Babcock & Gulati
[2023] FedCFamC1A 113
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1) APPELLATE JURISDICTION
Babcock & Gulati [2023] FedCFamC1A 113
Appeal from: Gulati & Babcock (No 2) [2023] FedCFamC2F 320 Appeal number: NAA 129 of 2023 File number: MLC 10085 of 2019 Judgment of: AUSTIN J Date of judgment: 13 July 2023 Catchwords: FAMILY LAW – APPEAL – APPLICATION IN AN APPEAL – Reinstatement – Where the appeal registrar granted the wife leave to file a Notice of Appeal out of time – Where the matter was listed to hear the Application in an Appeal filed by the husband to review the appeal registrar’s decision – Where shortly before hearing the wife failed to file the draft index to the appeal book on time – Where the appeal was deemed abandoned – Where the wife made an oral application to re-instate the appeal – Where there is no ostensible merit in the appeal – Oral application to re-instate the appeal dismissed – Where it is unnecessary to consider the husband’s review application – Where the husband sought party/party costs of the interlocutory dispute – Application for costs dismissed. Legislation: Family Law Act 1975 (Cth) Pt VIII, ss 79, 117
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) rr 13.14, 13.40, 14.07
Cases cited: Allesch v Maunz (2000) 203 CLR 172; [2000] HCA 40
Gallo v Dawson (1990) 93 ALR 479; [1990] HCA 30
Harris v Caladine (1991) 172 CLR 84; [1991] HCA 9
Jackamarra v Krakouer and Anor (1998) 195 CLR 516; [1998] HCA 27
Trevi & Trevi (2018) FLC 93-858; [2018] FamCAFC 173
Number of paragraphs: 34 Date of hearing: 13 July 2023 Place: Newcastle (via Microsoft Teams) Counsel for the Applicant: Mr Oldham Solicitor for the Applicant: Spectre Linkers Counsel for the First Respondent: Mr Robinson Solicitor for the First Respondent: Saunders Family & Estate Lawyers The Second Respondent: Litigant in person ORDERS
NAA 129 of 2023
MLC 10085 of 2019FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
DIVISION 1 APPELLATE JURISDICTIONBETWEEN: MS BABCOCK
Applicant
AND: MR GULATI
First Respondent
B PTY LTD AS TRUSTEE FOR THE BABCOCK FAMILY TRUST
Second Respondent
order made by:
AUSTIN J
DATE OF ORDER:
13 July 2023
THE COURT ORDERS THAT:
1.The applicant’s oral application to re-instate the appeal is dismissed.
2.The first respondent’s application for costs is dismissed.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
IT IS NOTED that publication of this judgment by this Court under a pseudonym Babcock & Gulati has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
EX TEMPORE
REASONS FOR JUDGMENTAUSTIN J:
Before the Court is an oral application to re-instate an appeal, deemed abandoned two days ago by reason of failure to comply with the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) (“the Rules”).
For the reasons which follow, the re-instatement application fails, meaning it is unnecessary to consider the other application pending in the appeal before its deemed abandonment, which was originally listed before the Court for hearing today.
Background
The parties to the appeal were formerly parties to property settlement proceedings under Pt VIII of the Family Law Act 1975 (Cth) (“the Act”), finalised by orders made by a judge of the Federal Circuit and Family Court of Australia (Division 2) on 23 March 2023.
The time for filing an appeal from those orders expired on 20 April 2023. No appeal was filed within time.
Several weeks later, on 11 May 2023, the applicant filed an Application in an Appeal seeking leave to file a Notice of Appeal out of time. The application was heard by the registrar on 22 May 2023 and the relief sought by the applicant was later granted on 9 June 2023.
Exercising such leave, the applicant promptly filed her Notice of Appeal on 13 June 2023.
On 4 July 2023, the first respondent filed an Application in an Appeal seeking review of the registrar’s decision to extend time for the applicant to appeal.
The time for filing the review application expired 21 days after the registrar’s decision was made (r 13.40(2) of the Rules), which was by 30 June 2023. The review application was filed four days late and so the first respondent needed leave to prosecute it. That was the application listed before the Court for hearing today.
However, in the meantime, the appeal was deemed abandoned pursuant to r 13.14 of the Rules. To avoid the deemed abandonment of the appeal, the applicant was obliged to file a draft index to the appeal book by close of business two days ago (11 July 2023). She did not do so. Consequently, there is no appeal unless and until the applicant successfully applies for its re-instatement – hence her oral application to do so today.
Re-instatement
The applicant contended the failure to file the draft index to the appeal book two days ago was caused by her and her lawyer’s attention being distracted by the first respondent’s review application concerning her permission to prosecute the appeal out of time.
Delay has been a feature of the appeal proceedings, but the parties acknowledged none of their delay could properly be considered as being prejudicial to the others.
The applicant offered a reasonable explanation for her delay in filing the appeal. The appeal was drafted by 18 April 2023, ready for it to be filed within time on 20 April 2023. The applicant’s lawyer tried to file the appeal in time through the Court’s online portal on 19 April 2023, not realising that documents in appeal proceedings must be filed by email with the appeal registrar. When alerted to the error, the applicant’s lawyer attempted to file the appeal with the registrar on 20 April 2023 but, as the email was not received by the registrar until after 4.30 pm that day, the appeal was out of time. Although the application for leave to file the appeal out of time was not then filed until 11 May 2023, the proposed Notice of Appeal had been served upon the first respondent’s lawyers within time on 19 April 2023.
Similarly, the first respondent offered a reasonable explanation for the delay in filing the application to review the registrar’s decision to extend time for the applicant to appeal. The registrar’s decision was published on Friday 9 June 2023. Any review application should have been filed by 30 June 2023. The first respondent’s solicitor filed the review application before close of business on 30 June 2023 but, as it was in an incorrect form, it was rejected. The formal irregularity was corrected shortly afterwards.
The applicant again failed to meet a deadline by failing to file the draft index to the appeal book on time, but it is a default which can supposedly be rectified within 48 hours.
Ordinarily, parties ought not have visited upon them the consequences of mistakes made by lawyers (Allesch v Maunz (2000) 203 CLR 172 at 186; Jackamarra v Krakouer and Anor (1998) 195 CLR 516 at [14], [33], [68] and [70]).
Sensibly, the parties agreed the resolution of their dispute hinged upon the ostensible merit of the appeal. Such an approach is consistent with binding authority.
The questions of whether the appeal should initially have been permitted to be brought out of time and whether it should now be re-instated both turn, essentially, upon whether or not the applicant can demonstrate there is a substantial issue to be raised in the appeal. That issue is always central to the inquiry, because it is futile permitting an appeal to be prosecuted if it lacks apparent merit. If there is a substantial issue to be raised in the appeal, then other considerations influence the exercise of discretion, such as the extent of the delay, the cogency of the reasons offered for the delay, whether hardship or prejudice would accrue to a party, and the public policy of ensuring that finalised litigation is not unnecessarily re-opened (Gallo v Dawson (1990) 93 ALR 479; Jackamarra v Krakouer).
The primary judgment, which is the subject of the abandoned appeal, embodies orders which reflect the conclusion to divide the spouses’ assets in equal shares. The first respondent had proposed his entitlement was to 60 per cent, whereas the applicant had proposed her entitlement to no less than 70 per cent. The result therefore fell between their proposals, but marginally closer to the first respondent’s proposal.
The appeal from those orders was confined to these grounds:
(a)the primary judge erred by adding back certain expenditures to the matrimonial pool of property as notional assets (Grounds 1 and 2);
(b)the primary judge gave inadequate reasons to explain the finding about the fact and effect of the applicant’s non-disclosure (Ground 3); and
(c)the primary judge made a factual mistake about money transferred by the first respondent to his parents, which vitiated the finding about the spouses’ contributions (Ground 4).
The applicant commendably conceded Ground 4 lacked merit.
As to the residual grounds, the applicant submitted Ground 3 was the most meritorious, but made this concession about the overall merit of the appeal:
The prospects of the appeal are not strong, but not so weak as to be futile
The first respondent contrarily submitted the appeal is futile because none of the residual grounds demonstrate ostensible merit. That submission is accepted, albeit that the merit of the grounds of appeal is only amenable to ostensible appraisal at this interlocutory hearing.
Grounds 1 and 2 both assert the primary judge erred by adding back to the pool of matrimonial property available for distribution between the spouses by property settlement order under Pt VIII of the Act, certain payments found to have been paid for the applicant’s benefit.
Those amounts were identified by the single expert witness, when valuing a relevant business, to be: first, excessive rent paid and retained by the wife as a claimed business expense; and secondly, excessive payments to the second respondent corporation for services rendered and claimed as a business expense, in circumstances where it was found the second respondent was the applicant’s “puppet” or “alter ego”. As a consequence, in the valuation of the business, the payments identified as being “excessive” overhead expenses were ignored by the single expert and, instead, more modest industry-standard expenses were assumed.
The excessive payments, which the primary judge found were “siphoned off” and “hidden” by the applicant, were then notionally added back to the matrimonial pool of property as premature distributions of matrimonial funds (at [145]–[154], [173]–[174] and [183]). That course was open and consistent with authority (Trevi & Trevi (2018) FLC 93-858).
The complaint within Grounds 1 and 2 is that the error of the primary judge lay in adding-back those payments when they had already been taken into account in the business valuation. There can be no doubt that is the gravamen of the complaint because the applicant submitted:
Double-counting is the issue
On the face of the material now available, which includes the reasons for judgment and a copy of the relevant single expert report (annexed to the affidavit filed by the first respondent on 22 May 2023), the complaint of double-counting within Grounds 1 and 2 lacks ostensible merit.
The complaint within Ground 3 is that the primary judge erred by failing to give adequate reasons to explain the finding of the applicant’s non-disclosure of assets and how that finding was then used. In response, the first respondent invited attention to the reasons for judgment, which he contended were more than adequate.
The primary judge found the applicant lied, obfuscated and failed in her duty of disclosure (at [68c]), which actual finding is not under challenge as being mistaken. The primary judge explained the finding of her non-disclosure by reference to her failure to disclose bank records, either at all or in a timely way (at [70], [73]–[76] and [146]). The non-disclosure finding was not used to the applicant’s disadvantage in either the assessment of the spouses’ contributions or the evaluation of statutory considerations under s 79(4)(d)-(g) of the Act, as it was not inferred she possessed other undeclared assets. Rather, the finding of non-disclosure only formed a component of the wider finding that the applicant’s evidence was unreliable by comparison with the evidence given by the first respondent. Evidently, the reasons adequately explain the finding of non-disclosure and how it was used.
The onus is upon the applicant to demonstrate there is a substantial issue to be raised in the appeal. The onus is not discharged. The re-instatement application fails. The modest delay so far incurred in filing the draft index to the appeal book is beside the point.
As the appeal remains abandoned, there is no need to advert to the first respondent’s review application.
Costs
The first respondent sought his party/party costs of the interlocutory dispute, assessed by him in the sum of $5,702.39. The foreshadowed claim for indemnity costs was abandoned.
The sole premise advanced for the claim for costs was that, had the review application been heard it would have likely been successful and, inferentially, the applicant’s oral application to re-instate the appeal was wholly unsuccessful, thereby engaging s 117(2A)(e) of the Act.
I am not satisfied that is sufficient reason to depart from the presumption that parties should bear their own costs of proceedings under the Act (s 117(1) and s 117(2)). The court listing today was to accommodate the first respondent’s review application, which was brought out of time and would have required leave to prosecute. As it transpired, both parties came before the court seeking indulgences. The costs application is dismissed.
I certify that the preceding thirty-four (34) numbered paragraphs are a true copy of the Reasons for Ex tempore Judgment of the Honourable Justice Austin. Associate:
Dated: 14 July 2023
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