Can Senior Judicial Registrars lawfully hear and determine “Rice & Asplund cases”?
In my opinion, the answer is no.
Subsection 65DAAA(1) of the Family Law Act 1975 commences with:
“If a final parenting order is in force in relation to a child, a court must not reconsider the final parenting order unless: …”
Subsections 65DAAA(2), (3) and (4) are informative or exclusionary.
There is no power to a court provided within that section. Rather, it imposes a restriction or limitation on the exercise of a power.1 It is akin to section 60I(7) in that respect.
Section 65DAAA has been expressed as the legislation of the ‘Rule’ in Rice & Asplund. That may be an accurate description. The ‘Rule’ was never itself a power but a mandatory consideration in a relevant parenting matter.
Notwithstanding that no power can be found in section 65DAAA, the Family Law Rules 2021 purport to delegate the ‘power’ under section 65DAAA to Senior Judicial Registrars who have been approved by the Chief Justice.2
That delegation is ineffective because no power has been delegated.
Senior Judicial Registrars are delegated the power to summarily dismiss a matter.3
However, subsection 254(3)(d) of the Federal Circuit and Family Court of Australia Act 2021 precludes the delegation of power to registrars to make an ‘excluded child order’.
Excluded child order is defined in section 7. Relevantly, it is ‘an order in relation to the welfare of a child’ other than a make-up time order, an order until further order, an order in undefended proceedings, or an order by consent.
The authorities in relation to the Rice & Asplund issue are inconsistent or at least uncertain about whether dismissing a parenting application on the basis of the ‘Rule’ could be summary dismissal.
Taking a liberal approach to delegated powers, assume that a Senior Judicial Registrar is empowered to summarily dismiss a parenting application on the basis of no reasonable prospects of successfully satisfying the requirement of subsection 65DAAA(1)(b). Exercising the power still requires the consideration of the best interests of the child.
In Defrey & Radnor [2021] FamCAFC 67, the Full Court emphasised that identifying changes in circumstances is a fact-finding step, but the second step requires the exercise of a discretion. It would seem that subsection 65DAAA(1) is no different.
An order that dismisses the parenting application is made because the court is not satisfied that litigation, when held up against all other circumstances, is not in the child’s best interests.
The Full Court in Defrey & Radnor said at [21]:
“… Axiomatically that is because unless other considerations are more weighty, it is not in the best interests of a child for that child to be the subject of repeated litigation between his/her parents. …”
It follows that an order summarily dismissing a parenting application, based on no reasonable prospects of successfully satisfying s65DAAA(1)(b), must be an order in relation to the welfare of the child.
It is plainly not an order: until further order, by consent, in default, or for make-up time.4
It is therefore an excluded child order, the power for which cannot be delegated to registrars.
David Marcolin Senior Associate
1 Albeit an ineffective limitation see subsection 65DAAA(4). 2 Schedule 4, Clause 2, Item 3.9. 3 Schedule 4, Clause 2, Part 31 of the Family Law Rules 2021. 4 The exceptions to the ‘excluded child order’ definition.
Pre-nups, mid-nups and done-nups – financial agreements
The Family Law Act permits a couple to enter into a contract about their financial circumstances in the event of a breakdown of a relationship, or after they have already separated.
In Australia we have one term for that type of contract, whether before, during or after a relationship: Financial Agreement.
The first rule to wrap your mind around is that pre-nups (and mid-nups) cannot regulate the financial conduct during a relationship. The terms of those contracts are only enforceable if and when the couple separates.
There are a number of reasons why people enter into Financial Agreements.
After separation
When a couple separates, either of them may apply to the family courts for orders about property settlement and/or spousal maintenance.
If the couple have reached an agreement about either or both of those matters, they generally have two options to document and create binding, their agreement:
A joint application to the Court to make a “consent order”; or
A financial agreement.
An effective agreement requires certainty and enforceability. If a party to an agreement can simply renege on the deal, it is not effective.
The Family Law Act provides that a court may make property settlement orders and spousal maintenance orders, if the court considers it appropriate, with only one exception: if a financial agreement is binding on both parties.1
The only way to create an effective agreement then is either to exclude the court’s jurisdiction or to exhaust the court’s jurisdiction.
The former is done by entering into a financial agreement.2
The latter is done by applying for a consent order. The Court may only exercise its power in relation to property settlement once.3 So a consent order will exhaust the jurisdiction.
There are reasons why people choose to enter financial agreements rather than apply for consent orders, and vice versa. This is important to understand, but it depends on your specific circumstances.
Before or during the relationship
The contract with which most family lawyers have a love-hate relationship: the “pre-nup”.
American TV tells us that husbands can demand weekly pillow fights from their multiple wives and wives can contractually limit the recreational activities of their husbands.
If a couple entering a relationship (or recently in one) wish to avoid the potential for litigation in the event of their future separation, they can enter into a contract setting out how their finances will be settled at the end of their relationship.
The legal effect of this agreement is as discussed earlier: the exclusion of the court’s jurisdiction.
There are ways for these contracts to be set aside in the future. It is critical that you understand this before entering the contract.
Another reason why a “pre-nup” may suit a couple is if they wish to settle their finances – in the event of the breakdown of their relationship – in a way that is unlikely to be the conclusion of a court.
In that sense, the law does not protect a person from entering a bad deal.4
What can we do for you
One of the reasons that couples choose to enter financial agreements (instead of apply for consent orders or let the court decide) is the flexibility of the content of their agreement.
Financial agreements must still meet the legal requirements of contract law generally, but they are not bound by the same principles upon which courts must base their decisions (including consent orders).
For pre-nups, there are many options to address what will happen in the event of separation and importantly when. For example, if a relationship were to end after 5 years, the couple may expect a very different outcome than if it were to end after 20 years.
David Marcolin Senior Associate
1 The actual legal position is a bit more technical. The exception applies to the extent that the financial agreement applies to the matters about which the court would otherwise seek to make orders. 2 See the note above. 3 Again, the legal reality is more nuanced. But this is assuming well prepared documents. 4 It does however protect a person from entering a deal for a bad reason. It is critical that you understand this before entering the contract.
Raising community awareness about the nature and impact of family violence
One woman was killed every 11 days, and one man was killed every 91 days by an intimate partner on average in 2022-2023 in Australia.1
Female intimate partner violence homicide victims are more likely to be killed during a period of intended or actual separation.
In more than 2 in 5 intimate partner homicide cases children were exposed to the violence between their parents.
Domestic and family violence has, historically, been a “closed-door” family issue.
Coercive control and other forms of domestic and family violence are more and more frequently being reported in the media following several high-profile cases, and tragic deaths.
With this high level of reporting, and the criminalisation of coercive control, it appears that a deeper comprehension and recognition of the different forms of family and domestic violence is beginning to gather momentum.
However, many victims of domestic and family violence are not aware that what they were experiencing was domestic and family violence.
Are we failing to educate our community on the nature and impact of family and domestic violence?
We, as lawyers, understand what abuse looks like. But do our clients?
It can be challenging for our clients to realise that they are victims of family and domestic violence.
The Women’s Safety and Justice Taskforce Hear Her Voice Report 1, Volume 3 discussed the critical need for significant community education prior to the criminalisation of coercive control.2
That report was released in December 2021. Coercive control was criminalised in Queensland on 6 March 2024.
What have we done as lawyers, individuals and as a community to increase our awareness and understanding about the nature and impacts of domestic and family violence including coercive control between December 2021 and now?
As lawyers, we have introduced preliminary domestic violence screenings into practice, we are increasingly becoming more trauma informed in our practice, and we see the effects of family and domestic violence on a daily basis. We are so constantly exposed to the research and reporting of domestic and family violence, that we can often understand the signs upon our first meeting with our client.
Our clients don’t receive the benefit of our exposure until they walk through the front door of our office.
To better protect future generations and victims of family and domestic violence, better community awareness and understanding about the nature and impacts of domestic violence is vital.
A common recommendation is the implementation of school-based education.
We teach children how to practice safe sex, but are we neglecting to teach children about cultivating healthy and safe relationships?
A positive step is Respectful Relationships Education which involves specialised resources for schools and teachers to assist young people in developing emotional and social learning in self-awareness, self-management and risk and responsible decision making.
Legal Aid Queensland has just produced a webinar aimed at changing young people’s attitudes and behaviours towards violence against women.
Within that webinar, they pointed to the Youth Advocacy Centre which is a Brisbane based not-for-profit organisation that has a mission to increase young people’s access to justice, both legal and social.
Within that service is their Domestic and Family Violence Legal Service open to both victim and perpetrator who are under the age of 18 years.
It is clear that we are taking steps to educate young people and the community.
Amendments to the Family Law Act: The best interest principles and equal shared parental responsibility
Recently, the Australian Parliament has passed two pieces of legislation amending the Family Law Act 1975 (Cth).
This legislation was introduced with the aim of making the Australian family law system “simpler, safer and more accessible for separating families and their children”.
These amendments are to apply in relation to all proceedings after commencement, as well as proceedings already in the court-system but not subject to final order.
Family Law Amendment Act 2023
The Family Law Amendment Act 2023 was passed on 19 October 2023 and received assent on 6 November 2023.
Most of the changes to the law will apply from 6 May 2024, unless an earlier date is otherwise fixed by Proclamation.
Its purpose is to ensure that the best interests of the children of separating families are prioritised in the family law system.
Several changes will be made to the current Family Law Act 1975 (Cth).
This article briefly discusses the changes to be made in relation to the best interest factors and the repeal of the presumption of equal shared parental responsibility.
Other key amendments include:
The requirement for the Independent Children’s Lawyer to meet directly with the children;
Greater powers to protect parties and children from the harmful effects of protracted and adversarial litigation;
A definition of ‘member of the family’ that is inclusive of Aboriginal and Torres Strait Islander concepts of family and kinship;
Simplified compliance and enforcement provisions for child-related orders;
Powers to enable government to regulate family report writers;
Ensuring that children’s voices are heard more easily in matters under the Hague Convention on the Civil Aspects of International Child Abduction.
Changes to the best interest principles
The current factors outlined under s 60CC, also referred to as the primary and additional considerations of the Court when determining parenting arrangements in the child’s best interest, were critiqued in the Australian Law Reform Commission Report Family Law for the Future: An Inquiry into the Family Law System: Final Report.
The ALRC Report stated that amendments were necessary to simplify, clarify and improve how the best interests of the children are considered in parenting matters.
The amendments see the abolishment of the primary and additional considerations.
Instead, the amendments introduce six general considerations, and two further considerations for Aboriginal or Torres Strait Islander children.
Under the reforms, the Court must consider the following when determining what is in the children’s best interests:
What arrangements would best promote the safety (including safety from family violence, abuse, neglect, or other harm) of
The child; and
Each person who has parental responsibility for the child;
Any views expressed by the child
The developmental, psychological and emotional needs of the child;
The capacity of each proposed carer to provide for the child’s developmental, psychological and emotional needs, having regard to the carer’s ability and willingness to seek support to assist them with caring;
The benefit to the child of being able to maintain a relationship with both of the child’s parents, and other people who are significant to the child, where it is safe to do so;
Anything else that is relevant to the particular circumstances of the child.
If the child is Aboriginal or Torres Strait Islander, the Court must look at two additional considerations. Namely, the Court must consider:
The child’s right to enjoy the child’s Aboriginal or Torres Strait Islander culture, by having the opportunity to connect with, and maintain their connection with, their family, community, culture, country and language;
The likely impact any proposed parenting order under this Part will have on that right.
Despite the changes, the Court retains their wide-ranging discretion to determine what parenting arrangements are in the child’s best interest.
Equal Shared Parental Responsibility
Currently, s 61DA of the Family Law Act 1975 (Cth) provides that when making a parenting order in relation to a child, the Court must apply a presumption that is in the child’s best interest for the parents to have equal shared parental responsibility for the child.
Section 65DAA, as it currently stands, requires the court to consider a child spending equal time, or substantial and significant time, with each parent when an order of equal shared parental responsibility is made.
This presumption, and consideration of equal or substantial and significant time, have been controversial since their inception.
The Explanatory Memorandum to the Family Law Amendment Bill 2023 outlines that recent inquiries into the family law system have found that the presumption of equal shared parental responsibility is commonly misunderstood as creating a right to equal shared time with children. This has never been the case and has led to inappropriate arrangements for children and increased parental conflict.
Given this, the presumption has been repealed. Under the reforms, there will be no presumption of equal shared parental responsibility.
Parenting arrangements will be based solely on what is in the best interest of the child.
The Court may make orders providing for joint or sole decision making about major-long terms decisions.
The Court may also find that it is in the children’s best interest that one parent has sole decision making in relation to a particular major-long term decision, but both parents have joint decision making in relation to the others.
The Court will still be required to consider the allocation of parental responsibility, and responsibility for decision-making about major long-term issues, when raised by the parties.
Essentially, the wording of the Act has been clarified to avoid conflating the term ‘equal shared parental responsibility’ with equal time.
Family Law Amendment (Information Sharing) Act 2023
The Family Law Amendment (Information Sharing) Act 2023 was passed on 19 October 2023 and received assent on 6 November 2023.
The purpose of the Family Law Amendment (Information Sharing) Bill 2023 is to ensure the courts have access to the full picture of family safety risk in order to prioritise the safety of children and families, particularly in circumstances where there is a risk of child abuse, neglect or family violence.
The main amendments to the Family Law Act introduced by this Act are the following:
Establishment of two new information sharing orders to allow courts to quickly seek information from police, child protection and firearms agencies about family violence, child abuse and neglect that may place children at risk;
Allowing a court to make these orders at any time during proceedings so information is accurate and up-to-date, and
Ensuring sensitive information is only disclosed in a safe and appropriate manner.
This article is not intended to be a complete outline of the amendments to be made to the Family Law act 1975 (Cth).
The team at Feeney Family Law have reviewed the amendments and understand how the law and the decision-making framework in parenting cases is expected to change.
If you have any questions in relation to the changes, please do not hesitate to contact a member of our team.
Why students shouldn’t be so quick to write off family law
Every law student who aspires to be a family lawyer has experienced the somewhat awkward, but not surprising, shocked gasp and grimace of another person after telling them that family law is the goal.
That person (usually the aspiring corporate or commercial lawyer) almost always responds with a statement along the lines of “but that must be so hard and emotional”.
Given that many students aspire to be the Harvey Spector’s or Elle Woods’ of the world, it is incredibly common that many of them write off family law without considering the numerous benefits this area has to offer to a young lawyer.
As there is no Hollywood fictionalised family lawyer for students to aspire to, this article outlines three big ticket items of family law for young lawyers, and why students shouldn’t be too quick to write it off.
Time in court
A common goal of the aspiring corporate lawyer is their desire to become a great litigator. The aspiring commercial lawyers can be seen participating in the law school mooting competitions, or witness examination at every opportunity to advance their skills in this regard.
These students are ready for their time in court.
What many of them do not realise is that young family lawyers often have more exposure to the court system and appear far mor regularly in the Federal Circuit and Family Court than young corporate or commercial lawyers.
Between court ordered dispute resolution conferences and defended hearings, there are ample opportunities for young lawyers to appear before the court. Obviously, this greatly assists young lawyers with gaining an in-depth understanding of the court system and processes early on in their career.
Here at Feeney Family Law, our young lawyers frequently appear on behalf of our clients before the court for numerous reasons.
Interacting with the clients
Unlike commercial or intellectual property law, family law allows you to build significant rapport with your clients.
Our clients are almost always “everyday” people who come from an array of backgrounds and cultures, which require legal assistance as a result of a breakdown in their relationship.
Young lawyers have far more involvement in speaking and meeting directly with the client on a regular basis, than they might in a tax or commercial setting.
It is extremely common for young lawyers, and paralegals to have relatively constant communication with the client.
As you can imagine, this naturally develops young lawyers’ interpersonal skills which greatly assists in all aspects of life.
It is expected, and very common, that the clients are likely to be extremely emotional and in a particularly fragile, anxiety-fraught part of their life. Our work, and the outcome that we receive from a matter can have a potentially drastic effect on our client’s lives. For this reason, it is vital that young family lawyers actively listen and correctly advise their client’s while understanding the emotional turmoil and difficulty they are facing.
Students often wish to make a positive change in the world. Once a matter is finalised, and the client is satisfied with the outcome, it is immensely rewarding to have had such a positive impact in their lives. Often it is not just the client, but also their children that benefit from our work. This is something for students to consider when deciding whether family law is an option for them.
Getting the win
Something that practitioners who work in family law recognise very early on in their careers, is that there is no real win or lose in family law.
In many cases, a partial win is a win. It is not uncommon for client’s to “˜give and take’ throughout the process, especially at the negotiation and mediation stages of a matter.
The “need to win” mentality common in other areas of law is significantly challenged in family law.
That is not to say that family lawyers don’t need to fight to advance their client’s case, but the goal should never be to bulldoze over the other side to advance our client’s case.
Our clients are people, who often share children with the other party, and it is vital that we work together with the other side to advance everyone’s best interest.
A drawcard to family law is that it is resolution focused, rather than “˜win’ focused. While the collaborative approach is not always possible, it does allow young lawyers to acquire and exhibit skills of cooperation and “˜big picture’ thinking.
Family law practitioners choose to specialise in family law for an array of reasons, the pros outlined above are just a handful of them.
Hopefully next time a student is faced with the very common utter shock and disbelief from others, they enlighten them with the ample positives of a career in family law. Who knows, family law may gain a practitioner or two.
Five quick tips for working with your Financial Professional during your Family Law matter.
Most of our clients have, at least to some degree, an ongoing relationship with a financial professional that existed prior to separation.
For some people, that could be as limited as having a tax accountant do tax returns each year, while for others they have a close, day to day relationship with their accountants, financial planners and/or other professionals.
Whatever the relationship between you and your financial professionals, they can be an invaluable and integral part of a team assisting you through the legal and financial aspects of a separation.
The following five tips will help you get the most out of your financial professional when going through a separation.
Make sure you know who they are acting for.
This sounds simple, but many times an accountant or financial planner who someone thinks of as “their” financial professional is actually engaged by their ex-partner and/or a company/trust/business operated by one or the other of them.
In those circumstances, their first obligation will generally be to the person/entity who has engaged them.
If that is the case, it is generally best to find a new professional, unless you can be completely comfortable that any information you provide them will be kept confidential and they are willing to take you on as a client in your own right.
Understand what their expertise is (and what it is not).
Just like lawyers, financial professionals have their own individual skills, expertise, abilities and qualifications.
It may be that your financial professional is an expert at understanding complex tax issues, but cannot give financial planning advice about things like cashflow. In those circumstances there is little benefit in asking that person to prepare modelling based on a variety of different outcomes, but they are likely to be very helpful in considering the tax implications of different ways of structuring the transfer of a business (or part thereof).
Talking to your financial professional about their expertise, then discussing that with your family lawyer, will ensure that everyone is on the same page when it comes to deciding who needs to do what.
Engage them at the right time.
Different things are relevant at different stages of a family law matter and the effectiveness of the assistance from your financial professional will likewise change throughout your matter.
For example, at the very beginning of a family law property settlement matter, obtaining a lot of financial information quickly is very useful. The accountant for the family business is likely to have much of this information, at least for the business, and engaging or directing them to provide it to your lawyers and the other party can make what is sometimes a slow and involved process much quicker.
On the other hand, getting tax advice about potential business (re)structures before completing the disclosure process and obtaining valuations or getting an understanding of what the potential range of outcomes could be is potentially going to be money and/or time wasted.
Likewise, getting a financial planner to prepare modelling of what your financial future looks like after you have already negotiated a deal is unlikely to be of much assistance other than for the purposes of preparing a personal budget. If you had engaged them after you had received advice about potential outcomes but before negotiations, you could use that further information to guide you in negotiating an outcome that best suits your circumstances.
Know when to bring in a third party expert (and why).
Whilst the financial professionals who are part of your day to day lives are experts in their own field, there are a few specific areas that we strongly recommend bringing in a third party expert for.
The most obvious of these is for the valuation of a business (or legal entity such as company or trust) for family law matters. There are a number of expert forensic accountants who specialize in this field and we would strongly recommend that one of them be engaged for this step.
These third parties have the benefit of being independent, so their conclusions generally carry more weight in negotiations and before the Court. It is generally a requirement that an agreed single expert valuer be appointed if parties cannot agree on the value of legal entities and/or a business.
Be aware of limits to confidentiality.
It is important to know that there are limits to the confidentiality of the information you provide to your financial professionals.
Accountants, financial planners and other advisors can all potentially be subpoenaed to provide documents or give evidence in matters before the Court, so just be aware that information you provide them may be able to be obtained by your ex-partner.
There are also circumstances where you could be seen to have waived the legal professional privilege attaching to the instructions and advice given and received from your lawyers if you provide your financial professionals with advice you have received from your lawyers.
This is a complex area of law and can have serious consequences, so we always recommend getting specific advice from your lawyers before providing your financial professionals anything that your lawyer has provided you.
If you would like to talk to me or any of our team here at Feeney Family Law, please do not hesitate to contact.
The husband was the “˜primary income earner’ through his employment; the “˜financial spouse’.
The wife did not pursue her career in favour of raising the parties’ children. She was the “˜primary homemaker and parent’; the “˜non-financial spouse’.
Together the parties have about $300,000 in cash, a real property or two, cars and so on.
The wife is recently employed but earns well below average wage.
The husband continues to earn his good income and doesn’t pay any maintenance because the wife has sought to avoid paying the fees to run, and otherwise risk, the litigation.
By trial the wife has spent $150,000 on lawyers; the husband about $100,000.
The wife’s income is barely enough to support herself. She has used savings to meet her legal fees.
By contrast, the husband’s income is sufficient both to support a standard of living well above that of the wife and to meet his legal fees.
At trial the husband argues that the wife’s legal fees should be added back, and his should not because they were met from “˜post-separation income’.
Save for a bit of discretion here and there, this scenario is probably straight forward.
Now, replace “through his employment” with “through his business“, and introduce the concept that the business is operated through a family trust of which the wife is a beneficiary, and, say, shareholder of the corporate trustee. Less straight forward.
Why?
The Full Court in Trevi & Trevi1 reminded us that those famous paragraphs in Chorn & Hopkins2 established guidelines. There is a strong flavour of an analysis of the interests in the parties in the funds: income vs capital, but also the more complex situations.
In setting out the relevant principles in Trevi, Murphy J reiterated the distinction between pure income as a source and funds generated from assets or businesses to which the other party had made a significant contribution or has an actual legal entitlement.3
His Honour identified that the latter suggestion recognises the discretion inherent in the task and that adding back sums generated post-separation in the different manners suggested might create injustice as much as it might cure it.4
Trevi involved a first instance decision not to addback any notional property, including over $400,000 of the wife’s legal fees. The husband was a solicitor and had the advantage of his legal fees being “absorbed in-house”. He incurred about a third of the cost of the wife.
Rather than treating the issue of the wife’s legal fees as an addback, Thornton J purported to consider the matter under section 75(2)(o). But in conclusion her Honour said, in relation to section 75(2)(o), “[I] do not propose to make any “adjustment” to the pool for the funds which the wife has spent to pay some of her legal costs“.5
Murphy J spent considerable time explaining how the trial judge confused two established and alternative approaches:
to addback legal fees; or
to take into account paid legal fees under section 75(2)(o) in the consideration of whether to adjust the contributions-based assessment, and if so, to what extent.
But the confusion of two distinct exercises of discretion is not the source of the appealable error. The error was summarised in paragraph 72:
In my view, her Honour’s confusion as to the approach to the wife’s paid legal fees led to her Honour taking into account irrelevant considerations in her s 75(2) assessment and, concomitantly, failing to take account of relevant considerations.
The impact of not adding back legal fees was to have the husband responsible for 50 per cent of the wife’s indemnity costs on the contributions assessment, and 60 per cent of the wife’s indemnity costs on the final outcome. Thornton J did not include those considerations in her reasons. The Full Court found that to be a failure to take into account a relevant consideration.
Further, the Full Court was of the view that, despite discussing the circumstances of paid legal fees under a heading referring to section 75(2)(o), insufficient reasons were given to explain how the trial judge took into account the expenditure in circumstances where it was not added back.
In relation to the irrelevant consideration of the trial judge, it is useful to set out the relevant passage from her Honour’s reasons:
In both Calder & Calder and Chorn & Hopkins the Full Court affirmed that whether to take into account legal fees is a matter of discretion. This is an unusual circumstance where the wife was obliged to pay her legal fees of $437,628.10 whilst the husband, who is a solicitor, had the advantage of not being required to pay all of his legal fees other than approximately $142,587 which he has paid. Where there is no clear evidence that the husband will ever have to pay his legal fees, these are unusual facts which the justice of the case requires to be taken into account under s 75(2)(o) of the Act. In the unusual circumstances of this case and notwithstanding that the source of the funds paid by the wife for her legal fees was from joint property, I accept the submissions of counsel for the wife and do not propose to make any “adjustment” to the pool for the funds which the wife has spent to pay some of her legal costs. (emphasis added)
To the extent that the “unusual circumstances” were the reason not to give any weight to the paid legal fees, the Full Court said at [71]:
The “sole matter” informing the decision to not addback emerges as the same sole matter in her Honour’s purported consideration of the wife’s paid legal fees as a relevant s 75(2) factor. Again, I am respectfully unable to see how that factor, notably expressed as a reason for not adding back the fees, is relevant to the s 75(2) analysis. … (emphasis added)
That must mean that the Full Court took the view that the parties’ financial and historical circumstances, underpinning the disparity in their paid legal fees, was an irrelevant consideration in the section 75(2) analysis.
That being said, I do not purport to ignore the words “notably expressed as a reason for not adding back the fees”.
Interestingly, in the decision on re-exercise, no weight was placed on those “unusual circumstances” at all.6 The wife’s legal fees were added back, the husband’s were not, and there was no discussion in the section 75(2) analysis of the “unusual circumstances”.
I struggle to understand how even in that circumstance it could be said to be irrelevant to whether any weight is placed on those circumstances in the section 75(2) analysis.
I think that is because it is not an irrelevant consideration.
In Oamra & Williams the Full Court considered Trevi and said:7
As the Full Court in Trevi intimates at [42], when considering whether or not to add back paid legal fees, “source of funds” should be subservient to the overall discretionary consideration of the interests of justice in the circumstances of a particular case.
As discussed during submissions, an example of an injustice which might occur is if a party, who had developed significant earning capacity during a course of a long marriage, was able to use that earning capacity to pay legal fees when the other party, who did not have that earning capacity, was left with a liability to pay legal fees from their share of the property settlement order. Another example of possible injustice arises in this case where it was agreed that an unspecified amount of monies from a redundancy payment received by the husband were contained in bank accounts added to the table of assets and liabilities, yet the husband asserted that an unspecified part of the redundancy payment used to pay legal fees should not be added back.
In this case the primary judge declined to exercise a discretion to add back paid legal fees because of an inadequacy in the evidence on both sides in relation to the source of funds used to pay them.
The analysis in Trevi has been endorsed by subsequent Full Courts.8
Yes, Trevi is a case that turned on its own facts. However, the essence of those facts cannot be said to be so unusual:
the husband on a considerable income met his legal fees from his income;
the wife on very little income relied on capital;
the success of the husband’s career could only be said to be something to which the other party had made a significant contribution in her role as primary homemaker and parent.
The wife did not have the same opportunity to meet her legal fees from her income, nor was she a partner in a law firm which carried much of her costs of litigation. The husband had that opportunity due in part to the efforts of the wife throughout their marriage.
Thornton J identified those circumstances in the broader section 75(2) analysis:9
By reason of the arrangements made during what is indisputably a long marriage, the wife did not enhance her income earning capacity in any meaningful way. The wife attempted to contribute financially during the marriage in undertaking work for approximately 12 months in 2006 which was ultimately not viable because of the low remuneration, the needs of the children and the husband’s work commitments.
The recent decisions merely emphasise that the process of consideration of legal fees paid or owing is a discretionary exercise guided by authority.
A more cynical view could be that despite failing to give reasons for departing from guidelines is not an appealable error of itself, it is dangerous to do so.
What then for the family lawyer whose client is at risk of being punished for having no ability to meet their legal fees other than from capital?
In my view, whatever your argument is, articulate it well.
Fear often accompanies the section 75(2) case due to uncertainty in achieving anything from it. But the recent cases in which legal fees are not added back usually involve an inadequacy of evidence about the quantum and/or source of paying legal fees. I have included some cases below for example. Do not be the lawyer who does not produce sufficient evidence.
Some cases involve a concession to addback fees paid by capital, with no argument to addback the fees paid by income, and then some hopeful attempt for a section 75(2) weighting.
In the circumstances I have addressed in this paper, I think that more emphasis could be placed on the types of “injustice” alluded to in Trevi and Oamra & Williams and seek that both parties’ fees be added back despite their sources because of the nature of the circumstances.
Doing so does not offend section 117, and it arguably requires no weighting under section 75(2) as in essence the overwhelmingly offsetting factors are found in subsections 75(2)(b) and (k), the latter of which provides:
(k) the duration of the marriage and the extent to which it has affected the earning capacity of the party whose maintenance is under consideration
An important observation from the cases is that the difference between the parties’ fees is often a major consideration in the section 75(2) analysis.
If a refusal to addback legal fees is argued, it should be accompanied with at least a recitation of principle that the impact of that decision must be considered.
Despite being described as a “de facto costs order” by Judge Morley,10 a refusal to addback legal fees apparently does not require consideration of subsection 177(2A). It is often argued that consideration of parties and their costs is best left to an application after trial. But the authorities on costs do not discuss the critical circumstances, such as subsection 75(2)(k), relevant to the parties’ expenditure on legal fees.
But of all the reported decisions, no distinctive pattern emerges even in this decade.
Baumann J put it aptly in Duffy & Duffy:11
I am satisfied that justice and equity between the parties is better achieved by adding back the sums the husband has elected to pay to his chosen lawyers rather than for the wife to not only be required to represent herself but to, effectively, make a contribution of the husband’s costs by his use of the funds that would otherwise have remained in the pool.
Mr Moxon, to his credit, valiantly contended that the discretion should not be exercised relying on two authorities of the Full Court where the Full Court found the primary judge was not in error in those cases in not adding back for legal expenses (see Oamra & Williams (2021) FLC 94-035; Dulton & Dulton (2020) FLC 93-984). In my view, those authorities are of little assistance (and are distinguishable on their individual facts) and can be offset by numerous Full Court authorities where a primary judge did addback legal expenses and no error was found to exist. This is, essentially, the nature of a discretion.
Review of the cases is important for context to inform the possible outcomes, rather than reliance on purported authority.
Judge Glass applied the comments from Oamra & Williams in Emmeran & Emmeran:12
Generally the payment of legal fees from post-separation income rather than from funds that existed at separation would not be added back unless they were generated from “assets or businesses to which the other party had made a significant contribution or has an actual legal entitlement.”[7] However, that focus on the source of funds should be subservient to the overall discretionary consideration of the interests of justice in the circumstances of the particular case.[8] It may be unjust where a party “who had developed significant earning capacity during a course of a long marriage, was able to use that earning capacity to pay legal fees when the other party, who did not have that earning capacity, was left with a liability to pay legal fees from their share of the property settlement order.”
Here, Ms Emmeran developed her significant earning capacity that exceeds $100,000 per annum during the parties’ 18 year marriage. She had the benefit of income from Mr Emmeran during the period in which she was able to accumulate funds to pay her legal fees. Ms Emmeran did not establish that Mr Emmeran was able to pay his legal fees which are anticipated to be owing in the amount of approximately $41,000. He nevertheless made contributions to Ms Emmeran’s household which persisted for 18 months after he left the former matrimonial home from his more modest income of approximately $65,000 per annum.
In those circumstances, I consider it would create an injustice for Ms Emmeran’s paid legal fees not to be added back. Given her ultimate concession that the totality of her savings ought be included in the assets to be divided between the parties had she not paid her legal fees from those savings, there would have been an increase in the funds available for distribution to Mr Emmeran by the same sum. To fail to add back Ms Emmeran’s paid legal fees would have the effect of requiring Mr Emmeran to contribute to her legal costs contrary to the position enshrined in subsection 117(1) of the Act.
In Jong & Jeng the Full Court said:13
Fundamental to a consideration of whether expenditure is “added back” into the assets of the parties for division is the source of those moneys. In circumstances such as in this case where a party has been earning an income since separation, it would be necessary to demonstrate that the source of the funds in question was connected to the marriage in some way.
In Kasiopoulos & Garapiperis14 the Full Court considered an appeal in which the trial judge erroneously recorded that the husband accepted that his about $70,000 in legal fees should be added back. He in fact opposed that addback on the basis that he met his fees largely from post-separation income. On the re-exercise, the Full Court said:
The evidence before the trial Judge in relation to the funds available to the husband in the post-separation period, from capital and income to which we have earlier referred is in our view sufficient to justify adding back the husband’s paid legal fees in the sum of $77,292.15. This is particularly so given that the wife’s paid legal fees of $47,206.06 should be added back. The evidence reveals the wife to have received materially less income or capital than the husband did in the post-separation period.
In Bazzi-Cirino & Cirino,15 the wife ran a professional practice from which she met her legal fees and otherwise by a line of credit. The husband had loans from his family to meet legal fees. The wife argued that no legal fees should be added back and no loans relating to legal fees should be included in the balance sheet. The husband sought that both paid legal fees and the loans should be included. Rees J determined not to include in the balance sheet either paid or loans for legal fees. Instead, her Honour took into account under section 75(2) the “difference in their liabilities for legal fees”.
The complexity of addbacks especially in the most settled category, legal fees, remains. The guidelines are too blurred.
David Marcolin Senior Associate
1Trevi & Trevi [2018] FamCAFC 173 Murphy J with whom Alstergren DCJ and Kent J agreed. 2Chorn & Hopkins [2004] FamCA 633 Finn, Kay & May JJ. 3At [31]; see also [41]. 4At [42]. 5Trevi & Trevi [2017] FamCA 321 at [424]. 6Trevi & Trevi (Re-Exercise) [2019] FamCAFC 51 (Murphy J with whom Alstergren CJ and Kent J agreed), see for example [46]. 7Oamra & Williams [2021] FamCAFC 117 (Strickland, Watts & Sutherland JJ). 8Carron & Laniga [2019] FamCAFC 115 at [56] (Aldridge, Kent & Austin JJ). 9Trevi & Trevi [2017] FamCA 321. 10Ungur & Inaba [2021] FedCFamC2F 65 at [175] and [177], for example. 11Duffy & Duffy [2022] FedCFamC1F 635. 12Emmeran & Emmeran [2022] FedCFamC2F 1507. 13Jong & Jeng [2014] FamCAFC 156 (Finn, May & Ainslie-Wallace JJ ). Cited with approval in Eufrosin & Eufrosin [2014] FamCAFC 191 at [41] and [42] (Thackray, Murphy & Aldridge JJ). 14Kasiopoulos & Garapiperis [2012] FamCAFC 85 (Coleman, Thackray & Stevenson JJ). 15Bazzi-Cirino & Cirino [2014] FamCA 920.
Practitioners continue to worry about the vulnerability of their client if a spouse maintenance order has been made in favour of the other party or if there has been an acknowledgement that a portion of a property settlement is a recognition of a spouse maintenance order.
Section 77A was inserted into the Family Law Act in 1987. The explanatory memorandum makes clear that, “This clause inserts into the Act a new section 77A, the primary purpose of which is to enable the income testing for social security purposes of maintenance received other than by way of periodic sums”.
If an order was not expressed to be one to which section 77A applied, then any payment or transfer under the order would not be taken to make provision for the maintenance of the party to the marriage.
The second reading speech was made on 26 May 1987 by John Spender QC.
“The purposes of the Family Law Amendment Bill 1987 are to amend the Family Law Act so as to reinforce the principle that parents, not the taxpayer bear the prime responsibility for the maintenance of their children.”
“Since the Family Law Act was enacted, society has become accustomed to high levels of marriage breakdown. Perhaps those levels were inevitable. About 35% of marriages end in divorce and for many marriages are simply a contract.”
He went on to say:
“Just as many treat the institution of marriage casually, so do many treat responsibility for maintenance of their children and former spouses with equal casualness.”
“The majority of custodial parents either receive no maintenance at all or what they get is manifestly inadequate so that many live in poverty and suffering from which they cannot escape.”
“At present, in considering what maintenance the parties to a marriage should be ordered to pay, the court is required to consider the eligibility of either party for social security benefits. This means that responsibility to support children can be shifted from the parents to the taxpayer. This is not acceptable.”
“As a matter of history, at the time that the Family Law Act was brought into force, the government of the day had recently introduced the supporting parents’ benefit. Since that time, there has been an astronomic rise in the cost of that benefit to the Australian taxpayer from $40.6 million in 1974 to $1,238 million in 1986.
“These are complex questions because one is dealing with how to divide a limited amount of money between various fundamental obligations.”
The 1987 amendments brought three important changes. One was the amendment to section 75 which was the section 75(3) inclusion.
Lionel Bowen, the Attorney-General, moved that the bill be read a second time. He said:
“For 11 years the Commonwealth and the States have been negotiating for a reference of powers from the States in respect of family law matters. Last year (1986) four States, New South Wales, Victoria, South Australia and Tasmania enacted legislation referring to the Commonwealth powers over the maintenance, custody and guardianship of and access to all children and for the payment of expenses in relation to children and childbearing.”
At that stage, Queensland and Western Australia were outside those making the referral of powers.
Section 77A was described in this way:
“The bill also inserts new provisions to enable the income testing for social security purposes of maintenance received other than by way of periodic sum.”
The 1987 amendments also introduced the concept of judicial registrars which are so significant in the present court structure.
Both s.75(3) and s.77A were introduced to ensure that the impost on the social security system was reduced as much as possible.
The same amendment act introduced section 66L which ran parallel to s.77A. The court was to express the order to be one to which “s.66L applies and must specify the child or children for whose maintenance provision is made by the payment, transfer or settlement and the portion of the payment or the value of the portion of the property attributable to the provision of maintenance for the child or for each child”.
Section 66N permitted a variation or discharge of a child maintenance order and s.66N(1) to (4) and (6) to (10) re-enacted the substance of s.83 of the principal act in relation to the variation or discharge of a child maintenance order.
Paragraph 83(2)(b)(a) provided for an additional ground on which a spousal maintenance order could be varied. The new ground for variation is that “the amount to be paid under the order (where the order was made by consent) is not proper or adequate. In satisfying itself the order is not proper or adequate, the court must have regard to any payments or transfers of property previously made to or for the benefit of the party to the marriage by the other party”.
Section 87A was introduced and “the primary purpose of which is to enable the income testing for social security purposes of maintenance received other than by way of periodic sums”.
Mehta & Crimmins [2021] FedCFamC1A 73, is a significant spouse maintenance decision.
The outcome of this appeal was that one Division 2 order was successfully appealed and an application for summary dismissal was remitted for hearing by a judge other than the primary judge.
The wife’s application for spouse maintenance had been permanently stayed.
The parties began to cohabit in April 2017 at about the time they married, and they separated on 1 August 2017 and divorced on 6 March 2019.
The wife commenced proceedings seeking orders for property settlement and both interim and final spouse maintenance orders.
Interim orders were made on 11 December 2017 requiring the husband to pay the wife spouse maintenance of $1,070 per week as well as $1,800 to be applied to a rental bond.
In April 2018, she filed an Application in a Case. She sought spouse maintenance of $1,515 per week, $450 per week towards rental expenses, and $13,950 to assist her with setting up rental accommodation, dental and medical expenses and a further $1,280 to assist her to repay a debt incurred for her living expenses. She sought $10,000 being her costs of proceedings in relation to a property dispute, and $100,000 on account of her legal fees in the family law proceedings.
On 1 June 2018, the judge ordered the husband to pay the wife spouse maintenance of $1,500 per week and a lump sum of $15,000.
At that time, the wife was living in Australia on a bridging visa and the husband had cancelled his sponsorship of her spouse visa. She was not working and was ineligible for government support.
A finding was made that she was unable to support herself and that she was in need of support until she was able to obtain “gainful employment”.
Further, the court found that the husband had the capacity “to meet on ongoing but interim obligation for spousal maintenance”.
The court ordered a lump sum payment to the wife of $67,000 to meet her costs of the property proceedings.
On 20 April 2018, the wife amended her Initiating Application and sought a lump sum payment of $1.3 million as property settlement. She sought $2,000 a week for a period of five years.
That application never came to a hearing.
On 25 July 2019, consent orders were made that provided that the husband would pay the wife a sum of $170,000 in five tranches. The order for the payment of the lump sum was expressed to be a payment pursuant to s.79 of the Family Law Act.
Order 10 of those consent orders was as follows:
“All interim spousal maintenance orders are discharged and to the date they stand paid.”
Order 11 of those consent orders was as follows:
“All extant applications be dismissed with no order as to costs with the intention that each party bear their own costs.”
At that stage, the extant applications included the wife’s claims for spouse maintenance in her amended Initiating Application filed 20 April 2018.
On 4 March 2020, the wife brought an application seeking $195,000 as lump sum spouse maintenance and interim orders for a payment of $100,000 for her security of costs. She also sought various injunctions.
The wife amended that application seeking additional orders that the husband pay her $760 per week as living expenses, $6,138 being her university tuition fees for the summer semester, and $24,552 for the autumn semester university tuition fees.
The husband applied to have that amended application summarily dismissed.
This issue was heard as a discrete issue on 5 March 2021 and was determined on 21 June 2021. “The primary judge found that the wife was precluded from continuing the application of 19 November 2020 by operation of res judicata because of the dismissal of the earlier claim for maintenance. His Honour then permanently stayed the wife’s application”.
There were two grounds of appeal. One was that the wrong principle had been applied in making the order that the wife be precluded from continuing the application and the second was the primary judge erred by failing to take into account all the evidence relevant to the application before him.
The Full Court said at paragraph 21:
“There is no need to consider the second ground because the first ground will succeed as the primary judge erred in principle in making the order for the permanent stay.”
No-one had asked the primary judge to permanently stay the wife’s application.
The Full Court said it was not appropriate to make that order.
The Full Court applied the High Court statement from Chamberlain v Deputy Commission of Taxation [1988] HCA 21; (1988) 164 CLR 502 at 510-511:
“… It is no answer to say that the Court might, if appropriate stay the second action as an abuse of process. The impediment goes deeper than that; res judicata may sustain a plea of abuse of process but in that case the appropriate remedy is to strike out the later action.”
At the end of this appeal, the court remitted the husband’s application for summary dismissal to the Federal Circuit and Family Court of Australia Division 2.
The balance of the case requires serious attention.
The primary judge said:
“The Court accepts that the Applicant retains a right to commence proceedings pursuant to section 74 of the Act in other circumstances where the substance and the characterisation of which are not the same as these proceedings. What the Applicant cannot do is maintain these proceedings.”
At the appeal, the husband’s senior counsel did not adhere to the res judicata argument.
The argument on appeal was that “the dismissal of the wife’s earlier maintenance applications, consequent on the entering of the consent orders, permitted her to bring another application based on different circumstances but not, as here, where he submitted the wife was advancing the same claim”.
At paragraph 30:
“Thus the nub of the husband’s assertion is that the wife’s claim for maintenance made in 2018 and dismissed by the July 2019 consent orders was substantially the same as that sought to be advanced in the November 2020 application.”
The husband had argued the concept of cause of action estoppel. The operation of that principle was described by Edelman J in Clayton v Bant[2020] 95 ALJR 34 as:
“… if the judgment finally resolved a conflict about the existence or extent of a “cause of action” then the parties to that proceeding, or their privies, will be precluded from relitigating that cause of action.”
The Full Court then set out the important discussion as to in what circumstances can a party be precluded from seeking spouse maintenance.
The statute confers the power to make orders for spouse maintenance.
The Full Court said:
“Whether the Court should exercise its discretion and make an order constitutes the justiciable controversy.”
The High Court in Clayton said:
“The rights created by ss 79(1) and 74(1) cannot “merge” in any judicial orders other than final orders of a court having jurisdiction under the Act to make orders under those sections. The rights of the wife to seek orders under ss 79(1) and 74(1) continue to have separate existence unless and until the powers to make those orders are exercised on a final basis and thereby exhausted.”
The Full Court said that they didn’t consider that in the circumstances of this case, the court’s “jurisdiction to make spousal maintenance orders has been exhausted and no res judicata arises”.
At paragraph 35 they said:
“We do not accept that the wife was precluded from advancing the claim for spouse maintenance in the November 2020 application because of claim estoppel.”
The Full Court referred to s.72(1) of the Act.
The Full Court noted that in s.72, the matters are expressed in the present tense. The Full Court went on:
“Once those two conditions precedent to an order being made are established, s.74 of the Act empowers the court to make an order for the maintenance of a party as it considers proper”.
Further, the Full Court pointed out that it must be at the date of the determination of the application.
Paragraph 39 says:
“It is not suggested that a party’s liability to support the other party ceases on the conclusion of property settlement proceedings by orders nor by the dissolution of the marriage. Indeed s.83 of the Act (while not relevant here) contemplates the revival, variation or dismissal of existing orders for maintenance.”
Section 44(3) provides:
“that an application for spouse maintenance must not be brought more than 12 months of the date of divorce without leave.”
Paragraph 41:
“A party’s right to seek spouse maintenance is capable of being exercised many times and subject to leave over many years. So much is apparent from the terms of the sections themselves.”
The Full Court said:
“The dismissal of the wife’s earlier application did not quell any controversy nor finally resolve a conflict of the existence of a right of the wife to spouse maintenance.”
Clayton & Bant [2020] 94 ALJR 34 is often approached as a jurisdictional case.
The husband in that case had applied to the Family Court for a permanent stay of property settlement proceedings and spouse maintenance proceedings on the basis that the ruling of the Dubai Court operates as a bar to those proceedings “by virtue of the operation of the principles of res judicata – cause of action estoppel”.
At first instance, the trial judge had dismissed the application for a permanent stay.
The Dubai proceedings did in fact not deal with any right of the wife to alimony.
The Full Court ordered a permanent stay of the property settlement proceedings and the spousal maintenance proceedings. The Full Court in that case consisted of Strickland, Ainslie-Wallace and Ryan JJ.
The Full Court in Mehta & Crimmins consisted of Ainslie-Wallace, Aldridge and Rees JJ.
The High Court at paragraph 24 referred to the right conferred on the wife as a party to the marriage by s.74(1) of the Act. “That right is to obtain in the discretion of the Family Court such order for the provision of maintenance by the husband as the court considers proper having regard to the matters referred to in s.75(2).”
“The justiciable controversy as to whether such an order should be made constitutes the matter defining the jurisdiction of the Family Court.”
The High Court identified that the rights were statutory rights and that therefore, the Dubai Court couldn’t give rise to a res judicata in the strict sense in which that term continues to be used in Australia. The right created “by s.79(1) and s.74(1) cannot merge in any judicial orders other than final orders of the court having jurisdiction under the Act to make orders under those sections”.
The High Court considered that the Full Court’s broad-brush transactional approach was not supported by authority.
Atkins & Hunt [2016] FamCAFC 230 is another significant spouse maintenance case. The Full Court on this occasion was Bryant, May and Murphy JJ, with the principal judgment being written by Murphy J.
Leave was granted to the wife to file a further Amended Notice of Appeal. She was granted leave to appeal. Her appeal was allowed. Orders 1, 2 and 3 of the orders of 21 August 2015 were set aside.
The wife was also ordered to file and serve any Amended Initiating Application within 21 days of the date of the orders.
On 14 July 2015, the wife filed an Initiating Application. Orders for interim and final spousal maintenance were sought. That would of itself require a variation of a spousal maintenance order made by Aldridge J on 4 December 2014 after a trial of property and spousal maintenance issues.
That application was filed when an appeal against Aldridge’s orders were pending and after he had refused her application for a stay of his orders.
At the hearing on 21 August 2015, McClelland J indicated that the court’s jurisdiction to make the Orders sought by her was a big issue.
The husband had raised the issue in his Outline of Argument filed ahead of that hearing.
The wife then argued in her Outline of Argument dated the day before the hearing that if her contention for relief pursuant to section 83 of the Act was rejected, leave should be granted to amend so as to permit her to seek an order for maintenance pursuant to section 74 of the Act. An application for that leave was made orally before His Honour.
The wife’s Initiating Application was dismissed with the court ordering that it was without jurisdiction to make an order under section 83. The wife’s oral application for leave was dismissed with the court expressing the view the amendment “would effectively circumvent section 44(3) of the Act”.
At paragraph 7, the Full Court set out four questions as those to be determined by the Full Court. They were:
Did the wife’s application seek, in any event, an order pursuant to s 74of the Act as an alternative to her claim pursuant to s 83 of the Act?
If that question is answered in the negative, was there “in force an order” within the meaning of s 83of the Act as at the date of the hearing of the wife’s application so as to permit the court to, relevantly, “vary the order so as to increase or decrease any amount ordered to be paid”?
Is there a distinction between a maintenance order which is “in force” as s 83requires and an order that has “ceased to have effect”?
Was his Honour’s refusal to grant leave to the wife to amend her application attended by an error of law or did irrelevant considerations attend the exercise of that discretion?
This judgment has headings. They are:
The context for the primary judge’s orders;
Was S 74 pleaded in the alternative?
The S 83 questions;
The questions as to s 44(3) and leave to amend;
Leave to appeal;
Costs of the appeal;
Proposed orders.
His Honour considered the form of the orders sought by the wife in her Initiating Application.
Order 2 sought a variation and orders 3 and 4 sought detailed payments to the wife. Later, 3 and 4 were construed by Murphy J as “in effect, particulars of the order for modification sought in paragraph 2″.
On 4 December 2015, among other orders made by Aldridge J, His Honour ordered that all existing orders for spousal maintenance be discharged upon the completion of the sale of the former matrimonial home. When the wife filed this application, completion of the sale had not occurred. By the time the application was heard on 21 August 2015, completion of the sale had occurred.
The Trial Judge said, “The Court now has no jurisdiction to make an order under section 83 because, as at the date of hearing, there is no longer an order in force in respect to spousal maintenance. I therefore find that the Court is without jurisdiction to make an order under section 83“.
The wife sought to bring an application under section 74. The Trial Judge considered that it would confront section 44(3).
The Full Court did not accept that section 74 had been pleaded in the alternative.
The section 83 discussion is important.
At paragraph 27, the Full Court said:
“It is uncontroversial that there was “in force an order” with respect to maintenance of the wife when the application was filed – that is at the time the jurisdiction granted by s 83 of the Act was invoked.“
An argument of statutory interpretation was made.
At paragraph 29, His Honour said:
“In my view, s 83 is to be interpreted in the same manner as the statutory provision considered by the High Court (albeit in a different context) in Lacey v Attorney-General (Queensland) (2011) 242 CLR 573, that is as “a provision which confers jurisdiction … together with powers to be used by [the] Court in the exercise of its jurisdiction.” [593]
The Court continued at 30:
“The conferral of jurisdiction in s 83 is additional to the jurisdiction conferred in respect of matters arising under the Act in which the matrimonial cause “with respect to the maintenance of one of the parties to the marriage” is instituted by proceedings relating to same. The jurisdiction conferred by s 83 is “the authority which [the] court has to decide” variation of a spousal maintenance order and “in the exercise of that jurisdiction [the] court has powers expressly or impliedly conferred (see Harris v Caladine (1991) 172 CLR 84, at 136 per Toohey J.)“ by s 83. “The claims for relief illuminate the scope of a controversy which constitutes a matter and once the [court] has jurisdiction to determine a controversy it has power in the exercise of that jurisdiction to give the remedies sought” (see Australian Securities and Investments Commission v Edensor Nominees Pty Ltd (2001) 204 CLR 559 at 590 per Gleeson CJ, Gaudron and Gummow JJ).“
The Court then referring to the Asic v Edensor decision again said, “characteristically an exercise of jurisdiction is attended by an exercise of power”.
At paragraph 32, the Full Court said:
“The jurisdiction conferred by s 83 is validly invoked by the filing of an application seeking relief pursuant to that section when “there is in force an order … with respect to the maintenance of a party to a marriage”.
At paragraph 33:
“Thus, in my view, the court’s power to make an order within the jurisdiction properly invoked by the filing of the wife’s application pursuant to s 83 depends entirely on whether there was “in force an order” at the date of hearing of that application.”
The Court said the question wasn’t really about whether the house had been sold between the filing and the hearing of the application but “whether the statute gives the court power to make the order sought at the time the power is sought to be exercised”.
Section 82 provides for the cessation of spousal maintenance orders being the death of the party whose maintenance is being paid or the death of the party liable to make the payments or upon the remarriage of the party unless in special circumstances.
There was argument before the Court as to the difference between “ceases to have effect” and an “order in force”.
At paragraph 41, Murphy J said:
“Each of sections 82(4), 82(7) and 82(8) provide specific powers to the court in the circumstances provided for within s 82. The powers provided for in s 83 are in respect of a different grant of jurisdiction.That different grant of jurisdiction deals with a circumstance that may be different from “an order with respect to the maintenance of a party to a marriage” which is the subject of s 82.Section 83 can deal with orders made “before the commencement of [the] Act” and orders which are “made by another court and registered in [the court] in accordance with the applicable Rules of Court”.Thus, orders may be “in force” for the purposes of s 83 although they are not orders made under the Act to which s 82 applies.That in my view provides the reason for the difference in legislative language.”
The Caska case, a (2002) FLC 93-092 decision was then discussed. That case held “that an order for lump sum maintenance is, once paid, not “an order in force” for the purposes of s 83 of the Act“.
At paragraph 46:
“The expression “in force an order” means, in my view, an order pursuant to which (relevantly) obligations to make payments in accordance with its terms exist at the time that the power to make a variation order falls to be exercised. Conversely, where, as here, an order is fully executed by the time of the hearing because of the satisfaction of a condition attaching to payment, there is no order “in force” within the meaning of s 83(1) of the Act.”
In this case, that meant that the wife could not agitate a claim for maintenance relying on s 83.
Section 80(2) did not assist either.
The court then considered s 44(3).
His Honour formed the view that “neither the ordinary and natural meaning of the expressions there contained, nor the broader provisions of the Act pertaining to spousal maintenance, admit of reading down the terms of s 44(3) in that manner”.
Paragraphs 52, 53 and 54 then discuss the interplay of spousal maintenance and s 44(3).
At paragraph 52:
“First, and centrally, the liability for spousal maintenance does not come to an end upon the end of the marriage, nor necessarily when orders are made pursuant to Part VIII of the Act...That new spouse maintenance orders can be made in circumstances where the initial order is properly made within time is entirely consistent with a liability for spousal maintenance persisting despite the formal end of the marriage or other financial orders having been made.“
At paragraph 53:
“Secondly, no specific reference is made within s 44(3) either to s 83 itself or to any link between the expressions used within s 44(3) and like expressions in s 83… it is of significance in my view that the exceptions provided for in respect of settlement of property are made by reference to specific sections whereas the expressions used in respect of maintenance are not. The nature of orders for settlement of property and their “finality” should be contrasted with orders for spousal maintenance which the Act contemplates specifically might be later modified. Despite that important distinction, the words used in s 44(3) are not confined by specific reference to s 83.“
Paragraph 54:
“Thirdly, the expression “an order previously made” is not defined, confined or restricted in its operation. Fourthly, the expression “revival” is not confined in s 44(3), as it is in s 83, to the situation where an order has been suspended.… the word “revival” is a word of ordinary usage and meaning…Thus, s 44(3) can be seen as having in contemplation “an order previously made” becoming “operative or valid again“.“
His Honour said at paragraph 56:
“I conclude that it was not necessary for leave to be sought pursuant to s 44(3) so as to permit any amended application for spousal maintenance to proceed.”
The Full Court Judgment argued against the s 81 having an impact on the maintenance powers. At paragraph 60:
“As has been seen, s 44(3) does not impose an impediment to the wife pursuing an order for maintenance pursuant to s 74 of the Act so as to seek the revival of “an order previously made in proceedings with respect to the maintenance of a party”. Indeed, as has earlier been seen, the Act contemplates applications for maintenance that sit squarely outside any “finality” said to be effected by earlier orders.”
The implications of the views expressed in this Judgment are, in the writer’s view significant.
Kay Feeney, Feeney Family Law Legalwise Family Law Conference
As practitioners we recognise that many more people are assisted to resolution by family lawyers giving advice rather than by a judicial officer.
We work within the illumination of a discretionary judicial power and usually would expect to fall within the same range as the lawyers acting for “the other side”.
If we are not within “the range” then we need to re visit our analysis of the facts of the case and the law of contributions and adjustments.
Practitioners need to be familiar with the variety of arguments they can use or against which they may defend.
This paper hopes to help you as you rattle the bones, light the incense and mutter to yourself about the true meaning of your client’s contributions.
The starting point is of course section 79 (or section 90SM).
The first task of the Court is to identify the parties’ existing legal and equitable interests in their property: Stanford. That of course requires a consideration of appropriate liabilities: Biltoft.
The assessment of all of the relevant contributions, and then whether there ought to be an adjustment to that assessment, and if so the extent of that adjustment, leads us to “˜the range’ and then to an outcome.
Initial contributions
We usually look carefully at initial contributions. A convenient way to consider the recognition initial contributions are often given is to consider the concept of erosion.
That principle was considered in Kardos v Sarbutt [2006] NSWCA 11 (cited in Baranski & Baranski and Anor [2012] FamCAFC 18 at [248]):
65 In Pierce & Pierce (1998) 24 Fam LR 377; (1999) FLC 92-844, the Full Court (Ellis, Baker and O’Ryan JJ at 85-881) explained the significance of initial contributions and their “erosion” in a way which makes clear that, with the passage of time in the course of a relationship, substantial initial contributions may(emphasis added) in an appropriate case be eroded by the offsetting and ongoing contributions which result more and more in there being a totality of contributions, including of a non-financial kind, not all of which can be satisfied in full out of the available pool. As a result, all contributions, including those made at the outset, are “eroded”, in the sense that they cannot all be satisfied in full (emphasis added):-
[25] In addition to referring to a short passage from the judgment of Fogarty J in In the Marriage of Money (1994) 17 Fam LR 814; FLC 92-485, the trial judge noted that the passage was cited with approval by the Full Court (Nicholson CJ, Baker and Tolcon JJ) in In the Marriage of Bremner (1994) 18 Fam LR 407; (1995) FLC 92-560.
[26] In Way and Way (1996) FLC 92-702, the Full Court (Barblett DCJ, Finn and Butler JJ), said at 83,404:
In the subsequent Full Court decision in Bremner all three Judges expressly preferred the approach taken by Fogarty J in Money over that taken by Lindenmayer J in the same case. Thus, and notwithstanding the attempts by Counsel for the husband in this case to demonstrate that there was some inconsistency between what Fogarty J said in Money and what was actually said in the joint judgment of the Full Court in Lee Steere , we regard the law in this area as now settled by the statement by Fogarty J in Money (and subsequently accepted by all members of the Full Court in Bremner ) that “… an initial contribution by one party may be `eroded’ to a greater or lesser extent by the later contributions of the other party even though those later contributions do not necessarily at any particular point outstrip those of the other party” (emphasis added).
[27] However, it is important to put that quotation in its correct context. Fogarty J in In the Marriage of Money said at Fam LR 816; FLC 81,054:
I am unable to agree with the criticism by his Honour in the passage in his judgment immediately after that quotation or of his analysis of the issues involved. In an appropriate case, in my view, an initial substantial contribution by one party may be “eroded” to a greater or lesser extent by the later contributions of the other party even though those later contributions do not necessarily at any particular point outstrip those of the other party. I feel, if I may say so with respect, that his Honour’s formulation to the contrary is unrealistic and does not correspond with common experience in the court in many of these cases.
I think it is legitimate for me to say, as I was a member of the Full Court in the Marriage of Lee Steere (1985) 10 Fam LR 431; FLC 91-626, that His Honour has read too much into the passage to which he refers and that the term “off-setting contribution” does not necessarily mean “greater contribution”. It simply reflects the circumstance that the respective contributions of the parties over a long period of marriage “offset” the significance which might otherwise be attached to a greater initial contribution by one party. This is, in my view, made clear by the Full Court in White (1982) 8 Fam LR 512; FLC 91-246 where that court pointed out that the principle in Crawford (1979) 5 Fam LR 106; FLC 90-647 is that the original contribution should not be carried forward as a mathematicalproportion; ultimately, when it comes to the trial such a contribution is one of a number of factors to be considered. The longer the marriage the more likely it is that there will be later factors of significance and in the ultimate the exercise is to weigh the original contribution with all other, later, factors and those later factors, whether equal or not, may in the circumstances of the individual case reduce the significance of the original contribution.
[28] In our opinion it is not so much a matter of erosion of contribution but a question of what weight is to be attached, in all the circumstances, to the initial contribution. It is necessary to weigh the initial contributions by a party with all other relevant contributions of both the husband and the wife. In considering the weight to be attached to the initial contribution, in this case of the husband, regard must be had to the use made by the parties of that contribution. In the present case that use was a substantial contribution to the purchase price of the matrimonial home: see also Campo and Campo (Full Court, Sydney, 19 May 1995, unreported) at pp 21-2 of the joint judgment of Ellis, Lindenmayer and Finn JJ and Zahra and Zahra (Full Court, Sydney, 3 October 1996, unreported) per Ellis J at p 10.
66 In Howlett v Neilson, Hodgson JA referred to that passage and, observing that there was no clear statement concerning the “erosion principle” in cases under the Property (Relationships) Act, suggested that it was by no means clear that it would apply to the same extent as under the Family Law Act where matters other than contributions can be taken into account and where the relationship involves a public commitment to mutual support for life [Howlett, [34]]. However, as the Full Family Court pointed out in the passage just cited, it is really a matter of weighing initial contributions with all other relevant contributions. In a short marriage, the other contributions may be relatively insignificant. In a long marriage, ongoing income contributions and contributions as a homemaker and parent, if they have not resulted in the acquisition of assets sufficient to recognise them, may warrant the “erosion” of initial contributions so that all contributions can be satisfied to some extent, though not in full, out of the available property. There is no reason why this approach would apply to any less extent under the Property (Relationships) Act than under the Family Law Act; it does not involve taking into account matters other than contributions, but is part of the methodology for weighing and balancing the different contributions.
67 Significant factors affecting the application of the “erosion principle” are the length of the relationship and, in particular, the extent to which there have been other or off-setting contributions which also have to be satisfied from the available pool. It is to accommodate those contributions that the initial contributions are “eroded”.
The Full Court in Pierce & Pierce told us not to associate erosion of initial contributions as a mere passage of time issue.
In Wallis & Manning a different Full Court elaborated.[1]
The parties were married for 27 years
Judicial debate has surrounded the so-called “erosion principle” but that debate has centred primarily on the question of whether early capital contributions are eroded only by “an imbalance” in later contributions.
In our view, talk of “erosion” of the early capital contribution obscures the issue rather than illuminates it.
However, it can be taken as well settled that the length of the relationship has a significant impact on how early significant capital contributions should be viewed in assessing the totality of the parties’ contributions.
The Full Court then referred to Lee Steere and Money & Money and said:[2]
The length of a marriage is important, then, in assessing the respective contributions of the parties, particularly when it is said that significant capital contributions made early in the marriage are a dominant feature of that assessment.
What we are seeing as early as Pierce, at least in relation to initial contributions, and a re-emergence in the late 2010s, is what practitioners sometimes conveniently refer to as the Jabour type assessment.
That is, there need not be such a nuanced identification, analysis and characterisation of contributions.
Large capital introductions, injections or acquisition over the long term must be held against the role of the other party.
It invites error to identify only the matters which can be “˜distinguished’ as not being equal.
For instance, both parties contributing to the home equally, both working full time, but one earning a greater income.
Another instance is the minor initial contribution.
Parties and practitioners will often cling to the discrepancies to advance their case.
In my view, it is not by coincidence that the Full Court lays down authority to take the big picture approach.
If we as practitioners whole-heartedly adopted that Full Court-endorsed approach, perhaps we would find ourselves agreeing on the range and even the outcome more often.
Equality is not allowed to be the starting point. But it is certainly an oft-arrived conclusion.
Practitioners may come across the rare case in which a client argues a gift, a wedding for example, ought to be considered a “joint” contribution. The usual principle is that such a gift is deemed to come in from your side: Gosper (1987) 11 Fam LR 601, 612 per Fogarty J:
The critical case is where a relative of one of the parties gifts property to both the parties to that marriage. Dependent upon the circumstances of the case, it is, in my view, open to the Court in such a case to look at the actuality and treat that as a “financial contribution made directly … on behalf of” the spouse relative (see for example Rainbird, Matthews, W, Underwood, Abdullah, Freeman, cf Cleary, Hogan J in Freeman, and Antmann, supra ).
In many such cases that gift was made only because of that relationship and in reality as a means of benefiting that relative in that marriage. It was made “because she was a daughter of that family” as was said in W’s case at 75,527 .
It is clearly a “financial contribution” and one “made directly” to the acquisition, conservation and improvement of property. In such cases it is open to the court to conclude, if the facts justify it, that it was made “on behalf of” one spouse.’
Commonly one party argues that their financial contribution ought to be given greater weight because they entered the relationship with their income earning capacity, be it skill, experience or qualification. It is trite to distinguish that argument from one of special contributions.[3] Warnick J has discerned the argument in an unreported decision:[4]
… what is being counted as a contribution by the husband is not his potential to produce income. All that is being done is recognising that the actual financial contribution of the husband was made in the context of the exercise of a capacity substantially developed prior to cohabitation.
That argument however often falters to the inevitable holistic assessment. In Grier & Malphas [2016] FamCAFC 84 at [91]:
… A person with the same “skill set” but who was not so fortunate in their financial dealings throughout the marriage may conclude their relationship with a very different financial outcome. The same “skill set” applied in the context of that relationship would therefore be irrelevant. To develop an argument ex post facto that a particular set of skills available at the outset of the marriage is the only or major cause of the parties’ later prosperity is to hypothesise a causal relationship which in most cases will be difficult to reconcile or prove.
In that case, the “skill set” which the husband argued he brought to the relationship was questionable. The focus is of course how the skill set was used, and where it is reflected in the acquisition, conservation and improvement of the property of the parties or in indirect contributions.
In most cases the argument is likely to conflate the “special contribution” or beset by the double-count of first skill and second contribution to property. It is part of an argument.
It is important in such cases to consider the particular “skill set” only as context to the financial contribution made by the party. In some cases, it may be that fewer hours at work enabled more contributions at home.
The inverse invites the challenge to the importance of those contributions in light of the other spouse’s contributions as homemaker and parent: Kasiopoulos & Garapiperis (No. 2) [2010] FamCA 1184 at [185] (first instance, undisturbed on appeal).
The problem the husband faces in arguing that his contributions over about 20 years, were greater than those of the wife, is one of time. He is not someone who generated an income out of all proportion to the time he applied to his work. He worked long hours and made a substantial commitment of time to work related travel. He is to be credited with those efforts but they necessarily came at the expense of his availability to the family.
When combining the rationale in cases arriving at equality (or close to equality) of contributions despite the immense income of one party, such as Kasiopoulos, and the consistent stream of cases eschewing “special contributions”, such as Fields & Smith, it seems almost that the jurisprudence borders if not dabbles in the notion that the quantum of one’s income is irrelevant, it is the variety of their contributions that is given weight.
Or simply, did everyone do their role as well as they could?
Does that then mean, in a case with two working spouses, their hours, or “efforts” are taken into account, rather than an assessment of who derived the more income?
Attempts to simplify the holistic assessment
The Court has the discretion to “˜quarantine’ property in the appropriate circumstances, including post separation property. Chan & Chih [2020] FamCAFC 31 the Full Court considered whether a global or asset-by-asset approach was appropriate where each party had inherited property in South Korea.
The husband used the property he had inherited in South Korea to purchase property in Australia, while the wife had not received the property she inherited at the time of trial.
Watts J rejected the husband’s argument that the Court should consider the property as three distinct pools, as the husband’s inherited property had been intermingled with the Australian property, whereas the wife’s inherited property had effectively been quarantined as it had not become available.
Contrastingly, Marcel & Garrigan [2013] FamCAFC 94 at [68]:
Having formulated the main pool, the trial judge identified and analysed the parties’ contributions. Contributions are not tied to assets which exist at the date of hearing and are taken into account in a general sense, including in relation to property that has been disposed of (Farmer & Bramley (2000) FLC 93-060).
It can be all too tempting to attribute percentages to different stages of the relationship or categories of contributions. The Full Court has time and time again warned against such an approach:
Dickons& Dickons [2012] FamCAFC 154 at [26]:
The necessarily imprecise “wide discretion” inherent in what is required by the section is made no more precise or coherent by attributing percentage figures to arbitrary time frames or categorisations of contributions within the relationship. Indeed, we consider that doing so is contrary to the holistic analysis required by the section and, in the usual course of events, should be avoided.
See also: Wallis & Manning, Fields & Smith.
Galliano & Galliano [2011] FamCAFC 149 is a good example of the slippery slope that is attributing percentages at any stage of the process other than on a holistic view. At [67] and [68] Strickland J referred to the submissions on behalf of the husband that the difference in income represented 57% and therefore on that basis alone contributions could not be equal. His Honour said:
The flaw in this approach though is that it has long been held in this Court that “[t]he assessment and comparison of contributions, both financial and non-financial, and the translation of that weighing and comparison is not and cannot generally be a strictly mathematical task” (Z & Z (2005) FLC 93-241 at paragraph 165).
In my view, this case exemplifies why a strict mathematical approach is inappropriate. That approach fails to allow for the proper assessment and comparison of all contributions of the parties, both financial and non-financial, and that is an essential aspect of an appropriate exercise of the broad discretion that the Federal Magistrate undoubtedly had.
The recent case of Vinci & Adamo [2021] FedCFamC1A 53 (Aldridge, Gill and Hartnett JJ) affirms a recent departure from a historic approach of weighting one significant contribution against other contributions. At [21] the Court said:
Such reasoning is entirely orthodox and does not bespeak error. Indeed, had her Honour weighed particular contributions, such as the appellant’s contributions whilst an elected official against all of the other contributions of the parties’, that would have been an error (Dickons v Dickons (2012) 50 Fam LR 244 at [21]; Jabour & Jabour (2019) FLC 93-898 at [73]-[87]; Horrigan & Horrigan [2020] FamCAFC 25 at [42]-[48]; Benson & Drury (2020) FLC 93-998 at [35]).
Another temptation which must be avoided is the comparison of one category of s.79(4) contributions, labelling them as equal and then seeking to disregard them to only focus on the categories which result in disparity. The difficulty arises similarly in the comparison of contributions over the three different stages of the relationship.
The inappropriateness of lending to the temptation is well established. In Samper & Samper [2021] FamCAFC 140 the Full Court observed:
Significantly however as required by established authority (Dickons v Dickons (2012) 50 Fam LR 244; Jabour & Jabour (2019 FLC 93-898 at [73]-[87]; Horrigan & Horrigan [2020] FamCAFC 25 at [42]-[48]; Benson & Drury (2020) FLC 93-998 at [35]), the primary judge placed the post-separation contributions over that six year period in the context of all contributions made over a 32 year period and concluded:
The fact that the parties, quite rightly, agreed that contributions in this 26 year period were equal does not mean that the Court treats these as being mathematically equal and then ignores them when assessing and weighing post separation contributions. To do so would give undue weight to the contributions during the 6 post separation years over the 26 pre-separation years, particularly when the asset pool was largely developed over the period prior to separation. The post separation contributions are to be seen and weighed and as part of the totality.
This is not a mathematical exercise. While on one view [the wife] may have made slightly greater post separation contributions, weighing so far as possible all of the mutual contributions across the 26 years of cohabitation and the various post-separation contributions as set out above, I am not satisfied that there is any basis on which I should find that either party made greater contributions overall.
Accordingly, I find that the parties made equal contributions to the date of hearing.
The primary judge was entitled to so find and gave adequate reasons for doing so.
The parties’ roles
We are seeing more and more courts at first instance placing less weight on significant incomes, by having regard to the parties’ roles during and after the relationship. Kasiopoulos & Garapiperis (No. 2) [2010] FamCA 1184, albeit from over a decade ago, conveniently summarises the point at [185] (first instance, undisturbed on appeal):
The problem the husband faces in arguing that his contributions over about 20 years, were greater than those of the wife, is one of time. He is not someone who generated an income out of all proportion to the time he applied to his work. He worked long hours and made a substantial commitment of time to work related travel. He is to be credited with those efforts but they necessarily came at the expense of his availability to the family.
This can be compared with the notion that parties are entitled to “˜get on with their lives’.
In the appeal of that case, Kasiopoulos & Garapiperis [2012] FamCAFC 85, at [36], the husband argued that:
[He] was free to do with his post separation income as he pleased, provided he was at the same time properly meeting his obligations towards the wife and children. There was no obligation on the Husband in that decision to accumulate assets after separation. It is submitted that in this case, the Husband has in essence accumulated assets after separation from his income by discharging liabilities and increasing his superannuation and therefore he should be given credit for this in any assessment of contributions.
The wife argued that the bonus the husband received post separation resulted from his qualifications acquired during the 20-year relationship.
The Full Court said at [43]:
… Neither in Gollings (supra) nor any provision of the Act, or other authority to which we have been referred, do we discern support for the proposition that, once a party has provided adequately for the other party and/or children of the marriage in the post-separation period, the fruits of any acquisition, conservation or improvement of further property in that period are necessarily to be regarded as exclusively, or overwhelmingly, the entitlement of that party. A Court may so conclude in an appropriate case, but so doing does not establish any “principle” to that effect.
The non-financial party argues that it is really business as usual – one works in the environment established during the relationship and one takes on the homemaker and parent roles as during the relationship.
Even if the range is known, every family lawyer knows that a judicial determination will depend on the trial judge. We all know there are certain judges who tend to conclude matters in one favour and others who take the opposite approach. The Full Court acknowledges that is OK as long as both judges are within Range.
In my view, the Honourable Paul Cronin often gave significant consideration to the concept that the parties had “˜roles’.
Vasilias & Vasilias was a first instance decision of Cronin J in 2008.[5] The poor state of the evidence informed the outcome.
The husband was a taxi driver. He worked from early morning to late at night. He used his “˜tradesmen-like talents’ on and around the home and to maintain the parties’ cars.
The wife undertook the traditional homemaker and parenting role. Having regard to the limited time available to the husband to contribute “˜at home’, the wife’s role was taken to be significant.
On the husband’s part, he argued the wife spent an exorbitant amount of time on the telephone and in so doing, neglected her role as homemaker. He adduced photographs of the state of the home the day after separation. The wife looked at the photographs and when asked to describe the condition of the home, she described it as “disgusting”. His Honour made some important comments:
… cobwebs on windows, dirty bathroom basins and untidy floors and laundries are not matters about which this Court should be unduly critical. This is a very subjective area into which judges should be cautious about treading. The quality of a homemaker role is an issue of contribution about which an assessment has to be made and weight given. However, over a period of the length of a relationship such as this with all of its incumbent problems, in my view, it is dangerous to draw broad assertions from a series of photographs even if they did depict a home that was “disgusting”. Contrary to the assertion that this was consistent with her behaviour and effort all of the time, the wife maintained that she was a very proud homemaker. There is no evidence that the children were adversely affected by it and certainly no evidence that it in someway diminished the value of any property.
In a case in which the husband has worked extraordinarily long hours to earn a limited amount of income, it is difficult to make an assessment as to whether that absence from home contributed to what might otherwise attract criticism for the homemaking role of the wife. In my view, that comparison would be completely inappropriate.
In the circumstances, I do not propose to distinguish between the husband and the wife in respect of the period of time that they were together during the marriage.
Then, turning to post separation matters:
Contributions do not cease when the relationship comes to an end. Parties contribute in their own ways subsequent to that time. In this case, the wife took on the very significant role of the care of the children which she had clearly done well during the relationship itself. Her role was not made any easier by a number of matters about which I have already criticised the husband … Most significantly, subsequent to separation, the husband has contributed very little by way of financial support for the children albeit that he has contributed to the mortgage. In so doing however, he has clearly protected his own financial position.
The issue of disparate early contributions was also relevant. The husband’s parents gave him money towards the purchase of the family home. a considerable argument about whether the advance was a gift or loan was resolved by the husband’s father’s evidence in cross examination that he did not require the loan to be repaid. Cronin J accepted the advance as a contribution by the husband.
After referring to Lee Steere, Way & Way and Pierce & Pierce, his Honour held that:
162 … Even if there was a contribution by one party greater than the other, it has to be weighed against the subsequent contributions over a period of many years in which both parties worked and/or raised their family. …
Post separation income
One of the plights of the s.79 process can be identifying and giving weight to post separation income and expenditure, and more intricately, at what stage of the process that consideration is given.
Income earned since separation is relevant in several distinct, and not so distinct, ways. For example:
In identifying the property of the parties and any relevant liabilities;
As a direct contribution; or
As evidence of a parties’ current and future financial circumstances (75(2)(b)).
There are important subcategories.
Post separation income could manifest as savings sought to be “˜excluded’ from the pool. Expenditure could be sought to be added-back.
A post separation contribution can be easy to identify, but it is much more difficult to support arguments for the weight to be attached to it.
Expenditure could be framed, not as a negative contribution, but through context of the other party’s contribution to the conservation of property, for example. Simply put, one party spends while the other doesn’t. Attracting any weight to that argument can be difficult. That may always have been the pattern. Is it the pattern or a change that matters?
Greater post separation income cannot be its own reward by attracting little weight as a contribution and supporting an argument for a greater adjustment on account of income disparity.
In some cases, parties continue their pre-separation roles in their post-separation lives. This continuation of roles was an integral consideration in Trask & Westlake, where the Full Court heard an appeal against property adjustment orders made by Aldridge J. The parties’ marriage was a traditional one – the husband zealously pursued his career, and the wife was the homemaker and primary carer of the children. Although university educated, the wife had never been employed on a full-time basis and would need extensive training to enter the workforce.
The parties continued their roles post-separation – the husband’s income increased by way of his employment, while the wife’s role as primary carer became more difficult due to the separation.
The husband argued that Aldridge J attributed excess weight to the non-financial post-separation contributions of the wife.
The Full Court said at [14] – [15]:
The husband’s written outline of argument calculates the percentage of the total value of the property represented by the husband’s post-separation cash injections. That can be a useful measuring stick, but the assessment of contributions remains “a matter of judgment and not of computation” (In the Marriage of Garrett (1984) FLC 91-539 at 79,372). That it must be so is emphasised by the fact that the percentage figure pertaining to direct financial contributions is being compared to the extremely important contributions made by the wife in maintaining a home as a single parent to four children dealing with the separation of their parents. Those contributions are not susceptible to any such mathematical calculation. His Honour plainly, and with respect correctly, recognised that the wife’s contributions did not cease upon separation but, rather, continued in circumstances made more difficult by the fact of separation. His Honour plainly accorded significant weight to those contributions.
Central to his Honour’s assessment of the parties’ respective post-separation contributions are the findings to the effect that the husband had arrived at his position with Company E by dint of his talents, dedication and hard work but also by dint of the contributions made by the wife across the years preceding that employment. The years of cohabitation had embraced roles for the parties agreed between them that had led them to the point where one of them, the husband, received tangible recognition of, as his Honour put it, the “experience, knowledge and opportunities he had obtained in his earlier employment” (at [84]). The contributions of the wife are much less tangible. The lack of tangible recognition, or the fact that they are not susceptible to a dollar calculation, does not render them less important.
The Full Court allowed the husband’s appeal on the basis that the original orders did not reflect the judgment that had been given. Crucially, the husband’s increase in income did not alter the Court’s consideration of the contributions-based assessment.
This jurisprudence can interestingly be compared with the Full Court’s approach to windfall increases in the value of property.
In Jabour & Jabour [2019] FamCAFC 78 the Full Court famously said at [43]:
We consider that the decisions in Baker and Bilous indicate that the Court in Williams somewhat overstated the importance of the increase in value of a piece of property at the expense of “the myriad of other contributions that each of the parties has made during the course of the relationship” (Williams at [26]).
And then at [55]:
Again, consistent with the authorities set out above and those which we discuss below, the import of Pierce is that the weight to be attached to an initial contribution must be assessed against the rubric of all of the contributions, both financial and non-financial, made by the parties over the course of their relationship.
Concluding at [73]:
As can be seen the primary judge weighed the myriad of contributions made by the parties against the contribution made by the husband by bringing in Property A rather than treating Property A as one of the myriad of the contributions made.
Savings generated by post-separation income which comprise a substantial part of the pool are often not given weight on account of other circumstances.
In Teal & Teal [2010] FamCAFC 120 the husband’s post-separation savings comprised 21% of the non-superannuation assets. However, the Court considered that against the benefit of the wife’s employment reducing the children’s school fees by 90%. But for the wife’s contribution reducing the parties’ expenses, the husband would have been unable to save as much as he did post-separation.
That case involved a unique contribution which explicitly offset the post separation savings. It does communicate the idea though that even post separation the parties may still be contributing in their own way and one way is no better than another.
In other cases, one party has continued to benefit post-separation while leaving the other to fend for themselves.
The cases of Gollings & Scott [2007] FamCA 397 (at [68]) and C & C [1998] FamCA 143 are often used to support arguments that parties are entitled to use post separation income as they see fit.
The Full Court considered the weight to be attributed to contributions in those circumstances
In Rankin & Rankin [2017] FamCAFC 29, the Full Court considered an appeal against, inter alia, the treatment of the husband’s post separation income which was largely spent on legal fees. This case emphasises the flexibility for courts dealing with post separation income.
The primary judge’s relevant reasons are set out by the Full Court at [54]:
In view of these passages, the primary judge concluded:
There is no dispute that the funds used by the husband to pay his legal fees have been generated by him after separation from his employment as a [professional]. It is submitted on behalf of the wife that she has made contributions to the development of the husband’s career; she has supported him in the early years of his practice when he was establishing himself as a [professional]. Otherwise, it is submitted on her behalf that she has been the primary care-giver to the parties’ children and principally responsible for maintaining the home; in this way she provided invaluable support to the husband in the progression of his career and development of his capacity to earn income. I accept those submissions.
At the time the husband earned the income applied to the payment of his legal fees, he had an obligation to support the wife and the children of the marriage. That this is so is evident from the orders dated 4 November 2013 which required him to meet mortgage payments and outgoings with respect to the properties in Western Australia and [Suburb C].
As noted earlier, the husband did not service the mortgage liabilities on the parties’ properties, thereby increasing the debt payable upon settlement of the sales of those properties. Further he substantially reduced his child support liability by providing an estimate of his income to the Child Support Registrar which substantially reduced his obligation to pay child support. Income which otherwise would have been available to support the wife and the children was applied to the payment of his legal fees. The husband has effectively executed self-help with respect to his legal costs and in doing so has disregarded his obligations to meet liabilities pursuant to orders of this Court and in accordance with the Child Support (Assessment) Act 1989 (Cth). (emphasis added)
Such matters may be taken into account pursuant to the provisions of s. 75(2)(o) of the Family Law Act. However, in my view a percentage adjustment will not achieve justice and equity in the overall context of this case in circumstances where:-
the asset pool excluding superannuation is only $803,000;
the husband has paid $230,000 to his lawyers in preference to his obligations to the wife and the children; and
such payment has been made from income which he has been able to earn, in part, through the contributions of the wife.
Having regard to those circumstances, I am satisfied that justice and equity require that there be a cash adjustment in favour of the wife with respect to her outstanding legal costs prior to the disbursement of the sale proceeds rather than a percentage adjustment in her favour.
The husband accepted that “income which otherwise would have been available to support the wife and the children was applied to the payment of his legal fees”.
The Full Court proceeded to affirm the approach taken by the trial judge, acknowledging that considering the s.75(2)(o) adjustment as a lump sum was appropriate, but eschewed the comment that a percentage adjustment was inappropriate “if correctly calculated”.
The husband argued that the primary judge did not take into account money paid post separation, which “he was entitled to spend as he saw fit”.
The Full Court observed:
… In support of this submission, the husband referred to Beklar & Beklar [2013] FamCA 327. In that case the primary judge “added back” into the property pool payments made to a party’s lawyer, but, recognising that the payments had been made from post”‘separation income, the amounts added back were reduced by 50 per cent.
That case is, of course, an example of the flexibility of approach required in complex financial cases where the orders must be adapted to the particular facts of the matter before the court. It is not, and did not purport to be, a statement of general principle, as counsel for the husband properly conceded.
In the unique circumstances of this case and having regard to the husband’s evidence and her Honour’s unchallenged findings, the primary judge could have followed such a course. However, the relevant enquiry is whether the primary judge was in error in taking into account the whole of the $230,000. It is apparent from what we have already said that we do not consider that there was such an error. In particular, the findings made by the primary judge at [136] – [138], which were unchallenged, support her approach.
In some cases, it is not the treatment of post-separation income, which is the subject of dispute, but the taxation liability remaining at the time of trial.
The Full Court considered the treatment of pre- and post-separation taxation debts in Zabarac & Zabarac & Anor [2016] FamCAFC 186.
The Full Court said at [176] – [184]:
Ground 14 contends that her Honour ought to have found that the wife continued to enjoy the benefits of the husband’s post separation income and thus should have been required to share jointly in the 2012 tax debts.
Her Honour said:
In my view, justice between the parties dictates that separate consideration is given to the pre- and post-separation taxation debts. In her oral evidence the wife conceded that she “liaised with our accountants and lawyers“ and that she “had [her] finger on the pulse in relation to our money“ prior to the separation. By contrast, the husband thereafter caused the incorporation of the company [SY Pty Limited] and channelled his income into that entity without any input at all from the wife.
(Emphasis in original)
Before moving to the thrust of this ground, her Honour’s reasons clearly indicate why she chose to treat the pre and post separation tax debts differently.
In support of this ground it was argued that her Honour failed to take into account the husband’s evidence that his post separation income had been applied to benefit the wife, children and in maintaining the parties’ properties (husband’s written summary of argument at [14.2]).
Further it was argued that her Honour failed to give proper weight to the wife’s agreement that after separation the husband paid her periodic sums of $13,303 per month, reduced later to $10,000 per month, and that the husband’s income received from LBP was applied to the purchase of the Suburb R property, the value of which was included in the balance sheet of the parties’ assets.
For the wife it was submitted that before the husband incorporated SY Pty Ltd his income was paid into the Trust from which both the husband and wife jointly benefitted.
Clearly her Honour’s distinction between the wife’s capacity to control or exercise control over the parties’ finances before separation and the husband’s election to refocus the channel for his income to a separate corporation justified both her treatment of the tax debts and her conclusion that post separation tax debts should rest with the husband.
That the husband attended to his obligations to provide financial support to his children and the wife does not, in our view, support this ground.
There is no substance in this challenge and it is not made out.
Post separation “˜excessive’ expenditure
It is commonly the duty of a family lawyer to explain to their client why the so-called “excessive” expenditure of their spouse is unlikely to attract any real weight in the section 79 process.
Family lawyers often seek to exclude assets or liabilities from, or add-back notional assets to, the balance sheet because doing so enhances the chances of extra weight being attached to the particular circumstance. They forefront issues as advocates.
The alternative is to have it considered as either a contribution or a section 75(2) matter, the concern being that both of which are easily devalued or even lost altogether in the sea of the myriad of contributions.
It is for that reason that expenditure is rarely sought to be taken into account under s.75(2)(o) by the party alleging profligate spending.
Manipulating the balance sheet is desirable because it secures consideration of an aspect of the case. That is arguably applying a mathematical approach to what must be a holistic assessment. However, as we are reminded time and time again, it is not improper in the appropriate cases: Trevi.
It is, however, important to acknowledge the impact of manipulating the balance sheet, because it is the reason only the exceptional cases are adopted by the courts.
The high threshold of establishing a party’s profligate spending besets the frugal spouse. Some level of hobby spending might be appropriate or at least accepted as not being waste.
The party asserting wastage on part of the other invites application of scrutiny to their own affairs. The courts will often reject an argument of wastage on the basis that both parties made less than prudent decisions concerning their property or finances.[6]
In Murray & Murray [2020] FamCAFC 293 the Full Court considered an argument that credit card debts of $78,000 were inappropriately omitted from the balance sheet by the primary judge. The husband had previously earned a consistently high income of approximately $800,000 to $1,100,000. After separation he suffered a significant reduction in his income. Despite his reduced income, he did not curb his expenditure and amassed a large debt. In cross-examination he said he conceded that his lifestyle had not changed “all that much”. The primary judge omitted the debts from the balance sheet because they were incurred “in order to maintain [his] lifestyle”. The Full Court held that the primary judge was within discretion to ignore the debts “in accordance with the Biltoft guidelines”: ([31] to [41]).
The principle against a presumption of equality is clear. It is perhaps due to the overwhelming amount of cases in which equality is the appropriate conclusion that the annunciation of the principle is required. In Elgin & Elgin [2014] FamCA 10 (first instance, undisturbed on appeal) Forrest J said:
Although I am quite conscious of the clear authoritative rejection of the existence of a presumption of equality as a starting point in the assessment of contributions in this discretionary exercise, I am equally conscious of the authoritative pronouncement of the following propositions that go to informing the discretion (whether they are correctly described as “values” or otherwise):
contributions by a spouse to the welfare of the family, including as a homemaker and a parent, should be recognized in a substantial and not merely in a token way;
no nexus between a spouse’s contribution and a specific item of property is required when the parties’ contributions are being considered; and
marriage is and should be regarded as a genuine partnership to which each party brings different gifts and when one party’s efforts produce great wealth that is no reason, in itself, to disadvantage the other party.
Having regard to these propositions, I respectfully agree with the view expressed by my judicial colleague, Cronin J, in Bulleen & Bulleen (2010) 43 Fam LR 489 that to retrospectively distinguish between the value of the roles respectively adopted by the parties in the course of a very long marriage, who saw themselves as equals, merging their lives and each contributing to their common goals to the best of their abilities, is something fraught with the risk of injustice.
In the same vein, I also agree with the submission of counsel for the Wife that to consider a party’s contributions to the welfare of the family as of diminished significance in a long marriage where the children who that party principally parented have long grown up and left home is contrary to community expectations and also likely to be productive of injustice. The obligation to recognize contributions to the welfare of the family in a substantial and not token way, without having to link them to particular property amassed by the couple, provides principled foundation, in my view, to the attribution of weight to the “fantastic” and “terrific” contributions made by the Wife to the welfare of the family, including as a homemaker and parent over 30 years, and as a homemaker on an ongoing basis to the point of separation after 49 years, so as to arrive at a determination that the contributions of both parties made in their respective roles weigh relatively equally, even where the Husband has continued to generate further wealth by his own contributions after the children have grown up.
If the Court does not accept that property provided to a party constitutes a loan, the Court will in the ordinary course of events consider the property a contribution: Vass & Vass [2015] FamCAFC 51 at [119] citing Kessey & Kessey (1994) FLC 92-495 at 81,150.
Then there is the debt that may never have to be repaid. Where an unsecured liability is vague or uncertain, or unlikely to be enforced, the Court may determine not to take it into account: Biltoft
Rent vs mortgage repayments
Another common argument between parties is the discrepancy in living situations post-separation where one party remains in the family home and the other must find and pay for temporary or rental accommodation.
Who pays the mortgage?
In some cases the financial spouse moves out but continues to meet all or some of the mortgage repayments. This is often treated as a contribution, but in all of the circumstances, seen as the continuation of pre-existing roles.
Defraying the costs of the mortgage can often be seen as asset preservation and credit rating preservation.
Paying the costs of rent, with the care of a child, is often seen as a contribution in its own right but also an indirect contribution to the mortgage repayments in all the circumstances.
In Meadows & Meadows (No 3) [2020] FamCAFC 124 the husband occupied the home post separation. The wife rented. She argued[7] that there ought to be a capitalisation of the benefit of the husband remaining in the home with regard to the estimate of rent he otherwise would have paid. The trial judge appropriately refused to identify a capitalise rental benefit, acknowledging it was properly a matter for contributions.
As to the assessment of contributions by the trial judge, the Full Court said:[8]
Having discussed the parties contributions during the marriage, including the mother’s contribution as primary carer of the child and accepting her contention that the father had the benefit of occupation of the former marital home, albeit paying the mortgage, whereas she and for significant time the child, were living elsewhere paying rent. His Honour took into account the relative disparities in the parties’ income and earning capacities. He concluded that the mother’s contribution based entitlements were slightly greater than those of the father and assessed them at 55 per cent in favour of the mother.
The wife complained that the trial judge gave insufficient weight to the disparate living situation.
The Full Court then concluded:[9]
His Honour took the father’s occupation into account and considered it to be an indirect contribution by the mother, albeit noting that the father’s occupation included payment of the mortgage, rates and taxes on the property (at [87(f)]). No error has been established.
Contributions and adjustments in elder divorce
The median age of divorcees in Australia has risen sharply, from 34 years old in 1990 to 45.6 years old in 2020.[10] The rise of the so called “˜grey divorce’ phenomenon raises numerous questions regarding the application of section 75(2) for elderly parties.
The Court will consider the “˜future needs’ of each party, and has the discretion to determine how much weight will be placed upon the relevant considerations.
The section 75(2) considerations of particular relevance for the Court when assessing the parties’ future needs in elder divorce cases are:
Their age and health;
Their income and capacity for appropriate gainful employment;
Their eligibility for a pension, allowance or benefit;
A standard of living that in all the circumstances is reasonable;
The duration of the marriage and the extent to which is has affected the earning capacity of the party whose maintenance in under consideration;
The relevant section 75(2) considerations can be contradicted by an elderly party’s life expectancy. A shortened life expectancy effectively reduces the future needs of that party. Adducing persuasive evidence of that fact may be challenging.
If a party is elderly and unwell, their future medical needs will increase, even if that increase coincides with a reduction of the life expectancy of the party.
The Full Court in Varnham & Moses [2020] FamCA 83 considered the assessment of post-separation contributions and the approach to address the relevant section75(2) factors in the property settlement of an elderly couple.
At [48] – [60]:
The 60 per cent contribution-based entitlement of the wife determined by the primary judge represented, in money terms, $1,683,837.60 as compared to the husband’s 40 per cent entitlement worth $1,122,558.40.
The primary judge did not have regard to that as a starting point when assessing the s 75(2) factors. Her Honour’s consideration of s 75(2)(b) “the income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment” in respect of the wife appears to be confined to her existing property interests (at [191]) and her employability (at [198]-[201]). Moreover, s 75(2)(n)(i) mandates that account be taken of “the terms of any order made or proposed to be made under section 79 in relation to … the property of the parties”. That factor was not identified or addressed by the primary judge in her Honour’s listing of the factors her Honour considered to be relevant.
The primary judge erred in failing to consider, for example, potential income to the wife, or the financial resource of the investment of capital consequent upon the 60 per cent the wife was to receive, as compared with the husband’s position and his 40 per cent entitlement, given also that her Honour did not propose to make any splitting order with respect to the husband’s superannuation.
These errors also manifest themselves in the conclusion the primary judge expressed at [217] as follows:
Taking those matters into account an adjustment in favour of the wife is appropriate in circumstances where her earning capacity and access to superannuation is much less, by a factor of 10 percent.
(Emphasis added)
The property pool determined by the primary judge (at [143]) included the wife’s superannuation of $31,000 and the husband’s superannuation interests totalling $542,386. All of the parties’ superannuation interests were accounted for. On a 60 per cent/40 per cent contribution assessment overall the wife was obviously to receive the equivalent of 60 per cent of the parties’ combined superannuation. In circumstances where the primary judge did not propose to make any splitting order with respect to the husband’s superannuation, the wife was already to receive, wholly by way of non-superannuation capital, the majority of the value of the parties’ combined superannuation.
The primary judge’s reference then in [217] to the wife’s “access to superannuation is much less” as part of the foundation for a further 10 per cent adjustment in the wife’s favour for s 75(2) factors is an obvious error.
We have considered whether the primary judge’s error with respect to superannuation is capable of being characterised as immaterial on the basis that the primary judge’s 10 per cent adjustment for s 75(2) factors is supportable by reference to only the disparity between the parties’ respective earning capacities as discussed by the primary judge.
However, a 10 per cent adjustment for s 75(2) factors gives rise to a 20 per cent disparity between the parties worth, in money terms, $561,279.20.
As at trial in July 2019 the husband was soon to turn 61 years of age and whilst he was then unemployed his evidence was that he was actively seeking employment and, if successful, he intended to work “for two or three years at the maximum” before retiring (husband’s affidavit filed 5 June 2019, paragraphs 398-399). There was no challenge in the course of the husband’s extensive cross-examination at trial as to his stated intention in this respect. That is perhaps unsurprising given the husband’s age and the feature that as at trial the wife, at age 58 years, already regarded herself as retired as found by the primary judge (at [201]).
For the purposes of making some comparison, it is notable that the primary judge recorded:
The husband received a substantial redundancy package (AUD$529,000) equivalent to three years employment, paid to him in June 2017.
(Emphasis added)
On that comparison, the disparity of $561,279.20 is a present capital sum greater than the redundancy package the husband historically received calculated by reference to three years of his employment.
Self-evidently the disparity amount exceeds the entirety of the husband’s probable (or possible) total net (after tax) earnings for the anticipated balance of his notional working life. Viewed another way, the husband would have to work for many more than three years to ever have any prospect of accumulating an amount of capital approaching that magnitude and there was no evidentiary basis for such a conclusion. As noted, the unchallenged evidence of the husband was that he would work for a further period of two or three years before retiring.
It is well settled that the primary judge was obliged to analyse the effect of any further adjustment for s 75(2) factors in real money terms (Clauson and Clauson (1995) FLC 92-595; Steinbrenner & Steinbrenner [2008] FamCAFC 193; Phipson & Phipson [2009] FamCAFC 28; Wayne & Wayne [2010] FamCAFC 33 at [106]; Lovine & Connor (2012) FLC 93-515 at [80]). We are satisfied that the primary judge failed to so do and that error vitiates the exercise of discretion.
In Trevi & Trevi [2019] FamCAFC 51, the Full Court considered a section 75(2) percentage adjustment, where the husband earned $30,000 per week and intended to soon retire and the wife had minimal income capacity.
[45]:
Noting that, as has often been said, there is considerable overlap in the applicability of s 75(2)’s sub-paragraphs, her Honour’s findings referenced to the relevant sub-paragraphs of s 75(2) are as follows:
…
s 75(2)(b)
“There is a large disparity in income between the parties. The husband’s total average weekly income in accordance with his latest financial statement is $29,980 and his total weekly personal expenditure is $26,189″ (at [52]).
“The wife’s average weekly income in accordance with her latest financial statement is estimated at $317 and her total weekly personal expenditure is estimated at $2,835″ (at [53]).
“The wife is now living in an unencumbered property valued at approximately $2,480,000 purchased from her part property settlement and the husband is living in an unencumbered property valued at $2,700,000 which was purchased during the marriage…” (at [396]).
“There is a significant disparity of income earning capacity between the parties” (at [400]).
“The husband’s income is significant and for the year ended 30 June 2015 it was $1.54 million. In contrast the wife is studying and without paid employment. She is depleting her capital to pay living expenses. She has a nominal income earning capacity” (at [401]).
“…The wife will take some time to complete her studies and having regard to her age and lack of experience in the workforce, her employment prospects and potential for remuneration are limited” (at [402]).
“I accept the submission on behalf of the husband that it cannot be assumed that he will still be earning at his current level in seven years’ time. Having regard to his highly demanding position and competitive work environment, I accept the argument that a prospective assessment on the assumption of future earnings at this level can be no greater than four to five more years…” (at [403]).
“At the conclusion of the trial the parties reached an agreement on this issue and the expert witnesses were not required for cross examination. The agreement reached was that on an invested sum of $1.5 million that the wife would receive a return on that investment of between $50,250, which equates to 3.35% per annum and $141,873, which equates to 9.5% per annum” (footnote omitted) (at [406]).
“The significance that I should attach to this evidence was never explained” (at [407]).
“The husband’s income as a partner is approximately $1,196,416 per annum. As an equity partner, the husband’s remuneration depends upon his performance which is linked to the profitability of the practice. His work environment is competitive and demanding. However it was conceded in closing submissions, that it could be assumed that his income is likely to remain the same for a period of between two to four years. I accept that proposition as reasonable given that his income might decrease or increase” (at [427]).
“The husband also receives rental income from the investment properties which on his financial statement amounts to approximately $239,824 per annum. His weekly income is $29,980 and his weekly personal expenditure is $26,189. He has funds in his bank account of approximately $449,705 and he has superannuation of approximately $473,071 which includes his benefit under the [Trevi] Family Superannuation Fund” (at [428]).
“The wife’s income is approximately $317 per week but this is dependent upon her savings. According to her financial statement filed 28 April 2016 her weekly personal expenditure is $2,835 and her funds in her bank account are $215,228. The wife has superannuation of approximately $77,352 including her benefit in the [Trevi] Family Superannuation Fund” (at [429]).
“I am satisfied that in the years remaining of his working life, the husband is likely to continue to earn a significantly greater income than the wife” (at [430]).
“The wife ascribed a value of $2,250,000 to the husband’s potential [N Lawyers] Early Retirement Scheme entitlement in her balance sheet (Exhibit 11) but ultimately accepted the husband’s evidence that he was not “˜counting’ on getting money from the scheme and his evidence that “˜if I need another million dollars I will just work for another year’. Her case is that this should not be ignored. However I find that the husband is proposing to work for another five to seven years” (footnote omitted) (at [433]).
“I find that for the purposes of considering s 75(2) factors that the husband’s present income cannot be assumed for any longer than four to five years” (at [437]).
“[The husband] … intends to continue to work for the next five to seven years but obviously this cannot be guaranteed” (at [4]).
“I also find on the joint expert evidence of the chartered accountants, which was accepted by the parties, that if the wife received an amount of $1.5 million and invested that sum, that she would be likely to receive a return on that investment of between $50,250 which equates to 3.35% per annum and $141,873 which equates to 9.5% per annum” (footnote omitted) (at [438]).
[56]:
Weighing all of her Honour’s findings and all of the matters to which I have just referred, I assess the s 75(2) factors as weighing significantly in favour of the wife receiving a significant sum. I have given very significant weight to the disparity in income and income earning capacity seen in light of the parties’ respective ages.
Colleagues, once more into the fray. No doubt there are experiences of trial decisions that stick with each of us. I always remember the wife arguing the husband spending about $18,000 a year on gambling was wastage. The trial judge thought it was a reasonable hobby spent in proportion to his income. I was relieved to hear that.
By Kay Feeney
[1] [2017] FamCAFC 14 at [116].
[2] [2017] FamCAFC 14 at [117].
[3] Kane & Kane (2013) FLC 93-569; Hoffman & Hoffman (2014) FLC 93-591; Fields & Smith (2015) FLC 93-638.
[4] Doolan & Doolan (20 November 2003) [2003] FamCA 1356, cited in Grier & Malphas [2016] FamCAFC 84 at [90].
[5] [2008] FamCA 34.
[6] For example Walters & Carson [2018] FamCAFC 233 at 111 (citing the trial judge’s undisturbed reasons).
[7] Meadows & Meadows (No 3) [2020] FamCAFC 124 [143].
[8] Meadows & Meadows (No 3) [2020] FamCAFC 124 [128].
[9] Meadows & Meadows (No 3) [2020] FamCAFC 124 [152].
Application for review of a Registrar’s decision: The cooling off period inherent in an Application for Consent Orders
By Charles Letts, Senior Associate, and David Marcolin, Associate
As many practitioners in family law would be aware, the family law legislation provides that decisions made by Registrars of the Federal Circuit and Family Court of Australia can be reviewed by a Judge upon the application of one or both of the parties within a specified time limit.
A decision of a Registrar will be either an “administrative” or a “judicial” decision. The type of decision is critical to the nature of the review process.[1] This article focuses only on judicial decisions.
The review by a Judge of a judicial decision made by a Registrar is conducted as an original hearing[2], also described as a hearing de novo, which importantly is very different from an appeal.
Most family law practitioners would understand that the vast majority of Orders made following an Application for Consent Orders being filed are being made by Registrars of the Court.
The implications of this, however, especially when considering the recent Full Court decision of Mirren[3], do not seem to be widely discussed or taken into consideration in general practice.
In Mirren, the Full Court conducted an analysis of the operation of the legislation relating to a review of a Registrar’s decision in circumstances where Orders were made by consent.
Ultimately, the Court held that in circumstances where an Order has been made by a Registrar with the consent of the parties, should one or both of the parties file an application for review of that decision and in doing so withdraw their consent to the initial consent Orders, then as the review by a Judge of the Registrar’s decision proceeds by way of a hearing de novo the only possible outcome is that the initial consent Order cannot be made due to a lack of consent.
The Court’s approach in Mirren and the current legislation creates a situation whereby any Order made by consent by a Registrar effectively contains an inherent “cooling off” period that lasts until the time limit for the filing of a review of a Registrar’s decision passes. That time limit is currently 21 days[4] from when the order or decision is made.
It would appear that as the law stands currently, parties to any Order made by a Registrar following an Application for Consent Orders being filed (or in any other circumstances where a Registrar is making the Orders on a consent basis) can effectively have that Order set aside by, within the prescribed time limit, filing an application for review of a Registrar’s decision and including that they withdraw their consent to those Orders being made in their affidavit evidence in support of such application.
Consent Orders made by a Judge, of course, do not have such an inherent “cooling off” period.
This has significant implications for Orders made following an Application for Consent Orders being filed given that the vast majority of such Applications for Consent Orders are dealt with by Registrars, and a significant proportion of consent agreements reached through dispute resolution outside of the Court process are formalised through the filing of an Application for Consent Orders. Agreements reached after a court-based dispute resolution process also generally result in Consent Orders made by Registrars.
Significant issues could arise in such circumstances where consent Orders require parties to take steps prior to the time limit for an application for a review of the Registrar’s decision elapsing, given that doing so potentially leaves a party open to acting in accordance with the initial consent Order and later being disadvantaged as a result of an application for review being filed and being left in a position where no Order later exists.
As such, we would recommend that all practitioners advise their clients prior to them entering into any Consent Orders of the risks that may arise as a result of the review process.
It may also be prudent to, whenever possible, draft Orders such that the parties are only required to implement the requirements of the Orders following the review time period elapsing. This would ensure, as much as possible, that parties to the Orders are protected against the other party either entering into the consent Orders in bad faith or resiling from their agreed position following either party taking steps to comply with the Orders made by a Registrar.
Should an Order need to be made that requires the parties to take steps prior to the elapsing of the review period, consideration should be given as to how to best protect against that review period causing issues. Options that come to mind potentially include filing the Application for Consent Orders in a state Court (where the decision as to whether to make the Orders or not is generally made by a judicial officer rather than a Registrar and therefore not subject to the same review time periods), the use of a Financial Agreement (which of course brings its own complexities and difficulties to the table) or potentially filing an Initiating Application in the Federal Circuit and Family Court of Australia and thereafter seeking to have Orders by consent made in chambers by a Judge. The same request could accompany an Application for Consent Orders.[5]
Of course, this issue is unlikely to be a problem (or can be appropriately worked around) in the vast majority of matters, however, it is important to keep these issues in mind in relevant cases.
It also appears that, with the court’s move towards a more Registrar-based case management program, many Consent Orders that would previously have been made by a Judge are now likely to be made by a Registrar (such as, for example, when parties settle at or before the first return date), potentially increasing the scope for this review period to be an issue.
It should also be noted that the Court has the power to extend the time limit for a review of a Registrars decision. That process is beyond the scope of this article, but our firm was recently successful in obtaining, on behalf of our client, such an extension following the making of Consent Orders.
Following the Full Court’s approach in Mirren, therefore, the Court, upon granting the extension of time and allowing the application for review of a Registrars decision, had no option but to decide not to make the initial Consent Orders given our client had withdrawn their consent to those Orders.
Whilst this application was made in unusual circumstances where we consider that it would have potentially also have been possible for our client to succeed in having the Orders overturned by way of an application pursuant to section 79A of the Family Law Act, it would appear to be important to advise clients of the potential for such an application for review to be made outside the time limit, especially if the proposed consent Orders could be seen to perpetuate an injustice.[6]
Charles Letts, Senior Associate, and David Marcolin, Associate.
For further information about this issue, or family law matters generally, please do not hesitate to contact us here at Feeney Family Law.
Feeney Family Law
[1] See Valack & Valack [2020] FCCA 1354 and Valack & Valack (No.2) FCCA [2020] for an example of the consequences of conflation of the two types of decisions.
[2] r14.07(1) Federal Circuit and Family Court of Australia (Family Law) Rules 2021
[3] Mirren & Mirren [2020] FamCAFC 94
[4] r14.05(1), r14.05(2) Federal Circuit and Family Court of Australia (Family Law) Rules 2021
[5] r10.07(4) Federal Circuit and Family Court of Australia (Family Law) Rules 2021
[6] In Mirren, for example, the Family Court granted an application for an extension of time in which to file the review application brought some six years after the orders were made. That decision was undisturbed on appeal.
