16 July 2016

Is Equal Shared Parental Responsibility the same as “Equal Time”

Written by Rachael Vincent, Solicitor

The short answer is “No!” Although often confused, equal shared parental responsibility and equal time are separate and distinct.

What is Parental Responsibility?

Parental Responsibility means “all the duties, powers, responsibilities and authority which, by law, parents have in relation to children”.  Parental Responsibility can be exercised solely or jointly. In the absence of any court order, parental responsibility is deemed to be joint (or “equal shared”), meaning that parents have to consult the other and make joint decisions in relation to major long term issues affecting their children.  Such major long term decisions can include:

  • Where a child goes to school;
  • What religion a child practices;
  • What surname a child has;
  • In the event that a child has major health issues, what treatment that child should receive and where they should receive it; and
  • Changes to the child’s living arrangements, for example, a proposed relocation to a new location making it difficult for the child to spend time with one parent.

What is Equal time? 

Equal time refers to a parenting arrangement for separated parents whereby children spend the same (or close to the same) amount of time with each parent. This is often on a “week about” basis, meaning during school term time, the children spend one week with one parent and then the following week with the other parent. There can also be other ways to divide the time evenly, depending on the parents’ and the children’s circumstances.

How do you get Equal Shared Parental Responsibility?

If there are no court orders or parenting plans in place, parents automatically have equal parental responsibility.

If, after having consulted the other parent, parents continue to have difficulty in making decisions relating to parental responsibility, there are avenues that parents can take without having to approach the Court. Local agencies can assist and offer mediation services to separated parents to discuss parenting arrangements and parental responsibility. Such agencies can include:

  • Relationships Australia;
  • Local Family Relationship Centres;
  • Catholic Care; and
  • Private Mediators.

It is a requirement that parents attend mediation prior to commencing Court proceedings, other than in cases where there is urgency or family violence. If no agreement can be reached at the mediation process it is open to either parent to file an Application with the Court.

In Australia there are two Courts that have the jurisdiction to make a parenting order, the Family Court, and the Federal Circuit Court. When making any parenting order in relation to children both courts operate on the presumption that it is in the best interests of the children for their parents to have equal shared parental responsibility for them.  In the case of Goode (No 2) [2007] FamCA 31, the presiding Judge stated:

“From the children’s perspective, I can only see good will come from their parents jointly exercising parental responsibility.”

Once a Court makes an order for equal shared parental responsibility the Family Law Act 1975 (“the Act”) then requires the Court to look at whether an equal time arrangement is “reasonably practicable” and “in the best interests of the children.”

Again, equal shared parental responsibility is not the same as equal time, rather it comes before an order for equal time is considered.

Parents who have equal shared parental responsibility for their children only have to consult the other in relation to major long term issues affecting the children, not simple day-to-day issues. Day-to-day issues include what the children have for meal time or whether they attend school excursions.

When might a Court not make an order for Equal Shared Parental Responsibility?

There are some circumstances where the Court may decline to make an order for equal shared parental responsibility, for example:

  1. Where there has been alleged violence that has continued since separation;
  2. Evidence of family violence or child abuse by the other parent where a parent or child reasonably fears for or is apprehensive about their personal wellbeing or safety.

Sometimes the Courts can decline to make an order for equal shared parental responsibility on the basis that communication between the parents is so bad that there can be no hope that they could effectively communicate to discuss major long term issues surrounding their children. The Full Court of the Family Court has said in relation to this:

“It appears to us that a parenting order, including an order for equal shared parental responsibility, must be in the best interests of a child, a court may in the exercise of its discretion find it inappropriate to make an order in certain circumstances. This could occur where, although there is no family violence or child abuse, the conflict or lack of effective communication between the parents is such that to properly exercise their equal shared parental responsibility they would be unable to comply with section 65DAC by consulting and making a genuine effort to reach agreement about major long term issues affecting their child or children. In other words, in these circumstances an order for equal shared parental responsibility would inevitably lead to further conflict and perhaps contravention applications, which conflict and/or ongoing litigation could be adverse to the child’s best interests.”

In the overwhelming majority of cases, however, the Court does make an Order for Equal Shared Parental Responsibility.

16 July 2016

Bank’s attempt at possession of an elderly couple’s home fails for ‘Unjust’ and ‘Unconscionable Conduct’

Written by Justine Taylor, Senior Associate

RHG Mortgage Corporation v Ianni [2014] NSWSC 849

His Honour, Davies J of the Supreme Court set aside a Loan Agreement and ordered that the Bank, RAMS, discharge the mortgage over the home of the elderly Defendants, on the basis of an Unjust Contract and Unconscionable Conduct.

UWE acted for the Defendants Mr. & Mrs Ianni, who were successful in defeating the bank.

History of Proceedings

The case has had a long history before the Court, in proceedings which were commenced by the Bank against the elderly couple back in 2008.  Sadly, Mrs Ianni passed away since the commencement of the proceedings.

The matter was first heard before His Honour Grove AJ who upheld the loan agreement. However the Court of Appeal, before Bathurst CJ, Basten JA and Tobias AJA (dissenting), set aside the Judgment of Grove AJ and remitted the matter for retrial.  The Court of Appeal held that His Honour’s finding as to the Mortgage Broker, Mr Famularo, being a reliable witness, was “glaringly improbable” and that the Court at first instance had overlooked incontrovertible facts.

The Facts

Mr. and Mrs Ianni, emigrated from Italy in 1954.  Mrs. Ianni had left school at the age of 8, worked for a year in a convent and married Mr. Ianni in 1960.  She could not read or write, although she could print her name and understand a few words in English.  Mr. Ianni worked as a painter and docker until retiring and also had poor reading and writing skills in English.

Mr. & Mrs Ianni gave a personal guarantee in 2000, over a loan from St George Bank to their son and daughter in law, who operated a business in Darling Harbor.  Mr. Ianni told the court that he had given guarantee limited to $100,000.

In 2005, the children refinanced in order to buy a property in Dural. On 14 September 2005, a Loan Application was submitted to RAMS in a 20 page fax by then Mortgage Broker, Mr. Famularo as Principal of Australian Mortgage & Business Finance Solutions.  The loan was for a term of 30 years, (by which time Mr. Ianni would have been 100 years of age). The purpose of the loan was stated in the application to be:

  1. the purchase of a property for $500,000,
  2. the refinancing of loans for $490,000 and
  3. costs for the financing of $10,000,

so that the total loan facility sought was $1,000,000.

The application contained a number of false statements:

  1. Firstly it annexed a contract of sale (referred to in the proceedings as the ‘Sham Contract’) so that it  appeared Mr. and Mrs Ianni Snr were the purchasers of the Dural Property for $500,000, when in fact their children were purchasing the Dural Property for $2.2 million.
  1. Secondly, the Loan Application attached a “Snapshot” of a St George Loan Statement that suggested Mr & Mrs Ianni Snr had received a loan from St George in their own names rather than as guarantors.
  1. Thirdly, the application stated that Mr. Ianni and Mrs Ianni were self-employed, earning an income of $85,000- $90,000, with assets exceeding 2.5 million which included a share in the restaurant business.
  1. The application was also submitted with false identification and passport numbers.

In fact, Mr. & Mrs Ianni were pensioners with no capacity to service any such loan, and Mrs Ianni did not hold an Australian passport.

The Judgment

His Honour noted that the Mortgage Broker, Mr. Famularo, had a copy of the real contract for the purchase of the Dural Property, because he had submitted a separate financing application with NAB on behalf of the children.

The Court found:

  1. The Bank had notice as to the age of the Applicants and the fact that this was a 30 year loan.
  1. Despite the Bank’s internal file notes, (indicating concern that Mr. & Mrs Ianni were not listed as self-employed “directors” and requesting that the statement of assets and liabilities be amended), the Bank proceeded on the loan.  The Bank never requested clarification as to the Applicants’ employment, and the Bank called no witness to give explanation.
  1. The Bank also proceeded on the loan on the basis that 100 identification points were held on file, yet the points held on file for Mrs Ianni added up to 60;
  1. The Bank proceeded on the loan despite the apparent deficiency between the amount required in the stated loan purpose as against the amount to be loaned.
  1. RAMS knew from the ‘Sham Contract’ that the property being purchased was said not to be part of the security for the loan being sought.  That was unusual because it strongly suggested that the property was not being purchased as an investment property.  The tax benefits that would have flowed from using that property as security for a loan made that clear, yet the Bank’s internal notes, in contrast, suggested that the property was being purchased as an investment.  Again no witness from the Bank was called by way of explanation.
  1. An inference was drawn by His Honour that in fact the Bank had notice, based on a water rates statement, that Mr. Ianni was a pensioner.
  1. It was apparent that the Bank overrode its own guidelines.

His Honour found the Mortgage Broker, Mr. Famularo, “to be a most unsatisfactory witness” and found it difficult to accept much of the evidence he gave.”  His Honour determined that some evidence from Mr. Famularo was “quite frankly unbelievable.”

In this most recent paradigm of David vs Goliath, the Court found that the contracts were unjust and had the bank done things that might, in the circumstances have been expected of a bank, they would have ascertained the improvident nature of the contract

The court also found that the Defendants were under special disability by reason of their age, language, education and economic background.

The Bank has filed a Notice of Appeal, to be determined next year. And so the proceedings continue to yet another round.

16 July 2016

Competing Security Interests and the Personal Property Security Register (PPSR)

Written by Zachary Gazzard, Solicitor

First major Australian case regarding competing security interests and the Personal Property Security Register (PPSR) confirms that Creditors/Businesses who fail to perfect their security interests are likely to lose their security

Maiden Civil (P&E) Pty Ltd v Queensland Excavation Services Pty Ltd & Ors [2013] NSWSC 852

This case involved the lease of excavators and loaders. Queensland Excavation Services Pty Ltd (“QES”) had lent these items of machinery to Maiden Civil (P&E) Pty Ltd (“Maiden”).

QES and Maiden had no written lease agreement, but the equipment had been in Maiden’s possession for over a year and QES periodically invoiced Maiden for the use of the equipment. QES had not perfected a security interest by registration under the PPSA or by any other means.

Maiden had separately granted security over all of its assets to Fast Financial Solutions Pty Ltd (“Fast”) under a general security agreement (“GSA”). Fast perfected its security interest under the GSA by registration under the PPSA. Maiden encountered financial difficulty and Fast appointed receivers under its GSA. QES then cancelled the leases and asserted primary rights to the equipment as owners. Fast’s receivers claimed primary rights to the equipment as sole perfected security interest holder.

It was held the receivers were entitled to possession of the equipment.

Given the PPSR regime is very recent, this is one of the few Australian decisions involving competing security interests and the PPSR to date. Case authorities from New Zealand where the regime has been implemented for a longer time, are likely to be followed in Australia.

A notable case in New Zealand which is a further example of the importance of registration on the PPSR was Waller v New Zealand Bloodstock Limited [2006] 3 NZLR 629.

In that case, New Zealand Bloodstock leased a stallion to Glenmorgan Farm for a three year period. The lease term specified that the title in the stallion remained with New Zealand Bloodstock. This interest created a PPS Lease which is a deemed security interest under the New Zealand regime. New Zealand Bloodstock did not register its interest.

A few years prior, Glenmorgan Farm had granted security over “all its present and future assets” to a creditor, S.H. Lock (NZ) Limited. S.H. Lock registered its security interest in Glenmorgan Farm’s assets. Glenmorgan Farm went on to become insolvent. Despite New Zealand Bloodstock owning the Stallion, as they had not registered their security interest, it lost priority over the Stallion and New Zealand Bloodstock lost their entire investment of $2 million by not registering their security interests.

Another recent Australian case for which a decision is yet to be handed down involves the Receivers of the Forge Group taking action in the NSW Supreme Court and attempting to obtain control of $50 million worth of gas turbines that APR Energy (the owners) leased to the Forge Group. APR Engery failed to secure with a PPSA registered charge. A decision is expected later this year.

How do the changes to the Personal Security Act affect your business?

The recent implementation of the Personal Property Securities Act 2009 (Cth) (“PPS Act“) in Australia brought important changes to the law. It is essential that your new and existing agreements which create security interests are registered following the commencement of the operation of the PPS Act. Under the new regime you need to register new and existing security interests on the Personal Property Security Register (PPSR) within strict timeframes. If you fail to ‘perfect’ your security interest, by registering on the PPSR, your security may not be enforceable or your priority may be lost.

Do you have a Security Interest?

A security interest is an interest in personal property provided for by a transaction that in substance, secures payment or performance of an obligation. Section 12 of the PPS Act defines what a Security Interest is. Common security interests include liens, chattel mortgages, charges and retention of title clauses in contracts (ROT). Other security interests include financing or operational leases of personal property for more a period of more than 12 months or 90 days for motor vehicles or aircraft, hire purchase agreements and consignment agreements.

You should refer to Section 12 of the PPS Act if you are unsure whether your interest is a security interest, registrable under the PPS Act.


How do I register and how much does it cost?

There is a national online register, known as the Personal Property Security Register (PPSR). You don’t have to set up an account. You may create registrations in the PPS Register as an account customer or a casual user.

Registration should occur within 20 business days of the signing of any security agreement by your customers. To view prices involved with registration, and to register your security interests, click here.

Can I search a business or individual to whom I am providing credit to find out if other Creditors have security interests registered against that business or individual?

Yes. A comprehensive register of all PPSR registrations can be searched online. To search the PPSR click here.

Where will my security interest Rank as against other Creditors of a business or individual?

Under the PPS Act, suppliers using retention of title clauses have a purchase money security interest (“PMSI”). A PMSI interest elevates the interest of a secured party to a higher status relative to other interests, such as general or “all assets” charges held by the Bank for example. Unperfected security interests only rank in order of attachment, and a perfected interest will defeat an unperfected security interest. Perfected security interests rank in priority of time.

How should I word my commercial credit terms so that I can register a security interest?

Your terms of trade should include a general security agreement and a retention of title clause.

If you are unsure whether your terms are sufficient or would like assistance with re-wording your commercial credit terms, to ensure that your terms create a recognised security interest which can be registered on the PPSR, Uther Webster & Evans can assist you.

16 July 2016

Sham Trusts

Written by Justine Taylor, Senior Associate


Trusts originated in late medieval England where a wealthy land owner (“The Feoffor”) would convey land to another trusted party (“The Feoffees to uses”) to hold the land as directed for the benefit of persons nominated. The object behind the predecessor to today’s modern trust was to allow land holders to make ‘wills’ for their land, which would automatically have otherwise passed to their heir, and normally the oldest son.

The modern trust is commonly utilised and has many advantages including taxation benefits, strategic estate planning which keeps assets outside a will, and of course, protecting assets from creditors.

However the trust structure is not safe from attack (just ask Gina Rinehart), and the Court will in some circumstances go behind a trust.


The question of when the Court will consider a trust to be a “sham” was considered in the recent case of Condon v Lewis [2013] NSW CA 204. In that case the debtor, Colleen established a discretionary trust as the vehicle for the purchase of real property. Colleen was the Appointor (which is the person with ultimate control who decides who the trustee is) and the beneficiaries included herself, her daughters and her grandchildren. Colleen had established the trust and at the time the property was purchased told her accountant “I’m in a complicated court case. I’ve found property which I want to buy, but I want to keep it in my own name in the short term because of the court case”.

In 2005, Colleen amended the trust so that one of her daughters was the Appointor and she removed the corporate trustee and appointed herself personally as trustee. In 2006, proceedings between Colleen and her former husband were settled and a declaration was made that Colleen would hold the property as trustee of the discretionary trust and that it be transferred to her within 30 days.

Despite the 2005 deed of amendment and the settlement in 2006, it was not until 3 years later that Colleen transferred the property into her name as set out in the 2006 Order.

In 2009 and 2010, Colleen entered into a series of loans, secured over the property with no mention of her holding the property as trustee. Subsequently, Colleen’s daughter appointed a new trustee of the company, however the property was not transferred into the new trustee company’s name before Colleen was made bankrupt in 2012.

It is also noted that all funds purchased of the property were contributed to by Colleen personally.

The Trustee in bankruptcy asserted that the trust was a sham and was entered into so as to conceal fact that the property was actually owned by Colleen.

The Court of Appeal, held that the trust was not a sham and that whilst the trust had been established with the intention of protecting Colleen’s assets, it had been established with the intention that it should not have its apparent effect nor any legal consequence. “To say that a document or transaction is a sham, means that while professing to be one thing, it is in fact something different.”

The Court must essentially look to the circumstances in which the trust was created so as to ascertain the clear intention of the party in establishing trust.

The Court will only look behind a document or transaction if there is a “good reason to do so” so that there is effectively a presumption against the findings that a trust is a sham.

The Court also noted the distinction between sham trust and a trust which had been entered into specifically for the purpose of defrauding or defeating creditors.


The Family Court is no stranger to looking towards the true nature and controller of a trust, and indeed the Family Court requires disclosure as to the Appointor and interest in any trusts so as to determine the true extent of matrimonial assets.

It is for this reason that, when establishing a trust, persons will often elect to put in place an alternative friendly Appointor to put distance between the person and the trust. Of course this ultimately has to be weighed against relinquishing true control of the trust.

In the Family Court, even an entitlement as a beneficiary under a trust can be a relevant consideration to the Court, as in the case of Read v Chang [2010] FAMCA 876, where a wife was the discretionary beneficiary of a trust which had assets of $630 million. In that case the Court held that “although the wife may only have a contingent entitlement and is no more than a member of a class of beneficiaries, the memorandum of wishes enlightens the Court as to future the wife’s economic circumstances”.