Family Law Undertaking – Application of Wife’s Legal Representative Against Husband For Contempt Dismissed

An undertaking is a promise to the Family Court of Australia (or Federal Circuit Court of Australia). It is as binding as an order of the Court. Where a person gives an undertaking that they will take, or refrain from taking a certain action, the Family Court will require that person to take that action as if the Family Court itself had ordered and compelled the person to take the action.

A breach of an undertaking is treated by the Family Court the same as a breach of an order.

Background

In the recent case of Bain & Bain (Deceased) [2017] FamCAFC 80 (3 May 2017) the issue of undertaking was examined in great detail. The Full Court of the Family Court (Bryant CJ, Ainslie-Wallace & Rees JJ) heard an appeal by the husband, a principal of a law firm, in a case where his terminally ill wife had applied for an interim order that he transfer his interest in a life insurance policy over her life to her so that the children would benefit from it upon her death. The policy over the wife’s life provided that on her death, the husband would receive a payment of $457,786.

The husband opposed the application, arguing that any insurance should be applied towards the parties’ debts. He alternatively sought an order that any payment be held in his solicitor’s trust account.

Hogan J dismissed the wife’s application on the husband’s undertaking that any payment would be held in trust. The undertaking was not given in court but noted in the order after being deposed to in the husband’s affidavit and reiterated by his counsel. The husband did not attend court. The wife died and her legal personal representatives were appointed to continue the case under s79(8) of the Family Law Act. The husband received the insurance but applied it towards debt. The estate brought contempt proceedings under s112AP. Hogan J found the husband guilty of contempt, sentencing him to six months imprisonment, suspended pending his appeal.

The husband argued that the estate lacked standing to bring a contempt application; and that he was not told of his undertaking by his solicitor who simply said that the wife’s application was dismissed.
In allowing the appeal, the Full Court held that the wife’s legal personal representatives did have standing to bring contempt proceedings. As to the finding of contempt, the Court said that the trial judge’s determination of the husband’s guilt was flawed. The Full Court was not satisfied beyond a reasonable doubt that the husband knew at the time he disbursed the funds that he was bound by an undertaking accepted by the Court that he would hold the funds in his solicitors trust account pending further orders by the Family Court.

Orders

Therefore the application for contempt brought by the wife’s legal personal representatives was dismissed.

Significance

Undertakings can be in writing or provided orally to the Court by the litigant or by their legal representative. Providing an undertaking to the Court is not something that should be taken lightly or done on a whim. There are serious consequences including the possibility of imprisonment if an undertaking is breached.

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