F Firm & Ruane and Ors

[2014] FamCAFC 189 (2 October 2014)

(May, Thackray and Strickland JJ)

Fields & Smith

[2015] FamCAFC 57 (17 April 2015)

(Bryant CJ, May and Ainslie-Wallace JJ)

X Pty Ltd (Administrator Appointed) & Milstead and Anor

[2015] FamCAFC 50 (30 March 2015)

(Thackray, Strickland and Tree JJ)

Teo & Guan

[2015] FamCAFC 94 (21 May 2015)

(Thackray, May and Crisford JJ)

In 2014–15, judges of the Family Court of Australia handed down judgments at both first instance and appellate levels. The decisions reflect the Court's expansive jurisdiction, the wide variety of issues that it addresses, and its position as a superior specialist federal court that deals with the most complex and serious family law cases.

A selection of significant and noteworthy judgments are published in this report. The Court recognises that the accessibility of its judgments to the public is important. It commits the resources required to ensure that every final judgment delivered is anonymised and published consistent with s 121 of the Family Law Act 1975 (Cth).

Virtually all judgments, after anonymisation, are published in full text on the Australasian Legal Information Institute (AustLII) website. There is a link to the AustLII site from the Court's website (www.familycourt.gov.au). Recent decisions are also published on the Court's website for a period of two months. This policy has enabled the Court to better respond to community interest and concerns about particular cases highlighted in the media and demonstrates the commitment of the Court to being open and accountable for its judgments.

F Firm & Ruane and Ors

[2014] FamCAFC 189 (May, Thackray and Strickland JJ) – delivered on 2 October 2014.

Appeal—binding financial agreements—accrued jurisdiction

This matter involved an application for leave to appeal and, if leave was granted, an appeal to the Full Court against orders made by Justice Murphy, which dismissed the appellant's application in a case. The appellant was a law firm that had acted on behalf of the wife, who was the second respondent to the appeal. The first respondent was the husband and the third respondent was a barrister who had been instructed by the appellant to advise the wife in respect of a financial agreement entered into by the husband and the wife following separation.

Following an application by the husband to set the agreement aside, which was resisted by the wife, Justice Cronin found that the financial agreement was not binding as it failed to comply with s 90G of the Family Law Act 1975 (Cth) ("the Act"). The wife subsequently joined the appellant and the third respondent to the proceedings and sought that the appellant pay her costs, indemnify her for any loss arising from the husband's application, or pay her damages for breach of contract and/or negligence, together with interest and costs. In response, the appellant sought that the wife's application be dismissed and that the appellant and the third respondent be removed as parties to the proceedings. Justice Murphy dismissed the appellant's application. In so doing, Justice Murphy found that there was accrued jurisdiction to hear the wife's claims against the appellant and the third respondent for breach of contract, negligence, breach of duty of care or breach of fiduciary duty. These orders were the subject of the appeal.

The major issue arising in the appeal was whether the primary judge erred in finding that the Court had jurisdiction to hear the claims in negligence and, in particular, whether his Honour erred in failing to follow the earlier Full Court decision in Noll & Noll (2013) FLC 93–529. In Noll, an appeal against a decision that held that the Court did not have jurisdiction to entertain proceedings by the husband against the wife's solicitors, in the context of financial proceedings between the husband and wife relating to a financial agreement, was dismissed.

Each member of the Full Court delivered separate reasons. However, Justice May recorded that she largely agreed with the judgments of Justice Thackray and Justice Strickland, and Justice Thackray recorded that he agreed generally with Justice Strickland's reasons, save for the issue of the relevance of any factual distinction between the matter under appeal and Noll.

Justice Strickland stated that the principles relevant to when intermediate courts of appeal may depart from their own earlier decision were well settled. The first consideration was whether there was a factual difference between the two cases that has any relevant legal significance. If that question is answered in the negative, the decision can only be departed from if the Full Court considers that it is "plainly wrong". Justice Strickland then recorded that the authorities state that an earlier decision should only be departed from cautiously and when the Court is compelled to the conclusion that the decision is wrong. His Honour then confirmed that, according to the authorities, a discretion to depart from the decision exists, even where the later Full Court forms the view that the earlier decision is "plainly wrong".

On the facts of the case, Justice Strickland found that there was a relevant factual distinction between Noll and the instant case. That distinction was found in the fact that the husband in Noll instituted proceedings against the wife's solicitors, whereas in the case at hand, the wife's proceedings were against her own solicitors. Therefore, the respective claims were differently based because the husband in Noll could not plead breach of retainer, breach of duty of care or breach of fiduciary duty. Justice Strickland also observed that, as a result of the different legal basis for the claims, they crystallised at different times. Justice Strickland stated that the nature of husband's claims in Noll was at least arguably related to the finding that those claims were "completely separate and distinct" from the proceedings under the Act. Therefore, there was relevant legal significance in the factual distinction between the two cases.

Justice Thackray identified a number of factual distinctions between Noll and the matter under appeal, including the fact that the husband brought the action against the wife's solicitors in Noll whereas in the present case the wife joined her own solicitors. Justice Thackray found this distinction to be irrelevant. Justice Thackray said:

It seems to me that it cannot be right that the Court has accrued jurisdiction to determine a claim for damages by one party against their own solicitor, while not having jurisdiction to determine a damages claim against the other party's solicitors, in circumstances where both claims arise out of a Part VIIIA agreement.

Justice Thackray said the focus should be on deciding whether there was one controversy. After considering various indicia, Justice Thackray was satisfied that those indicia pointed to the conclusion that the damages claim in Noll was part of one wider controversy, and that the Court in Noll erred in finding that the husband's damages claim was not essential to the determination of the federal element of the dispute. Justice Thackray said he was satisfied that, upon closer examination, part of the Full Court's decision in Noll was inconsistent with authority. However, Justice Thackray did not consider it necessary to decide whether or not Noll was "plainly wrong".

Justice May stated that although she did not disagree with Justice Strickland's finding that the Full Court was able to depart from Noll by reason of the factual difference, her Honour was also of the view that there were aspects of principle espoused in Noll about which there could be more than reasonable disagreement.

The Full Court allowed the application for leave to appeal and dismissed the appeal.

Fields & Smith

[2015] FamCAFC 57 (Bryant CJ, May and Ainslie-Wallace JJ) – delivered 17 April 2015.

Appeal—property settlement—contributions

In this matter the wife appealed property settlement orders which effected a division of the parties' assets as to 60 per cent to the husband and 40 per cent to the wife. The wife's contention on appeal was that a proper assessment of the parties' respective contributions should result in the assets being divided equally. The husband also cross-appealed the property settlement orders but contended that the assets should have been divided as to 70 per cent in his favour and 30 per cent to the wife.

At the time of separation in 2008 the parties had been married for almost 30 years. At the beginning of their marriage they had no assets of real significance. Approximately 11 years into their marriage the parties commenced their own construction company, Y Pty Ltd. By the time of separation, Y Pty Ltd was a successful business with a value of between $21,800,000 and $29,600,000. The total property pool by the time of separation was valued at between $32,321,000 and $39,816,000.

During the marriage the husband was the main breadwinner, working as the managing director of Y Pty Ltd. The wife fulfilled homemaker and parenting duties for the parties' three children. However, the wife was also a director of and equal shareholder in the business.

The majority judgment on appeal was delivered by Chief Justice Bryant and Justice Ainslie-Wallace. Justice May delivered separate reasons for judgment agreeing with the outcome of the appeal.

The key issue on appeal, as it was at trial, was the assessment of the parties' respective contributions and their subsequent percentage entitlements to property, particularly their shareholding in Y Pty Ltd and their interest in the former matrimonial home.

In their consideration of the trial judge's reasons for judgment, Bryant CJ and Ainslie-Wallace J noted with approval the trial judge's rejection of the notion that there is a particular type of contribution that relates to "special skills" which results in a particular finding in respect of contributions. Their Honours confirmed similar statements from other Full Courts in Kane & Kane [2013] FamCAFC 205 and Hoffman & Hoffman [2014] FamCAFC 92.

In considering the complaints raised on appeal, Bryant CJ and Ainslie-Wallace J firstly accepted that upon reading the trial judge's findings that apparently related to the pre-separation period, it would be "difficult to infer that his Honour had something other than equality of contributions by each of the parties in mind".

Their Honours then considered the apparent findings in relation to the pre-separation period against the trial judge's findings concerning post-separation contributions, and the ultimate disparity of a 20 per cent entitlement differential. Bryant CJ and Ainslie-Wallace J held that the trial judge's ultimate findings of disparity of contribution post-separation were inconsistent with his apparent findings of equality of contribution for the pre-separation period. Their Honours further held that a result that seemed in conflict with a finding of equality required adequate explanation by the trial judge, and none was provided.

In their consideration of the trial judge's findings in relation to post-separation contributions, Bryant CJ and Ainslie-Wallace J also considered what evidence, if any, was before the trial judge that would support a finding that in the post-separation period there was a diminution in the wife's contributions as compared to the husband that would justify a disparity of 20 per cent between the parties. Their Honours ultimately concluded that there was no such evidence. In so finding, their Honours emphasised that while the fact of separation will mean in some cases that the contribution to the welfare of the family will be different, the role does not necessarily cease. Their Honours also focused on the fact that in the relatively short post-separation period in this case, the parties did not acquire further assets, nor was there evidence of improvement of their existing assets and, importantly, there was no evidence that the husband had made any greater contribution than the wife to the conservation of the assets in the post-separation period.

However, their Honours also said that the appeal would not necessarily be allowed on that basis alone. Their Honours then turned to a consideration of the complaint raised by the wife that the trial judge's inclusion of a table of "Comparable Cases" in his reasons for judgment acted as an impermissible fetter on his otherwise extraordinarily wide discretion. The table included reference to six other cases with categories such as "assistance with children by husband" and "work by wife in business". The percentage entitlements awarded to the wives in each case ranged from a lower limit of 27.5 per cent and an upper limit of 40 per cent. Bryant CJ and Ainslie-Wallace J accepted that the trial judge's apparent reliance on the table led him into error, noting in particular that the wife was in fact awarded 40 per cent of the property, which was also the upper limit of entitlement outlined in the table. Their Honours also noted that the table gave no real indication of the relevant facts in the apparently similar cases and it could "only inform the glibbest of comparisons".

Bryant CJ and Ainslie-Wallace J (with May J agreeing) determined that it was open to the Full Court to re-exercise the discretion. In so doing, their Honours assessed the evidence as reflecting equality of contribution by both parties in relation to both the pre and post-separation periods. Their Honours further determined to make no adjustment under s 75(2) of the Family Law Act 1975 (Cth) and made orders providing for the equal division of assets.

X Pty Ltd (Administrator Appointed) & Milstead and Anor

[2015] FamCAFC 50 (Thackray, Strickland and Tree JJ) – delivered 30 March 2015.

Appeal—property settlement—power to make orders where a third party company is in administration

In this matter the Voluntary Administrator of X Pty Ltd ("X Pty Ltd") appealed all orders made by the trial judge which effected property settlement as between the husband and the wife, being the first and second respondents to the appeal. The orders appealed provided for money to be paid jointly or severally by the wife and X Pty Ltd to the husband and, if that money was not paid within 60 days, real property of X Pty Ltd was to be sold and the proceeds distributed to cover the cash payment to the husband. The husband opposed the appeal but the wife supported it.

The key issue on appeal, as argued by X Pty Ltd, was that all the orders made by the trial judge were contrary to certain provisions of the Corporations Act 2001 (Cth) ("Corporations Act") because after the trial was completed and while judgment was reserved, X Pty Ltd went into administration.

On appeal the Full Court's consideration focused on the argument that the orders were made contrary to the provisions of s 440D of the Corporations Act. Section 440D relevantly provides that during the administration of a company, a proceeding in a court cannot be proceeded with except with the written consent of the administrator or the leave of the Court. The issue for the Full Court was whether, where X Pty Ltd went into administration while judgment was reserved, the subsequent making of orders constituted proceeding with a matter contrary to s 440D.

In considering this question the Full Court applied the principles of statutory interpretation and made reference to the object of Part 5.3A of the Corporations Act, being the Part of that Act where s 440D appears. The object of that Part as set out in s 435A is relevantly expressed as being to provide for the business, property and affairs of an insolvent company to be administered in a way that maximises the chances of the company continuing in existence or, if that is not possible, in a way that results in a better return for the company's creditors. The Full Court then considered the legislative history of s 440D before saying:

41. It can therefore be seen that the purpose for the initial enactment of what is now s 440D of the Corporations Act was to, so far as possible, and insofar as the company was not the moving party, freeze the financial circumstances of the company in question, to permit the administrator to devise a plan of action for the future of the company in conformity with the statutory objects of s 435A. The legislature did so by prohibiting proceedings or enforcement being commenced, and by statutorily staying any extant proceedings or enforcement process. Given that purpose, it would be anomalous if s 440D permitted the adjudication upon extant proceedings, either against the company or in relation to its property, to nonetheless conclude by judgment during the moratorium period. That is because a judgment may create rights and liabilities which otherwise do not exist either at law or in equity, or adjust rights. The judgment in question is a good example of that, in that it created a liability on the part of X Pty Ltd which did not exist prior to judgment, and further required [real property belonging to X Pty Ltd] to be sold to satisfy the debt just created if it was not paid within 60 days.

(emphasis added)

The Full Court ultimately found that the trial judge should not have proceeded to deliver judgment and make the orders. The Full Court therefore allowed the appeal, set aside the trial judge's orders and remitted the matter for rehearing.

Teo & Guan

[2015] FamCAFC 94 (Thackray, May and Crisford JJ) – delivered 21 May 2015.

Appeal—property—power of the Family Court of Australia and Family Court of Western Australia to grant anti-suit injunctions

In this matter the husband appealed against an order made by a judge of the Family Court of Western Australia restraining him from pursuing proceedings instituted in the High Court of the Republic of Singapore. In determining the appeal the Full Court considered the power of both the Family Court of Australia and the Family Court of Western Australia to grant anti-suit injunctions.

By way of background, the husband and the wife married in 1984 and separated in 2010. They had three children. The husband spends about seven months of the year in Perth and the balance of his time in Singapore. The wife lives in Perth and is an Australian citizen. In February 2012 the parties and their three children executed a Deed of Family Arrangement. The Deed was governed by Singaporean law and its effect was to share assets equally between the five parties. Two clauses of the Deed were of particular relevance to the matter, one provided that the division of assets provided for by the Deed would constitute full and final settlement between the parties, and the other stated that the Deed would be governed and construed in accordance with the Laws of Singapore.

In December 2013 the wife filed proceedings in the Family Court of Western Australia pursuant to s 106B of the Family Law Act 1975 (Cth) seeking to have the Deed set aside and for assets to be divided equally. In February 2014 the husband filed proceedings in the High Court of the Republic of Singapore seeking that the wife withdraw her Australian proceedings and that the Deed be declared as valid and binding. In March 2014 the wife filed an application in a case seeking that the husband be restrained by injunction from prosecuting his proceedings in Singapore. The trial judge found that the Family Court of Western Australia had jurisdiction to grant an anti-suit injunction and made such an order (the Full Court noted that technically the trial judge made an anti-anti-suit injunction). The trial judge's finding as to jurisdiction was a key issue challenged on appeal.

In considering the husband's challenge to the jurisdiction of the Family Court of Western Australia, the Full Court first considered the source of the Family Court of Australia's power to grant anti-suit injunctions. The Full Court provided an extensive discussion of authorities before concluding that:

45. ... the power [to grant anti-suit injunctions] must be one which is conferred expressly by or under [the Family Law Act]; or arises by way of an implication from that Act; or is incidental and necessary to the exercise of the jurisdiction conferred by that Act.

The Full Court further held that:

67. ... It is sufficient for present purposes to say that there is strong authority for the proposition that an anti-suit injunction may be granted by the Family Court of Australia in the exercise of its inherent, or more correctly, its implied powers [to control its own process].

The Full Court also found that it is arguable that s 114(3) of the Family Law Act gives power to grant an anti-suit injunction, although as the issue was not fully argued on appeal, they made no absolute finding.

In relation to the jurisdiction of the Family Court of Western Australia to grant anti-suit injunctions the Full Court said:

81. Construing the subject matter, scope and purpose of the State and federal Acts, we find a clear intention that a State Family Court should have precisely the same powers in the exercise of federal jurisdiction as the Family Court of Australia. Since it is accepted that the Family Court of Australia has the power to grant an anti-suit injunction, we consider the [Family Court of Western Australia] has the same power...

Upon finding that the Family Court of Western Australia had jurisdiction, the Full Court had to consider whether the trial judge otherwise erred in granting the anti-suit injunction. The Full Court found no error on the part of the trial judge and accordingly dismissed the appeal.