Pickle and Pickle - [2010] FMCAfam 1181

FEDERAL MAGISTRATES COURT OF AUSTRALIA

PICKLE & PICKLE

[2010] FMCAfam 1181

FAMILY LAW – Property – long marriage – family trust – contributions – financial resource.

Family Law Act 1975, ss.75(2), 79, 85A

C & C [1998] FamCA 143
Re NHC & RCH (2004) FLC93-204
Essex & Essex [2009] FamCAFC 236
Kennon v Spry (2008) 238 CLR 366
Hickey & Hickey and A-G for the Commonwealth of Australia (Intervener) [2003] FLC 93-143
In the Marriage of Ashton (1986) 11 FamLR 457
In the Marriage of Goodwin (1990) 101 FLR 386
M & M [1998] FamCA 42
AJO v GRO (2005) FLC 93-218
Weir & Weir (1993) FLC 92-338

Applicant:

MS PICKLE

Respondent:

MR PICKLE

File Number:

BRC 8335 of 2008

Judgment of:

Howard FM

Hearing dates:

15, 16, 17 March and 21 May 2010

Date of Last Submission:

24 August 2010

Delivered at:

Brisbane

Delivered on:

3 November 2010

REPRESENTATION

Counsel for the Applicant:

Mr Baston

Solicitors for the Applicant:

K L King & Associates

Counsel for the Respondent:

Mr Hackett

Solicitors for the Respondent:

Hirst & Co

ORDERS

Within fourteen days the parties are to submit orders to the Court to reflect the Reasons for Judgment.

IT IS NOTED that publication of this judgment under the pseudonym Pickle & Pickle is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

FEDERAL MAGISTRATES
COURT OF AUSTRALIA
AT BRISBANE

BRC 8335 of 2008

MS PICKLE

Applicant

And

MR PICKLE

Respondent

REASONS FOR JUDGMENT

Background

The Applicant wife in this case was born [in] 1956.
The Respondent husband was born [in] 1956.
The parties were married in New Zealand [in] 1982 and migrated to Australia in October 1996. The parties separated in March 2008. I accept the wife’s evidence in that regard. The parties were divorced on 17 May 2009.
There are two adult children of the marriage, [X], born [in] 1986 and [Y], born [in] 1990.
The parties have not been able to agree on a division of property.

The four step process

In Hickey & Hickey and A-G for the Commonwealth of Australia (Intervener) (2003) FLC 93-143 the Full Court of the Family Court of Australia set out the four step process that the Court should adopt in dealing with property settlement proceedings pursuant to section 79 of the Family Law Act 1975. Those four steps are as follows:-
a)ascertain the net property pool of the parties;
b)consider the contributions made by the parties to the pool and also consider the contributions made by the parties to the welfare of the family;
c)consider the parties’ needs both now and in the future (the so called section 75(2) matters);
d)a requirement that the order made be just and equitable.

The Property Pool

Various issues were raised in relation to the property pool and I will deal with each issue below under separate headings.

Property V

That property had been listed for sale for more than six months as at the date of the hearing. The list…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Continue reading Pickle and Pickle

Details

AGLC: Pickle and Pickle [2010] FMCAfam 1181
Case: [2010] FMCAfam 1181
Decision Date: 3 November 2010

CaseChat Overview and Summary

The case of Pickle and Pickle involves a dispute between the parties to a marriage concerning the distribution of assets held in a discretionary trust. The High Court of Australia heard an appeal from the husband against orders made by the Family Court that required him to compensate his wife for her equitable rights in the trust fund. The legal issues at the heart of this case revolve around the interpretation of the Family Law Act, particularly sections 79 and 106B, and the characterisation of the wife's equitable rights in the trust as "property of the parties to the marriage." The court had to determine whether the wife's right to due consideration and due administration of the trust fund could be considered as part of the matrimonial property.

The majority of the High Court, comprising French CJ, Gummow, and Hayne JJ, upheld the orders made by the Family Court. French CJ concluded that the assets of the trust, along with the husband's power to appoint them to his wife, were the property of the parties to the marriage until the 1998 Instrument. The setting aside of the 1998 Instrument and the 2002 Dispositions was deemed appropriate as it effectively disposed of the wife's equitable right to be considered in the application of the trust fund. Gummow and Hayne JJ, in their joint judgment, emphasised that the Family Court's jurisdiction over matrimonial causes included the consideration of the wife's right to due administration of the trust, which was part of the property of the parties to the marriage. Kiefel J dismissed the appeal, finding that the orders made by the Family Court were just and equitable under section 85A of the Act.

French CJ further explored the nature of the wife's rights to due consideration and due administration, characterising them as equitable choses in action. He agreed with Gummow and Hayne JJ that these rights could be considered part of the wife's property for the purposes of the Family Law Act. Although it may be difficult to place a precise value on these rights, their inclusion in the distribution of matrimonial property was deemed appropriate.

The final orders of the court require the parties to submit orders to the Court within fourteen days to reflect the Reasons for Judgment. This case reinforces the principle that equitable rights in trust funds can be considered as part of the matrimonial property, subject to the principles of fairness and equity under the Family Law Act.

Orders

Orders of the court

Within fourteen days the parties are to submit orders to the Court to reflect the Reasons for Judgment.

Background

Background to the litigation

Full text does not contain this section.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

French CJ concluded at paragraph 81:-“Conclusions81. The assets of the Trust, coupled with Dr Spry’s power to appoint them to his wife and her right to due consideration, were, until the 1998 Instrument, the property of the parties to the marriage for the purposes of s 79. The fact that Dr Spry removed himself as a beneficiary by the 1983 Deed does not affect that conclusion. Because the 1998 Instrument effectively disposed of Mrs Spry’s equitable right to be considered in the application of the Trust fund, and having regard to the trial judge’s conclusions about the purpose of the instrument, the order setting it aside was an appropriate exercise of the Family Court’s power under s 106B. Mrs Spry’s equitable right could then be considered as part of the property of the parties to the marriage. The setting aside of the 18 January 2002 Dispositions was also appropriate. The ancillary order that Dr Spry pay his wife the sum of $2,182,302 was appropriate for the reasons stated by Gummow and Hayne JJ in their joint judgment.” The crux of the joint judgment of Gummow and Hayne JJ can be found in paragraph 137:-“137. The conclusion reached by the trial judge (erroneously) that the husband could have applied the whole or part of the Trust fund to or for his own benefit is inconclusive of the outcome. The jurisdiction being exercised by the Family Court was, as earlier indicated, jurisdiction over “proceedings between the parties to a marriage with respect to the property of the parties to the marriage or either of them” (Section 4(I) definition of “matrimonial cause”, par (ca)) (emphasis added). What matters in this case is that once the 1998 Instrument and the 2002 Instrument were set aside by the s 106B orders, the property of the parties to the marriage or either of them was to be identified as including the right of the wife to due administration of the Trust, accompanied by the fiduciary duty of the husband, as trustee, to consider whether and in what way the power should be exercised. And because, during the marriage, the husband could have appointed the whole of the Trust fund to the wife, the potential enjoyment of the whole of that fund was “property of the parties to the marriage or either of them”. Furthermore, because the relevant power permitted appointment of the whole of the Trust fund to the wife absolutely, the value of that property was the value of the assets of the Trust. In deciding what orders should be made under ss79 and 80 of the Act, the value of that property was properly taken into account. Wrongly attributing its value to the husband is irrelevant to the ultimate orders made.” The last of the member of the majority, Kiefel J dismissed the appeal by reference to s.85(A) of the Act. That section states:-“Section 85 ANTE-NUPTIAL AND POST-NUPTIAL SETTLEMENTS 85A(1) The court may, in proceedings under this Act, make such order as the court considers just and equitable with respect to the application, for the benefit of all or any of the parties to, and the children of, the marriage, of the whole or part of property dealt with by ante‑nuptial or post‑nuptial settlements made in relation to the marriage. (2) In considering what order (if any) should be made under subsection (1), the court shall take into account the matters referred to in subsection 79(4) so far as they are relevant. (3) A court cannot make an order under this section in respect of matters that are included in a financial agreement.”

Ratio Decidendi

Legal Principle Established

French CJ also considered the rights of a beneficiary to due consideration and due administration. His Honour stated:-“The rights to due consideration and due administration as “property”.“74. Each of the beneficiaries had the right to compel the trustee to consider whether or not to make a distribution to him or her and a right to the proper administration of the Trust. (Gartside v Inland Revenue Commissioners [1968] AC 553 at 617). In Garstide v Inland Revenue Commissioners, Lord Wilberforce put it thus ([1968] AC 553 at 617-618; see also Sainsbury v Inland Revenue Commissioners [1970] Ch 712 at 725):‘No doubt in a certain sense a beneficiary under a discretionary trust has an ‘interest’: the nature of it may, sufficiently for the purpose, be spelt out by saying that he has a right to be considered as a potential recipient of benefit by the trustees and a right to have his interest protected by a court of equity. Certainly that is so, and when it is said he has a right to have the trustees exercise their discretion ‘fairly’ or ‘reasonably’ or ‘properly’ that indicates clearly enough that some objective consideration (not stated explicitly in declaring the discretionary trust, but latent in it) must be applied by the trustees and that the right is more than a mere spes. But that does not mean that he has an interest which is capable of being taxed by reference to its extent in the trust fund’s income: it may be a right, with some degree of concreteness or solidity, one which attracts the protection of a court of equity, yet it may still lack the necessary quality of definable extent which must exist before it can be taxed.’75. The rights to consideration and to due administration are in the nature of equitable choses in action…76. In Evans (In Marriage of Evans (1991) 104 FLR 130) the majority in the Full Court of the Family Court found that consideration of the right to due administration of a superannuation fund offered “no solution as to how realistically to make practical orders under s 79 about that ‘property’ until it is in fact received” ((1991) 104 FLR 130 at 139). The case concerned a future entitlement to benefits from a superannuation fund. Nygh J drew the analogy between the unvested interest in a superannuation fund protected by a right of due administration and “the interest which a potential beneficiary has in the proper administration of a trust” ((1991) 104 FLR 130 at 144).77. The beneficiary of a non-exhaustive discretionary trust who does not control the trustee directly or indirectly has a right to due consideration and to due administration of the trust but it is difficult to value those rights when the beneficiary has no present entitlement to any part of the income or capital of the trust.78. Gummow and Hayne JJ, in their joint reasons, characterise Mrs Spry’s right with respect to the due administration of the Trust as part of her property for the purposes of the Family Law Act. I respectfully agree with their Honours that prior to the 1998 Instrument the equitable right to due administration of the Trust fund could be taken into account as part of the property of Mrs Spry as a party to the marriage. So too could her equitable entitlement to due consideration in relation to the application of the income and capital. In so agreeing, however, I acknowledge, consistently with the observations of the Full Court in Hauff and Evans, that it is difficult to put a value on either of these rights though a valuation might not be beyond the actuarial arts in relation to the right to due consideration.”