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Latest Notable Cases samples

This is a sample (posted 19 March 2018) of "latest notable cases", which is posted monthly with live links for members at the Members' Home Page under Members' Practice News. Also available at our Members' Home Page (along with our E-Book, our up-to-the-minute family law and child support practice news, our online forms and precedents and our free legal help line) is our online members' Archive of all our back issue indexed case notes (assembled by topic and with live links to AustLII), useful papers and client brochures.

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Property – Parties suppressed evidence of husband’s $606,000 debt in their Application for Consent Orders – Full Court upholds appeal by trustee in husband’s bankruptcy against dismissal of its s 79A application

In Trustee of the Bankrupt Estate of Hicks & Hicks and Anor [2018] FamCAFC 37 (26 February 2018) the Full Court (Strickland, Murphy & Austin JJ) heard an appeal by the trustee in bankruptcy against Stevenson J’s dismissal of its s 79A application. The trustee argued at trial that the consent order between the husband and wife should be set aside as they had entered into a scheme to defeat a creditor by applying for consent orders when “Mr S” was suing the husband for $606,000 (he obtained judgment against him a week after the consent orders were made).

The parties did not notify Mr S of the proposed orders, nor inform the Court (in their Application for Consent Orders) of Mr S’s claim. The trial was bifurcated, the Court only hearing and determining the s 79A issue separately from any s 79 considerations. At first instance, the wife conceded that there was a miscarriage of justice but persuaded Stevenson J not to exercise discretion to set aside the order, her Honour finding that the wife had no involvement in the husband’s debt to Mr S; that the debt was not incurred for a matrimonial objective; and that the trustee would find itself in no better position if the order were set aside.

Each member of the Full Court delivered separate reasons, Strickland & Murphy JJ upholding the appeal (Austin J dissenting).

Strickland J said (from [46]):

“This appeal highlights the difficulties in bifurcating the s 79A and the s 79 proceedings, rather than determining both issues together as is generally the preferred option according to the authorities (e.g. see Patching and Patching (1995) FLC 92-585).

[47] The particular difficulty which arose in this case is in the exercise of the discretion under s 79A of the Act. It is beyond doubt that in exercising that discretion the court is entitled to take into account the likely outcome of the s 79 proceedings, if the orders are set aside … The question in any case though is the extent to which that can be done given that the s 79A and the s 79 proceedings are separate proceedings, and the discretions to be exercised are different. The ability to address the likely outcome can also be dependent on what evidence is before the court, but that in itself can be problematic, particularly in a case such as this where there is a trustee who was not a party to the orders sought to be set aside, and a party (the husband) who has not given evidence in the s 79A proceedings, but may well do so in the s 79 proceedings. ( … )

[48] … Plainly, her Honour’s primary reason for dismissing the application of the trustee, was her finding that in effect there was no utility in setting the consent orders aside …

( … )

[52] … [T]he trustee’s case [was] … that the wife was complicit in the miscarriage of justice and engaged in ‘conscious wrongdoing’ …

[53] … [T]his issue was only raised by the trustee before her Honour in the context of whether there was a miscarriage of justice, not in the context of the exercise of the discretion. … I agree with [Murphy J’s] conclusion [at [162]-[175]] that the trustee is not precluded from raising this argument [on appeal].

( … )

[68] Her Honour found … that ‘it is more probable than not that the husband deliberately elected not to disclose information concerning Mr S in the Application for Consent Orders’. However, no finding was made as to this in relation to the wife.

[69] I agree with the submission of the trustee that a similar finding as to the wife’s intention was ‘irresistible’.

[70] The wife’s evidence was that … she knew when she signed the application that the question of the debt was to be resolved within three weeks by the Supreme Court.

[71] … Once the miscarriage of justice had been conceded, the question then became how would her Honour exercise her discretion. Here, that entailed her Honour considering whether the wife was complicit in the miscarriage of justice …

( … )

[82] It is unclear what her Honour meant by finding that the debt was not incurred in ‘the pursuit of a matrimonial objective’. I assume that is meant to signify that given the circumstances of its creation, it was solely for the benefit of the husband, and thus he is solely responsible for it, as opposed to it being a debt intended to be for the benefit of both parties, and thus they are both responsible for it.

( … )

[84] However, I am persuaded that the evidence demonstrates otherwise …

[85] The debt was incurred during the marriage on any view of the date of separation. ( … )

( … )

[87] It is readily apparent that the … projects [associated with the loan] … were intended to benefit the marriage relationship. ( … )”

Murphy J agreed that the appeal should be allowed but delivered different reasons, saying (from [145]):

“The inevitable finding of miscarriage of justice emerges independently of any finding of wrongdoing – for example, by reason of intentional ‘suppression of evidence’ … on the part of either the husband or the wife. If the consent order is made on the basis of sworn information that is materially false, the evaluative process conducted by the Registrar has miscarried; the Registrar cannot have decided that the orders are appropriate based on them being just and equitable if materially false information has informed the inquiry [see e.g. Pelerman [2000] FamCA 881].

[146] A consequence is that it was, in fact, unnecessary for the trustee to contend for any findings, and unnecessary for her Honour to make any findings, about asserted wrongdoing on the part of either the husband or the wife in seeking to establish miscarriage of justice within the meaning of the section.

( … )

[149] Establishing a ‘miscarriage of justice’ does not of itself lead to s 79A relief. It must be established, in addition, that the court should, in light of the miscarriage of justice, exercise the discretion to set aside or vary the impugned order …

( … )

[156] The relevant issues for s 79A purposes was not whether the asserted debt had crystallised but, rather, the fact that a relevant Supreme Court claim had been made by Mr S and was awaiting determination; that he consequently had an interest in the Application for Consent Orders; that he consequently ought to have had notice of the proceedings and be heard if he chose but was not given that opportunity. As Biltoft [[1995] FamCA 45] makes clear, each and all of those considerations arise irrespective of whether the claimed debt had crystallised or not. …

( … )

[183] … When the circumstances raised by the trustee were said to impugn the integrity of court orders and the process which led to them, her Honour was in my view duty bound to make findings as to the trustee’s central contentions and to consider those findings in the exercise of the s 79A discretion notwithstanding the trustee’s failure to so contend specifically. In my respectful view, her Honour did not do so.

( … )

[195] … It would in my view be, to say the least, a highly exceptional case for a conscious abuse of the court’s process – in effect a fraud on the court – to not result in orders being set aside, at least in the absence of truly exceptional countervailing discretionary considerations.”

Austin J (in dissent) said (from [255]):

“The application of s 79A(1) entails a sequential stepped process. It is unwise, but not necessarily an error, to segregate the process into two isolated parts by first considering whether any miscarriage of justice is established and, if so, assuming the orders must be set aside, then later moving on in a separate inquiry to consider what orders should then be made. ( … )

( … )

[260] The primary judge’s conclusion about the husband’s probable exclusive liability for the S debt was open on the evidence. ( … )

( … )

[270] ( … ) The trustee inferred on appeal, but did not actually say, the proper analysis of the spouses’ property entitlements would not result in the wife’s receipt of up to 60 per cent of the property, as the wife contended and the primary judge accepted.

[271] The fatal impediment to the trustee’s submission was that he did not argue the point at trial. … Given the trustee’s failure to address that particular issue at trial, both in evidence and during submissions, he cannot raise it now. Having regard to the evidence adduced by the wife and the submissions made by her, the primary judge’s conclusion about the spouses’ probable respective entitlements under any fresh property settlement orders was open and not demonstrably unsound.”

The appeal was allowed and the case remitted for rehearing by another judge.

NOTE – A further 7 cases are summarised for members this month at our Members’ Home Page under “latest notable cases” under the following headings:

Children – Full Court upholds birth mother’s appeal against naming of biological father on the child’s birth certificate – Parties and trial judge had not addressed factual preconditions for establishing whether he was the father pursuant to the Status of Children Act 1978 (Qld)

Property – Ex parte Anton Piller orders (authorising entry of premises and search of computers and husband’s emails) vacated as wife in seeking those orders misled the court by not informing it that she had previously gained access to more than 154,000 emails from the husband’s email account

Children – Registration of overseas child order – Victorian couple successfully register US order that declared them parents of twin daughters born pursuant to a commercial surrogacy agreement

Property – Tax debts (mainly the husband’s) exceeded value of net pool – Wife made initial contributions and had s 75(2) needs – Husband’s gambling losses – Wife ordered to pay 10 per cent of husband’s tax debt, but was otherwise to retain 71 per cent of a pool that excluded those debts

Conflict of interest – Husband had attended free consultation with lawyers who subsequently acted for wife – Husband failed to establish conflict of interest

Children – Father imprisoned until 2040 granted no time with daughters – His consent to the issue of passports to the children (aged 12 and 6) was dispensed with – Mother granted sole parental responsibility – Order facilitating phone contact by the children and the sending of correspondence by father

Property – Pre-splitting regime order compelled husband to pay 25 per cent of his superannuation when he became entitled to payment – Wife failed to enforce the order when husband received his entitlement – Upon husband’s death wife had no remedy against either his estate or the ultimate recipient of his super (his second wife) – Summary dismissal of wife’s application