Jackson and Shea

[2015] FamCA 22

FAMILY COURT OF AUSTRALIA

JACKSON & SHEA [2015] FamCA 22

FAMILY LAW – CHILDREN – Parental Responsibility – variation of final orders – where husband seeks an order for sole parental responsibility to institute proceedings in another jurisdiction – consideration of “the rule” in Rice & Asplund (1979) FLC 90-725 – no material change of circumstance – potential for adverse impact on child – husband already entitled to pursue litigation by virtue of s 65DAC(4) – orders made dismissing the husband’s application.

Family Law Act 1975 (Cth) s 65DAC(4)

Carvill & Carvill (1984) FLC 92-586
Freeman & Freeman (1987) FLC 91-857
Langmeil & Grange [2013] FamCAFC 31
Marsden & Winch (2009) 42 Fam LR 1
Rice & Asplund (1979) FLC 90-725

APPLICANT: Mr Jackson

RESPONDENT: Ms Shea

FILE NUMBER: MLC 5985 of 2011

DATE DELIVERED: 28 January 2015

PLACE DELIVERED: Adelaide

PLACE HEARD: Melbourne

JUDGMENT OF: Berman J

HEARING DATE: 10 December 2014

REPRESENTATION

COUNSEL FOR THE APPLICANT: Ms Stoikovska

SOLICITOR FOR THE APPLICANT: Berry Family Law

COUNSEL FOR THE RESPONDENT: Dr Ingleby

SOLICITOR FOR THE RESPONDENT: Forte Family Lawyers

Orders

1. That the Initiating Application filed by the husband on 9 October 2014 be dismissed.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Jackson & Shea has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT

FILE NUMBER: MLC 5985 of 2011

Mr Jackson

Applicant

And

Ms Shea

Respondent

REASONS FOR JUDGMENT

INTRODUCTION

1. On 12 February 2014 judgment was delivered which resolved parenting issues and property settlement as between Mr Jackson (“the husband”) and Ms Shea (“the wife”). The parenting orders were in respect of C born in 2004 (“the child”).

2. By Initiating Application filed 9 October 2014, the husband seeks both final orders and interim orders in the same terms. The orders sought can be summarised as follows:-

   (1)That the wife cooperate with the husband and do all things necessary including the institution of proceedings against Mr Shea and Ms B Shea (“the Trustees”) as trustees for the D1 Trust (“the Trust”) to pay to the parties on behalf of the child the following:-

   (a)The balance of any loan account standing to the child’s credit in the Trust; and

   (b)Any amount equivalent to any diminution in the balance of the loan account standing to the credit of the child as at June 2011.

   (2)That the husband have “sole parental authority” (sic) to make a demand upon and if necessary to institute and prosecute proceedings against the said trustees of the trust for the past and present entitlement of the child.

   (3)That upon the payment of the proceeds of the loan account to the husband (or the parties), the proceeds are to be applied to meet all arrears of and ongoing fees associates with the child’s education at N School and such other expenses for and on behalf of the child as may be agreed between the parties.

3. The application is supported by an affidavit of the husband filed on the same date, the husband’s answers to a Notice to Admit Facts filed 24 November 2014 and a further affidavit filed 9 December 2014 which conveniently summarises the husband’s position:-

   [2]At all times material I was not made aware that distributions which had been made to my daughter [C] from the [D1] Trust had been lent back to the Trust so as to create a loan account.  As a parent having joint responsibility for the child with my former wife, I was not consulted and I did not agree to such loan being made.

   [3]Given that the monies stand to my daughter’s credit in a loan account but she does not have access to those funds for her benefit, I seek orders in terms of my application filed herein.  My application is designed to ensure that both the wife and I have equal shared parental responsibility for control of the monies to be utilised for the benefit of our daughter and in the alternative that I have sole parental responsibility to make demand for payment.

4. By Response filed 24 November 2014, the wife seeks that the Initiating Application of the husband filed 9 October 2014 be dismissed and that he pay the wife costs of and incidental to the Response on an indemnity basis.

5. In summary and for reasons set out in the Summary of Argument filed on 3 December 2014, the wife seeks the summary dismissal of the husband’s application on the following basis:-

   ·That the application does not satisfy the Rule in Rice & Asplund.

   ·That the husband is estopped from bringing the application following the consideration of the principles relating to Anshun estoppel.

   ·That the application is in all respects an abuse of process.

BACKGROUND

1. The husband was born in 1961.  The wife was born in 1962.  The parties were married in 1997, separated in early 2011 and ultimately separation was formalised with the husband vacating the former matrimonial home on 12 December 2011.  The child presently aged 10 years has attended N School and is presently in Year 5.  It is generally the position of the parties that the child will continue to attend N School and whilst not the subject of any order, the judgment records the agreed position of the parties namely, that each of them were contributing 50 per cent of the child’s private school fees.

2. Whilst there is significant complexity in respect of the orders made, the broad summary is that the parties have equal shared parental responsibility for the child who lives with the husband for five nights per fortnight and substantial time during school holidays and special occasions and with the wife at all other times.

3. The orders reflect that neither party will remove the child from N School.

4. Whilst not directly relevant to the current application, the orders for property settlement provided that the wife pay the sum of $855,520 to the husband and that thereafter each of the parties shall retain such other realty and personalty as shall be in their general possession, power and control.

5. The affidavit in support of the application provides some background to the relevance of the child’s beneficial entitlement in the D1 Trust to the current proceedings.  The husband highlights that on 16 August 2013 and prior to the wife closing her case, she made application to call further evidence but in particular from her mother Ms B Shea.  That application was heard and following judgment delivered 11 September 2013, I gave leave for the wife to file and serve and to thereafter rely upon an affidavit of her mother.

6. It would seem uncontroversial that from 2004 to 2012 regular distributions had been made in favour of the child and as a result as at 30 June 2012 she had a credit loan account in the sum of $350,780. Clearly, the distributions were not paid directly to the child and accordingly are represented as a credit loan account entitlement.

7. The following is accurately recorded in my Reasons for Judgment:-

   [224]This trust [D1 Trust] was created in May 1977.  The trustees of the trust are [Ms B Shea] and her husband [Mr Shea]. In her affidavit [Ms B Shea] sets out that no distributions have been made to the wife from the trust but significant distributions have been made to her grandchildren including the child [C].  As at 30 June 2012 [C] had a credit loan account in the sum of $350,780.  That money has not been the subject of actual distribution and accordingly, it remains the child’s entitlement.

   [225]Exhibit 26 contains the beneficiary accounts for [C].  Significant and regular distributions have been made in favour of the child for each financial year from 2004 to 2012 inclusive.  Notwithstanding the assertion of [Ms B Shea] that there have not been any distributions of capital from the trust, the ledger shows a distribution of capital gains for 2007 in the sum of $140,000.

   [226]There is no suggestion that the child’s loan account entitlement should be brought to account as property of the parties.  The relevance is that it potentially represents a significant financial resource to the wife.  The wife can (as can the husband) call upon the trust to pay monies to which the child is entitled.  Those monies are able to be used for expenses in respect of the child, in particular private school fees and other activities.

   [227]Whilst the evidence of the wife (and also [Ms B Shea]) is that this money should not be used, I accept the contention of the husband that it represents a valuable resource available to the wife and importantly, there is some genuine basis to expect that the distributions of income and on occasion capital gain are likely to continue on the future on at least the same basis as has occurred historically namely, $26,000 per annum on average.

8. The husband alleges that as at 16 January 2014 the parties owed a total of $31,395.62 to N School which the husband alleges is still outstanding.

9. By letter dated 20 May 2014, the husband via his solicitors made a demand on the trustees of the trust that they cause the whole of the balance of the child’s credit loan account (and any amount equivalent to a reduction from the sum of $350,780) to be paid to the parties jointly.  Importantly, it is threatened that if the trustees fail to comply with the husband’s demand then they (his solicitors) “hold instructions to institute proceedings against them (the trustees) as may be deemed necessary”.  It is the position of the husband that the wife’s response was to oppose his demand, gave no support for his contention that the child’s credit loan account should be paid by the trust and was certainly not prepared to support any intention of the husband to institute proceedings directed against the trustees.

10. Whilst it is a complaint of the husband that the creation of a credit loan account effectively indicates that a unilateral decision was made by the trustees that the child would loan back to the trust her entitlement, the focus of the orders sought and the affidavits in support are directed to the contention that the parties are in arrears to N School in the sum of $31,395 with the implication that the figure is likely to increase in the future.  In summary, it is reasonable to find that the husband’s position is that the child’s credit loan account entitlement should be utilised to pay her education costs. This raises the implication that the child’s continued attendance at N School maybe is at risk.

11. In her affidavit filed 24 November 2014 the wife is critical of the husband’s position.  She highlights that the husband omits from his affidavit correspondence passing between the parties, their legal representatives and N School which sets out the correct position namely, that as at 3 October 2014 the amount owing to N School was $14,595.34 and that this amount represents the husband’s share of the school fees, the wife having paid her half.  That issue is the focus of the wife’s Notice to Admit filed 24 November 2014.  The husband admits the facts raised in that document and in respect of the child’s 2014 school fees, the husband has paid $1,000 whereas the wife has paid $16,800.

12. I accept the wife’s submission that the husband did not set out the correct position in respect of the child’s school fees as at the date of the filing of the Initiating Application on 9 October 2014.

THE HUSBAND’S APPLICATION

1. It was conceded by the husband’s counsel that the focus of the application is really in respect of Order 1 or the alternative position adopted in Order 2.  The matters raised in Order 3 are consequential namely, if an order is made that results in that monies standing to the credit of the child being paid to the parents for and on her behalf, how that money can or should be used.

2. Order 1 seeks that the wife cooperate with the husband in making a demand on the trustees, but if necessary thereafter to institute and prosecute proceedings against the trust in order to secure the monies standing to the child’s credit.

3. Irrespective of whether the matters raised in Order 1 are really subsumed in Order 2, the husband concedes that s 65DAC(4) “makes it possible for the husband to institute Supreme Court proceedings against the wife”.  The wife’s position is clear namely, that she would not support or assist the husband in either a demand against the trustees or in any subsequent litigation.  There is clearly hostility between the parties as is there hostility between the husband and the wife’s family, but in particular her mother.

4. It cannot be said that other than the husband’s demand, there is any other detail of the remedy or relief likely to be sought by the husband should he decide to resort to litigation against the trustees.  It is not asserted with any force that the merits of any future litigation will or will not be adversely affected by the cooperation of the wife or her involvement in the proceedings.  Clearly, the wife does not consider that either the demand or any threatened proceedings against the trust is meritorious or will succeed.  It would be difficult to conceive of a circumstance where a Court would require a reluctant party to participate in proposed litigation.  That is certainly the case where the litigation has not yet been formulated.

5. The ability of a party to bring litigation for and on behalf of a reluctant respondent is not unknown and was considered in the decision of Carvill & Carvill (1984) FLC 92-586. The facts of that case involved an application by the wife to have a chose in action which she asserted was owned by the husband to vest in her which was his right to take proceedings against his father in respect of monies that had been spent by the parties to build the former matrimonial home on the father’s property. The Court found that the right to take action was a chose in action and was properly within the definition of “property”. That is not the situation presently to hand.  The proceedings are not property proceedings and the husband concedes that whilst it may be easier if there was a joint approach to the request for the child’s loan account to be paid to them, the clear response of the trustees is that irrespective of the wife’s position, the demand made by the husband is opposed.

6. In circumstances where the husband concedes that he can bring the proceedings in another Court without the involvement of the wife, it is difficult to see on what basis the Court could or should make an order as sought by the husband in Order 1.

7. The drafting of Order 2 was initially problematic in that the husband sought “sole parental authority” to make a demand upon and if necessary institute proceedings against the trustees.  After some consideration, counsel for the husband conceded that consistent with paragraph 3 of his affidavit filed 9 December 2014 what he was seeking was “sole parental responsibility”.  If the Court were to make such an order, the husband considers he would then have the ability to make a demand upon and if necessary institute proceedings against the trustees.

8. To a very large degree, the husband’s concession that he would be able to bring proceedings unilaterally against the trustees would at first instance appear to remove much of the force in the husband’s position.

9. On the basis that the husband seeks by way of a parenting order a significant change to the orders made disposing of the substantive proceedings, consideration of the rule in Rice & Asplund (1979) FLC 90-725 arises.

RICE & ASPLUND ARGUMENT

1. In the decision of Langmeil & Grange [2013] FamCAFC 31 the Full Court reinforced the remarks by Evert CJ in Rice & Asplund (supra) at 78,905-06:-

   The principles which, in my view, should apply in such cases are that the court should have regard to any earlier order and to the reasons for and the material on which that order was based.  It should not lightly entertain an application to reverse an earlier custody order.  To do so would be to invite endless litigation for…change is an ever present factor in human affairs.  Therefore, the court would need to be satisfied by the applicant that…there is some changed circumstance which will justify such a serious step, some new factor arising or, at any rate, some factor which was not disclosed at the previous hearing which would have been material…

2. Their Honours highlighted the mischief that can arise from endless litigation and referred to consideration given by Strauss J in Freeman & Freeman (1987) FLC 91-857 at 76,470-71:-

   …continuing and seemingly endless and inconclusive litigation is usually emotionally damaging to the litigants and is likely to affect the children adversely.  It impairs the ability of the custodian, in this case the wife, to deal with the present and plan for the future of the family.  It is financially burdensome…The welfare of the children is, in this case, as in any others concerning custodial arrangements, the paramount consideration.   But once the court, either after a full hearing or by a consent order, has settled the question of custody, it is usually in the interests of the children that the order made by the court is treated as determining the dispute and be given the necessary support.  Stability in the lives of children and also in the lives of adults is an essential prerequisite to their well-being…

3. The Full Court in Marsden & Winch (2009) 42 Fam LR 1 clearly recognised that there will be circumstances where a significant change has occurred and a Court may need to reconsider the parenting arrangements as they affect a child or children. The Court considered in Langmeil & Grange (supra) that the following indicators should be considered:-

   (i)The past circumstances, including the reasons for the decision and the evidence upon which it is based;

   (ii)Whether there is any likelihood of orders being varied in a significant way, as a result of a new hearing;

   (iii)If there is such a likelihood, the nature of the likely changes must be weighed against the potential detriment to the child or children caused by the litigation itself.  Thus, for example, small changes may not have sufficient benefit to compensate for the disruption caused by significant re-litigation.

4. It is argued by the wife that there has not been any change in the current circumstances significant or otherwise.

5. The issue of the child’s entitlement under the trust formed part of the evidence in the trial.  Whilst it may well be a valid complaint that the information was provided late in the proceedings, nonetheless it was given particular focus by the husband.  The issue of the child’s attendance at N School was a matter raised upon the application of the husband namely, that there be no change to the child’s schooling.  The financial arrangements in respect of the child’s attendance at N School was not a matter of controversy in the sense that the husband readily conceded that he would be responsible for one half of the anticipate school and tuition fees.

6. Even on the husband’s current application it is not clear whether he submits that unless the child’s financial resources are relied upon to supplement her education costs, her continued attendance at N School is at risk.  The husband’s material is silent as to his own financial position and it is a strong submission made by counsel for the wife that the husband’s application fails to disclose the financial arrangements as between the parties and school.

7. If it is the husband’s intention to take action against the trustees on behalf of the child in the absence of any evidence adverse to the interests of the child, an order that the husband have sole parental responsibility would provide no benefit.  In any event, the husband concedes that if litigation is his focus then the current orders provide him with sufficient standing.

8. Whilst it was not argued, I do not consider that the husband can pull himself up by his own bootstraps in the sense that his application creates the dispute which he then seeks to remedy by a change to the parenting orders.

1. The paucity of evidentiary support for the husband’s application raises the question as to whether the husband’s concerns and his proposed course of action may in fact be financially disadvantageous to the child in the long term in that it might act as a disincentive to the trustees to make distributions to the child given the complete inability of the parties to reach any consensus on this topic.

2. It could not be said that there is a likelihood that orders as sought by the husband would be made and in the absence of any finding that the orders sought would be in the child’s best interests, there is a real risk that the potential for further litigation would be detrimental to the child.

CONCLUSION

1. I find that there is insufficient evidence before the Court to establish a material change in the circumstances of the child that would justify the orders sought by the husband.  There is also the potential for there to be an adverse impact on the child if the husband’s application is granted both by the exacerbation of the parental conflict arising from ongoing litigation but even if successful, there is no evidence that the orders sought by the husband would necessarily benefit the child.

2. I consider that the husband’s application falls at the first hurdle and it is not necessary for me to consider whether the husband is estopped from bringing proceedings pursuant to the principles relating to Anshun estoppel, or whether the actions of the husband amount to an abuse of process.

3. I make orders as appear at the commencement of these reasons.

I certify that the preceding thirty nine (39) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Berman delivered on 28 January 2015.

Associate: 

Date:  28 January 2015.