Stephens and Stephens and Ors

Case [2007] FamCA 680


FAMILY COURT OF AUSTRALIA

STEPHENS & STEPHENS and ORS [2007] FamCA 680

APPEAL and CROSS-APPEAL – From decision of Family Court judge – PROPERTY SETTLEMENT – Discretionary Trusts – Trust established by husband prior to marriage – Husband by deed relinquished his position as beneficiary early in marriage – Late in marriage, at a time when the wife alleged the marriage was failing and after separation, husband took various steps which resulted in assets of the first trust being transferred to trusts for each of the four children of the parties - Primary basis on which trial Judge’s s106B orders were based was that the Deed of relinquishment could be overcome (either revoked, cancelled or avoided) and the husband could regain or resume his position as beneficiary of the Trust –Whether it would be contrary to law or public policy for the husband to regain membership of the class of beneficiaries of the Trust – Whether trial Judge was correct in finding that even if the Deed remained in full force and effect, the Trust was the alter ego of the husband and under his control; at the least, the Trust assets could be treated as a financial resource - Question as to control of the Trust in the absence of beneficial entitlement – Whether orders prefaced on the availability to the husband of Trust assets required a breach of trust/fraud on the power – Whether there was, contrary to finding of trial Judge, an agreement between husband and wife that Trust capital was to pass to the children at any time before either parent’s death – Question as to whether if husband had put Trust assets out of reach by the Deed, that action could amount to a reckless or wanton use of “marital” assets and draw the application of Kowaliw and Townsend provisions – Whether the trial Judge was correct in setting aside the 1998 instrument of variation – Whether the trial Judge was correct in setting aside the 2002 instrument and consequent dispositions - Whether shares held by the wife as nominee were “double-counted” by the trial Judge – Whether the value of shares disposed of by the husband should have been reduced to provide motor vehicle for each of three younger children – Whether the beneficiary loan accounts in Trust should have been deducted in the calculation of the asset pool by trial Judge – Whether the shares declared by husband to be held by himself as trustee for children should have been included as notional property - Contribution assessment and s75(2) conclusion challenged – Criticisms of the husband and children by the trial Judge – Whether this exceeded the trial Judge’s judicial role - Whether the husband, trustees and/or children were denied procedural fairness during trial

Family Law Act 1975 (Cth) s 79, s 106B, Part VIIIAA
Federal Proceedings (Costs) Act 1981 (Cth)

Ashton and Ashton (1986) FLC 91-777
Davidson and Davidson (1991) FLC 92-127
Goodwin and Goodwin-Alpe (1991) FLC 92-192
Webster and Webster (1998)…

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Stephens and Stephens and Ors [2007] FamCA 680
Case
[2007] FamCA 680
Decision Date

CaseChat Overview and Summary

The appeal and cross-appeal concerned the division of property and the application of section 75(2) factors in a family law matter. The parties involved were the appellant/cross-appellant husband and the respondent wife. The dispute centred on whether adjustments should be made to the property division based on the parties' respective circumstances after an initial assessment of contributions.

The primary legal issues before the court were whether the trial judge erred in their assessment of the parties' contributions and, consequently, whether any adjustment under section 75(2) of the *Family Law Act 1975* (Cth) was warranted. Specifically, the court considered the wife's submission that an adjustment should be made in her favour due to her continued care of the child Z, and the husband's submission that an adjustment should be made in his favour due to the disparity in income and earning capacities.

The court reasoned that the wife's submission for an adjustment based on her care of Z was offset by the disparity in the parties' respective incomes and earning capacities, particularly when the property division was factored in. The court found no basis for any adjustment under section 75(2) factors, concluding that the circumstances of the wife having care of Z were balanced by the income and earning capacity differences. The husband's arguments regarding his retirement, reduced income, and potential benefit from trust assets were considered within this context.

The appeal and cross-appeal were dismissed. The appellant and cross-appellant husband were ordered to jointly pay the respondent wife's costs of and incidental to the appeal and cross-appeal, to be assessed in accordance with the *Family Law Rules 2004* (Cth) in default of agreement.

Orders

Orders of the court

IT IS ORDERED

1.

That the appeal and cross-appeal be dismissed.

2.

That the appellant and cross-appellant jointly pay the respondent wife’s costs of and incidental to the appeal and cross-appeal, with such costs to be assessed in accordance with the Family Law Rules 2004 (Cth) in default of agreement.

Background

Background to the litigation

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Evidence

Evidence Before The Court

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Decision

Reasons for decision

As to s 75(2) factors, his Honour said:Conclusion on Section 75(2) factors257. The wife’s senior counsel submitted that if contributions are assessed as being equal then there is no basis for any adjustment pursuant to Section 75(2) of the Act. However, if the husband is assessed as having a greater percentage entitlement for contributions then the Section 75(2) factors should be considered and an allowance made to bring the final percentage division up to 50%/50%.258. I have assessed the parties’ respective contributions at 52%/48% in the husband’s favour and thus the effect of the wife’s submission is that there should be an adjustment of 2% in her favour pursuant to any relevant Section 75(2) factors. The primary factor that she points to is that she still has the care of Z.259. The husband’s senior counsel submits that there should be an adjustment of 5% in the husband’s favour primarily because the disparity between the income of the parties and their respective earning capacities.260. In my view there should be no adjustment for any Section 75(2) factors. The circumstances of the wife having the care of Z is offset by the disparity in their respective income and earning capacities, once the disparity in their property is factored in. A summary of facts relevant to s 75(2), taken from the judgment, follows. At the time of trial the wife occupied rented premises. The youngest child Z resided with her. She was in Year 11 at school. The wife was employed part-time as … with an income of $12,500.00. In addition she received investment income of $1,800.00 per week, although that income fluctuated. She had enrolled in a Masters degree at … University. The Z Stephens Trust paid Z’s school fees and various other expenses and paid the wife $170.00 per week for Z’s maintenance. Z also had part-time employment and sufficient income to pay … personal expenses. [Z] also received $175.00 by way of dividend income from shares. Z saw the father regularly and usually stayed with him one night each week and half of school holidays. The husband resided in property purchased at [Suburb B] post-separation and the adult children, W and X, lived with him. The husband’s only income was from investments and royalties totalling $560.00 per week. However, he also received weekly amounts from the trusts in respect of W and X by way of their maintenance. Those trusts also paid any university fees and miscellaneous expenses. However, the husband provided the accommodation for W and X including their meals. Y spent time with each parent and her trust paid $100.00 per week to each parent for Y’s maintenance. [Y] also worked part-time and had … income including some share dividends. Mr Myers argued:• That the husband had retired and had no income earning capacity;• Even after the property division as ordered his income would be less than that enjoyed by the wife;• To the extent that the trial Judge took account that the husband would receive or be entitled to benefit from Trust assets, he was in error;• It should have been held that Z would spend half …time with the husband and half with the wife; and• Furthermore, it should have been held that the wife would receive the greater benefit by way of the defraying of children’s expenses from the Trusts.

Ratio Decidendi

Legal Principle Established

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