The 'Trains, Planes and Automobiles' of family law matters

Gongsun & Pailing [2020] FamCAFC 244

This case involved legal issues not always seen together together with family law being held in the NSW Supreme Court, rather than the Family Court, and because of this it is interesting, informative and also useful. Thanks to Dianne Mitreski (law student and paralegal at Biddulph & Salenger) for the first draft.

Most of us have seen the movie starring Steve Martin and John Candy, but most people have not sat down to read judgments from the Full Court of the Family Court of Australia. This case involved a range of legal issues not usually seen together.

Facts: The Appellant was born in ‘Country E’ and was previously married with a child. The Respondent was born in Australia and had never married or been in a significant relationship. The Appellant and the Respondent met in early 2009 – she was aged 49 and he was 72. The Appellant spoke her native language and only a little English. The Respondent only spoke English. Despite the communication difficulties between the parties they signed a Financial Agreement on 17 Sep 2009 and began a de facto relationship. The parties lived together in the Respondents ‘Suburb C’ property for 6 months. In early 2010 the ‘Suburb C’ property was sold and the ‘Suburb B’ property was purchased, but with the Appellant as the sole registered proprietor, despite the Respondent providing the funds to purchase the property. On 23 July 2010, the Respondent executed a will leaving all his property to the Appellant. In April 2017, the Respondent went into a nursing home and the relationship between the parties of seven and a half years ceased. The plaintiff in the first instance proceedings sought an order that the defendant held half of her interest in the Suburb B property on trust for him. 

Issues: Whether the gift of the Suburb B property to the appellant was a product of undue influence or unconscionable conduct, with the result being that the Appellant would hold a portion of the property on constructive trust for the respondent. Alternately, whether the Appellant’s interest in the property should be adjusted under s 90SM of the Family Law Act 1975 (Cth) or whether the Financial Agreement excluded the Court’s jurisdiction.

Held:  The primary Judge found that the gift of suburb B property was a product of undue influence and unconscionable conduct and that the defendant held half of the property on constructive trust for the plaintiff. The Judge also found that this outcome could have been reached under s 90SM of the Family Law Act.  The Judge found that the Financial Agreement should be set aside because it was impracticable to carry it out.

On appeal the Full Court of the Family Court found that undue influence was not established and upheld this part of the appeal; the balance of the appeal was dismissed, meaning that the primary Judge’s findings of unconscionable conduct, and in the alternative a s 90SM property adjustment, remained undisturbed.

Discussion: This case involves a plethora of legal and procedural issues that are not always seen in close proximity. It is unusual, but not unheard of, for family law proceedings to be held in the Supreme Court – this can occur under federal cross-vesting legislation, but any appeals must be heard by the Family Court, and that is what occurred here. 

This case is also a useful reminder of the relationship between the equity and family law jurisdictions and shows the application of the principles that the High Court set out in Stanford [2012] HCA 52 and applied by the Full Court of the Family Court in Bevan [2014] FamCAFC 19. In the family law world it is easy to overlook the significance of a property adjustment order – whilst orders for property settlement are made in the majority of cases, matters such as Gongsun show that the Court should only interfere with a person’s interests in property when it is just and equitable to do so. Here, the Supreme Court was able to achieve the same outcome using the laws of equity as it could have done under the Family Law Act. The upshot is that the finding of unconscionable conduct and an associated constructive trust gave the plaintiff a beneficial interest in property that could be converted to a legal interest via an order for sale under the Conveyancing Act, without those interests being adjusted under the Family Law Act. 

Do cases like this occur every day? Not really, but that’s why they are both interesting and illustrative. The judgment is, from a legal perspective, a lively read because it shows how one conclusion – each party receiving half of the property or its sale proceeds – could be reached in different ways and it also reminds the reader of legal issues that we normally don’t consider or otherwise take for granted. 

This case is also a reminder about the importance of the procedural steps associated with Financial Agreements – instead of considering whether or not the Financial Agreement should have been set aside, the Full Court observed that neither party had signed a Separation Declaration, and as a consequence the Financial Agreement had no effect on the proceedings. The judgment says, very succinctly: ‘Absent such a declaration, the BFA presently “is of no force or effect” (s 90UF(1) of the Act).”’ [69]

Thanks to Dianne Mitreski (law student and paralegal at Biddulph & Salenger) for preparing the first draft of this article.