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Family Law Agreements Entered into Outside Australia

Case Note: Teo & Guan [2015] FamCAFC 94.  In today’s increasingly global culture, it is not uncommon for family law agreements to be entered into outside of Australia, but which have some legal effect within Australia.

The recent Full Court of the Family Law decision of Teo & Guan explores some cross-jurisdictional and international law issues from a Family Law Perspective.

Brief Relevant Facts

The husband and wife were married in Singapore in 1984, separated in 2010 and have 3 adult children.

The husband lives about 7 months per year in Perth, Australia, and spends the balance of his time in Singapore.

The wife lives in Perth, Australia, and is an Australian citizen.

In February 2012, the parties and their children executed a Deed of Family Arrangement (“the Deed”). The Deed made declarations of trust by each party, and “regulated the ownership” of assets located in both Australia and Singapore.

In general, the effect of the Deed was that the 5 parties were to share matrimonial assets equally.

The wife was to receive her $2 million share by way of instalment payments.

The Deed had the following key clauses:

a.  The division of the “Collective Assets” in particular as between the husband and the wife shall be in full and final settlement of all matters and present and future claims between themselves including and not limited to any claims for matrimonial assets in any proceedings whether in Singapore or anywhere else (emphasis added)

b.  The Deed shall be governed and construed in accordance with the Laws of Singapore.

In December 2013, the wife filed an application in the Family Court of Western Australia (“FCWA”), seeking to set aside the Deed pursuant to Section 106B of the Family Law Act 1975 (“the Act”).

Section 106B of the Act provides for the Court to set aside transactions entered into for the purpose of defeating an order (or anticipated order) of the Court in Family Law Proceedings.

The Court has very broad powers in this regard, and we have even seen the Family Court dismantle complex Family Trust Structures (refer to our case note on Kennon v Spry here).

On 28 February 2014, the Husband filed an Originating Summons in the High Court of Republic of Singapore seeking:

a.  A Declaration that the Deed is “valid effectual and binding” on all parties to the Deed;

b.  An Order that the wife “withdraw or cease all action and proceedings” in the FCWA; and

c.  An injunction restraining the wife and her servants and agents from “carrying on” the proceedings in the FCWA.

These type of proceedings are commonly described as an “anti-suit injunction”.

On 20 March 2014, the husband filed a response to the wife’s application in the FCWA, seeking final orders for a stay and the dismissal of the wife’s claim in the FCWA.

On 25 March 2014, the wife filed an Application in a Case in the FCWA seeking an anti-suit injunction to the husband’s proceedings in the Republic of Singapore (effectively, an “anti-anti-suit injunction”).

On 8 April 2014, the trial judge in the FCWA made an order restraining the husband from prosecuting the proceedings in Singapore. The trial judge found that:

a.  The FWA was not a “clearly inappropriate forum” to hear the dispute; and

b.  The proceedings commenced in Singapore were “vexatious and oppressive to the wife”.

This decision was appealed by the husband to the Full Court of the Family Court.

The Appeal

The Appeal raised two main questions:

  1. Does the FCWA have power to grant an anti-suit injunction? This was described by the Full Court as a “novel” issue; and
  2. If the power exists, should the injunction be granted?

In relation to the first question, the Court held that the FCWA does have jurisdiction to grant an anti-suit injunction.

In relation to the second question, it was held that:

  1. The FCWA had the ability to determine all aspects of the dispute, including over the choice of law clause, the creation of trusts over real property in Singapore, and the effect on third party beneficiaries (i.e. the children).
  2. The FCWA had not erred in law and fact by finding that the FCWA is not a clearly inappropriate forum.
  3. The Singaporean proceedings were vexatious and oppressive, particularly where the issues raised in both Courts are identical.
  4. The FCWA did not fail to take into account a number of considerations the husband considered “relevant”. Many of these considerations were considered so “lacking in merit” that they were not discussed further in the decision, and some other discussions were left for trial.
  5. The wife had valid grounds for commencing a Section 106B claim.
  6. There was no failure of the FCWA to properly exercise its discretion to allow the wife’s anti-suit injunction. It should be noted that when dealing with these grounds the husband submitted that there would be unspecified advantages in obtaining a Singaporean judgment determining title to and interest in the property located in Singapore. The Court highlighted that there does not appear to be any dispute about the existing legal or equitable ownership of any of the assets in Singapore.
  7. The Deed was irrelevant to the wife’s application.

It should be noted that as the husband’s appeal as entirely unsuccessful, the husband was ordered to pay the wife’s costs in the appeal. This departed from the usual presumption that “each party bears their own costs”.

Our Concluding Comments

This decision is noteworthy as it raises deals with a number of international law and cross-jurisdictional issues.

Further, this decision highlights the broad discretion of Australian Family Law Courts to deal with agreements entered into outside of Australia (and in certain circumstances, effectively block proceedings commenced outside of Australia) that deal with matrimonial property.

This also highlights the importance of taking urgent Family Law advice, and dealing with disputes.

It should be noted that Australian proceedings were commenced prior to the Singaporean proceedings.

We note this judgment only deals with the anti-suit injunction, and not whether the Deed is to be set aside by an Australian Court.

We will provide a further case update, if and when a decision is made on the wife’s application dated December 2013 to set aside the Deed on the basis it was entered into to defeat the Australian Family Law proceedings.