Bain & Bain (Deceased)
[2017] FamCAFC 80
•3 May 2017
FAMILY COURT OF AUSTRALIA
| BAIN & BAIN (DECEASED) | [2017] FamCAFC 80 |
| FAMILY LAW – APPEAL – CONTEMPT – STANDING – Standing of Legal Personal Representatives to bring a contempt application – Consideration of role of Legal Personal Representatives pursuant to s 79(8) of Family Law Act 1975 (Cth) – History of contempt procedures in previous Rules and Regulations – Necessary to give effect to the proper meaning of the Act and Rules – Where the Legal Personal Representatives have standing pursuant to the Family Law Rules 2004 (Cth) – No appealable error. FAMILY LAW – APPEAL – CONTEMPT – Appeal against finding of contempt and penalty – Where a key issue was whether the husband had knowledge of the undertaking he was bound by – Rejection of husband’s evidence as inherently unbelievable – Use of circumstantial reasoning and inferences – Failure to address evidence inconsistent with the husband’s guilt – Where the trial judge was required to be satisfied beyond reasonable doubt of the husband’s state of mind at the relevant time, not the state of mind of a hypothetical person – Appealable error demonstrated. FAMILY LAW – APPEAL – JURISDICTION – UNDERTAKINGS – Whether the Court had jurisdiction to accept an undertaking from the husband – Undertaking in interim proceedings in relation to the subject matter of the litigation – Power of the Court to make injunctions per s 114(3) of the Family Law Act 1975 (Cth) – No appealable error. FAMILY LAW – APPEAL – PROCEDURAL FAIRNESS – Where the husband’s evidence was largely unchallenged – Reliance on matters not put to the husband – Where the trial judge did not indicate a disbelief of the husband’s evidence – Where the trial judge produced costs submissions from the court file that were not otherwise before her – Where the trial judge did not make clear the conclusions she believed flowed from the fact of their filing – Denial of procedural fairness – Appealable error demonstrated. FAMILY LAW – APPEAL – RE-EXERCISE – CONTEMPT – No direct evidence as to the husband’s knowledge of the undertaking – Unchallenged evidence of the husband – No satisfaction beyond reasonable doubt that the husband knew of the undertaking at the time he disbursed the funds – Contempt application dismissed. FAMILY LAW – APPEAL – COSTS – First instance costs order set aside – Timetable provided for submissions concerning costs at first instance and on appeal. |
| Evidence Act 1995 (Cth) s 144 Family Law Rules 2004 (Cth) rr 6.15, 17.02, 21.02 |
Abduramanoski v Abduramonoska (2005) FLC 93-215
Argos Pty Ltd v Corbell, Minister for the Environment and Sustainable Development (2014) 254 CLR 394
Attwood v The Queen (1960) 102 CLR 353
Bale v Mills (2011) 282 ALR 336
Barca v The Queen (1975) 133 CLR 82
Braysich v The Queen (2011) 243 CLR 434
Browne v Dunn (1894) 6 R. 67
Construction, Forestry, Mining and Energy Union v Boral Resources (Vic) Pty Ltd (2015) 256 CLR 375
Doyle v Commonwealth (1985) 156 CLR 510
Ellis v Wallsend District Hospital (1989) 17 NSWLR 553
Fisher and Fisher (1986) 161 CLR 438
Gilbert v Estate of Gilbert (1990) FLC 92-125
Greval, J.S, v. Estate of the late Greval, F.; Sandalwood Lodge Pty. Ltd. (Intervener) (1990) FLC 92-132
Holman v Holman (1964) 5 FLR 406
IMM v The Queen (2016) 257 CLR 300
Hatton v Harris [1892] AC 547
| Khul v Zurich Financial Services Australia Ltd (2011) 243 CLR 361 Koowarta v Bjelke-Petersen (1982) 153 CLR 168 LGM & CAM (Contempt) (2008) FLC 93-355 McCulloch and McCulloch (1978) FLC 90-426 Melbourne v The Queen (1999) 198 CLR 1 Newmont Yandal Operations Pty Ltd v The J Aron Corporation and The Goldman Sachs Group Inc and Others (2007) 70 NSWLR 411 Pertsoulis & Pertsoulis (1979) FLC 90-613 |
Purkess v Crittenden (1965) 114 CLR 164
R v Baden-Clay (2016) 334 ALR 234
R v Dunbabin; Ex parte Williams (1935) 53 CLR 434
R v Giam(No 2) [1999] NSWCCA 378
R v Murphy (1985) 4 NSWLR 42
R v Stalder (1981) 2 NSWLR 9
R v Trimboli (1979) SASR 577
Re Colina; Ex parte Torney (1999) 200 CLR 386
Re McBane; Ex parte Australian Catholic Bishops Conference (2002) 209 CLR 372
Sahari and Sahari (1976) FLC 90-086
Shepherd v The Queen (1990) 170 CLR 573
Somerton & Wells [2013] FCWA 59
Stanoevski v The Queen (2001) 202 CLR 115
Strelys and Strelys (1988) FLC 91-961
Tate and Tate (2002) FLC 93-107
The People v Ennis 190 Cal. App. 4th 721
Thomson Australian Holdings Pty Ltd v Trade Practices Commission and Others (1981) 148 CLR 150
APPELLANT: | Mr Bain |
| RESPONDENTS: | Ms Little and Ms Searle, the Legal Personal Representatives for Ms Bain (deceased) |
| FILE NUMBER: | BRC | 2481 | of | 2010 |
| APPEAL NUMBER: | NA | 56 | of | 2016 |
| DATE DELIVERED: | 3 May 2017 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Bryant CJ, Ainslie-Wallace & Rees JJ | |
| HEARING DATE: | 25 October 2016 | |
| LOWER COURT JURISDICTION: | Family Court of Australia |
| LOWER COURT JUDGMENT DATE: | 4 February 2016 31 March 2016 9 August 2016 |
| LOWER COURT MNC: | [2016] FamCA 42 [2016] FamCA 602 [2016] FamCA 600 [2016] FamCA 662 |
REPRESENTATION
| COUNSEL FOR THE APPELLANT: | Mr Richardson SC |
| SOLICITOR FOR THE APPELLANT: | Hopgood Ganim Lawyers |
| COUNSEL FOR THE RESPONDENTS: | Mr Morgan |
| SOLICITOR FOR THE RESPONDENTS: | Blair Anderson Solicitor |
Orders
The appeal against the orders of Hogan J of 9 August 2016 is allowed and orders 1 to 4 made on 9 August 2016 are set aside.
The respondents’ application for contempt filed on 30 July 2015 be dismissed.
In relation to the costs of the appeal:
(a)Within 21 days of these orders the appellant husband shall file and serve written submissions (not exceeding 10 pages) dealing with the issue of costs.
(b)Within 14 days of service of the submissions referred to in Order 3(a), the respondents shall file and serve written submissions in response (not exceeding 10 pages).
(c)Within seven days of service of the submissions referred to in Order 3(b), the appellant may file and serve submissions in reply (not exceeding five pages).
In relation to the costs of the hearing at first instance:
(a)Within 21 days of these orders the appellant husband shall file and serve written submissions (not exceeding 10 pages) dealing with the issue of costs.
(b)Within 14 days of service of the submissions referred to in Order 4(a), the respondents shall file and serve written submissions in response (not exceeding 10 pages).
(c)Within seven days of service of the submissions referred to in Order 4(b), the appellant husband may file and serve submissions in reply (not exceeding five pages).
A Registrar of the Family Court of Australia forward a copy of these reasons for judgment to the Legal Services Commission Queensland, and the Queensland Law Society.
Note: The form of the order is subject to the entry of the order in the Court’s records.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Bain & Bain (Deceased) has been approved by the Chief Justice pursuant to
s 121(9)(g) of the Family Law Act 1975 (Cth).
Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).
| THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT SYDNEY |
Appeal Number: NA 56 of 2016
File Number: BRC 2481 of 2010
| Mr Bain |
Appellant
and
| Ms Little and Ms Searle, the Legal Personal Representatives for Ms Bain (deceased) |
Respondents
REASONS FOR JUDGMENT
On 25 May 2016 Hogan J found Mr Bain (“the husband”) guilty of contempt of an undertaking accepted by the Court. On 9 August 2016 her Honour sentenced the husband to six months imprisonment.
The husband’s appeal challenges the contempt finding and appeals the order imposing a sentence.
The sentence has been stayed by her Honour’s order pending the disposition of the appeal.
The contempt application was brought by the Legal Personal Representatives of Ms Bain (“the wife”), and they oppose the appeal.
The wife was engaged in property proceedings with the husband at the time of her death.
Some background of the matter and its procedural history is necessary so as to give context to the appeal.
Background
The wife and the husband were married in 1985. They have two adult children. They separated in 2009 and divorced in 2010.
In 2007 the wife developed cancer which ultimately claimed her life in 2014.
In March 1996 the husband and the wife took out life insurance, each insuring the life of the other. Relevantly, the policy over the wife’s life provided that, on her death, the husband would receive a payment of $457,786.00.
In March 2010 the husband commenced property settlement proceedings against the wife.
On 12 November 2013 the wife sought an order that the husband transfer his interest in the life policy over her life to her and that she transfer to him her interest in the life policy over the husband’s life. The husband opposed the application.
On 12 December 2013 the trial judge delivered reasons and made the following order:
UPON APPLICATION made to the Court AND UPON HEARING
Mr Baston of Counsel appearing for the Applicant Wife and Mr Dick of Counsel appearing for the Respondent Husband AND UPON the Court having reserved the decision AND UPON THE UNDERTAKING of the husband to hold any payment received by him under the life insurance component of MLC Life Policy …4U in his solicitor’s trust account pending further order of the CourtIT IS ORDERED
1. That the wife’s interim application for the transfer of MLC life policy …4U and MLC life policy …5F is dismissed.
2. In the event that the Respondent seeks an order that the Applicant pay his costs of and incidental to her interim application for the transfer of MLC life policy …4U and MLC life policy …5F:
a.the Respondent file and serve brief written submissions in support of such application for costs within 14 days of the date hereof;
b.the Applicant file and serve any brief written submissions in answer to any submission filed and served by the Respondent within a further 14 days thereafter;
c.the Respondent file and serve any brief further written submissions strictly in reply to the submission served by the Applicant within seven (7) days of its service,
and such application for costs shall be determined in Chambers.
Following the wife’s death in 2014, the husband received the payment under the terms of the insurance policy on 19 August 2014. He did not pay that money into his solicitor’s trust account in compliance with the noted undertaking but, rather, expended all of the funds in the payment of debts owed jointly by him and the wife.
On 11 March 2015, Ms Little and Ms Searle (“the Legal Personal Representatives”) were appointed pursuant to s 79(8) of the Family Law Act 1975 (Cth) (“the Act”) to continue the property settlement proceedings as between the wife and the husband on the wife’s behalf.
On 30 July 2015 the Legal Personal Representatives brought an application alleging that the husband was in contempt of court for failing to comply with the undertaking noted in the order of 12 December 2013.
That application was heard in a number of stages from October 2015 to August 2016.
By application filed on 6 October 2015 the husband sought that the order made on 12 December 2013 be amended under the slip rule (r 17.02 of the Family Law Rules 2004 (Cth) (“the 2004 Rules”)) to remove the words “AND UPON THE UNDERTAKING of the Husband to hold any payment received by him under the life insurance component of MLC Life Policy …4U in his solicitor’s trust account pending further order of the Court”.
On the same day the husband sought an order that the contempt application be summarily dismissed because he asserted that the Legal Personal Representatives had no standing to bring such an application.
The application under the slip rule was refused by her Honour and dismissed on 4 February 2016 as was the husband’s application for summary dismissal.
On 31 March 2016 the trial judge found the contempt charge proved beyond reasonable doubt and adjourned the consideration of penalty consequent on that finding to 25 July 2016. As we have said, on 9 August 2016, the trial judge sentenced the husband to a period of six months imprisonment. Her Honour also ordered the husband pay the Legal Personal Representatives’ costs of the application and further directed that a Registrar of the Family Court of Australia forward a copy of the reasons for judgment delivered on 25 May 2016 and 9 August 2016 to the professional bodies in the state in which the husband practises as a solicitor.
The husband appeals against her Honour’s orders in dismissing the two applications and against her Honour’s orders finding the contempt proved and as to penalty. However, before we come to the issues raised on appeal, it is necessary to consider the context in which her Honour’s order of 12 December 2013 was made and in which the noting of the undertaking arose.
The hearing of the wife’s application on 12 November 2013
This hearing came about because the wife sought an order that the husband transfer to her his interest in the life policy over her life. The wife sought the transfer in order to change the beneficiaries of the policy from the husband to their adult children.
The husband opposed the application. On 8 November 2013 the husband swore an affidavit in the proceedings which was filed on 11 November 2013. In that affidavit he deposed that the policies had been taken out by the parties so that in the event of the death of one of them the policy would provide a source of funds with which to meet joint liabilities. He set out in his affidavit the parties’ then liabilities and argued that if the order was made it would defeat the purpose of procuring the policies, that is the payment of the debts, and further that nominating new beneficiaries to the policy would risk those beneficiaries receiving and dissipating the funds which would have the effect of removing the proceeds of the insurance policy from the parties’ property pool.
He said at paragraph 24:
In the event of that [sic] I receive any benefit under the life insurance component of my Personal Protection Portfolio, I am willing to undertake to the Court to hold any payment I might receive in the [X] Lawyers Trust Account pending any further order of the Court.
Seminal to the issues to be decided is the fact that the husband did not attend the hearing before the trial judge but was represented by counsel, Mr Dick, and by Mr S, a solicitor employed by the husband’s firm. The husband is a solicitor and principal of X Lawyers. Mr S was engaged from July 2013 to 24 December 2013 by X Lawyers solely to manage the husband’s family law litigation.
Mr Dick prepared written submissions for the hearing which he handed to the trial judge at the commencement of his oral submissions and in respect of which counsel said he would be “repeating” what was in those submissions.
It is important to consider the written submissions.
They commence:
1.3The Wife’s Application is opposed by the Husband.
1.4He asks that the Wife’s application be dismissed.
The document continued and submitted why the trial judge would not order the transfer of the insurance policy to the wife, including the argument that the liabilities of the parties then exceeded their assets. The document concluded:
5.18 The Husband seeks orders that the Wife’s Application be dismissed.
5.19In the alternative, given the importance of the insurance policy over the Wife’s life (particularly in the context of liquidating matrimonial liabilities), and given that the parties contend different positions in respect of the use to which possible insurance proceeds should be put, the Husband deposes at paragraph 24 of his Affidavit that he is willing to undertake to the Court to hold any payment that he receives under the life insurance component of his Personal Protection Portfolio in his solicitor’s trust account, pending any further order of the Court.
(Emphasis added)
The husband contended that on 12 November 2013 his position was that the court should dismiss the wife’s application on its merits, but if the court was otherwise minded to accede to the wife’s application and order a transfer of the policy to her he would instead preserve the asset by the giving of the undertaking.
In oral submissions to her Honour, Mr Dick said:
…the risk […] is that the proceeds will be dissipated, […] and any entitlement that the husband has, […] will be defeated, and that would be, in my respectful submission, unjust and inequitable in the context of the proceedings.
(Transcript 12 November 2013, page 11 lines 24 – 31)
Immediately thereafter he said:
As your Honour will note from paragraph 24 of the husband’s affidavit, he is willing to undertake, should he receive any benefit under the life insurance … he’s willing to undertake to hold those proceeds in his solicitor’s trust account pending any further order of the court. So, contrary to the submission made by my learned friend, the husband doesn’t seek to immediately access or take a benefit from the demise of his former wife … What he is willing to do is to hold those proceeds on trust until these proceedings … resolves…
And later:
...We say the safest - in my respectful submissions - the safest way to proceed and the best way to proceed, I should say, regardless of safety or otherwise, is for the moneys to be held on trust pending any order that might need to be made, and any - and that would be open to either party to make an application at a subsequent time.
(Transcript 12 November 2013, page 11 lines 24 – 31. page 13 lines 17 – 21)
Mr Dick sent a copy of the written submissions to the husband on
13 November 2013, the day following the hearing.
The trial judge reserved her decision, which was delivered on 12 December 2013. Different counsel appeared for the husband to take the judgment, again instructed by Mr S. Her Honour dismissed the wife’s application and her orders contain the notation that it was on the husband’s undertaking not to disburse the proceeds of the insurance policy.
Her Honour’s orders of that day also provided for the filing of submissions in the event that the husband wished to make an application for costs.
It is agreed that the husband was never served with a copy of the orders made on 12 December 2013.
Events which followed the determination of 12 December 2013
To a degree much of what now follows is uncontroversial in the sense that the facts are uncontested. What flows from those facts is controversial and we will return to the controversy later in these reasons.
The husband said that either late on 12 December 2013 or early on
13 December 2013 Mr S told him that the wife’s application had been dismissed. A file note written by Mr S dated 12 December 2013 which contained the words: “Orders as per reasons. Wife’s application dismissed” was in the husband’s file. Nothing in the file note referred to the court’s acceptance of the undertaking.
Mr S left the husband’s employment on 24 December 2013. In accordance with her Honour’s directions of 12 December 2013 he had prepared a submission as to the husband’s costs of the wife’s unsuccessful application. He did not, however, file it. The husband said that in February 2014, while going through the file relating to his litigation, he may have become aware of the document and given instructions for it to be filed. The submissions were filed on 13 February 2014.
The costs submissions commence:
(1) On 12 December 2013 Her Honour Justice Hogan delivered a judgment regarding the Wife’s interim application within a case to seek an interim transfer of marital property.
(2) Her Honour Justice Hogan was not persuaded that the Wife’s application should be made on an interim basis and the Wife’s application was dismissed.
(3) Pursuant to paragraph 2 a. of the Orders of the Family Court of Australia (Court) dated 12 December 2013, the Husband delivers his written reasons applying for costs of the application to be awarded to him on the standard basis of assessment…
There is no reference in the costs submissions to the undertaking noted in her Honour’s order of 12 December 2013.
As we have said, on the wife’s death, the husband received the proceeds of the insurance policy on her life and disbursed the funds in payment of their joint debts.
On 30 July 2015 the Legal Personal Representatives filed an application seeking that the husband be dealt with for contempt by reason of his failure to comply with the undertaking noted in her Honour’s orders of 12 December 2013.
The hearing of the contempt application
After hearing submissions on 8 March 2016, on 31 March 2016 the trial judge found a prima facie case of contempt established and proceeded immediately to hear evidence on the contempt application. The husband then filed an affidavit and was cross examined.
In his affidavit filed on 31 March 2016 the husband referred to his affidavit filed in opposition to the wife’s application heard on 12 November 2013 and said, apropos paragraph 24 of that affidavit:
13. Whilst I do not recall if the suggestion for the offer of an undertaking was made by Mr [S] or by Mr Dick of Counsel I do recall instructing Mr [S] that I should indicate in the Affidavit a willingness to provide an undertaking to the Court to hold the proceeds of the life insurance policy, in the event that the Application was not dismissed.
He further said:
29. At no time prior to dealing with the insurance proceeds had I seen a copy of the orders made that day or the reasons for judgment, nor was I informed by anyone that the order recorded a notation to the effect that orders were made on my undertaking.
30. I did not make any enquiry about the undertaking because my understanding was that the undertaking was only offered as an alternative, in the event the Wife’s application was not dismissed.
31.As the application was dismissed, the events giving rise to my offer of the undertaking did not arise and I had no reason to expect that the Court would have taken a different course.
The husband was cross examined by counsel for the Legal Personal Representatives.
The husband agreed that:
·As a solicitor he understood the seriousness of giving an undertaking to the court and the consequences of breaching an undertaking;
·Mr Dick and Mr S acted on his instructions;
·Until he became aware of the existence of the order and the noted undertaking on 3 October 2014 he was not aware that an undertaking had been offered on his behalf other than as he instructed Mr Dick and as set out in Mr Dick’s written submissions;
·After Mr S left his employment, the husband conducted his own file for a brief period before passing it on to other solicitors; and
·As part of the process of instructing the new solicitors he went through the voluminous file and extracted documents relevant to forthcoming applications for the new solicitors.
It was never suggested to the husband that his evidence was a lie or was otherwise unworthy of belief.
The trial judge’s reasons of 25 May 2016 on the finding of contempt
The nature of the undertaking offered by the husband
Her Honour rejected the husband’s evidence that he believed his undertaking would only be offered in the event that the court was considering acceding to the wife’s application (at [49] – [51]).
Her Honour found that the husband’s undertaking was offered “unconditionally” and said that she reached this conclusion on the following bases (at [23]):
·The husband was not present at the hearing on 12 November 2013 ;
·The husband was represented by counsel and solicitor at this hearing;
·The affidavit filed by the husband on 8 November 2013 and in particular paragraph 24 of that affidavit;
·Counsel then appearing for the husband provided an outline of submissions to the court on 12 November 2013;
·The submissions were sent to the husband by counsel on 13 November 2013;
·The husband therefore was aware of the content of those submissions;
·The submissions opposed the order being made; and
·Counsel for the husband contended that if the court was unwilling to dismiss the wife’s application, the husband was willing, in the alternative to undertake to hold the money in trust pending further order.
However, her Honour concluded that since the husband’s offer of an undertaking given in his affidavit of 8 November was not expressed to be in the alternative or in the event that the wife’s application was not to be dismissed, then despite the written submissions provided to the court by the husband’s counsel, the oral submissions instead reflected the husband’s true position in relation to the undertaking (at [25] – [29]).
Her Honour’s reasons for decision delivered on 12 December 2013 make no mention the undertaking, the terms of its offer or the basis on which it was accepted and to what end. Neither did her Honour in court on 12 November 2013 discuss the nature, terms or conditions on which the undertaking was offered with Mr Dick on that day. Thus, the basis on which her Honour dismissed the wife’s application and then bound the husband to the undertaking is not able to be discerned.
The husband’s knowledge at the relevant time
Her Honour then turned to the question of whether the husband knew “some time before” he received the funds from the insurance policy that the court had accepted his undertaking to hold those funds in trust.
Her Honour concluded that that husband knew of the seriousness and consequences of offering an undertaking in terms of paragraph 24 of his affidavit and further that the husband understood the effect of giving an undertaking to hold in trust the proceeds of payment under the insurance policy (at [42] – [43]).
In considering the husband’s evidence that he was not informed of the order binding him to an undertaking nor did he make an inquiry as to whether the undertaking had been accepted, her Honour said:
50. Of course, as I have already noted, paragraph 24 of [the husband’s] affidavit was not framed in the alternative, nor did it raise in any way that his proposed actions as summarised within it were conditional upon any event occurring. Rather, it is clear in stating that, in the event, he received any benefit under the policy, he was willing to undertake to the Court to hold any payment he might receive in his solicitors’ Trust Account pending any further order of the Court.
51. I do not accept [the husband’s] evidence in relation to the matters I have just summarised.
Her Honour further rejected the husband’s evidence that he did not know that the orders included an acceptance of an undertaking.
The trial judge then considered the evidence, other than that of the husband, to determine whether it permitted a finding beyond reasonable doubt that the husband knew of the making of the order binding him to his undertaking at the time he disbursed the insurance money. Her Honour concluded that it did at [91]. Thus her Honour found the husband had disbursed the funds in flagrant contravention of the undertaking accepted by the court.
Having found the contempt proved, her Honour heard submissions on penalty on 25 July 2016 and on 9 August 2016 imposed a sentence of six months imprisonment.
The appeal
By Notice of Appeal filed on 12 September 2016 the husband’s grounds of appeal challenge her Honour’s orders made at several stages of the contempt application process, namely:
a)The dismissal of the application for amendment of the orders made on 12 December 2013 pursuant to the slip rule on 4 February 2016;
b)The dismissal of the challenge to the standing of the Legal Personal Representatives to bring the contempt application on 4 February 2016;
c)
The finding of a prima facie case of contempt against the husband on
31 March 2016;
d)The finding of contempt on 25 May 2016;
e)The penalty imposed upon the husband consequent on the finding of contempt on 9 August 2016.
The appeal was argued under the rubric of these general headings and it is convenient that we consider the appeal in the same way. During the appeal, counsel for the husband did not press the appeal against the finding of a prima facie case.
However, we propose first to deal with the challenge to her Honour’s decision about the standing of the Legal Personal Representatives.
Standing of the Legal Personal Representatives
At an early stage in the proceedings, the husband challenged the standing of the Legal Personal Representatives to bring a contempt application. It was argued to the trial judge that the right to bring the application for contempt was personal to the wife and, on her death, that right abated and could not be continued after her death by her Legal Personal Representatives as it was outside the scope of their role under s 79(8) of the Act.
Counsel for the Legal Personal Representatives argued that nothing in s 112AP or in r 21 restricts the class of people who may bring an application for contempt. Indeed, it was argued that the rule itself speaks of “a person” who brings an application. It was further submitted that, in any event, the contempt proceedings were “connected” to the property settlement proceedings and thus fell within the role of a Legal Personal Representative.
The application was heard on 6 October 2015 and her Honour made orders dismissing the application on 4 February 2016. Reasons were delivered on that same day.
Her Honour concluded that:
32. Nothing in either the Act or the Rules restricts the category of persons who may apply for an order that another person be punished for contempt. In fact, Rule 21.02(1) specifically provides that ‘a person’ seeking to apply for an order under Part 21.1 of the Rules must file an application for contempt.
Her Honour thus found that the Legal Personal Representatives had the standing necessary to bring the application.
On the wife’s death, the property settlement proceedings then on foot between her and the husband were continued, and entitled to be continued, by the appointed Legal Personal Representatives. The appointment of the Legal Personal Representatives, pursuant to r 6.15, had the effect of substituting them for the wife as a party to the property proceedings for the purposes of continuing those proceedings.
The basis for that continued representation is found in s 79(8) of the Act which provides:
(8) Where, before property settlement proceedings are completed, a party to the marriage dies:
(a) the proceedings may be continued by or against, as the case may be, the legal personal representative of the deceased party and the applicable Rules of Court may make provision in relation to the substitution of the legal personal representative as a party to the proceedings;
(b)if the court is of the opinion:
(i) that it would have made an order with respect to property if the deceased party had not died; and
(ii) that it is still appropriate to make an order with respect to property;
the court may make such order as it considers appropriate with respect to:
(iii)any of the property of the parties to the marriage or either of them; or
(iv) any of the vested bankruptcy property in relation to a bankrupt party to the marriage; and
(c) an order made by the court pursuant to paragraph (b) may be enforced on behalf of, or against, as the case may be, the estate of the deceased party.
In Fisher and Fisher (1986) 161 CLR 438 Brennan J said at 457-458:
Section 79(8) does not confer jurisdiction on the Family Court to entertain proceedings commenced after the death of one of the parties to the marriage. The proceedings to which it relates are proceedings commenced between the parties to a marriage with respect to the property of those parties or either of them arising out of the marital relationship or otherwise falling within par. (ca) of the definition of ‘matrimonial cause’ in s. 4(1) of the Act. The proceedings must have been a matrimonial cause commenced pursuant to s. 79(1). The death of a spouse will not always extinguish or satisfy the moral claims of the surviving spouse and children to which effect would have been given if the proceedings had been completed. Section 79(8) empowers the Family Court to give effect to the moral claims made in respect of the property of the spouses which was made available to answer those claims by the commencement of the proceedings, provided “it is still appropriate to make an order with respect to property”: s.79(8)(b)(ii). That qualification on the power, coupled with par. (ca)(i) of the definition of ‘matrimonial cause’, ensure that the jurisdiction is exercised only in cases the moral obligations arising out of the marriage remain unsatisfied.
(Emphasis added)
In Strelys and Strelys (1988) FLC 91-961 Nygh J said at 76,963:
The types of proceeding which can be included in an application are set out in the definition of “matrimonial cause” in sec. 4(1) of the Act. The paragraph relevant to the present case is para. (ca) which refers to “proceedings between the parties to a marriage with respect to the property of the parties to the marriage or either of them”.
His Honour continued at 76,964:
The word “proceedings” in sec. 79(8) must therefore be taken to refer to the process of litigation which will result in an adjustment of the interests of each of the parties in relation to the whole of their property which is just and equitable in the circumstances. That process may under sec. 79(8) be continued by either the applicant or the respondent.
Since the introduction of s 79(8) into the Act in 1983, the issue of what a Legal Personal Representative can do has been examined. There is no doubt that the Legal Personal Representatives can enforce an order after the death of the party in whose shoes they stand (see Pertsoulis and Pertsoulis (1979) FLC 90-613 and s 79(1A) of the Act). The Legal Personal Representatives can appeal an order made and seek an extension of time in which to bring an appeal (see Gilbert v Estate of Gilbert (1990) FLC 92-125).
In Greval, J.S, v. Estate of the late Greval, F.; Sandalwood Lodge Pty. Ltd. (Intervener) (1990) FLC 92-132 the Full Court held that incidental proceedings could also be continued under s 79(8), finding at 77, 907 that:
“Proceedings” in sec. 79(8) are not limited to some particular application. (Jacobsen and Jacobsen (1988) FLC 91-901 and Strelys and Strelys (1988) FLC 91-961).
The word “proceedings” is defined in sec. 4(1) of the Act to mean:
“a proceeding in a court, whether between parties or not, and includes cross-proceedings or an incidental proceeding
in the course of or in connexion with a proceeding”.
Thus what may be continued by reason of the provisions of sec. 79(8) are not only proceedings which fall within para. (ca) of the definition of “matrimonial cause” in sec. 4(1), but also any incidental proceedings and that would include a proceeding which falls within para. (f) of the definition where the appropriate relationship exists…
As to what constitutes “proceedings”, in Somerton & Wells [2013] FCWA 59 Thackray J said:
98. In my view, it is arguable that the word “proceedings” … encompasses everything done in litigation relating to a specific matrimonial cause from the time the jurisdiction of the Court is first invoked until the time judgment is enforced or fully performed. One benefit of such an interpretation is that parties to the litigation know that all decisions made in the course of the controversy will be subject to the same process of appellate review. This avoids what I consider to be the possibility that there could be on foot at the same time two different appeals in different venues relating to what is essentially the same subject matter.
The terms and effect of s 112AP are, inter alia, to punish a party for a contravention of an order that involves a flagrant challenge to the authority of the court. For the purposes of s 112AP “order” is taken to include an undertaking “given to and accepted by the court” per s 112AA. There was no issue that the alleged breach of the undertaking fell within s 112AP.
A court, having been satisfied of proof of the asserted contempt, may punish by sentence of imprisonment, a fine, a suspended sentence or the giving of security for good behaviour. It is useful to compare the terms of s 112AP with those of s 112AD. While s 112AD empowers a court to impose a sentence of imprisonment on a person found to have contravened an order without reasonable excuse, the words of s 112AD(4) strike what we regard as a relevant distinction. That section says:
Where a court makes an order under subsection (1), the court may make such other orders as the court considers necessary to ensure compliance with the order that was contravened.
(Emphasis added)
In our view, s 112AD is remedial in nature, aimed at securing compliance with orders. Comparatively, while s 112AP might be used to coerce compliance of an order, its other purpose is to punish flagrant challenges to the authority of the court (see Tate and Tate (2002) FLC 93-107 at 89,015 and Abduramanoski and Abduramanoska (2005) FLC 93-215).
The s 112AP application before her Honour brought by the Legal Personal Representatives sought condign punishment for an alleged flagrant challenge to the court’s authority. So much is clear from the proceedings before her Honour and, indeed, the Legal Personal Representatives had also filed an application for enforcement of the terms of the undertaking, but the parties agreed that that application should be adjourned until after the contempt application had been heard and determined.
We are of the view that the bringing of an application for contempt seeking that the husband be punished cannot reasonably be regarded as being proceedings with respect to the property of the parties or either of them or incidental to them, since its primary purpose was not to ensure compliance with an order but rather is an exercise of judicial power by the court to protect the due administration of justice. See Re Colina; Ex parte Torney (1999) 200 CLR 386; cited by French CJ, Kiefel, Bell, Gageler and Keane JJ at [41] in Construction, Forestry, Mining and Energy Union v BoralResources (Vic) Pty Ltd (2015) 256 CLR 375.
Notwithstanding the attraction of that argument, there is a requirement to give effect to the proper meaning of the section and the Rules. Section 112AP provides:
(1) Subject to subsection (1A), this section applies to a contempt of a court that:
(a) does not constitute a contravention of an order under this Act; or
(b) constitutes a contravention of an order under this Act and involves a flagrant challenge to the authority of the court.
Section 112AP(3) provides that “[t]he applicable Rules of Court may provide for practice and procedure as to charging with contempt and the hearing of the charge.”
The section itself makes no provision for who may bring an application. The history of the current rules is of some relevance. The matters dealt with in
r 21.01 of the current Rules were previously dealt with first in the Family Law Regulations 1975 (Cth) (“the Family Law Regulations”) and subsequently the Family Law Rules 1984 (Cth) (“the 1984 Rules”).
The Family Law Regulations
Regulation 137(4) of the Family Law Regulations provided:
If a person alleges that another person has wilfully disobeyed a decree of a court, he may file in that court, an application in accordance with Form 6 together with an affidavit setting out the details of the alleged wilful disobedience.
In McCulloch and McCulloch (1978) FLC 90-426 Wood SJ said at 77,160:
That regulation does not require that the person who commences proceedings alleging contempt of court must be a party to the proceedings and to this extent, it is in contrast with the provisions of reg. 133(2) empowering (inter alia) a person entitled to institute proceedings for enforcement of decrees to make application to the Court for an oral examination; it is in contrast to reg. 134(2) specifying the category of persons who may take garnishment proceedings; it is in contrast to reg. 135(1) specifying the categories of persons who may apply for an order for seizure of property, and also in contrast to reg. 136(1) empowering the Registrar or party to proceedings under the Act to apply for a sequestration order. Proceedings under sec. 108 for contempt of court are in effect proceedings alleging an offence, and such proceedings may, at common law, be instituted by any person on the basis that that person is exercising the right of any member of the public to lay an information and to prosecute an offence.… [R]eg. 137(4) does not require that the person who makes such application be a party to the proceedings, nor an officer of the Court, nor any other authority recognised under the Act, and this regulation reflects the common law.
The 1984 Rules
In 1984 the Family Law Regulations were replaced by the 1984 Rules. Order 35, r 3(1)(a) of the 1984 Rules provided a more restrictive position in relation to who had standing to bring contempt applications than had been the case under the Family Law Regulations. Order 35 relevantly provided:
2 Application of order
This Order applies if it is alleged that a person:
(a) has contravened an order affecting children; or
(b)has without reasonable excuse (within the meaning of Part XIIIA of the Act) contravened an order not affecting children; or
(c)has, intentionally and without reasonable excuse, prevented or hindered the taking of action under a third party recovery order; or
(d) has, without reasonable excuse, failed to comply with:
(i)a sentence imposed on the person under paragraph 70NJ (3) (a) or (b) or paragraph 112AD (2) (b) of the Act; or
(ii)an order directed to the person under one of those paragraphs; or
(iii)a requirement made, in relation to the sentence or order, by or under the applied provisions; or
(e) has committed a contempt of:
(i) the Family Court; or
(ii) another court exercising jurisdiction under the Act.
3 Who may make an application?
(1) An application under this Order may be made by:
(a)a person who is aggrieved by an action of the kind referred to in rule 2; or
(b) the Marshal; or
(c) a member of the Australian Federal Police; or
(d) a member of a police force of a State or Territory; or
(e) an officer of the Attorney-General’s Department.
(2)The Family Court may direct the Marshal to make an application under this Order.
(Emphasis added)
Apart from the specific officers described, Order 35, r 3(1)(a) required that a person bringing an application must be “aggrieved by an action referred to in rule 2”.
A “person aggrieved” was not defined in Order 1, r 4 (the interpretation section of the 1984 Rules) but that term has been used in many statutes, notably in relation to judicial review, and is generally understood to mean “a person whose interests are adversely affected by the decision”: Argos Pty Ltd v Corbell, Minister for the Environment and Sustainable Development (2014) 254 CLR 394; Koowarta v Bjelke-Petersen (1982) 153 CLR 168; Re McBane; Ex parte Australian Catholic Bishops Conference (2002) 209 CLR 372.
However widely one might construe the words “a person who is aggrieved” in
Order 35, r 3(1)(a) of the 1984 Rules, absent any definition in the Act or the Rules themselves, beyond the officials nominated, it would appear that there was a need for the person bringing the application to have a connection with the contempt alleged which adversely affected their interests.
The 2004 Rules
In 2004 the 1984 Rules were repealed and replaced by the 2004 Rules. Those rules provide for a procedure for the bringing of contempt applications in
rr 21.01 to 21.08.
The 2004 Rules provide, relevantly in r 21.01:
This Part applies to an application for an order:
(a) to enforce a parenting order;
(b) under Division 13A of Part VII or Part XIIIA of the Act; or
(d) that another person be punished for contempt of court.
The 2004 Rules do not provide any category of persons who may bring an application as the 1984 Rules did. Rule 21.02 (How to apply for an order) provides:
(1) A person seeking to apply for an order under this Part must file an application as set out in Table 21.1.
Rule 21.02(2) provides that:
A person filing an application mentioned in Table 21.1 must file with it an affidavit …
The Dictionary to the 2004 Rules describes “person” as including a corporation, authority or party.
That definition is broad and may be thought to include a mere interested bystander. In R v Dunbabin; Ex parte Williams (1935) 53 CLR 434, the High Court of Australia considered an application made by motion under the High Court Rules by Ms Williams that the editor and proprietor respectively of the Sun newspaper be dealt with for contempt of the High Court. The proceedings arose out of the publication of an item in the newspaper that Ms Williams alleged tended to prejudice her in an appeal pending before the High Court. The High Court treated the initiation of the proceedings by Ms Williams as a proper invocation by a private litigant of the jurisdiction of the High Court of Australia to punish the alleged comtemnors for contempt. The Court (Rich, Dixon, Evatt and McTiernan JJ; Starke J dissenting) determined that a contempt had occurred and Rich J (with whom the majority agreed) specifically stated that the Court might be put in motion by a person who has no particular interest in the contempt complained of.
However, for the purpose of these proceedings we do not need to consider whether, and to what extent, the 2004 Rules may be said to have expanded the class of persons who may make an application, as the definition of a person includes a party, and the appointment of the Legal Personal Representatives pursuant to r 6.15 had the effect of substituting them for the wife as a party to the property proceedings. Hence, in our view, they had standing to bring the proceedings.
The finding of contempt (Reasons of 25 May 2016)
The characterisation of the undertaking
Part of her determination of this issue, and significant to her Honour’s finding that the husband was in contempt of the undertaking accepted on 12 December 2013, was her Honour’s characterisation of the nature of the undertaking proffered by the husband.
Her Honour concluded that, contrary to the husband’s evidence, it was not offered conditional on and in lieu of the court acceding to the wife’s application but was offered to be accepted no matter what decision the court came to. The husband contended that her Honour’s characterisation of the undertaking was erroneous.
Her Honour said:
34. I am not persuaded that there was any precondition upon which the proffering of the undertaking rested.
35. As I have already outlined, nothing in Mr Dick’s oral submissions on the day of the hearing, nor in [the husband’s] affidavit to which
Mr Dick specifically referred suggests such a position. In fact, the proposition advanced by Mr Dick was clearly that any funds which resulted from a claim on the policy made after [the wife’s] death should be held safely in trust so that the dispute about the appropriate application of them could be considered at the final hearing.36. Whatever may have been the position advanced in the written Submissions, the oral submissions made by Mr Dick on [the husband’s] behalf - such submissions being completely consistent with [the husband’s] evidence at paragraph 24 of his affidavit - amounted, in my view, to the proffering on [the husband’s] behalf of the undertaking recorded on the face of the December 2013 Order.
37. I find that in the conduct of the appearance on 12 December 2013, including in making the oral submissions made and proffering the undertaking proffered, Mr Dick acted in accordance with [the husband’s] instructions. I am satisfied beyond reasonable doubt that Mr Dick acted on instructions at all times during the appearance.
38. I am also satisfied beyond reasonable doubt that the notion that
Mr Dick would proffer the undertaking on [the husband’s] behalf in his absence during the hearing in November 2013 was clearly known to [the husband] - given that his affidavit contains his sworn evidence that he was willing to undertake to hold any payment he received from the MLC policy in this solicitor’s trust account pending further order of the Court and that this was contained in an affidavit sworn by him after his attendance at the hearing had been excused.39. For these reasons, I am satisfied beyond reasonable doubt that, through his Counsel who appeared on his behalf and acted on and in accordance with his instructions, [the husband] gave, in open Court, the undertaking to the Court in the terms recorded in the December 2013 Order.
In reasons delivered earlier in relation to the application to amend the
12 December 2013 order pursuant to the slip rule her Honour said:
21. I do not accept the submissions made by Mr Richardson SC to the effect that that which was spoken by Counsel during oral submissions should not be regarded as overtaking (as it were) the Respondent’s position that the proffering of an Undertaking was to be considered only as an alternative to his primary position that
[the wife’s] Application in a Case be dismissed.22. Whatever may have been the initial position, submissions made by Counsel on the Respondent’s behalf amounted, in my view, to the proffering of the Undertaking recorded on the face of the December 2013 Order.
It was argued on appeal that although the offer in paragraph 24 of the husband’s affidavit was not in terms conditioned on the court acceding to the wife’s application, the husband’s position was made entirely clear in the written submissions of Mr Dick. That is, the undertaking was to be offered only in the event that the wife’s application was not dismissed. It is perhaps more apt to describe the husband’s position as being that the undertaking was only offered in the event that the wife’s application was not dismissed on its merits, and would be offered in lieu of an order made in the wife’s favour.
It was conceded in argument for the husband that Mr Dick did not in the oral argument directly indicate the conditional basis on which the undertaking would be offered by use of the word “alternative” or similar. However, counsel for the husband argued that there was no basis for her Honour to understand that Mr Dick was stepping away from the written argument in which that position was clear. It is relevant too that at the commencement of his submissions, Mr Dick said that his oral submissions would be repeating the writing submissions.
It could be that since the written submissions were handed to her Honour at the commencement of the oral submissions, she may not have had the opportunity to read them before hearing the argument. However, when the matter concluded she said to Mr Dick that she would have regard to the written outline. Her Honour’s decision was reserved for a month and if her Honour was in any doubt as to what was being offered by the husband, she made no attempt to clarify that with those then representing the husband.
A number of complaints were made by the husband in relation to her Honour’s finding. First, and principally, it was argued that the husband was not present during the making of the oral submissions, and thus any perceived “change” in the husband’s instructions from the written submissions to the oral submissions of his counsel could not have been on the husband’s instructions. Secondly, in coming to the conclusion that what counsel said in oral submissions represented a variation in the husband’s instructions, her Honour did not articulate how then the oral submissions (made in the absence of the husband) and the written submissions could both be on the husband’s instructions or, consistent with her findings, how the oral submissions could be in accordance with the husband’s instructions and the written submissions not be.
Given that neither a reading of the transcript of the proceedings before her Honour nor her Honour’s reasons for decision of 12 December 2013 reveal the basis for her binding the husband by the undertaking, it is difficult to reconcile her Honour’s findings.
Although Mr Dick did not in terms say that the husband’s offer to give an undertaking was in lieu of her Honour acceding to the wife’s application, his oral submissions read in context make that position tolerably clear (see [31] and [32] of these reasons).
It was argued that the evidence before her Honour did not permit the conclusion to which her Honour came, that is that the husband offered to give an undertaking regardless of her Honour’s findings on the merit of the wife’s application. In the absence of any reasons as to the acceptance of the undertaking and no reconciliation of the written and oral submissions we accept that her Honour’s conclusion that Mr Dick’s oral submissions reflected the husband’s instructions to him is unable to be supported and her Honour’s conclusion was in error.
However, it was unnecessary for her Honour to determine what the actual basis on which the undertaking was offered, but rather what the husband believed he offered.
Central to the challenge to her Honour’s finding that the husband was in contempt is her Honour’s rejection of the husband’s evidence.
The rejection of the husband’s evidence
Although her Honour accepted that the husband was not served with the order, she nonetheless rejected his evidence that he did not know that an undertaking had been accepted by the court on 12 December 2013 and that all he had been told by Mr S was that the wife’s application had been dismissed. Her Honour further rejected his evidence that he made no enquiries about an undertaking because he believed it would only be offered as an alternative position to making the orders sought by the wife (in the event that the wife’s application was to succeed) and that on being told that the wife’s application had been dismissed he believed that no undertaking had been given or accepted (at [45] – [51]).
Her Honour’s findings on this matter were:
53. It is inherently incredible to me that Mr [S], employed in the firm in respect of which [the husband] was the principal and engaged only in doing work for, and on behalf of, the principal of that firm and in respect of [the husband’s] personal matter in this Court, did not inform [the husband] of the undertaking recorded in the order in circumstances where paragraph 24 of [the husband’s] affidavit contains his evidence of his willingness to give an undertaking to hold funds in trust, pending further order of the Court.
54. After all, it cannot be forgotten that [the husband] was Mr [S’s] only client and, thus, his only responsibility during this time.
55. Additionally, as well as the fact that Mr [S] worked only on [the husband’s] matter during the approximately six month period of his contact with, and/or his employment by, [X] Lawyers,
Mr [S] was supervised by [the husband].56. I consider that, having regard to [the husband’s] experience as a solicitor and the fact that he had sworn paragraph 24 of his affidavit - which contains no reference to the idea or concept that his offer (as contained within that paragraph) was conditional upon [the wife’s] Application being dismissed or on any other eventuality – [the husband’s] evidence that he did not make any inquiry about the December 2013 Order and that he had no reason to expect that the Court would have taken a “difference course” (namely, the very potentiality clearly anticipated by the fact that paragraph 24 of his affidavit exists as it does) is inherently unbelievable and I do not accept it.
57. It is inherently unbelievable that [the husband], an experienced solicitor who had been engaged in his own personal litigation for a number of years, did not make sure he knew whether he was bound by the undertaking he had sworn to in the affidavit, specifically prepared for use at the hearing.
58. I do not accept [the husband’s] evidence that Mr [S], who had been employed by him solely to work on his file, did not tell him at any time before 19 August 2014 that the undertaking proffered by him in paragraph 24 of his affidavit had been accepted and recorded.
59. I consider that it defies all credible reasoning that a solicitor solely employed by, or contracted to, the firm in respect of which [the husband] is the principal, to manage and run the principal’s own personal litigation and told to treat that person – [the husband] – as a client and whose file note records “orders as per reasons” - in circumstances where the Reasons themselves contain the order and in circumstances where there clearly have been prior discussions about the offering of an undertaking to hold funds in trust pending further order of the Court - did not inform his client ([the husband]), who he had been instructed to treat as a client and who was himself an officer of the Court, that he was now bound by the terms of an undertaking accepted in the terms it was offered in paragraph 24 of the affidavit – an affidavit by the husband after he knew his attendance at the hearing for which the affidavit had been prepared had been excused.
What is evidence that is “inherently unbelievable”?
It is well accepted that where evidence is uncontradicted and is not otherwise inherently improbable or inherently incredible, and where the other party has not elicited in cross-examination or led in evidence some material to overcome it, either by proving the contrary or throwing the matter into doubt, it should be accepted (see Purkess v Crittenden (1965) 114 CLR 164 and Ellis v Wallsend District Hospital (1989) 17 NSWLR 553 at 561 per Kirby P).
As Sugerman J said in Holman v Holman (1964) 5 FLR 406 (“Holman”) at 409:
The powers of a court on appeal from the decision of a judge sitting without a jury are generally restrained in their exercise by considerations which attach great weight to the decision of the judge of first instance whenever in a conflict of testimony the demeanour and manner of witnesses who have been seen and heard by him are material elements in the consideration of the truthfulness of their statements (see Paterson v. Paterson, where the leading authorities are examined). … Another instance of evaluation is where uncontradicted evidence tendered in support of an uncontested claim is rejected on the ground of inherent incredibility rather than by reference to criteria based upon the trial judge's observation of the witness. An appellate court then is commonly in as good a position as was the trial judge to decide upon the inherent probability or improbability of the account given, although naturally it will give weight to the view of the trial judge, more especially where he enjoys the familiarity with the subject-matter which results from sitting in a specialized jurisdiction where similar questions recur.
(Citations omitted)
The converse position holds equally true, that is evidence which “in itself is so incredible and unreasonable that no reasonable man could accept it”, may be rejected, even though unchallenged (see Holman at 410; also see IMM v The Queen (2016) 257 CLR 300 at [58]).
The assessment that evidence is “inherently improbable or unreasonable” must be reflective of some circumstance appearing from the evidence itself. That is there must be some aspect of the evidence itself which renders it incapable of acceptance, apart from the assessment of the credibility of the witness.
In The People v Ennis 190 Cal. App. 4th 721, Bedsworth J said:
“…While an appellate court can overturn a judgment when it concludes the evidence supporting it was “inherently improbable,” such a finding is so rare as to be almost non-existent.” ‘To warrant the rejection of the statements given by a witness who has been believed by a trial court, there must exist either a physical impossibility that they are true, or their falsity must be apparent without resorting to inferences or deductions.’
(Citations omitted)
In circumstances where her Honour did not identify in what way the husband’s evidence was “inherently unbelievable” in the sense that “no reasonable man could accept it” and to the extent that the trial judge rejected the husband’s evidence on that basis, it cannot be supported.
Further, at [60] her Honour said of the husband’s evidence as to his knowledge:
Simply put, I consider that, whilst [the husband’s] account is possible, it is not, in the least, probable.
We find her Honour’s language used there to describe the husband’s evidence to be inconsistent with her earlier findings that his evidence was “inherently unbelievable” and this reinforces our conclusion that her Honour’s rejection of the husband’s evidence on the basis that it was “inherently unbelievable” was erroneous.
The husband’s credibility
It is to be observed that but for one point, the husband’s evidence as to his state of mind and his knowledge was unchallenged. It was only in relation to his evidence that in extracting documents from the file to send to his new solicitors he did not see the orders made on 12 December 2013, that his evidence as to his knowledge was challenged thus:
You must, I would suggest, have come across the court order in that process? --- I did not.
And:
To be clear, I’m talking about the order of the court which recorded the undertaking not to distribute the proceeds of the life policy … it seems incredible that during that process you wouldn’t have come across the order?---I did not.
(Transcript 31 March 2016, page 20 line 41 – 42, page 21 line 8 – 11)
That was the extent of the challenge to the husband’s evidence.
At no point during his evidence did the trial judge indicate a disbelief of the husband’s evidence.
Her Honour was obliged to raise her frank disbelief of the husband’s evidence as a matter of fairness of the type to which the court referred in Browne v Dunn (1894) 6 R. 67.
In Holman Sugerman J quoted Madden CJ and said at 410:
In Richards v. Jager the learned Chief Justice said that where there is evidence sworn to prove one side of the issue, and there is no evidence whatever sworn on the other side to contradict it, the court is bound to accept it unless that evidence is “in itself so incredible and unreasonable that no reasonable man could accept it”. He went on to indicate that if the decision is founded on disbelief of the witness this should be disclosed. If this is not done, “then they are deciding in the teeth of the evidence without showing why they do so, and I do not think that is reasonable in any court of justice, or according to the principles to be applied by courts of justice”.
(Citations omitted)
Sugerman J continued and again quoting Madden CJ said at 410:
Again in Swinburne v. David Syme & Co his Honour said that he adhered most stoutly to the principle that where evidence is given on one side which is conclusive of the matter, which is in itself inherently probable, and not unreasonable or improbable, and where it is not contradicted by evidence on the other side, the tribunal which hears it is bound to accept it. “Because if it were otherwise” his Honour said, “the decision would be a matter of caprice, a mere matter of prejudice, so that some judge might say-‘I do not like this person or this kind of thing’”.
(Citations omitted)
The so called “rule” in Browne v Dunn is a rule of fairness. Lord Herschell LC said at 71:
All I am saying is that it will not do to impeach the credibility of a witness upon a matter on which he has not had any opportunity of giving an explanation by reason of there having been no suggestion whatever in the course of the case that his story is not accepted.
The application of that principle of fairness extends to the judge hearing the matter. In Khul v Zurich Financial Services Australia Ltd (2011) 243 CLR 361, the plurality of the High Court said at 388:
72Now if it was not open to counsel for the first respondent to make the postulated allegation, how can it have been open to the trial judge, without warning, to incorporate into his reasons for judgment a finding to the same effect as the allegation?
In Khul the trial judge said in his reasons that the plaintiff was “reluctant to say precisely what happened”. The plurality said at 384 that such a finding was significant because:
62…Witnesses are supposed to answer questions put by counsel responsively: they are supposed to give a full answer, but no more. It is one thing to say that a witness was not asked the right questions. It is another thing to say that a witness did not answer the questions that were asked. And it is an even more serious thing to say that a witness was “reluctant” to answer. The duty of a witness is to tell the truth, the whole truth, and nothing but the truth so far as the questions asked seek it. … To conclude that a party-witness is reluctant to say what happened is to conclude that the party-witness is deliberately failing to comply with the duty to tell the whole truth. That is a serious conclusion to reach…
The “postulated allegation” there referred to has resonance in this case. Apart from her Honour’s conclusions about the husband’s evidence, her Honour also said at [84] “I consider that [the husband’s] evidence about the knowledge of these submissions was very carefully given”. This finding that the husband’s evidence was “carefully given” conveys the same conclusion, that is, that he did not give the truth or the whole truth.
Given that the husband’s evidence was almost entirely unchallenged in this regard and in regard to the matters on which her Honour concluded that the husband’s evidence was not to be accepted, as a matter of procedural fairness she was obliged to raise them with him (or his counsel) to enable him to make what answer he could. Without having done so, her Honour failed to accord the husband procedural fairness.
Of course, having rejected the husband’s evidence that he did not know of the undertaking did not, without more, entitle her Honour to find the contrary, that is that he did, in fact, know.
One further matter needs to be considered before passing from her Honour’s consideration of the husband’s credibility.
Good character and the assessment of guilt
The issue relates to the husband’s good character. There seemed to be no issue that the husband was a person of good character. At the time of the hearing on the contempt application her Honour was aware that the husband was a solicitor practising as the partner in a law firm and nothing was suggested to her that he was other than a person of good character. Furthermore, her Honour had before her and accepted the husband’s evidence that he understood the nature of an undertaking accepted by a court and the serious consequences that would flow from a breach of that undertaking (at [42]).
Counsel for the husband did not ask her Honour to take the husband’s good character into account in determining his guilt and so it is unsurprising that her Honour did not give it consideration.
However, it is as well to understand that in considering the guilt of a person in the position of the husband, good character has an important role to play.
In Attwood v The Queen (1960) 102 CLR 353 at 359 the High Court said:
The expression “good character” has of course a known significance in relation to evidence upon criminal trials; for it denotes a description of evidence in disproof of guilt which an accused person may adduce. He may adduce evidence of the favourable character he bears as a fact or matter making it unlikely that he committed the crime charged. … [E]vidence of good character is regarded as really bearing on the probability or improbability of guilt. As Cockburn C.J. said: “The fact that a man has an unblemished reputation leads to the presumption that he is incapable of committing the crime for which he is being tried”.
(Citations omitted)
Further in R v Trimboli (1979) SASR 577 at 578 King CJ said:
I think that it is possible to lay down some propositions which might be of assistance to the judge at the new trial and to other trial judges.
1.It is desirable in all cases in which there is evidence as to the accused's good character that a direction be given as to the use to which that evidence should be put.
2.No particular form of words is necessary, but the direction should convey to the jury that they should bear in mind the accused's previous good character when considering whether they are prepared to draw from the evidence the conclusion of the accused's guilt. They should bear it in mind as a factor affecting the likelihood of the accused committing the crime charged. The judge may add, if he thinks it appropriate in the particular case, that the jury should consider the accused's previous good character in assessing the credibility of any explanations given by him and, when he has given evidence, his credibility as a witness.
Later cases, such as Melbourne v The Queen (1999) 198 CLR 1 and Stanoevski v The Queen (2001) 202 CLR 115 have decided that while it is not obligatory to direct a jury on the issue of a person’s good character, its importance in the determination of the question of guilt remains.
In Braysich v The Queen (2011) 243 CLR 434 French CJ, Crennan and Kiefel JJ said at 455 – 456:
41The admission and use of evidence of good character has a long history. It dates back, as Gummow J pointed out in Melbourne v The Queen, to a time before the accused became a competent witness when there was generally no question of a jury using such evidence in an assessment of the accused’s testimonial credit. Its history has been characterised by conceptual confusion between reputation and actual disposition. As McHugh J said in Melbourne, character refers to the inherent moral qualities or disposition of a person. It is to be contrasted with reputation, which refers to the public estimation or repute of a person irrespective of that person’s inherent qualities. The evidence in the present case went to the actual disposition of the appellant. The witnesses called on his behalf testified to their dealings with him, and knowledge of him, as an honest person.
42 In the end, as Gummow J said in Melbourne:
“The issues in the particular case and the nature of the evidence of ‘good character’ which is proffered will guide the process of reasoning of the tribunal of fact on the path to providing an answer to the ultimate question of whether the accused is guilty beyond reasonable doubt.”
The same proposition applies to the use of evidence of good character in support of the statutory defence in this case.
43 In discussing what is required of a judge directing a jury where evidence of good character has been called, Hayne J, in Melbourne, referred to the common example of an accused of previous undoubted honesty in money matters being tried for an offence of fraudulently obtaining financial advantage. In such a case, as his Honour observed :
“[T]he judge may think it appropriate to draw the attention of the jury to the fact that prior good character may be thought, by them, to make it less likely that the accused acted with dishonest intent.”
His Honour added the caveat that on those bare facts there is no requirement that the judge give such a direction. But his observation recognised the potential relevance of evidence of honesty to the likelihood that an accused person has acted dishonestly.
Therefore good character, where available, may be taken into account on the question of determining the guilt of an accused in two ways. First, a person of good character is less likely to commit a crime than one who is not of good character. Secondly, a person of good character is entitled to have that fact taken into account in determining his credibility because a person of good character is less likely to lie on his oath than a person who is not of good character (see also R v Stalder (1981) 2 NSWLR 9 at 17 – 18; R v Murphy (1985) 4 NSWLR 42 at 53 – 54).
The husband was entitled to have his good character taken into account in the determination of his guilt. In a civil context it is, perhaps, understandable that a judge would not necessarily bring such considerations to bear. However, where a court of any kind is invested with the jurisdiction of contempt, it is incumbent on the court to be mindful that “[s]afeguards similar to those appropriate in criminal proceedings therefore apply” (Doyle v Commonwealth (1985) 156 CLR 510 at 516) and that “the defendant should have the same rights and privileges as a person charged summarily with a criminal offence” (Sahari v Sahari (1976) FLC 90-086 at 75,406).
In her sentencing remarks, her Honour took into account that the husband had no previous criminal convictions, was a solicitor practising as the principal of his own firm and is responsible for the supervision of other solicitors and support staff (see [29] of the August 2016 reasons). All of these matters were known to her Honour (save, perhaps, for his having no prior criminal convictions) at the time of her consideration of whether the husband was in contempt of the noted undertaking. All were relevant to her determination of his guilt both as to his credibility and to the likelihood of his committing the alleged contempt.
The conclusion as to the husband’s knowledge
Having rejected the husband’s evidence as being unworthy of belief, her Honour noted at [61] that she must nevertheless be satisfied of the husband’s knowledge beyond reasonable doubt having put his evidence as to that matter to one side. Her Honour observed that there was no direct evidence of the husband’s knowledge and that proof of his knowledge must be derived as a conclusion from the facts and circumstances of the matter (at [62]). Her Honour identified that, when called upon to determine the guilt of a person based on a conclusion drawn from the facts and circumstances of the matter, that may only be done if, after considering all of the facts and circumstances, the only reasonable conclusion arising from the evidence is that the husband knew at the time he obtained and disbursed the insurance money that he was bound by the court accepting his undertaking made on 12 December 2013.
It is necessary however, to underscore that the knowledge of which her Honour was required to be satisfied beyond reasonable doubt was that of the husband, not of some hypothetical person in his position.
This leads then to the next challenge to her Honour’s conclusion.
It was argued that the reasoning process by which her Honour came to satisfaction as to the husband’s knowledge was flawed in two respects. First it was argued that her Honour failed to resolve disputed issues of facts before using them to found the basis for an inference as to the husband’s guilt. Second, it was contended that her Honour relied on matters which were not established by the evidence, in effect, concluding the husband’s state of mind by reference to a hypothetical person.
Her Honour set out from [70] the facts and circumstances on which she relied and from which she concluded the husband’s knowledge.
The facts and circumstances were:
·
Mr S ceased employment with the husband’s firm on
24 December 2013 but had prepared the costs submissions before he left;
·Thereafter, the husband had control of his own matter until about February 2014 when he handed it over to new solicitors; and
·In the process of handing over the file, the husband extracted documents from the voluminous file which related to proceedings which were next to occur.
Her Honour then referred to the husband’s evidence that in that process he did not see her Honour’s order of 12 December 2013 and again rejected it at [76]. Her Honour continued:
77. I find it simply unbelievable that an experienced solicitor, engaged in his own long-standing litigation, taking up the carriage of his own matter after it had been conducted by another solicitor for about six months, during which period he ([the husband]) had sworn an affidavit in which he told the Court he was willing to undertake to hold any payment he might receive in trust pending further order of the Court, would not have undertaken a thorough review of the file - especially in circumstances where, in fact, the submissions for costs prepared by Mr [S] on [the husband’s] behalf were filed with the Court after Mr [S] left and while [the husband] had carriage of his own matter.
78. However, again, these findings I have made about [the husband’s] evidence are, of themselves, insufficient to establish what is required to be established by the Applicant if the Application is to succeed.
Her Honour then turned to the costs submissions filed on 13 February 2014 which she accepted were prepared by Mr S (at [82]).
At [83] her Honour referred to the body of those submissions, and in particular paragraph 3 which was as follows:
Pursuant to paragraph 2 a. of the Orders of the Family Court of Australia (Court) dated 12 December 2013, the Husband delivers his written reasons applying for costs of the application to be awarded to him on the standard basis of assessment…
Her Honour accepted at [84] that the submissions were not prepared by the husband but concluded the husband became aware of the existence of the costs submissions after Mr S left and caused them to be filed (at [87]).
Her Honour further accepted that while the submissions refer to the
12 December 2013 order they do not refer “specifically” to the undertaking recorded as part of the order (at [88]).
Her Honour then took into account the following matters at [89]:
a) [The husband] swore an affidavit containing an offer of an undertaking in the circumstances where it was prepared when he knew he was not going to attend the hearing on 12 November 2013; and
b) the contents of paragraph 24 of that affidavit; and
c) the fact that Mr Dick acted on instructions during the course of the hearing in November 2013; and
d) during the course of his oral submission, referred specifically to paragraph 24 of [the husband’s] affidavit; and
e) [The husband’s] matter was the only matter in which Mr [S] was engaged during his engagement with [X] Lawyers and he was present on both occasions of the hearing in November and December 2013 and he worked under [the husband’s] supervision and was instructed to treat [the husband] as a client; and
f)the usual course of a solicitor acting for a client would be to inform that person of the terms of an order made - particularly where it involves the Court’s acceptance of an undertaking referred to and proffered by affidavit material prepared by and relied upon by that client at the hearing; and
g)[The husband] was represented by Mr [S], whose only engagement was for the sole purpose of conducting [the husband’s] litigation with [the wife]; and
h)the costs’ (sic) submissions prepared by Mr [S] – consequent upon the Order made on [12] December 2013 – were not filed until a time during which [the husband] was responsible for the conduct of his own proceedings; and
i)[The husband] sought an order for costs of and incidental to the Application determined by the December 2013 Order in a manner consistent with that provided for by the terms of the order itself (and not in accordance with the procedure provided for in the Rules); and
j)given the importance to a solicitor such as [the husband] (an officer of the Court) of clearly understanding whether the undertaking proffered in paragraph 24 of his affidavit relied upon at the hearing was or was not accepted by the Court; and
k)the fact that [the husband] undertook a review of his file after Mr [S] left at the end of December 2013 and, as I have found, subsequently caused the costs’ (sic) submissions which relied upon the terms of the December 2013 Order to be filed; and
l)that he undertook a review of his file in order to ascertain material to provide to solicitors he then engaged,
Her Honour then concluded:
…in light of human experience of the conduct of long-standing litigation by a lawyer ([the husband]) in his personal capacity by way of the engagement of another lawyer, specifically charged with the conduct of only his litigation, persuades me that knowledge that the undertaking, referred to in paragraph 24 of the husband’s affidavit, had been given and accepted by the Court, as recorded in the Order made in December 2013, is the only rational inference in the circumstances.
Circumstantial reasoning
It is helpful to consider the nature of a conclusion reached by circumstantial reasoning before moving to the challenges to her Honour’s determination.
We accept that her Honour’s production and use of the costs submissions in the way just described denied the husband procedural fairness and was an error.
It was argued for the husband that the authorities to which her Honour referred both in the reasons of 31 March 2016 and 25 May 2016 do not support her contention that s 144 of the Evidence Act 1995 (Cth) entitled her to rely on a document not otherwise in evidence and thus not the subject of challenge as part of the inferential reasoning process. Five of the cases to which her Honour referred consider the enactment of s 144 and the operation of the common law doctrine of judicial notice and relate to the application of the section. We do not understand what support her Honour took from those authorities in relation to the instant issue. R v Giam (No 2) [1999] NSWCCA 378, established that “the Court does not need to receive evidence of its own proceedings”. In that case, however, the evidence related to an earlier appeal and its outcome which the court found were “matters of record in this Court”. We note that although the NSW Criminal Court of Appeal found that they could “acquire knowledge of these matters by looking at the Court file and/or by reading the Published Reasons for judgment”, it gives no support for her Honour’s actions in examining the file court file generally.
In any event, by failing to make clear to the parties what use her Honour intended to make of the document and allowing them an opportunity to respond, we do not see how the requirements in s 144(4) could be met. However, given our finding as to the lack of fairness attending her Honour’s use of the document, it is unnecessary to consider this point further.
Returning then to the asserted errors in her Honour’s chain of reasoning, it was argued that her Honour’s finding that the submissions were filed in a “manner consistent with that provided for by the terms of the order itself” is incorrect. Her Honour’s order provided that the submissions for costs be filed within 14 days of the making of the order on 12 December 2013. In fact, the submissions were filed on 13 February 2014.
In the light of her Honour’s acknowledgment that the submissions make no reference whatsoever to the undertaking accepted by the court on
12 December 2013 and even taken in the context of the whole of the evidence, the husband’s knowledge that submissions were drafted and his causing them to be filed could not, without more, safely be used by her Honour in the circumstantial reasoning. It could certainly not, as her Honour implied, support a conclusion that in filing the submissions, the husband saw the orders and thus knew of the acceptance of his undertaking.
Her Honour’s reliance on the filing of the costs submissions was flawed and unfair and could not properly form part of the facts and circumstances on which she relied in the determination of the husband’s knowledge.
Reliance on matters not established in the evidence
It is trite to observe that her Honour was required to be satisfied beyond reasonable doubt of the husband’s state of mind at the relevant time, not the state of mind of some other, hypothetical person in the husband’s position.
As part of the circumstantial reasoning process her Honour called in aid what would be the “usual course of a solicitor” in advising the client that an undertaking had been proffered and had been accepted.
It was argued that her Honour erred because there was no evidence as to what the “usual course” of a solicitor would be, nor was this point raised with the husband during his evidence.
Dealing with the first point, that is, that there was no evidence before her Honour as to what the “usual course” adopted by a solicitor would be. We are not necessarily persuaded that evidence would be necessary before a judge expressed a view about what a solicitor might or might not do in the usual course, although we would expect the judge to give some basis for that conclusion.
However, in our view, the flaw in her Honour’s approach in this regard rests in the second point, that is one of procedural fairness. At no time was the suggestion that Mr S would be expected to follow a “usual course” put to the husband for his consideration nor did her Honour outline to the husband what that “usual course” might be.
The husband gave evidence of what he was told by Mr S and supported that oral advice by reference to the file note. It was not the case, as it was in LGM & CAM (Contempt) (2008) FLC 93-355 that the husband did not give evidence or sought to take refuge in legal professional privilege. He clearly waived that when he gave evidence of his instructions to, and advice from, Mr S.
True it is that the husband did not call Mr S to give evidence, but he did not bear the onus of proof. His affidavit, in which he set out in some detail his instructions to Mr S and what Mr S told him, including the contents of the file note prepared by Mr S on the 12 December 2013, clearly waived privilege. The Legal Personal Representatives could have, but did not, call Mr S and they bore the onus of proof.
While her Honour determined the husband’s guilt based in part on her acceptance of the “usual course” which might be adopted by a solicitor, in circumstances where there was no testing of the husband’s evidence that he was not told, no questions directed to the husband about Mr S and his experience and ability as a solicitor, and no attempt to call Mr S, her Honour’s reliance on what was a “usual course” in this case amounted to nothing more than speculation. Nor did her Honour, in considering what a solicitor would do in the “usual course”, take into account the file note written by Mr S in assessing whether the “usual course” was in fact available to her in concluding the husband’s guilt and this ought to have given her Honour reason to pause before relying on the conduct of a hypothetical solicitor in the position of Mr S.
It was also argued that her Honour erroneously took into account what a hypothetical solicitor in the husband’s position would have done in the same circumstances. She concluded that the husband as an experienced solicitor would have enquired about whether the undertaking was offered and accepted (at [56]) and would have ensured he found out whether he was bound by the undertaking (at [57]) and that an experienced solicitor conducting his own litigation would have undertaken a thorough review of the file (at [77]). Thus her Honour concluded that “human experience of the conduct of long-standing litigation” by a lawyer in his personal capacity and his engaging another solicitor persuaded her that the husband knew of the order and that he was bound by the undertaking (at [89]).
In our view her Honour, in taking into account her conclusions about what an experienced solicitor would have done, considered not the husband’s state of mind by reference to the evidence but considered what another solicitor in the position of the husband would have done and in this respect fell into error.
We thus find that the process by which her Honour concluded the husband’s state of mind was erroneous and cannot be sustained.
Jurisdiction to bind the husband to the undertaking
While it was the husband’s position before her Honour that he did not intend to give an undertaking to the court in circumstances where the court dismissed the wife’s application on its merits, it was contended on appeal that, in any event, her Honour lacked jurisdiction to accept an undertaking from the husband.
It was argued that since the acceptance of the undertaking was not made in lieu of the court making an injunction, there was no jurisdiction to accept it once the wife’s application was dismissed.
Counsel for the husband relied on Thomson Australian Holdings Pty Ltd v Trade Practices Commission and Others (1981) 148 CLR 150 (“Thomson”), in which the plurality of the High Court said at 165:
As an undertaking is given in lieu of an injunction and is enforceable in like manner, the principles which govern the grant of an injunction by a court must guide it in deciding whether it should accept an undertaking. Limitations which affect the court’s jurisdiction or power to grant a final injunction must be observed in the acceptance of an undertaking when it is offered as a substitute for a final injunction. The court cannot escape such limitations by the expedient of accepting an undertaking in lieu of an injunction. The court cannot put itself in the position of enforcing conduct which it has no capacity to command or compel.
Her Honour considered this argument and said:
40. I am satisfied beyond reasonable doubt, that when the undertaking was given, proceedings were on foot. It was offered in open Court in the course of the hearing and was scrutinised and accepted by the Court and the acceptance of it acknowledged and demonstrated by the Court by recording it in the December 2013 Order.
41. In light of the matters outlined thus far, I do not accept the submission that there was no jurisdiction to accept the undertaking.…
On 4 February 2016, in reasons delivered dismissing the husband’s application to amend the 12 December 2013 order pursuant to the “slip rule”, her Honour said:
26. Additionally, I do not accept the thrust of the additional submissions contained in paragraph 2 of the husband’s Submissions in Response filed on 19 October 2015. I consider that, whilst [the wife’s] application – which was for the transfer of the insurance policy to her – was unsuccessful, the hearing also included a consideration of the “protection” of the proceeds of the policy pending final determination by the Court of the proceedings for orders pursuant to s 79 of the Act: so much was clearly acknowledged by the husband’s material and the submissions made on his behalf. It is within such context that the December 2013 Order was made in its terms.
The husband’s point was that where there was no application before the court for an injunction restraining the parties or one of them from dealing with the proceeds of the insurance policy, and where the wife’s application was dismissed on its merits, her Honour had no jurisdiction then to bind the husband to the undertaking, as it were, in a vacuum.
Although her Honour’s reasons for decision delivered on 12 December 2013 made no reference to the undertaking or why it was noted as part of the orders made on that day, in her Honour’s reasons of 4 February 2016 she said that the undertaking was accepted as an aid to the “protection” of the proceeds of the policy (at [26]).
We note that here the undertaking was accepted in interim orders, not final orders. The extract in Thomson quoted above, to which counsel for the husband referred us, deals with undertakings when they are “offered as a substitute for a final injunction”. The plurality further said at 165:
No doubt the Federal Court has power to accept an undertaking at an interlocutory stage when the undertaking is reasonably related to the orderly procedure of the Court or to the subject matter of the litigation…
This clearly distinguishes the accepting of an undertaking as a final order in lieu of an injunction, and undertakings in interim proceedings, in this case where the undertaking is related to the subject matter of the litigation.
We further note that the power of the Family Court to accept such undertakings is evidenced by s 114(3) of the Act which provides that the court may grant an injunction, by interlocutory order or otherwise, in any case in which it appears to the court to be just or convenient to do so.
We reject the argument that the Court did not have the power or jurisdiction to bind the husband to the undertaking in these circumstances.
In any event, given our conclusion on her Honour’s determination as to the guilt of the husband and the inevitable result that her Honour’s orders will be set aside, it is not necessary to pursue this point further.
Amendment of the orders pursuant to the slip rule
The husband sought by operation of the slip rule (r 17.02(1) of the Rules), that the reference to the acceptance of the husband’s undertaking be excised from the orders of the trial judge made on 12 December 2013. The basis for the application was that the husband contended that he gave no undertaking to the court in the terms recorded in the preamble to the orders.
Rule 17.02 of the Rules as at the time of the husband’s application was as follows:
(1) If a party claims that there is an error in an order issued by the court, the party must give written notice of the error to the Registry Manager and all parties.
(2) A Registrar may rectify an error that appears obvious on reading the order.
Example: A kind of amendment that a Registrar may make under subrule (2) is the correction of a typographical error.
(3) If the Registrar:
(a) is in doubt about whether there is an error in an order; or
(b) believes that an error in an order has, or may have, arisen from an accidental slip or omission;
the Registrar may take action under subrule (4).
(4) If subrule (1) or (3) applies, the party or Registrar may, after giving reasonable notice to each party, refer the order to the judicial officer who made it.
Note: If the judicial officer who made the order is unavailable, it may be referred to another judicial officer (see rule 1.13).
(5) A judicial officer may, after giving each party a reasonable opportunity to be heard, rectify a suspected error referred to the judicial officer.
Note: An amendment of an order may be made under this rule only if it is an error obvious when reading the order. Any other amendment must be remedied by appeal or consent.
The rule deals with errors in orders and allows the court to correct a clerical mistake or error arising from an accidental slip or omission therein, or where the order does not reflect the intention of the court.
The husband’s argument to her Honour that the recording of her acceptance of the undertaking was a “slip” was not to contend that the record reflected an error arising from an accidental slip or omission, but rather rested on a contention that her Honour misconceived the evidence before her.
In this case, it is difficult to see how the contended “error” was made accidentally. In Newmont Yandal Operations Pty Ltd v The J Aron Corporation and The Goldman Sachs Group Inc and Others (2007) 70 NSWLR 411, the New South Wales Court of Appeal, Spigelman CJ (Santow JA and Handley AJA agreeing) considered the nature of the slip rule and the “errors” to which its operation is directed. His Honour then considered whether an order could be characterised as arising from an “accidental slip or omission” and said at 441:
166. …A judgment or order may be an “error” arising from an “accidental slip or omission” because of unintended or unforeseen consequences.
The test of whether an order was made by reason of an accidental mistake or through a deliberate course was considered by Lord Herschell in Hatton
v Harris [1892] AC 547 and articulated as whether, if the matter was brought to the court’s attention, the correction would have been made at once.In our view, her Honour’s acceptance of the undertaking and it forming the preliminary recital to the orders made on 12 December 2013 could not be characterised as arising through an accidental slip or omission.
It was further argued that her Honour’s acceptance of the undertaking was not referred to in her reasons given on 12 December 2013 and thus her intention to record the acceptance of the undertaking was not exposed.
It is undoubtedly correct that nowhere in her Honour’s reasons delivered on
12 December 2013 does she refer to the undertaking or its acceptance by her. However, we reject the argument that this enlivens the “slip rule”.
We thus conclude that her Honour was correct in dismissing the husband’s application that the order be amended as sought.
Conclusion
We have concluded that her Honour’s determination of the husband’s guilt was flawed and cannot stand, and thus the appeal will be allowed. It follows of course that the sentence imposed by her Honour will also be set aside, as will the order for costs and other orders made by her Honour. It is therefore unnecessary for us to consider the arguments advanced in respect to the grounds of appeal relating to these orders.
During the argument on the appeal, it was submitted for the husband that if the appeal was successful the matter should not be remitted for rehearing by another judge of the Family Court but, rather, the Full Court should re-exercise the discretion of the trial judge and dismiss the application.
In all of the circumstances, that course is appropriate.
Re-exercise
Given the extent to which we have set out the evidence before the trial judge it is unnecessary to repeat it, nor for the same reason do we need to set out the principles of law relevant to the matter. We conclude, based on the evidence and applying those principles as follows:
·There was no direct evidence as to the husband’s knowledge of the acceptance of the undertaking;
·The husband was not served with the order made on 12 December 2013 and was not present in court on its making;
·We accept the husband’s evidence that he was unaware of the recording of the undertaking until a time after the insurance money had been received and disbursed for the following reasons:
oThe husband’s good character;
oThe husband’s unchallenged evidence that as a solicitor he understood the seriousness of offering an undertaking and the consequences of breaching an undertaking;
oThe husband’s use of the money received from the insurance policy was consistent with his evidence as to why the policies were taken out and consistent with his stated intention as revealed in his affidavit filed in the proceedings of 12 November 2013;
oThe husband’s evidence that he was only prepared to offer an undertaking to hold the funds from the insurance policy if the court was otherwise to accede to the wife’s application is supported by the context of his affidavit, the written submissions of his counsel, Mr Dick, and the oral submissions of Mr Dick when read in context. The husband’s evidence that he was told by Mr S only that the wife’s application was dismissed is supported by the file note made by Mr S on 12 December 2013 and is consistent with that file note;
oThere is no reason not to accept the husband’s evidence that on retrieving documents on the file, while he most likely found and caused the costs submissions to be filed, he did not find and read the orders made on 12 December 2013. We are reinforced in this view by the fact that the costs submissions make no reference to the undertaking but only refer to the substantive orders.
oWhile the solicitors for the estate wrote to the husband after the wife's death reminding him of the undertaking recorded by the trial judge, that letter was not received by the husband and counsel for the husband submitted that there may have been confusion surrounding the address it was sent to. A letter sent a week earlier, correctly addressed, made no mention of the undertaking but was replied to by the husband. The husband’s reliance on his office mail log during the trial demonstrated that the second letter was not received, a point apparently accepted because the applicant’s counsel made no mention of it in closing address, and the husband was not cross-examined on this issue.
We are not satisfied beyond 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 solicitor’s trust account pending further orders by the court.
Thus the application brought pursuant to s 112AP will be dismissed.
It was submitted by counsel for the husband that a copy of these reasons should be sent to the relevant legal professional bodies in the state in which the husband practices as a solicitor. There was no objection to this course by counsel for the Legal Personal Representatives, and such orders will be made.
costs
Counsel for the husband wished to provide written submissions on the question of costs of the appeal and thus directions for the provisions of those submissions will be made.
Given that we have re-exercised the discretion of the trial judge and determined the application of contempt we will make further directions as to submissions on the costs of the hearing in the court below, noting that the orders for costs made by her Honour will be set aside by reason of this appeal.
I certify that the preceding two hundred and forty-eight (248) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court (Bryant CJ, Ainslie-Wallace & Rees JJ) delivered on 3 May 2017.
Associate:
Date: 3 May 2017
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