Ongoing funding crisis in the Family Courts

Late last year I wrote about the crisis in the Family Law Courts. It would appear that in the new year no improvements have occurred as recently the ABC reported on a matter from the Wollongong area having to be sent to Brisbane for the hearing.

The ABC interviewed a local solicitor who pointed out that this was distressing for the family involved as it will increase the costs involved in the hearing, both in terms of their personal travel costs but also the legal costs of their solicitors. The solicitor added that the reason the transfer was that other matters were already being given a date 2 years away and having the matter heard in Brisbane was the earliest date that could be given.

The report went on to note that the federal Attorney-General has still yet to appoint two judges to replace two retired judges.

http://www.abc.net.au/news/2016-01-15/judge-shortage-forces-nsw-family-interstate-for-court-hearing/7090164

A creditor, a bankrupt and a Binding Financial Agreement

The difficulties that arise in relation to enforcing a Binding Financial Agreement that provides for the division of assets and liabilities between a couple has increased following the recent decision of Grainger & Bloomfield.

In this case Ms Bloomfield obtained a judgement debt against Mrs Grainger for $2,100,000 in 2011. On 14 October 2012 a bankruptcy notice was served on Mrs Grainger. On 1 November 2012 Mr and Mrs Grainger entered into a Binding Financial Agreement that provided for Mrs Grainger to transfer her interest in a property to Mr Grainger. Mrs Grainger became a bankrupt on 7 January 2013.

Ms Bloomfield applied to the Court to set aside the Binding Financial Agreement. Ms Bloomfield was seeking that Mr Grainger transfer the property to Mrs Grainger's Trustee in Bankruptcy or alternatively pay the Trustee the equivalent value.

Mr Grainger responded arguing that as Mrs Grainger was a bankrupt Ms Bloomfield, as a creditor, did not have standing to bring her Application.

The first Judge decided that Ms Bloomfield did have standing. Mr Grainger appealed.

On appeal the Full Court of the Family Court agreed that Ms Bloomfield had standing to bring her application as, while the Family Law Act had been amended to restrict applications by creditors seeking involvement in property division proceedings nothing in the Act stopped a creditor bringing an application to set aside a Binding Financial Agreement.

Whether the Binding Financial Agreement should be set aside will now be determined by the Court. 

Valuing a business for family law property division

The valuation of a business is a complex objective. When it is to be done for consideration of how to divide property in family law matters it is even complex.

This is because the concept of 'fair market value' - the price that might be negotiated in an open market between an informed and willing buyer and an informed and not anxious seller, both acting at arms length - is confronted by the strategic interests that are characteristic of family law disputes.

In family law, allegations can be made that the value of the business has changed since separation. For example, one party has eroded the working capital, or that assets have now been hidden, or even that existing trade has been deliberately impaired. The party working in the business may allege that public statements by the other party following separation are harming the operation or profits of the business.

These issues are all relevant in the preparation of a business valuation.

But even in the absence of such allegations the value of a business will simply be influenced by the "value to the owner"; so that the history of a business having been passed down through a family, or established with another family member, the continued employment of a party or even that the business operates out of the family home are also considered in valuing a business for family law purposes.

Parliamentary inquiry into surrogacy

Shortly before the end of last year it was announced that the Attorney General has asked the House of Representative Standing Committee on Social Policy and Legal Affairs to inquire into the regulatory and legislative aspects of international and domestic surrogacy arrangements.

The Committee is to consider:

• The existing legislative arrangements, policies and practices and existing international obligations – including family law, immigration, citizenship, child support, passports and privacy – and inconsistencies that exist;
• Medical and welfare aspects, including the role of health care providers and welfare services;
• Issues about informed consent, exploitation, rights, payments and protections; and
• Information sharing between the states and territories and the Commonwealth.

The Committee's report is due by 30 June 2016.

The difficult role of an Independent Children's Lawyer

Late last year a Family Court judgement made headlines when orders were made that provided for the children's lawyer to remain appointed until the youngest child turned 18.

An independent children's lawyer is bound to seek Orders in the children's best interests. Their appointment is for the length of the Court proceedings.

The children's lawyer in the matter of Stacey & Woden however was left in a difficult position.

Allegations that the children were at risk of harm from the father had been made by the mother. The Court expert that found that there were risk factors present, a Police investigation commenced and Child Protective Services conducted an inquiry. But in the meantime the parents recommenced the children spending unsupervised time with the father.

Both the Police and Protective Services investigations resolved that no further action could be taken.
    

The Court then had to determine, without the benefit of a contested trial as the mother had withdrawn from the proceedings, whether the existing arrangements whereby one child lived with him and the other spent time with both where in the best interests of the children.

The independent children's lawyer, arguing that the risk was unacceptable but that no other protective course was available, took the unusual step of seeking to remain appointed so that he could continue to liaise with children's school and medical practitioners and Child Protective Services into the future. In making the Orders the Court acknowledged the onerous task ahead for the lawyer. 

Proposed amalgamation of the Federal Courts

Last week the Courts Administration Legislation Amendment Bill 2015 was introduced in the Senate. The proposed legislation is intended to bring the Federal Court of Australia, the Family Court of Australia and the Federal Circuit of Australia into a single administrative entity and make legislative provision for the courts to share corporate services.

In light of the funding crisis being experienced by the Federal Courts at this time it would appear that an aim of this proposed legislation is to save money in relation to administration costs. However, a concern has been raised in relation to the Bill as to whether expected savings can be achieved - without cuts to services.

Family Courts in crisis

You may have seen some media items recently regarding the current state of the Federal Circuit Court (FCC).

The FCC is responsible for the vast majority of family court proceedings.

The media has recently reported that the Chief Judge of the FCC is considering moving Judges from the Wollongong and Parramatta registries to the Sydney registry. The Court was quick to clarify that there was no current intention to close the registries in those areas, just that it was considering moving Judges to Sydney to cover the severe time delays being experienced in the Sydney registry at the moment. It is said that these are steps that the Court does not want to take but must consider in light of the funding crisis.

The media have also reported on a KPMG report, commissioned by the current Federal government, that reportedly concluded that there was an immediate need for the injection of millions of dollars simply to preserve the operation of the Courts.

The Family Law Section of the Law Council of Australia has called on the Federal government to immediately commit the funds to ensure the continued operation of the Courts, including the immediate appointment of Judges to meet the needs of the community. The press release from the Section stated "Families involved in the family law system already face delays of more than three years in waiting for a judge to hear their case. ... For Judge Pascoe to now have to consider closure is an indictment of the government's commitment to the administration of Australia's legal system ... No government that claims to be committed to justice and to addressing the scourge of family violence could permit the Federal Circuit Court to consider the closure of these registries"