court
        • Contributions are most likely to be assessed as unequal where assets are in ‘high range’
      • JEL and DDF (2001)
        • Parties were married for 18 years. They had 3 children and W son from previous marriage also lived with parties. H was a geologist and as a result of a successful gold mining venture, he acquired fortune of more than $40 m. W made very significant contribution as homemaker and parent, but in later years of marriage, her contribution to welfare of family was affected by illness.
        • Trial – although W made significant contributions as homemaker/parent for first 14 yrs of marriage, her contributions were outweighed by H special skill in est. large asset pool with limited assistance from W – assets divided 65:35 to H who appealed (W contribution was overvalued). W cross appealed seeking 45% of asset pool on basis of contribution
        • Held – special (exceptional skills) v standard (duty to share equally, success result of collective process)
        • Holden and Guest JJ: principles relating to special contributions
  1. There is no presumption of equality of contribution
  2. Respective contributions of H and W must be evaluated à Individual may have special skills in role as homemaker and parent à should be given as much weight as primary breadwinner
  3. In many cases, financial contributions of 1 partner will equal homemaker and parent contributions of other, but this will not always be the case
  4. In qualitatively evaluating parties’ cont. special factors may arise in cont. of 1 party
  5. Court will recognise special factor outside of “normal range” of contributions, as in McLay
  6. Assessment of contribution as special does not necessarily depend on size of pool à here, H skills, his ingenuity and enterprise produced assets in medium rather than high range
  7. Judge must ultimately exercise discretion à wording of s79(4) is unambiguous
  8. Judge must be satisfied actual orders are just and equitable, not just percentages
    • In Marriage of Figgins (2002)
      • Involved a r’ship of 9 yrs, with 5 years of broken cohabitation and 4 yrs of marriage which produced 1 child (5 yrs old at date of hearing). Neither party had significant assets at commencement of cohabitation. H wealth ($22.5m) derived in essence from death of his father/stepmother in a helicopter accident 2 weeks after the marriage
      • Trial – Carter J found inheritance was a “special factor” and massive contribution on behalf of H. Other contributions of parties were equal but H financial contribution completely overshadowed and outweighed W otherwise significant contributions. Trial Judge awarded $600,000 (2.66%) on basis of contribution and further $500,000 by way of adjustment for s 75(2) factors – a total of $1.1 million.  Full Court overturned decision and increased award to $2.5 million.
      • Nicholson CJ and Buckley J
        • Doctrine of special contributions should be reconsidered – court can’t determine whether H was good worker/lucky OR if wife was good homemaker/attractive personality
        • Rejected concept that there is something special about role of male breadwinner that means he should achieve preferred position in relation to his female partner.
        • Marriage should be regarded as genuine partnership to which each brings different gifts
        • Fact that one is productive of money in large quantities is no reason to disadvantage the other
        • Cases such as JEL and DDF have missed the point and have led to imbalance of gender considerations in arriving at results that unduly favour male partner.

 

  • Rhoades (2005) – Decision making approaches ***
    • Conducts a study of unreported Family Court judgments to explore patterns of reasoning in more general population of matrimonial property disputes.
    • Data revealed that judges regularly abandoned req. to consider parties’ contributions in favour of needs-based approach where there were limited assets and dependent children –
    • Choice of approach dependent on size of asset pool, marriage duration, matrimonial fault and entrepreneurial talent
    • Decision making approaches
      • Equality and balancing – Dominant approach is that of ‘marital collective’ in which spouse are treated as having made roughly equal contributions ***
      • Adjustments for bad behaviour – where marriage partnership was breached g. in cases of spousal abuse, additional weight may be given to other spouse’ contributions
      • Prioritizing needs –judges abandoned consideration of parties’ contributions and prioritized housing needs of young children where there was little property to divide à result was usually 70-90% to needy spouse ***
      • Short marriages and entrepreneurs – genuine evaluations of contributions and their links to accumulation of property in cases involving short marriage OR where there was successful bus enterprise of significant value

 

  • Young (1997) – Special skills
    • Where you have long marriage and both parties have fulfilled their roles of breadwinner and homemaker, mere fact of large pool of assets should not warrant different outcome from that where assets are more moderate.
    • Why do we not see breadwinners having their share of assets reduced when they fail to exploit their earning potential
    • Recommends that “special skill” exception should not be used because:
      • contributions not recognized in special skill cases – only financial success is rewarded
      • it is based on wealth and not skill
      • it is not logical NOR just and equitable
      • it makes mockery of court’s obligation to give proper recognition to value of contributions to welfare of family
      • undervalues women’s contributions to welfare of family –
      • It perpetuates myth that homemaker’s work is easy and not “real work”
      • Doctrine of special contributions should be reconsidered – court can’t determine whether H was good worker/lucky

Hill (2005) – FC decision where W/H both worked and contributed. 10.6m assets – gave her adjustment for needs – undermining W contributions as she left work to look after kids – modest assets but after marriage 10.6m

 

CONTRIBUTIONS MADE DURING PRE-MARITAL COHABITATION & POST-SEPARATION 602

  • Court may take into account ante-nuptial and post-nuptial contributions to property
  • In marriage of Olliver 1978 parties lived together for 12yrs but only married for 2 and court concluded its entitled to look at whole period of cohabitation for determination of property interests
  • Post-separation contributions must also be taken into account
    • Williams v Williams 1958 FC held wifes contribution in caring for chn after husband left was relevant
  • Negative contributions – Typical negative conduct
    • Damage to assets
    • Failure to maintain assets
    • Willfully depriving self of income
    • Tax debts depending on how it is required
    • Deliberately causing losses to the other party
    • Reduction of pool of assets during marriage through gambling or addiction

Relevance of domestic violence 603

  • Originally, Fam Court refused to treat conduct of spouses as relevant to property claims unless conduct had financial consequences
  • In marriage of Marsh (1994) – cross-vested CL claim for assault led to award of damages to W in addition to her award under s 79. Judges then started recognizing that domestic violence might be relevant to assessment of contributions
  • In marriage of Kennon (1997)
    • This was a short marriage. In addition to W claim for property division under s79, W brought cross-vested claim for damages for various physical assaults which she alleged to have occurred during course of marriage.
    • Trial judge found 4 of those incidents proven and awarded her damages.
    • In allowing appeal, and increasing W property settlement under s79, Fogarty J stated ‘where there is course of violent conduct by 1 party towards other during marriage which is demonstrated to have had significant adverse impact upon party’s contribution to marriage, that is a fact which a trial judge is entitled to take into account in assessing parties’ respective contributions within s 79
    • This argument has been raised in subsequent cases but only succeeds in exceptional cases *** 5-10% only
  • Baranski (2012)
    • Contribution initially 30:70 (W) but then was amended to 40:60(W) because of violence
    • FC held post separation violence was relevant and shouldn’t be excluded
    • First instance decision was upheld because of the violence

 

OTHER ISSUES ABOUT CONDUCT AND WASTE – LOSSES 606

  • Some parties will run argument that other party has wasted assets. Commonly this will be due to gambling or excessive alcohol intake. Some expenditure on gambling or drinking will be treated as hobby. It is very much a question of degree and context of individual cases.
  • Where it is not possible to quantify waste, court can make adjustment under s 75(2)(o) at needs factors stage rather than contribution stage – thus this financial misconduct may be taken into account by notional inclusion of amount at step one of 4 step process of determination of an application pursuant to s 79 or when assessing contributions at step two or perhaps when considering other factors at step 3.
  • Sheedy and Sheedy (1979) – Nygh J – conduct may be relevant “if it has financial consequences, such as financial misbehavior resulting in waste or suspension of family assets”
  • Kowaliw (1981) – Baker J expressed view that financial losses should ordinarily be shared, not necessarily equally, except
    • Where 1 of the parties has embarked on a course of conduct designed to reduce or minimize the effective value or worth of matrimonial assets, or
    • Where one of the parties has acted recklessly, negligently or wantonly with matrimonial assets, the overall effect of which has reduced or minimized their value
  • Polonius and York (2010)
    • Bad marital behavior of parties is not of itself relevant to applications under s 79; however court stated there may be circumstances in which conduct may be relevant and taken into account.
    • If conduct of party towards other had significant adverse impact upon other parties contributions to marriage or made other parties’ contributions more arduous than they ought to have been, then this may be relevant
    • This type of conduct in having economic consequences is clearly relevant under s 75(2)(o) to applications for settlement of property under s 79.
  • In Marriage of Townsend [1995]
    • H sold his taxi license and expended money. It was held that this amounted to a premature distribution of a proportion of matrimonial assets to himself.
    • Correct way to approach it was to deal with party’s receipt of moneys as a notional asset which is treated as forming part of pool of assets and to make a distribution of property accordingly
  • Brown v Green [1999]
    • Full Court overturned decision of trial judge which treated H as solely responsible for losses of about $4 million on a failed business venture. W had participated in business
    • Should be shared equally, except where:
      • A party embarked upon course of conduct designed to min effective value of matrimonial assets
      • 1 party acted recklessly or negligently with matrimonial assets, with overall effect min value.

 

FUTURE NEEDS & S 75(2) FACTORS 607

 

  • After assessing contributions of parties court must take account of s 75(2) factors as required by s 79(2)(e)
  • DF needs factors that are identical but are contained in s 90SF(3) and is required to be considered by s 90SM(4)(e)

 

Works as adjustment for property division BUT also freestanding factor for maintenance

 

Not relevant where marriage is short and there are no kids – there you just focus on contributions

In small asset pool 20-30 adjustment

 

FLA 1975 – s 75(2) – Needs factors – matters to be taken into account inc.

(a) age and state of health of each of parties; and

(b) income, property and financial resources of each party and physical and mental capacity for appropriate gainful employment; and

(c) whether either party has care or control of a child of the marriage < 18 years; and

(d) commitments of each of parties that are necessary to enable the party to support:

        (i) himself or herself; and

        (ii) a child or another person that the party has a duty to maintain; and

(e) responsibilities of either party to support any other person; and

(f) subject to ss (3), eligibility of either party for a pension, allowance or benefit under:

        (i) any law of the Commonwealth, of a State or Territory or of another country; or

        (ii) any superannuation fund or scheme, and rate of any such pension, allowance or benefit being paid to either party; and

(g) where the parties have separated or divorced, a standard of living that in all the circumstances is reasonable; and

(h) extent to which payment of maintenance to the party whose maintenance is under consideration would increase earning capacity of that party by enabling that party to undertake a course of education or training or to establish himself or herself in a business or otherwise to obtain an adequate income; and

(ha) effect of any proposed order on ability of a creditor of a party to recover the creditor’s debt, so far as that effect is relevant; and

(j) extent to which the party whose maintenance is under consideration has contributed to the income, earning capacity, property and financial resources of the other party; and

(k) duration of marriage and extent to which it has affected earning capacity of party whose maintenance is under consideration; and

(l) need to protect a party who wishes to continue that party‘s role as a parent; and

(m) if either party is cohabiting with another person–the financial circumstances relating to the cohabitation; and

(n) the terms of any order made or proposed to be made under section 79 in relation to:

        (i) the property of the parties; or

        (ii) vested bankruptcy property in relation to a bankrupt party; and

(naa) the terms of any order or declaration made, or proposed to be made, under Part VIIIAB in relation to:

        (i) a party to the marriage; or

        (ii) a person who is a party to a de facto relationship with a party to the marriage; or

        (iii) the property of a person covered by subparagraph (i) and of a person covered by subparagraph (ii), or of either of them; or

        (iv) vested bankruptcy property in relation to a person covered by subparagraph (i) or (ii); and

(na) any child support under the Child Support (Assessment) Act 1989 that a party to the marriage has provided, is to provide, or might be liable to provide in the future, for a child of the marriage; and

(o) any fact or circumstance which, in the opinion of the court, the justice of the case requires to be taken into account; and

(p) the terms of any financial agreement that is binding on the parties to the marriage; and

(q) the terms of any Part VIIIAB financial agreement that is binding on a party to the marriage

  • In Marriage of and Jurek [1995]
    • Both H and W were consultant psychiatrists earning substantial salaries. H earned much more than W. Trial judge therefore made adjustment of $50,000 in her favour. Appeal was upheld.
    • Adjustment under s 75(2) in this case was made in reliance upon disparity in parties’ incomes and income earning capacities. Both were practicing psychiatrists. H taxable income was approximately $171,000 and W approximately $74,000 but Ellis J, trial judge, considered she had a capacity to earn a greater sum in future. Question was whether it was reasonably open to trial judge to conclude that that was a factor relevant to a just and equitable property distribution between parties.
    • Disparity in income and earning capacities is a common basis for making an adjustment under s 79. The rationale for that usually lies in the circumstance that the difference in income earning capacities is significant and/or has arisen either directly or indirectly as a consequence of the marriage and the roles which the parties played during the marriage – that is from the division of roles, duties and responsibilities between the parties.
    • Separation of the parties would leave parties of the marriage as individuals from the people they became in the context of the marriage relationship and the roles, duties and responsibilities it entailed. Thus this would be disadvantageous for the party who was the homemaker or at a loss because of a role that they had in the relationship which the world outside the relationship does not recognise.
    • An order under s 79 would be unjust and inequitable in its operation if it failed to address the manner in which the value of the parties’ roles, adopted in the course of, and for the purposes of, the marriage, can be altered by the fact of separation.
    • Baker J found that the court does have the right to make an adjustment pursuant to s75(2)(b) if there is a disparity of income. If a trial judge comes to a conclusion that where there is an imbalance in the income and or respective earning capacity of each of the parties, adjustment can be made in favour of one of the parties. This must be so if for no other reason than that any order which the Court makes under the provisions of s 79 must, in all circumstances, be just and equitable
  • In Marriage of Pastrikos [1980]
    • The court stated that ‘any disparity between the parties’ financial resources and the obligation of either to provide a home for the children may make it just and equitable for the court to increase the share of a party beyond that amount which would be justified solely by the contribution of the party to the property’
    • Thus one reason for a s75(2) adjustment is to provide a home for the parent in whose favour a residence order has been made
  • In Marriage of [1995]
    • The court stated ‘there is, we think, at times a tendency to assess s 75(2) factors in percentage terms without considering its real impact, and we think there is legitimacy in the views expressed in more recent times that the court has tended to operate in this area within artificially delineated boundaries. That is, it appears almost to be inevitable that the s 75(2) factors will be assessed in a range between 10% and 20%. A number of cases will justify an assessment outside those parameters and in any event it is the real impact in money terms which is ultimately the critical issue
  • In Marriage of Burke [1993]
    • s 75(2) factors are gender neutral
    • Fogarty J decided that the parties’ contributions to the property were equal, and then made an adjustment in favour of the 55 year old husband of 10% of those assets in light of his unemployability given the economic conditions of Victoria.

SUPERANNUATION 611

 

  • Relevance of super – often largest asset, it is remuneration for employment and other spouse might have indirectly contributed to it
  • Superannuation now treated as property 90MC
  • Court can make orders affecting super by:
    • Splitting fund – to give non-member spouse their own superannuation account
    • Flagging fund – prevents dealings with it until flag is lifted OR
    • Offsetting – s75(2)(b)
  • s 75(2)(f) provides that court shall take into account eligibility of either party for a pension, superannuation fund or scheme – whether fund or scheme was est. or operates within or outside Australia
  • s 75(2)(j) requires court to take into account extent to which a party whose maintenance is under consideration has contributed to income-earning capacity, property and financial resources of other party.
  • Approach – 2 pools – harder for W to est. claim in H super
    • Coghlan and Coghlan [2005] ****
  • Facts – appeal by W against order for property settlement (divide net value of parties’ property excluding their superannuation entitlements – 60:40 in favor of W). H argued his super benefits exceeded W by about $230,000
  • Issue how to properly treat ‘superannuation’ as asset available to be divided in property settlement
  • Held – appeal allowed and matter remitted for re-hearing
    • Superannuation should be treated as another species of asset, distinct from property
    • One pool may be appropriate where parties agree or super is of small value
    • Approach of court should:
      • Value super interest
      • Consider contributions 79(4)(a)-(c) to super interest (relationship b/w fund membership duration and cohabitation AND actual cont made by fund spouse at start of cohabitation and by separation)
      • Consider other factors 70(4)(e)-(g)
      • Ensure orders are just and equitable 79(2)
    • Valuation
      • Accumulation funds: most common. They provide benefits to members based on aggregate of contributions by both member and employer and earnings less fees. Valuation is not difficult and members typically receive annual statement setting out value of entitlement at end of each financial year ***
      • Defined benefit funds: provide benefits to members according to a preset formula – this usually takes into account member’s length of service and final average salary. It is quite difficult to value.
      • Hybrid funds – combination of a defined benefit fund plus an accumulation component
    • Orders which can be made under pt VIIIB 615

 

FLA 1975 s 90MT Splitting order **** more common

(1) Court, in accordance with s 90MS, may make following orders re: superannuation interest

      (a) if interest is not percentage-only interest– order to effect that whenever splittable payment becomes payable in respect of interest

              (i) non-member spouse is entitled to be paid amount calculated in accordance with regulations; and

             (ii) there is corresponding reduction in entitlement of person to whom splittable payment would have been made but for order;

       (b) an order to effect that, whenever a splittable payment becomes payable in respect of the interest:

              (i) non-member spouse is entitled to be paid a specified percentage of the splittable payment; and

              (ii) there is corresponding reduction in entitlement of person to whom splittable payment would have been made but for order;

       (c) if interest is percentage-only — order to effect that, whenever a splittable payment becomes payable in respect of interest:

               (i) non-member spouse is entitled to be paid amount calculated in accordance with reg by ref to percentage specified in order;

             (ii) there is corresponding reduction in entitlement of person to whom splittable payment would have been made but for order;

       (d) such other orders as the court thinks necessary for the enforcement of an order under paragraph (a), (b) or (c).

 

 

  • Type (a) Order: growth phase order – when pension is still accruing
    • Applies to non% interests only
    • When payable –court first values interests and allocates base amount to other spouse
    • Base amount must be set in dollar figures à global assessment (% split to be applied to all assets) OR asset-by-asset approach (working out % of super interest that non member should receive and allocating $ value)
    • g. H has accumulation interest – valued at $253,590. Global 55:45 split to W:H = $139,474.50:$114,115.50
  • Type (b) Order – payment phase order – when retired and have a pension
    • Applies to non% interest only
    • When payable – pay other spouse % of splittable assets
    • Used for lump sum pension payments – H retires and takes whole super. Ct grant 15% of H’s income stream to H
    • Used for future lump sum payments – H gets lump sum in 2 parts ($200K total) and also $40K/year pension. Ct give W 50% – $20K/year and 50% of lump sums

 

 

FLA 1975 s 90 MU Flagging order

(1) Court, in accordance with s 90MS, may make order in relation to superannuation interest (other than unflaggable interest)

      (a) directing the trustee not to make any splittable payment in respect of the interest without the leave of the court; and

      (b) requiring the trustee to notify the member spouse and the non-member spouse, within a period specified in the order, of the next occasion when a splittable payment becomes payable in respect of the interest.

(2) In deciding whether to make an order in accordance with this section, the court may take into account such matters as it considers relevant and, in particular, may take into account the likelihood that a splittable payment will soon become payable in respect of the superannuation interest.

*** Explanatory memo stated when this may be used stating ‘it is envisaged that flagging agreement will be chosen by parties in circumstances where condition of release (for example, retirement) is imminent BECAUSE while actual value of superannuation interest IS not known at time that parties are entering into agreement, its precise value will be known in near future. Therefore parties may wish to use flagging agreement to “defer” a final decision about a superannuation interest until such time as actual value of superannuation interest is known, because member has met a condition of release’.

 

*** When a court is called upon to make a property settlement it may be that actual value of superannuation interest is unknown, but will become known in very near future. Thus court can ‘defer’ final decision on superannuation and in context of some or all of property, until actual value of superannuation interest is known.

 

Used when actual value of super is unknown, but will be known in very near future à flag to defer final decision until super known.

 

 

  • Application of s 79 principles to superannuation entitlements 619
    • In Marriage of West and Green [1993]
  • Mathematical approach was taken in dividing years of membership of fund by years of cohabitation –disproved
  • Formula was current value of fund x (years together/divided by years in fund) then have it split between H/W
  • g. H had $400K. Been together for 10 years/20 years in fund. x = 0.5. Therefore $200K divided by 2 if 50/50 contributions through marriage = $100K
  • W gets $100K and H $300K (H only has to share half value of superannuation because he is seen as 100% contributor to first 10%) à BUT then s75(2) needs factors may be used to adjust
  • Coghlan and Coghlan (2005) – there is a need to consider ***
  • Relationship between years of fund membership and cohabitation
  • Actual contributions made but fund member at commencement of cohabitation, at separation and date of hearing
  • Preserved and non-preserved resignation entitlements at those times.
  • M v M (2006)
  • Full Court disagreed with mathematical approach as it is a rough and ready way of assessing contribution.
  • Formulaic approach does not take account of years where > contributions were made later in marriage OR effect of contributions over many years of marriage which may have diluted initial contribution.
  • Actual contributions made by fund member at commencement of cohabitation may be relevant to accumulation fund where marriage was of short duration.
  • Empirical research on extent to which super is being divided indicates only 17% of couples are actually using super splitting provisions (Sheehan et al 2008)

 

OTHER FACTORS 622

  • s79 contains some factors of prospective nature
  • court required to take into account
    • effect of proposed order on earning capacity s79(4)(d)
    • any order made affecting a party to marriage or child s79(4)(f)

 

EMPIRICAL EVIDENCED ON OUTCOMES OF PROPERTY 623

  • Many studies on how property is divided on separation and divorce
  • Majority of cases settlements are reached by negotiation btwn parties and/or legal rep
  • Only small % are decided by judges
  • Studies
    • Legal services in FL (Hunter et al) 623
    • Division of matrimonial property in aus (Sheehan and Hughes) 624

 

BARGAINING IN THE SHADOW OF THE LAW 629

  • Negotiations are often done by lawyer
  • Such negotiations take place in the shadow of the law in the sense that there is an incentive not to settle or to delay settlement if one party considers that they will do better by going before a judge after taking cost into account
  • The laws norms of property division therefore provide ’bargaining chips’

PROPERTY INTERESTS OF THIRD PARTIES 635

GENERAL PRINCIPLES RELATING TO 3RD PARTY PROPERTY RIGHTS 636

  • Situations where property to which H/W has legitimate claim is in hands of third parties
  • Person can be joined as party to proceedings under Part VIIIAA
  • Third party interests arise when:
    • Purported debts owing to other persons crystallize on separation – e.g. parent puts in money towards house and then says it is loan that needs to be repaid, not a gift
    • Debts of one party secured against assets of both (gambling, or business loans secured against house)
    • Company and trusts entered into, to diminished assets available for distribution
    • Statutory liabilities, such as tax or debts due to trading while insolvent
    • Failure to pay mortgage triggering repossession and mortgagee sale
  • Courts
    • Accrued jurisdiction – cannot alter 3rd party interests unless fake transaction
    • Part VIIIAA ss90AC-AH – order overrides other laws; order must be reasonably necessary and appropriate, must not be foreseeable that it will lead to party not paying debt, must accord procedural fairness to 3rd party, must be just and equitable
  • General principles
    • Priority has changed – no general position – secured creditors have priority BUT courts have discretion to weight up factors
    • Ascot Investments Pty Ltd v Harper (1981) ***
  • Facts – H was ordered by VSC to pay lump sum maintenance to W and secure payment of that lump sum maintenance by transferring his shares in family co in which he and their 3 adult children were directors. H shareholding did not place him in control of company. He refused to pay maintenance or sign transfer of shares and court appointed a master of court to sign necessary transfer on H behalf. Co memorandum and articles gave directors absolute discretion to refuse to register shares. However, before any refusal took place, W applied to FCA for orders compelling H, company and its directors to register transfer in her favor.
  • First instance, no such order was made.
  • Appeal – CFCA ordered company and its directors including H to register transfer of shares. Co appealed to HC, arguing that shares did not carry ‘right’ to registration of their transfer and that H could have compelled registration of transfer of shares, nor for that matter could W as transferee. Accordingly, company argued that it could not be ordered to register transfer of shares.
  • HC held
    • Party to marriage may be ordered to do whatever is within his power to comply with court order even if what he does may have some effect on position of third parties
    • In some circumstances court has power to make order of injunction directed to third party, BUT third parties may not be ordered to do what they are not legally bound to do.
    • Company and its directors could not be ordered to do something re: shareholding which H, as SH could not compel co or its directors to do
  • R v Dovey; Ex parte Ross (1979)
  • Matrimonial home was owned by company which was controlled by H
  • Fam Court granted injunction restraining H from exercising his voting rights as shareholder and/or as director of company in favor of any proposed resolution whereby matrimonial home might be sold or encumbered.
  • HC held that order made was within jurisdiction, since order of Family Court did not prevent company from dealing with its own property. Order was not directed to company and did not bind it. Rather H, who controlled company, was prevented from exercising his control in such way as to bring about sale.
  • R v Ross-Jones; Ex parte Green (1984)
  • H and W were divorced in 1983. In 1981, H executed a deed in which he acknowledged a debt owed to W mother, of over $294,000. He agreed to repay this in installments with interest.
  • After defaults on these payments, W mother brought action in SC and gained judgment for over $336,000.
  • In the meantime, H filed an application in Family Court for orders under s 79 seeking indemnification by W of money owed to W mother. H also sought an injunction restraining W mother from enforcing her judgment
  • Ross-Jones J, hearing the initial application in January 1984, set a date for hearing the matter in April 1984. Counsel for W mother indicated that he would argue the question of jurisdiction. In the interim, and order was made restraining the enforcement of the judgment.
  • W mother went to High Court seeking an order of prohibition against Ross-Jones J. It was held that Family Court was not entitled to make such orders, since jurisdiction to do so was not conferred by the FLA and the principle from Ascot prevented any derogation from the rights of third parties.

 

FLA 1975 s 90AE Court may make an order under section 79 binding a third party

(1) In proceedings under section 79, the court may make any of the following orders:

        (a) order directed TO creditor of parties to marriage to substitute one party for both parties in relation to debt owed to creditor;

        (b) order directed to creditor of 1 party to marriage to substitute other party, for that party in relation to debt owed to creditor;

        (c) order directed to Creditor of parties to marriage that parties be liable for a different proportion of debt owed to creditor than 

              proportion parties are liable to before order is made;

        (d) order directed to director of company or to company to register transfer of shares from one party to marriage to other party.

(2) In proceedings under section 79, the court may make any other order that: 

         (a) directs a third party to do a thing in relation to the property of a party to the marriage; or

         (b) alters the rights, liabilities or property interests of a third party in relation to the marriage.

(3) The court may only make an order under subsection (1) or (2) if:

         (a) making of order is reasonably necessary, or reasonably appropriate and adapted, to effect a division of property between the

                parties to the marriage; and

         (b) if the order concerns a debt of a party to the marriage–it is not foreseeable at the time that the order is made that to make the

                order would result in the debt not being paid in full; and

         (c) the third party has been accorded procedural fairness in relation to the making of the order; and

         (d) the court is satisfied that, in all the circumstances, it is just and equitable to make the order; and

         (e) the court is satisfied that the order takes into account the matters mentioned in subsection (4).

(4) The matters are as follows:

         (a) the taxation effect (if any) of the order on the parties to the marriage;

         (b) the taxation effect (if any) of the order on the third party;

         (c) the social security effect (if any) of the order on the parties to the marriage;

         (d) the third party‘s administrative costs in relation to the order;

         (e) if order concerns debt of a party to marriage— capacity of a party to marriage to repay debt after order is made;

Note: See paragraph (3)(b) for requirements for making the order in these circumstances.

Example: capacity of party to marriage to repay debt would be affected by that party’s ability to repay debt without undue hardship.

         (f) the economic, legal or other capacity of the third party to comply with the order;

 

Example: The legal capacity of the third party to comply with the order could be affected by the terms of a trust deed. However, after taking the third party‘s legal capacity into account, the court may make the order despite the terms of the trust deed. If the court does so, the order will have effect despite those terms (see section 90AC).

         (g) if, as result of third party being accorded procedural fairness in relation to the making of order, the third party raises any other matters–those matters;

Note: See paragraph (3)(c) for the requirement to accord procedural fairness to the third party.

         (h) any other matter that the court considers relevant.

 

FLA 1975 s 90AF Court may make an order or injunction under section 114 binding a third party

(1) In proceedings under section 114, the court may:

(a) make an order restraining a person from repossessing property of a party to a marriage; or

(b) grant an injunction restraining a person from commencing legal proceedings against a party to a marriage.

(2) In proceedings under section 114, the court may make any other order, or grant any other injunction that:

(a) directs a third party to do a thing in relation to the property of a party to the marriage; or

(b) alters the rights, liabilities or property interests of a third party in relation to the marriage.

(3) The court may only make an order or grant an injunction under subsection (1) or (2) if:

(a) the making of the order, or the granting of the injunction, is reasonably necessary, or reasonably appropriate and adapted, to effect a division of property between the parties to the marriage; and

(b) if the order or injunction concerns a debt of a party to the marriage–it is not foreseeable at the time that the order is made, or the injunction granted, that to make the order or grant the injunction would result in the debt not being paid in full; and

(c) the third party has been accorded procedural fairness in relation to the making of the order or injunction; and

(d) for an injunction or order under subsection 114(1)–the court is satisfied that, in all the circumstances, it is proper to make the order or grant the injunction; and

(e) for an injunction under subsection 114(3) –the court is satisfied that, in all the circumstances, it is just or convenient to grant the injunction; and

(f) the court is satisfied that the order or injunction takes into account the matters mentioned in subsection (4).

(4) The matters are as follows:

(a) the taxation effect (if any) of the order or injunction on the parties to the marriage;

(b) the taxation effect (if any) of the order or injunction on the third party;

(c) the social security effect (if any) of the order or injunction on the parties to the marriage;

(d) the third party‘s administrative costs in relation to the order or injunction;

(e) if the order or injunction concerns a debt of a party to the marriage–the capacity of a party to the marriage to repay the debt after the order is made or the injunction is granted;

Note: See paragraph (3)(b) for requirements for making the order or granting the injunction in these circumstances.

Example: The capacity of a party to the marriage to repay the debt would be affected by that party’s ability to repay the debt without undue hardship.

(f) the economic, legal or other capacity of the third party to comply with the order or injunction;

Example: The legal capacity of the third party to comply with the order or injunction could be affected by the terms of a trust deed. However, after taking the third party‘s legal capacity into account, the court may make the order or grant the injunction despite the terms of the trust deed. If the court does so, the order or injunction will have effect despite those terms (see section 90AC).

(g) if, as a result of the third party being accorded procedural fairness in relation to the making of the order or the granting of the injunction, the third party raises any other matters–those matters;

Note: See paragraph (3)(c) for the requirement to accord procedural fairness to the third party.

(h) any other matter that the court considers relevant.

 

FLA 1975 s 90AK Acquisition of property

(1) The court must not make an order or grant an injunction in accordance with this Part if the order or injunction would:

(a) result in the acquisition of property from a person otherwise than on just terms; and

(b) be invalid because of paragraph 51(xxxi) of the Constitution.

 

 

 

DISCRETIONARY TRUSTS 642

  • Normally interests under DT will not give to beneficiaries any vested rights since there is no obligation placed upon the trustees either to make any distributions at all in a given year (usually power to accumulate) or to make a distribution to any particular beneficiary
  • Such interests are mere expectancies
  • Stein 1986 an eg of the relevant principles in which an order was made which exceeded the property of the husband, other than the money which was in the DT
  • s85A Ante-nuptial and post-nuptial settlements 646

gives courts special powers for settlements as above which may include DT

  • Kennon v Spry 2008
  • further issued with s85A is that 3rd parties may have interests in the trust fund which was considered in In the marriage of Knight 1987

TRANSACTIONS TO DEFEAT CLAIMS 652

  • s 106B empowers court to set aside transactions or make orders restraining someone from making disposition which is made, or proposed to be made, to defeat existing or anticipated order.
  • It is not necessary to establish there was intention to defeat a party’s claim. It is enough that transaction defeats, or is likely to defeat a claim.

FLA 1975 – s 106B – Transactions to defeat claims – used to be s85

(1) In proceedings, court may set aside or restrain making of instrument or disposition by or on behalf of, party, which is made to defeat existing or anticipated order in those proceedings or which, irrespective of intention, is likely to defeat any such order.

(1A) If:

(a) party to a marriage, or DF relationship, is a bankrupt; and

(b) bankruptcy trustee is party to proceedings under this Act; court may set aside or restrain making of an instrument or disposition:

(c) which is made or proposed to be made by or on behalf of the bankrupt; and

(d) which is made or proposed to be made to defeat existing or anticipated order in those proceedings or which, s likely to defeat order.

(1B) If:

(a) a party to a marriage, or DF relationship, is a debtor subject to a personal insolvency agreement; and

(b) trustee of agreement is a party to proceedings under this Act; court may set aside or restrain making of an instrument or disposition:

(c) which is made or proposed to be made by or on behalf of the bankrupt; and

(d) which is made or proposed to be made to defeat existing or anticipated order in those proceedings or which, s likely to defeat order.

(2) Court may order that any money or real or personal property dealt with by any instrument or disposition referred to in ss (1), (1A) or (1B) may be taken in execution or charged with payment of such sums for costs or maintenance as court directs

(3) Court must have regard to interests of, and shall make any order proper for protection of, a bona fide purchaser

(4) Party acting in collusion with party may be ordered to pay costs of any other party or of a bona fide purchaser

(4AA) Application may be made to court for an order under this section by:

(a) party to proceedings; or

(b) creditor of a party to proceedings if creditor may not be able to recover his debt if instrument or disposition were made; or

(c) any other person whose interests would be affected by the making of the instrument or disposition

 (5) In this section:

“disposition” includes sale, gift, issue, grant, creation, transfer or variation of rights attaching to, interest in company or a trust.

“interest” in co inc. share, debenture, option over share/debenture

“interest” in trust inc. beneficial interest, interest of settler, power of appointment or to rescind/vary provision

 

  • In the Marriage of Abdullah [1981]
    • W mother gives couple block of land to build home (transfer was sale as JT BUT no money passed from them to mother). Couple then split, land was subdivided and sold. Proceeds were paid in separate cheque (half each). H took was $32,000.
    • S 106B application concerned land owned by H as TIC with his brother. His half was subsequently sold to Mr. Jaja and W sought to have this transaction set aside ancillary to her application under s 79.
    • H stated he wanted to sell his share as soon as he became aware of present application to provide him with funds for further gambling activities. There was evidence he took steps to sell his property with no effort to obtain valuation. Property was sold far below reasonable market rate at time.
    • Court was of view that transaction was a sham and entered into for express purpose of defeating present application. In considering whether to make application under s 106B regard had to be made to possible interest and rights of Mr. Jaja.
    • Held
  • It is no longer necessary to prove party making disposition intended to defeat existing or anticipated order, it is sufficient to show that such a transaction is likely to defeat any such order.
  • Court was reluctant to set aside a transaction involving a bona fide purchaser for full value.
  • If proceeds of sale were still available, appropriate injunction under s 114 can be ordered
  • Where proceeds of sale have been dissipated and restitution is not possible, court should not make s 106B order with exception of matrimonial home.
  • If court is convinced particular transaction is a sham designed to defeat application it should not shrink from making a s 106B order to set aside transaction **** H transaction was a sham and Mr. Jaja was not bona fide purchaser nor was transaction for full and adequate consideration. Therefore transaction was set aside.
  • To succeed with a claim under s 106B, it is necessary to show that impugned transaction is likely to defeat existing or “anticipated” order.
  • In the Marriage of Pflugardt [1981]what is anticipated
    • H and W separated and had a daughter. W obtained maintenance order but H did not comply with it. At hearing time, amount owed was $10,000. In Mar 1978, H and his father who owned matrimonial home as JT made deed of trust in favor of daughter. In Dec 1978, W filed claim for property settlement and sought to have deed of trust set aside under s 106B, as this was H only asset.
    • Held – Elliot J
  • It was incumbent on W if she were to succeed to show that disposition was likely to defeat “anticipated” order. There was nothing to indicate that either H or grandfather ever “anticipated” claim being made by W
  • “Anticipate” means in sense of expected or foreseen as being likely or reasonably probable
  • Elements of expectation or foreseeability in “anticipated order” must be considered on objective basis – “anticipated” requires order to have quality of being “anticipated” by reasonable disponer at time of disposition, properly considering all of circumstances of case.
  • Here, claim would have been foreseeable or expected by H. W had made many mortgage payments from her own earnings, paid moneys to grandfather from her pension, spent flood grant money on repairs. These expenditures alone apart from her contribution as W and mother, would give her clear prima facie claim for a settlement order.
  • H trust disposition, irrespective of intention, was likely to defeat any such orders and must be set aside.
  • In order for a court to make order under s 106B, 4 conditions must be met:
  • Proceedings must have already been commenced for other relief
  • There must be an existing or anticipated order
  • Instrument or disposition must have been made by or on behalf of a party
  • Instrument or disposition must have been intended, or is likely to, defeat existing or anticipated order

 

THE CLAIMS OF 3RD PARTY CREDITORS 658

  • A question of priorities arise between parties to marriage making a claim under s 79, and unsecured creditors where property which is claimed is insufficient to meet needs of both
  • A number of decisions in Family Court have established that orders under s 79, will be set aside if orders of court have been made without knowledge of claims of substantial unsecured creditors.
  • In Marriage of Chemaisse; Commissioner of Taxation (Intervener) [1990]: Full court suggested there was no issue of priorities because if, after order has been made under s 79, there is insufficient property to satisfy various debts of one of spouses, competing claims will be determined by law of bankruptcy. This would be so if determination of a spouse’s claim under s 79 was made without first deducting unsecured liabilities of other spouse from calculations assets available for distribution.
  • In Marriage of Bailey [1990] court confirmed that in deciding cases under s 79, they should first deduct the liabilities of either party, including debts owed to unsecured creditors, and should postpone hearing a case if litigation by third parties is pending which would affect the court’s decision making under s 79
  • In Marriage of Biltoft [1995]
    • Full Court clarified when third party liabilities need not be deducted from assets at first stage of process in valuing pool.
    • Court has indicated that it may properly determine not to take account or to discount the value of unsecured liabilities in certain circumstances. These would include liabilities which are vague or uncertain, if it was likely to be enforced or if it was unreasonable incurred.
    • They took view that a diminution of assets of a party to a marriage as a result of an order of Family Court does not affect right of unsecured creditor to apply to a Court for an order which will then justify execution against the unencumbered assets of that party.
    • There is no requirement that the rights of an unsecured creditor or a claim by a third party must be considered and dealt with prior to the Court making an order under s 79, nor is there a rule of priority as between creditor claimant and a spouse. Those rights, however, cannot be ignored. They must be recognised, taken into account and balanced against the rights of the spouse.
  • Federal Commissioner of Taxation v Worsnop (2009) ***
    • Full Court upheld decision of trial judge not to deduct a substantial income tax liability from assets when assessing size of the pool. Only substantial asset of parties was former matrimonial home, worth $4,750,000. Tax liability of H, including interest and penalties was $12,031,124. Trial judge ordered that former matrimonial home be sold and that after costs of sale, proceeds be divided equally between W and commissioner.
    • Full court stated that Rose J clearly appreciated exercise of balancing of W claims against those of Commissioner.
      • As to W position during decade when tax was avoided, she continued to make significant contributions of nature recognised under s 79, in context where she was denied choices that would have been hers, had H informed her of his avoidance of tax.
      • Commissioner of Tax is in a position distinguishable from that of a commercial creditor. Commercial creditors have a choice about to whom they extend credit. On other hand, commissioner as a creditor of tax payers is of a completely different origin. The onus is on the tax payer to make full and proper disclosure to the commissioner. The commissioner does not extend credit at all, but becomes a creditor by virtue of the conduct of the affairs of the taxpayer
    • Rose J balanced these competing claims by depriving the wife of an adjustment to which he saw her as otherwise entitled, on account of s 75(2) factors, and of an adjustment for the notional asset represented by the husband’s paid legal costs, and of one-half of the monies in the controlled monies account and the B property
    • The Commissioner argued that both parties had benefited from the tax evasion of the husband, particularly in relation to enabling the purchase of the matrimonial home, and as such proceeds of sale of that property should be paid to the Commissioner. It was submitted that the trial judge ought to have found that the source of funds used to purchase the matrimonial home was income upon which tax had not been paid.

 

BANKRUPTCY 663

 

  • Since 2005 FC has power to include all property in hands of trustee of bankruptcy as property over which order can be made
  • s 75(2)(ha) of FLA requires court to consider effect of proposed maintenance order on ability of a creditor to collect a debt. Neither creditor nor spouse has priority over other.
  • Lemnos (2009)
    • Parties were married for 31 years and raised 4 children. At date of trial H and W had equity in a property of about $2-2.5m, but H had a substantial taxation liability. He was made bankrupt, with debts of $6m
    • Trial – based on contributions, proceeds of sale from matrimonial home should be divided equally between trustee and W. In considering s 75(2) factors, trial judge commented he had to balance those factors which favored W against substantial loss H creditors would suffer. Given size of debt, he found he could not make any further adjustment
    • court can make orders with adverse impact for creditors BUT must consider their interests under s75(2)(ha) first
    • Coleman J found appeal from Trustee in Bankruptcy should succeed as different outcome would have resulted if trial judge had exercised discretion in accordance with statute

 

CLAIMS BY CHILDREN IN S79 PROCEEDINGS 669

  • Claim of a child of marriage to share of parents property by intervening in s79 case btwn parents
  • 79(1) allows courts to make property orders in favour of children of marriage
  • Rarely made
  • Doughtery v Doughtery 1987 p669 an adult son intervened in s79nproperty proceedings btwn parents but application was removed from high court

Private ordering/distribution of property

Court distribution of property

  • Jurisdiction
  • Identify and assess liabilities
  • Assess contributions
  • Assess needs and make adjustments
  • Result – just and equitable?

Property interests of 3rd parties

Spousal maintenance

 

Private distribution of property

  • 3 methods of private ordering in relation to property
    • Informal agreement
    • Consent orders under s79
    • Financial agreements
  • Informal agreement
    • In cases where there’s little property or parties are able to support themselves (no need for spousal maintenance or social security) parties can decide to divide property and walk away but there are risks p21
    • ‘Law now encourages spouses to avoid bitterness after family breakdown and to settle their money and property problems. An object of modern law is to encourage each to put the past behind them and begin a new life which is not overshadowed by the relationship which had broken down’ Minton v Minton [1979] Lord Scarman at 608’
    • Finality in s44 clean break principle
  • Consent orders
    • maintenance agreement s4 which must be approved by court s87(2)
    • not automatic, court must scrutinize them considering s79(4) factors Harris v Caladine 1991
  • Financial agreements
    • Consists of what is commonly known as prenuptial and postnuptial agreements
    • If made validly under FLA, can prevent court intervention re: alteration of property or spousal maintenance s71A
    • s90B financial agreements before marriage
    • s90C financial agreements during marriage
    • s90D financial agreement after divorce is made
    • s90DA provides for separation declaration before agreement can come into effect

Court distribution of property

 

Jurisdiction

  • FCA has jurisdiction as a result of s4(ca)(i) as the proceedings constitute a matrimonial cause
  • they are proceedings between parties to marriage with respect to property of the parties to the marriage, arising out of marriage relationship

Steps p35

  • 4 Stages involved in an assessment under s79 per In marriage of Hickey [2003]
  1. Identify assets/liabilities
  2. Assess contributions
  3. Needs and adjustments
  4. Just and equitable?

 

  1. Identify assets and liabilities
  • ID/value property, liabilities, financial resources at time of hearing (both joint and individual)
  • Property defined s4 ‘property to which those parties are, or that party is, as the case may be, entitled, whether in possession or reversion’
    • Interpreted widely and liberally to include a wide range of assets and interests
    • ‘property is most comprehensive of all terms which can be used in as much as it is indicative and descriptive of every possible interest which party can have’ Jones v Skinner (1835) Langdale MR
    • Above definition applied in Duff 1977 to include shares as property
    • Entitlement to property in future Shepherd v FCT 1965
    • Partnership interest in law firm was property Best 1993
    • Includes interests in discretionary trusts Kennon v Spry 2008
  • Property cannot be determined until liabilities taken into account Bailey
  • Debt is also considered property
  • -> List assets and liabilities or make table below
 

Husband

Wife

Joint

ASSETS

   

Family home

   
    

LIABILITIES

   

House mortgage

   

Assets – liabilities = property of the parties

 

  1. Assess contributions
  • Identify and assess contributions in s79(4)(a-c) by or on behalf of parties
  • -> determine contribution as % of net value of parties’ property

-2 approaches

  • Either is legit and no binding principle of law controlling exercise of discretion in division of property, convenience depends on circumstances of particular case and neither alternative is more just and equitable than the other, outcome should be same regardless of approach taken Norbis
    • asset by asset: appropriate where marriage is of short duration and during marriage parties have strictly divided and kept their own assets separate from eachother McMahon v McMahon (1995)
    • global: enables court to assess contributions in overall way by considering parties’ contributions to property as a whole and generally preferred/more convienent as allows court to more easily deal with and giving proper recognition to parties’ financial and non-financial contributions In marriage of Zyk

-in weighing contributions

  • there is an approach that equality is equity Marriage of Wardman and Hudson 1978e assume equality as starting point in weighing/assessing the contributions
  • however, HC disapproved of idea of equality as starting point in Mallet 1984 and ruling prohibits judges from presuming parties made equal contributions

-Financial contributions s79(4)(a)

  • assets brought into the marriage
    • All property is distributable under FLA no matter when acquired and how it is acquired
    • Approaches include eriosion principle (In the marriage of Money), balancing approach (Alekovski), and weighing approach (In the marriage of pierce)
    • The latter is the most frequent and must give significant weight to substantial initial contribution
    • -> apply
  • gifts
    • Significance of funds from family sources received early in marriage for assessment of contributions will vary depending on number of factors including ultimate duration of marriage and whether counter-balancing contributions erode impact of early gift
    • where relative of 1 party gives property to both parties to marriage it is open to court to treat that as contribution made on behalf of spouse whose relative has made gift. Thus, where gift was made only because of relationship and was in reality a means of benefiting relative, contribution should be regarded as on behalf of that spouse Fogarty J in In Marriage of Gosper
    • includes advance of money In marriage of Kessey, rent-free accomm In marriage of Rickaby, but provision of child care by grandparent not counted as contribution AB and ZB 2003
    • ->apply
  • lottery wins
  • inheritances
  • damages award
  • superannuation
    • treated as property 90MC
    • obliged to consider this separately – should be treated as another species of asset, distinct from property Coghlan
    • approach of 2 pools – super in separate pool
    • asset by asset assessment of contribution if parties interests in specific items of property differ

-Non-financial contributions to property s79(4)(b)

 

-Contributions to welfare of family s79(4)(c)

  • Court is only required to take into account contributions to ‘family… and children of marriage’
    • Interpretation of ‘family’ considered by Nygh in Mehmet and interpretation of ‘children of marriage’ considered by Cohen in Molen
  • justification for considering homemaker contributions, including
    • it freed other person to concentrate on earning activities, its an indirect contribution to acquisition, maintenance and improvement of property and ensures women not disadvantaged by their role specialization
    • contribution should be recognised not in a token way but in substantial way Evatt CJ Rolfe and Rolfe (1977)
  • valuing homemaker and parenting contributions
    • no objective value that is placed upon homemaker and parenting contributions, as it’s a socio-economic partnership
    • assessed in comparative exercise with financial contributions of parties in accumulating wealth which is available to be divided
    • Homemaker contributions are to be given as much weight as those of primary breadwinner Fogarty J In Marriage of Waters and Jurek [1995]
  • Homemaker contributions as contributions to business assets
  • Special contribution
  • contributions made during pre-marital cohabitation & post-separation- negative contirbutions:
  • Relevance of domestic violence
  • other issues about conduct and waste – losses
  • ->apply

 

contribution %

  • looks at how each party contributed to that marriage, rather than costing/comparing with other marriages
  • this is discretionary so justify % and conclusion but should be within normal range
  • -> apply
    • find total $ amount of matrimonial property and financial resources available
    • list W’s contributions, list H’s conributions
    • Assess eg 35% wife, 65% H (contribution to property)

 

  1. Assess needs and make adjustments
  • Identify and assess needs ‘financial resources, means and [future] needs of parties’ by assessing factors in s79(d-g) inc. 75(2)
  • -> determine whether any adjustment should be made to % because of needs

-in considering what order should be made, court shall take into account s79(4)

  • s79(4)(d) effect of any proposed order upon earning capacity of either
    • -> discuss how proposed orders (esp re children) might affect earning capacity – as well as consider when dealing with s75(2) factors.
  • s79(4)(e) relevant s75(2) factors (below)
    • adjustment called for because of disparate roles during marriage leads to disparity in financial resources, especially income earning capacity Waters and Jureck
    • if court finds that amount awarded for contribution ‘more than amply meets needs’, no need to add s75(2) maintenance/needs component Lee Steere
    • depends on personal circumstances
    • note s75(2) factors are gender neutral Burke
  • s75(2)(a) age/health
    • esp middle aged women who have been out of workforce
    • health might be related to marriage Kennon eg depression related to business mismanagement, is he now unemployable? Burke
  • s75(2)(b) income, property and financial resources and physical and mental capacity for appropriate gainful employment
    • comparing relative financial positions
    • one parties future interest such as super and high earning capacity
    • any disparity btwn parties financial resources may make it just and equitable to increase share of party beyond amount which would be justified soley by the contribution of the party to the property Pastrikos 1980
    • superannuation: court may make orders to split fund s90MT, flag fund s90MU (pg 51) (prevents dealings under hold or flag is lifted) or offsetting
  • s75(2)(c) care or control of a child of the marriage < 18 years
    • assumes substantial additional needs and restrictions on ability to meet needs
    • obligation of either to provide home for chn may make it just and equitable to increase share of party beyond amount which would be justified soley by the contribution of the party to the property Pastrikos 1980
  • s75(2)(d) commitment necessary to support self or others they have duty to maintain
    • legal duties rather than moral: children
  • s75(2)(e) responsibilities to support any other person
  • s75(2)(f) eligibility for pension, allowance or benefit
  • s75(2)(g)reasonable living standard
    • relative concept
    • if H has resources to maintain living standard previously accustomed to, may order: cf Evans
  • s75(2)(ha) Effect of order on creditors
  • s75(2)(k)duration of marriage and effect of it on earning capacity
    • may erode skills, deprive of opportunity to acquire new skills; not clear extent to which this is the case – appears she maintained expertise in corporate law, although hasn’t worked for some time in rapidly changing field
    • Beck: include earning potential, not just current income
  • s75(2)(l) protecing parenting role
    • Nixon 1992 when have care of children may “choose to adopt the role of a full time parent and be unable to adequately support self” elect not to work;
    • implication is that where no children, parent (mother) expected to make efforts to find work – may limit W capacity to work, although both of high school age
  • s75(2)(m) if cohabiting with another person, the financial circumstances related
  • s75(2)(n) terms of any order made
  • s75(2)(na) child support
  • s75(2)(o)other circumstances required by justice
    • may deal with negative contributions eg violence p46

-adjustments

  • are any adjustments necessary?
  • Common assessment is a range between 10-20% Clauson 1995 however number of cases justify an assessment outside those parameters (pg 49)
  • For children there are generally 3 outcomes: 1 with H, 1 with W, 1 split – % may be adjusted according to these
  • eg extra 5% to W as will be caring for children, although seems is ‘amply provided for’

 

  1. Result – just and equitable?
  • Court to consider and determine if order is just and equitable s79(2)
  • controls way in which take into account s79(4) factors, but also reciprocal effect
  • individuals actions can be taken into account here eg. H preventing W from accessing materials for business

 

-Orders

Eg.

  1. Declare the wife entitled to 40% of matrimonial assets ($11,900,000).
  2. Declare the husband entitled to 60% of matrimonial assets ($17,850,000).
  3. Order the H transfer to the W his right title and interest in matrimonial home.
  4. Declare the W to be responsible for the mortgage on matrimonial home.
  5. Order the H transfer his right title and interest in the furniture to the W.
  6. Order the H to transfer the sum of $1,817,000 to the wife (including $17,000 as recompense for damage to the furniture).
  7. Declare the W the sole beneficiary of her superannuation entitlement.
  8. Declare the H the sole owner of the boats, cars, country properties, and assets from share sale ($19,650,000).
  9. Declare the H solely responsible for his gambling debts.

 

 

Consider Superannuation

  • Relevance of super – often largest asset, it is remuneration for employment and other spouse might have indirectly contributed to it
  • Superannuation now treated as property 90MC
  • Court can make orders affecting super by:
    • Splitting fund FLA 1975 s 90MT – to give non-member spouse their own superannuation account
    • Flagging fund FLA 1975 s 90MU – prevents dealings with it until flag is lifted OR
    • Offsetting – s75(2)(b)
  • s 75(2)(f) provides that court shall take into account eligibility of either party for a pension, superannuation fund or scheme – whether fund or scheme was est. or operates within or outside Australia
  • s 75(2)(j) requires court to take into account extent to which a party whose maintenance is under consideration has contributed to income-earning capacity, property and financial resources of other party.
  • Approach – 2 pools – harder for W to est. claim in H super Coghlan and Coghlan [2005]
  • Valuation
    • Accumulation funds: most common
    • Defined benefit funds
    • Hybrid funds
  • Orders which can be made under pt VIIIB pg 615 of text
  • Application of s 79 principles to superannuation entitlements
  • Other factors
  • empirical evidenced on outcomes of property
  • bargaining in the shadow of the law

 

Property interests of 3rd parties

  • Property of 3rd parties may be included in parties asset/liability pool and treated as matrimonial property (or as financial resource) if
    • de facto control can be traced to one of the parties Spry; Stein; Ashton
    • the assets are in a pre/post nuptial settlement s85A
    • or if the entity or disposition is a sham or a puppet of one of the parties Ascot
  • s90AE Court may make an order under s79 binding a third party
    • (1)(a) to substitute one party for both for a debt
    • (1)(b) to substitute one part for the other
    • (1)(c) to be liable for a different proportion of debt
    • (1)(d) to register transfer of shares
    • (2) court may direct 3rd party to do a thing or alter their rights, liabilities or property interests if reasonably necessary or appropriate
  • s90AF Court may make an order or injunction under s114 binding a third party
  • s90AK court must not make an order if it would result in acquisition of property unjustly

-Discretionary trust (from sample ans)

  • The trust may be an ante or post nuptial trust to which s85A applies
  • If determined to be a post nuptial trust, court could treat as matrimonial property
  • purpose may be
    • to benefit wife and children Kennon v Spry; Knight
    • a transaction to defeat claim p56 – off-setting assets in anticipation of divorce proceedings as was seeking to defeat a possible property application by the wife
      • if so s106B empowers court to set aside transaction or make restraining orders
    • may be a sham Ascot
  • 3rd party trust property is treated as property of the parties if
    • one party has complete control of the trust, Stein; Kennon v Spry
      • note one of Spry conditions is person to be trustee
    • or if de facto/ultimate legal control traced to party: discretionary trust, may be or control trustee, and be able to vest property in one party: Nygh J/Dickey; Ashton; Ashton and Davidson
  • may be evidence person is ‘ultimate controller’ of trust eg business colleagues are appointer and trustee and likely to follow his requests
  • ulterior purpose may be to ‘retain the illusion of separate ownership but retain real control over disposition of assets’: Stein; Ascot; Kelly
  • therefore may have complete control and therefore trust assets may be treated as the property of the parties
  • alternatively, if not, may be treated as financial resource
  • Transactions to defeat claims
  • FLA 1975 – s 106B – Transactions to defeat claim

-Company

  • could be considered matrimonial property if facts imply
    • person treated assets of this limited liability company as his own Stein
    • or that the company was mere puppet of the person Ascot

-Financial resources

  • if not treated as matrimonial property may be taken into account as financial resource
  • in deciding how to distribute remaining assets under s79(4)(e) which directs to assess s75(2), (b) of which includes financial resources
  • if one party has sufficient de facto control over to supply financial need or can reasonably expect will be available Kelly (see control above)
  • s90AE(2)(b) court may direct 3rd party to do a thing or alter their rights, liabilities or property interests if reasonably necessary or appropriate
    • -> are s90AE conditions satisfied and what orders might be made

-Claims of creditors

  • Orders under s79 may be set aside if made w/o knowledge of claims of substantial unsecured creditors (number of Family Court decisions established this)
  • court confirmed in deciding cases under s 79, should first deduct liabilities, including debts owed to unsecured creditors, and should postpone case if pending litigation Bailey 1990
  • no requirement that rights of creditor must be considered and dealt with prior to making order, however these rights cannot be ignored and must be recognised and taken into account an balance against spouse’s rights Biltoft 1995
  • Commissioner of Tax can be creditor for tax evasion and unpaid tax FCT v Worsnop 2009 Rose J balanced these competing claims by depriving wife of an adjustment to which he saw her entitled per s75(2) factors

– Bankruptcy

 

– Claims by children in s 79 Proceedings

 

Spousal maintenance p13

  • consider maintenance aspects (even if not asked)
  • SM is money paid by one spouse to another for their financial support after separation
  • May only be applicable if she has chn (consider chn here not child support)
  • May be necessary for a short period while gets on their feet
  • May need more facts e+g. Income from business
  • Court has power to order SM if it considers it proper s74
  • Note time limits: must be within 1 year s44(3) unless court grants leave s44(4)(b)
  • To consider what is ‘proper’ s75(2) matters should be taken into account s75(1)

-Personal Circumstances 75(2)

  • (a) Age/health of parties:
  • (b) income, property, financial resource of each party and physical/mental capacity for appropriate gainful employment
    • where minimal assets, sig needs and sig future earning capacity SM is appropriate Best [1993]
    • Prospective of re-marriage: may be taken into acct if on statistical/firm evidence Rouse [1982]
  • (d) commitments necessary for self-support or support of any C or other person that they have duty to maintain
  • (f) eligibility for social security or super pension, allowance, benefit:
    • Subject to s75(3) Ct disregard Applicant’s (not payer’s) entitlement to any income-tested social security
  • (g) standard of living that is (in all circs) reasonable
    • where W enjoyed high SOL and H has resources Ct may order SM Evans [1978]
    • alternatively, H (millionaire) but Ct ordered reasonable sum, not earlier lavish lifestyle Wilson [1989]
  • (h): extent that SM may improve earning capacity
    • Rehabilitative function of SM
    • W got SM to enable her to finish training course to make her self-supporting in 2yrs Hope 1977
  • (k) duration of marriage and extent to which it has affected earning capacity of party under consideration
  • (m) if applicant is cohabiting with another person – the financial circ of that cohabitation
    • W had new partner not contributing, SM denied as considers not only actual financial circ, but potential financial circ as partner able to make contribution Re F [1982]

-Obligations to Others 75(2)

  • (c) if either party has care orcontrol of C of marriage (18yrs):
    • May have substantial extra needs or restricted in paying SM bcos of C
    • Must be C of the marriage.
  • (e) if either party has responsibility to support another person.
    • covers obligations beyond legal duties in (d)
  • (ha) effect of SM on ability of 3rd party cred to recover debt
  • (l) need to protect a party’s parental role (continue being parent)
    • Consider if parent has alternative of paid work and childcare – may choose to be FT parent and in circ, may be held to be unable to support self Nixon [1992]
  • (n) terms of any prop order
  • (na) child support liability
    • payer will have less resources to pay SM
    • payee will be in better position under CS scheme

-Past circ of marriage 75(2)

  • (j) contributions of Applicant to income, earning capacity, prop and financial resources of other party
    • 1 partner pay the other’s way thru education
  • (k) duration of marriage and impact on earning capacity

-Conduct/fault in maintenance proceedings 75(2)

  • (o) other circ required by justice
    • Does not include circ re marital history but looks at facts/circ of a broadly financial nature Soblusky [1976]
    • May consider non-financial conduct (eg. domestic violence) Kennon [1997]

 

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