Family Law Cases

De facto Relationships – when does the law acknowledge my relationship?

Tuesday, May 15, 2012
Interestingly, the length of a de facto relationship is not the only criteria for determining its legitimacy in the eyes of the law.

Did you know that you can be in a de facto relationship provided that you meet the criteria specified set out in the Family Law Act?  There are a number of indicative factors identified by Justice Powell in the case of Roy v Sturgeon (1986) namely...

a) The duration of the relationship 
b) The nature and the extent of the common residence
c) Whether or not a sexual relationship existed
d) The degree of financial interdependence and any arrangements for support between or by the parties
e) The ownership, use and acquisition of property
f) The procreation of children
g) The care and support of children
h) The performance of household duties
i) The degree of mutual commitment and mutual support
j) Reputation and “public” aspects of the relationship

The Family Law Court will go to great length to question of facts in each particularly case.

From 1 March 2009, the jurisdiction for De Facto couples moved from the Supreme Court NSW into the Family Court. Accordingly, the Family Law Act now covers “the fields” in relation to applications relating to property and maintenance of de facto couples.  

Section 90SB of the Family Law Act states that the Court can make a declaration as to the existence of a de facto relationship if the period (or the total of the period) of the de facto relationship is at least 2 years.  

However, the Court may also intervene to declare the existence of a de facto (and start amending property interests or making orders for maintenance) if:

a) There is a child of the de facto relationship or a party to the de facto relationship has made substantial contributions to the relationship; or
b) A failure to make an order or declaration would result in serious injustice to the applicant; or
c) The relationship was registered under a prescribed law of New South Wales.

The law acknowledges de facto relationships that are at least two years of duration, but it may also chose to acknowledge de facto relationships of less duration.

Be Careful When Structuring Discretionary Trusts

Tuesday, May 08, 2012
A recent decision of the Full Family Court (Harris & Harris [2011] FamCAFC 245) has clarified the treatment of discretionary trusts in property settlements.

The case concerned a family trust which was established by the husband's father. After the husband's father's death, the husband's mother became the appointor of the trust. The principal beneficiaries of the trust were the husband's parents, their children, that is the husband and his sister, and the “lineal issue” of the husband’s father. 

In Kennon v Spry the court held that in order for the assets of a discretionary trust to be considered the property of a beneficiary for property settlement purposes, there must be 'direct' or 'indirect' control of the trust by that beneficiary. 
In the first instance the court held that the trust’s assets should be treated as the husband’s property because they were indirectly controlled by him. The assets of the trust were therefore held to form part of the pool available for division between the parties. 

The husband appealed this decision on the ground that he did not have sufficient control of the trust. The wife argued that the husband had indirect control over the trust through his mother who acted as a “puppet” for his interests. However the wife failed to provide any evidence to support this argument and consequently the Full Court held in favour of the husband.  It found that the husband had no indirect control of the assets of the trust and therefore they should not be considered as assets of the husband and thus should not be included in the property pool available for division. 

Comment from Mark Streeter - Sydney Lawyer

Harris is significant because it explains the concept of indirect control as mentioned in Kennon v Spry. It establishes that in order to prove that there is indirect control of a trust, evidence must be provided to support a 'puppet' scenario.

It is therefore important when considering estate planning or business planning that careful consideration is given to the structure of the trust.



Share float complicates Binding Financial Agreement

Thursday, November 24, 2011

The case of Nyles & Nyles highlights the importance of giving full and frank financial disclosure at the time that terms of settlement are being entered into of any circumstance which may impact the future value of an asset even if that event has not yet occurred and its future worth is unknown.  

In this case the parties entered into consent orders and a Binding Financial Agreement  (“BFA”) dealing with the adjustment of property interests in 2004.

According to the terms of settlement the husband was to receive 60% of the net assets which were set out and annexed to Binding Financial Agreement. At the time the parties entered into the BFA and consent orders the wife was a director of a public company and the shareholding in that company was disclosed to the husband in the asset schedule attached to the BFA.

Floating of Company on Stock Market

At the time the parties signed the terms of consent and the Binding Financial Agreement however, the wife’s company was in the process of converting from a private company to a public company. The company floated on the stock market less than 2 months after the Agreement was signed, the wife sold her shares and made a large profit.
The Husband then sought to set aside the Binding Financial Agreement by making an Application to the Court under s79A of the Family Law Act for reason of non-disclosure of relevant information and the fact that he relied on the wife’s assertion as to the value of the assets in making the Agreement.

Full and Frank Financial Disclosure

Full and Frank financial disclosure is a fundamental element of justice and applies as much to out of court settlements as it does to contested proceedings.

The complicating factor in this case was that the wife’s shares were subject to strict confidentiality obligations. The wife was not able to provide the husband with any documents with respect to the pending commercial transactions due to confidentiality issues. The Husband’s evidence was that the Wife disclosed the floating of the shares at the time it was occurring but alleged the wife said that the float would not happen for a number of years and that the value of the shares would be minimal. The wife’s evidence was that she directly discussed with the husband the possibility of the shares being floated and made an offer of settlement during mediation in which her proposal involved the transfer of some of those shares to the husband which he failed to take up.

The husband was advised by his solicitors that it was not in his best interest to enter into the Binding Financial Agreement until further disclosure was to hand. The husband therefore failed in his Application to set aside the consent orders and the BFA as it could not be said that he was induced to enter into the BFA by the misconduct of the wife and he had made an informed decision.  This was despite the fact that the Court actually found that the wife had failed to make full and frank financial disclosure and to some degree acted fraudulently.

Power of Attorney can lose its Power

Thursday, August 25, 2011

A Power of Attorney is a legal document enabling someone to act on another person’s behalf. It can be very useful and is worth considering. However the person who grants this ‘power’ needs to have the ‘capacity’ to do so.

In July 2010, a case in the Supreme Court of NSW, highlighted that a Power of Attorney can be considered void - even if they have been used over several years. The case of the case of Szozda –v- Szozda [2010] NSWSC 804 was decided by Justice Barrett. It has widely been reported as a significant “clarification” to the test of whether or not an individual has the capacity to create a Deed of Power of Attorney.

The case is a story of Polish immigrants, untimely family deaths, real estate properties, discretionary trusts, family business and the complications that can arise between siblings.

The widow Mrs Aneila Szozda executed 6 separate Power of Attorney Instruments between March 2004 and December 2007 for her children and grandchildren.  One of these Power of Attorneys was used to exercise the proxy votes of shares owned by the Attorney to Mrs Szozda. The Application to the Court sought declaratory orders as to whether or not Mrs Szozda had the capacity to grant the General and Enduring Power of Attorney in September 2006.

At law, people over 18 are presumed to have legal capacity. However, having raised prima facie evidence of an individual’s incapacity (usually medical evidence) the onus then shifts back to the party seeking to assert the validity of the document and the capacity of the individual to execute it at that time.

The test of the validity of the capacity of a person to execute a Power of Attorney was generally considered to be:  ‘an enquiry as to whether or not the principal’s understanding of the nature and effect of the Power at the time of execution of the instrument.’ It was presented to the Court that Mrs Szozda often forgot non-regular appointments (such as hairdresser appointments) although was able to remember things such as her regular Sunday outings with a friend.

His Honour Justice Barrett found that the decision to grant a General and Enduring Power of Attorney differs from that involved in making of a Will but should be regarded as a similar or even greater level of complexity.

If capacity, in the relevant sense, is absent when the Power of Attorney is granted, the general law position is that the Power of Attorney instrument is void.

• The Courts look at each case on its own facts and weigh up the evidence.
• In this case the Court found that Mrs Szozda did NOT have the capacity at the time of executing the document to understand the nature and effect of her actions.

HELPFUL TIP: 
Ensure that your estate planning documentation is up to date before there are any risks or concerns over “capacity”.



Widow fights for multi million dollar estate

Thursday, December 02, 2010
After 30 years of marriage what would you expect from your husband's estate? When your husband has a $15 million estate probably quite a bit.

In this fascinating case a widow turned to the courts for help in receiving a greater share of the estate. The case was reported in the Sydney Morning Herald on Monday 29 November 2010. This followed a decision of Associate Justice Macready on 25 November 2010 in determining a Family Provisions claim by the Wife against her late Husband's Estate. (Hoolahan v Scali [2010] NSWSC 1349) It is helpful to note that there were also 4 adult surviving children.

The late Husband died of cancer at age 63 leaving an estate of approximately $15 million.

The late husband left a Will which provided his wife with $100,000 and an annual stipend of $45,000 (indexed) until aged 70 and then decreasing to $40,000 (indexed) and after 75 the sum of $25,000 (indexed) until death together with the reimbursement of her residential outgoings. The deceased held the matrimonial home as joint tenants with his wife so this property became the wife’s upon his passing without going through the Estate. The wife also had the benefit of past contributions for her benefit to the superannuation fund made by the deceased. The matrimonial home had an estimated value of $900,000.

The majority of the Trustees of the Superannuation fund decided in January 2010 to pay the death benefit of the late husband of approximately $1,000,000 to the Estate rather than to the wife. The wife had an additional $700,000 of superannuation benefits in her own name. The wife was 59 at time of judgment and according to the life tables had a 29 year life expectancy. The wife had lived with her late husband for 35 years which included a 30 year marriage.

Comment from Mark Streeter Sydney Lawyer

The court found that there was a large estate and the provision for the wife was 'minimal'. Having regard to substantial evidence, the standard of living and the lifestyle enjoyed by the wife, the Court was invited by the plaintiff to make additional and ‘appropriate provision’. Accordingly, in lieu of the indexed annuity in the Will, the Court decided that an appropriate provision was:  

(a) a bequest of a property estimated value of $3 million
(b) a bequest of the deceased’s boat – (a 2005 SeaRay Sedan Bridge boat estimate of $450,000)
(c) a legacy of $4 million

The balance of the estate was to remain in the Trust established by the Will and provided for benefits to the 4 surviving adult children and their children.

This decision is a reminder of the legal implications when writing your will. Wills are intended to represent your intentions. But this will was also seen as an attempt to continue to control the family after his death. As a result the wife and children have been drawn into a legal battle. Fighting over wills can divide families. It also makes personal information public.

Having a will makes very good sense. However having a lawyer's assistance in creating your will can help reduce the chance of it being contested in the courts.


Failure to transfer properties causes complications in defacto case

Tuesday, November 30, 2010
When a Dad lovingly gives his daughter two properties it seems simple enough. But what happens when he fails to sign a transfer, pay stamp duty nor change the registration details on the Department of Lands Torrens Title Registry? It gets complicated.

After the giving the gift, the Dad enters into a de facto relationship. Time passes. The Dad and his de facto separate. After the separation, the ex-de facto claims the properties as part of the ‘pool’ of assets to be divided.

The daughter approached Streeterlaw Sydney Lawyers and we agreed to help fight her case.  Our argument to the Supreme Court was that the properties were hers and it was the ‘common intention’ of the parties that they be transferred. The decision of Justice Brereton was handed down on 26 November 2010. Holmes v Mack [2010] NSWSC 1365

This case started as a claim by the ex-de facto wife Laura Mack [surname changed by deed poll] against Donald Mack in the District Court of NSW seeking provision under the Property (Relationships) Act 1984. After a lengthy series of interim arguments, including an adjourned hearing date, the proceedings took an interesting twist. Streeterlaw received instructions to act for Sharon Homes, the daughter of Mr Donald Mack and the plaintiff in these Supreme Court Proceedings.   

The brief facts are:
Laura came to Australia from the Philippines in early 1997 and formed a close personal relationship with Donald form August 1997. Laura's tourist visa expired and she returned to the Philippines but then returned to Australia in December 1998 sponsored by Sharon Homes (the daughter of Donald Mack). Laura resumed the relationship with Donald. Laura & Donald initially separated in January 2005 but after an attempted reconciliation separated on a final basis in June 2006.

Laura commenced proceedings in the District Court seeking provision from the ‘property’ of Donald which included the house he lived in and a commercial property.

Although the properties were registered in Donald’s name, Sharon claimed that they in fact belonged to her and that she had entered into an agreement with her father before 30 June 1996 in which Donald transferred these properties to her.

The determination of this issue was of real significance in the De Facto Proceedings because if it was determined the properties were held on trust by Donald, for Sharon, there would be practically no property in the divisible pool for the De facto proceedings.

The Court carefully examined the historical records evidencing the purchase of the commercial property and the ‘dissolution’ of an antique business operated as a partnership between Sharon & Donald.  

On 28 June 1996 Sharon and Donald, without legal assistance entered into a “Deed of Dissolution of Partnership”, which relevantly provided that, with effect from 1 July 1996, Sharon would hold the trade names and business assets, and Donald relinquished all rights and claims to the business funds, assets, stock, furnishing and fittings, plant, goodwill, books, records and real estate at the commercial property.

In respect of the residential property, Sharon and Donald entered into a “Formal Contract Agreement” on 30 June 1996. This document again was not prepared with legal assistance but was witnessed by a Justice of the Peace. This agreement purported to transfer the ownership of the residential property to Sharon, with Donald being entitled to continue to live in the property until his death. Donald gave Sharon the Certificate of Title. The consideration for this transfer was that Sharon agreed to maintain and support Donald for the rest of his life.

The purpose of the transaction was expressed to be for the purpose of “protecting the family assets from all outsiders including those directly related to the mentioned parties within this agreement”. It was noted that this occurred before Laura was ‘on the scene’.

Decision
The Court found that the written instruments of 28 and 30 June 1996, were each witnessed by the same Justice of the Peace and whose affidavit evidence as to her practice in witnessing such documents was not challenged. There was no evidence, of forensic examination or otherwise, adduced to cast any doubt on the authenticity of those documents.

The Court based its consideration on the facts and applied the following doctrines of law:
1.      A specifically enforceable agreement supported by consideration, contained in the 30 June 1996 contract.
2.      A common intention constructive trust.
3.      Doctrine of proprietary estoppels.

The Court made following findings:
The “....property is vested in Sharon to the exclusion of Donald, and Donald holds upon trust for Sharon any legal interest he has in those properties. In respect of Kogarah, Sharon’s beneficial interest is subject to Donald’s equitable right of lifetime residence. Sharon is therefore entitled to the relief she seeks.”

Comments from Mark Streeter Sydney Lawyer

Before 1 March 2010 all de facto cases in New South Wales were heard in the State Court (Local, District or Supreme Courts). However, if the parties separated after 1 March 2009, the jurisdiction for determining disputes over property was the Federal Family Courts (Federal Magistrates Court of Australia & the Family Court of Australia). In this case, the parties separated prior to this critical date.

This was obviously an excellent decision for our client Sharon. It is also a reminder of the importance of properly dealing with property transfers and the legal complications which can arise in relationships.

Complications in declaring a marriage null and void

Thursday, November 18, 2010

When is a marriage not a marriage?

A surprise trip to the Philippines reveals more surprises for a husband.

A recent Family Court decision of 11 October 2010 considered the very technical and legal requirements of an legal application to declare a marriage null and void (MONTY & VILLAMONT).  There are very few grounds by which the Family Court may declare a marriage void. 

Section 23B of the Marriage Act 1961 provides a limited ground.  The full text of this section 23B is available here. The ground applicable in this case 23B(1)(a) either of the parties is, at the time of the marriage, lawfully married to some other person.

In the case of MONTY & VILLAMONT, the husband married a lady of Filipino nationality in October 2007.  The wife then returned to the Republic of the Philippines.

The husband traveled to the Philippines on a surprise visit in 2008. He discovered that the wife was in a relationship with another man with whom she had two children.  The husband then conducted a search with a Republic of Philippines national statistics office which provided a document evidencing the wife’s marriage to another person in May 1995. With the assistance of the Australian Department of Immigration the husband confirmed that the wife was still married to the other person at the time of their marriage in October 2007.

The primary evidence in support of the application were documents including documents from a foreign jurisdiction; Nevertheless the Family Court was satisfied that at the time of the marriage the wife was lawfully married to another person and granted an order of nullity and made a declaration accordingly.

Comment from Mark Streeter Sydney Family Law Lawyer

A further complicating factor in this case was the husband’s inability to ‘serve’ the Application for nullity upon the wife.  The Court rules require that documents filed in Court including an “Initiating Application” must be personally received by the other personThe Family Law Rules further provide for the means by which service can be “proved” to the satisfaction of the Court. Rule 7.18 of the Family Law Rules 2004  however provides the Court with the power to modify the requirements of the rules relating to service or alternatively to dispense with it altogether.  In this case the whereabouts of the wife was unknown. 

An old facebook entry indicated that the wife was potentially living in Canada.  The husband did not have the financial resources to conduct searches in Canada and enquiries with the relatives of the wife in the Philippines had indicated that she was no longer living in the Philippines and by the time of the hearing the wife’s facebook profile had been removed.

Justice O’Reilly was satisfied that the steps taken by the husband to search and serve the wife were exhaustive and ordered that the service of the Initiating Application and affidavit filed in support be dispensed with.

Castration decided in Best Interest of Children

Wednesday, November 17, 2010
Most parents want what is best for their child. If a child breaks their arm parents need no special permission to have it operated on and fixed. However consent to perform surgery on special medical conditions is not so easy. In a recent Family Law case [Sean and Russell (Special Medical Procedures)] the castration of two boys was presented to the Courts for a decision.

With headlines of “Judge Allows Parents to have Boys to be Castrated” Kim Arlington, journalist for the Sydney Morning Herald sensationally reports on a Family Court decision by Justice Murphy delivered 26 October 2010.  The facts of this case are special, sad and serious and belie the sensationalist headlines. 

In respect of 2 applications heard by the Court at the same time 2 young children known by the pseudonyms “Russell” (an 18 month year old boy) and “Sean” (a 3 ½ year old boy) had both been diagnosed as having Denys-Drash syndrome.  It was the specialist medical advice received by parents of both these children that the gonads of the boys be removed for their own health and to prevent some of the effects of the Denys-Drash syndrome.  It is thought that these two children are the only two people in Australia that suffer from this condition.  The medical evidence was that the boys would develop of tumors (cancer) in their kidneys and their testes.

It was acknowledged that the removal of the testes would render both of the children infertile, however the consensus of medical opinion was that by reason of the syndrome each child was almost certainly likely to be infertile even without the proposed surgery.  The parents of the children applied to the Family Court for approval and authorisation in order to instruct the treating doctors to conduct the surgery.

Comment from Mark Streeter Sydney Family Law Lawyer

Justice Murphy, after an extensive review of the previous cases and legislation relating to this area of the law found that the proposed treatment was more consistent with securing the children’s best long term outcomes both physically and psychologically and the authorisation of the proposed treatment was in the children’s best interests. The Judge made orders authorising the treatment.

In order to protect the identity of both the children, parents and treating doctors, the names of these parties were anonymised.  Section 121(9) of the Family Law Act 1975 prohibits publication of information which identifies a party in Family Court proceedings.

 





Reducing violence against Women and Children

Tuesday, November 16, 2010
Protecting people from violence is a significant role of Australian laws. The protection of women and children from domestic violence is a topic often covered in the media. Sexual assault is another. A recent report is hoped to be a step forward in addressing inconsistencies or areas for improvement in our State and Federal laws. Many Family laws intersect or cross over with other laws which can create confusion.

The joint Australian Law Reform and New South Wales Law Reform Commissions delivered their final report to the Attorney General on 10 October 2010. The report was released to the public in November 2010.

This 1,500 page, 2 volume report sought to comprehensively review the various Federal and State Laws. It's objective was reducing violence in the community and particularly in relation to women and children.  

This process is one of the ways in which changes to laws are made in Australia.  This comprehensive review of the existing laws identifies weaknesses and areas of potential improvement and then made 186 recommendations for improvement.

Areas include confidentiality, rape, family dispute resolution, bail, trial process, homicide, breach of protection orders. For the full text of the report click here




Beware of Illegal Covert Surveillance

Wednesday, November 10, 2010

When is Covert Surveillance illegal and when does it serve a Legitimate Forensic Purpose?

Have you ever wanted to record a phone conversation as evidence for a family law dispute. How about discretely filming a video of a meeting of a spouse meeting someone else? What about recording what your children say when you are not there? Take care before you press record as you may be in breach of the law. It all comes down to consent.

Some legal court cases throw up cross-jurisdictional issues in which Federal Courts need to have regard to State Laws and vice versa. The Courts don't operate independently. A breach of an Australian Federal law may have impact on a State based Family Law matter.

A recent decision (5 August 2010) of Justice Fowler in the Family Court of Australia at Sydney considered the application of the Surveillance Devices Act 2007 (NSW) and its application in a case in respect of children’s “independent expert”. The starting point for His Honour’s determination was that a mother had procured, in contravention of the provisions of the Surveillance Devices Act 2007, a recording of the interviews between the Court appointed independent expert and the children of the marriage.

Section 7 of this Act prohibits a person from installing using or causing to be used a listening device to overhear, record, monitor or listen to a private conversation to which the person is not a party. The penalty is 100 penalty units or 5 years imprisonment or both. There are some limited exceptions but principally a party must consent to the listening device. No such consent was provided by the Independent Expert.

His Honour, Justice Fowler, had a case before him which had already run for 8 days. A transcript and copy of the recording were  produced to the Court by the mother in response to a Notice to Produce. His Honour ordered that it was in the interests of justice, the public (who expect the Court system to act efficiently) and also in the interests of the parties that a copy of this transcript and recording be provided to the Independent Children’s Expert before she was cross-examined.

Comment from Mark Streeter Sydney Family Law Lawyer

This case illustrates an application of the principles of cross jurisdictional issues in the Family Court.

Anyone contemplating using Surveillance Devices (audio, video or data) should consider the law regulating this area and ensure they act lawfully. There remains the possibility the mother could face criminal penalties for potential breaches of the Federal Surveillance Devices Act regardless of what is decided in the Family Law Court.


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