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Family law judgments

Family law judgments

By Robert Glade-Wright

Courts Judgment 


Property Court’s interim appointment of receiver to sell parties’ business set aside In Scott & Scott [2019] FamCAFC 9 (24 January 2019) the wife worked as practice manager in a professional practice in which the husband worked as a professional until 2016, a year after separation, when he set up his own practice. A month earlier the Court appointed an independent interim manager to run the practice and directed the parties to remain involved in the business, subject to the manager’s discretion. In 2018 when the wife sought an order that the manager no longer be required to involve the husband in decisions, the husband sought the discharge of the manager and the appointment of a receiver. Cleary J removed the manager and appointed a receiver on the basis that the business was dysfunctional and each party would have the chance to buy the business from the receiver. The Full Court (Ainslie-Wallace, Ryan and Watts JJ) said: “At its highest . . . the husband’s complaints are that the manager acted inconsistently with his appointment in not providing the husband with financial information and the husband said that he would not sign the documents to roll over the financial facility . . . where he was unaware of the financial state of the business . . . (at [22]). “. . . [T]he husband’s solution to his complaints about the manager and the suggestion that the business was insolvent was that a receiver be appointed to sell the business (at [24]). “Her Honour’s reasons do not indicate the basis on which she concluded that the business was ‘dysfunctional’ and that management ha[d] been ‘shredded’ such that the manager’s position was untenable . . . (at [25]). “. . . Her Honour’s order, if the receivers exercised their power of sale, would be incapable of being reversed at a final hearing and . . . the wife’s hope of purchasing the business as a going concern would be lost. To sell the business would also bring the wife’s employment to an end” (at [26]). Property “Equalisation” of parties’ superannuation entitlements set aside In Bulow & Bulow [2019] FamCAFC 3 (18 January 2019) the Full Court (Strickland, Murphy & Kent JJ) considered a 20-year marriage between the wife (a registered nurse) and the husband who had worked for the Australian government as an engineer. The wife had superannuation worth $289,705 in two accumulation accounts in the growth phase and the husband a defined benefit interest in the Commonwealth Public Sector Superannuation Scheme (PSS) in the growth phase worth $636,013. At first instance Heffernan J ordered that the parties’ super entitlements be “equalised” by a splitting order under s90XT(1)(a) of the Family Law Act which allocated a base amount of $173,154 to the wife. The husband appealed, arguing that the Court erred in its approach, particularly given that throughout the four years since separation he had increased contributions from 2 per cent to 10 per cent of his salary. The Full Court allowed the appeal saying: “ … [W]here the superannuation interests of both parties to family law proceedings are accumulation interests, few difficulties are usually encountered. However, an accumulation interest in the growth phase (as held by the wife in this case) and a defined benefit interest in the growth phase (as held by the husband in this case) differ in several important respects (at [17]). “Those differences include the method by which the ultimate benefit is calculated; the risk to the member inherent in each and, very importantly, the effect of a s90XT(1)(a) order (an order which allocates a base amount to the non-member spouse). Each and all of those differences can, and very often do, have a dramatic impact upon the justice and equity of a proposed splitting order and, in turn, its place within just and equitable orders for settlement of property. (at [18]). “Crucially . . . defined benefit funds are not regulated by Part 7A of the SIS Regulations. It is therefore fundamental to a consideration of any proposed splitting order that the Court consider the governing rules of such funds contained within their specific trust deeds. It is those rules which will determine the effect of any splitting order on the underlying interest within that particular fund. As an example, within a defined benefit fund the fund’s rules can dictate that a splitting order has significant effects on the formula by which a member’s ultimate entitlement is calculated” (at [20]). Children Child smacked by mother – no unacceptable risk of harm – lawful chastisement In Cao & Cao [2018] FamCAFC 252 (19 December 2018) the father of children aged 8 and 4 filed an urgent interim application for a change of residence to him, his case being that the eldest child told him that the mother had struck her. The father kept the children in his care after the disclosure notwithstanding an interim order made in 2016 that the children live with the mother. The ICL supported the father’s case, submitting that the mother’s new partner (Mr C) also posed a welfare risk to the child who witnessed a prior assault of the mother by Mr C. Obradovic J dismissed the application and the father appealed. In dismissing the appeal with costs, Austin J said at [24] that the child’s exposure to a prior assault occurred 15 months before the father filed his urgent application and at [26] that “[i]n reality it was the first asserted risk [alleged physical abuse by the mother] which motivated the father to act”. Austin J continued: “In summary, the primary judge found the risk of harm to the children in the mother’s household was not unacceptably high because she lived alone with the children and Mr C was not a member of her household [and] she agreed to . . . an injunction restraining the children’s interaction with Mr C . . . (at [37]). “. . . [E]ven if the eldest child was struck by the mother . . . it did not necessarily mean she was physically assaulted. For example, she may only have been physically chastised. Even though corporal punishment is falling out of favour under contemporary moral standards, it is still not yet unlawful to use modest physical force to chastise a child (s61AA of the Crimes Act 1900 (NSW)). Corporal punishment does not amount to physical ‘abuse’ under the Act unless it constitutes an assault (s4(1)) . . . (at [42]). “It would . . . seem [from their records that] the police contemplated [that] the mother may have smacked the . . . child and they remained unconvinced [that] the incident amounted to an assault . . .” (at [43]). Property $275,000 held in bank account for child excluded from pool – express trust declared In Tamaris & Tamaris [2018] FCCA 3696 (14 December 2018) Wilson J considered a 31-year marriage with a $6 million asset pool. In a property case the husband sought an order that $275,000 held in an overseas bank account on trust for his daughter’s educational expenses be excluded from any division. He alleged that he and the wife discussed and agreed to this arrangement. The wife did not recall such a discussion and denied there was a trust. She also said that the child had completed her tertiary education and that there was no agreement or evidence that the child required funds for further study. In declaring the existence of an express trust, the Court said: “The issue is whether in the specific circumstances of the case language or conduct showed a sufficiently clear intention to create a trust . . . (at [14]) “As one of the essential elements of a valid trust, certainty as to the object of the trust is required. The creator of the trust must set out clearly the purpose of the trust or the persons whom he intends to benefit and the extent of the benefit. If there is any uncertainty the trust fails and the person upon whom the property is given in trust holds the property on a resulting trust . . . (at [18]) “[Counsel for the husband] . . . extracted the wife’s admission that her inability to recall any conversation about the creation of the impugned trust did not equate to there being no such discussion . . . In addition, the wife’s evidence was to the effect that for the life of her marriage she either agreed to or acquiesced in the husband dealing with financial matters . . . (at [21]) “In those circumstances I am persuaded that a valid express trust was created. The husband and the wife agreed that joint funds were to be hived off from their joint income and those funds were to be quarantined in a separate account for the purpose of funding the tertiary education of their daughter. The undisputed evidence was that the daughter undertook her undergraduate tertiary studies in Australia in respect of which both parents paid the daughter’s higher education contribution scheme debt. The funds in the [country omitted] account are yet to be applied to further study” (at [24]). Robert Glade-Wright, a former barrister and accredited family law specialist, is the founder of The Family Law Book, a looseleaf and online service: see www.thefamilylawbook.com.au. He is assisted by accredited family law specialist Craig Nicol. References to sections of an Act in the text are to the Family Law Act 1975 (Cth) unless otherwise specified. The full text of these judgments can be found at www.austlii.edu.au. The numbers in square brackets in the text refer to the paragraph numbers in the judgment.

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