| Family Law Case Watch News |
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Current 26th August 2009
PROPERTYWife succeeds against Tax Commissioner in divorce settlement The Commissioner of Taxation has lost an appeal against property orders dividing the sale proceeds of the matrimonial home equally between the wife and the Commissioner. Two pools — re-exercise of discretion Application of superannuation amendments considered Pre-marital trust assets part of pool: High Court 03 December 2008 | Courtesy of Political Alert This is a statement issued by the High Court of Australia EDWIN PHILIP KENNON AND IAN CHARLES FOWELL SPRY (in their capacity as trustees of the Catharine Spry Trust, the Caroline Spry Trust and the Penelope Spry Trust) AND ELIZABETH ANNE FOWELL SPRY AND IAN CHARLES FOWELL SPRY (in their capacity as trustees of the Elizabeth Spry Trust) v HELEN MARIE SPRY, IAN CHARLES FOWELL SPRY, ELIZABETH ANNE FOWELL SPRY, CATHARINE SARAH FOWELL SPRY, CAROLINE JANE FOWELL SPRY AND PENELOPE SARAH FOWELL SPRY IAN CHARLES FOWELL SPRY v EDWIN PHILIP KENNON AND IAN CHARLES FOWELL SPRY (in their capacity as trustees of the Catharine Spry Trust, the Caroline Spry Trust and the Penelope Spry Trust), ELIZABETH ANNE FOWELL SPRY AND IAN CHARLES FOWELL SPRY (in their capacity as trustees of the Elizabeth Spry Trust), HELEN MARIE SPRY, ELIZABETH ANNE FOWELL SPRY, CATHARINE SARAH FOWELL SPRY, CAROLINE JANE FOWELL SPRY AND PENELOPE SARAH FOWELL SPRY
The assets of a family trust established before marriage could be taken into account in property settlement orders under the Family Law Act, the High Court of Australia held today. Dr Ian Spry, a retired Victorian barrister, married Helen Spry in 1978. They had four daughters, now in their twenties. In 1968, Dr Spry created the ICF Spry Trust with himself and his siblings, their spouses and their children as beneficiaries. He was the sole trustee. In 1983, he excluded himself as a beneficiary for land tax reasons. In 1998, when his marriage was in difficulty, Dr Spry further varied the trust to exclude himself and his wife as capital beneficiaries. The Sprys separated in October 2001. In January 2002, Dr Spry divided the income and capital of the trust between four trusts he set up for his daughters. Mrs Spry filed for divorce in the Federal Magistrates Court in December 2002. The divorce was finalised in February 2003. In April 2002, Mrs Spry applied to the Family Court for orders for property settlement and maintenance. In 2005 Justice Strickland found that contributions to the couple’s assets, including trust assets, were 52 per cent by Dr Spry and 48 per cent by Mrs Spry, and that Dr Spry was entitled to $5,105,435 and Mrs Spry $4,712,709. Taking account of assets Mrs Spry already had, Justice Strickland ordered Dr Spry to pay her $2,182,302. Justice Strickland found that the steps taken with respect to the ICF Spry Trust in 1998 and 2002 were designed to keep property away from his wife and the Family Court. Under section 106B of the Act, he set aside the 1998 variation and the 2002 dispositions of assets. Dr Spry appealed. He and Edwin Kennon cross-appealed in their capacity as joint trustees of three daughters’ trusts. Dr Spry and his daughter Elizabeth cross-appealed in their capacity as joint trustees of the Elizabeth Spry Trust. The Full Court of the Family Court, by majority, dismissed the appeal and cross-appeals. Dr Spry and the joint trustees of the children’s trusts appealed to the High Court against both dismissals. The Court, by a 4-1 majority, dismissed the appeals and upheld Justice Strickland’s order for Dr Spry to pay Mrs Spry $2,182,302. The appellants were ordered to pay Mrs Spry’s costs. Dr Spry and the children argued that the assets of the trust were not part of the asset pool to be considered in making property orders. Three Justices held that without the 1998 variation and the 2002 dispositions, Mrs Spry would have had a right due administration of the trust and to due consideration as a beneficiary. Dr Spry would have had a power to appoint to her the whole of the assets of the trust. The Court held that these rights were property of the parties to the marriage. It held that the Family Court could make orders in property settlement proceedings as if changes to property rights brought about by the divorce had not yet occurred. The High Court held that it was open to Justice Strickland to make the orders he did on the basis that the asset pool comprised $9,818,144. One Justice supported Justice Strickland’s orders by reference to section 85A of the Act providing for variation of post-nuptial property settlements. · This statement is not intended to be a substitute for the reasons of the High Court or to be used in any later consideration of the Court’s reasons Court refuses retrial where parties led court into error In Sikorski & Sikorski(2008) FLC ¶93-381, the husband appealed against orders for property settlement, and sought leave to adduce further evidence. Among a number of complaints, the husband asserted that the trial judge erred by making an error in finding that both parties received $170,000 from proceeds of sale of a property and that the wife used her share of the proceeds to discharge a mortgage and erred with respect to the amount of that mortgage. The Full Court of the Family Court of Australia considered that there was no merit in the majority of the grounds of the appeal but there was an error in a finding of fact. Their Honours concluded that the trial judge was led into error by the way in which the parties conducted their respective cases, namely the wife’s evidence, the late production by the husband of relevant documents and the husband’s confusing evidence generally, and the submissions of both Counsel. The Full Court viewed that given the most confusing manner in which the case was presented at trial and on hearing of the appeal, significant further expense and delay would be occasioned if the matter was remitted. Court resources would be used to correct an error the parties themselves created. The appeal was dismissed and the husband was ordered to pay one half of the wife’s costs Undefended final hearing canvassed In this appeal to the Full Court, the husband sought leave to appeal against orders which provided, inter alia, that an application by the wife for orders for property settlement should be set down for hearing as an undefended final hearing. The trial judge subsequently heard the property settlement proceedings, made orders and delivered reasons for judgment. He explained in those reasons that the wife had appeared at the hearing with her solicitor and counsel that the husband had appeared through his solicitor and made an application for an adjournment which was refused. The husband’s solicitor advised the court that he would have someone from his office in court to observe what happened but the solicitor for the husband made no attempt to participate in the hearing nor did he make any further application. His Honour also identified in his reasons the material on which his findings were based. The husband appealed against the orders for property settlement. The application and both appeals were heard by the same Full Court. In the majority judgment of the Full Court, their Honours noted that, given their ultimate conclusion in relation to the order for an undefended hearing, it was unnecessary for them to express a view as to whether the trial judge’s understanding of the expression “undefended” was or was not correct. They noted that the order that the property proceedings should be the subject of an undefended final hearing was made pursuant to r 11.02(2)(c) and drew attention to the explanation of the term undefended in the Explanatory Guide to the Family Law Rules 2004. In their view, the application for leave to appeal and the appeal against the order for an undefended hearing could be determined in favour of the husband solely on the basis of the assertion that the trial judge erred in the exercise of his discretion by making the order for an undefended hearing. They went on to examine the exercise of that discretion, recording that the discretion to order an undefended hearing under r 11.02(2)(c) requires a finding of non-compliance with the Rules, the Regulations or a procedural order. They concluded that, in the circumstances the exercise of the discretion must be regarded as having miscarried and thus they allowed the application and the appeal. Accordingly, it followed in their view that the appeal against the order for property settlement must also be allowed. Zane & Allan(2008) FLC ¶93-378 CHILDRENChild ordered to return to United States A mother has unsuccessfully appealed against an order which required the return of a child to the United States pursuant to the provisions of the Family Law (Child Abduction Convention) Regulations 1986 (Cth). The child, a dual citizen of the United States and Australia, was born in 2004 in Australia and commenced living in the United States with the mother and father in 2005. Following separation in 2007, the mother left the United States with the child and travelled to Australia where they continued to live. The father thereafter commenced proceedings in Colorado under the Convention for the return of the child to the United States. On appeal, the issue requiring consideration was whether the trial judge made an error in his findings with respect to the exercise of jurisdiction by a court in the United States. The contention of the mother was that the child had not been resident in Colorado for a period of six months at the time of removal and, thus, there was no court in that state that could exercise jurisdiction over the child and that, as a result of this lack of jurisdiction, the father could not at that time enforce his rights of custody. In dismissing the appeal, the members of the Full Court of the Family Court of Australia found the Director-General demonstrated, by reference to the relevant statute law, that there was a basis upon which the father could invoke jurisdiction in the United States to enforce his rights of custody immediately prior to the time of removal. Their Honours further found that a court in the United States had jurisdiction to hear and determine the proceedings should the child be returned. Sharmain & Director-General Department of Community Services(2009) FLC ¶93-396 Four Israeli children to stay in Australia The High Court of Australia has allowed an appeal by a mother against orders which provided that the four children of the marriage return to Israel pursuant to the provisions of the Family Law (Child Abduction Convention) Regulations 1986 (Cth). The primary focus of the appeal was whether the children were habitually resident in Israel. The mother and father, who married and lived in Israel with the children, separated in 2005. The children had been born in Israel but were entitled to Australian citizenship by descent from their mother. Following separation, the children continued to live with the mother in the matrimonial home. In May 2006, the mother and children travelled from Israel to Australia. They held return tickets to Israel for August 2006. Before the mother and children left Israel, the father knew and accepted that they intended to travel to Australia and that the mother would return if the parties reconciled. Prior to leaving Israel and immediately after arriving in Australia, the mother took steps for her and the children to establish a home in Australia. Just over two months after the mother and children arrived in Australia, the father told the mother that he wanted the children to return to Israel and that he wanted a divorce. The members of the High Court of Australia found the Full Court of the Family Court of Australia erred in treating the absence of a settled purpose of abandoning habitual residence in Israel as determining the issue about the habitual residence of the children. Their Honours found that in circumstances where the parents intentions at the time of departure from Israel were expressed conditionally and the mother took the steps she did, both before and after arrival in Australia, to establish a new and permanent home for the children in Australia, it should have been found that the children were not habitually resident in Israel. The decisive factor was that the children left Israel with both parents agreeing that unless there was a reconciliation, they would stay in Australia, and their mother, both before and after departure, set about effecting that shared intention. LK v Director-General, Department of Community Services (2009) FLC ¶93-397 High Court says children don't have to return to Israel 11 March 2009 | Courtesy of AAP The High Court has ruled four children who are Australian citizens do not have to be returned to their father in Israel. LK then appealed to the High Court, which on Wednesday unanimously ruled that as of July 2006, the children did not habitually reside in Israel. Distinguishing L v T (1999) FLC¶ 92-875 Alternately, with respect to the order requiring the mother to attend psychotherapy, it was found that while the order was not supported in the circumstances of the case, under s 61 or s 64B(2)(i) of the Family Law Act 1975, it was distinguishable from the case of L v T such that there was no appealable error in making the order under s 67ZC. The appeal was dismissed. CHILD SUPPORTFathers' capacity to work In this SSAT appeal decision the Federal Magistrates Court found that the SSAT had erred in its finding of the extent of the applicant father’s capacity to work. The parties had two children and the appeal was brought over outstanding child support for a period from 2006 to 2008. An assessment of $8,840 had been fixed by way of departure decision and an objection to that decision was disallowed on 1 September 2006. The applicant brought a subsequent application for change in assessment that was refused and an objection was disallowed on 1 September 2006. A subsequent claim for support based on Mr Hadley’s income being nil was contested by Mrs Hadley. It was found that the applicant had no income beyond a Centrelink benefit. Both parties objected to the decision. Appeals to the Tribunal were made on 21 and 27 September by Mr and Mrs Hadley respectively. The period of review determined by the Tribunal was 23 May 2006 onwards. The Tribunal reviewed the child support from May 2006 to June 2008. The Tribunal set aside the decision under review and determined an amount for January to December 2007 and for January to June 2008 but not for May to December 2006. In addition, the Tribunal found that Mr Hadley was able to earn $36,000 based on a clerical rate. In allowing the appeal the court found that: 1. Objection decisions made during 2006 were not reviewable by the SSAT under Item 77(3) of Sch 3 of the Child Support Legislation Amendment (Reform of the Child Support Scheme — New Formula and Other Measures) Act 2006 (the Reform Act) and should be set aside. 2. In relation to the 2007/8 period the medical evidence confirmed that Mr Hadley was incapable of employment for an undetermined time. 3. The SSAT’s decision to address s 117(7B) of the Child Support (Assessment) Act 1989 looking at whether the parent’s earning capacity is greater than is reflected in his income was not necessary but rather the proper question was whether the applicant’s decision not to work was appropriate. 4. The ground referred to in s 117(2)(c)(ia) and s 117(2)(c)(ib) was not made out given that the Tribunal’s finding that Mr Hadley had not ceased work on medical grounds was not justified on the evidence, the evidence did not support a finding that the applicant’s income was $36,000 and reliance on Dr C’s evidence was misguided. 5. The decision relating to 2007 should be set aside. 6. The decision relating to 2008 should be set aside on the same basis as the decision for the 2007 period. Hadley & Hadley(2009) FLC ¶98-036 Right to pursue a child support debt In this matter the Child Support Registrar (the Registrar) had an action for summary dismissal brought by a respondent father dismissed on the basis that the Registrar has a duty to enforce a debt by all steps necessary. The respondent owed $85,725.15 for child support and penalties. The Registrar had filed two summonses related to that amount which the respondent sought to have summarily dismissed. The respondent claimed that the Registrar’s actions were vexatious, oppressive and an abuse of process and that the Registrar should be restrained from instituting further proceedings. The respondent also argued that as a declaration had been made on 19 December 2006 requiring the respondent to pay the arrears within 28 days, with which he had not complied, the case could be reopened. The Registrar argued that he was entitled to pursue outstanding debts and as such “continue to chew on the fruit until it has been devoured”: Deputy Child Support Registrar v Harrison(1995) 128 FLR 349 (Harrison’s case) although the important distinction in this case was that the arrears to be pursued included penalties and costs. The court held that the action be dismissed for the following reasons: 1. To the submission that the enforcement was vexatious, the court referred to the remarks of the Full Court from Harrison’s case stating that the legislation sought to provide “the maximum capacity to the agency to ensure child support or maintenance due and payable is in fact collected where possible”. 2. The court found for the applicant on the basis that in pursuing the debt it had acted entirely within the applicable rules. It found that a Registrar could seek to enforce orders of the court. Child Support Registrar & Gillies[2009] FMCAfam 34. |