Bakalov & Bakalov
[2021] FedCFamC1F 161
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Bakalov & Bakalov [2021] FedCFamC1F 161
File number(s): BRC 13229 of 2020 Judgment of: WILSON J Date of judgment: 27 October 2021 Catchwords: FAMILY LAW – ARBITRATION – unparticularised complaint loosely based on s 13J and s 13K – held, application dismissed. Legislation: Family Law Act 1975 ss 13H, 13J, 13K and13E Cases cited: Entezam v Devi (2021) 62 Fam LR 637
Gronow v Gronow (1979) 144 CLR 513
House v The King (1936) 55 CLR 499
Kennon v Kennon (1997) 22 Fam LR 1
Mallet v Mallet (1984) 156 CLR 605
Norbis v Norbis (1986) 161 CLR 513
S v S [2003] FamCA 905
Stanford v Stanford (2012) 247 CLR 108
Division: Division 1 First Instance Number of paragraphs: 29 Date of hearing: 27 October 2021 Place: Melbourne Counsel for the Applicant: Mr J. Bunnings Solicitor for the Applicant: Cherry Family Lawyers Counsel for the Respondent: Mr R. Clark Solicitor for the Respondent: Allan R De Brenni & Co ORDERS
BRC13229/2020
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS BAKALOV
Applicant
AND: MR BAKALOV
Respondent
ORDER MADE BY:
WILSON J
DATE OF ORDER:
27 OCTOBER 2021
THE COURT ORDERS THAT:
1.The husband’s application for review of the arbitral award is dismissed.
2.The stay order on the operation of the arbitral award made pursuant to my orders made on 2 August 2021 is lifted.
3.If either party wishes to be heard on costs –
(a)any written submissions by the wife in relation to costs including indemnity costs, must be filed and served by 4:00pm on or before 10 November 2021;
(b)any written submissions the husband in relation to costs must be filed and served by 4:00pm on 24 November 2021; and
(c)a determination on costs will be made on the papers.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under a pseudonym Bakalov & Bakalov has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
WILSON J
INTRODUCTION
On 17 May 2021 the arbitrator published the award in this proceeding. It was amended on 4 June 2021. The arbitrator made orders altering the interests of the parties such that the asset pool, as found by the arbitrator, was divided as to 55% to the applicant wife and 45% to the respondent husband.
Each award was registered by consent on 1 July 2021 and therefore takes effect pursuant to s 13H of the Family Law Act as a decree of the court.
By application in an arbitration filed on 26 July 2021 the husband sought seven orders. Taken verbatim from his application (prepared by solicitors) the husband’s application was as follows –
1.The arbitration award and supplementary arbitration award registered on 1 July 2021 be stayed, pending hearing of the review; or
2.Alternatively, the applicant wife be restrained from executing the registered arbitration award or decrees pending hearing by the court.
3.The finding by the arbitrator that the respondent husband’s income is three to four times greater than the applicant wife’s be set aside; and
4.Consequently, an order that the applicant wife be given an allowance under the principle of Kennon v Kennon [1997] FamCA 27 be set aside.
5.The applicant wife and the respondent receive 50% each of the net asset pool.
6.A declaration that the applicant wife has no future needs that warrant adjustment.
7.Such further and other order or orders and this Honourable Court deems meet.
It will be immediately apparent that the husband did not expressly invoke either s 13J or s 13K of the Family Law Act in any of those paragraphs of his application in an arbitration. The wife sought orders dismissing the husband’s 26 July 2021 application as well as indemnity costs in the sum of $11,550.
In written submissions prepared by counsel for the husband dated 13 September 2021, it was contended –
(a)in paragraph 2 that the husband relied on s 13J of the Family Law Act; and
(b)in paragraph 4, that the husband sought either the setting side of the award or the variation of it, inferentially made under s 13K of the Family Law Act, there being no other statutory source of power to make an order varying an arbitral award.
The precise provisions of s 13J and s 13K are important and are addressed below.
SYNOPSIS
For the reasons that follow, in my judgment –
(a)the husband failed to make out a basis for review of the arbitral award under s 13J of the Family Law Act; and
(b)no ground under s 13K(2)(a) to (d) was made out to vary the arbitral award.
RELEVANT FACTUAL SETTING
The applicant commenced a proceeding (in what was then) the Federal Circuit Court of Australia on 24 September 2020 seeking orders under s 79 of the Family Law Act. By agreement, on 11 February 2021 orders were made for the proceeding to be determined by arbitration pursuant to s 13E of the Family Law Act. The arbitration was conducted on 27 April 2021 and for a second day on 7 May 2021. The respondent was not legally represented. The applicant’s solicitor represented her. The arbitral reasons disclosed that on occasions during the husband’s cross-examination of the wife, with the consent of the wife’s representative, the arbitrator rephrased questions and put them to the wife. The arbitrator recorded that neither party said any unfairness was orchestrated by that technique.
According to the terms of the award, several issues were resolved yet certain other issues needed determination. Those requiring determination included –
(a)whether payment by the wife to her son from a previous relationship shortly after separation should be added back;
(b)the proper treatment of the sum of $3,600 received by the wife as an insurance payment after separation following a car being written off;
(c)the correct balance held in various bank accounts;
(d)the payment of a tax liability following the sale of property in Suburb B;
(e)the proper treatment of the sum of $4,000 spent on travel to Country C after separation;
(f)the proper treatment of the sum of $21,861 applied to a business venture; and
(g)the proper treatment of $32,121 applied towards legal fees.
The arbitrator made findings and determinations about each. Taking each in turn the arbitrator found as follows–
(a)the son returned the sum of $37,000 that the wife provided to him and the wife subsequently applied that sum in meeting the son’s school fees, in paying the wife’s legal fees and in acquiring a motor vehicle with the consequence that it would be double dipping to include the sum paid to the son ($37,000) while also bringing to account $30,812 for legal fees;
(b)the money received from the insurance upon the writing off of a motor vehicle was applied by the wife towards supporting herself so the arbitrator did not include it in the pool of assets;
(c)the money in the wife’s bank accounts was, in reality, a total sum of $1,115;
(d)so far as the sum of $4,000 spent on travel to Country C was concerned, the arbitrator was not persuaded that the husband used joint funds so the arbitrator did not include $4,000 in the asset pool;
(e)as to the legal fees spent by the husband, the arbitrator found that those fees should be included in the asset pool; and
(f)the arbitrator added back money spent by the wife in legal fees totalling $30,812.
The arbitrator found that principles espoused in Kennon v Kennon[1] and in S v S[2] applied to the facts of this case in the context of family violence. The arbitrator preferred the evidence of the wife on those matters. The arbitrator analysed the evidence of the wife’s psychologist’s description of the husband as “passive aggressive”, “vindictive” and “demonstrating narcissistic ego driven behaviour and personal insecurities”. The arbitrator accepted the wife’s evidence that the husband had struck the wife. The arbitrator then found as follows –
“95. I am satisfied that the Husband perpetrated domestic violence upon the Wife throughout a substantial period of their relationship.
96. I am satisfied that as a consequence of that violence, the Wife has suffered, and in some cases continues to suffer, from mental health conditions including severe anxiety, stress and depression.
97. I accept the Wife's evidence that the mental health conditions suffered by her made her ability to contribute during the marriage more onerous than it otherwise would have been. Amongst other things, one of the reasons she gave for not returning to work was her mental health.”
[1] (1997) 22 Fam LR 1.
[2] [2003] FamCA 905.
The arbitrator assessed contributions and made an adjustment to reflect future needs.
Against that backdrop the husband initially resisted the registration of the award. However, he was met with the decision in Entezam v Devi.[3] The award was subsequently registered.
[3] (2021) 62 Fam LR 637.
THE HUSBAND’S BASES OF CHALLENGE
The husband contended that he sought “either the setting aside or variation of the award”. Neither s 13J nor s 13K speaks of an order setting aside an arbitral award. Section 13J speaks of application being made for “review “of an award. On such a review the court is empowered by s 13J(2) to determine all questions of law arising in relation to the arbitration. Section 13K(1) permits one of the three courts there mentioned, in respect of a registered award, to “make a decree affirming, reversing or varying the award”. Section 13K(2) provides that the court may only make such a decree if satisfied about one of the four matters set out in s 13K(2)(a) to (d). One relates to fraud, one relates to the award being void, voidable or unenforceable, the third relates to changed circumstances and the fourth relates to bias or lack of procedural fairness.
Here, the husband stated that he sought an order for the variation of the award. To my mind, by the use of the verb “vary” he is to be taken to be invoking s 13K. But to succeed in an application varying the registered award, the husband must rely on a ground under s 13K(2) and even then, “the court may only make a decree under subsection (1)” (those are the words of s 13K(2)) if satisfied about one of the four subsections in s 13K(2). The words “may only make” are significant. To my mind, they import a limitation on the relief that the court can grant. I accept that the words “may only make” do not equate to a formulation in more mandatory terms such as “must not make unless”. However, the words “may only make” are to be considered as revealing a legislative intendment to the effect that a registered award can only be reversed or varied where any one of the four grounds set out in the subsections of s 13K(2)(a) – (d) is present. Any other ground beyond those stated will not suffice.
The question on this application under s 13K(1) is whether any of the grounds under s 13K(2) are met. In my view none was.
It is necessary to address the affidavits and submissions on which the husband relied.
Nowhere does the husband contend that the award was obtained by fraud for the purposes of s 13K(2)(a).
Nowhere does the husband contend that the award is void, voidable or unenforceable for the purposes of s 13K(2)(b).
The husband did not suggest that s 13K(2)(c) was engaged.
Nor did the husband assert that the arbitration was affected by bias or by any want of procedural fairness.
Instead, the husband contended that the award was affected by certain erroneous findings on which the conclusion was reached that the orders made by the arbitrator were just and equitable. More specifically the husband contended –
(a)the arbitrator’s finding of the wife’s income-earning capacity being lower than the husband’s was erroneous;
(b)the arbitrator’s finding that the wife paid her son $37,000 “do not support a spouse in fear of domestic violence” (those were the words used by the husband’s counsel);
(c)the finding that it was proper to make an adjustment for Kennon v Kennon matters was not supported by the psychologist’s evidence;
(d)the family violence given in evidence was “grossly exaggerated” (those were the words used by the husband’s counsel);
(e)no evidence was addressed to support the requirement from Kennon v Kennon that the wife’s contributions were made more arduous and the principle from Kennon v Kennon was erroneously applied;
(f)the arbitrator erred in findings in relation to future needs; and
(g)the arbitrator’s calculations of assets and add-back was “convoluted” (the husband’s counsel’s words).
None of those issues bear upon any one of the matters set out in s 13K(2). In those circumstances the perquisite to the making of an order under s 13K(1) was not established.
In those circumstances, the husband’s application to vary the award fails. I dismiss that part of the husband’s application.
The husband did not express his review application as being brought under s 13J of the Family Law Act, although he did state in unmistakeable terms in paragraph 2 of his counsel’s written submissions that he sought a “review” of the arbitral award. I am willing to proceed on the basis that by his use of the word “review”, the husband was seeking to invoke s 13J of the Family Law Act. I am also willing to apply a highly benevolent – dare I say charitable – construction to the review sought in that the question of law he was wishing to agitate was the miscarriage of discretion for the purposes of s 79. Of course, the husband did not cast his case that way. For that matter, he proffered no question of law that he said the arbitrator answered erroneously, besides his counsel’s imprecise and vaguely articulated grievance about the application of the principles in Kennon v Kennon.
Whether taken individually or in aggregate, I do not consider the arbitrator erred in the exercise of the discretion conferred upon him and certainly not according to principles espoused in High Court authorities such as House v The King,[4] Mallet v Mallet,[5] Norbis v Norbis,[6] Gronow v Gronow[7] and Stanford v Stanford,[8] those cases being the more important appellate level pronouncements at on the exercise of judicial discretion.
[4] (1936) 55 CLR 499.
[5] (1984) 156 CLR 605.
[6] (1986) 161 CLR 513.
[7] (1979) 144 CLR 513.
[8] (2012) 247 CLR 108.
To the contrary – I take the view that the arbitrator was correct in the findings reached and orders pronounced.
The husband’s application for review of the arbitral award failed. The stay order previously made by me on 2 August 2021 must be lifted which I now order.
If either party wishes to be heard on costs –
(a)any written submissions by the wife in relation to costs including indemnity costs, must be filed and served by 4:00pm on or before 10 November 2021;
(b)any written submissions the husband in relation to costs must be filed and served by 4:00pm on 24 November 2021; and
(c)a determination on costs will be made on the papers.
I certify that the preceding twenty-nine (29) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Wilson. Associate:
Dated: 27 October 2021
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