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Case Summary - Property

Case Summary - Property

By Daniel Myers, Farrar Gesini Dunn and member of the Maintenance and property sub-committee

Family Court Maintenance (Family) 

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Case Summary Hall and Hall 2016 – Interim Spousal Maintenance

The High Court of Australia upheld the dismissal of interim spousal maintenance orders where the wife's father's Will expressed a wish that Wife should receive a voluntary annual payment from a family business controlled by wife's brothers.

In Hall and Hall [2016] HCA 23, on 8 June 2016, the High Court of Australia dismissed an appeal from the Full Court in which the Full Court had discharged an interim spousal maintenance order pursuant to s83(1)(c) of the Family Law Act 1975.

The husband was a property developer, born in 1952. The wife was a medical practitioner, born in 1972. The parties married in 2001 and had two children. They separated on 26 September 2013. In October 2013 the wife filed an Amended Initiating Application in the Family Court seeking orders, inter alia, for permanent and interim spousal maintenance. Section 74(1) permits a court to make an order for the provision of maintenance by one party in a marriage to the other.

The wife’s Financial Statement filed in November 2013 disclosed that she had an "interest" in the estate of her late father, the value of which was not known to her. She explained in her affidavit evidence that her father had died in July 2009, having started a family business in which she had never had any active role. She did not have a copy of her father's Will and did not know the particulars of her father's estate. The business was run through a corporate structure controlled by her brothers.

The primary judge made an interim spousal maintenance order requiring the husband to pay the wife $10,833 per month pending a final hearing. She explained in her reasons that the absence of information about the nature and extent of any interest of the wife in the estate of her late father meant that no such interest could be taken into account as a financial resource of the wife in determining the application for the interim order.

The respondent husband sought to subpoena the Father’s Will but was unsuccessful in obtaining a copy. However he did obtain some information about it through an affidavit filed in opposition to the production of the Will under the subpoena by a solicitor acting for one of the brothers in their capacity of executor of the father’s estate. The solicitor explained:

  • The property of the father dealt with in the Will included shares in companies within a named group being "one of the largest business enterprises" in South Australia.
  • Under the Will, all of the shares in companies within the group formerly held by the father came to be held directly or indirectly by the three brothers.
  • The Will expressed the father's "wish" that the wife should receive from the group a lump sum payment in cash of $16,500,000 on the first to occur of a number of specified events, such as the wife being divorced from the husband. The clause also expressed the father's "wish" that the wife should also receive an annual payment of $150,000 until the date (if any) of that lump sum payment of $16,500,000.
  • In his opinion, the payment of the amounts to the wife was a mere wish of the deceased and she could not compel payment.

Armed with this information, the husband filed an application to discharge the interim orders. In the wife’s evidence, she stated that she had not received any income or capital, however, she was silent as to the making of such requests. In June 2014, the primary judge made an order dismissing the husband’s application.

The husband appealed to the Full Court. At the hearing, the wife adduced further evidence, being a letter dated 3 November 2014 to her from the brother who was the executor of the Will. The letter informed the wife in some detail about the "finalisation of the estate". The letter was careful to explain that neither the annual payment of $150,000 nor the payment of $16,500,000 were to be paid to the wife out of the estate and that "as executor" the brother had no obligation to her in respect of those amounts.

The Full Court identified the critical question as whether “there is now evidence before the court that demonstrates that the wife is able to support herself adequately”. The Full Court gave an affirmative answer. Although the making of the annual payment of $150,000 from the group to the wife would have been voluntary, it found that the wife would have received that payment if she had requested it of her brothers.

In drawing that inference from the limited evidence before it, the Full Court noted that the group was controlled by the wife's brothers and that there was no evidence that the wife had requested her brothers to comply with their father's wish once she became aware of the relevant terms of the Will. The Full Court saw nothing in the evidence to suggest that any such request, if made, would have been denied. The fact that her brothers had provided her with luxury motor vehicles indicated that the wife had a good relationship with them. The Full Court therefore ordered that the interim spousal maintenance order be discharged.

The wife appealed to the High Court. Her arguments included:

  • It was not open on the evidence to infer that the voluntary annual payment would have been made to her if she had requested that payment.
  • Even if it be the fact that the voluntary annual payment would have been made to her if requested, that fact could not constitute a proper basis for concluding that she was not unable to support herself adequately within the meaning of s 72(1). She argued that there must be some “degree of entitlement to, control over, or relative certainty” in the interest and a mere expectancy should not form a basis to conclude an ability to support herself.

By a 4 v 1 majority, the High Court upheld the decision of the Full Court. It found that financial resources of each of the parties should not be restricted to current financial entitlements but could extend to a source of financial interest to which a party may reasonably expect available to them. For example, in relation to the affidavit from the solicitor and the letter from the brother, it noted that both were at pains to explain that any payment from the group to the wife would not be a matter of legal obligation but would be a voluntary payment for the group to decide on making. However, the documents are “most informative in what they do not say: that the group was inclined not to pay”.

The Court found that the Wife’s interest fell within the ambit of 75(2)(b) as a “financial resource” because, if requested, the Wife had a reasonable expectation that discretion would be exercised in her favour. It said a financial resource “…must involve something more than an expectation of benevolence on the part of another. But it goes too far to suggest that the party must control the source of financial support.” It confirmed that a nominated beneficiary of a discretionary trust, who has no control over the trustee but who has a reasonable expectation that the trustee's discretion will be exercised in his or her favour, has a financial resource to the extent of that expectation. Additionally, the Court held that the interest was a “fact or circumstance” under s75(2)(o) that was pertinent in establishing her financial independence.

The dissenting judge found that there was no direct evidence that could infer that, if requested, the wife would receive payment as the father’s gift was an “expression of a wish by the father for the wife and it did not bind the executor”.

8 June 2016

Summary prepared by Daniel Myers, Farrar Gesini Dunn and member of the Maintenance and property sub-committee

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