Barnard and Warren and Warren
[2007] FMCAfam 191
•3 May 2007
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| BARNARD & WARREN & WARREN | [2007] FMCAfam 191 |
| FAMILY LAW – Summary dismissal of the application on the basis that the claim for relief has no reasonable prospect of successful prosecution. |
| Family Law Act1975 (Cth) ss.79A; 79A(1)(a) Criminal Offences Victims Act (Qld) 1995 Civil Liability Act (Qld) 2003 |
| Attorney-General (Gambia) –v– N’Jie [1961] AC 617 Coles Myer Ltd –v- O’Brien (1992) 28 NSWLR 525 Deputy Commissioner of Taxation v Spanjich (1988) FLC 91-974 Ex Parte Official Receiver: In Reed, Bowen & Co (1887) 19 QBD 174 In the Marriage of Bailey and Bailey(1990) FLC 92-117 In the Marriage of McMahon (1976) FLC 90-038 In the Marriage of Morrison (1995) FLC 92-573 In the Marriage of Prowse (1994) 118 FLR 135 Jones v Dunkel (1959) 101 CLR 298 Lindon v Commonwealth (1996) 136 ALR 251 Official Trustee in Bankruptcy v Donovan & Stevens (No 2) (1996) 132 FLR 407 Peters v The Queen (1998) 192 CLR 493 |
| Applicant: | MS BARNARD |
| First Respondent: | MR WARREN |
| Second Respondent: | MS WARREN |
| File number: | BRC 1679 of 2007 |
| Judgment of: | Burnett FM |
| Hearing date: | 26 March 2007 |
| Delivered at: | Brisbane |
| Delivered on: | 3 May 2007 |
REPRESENTATION
| Solicitors for the Applicant: | Suthers Lawyers |
| Counsel for the First Respondent: | Mr Linklater-Steel |
| Solicitors for the First Respondent: | Corser Sheldon Gordon Solicitors |
| Counsel for the Second Respondent: | Ms C. Carew |
| Solicitors for the Second Respondent: | Carswell & Co |
ORDERS
That the Application to summarily dismiss the principal application is refused.
IT IS NOTED that publication of this judgment under the pseudonym Barnard & Warren & Warren is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT BRISBANE |
BRC 1679 of 2007
| MS BARNARD |
Applicant
And
| MR WARREN |
First Respondent
| MS WARREN |
Second Respondent
REASONS FOR JUDGMENT
Introduction
Ms Barnard (the Applicant) by an amended Initiating Application filed 12 March 2007 seeks orders, inter alia, that orders made by consent between Mr Warren (the First Respondent) and Ms Warren (the Second Respondent) dated 23 June 2003 in the Magistrates Court at Maryborough be set aside pursuant to section 79A of the Family Law Act 1975 (Cth).
Upon a request being made by the Second Respondent’s solicitors of the Applicant, the Applicant informed them that the application was in particular made pursuant to section 79A(1)(a) of the Act.
In response to the application each of the First and Second Respondents have across applied for orders pursuant to Rule 13.10 of the Federal Magistrates Court Rules for the summary dismissal of the application on the basis that the claim for relief has no reasonable prospect of successful prosecution.
Background
The First Respondent was born in August 1934 and the Second Respondent in January 1941. The First and Second Respondents were married in September 1960.
They lived in Maryborough and operated a [business omitted] at Maryborough from about 1963. In about October 2002 the First Respondent was charged with an offence of indecent treatment of a child under the age of sixteen in relation to the Applicant. Those events are alleged to have occurred in or about 1996.
Following being charged the First Respondent was subsequently prosecuted upon indictment before the District Court at Maryborough. He pleaded guilty to the charge and was sentenced to a period of imprisonment for twelve months to be suspended after a period of three months with an operational period of two years. At the time of the commission of the offence the Applicant was still under twelve. At the time of the First Respondent’s conviction she was approximately fifteen.
In her affidavit the Second Respondent swore that she had no knowledge of the offence committed by the First Respondent against the Applicant until the police arrived at her home some months before his conviction. The First Respondent says this was about October 2002. She swears that she was absolutely devastated and that as a result of that conduct she and the First Respondent separated. She swore that initially the First Respondent lived in a shed on their property and then moved to North Queensland before returning to Maryborough at the time of his guilty plea from whence he was then sent to prison. The First Respondent deposed that the Second Respondent was extremely upset and disgusted with him following his being charged and that he commenced sleeping in a different room before relocating to Mossman immediately prior to his return to Maryborough for sentencing in March 2003.
The First Respondent was released from prison on or about 6 June 2003. Following his release he returned to North Queensland.
In the meantime the First Respondent swears that throughout this period he had experienced a great sense of guilt and remorse and that because of the hurt he had caused he “didn’t think it was fair for me to ask that our assets be split or sold up so that I could get some money to start again”. By inference the First Respondent was saying that he did not make any claim upon the matrimonial estate following their separation but simply intended for all his interests in the assets of the marriage to be conveyed to the Second Respondent.
To give effect to this intention and whilst he was in prison he permitted the Second Respondent to bring an uncontested application pursuant to section 79 of the Family Law Act for property settlement. That application was filed in the Magistrates Court in Maryborough on
26 May 2003. Shortly following his release from prison Consent Orders in respect of that application were signed by the First Respondent on 10 June 2003 and the Second Respondent on 12 June 2003 respectively. The orders themselves were perfected by an order of the Court made 23 June 2003 which orders were made by consent. The terms of settlement which in effect became the orders of the Court reflected the terms of the orders sought by the Applicant in the application filed 26 May 2003. No substantive material was filed in support of the application.
At or about the same time these events were taking place the Applicant, through her solicitor, was pursuing her rights to compensation pursuant to the provisions of the Criminal Offences Victims Act (Qld) 1995. In addition to those rights the Applicant also had common law rights. In that regard she prepared a Notice of Claim as required by the Civil Liability Act(Qld) 2003 which Notice was dated 17 June 2003.
It is not clear when that Notice was given by the Applicant to the First Respondent. However it appears by correspondence forwarded by the First Respondent to the Applicant’s solicitors dated 16 August 2003 that it was received by him sometime before 16 August 2003 as his letter notes he had previously sent a “recent letter” in which he stated he did not have legal representation. That earlier piece of correspondence referred to was no doubt in response to the receipt of the Notice of Claim.
Importantly however there is no evidence to demonstrate that the Notice of Claim was received by the First Respondent prior to orders of the Court made 23 June 2003. Clearly the Notice could not have been received prior to the First Respondent signing the agreement on 10 June 2003.
Given that only a matter of days passed between 17 June and 23 June and given the Notice of Claim was addressed to “Mr Warren, [address omitted]” it seems unlikely that even had the correspondence enclosing the Notice of Claim been forwarded expeditiously by the Applicant’s solicitors to the First Respondent it would have been received by him prior to 23 June as it would in turn have required re-posting onto the first Respondent because of the incorrect address.
Subsequently on 30 September 2003 the Applicant’s solicitors wrote to the Second Respondent informing her that the Applicant intended to bring the application pursuant to section 79A of the Family Law Act to set aside the property settlement which in that correspondence was noted to have been filed on 30 June 2003[1].
[1] The terms of the order clearly identify it as having been entered on 23 June 2003 although I note that the terms were appropriately stamped by an officer from the Stamp Duties office on 30 June 2003. It is perhaps this date which was seized upon by the Applicant’s solicitors in their correspondence of 30 September 2003.
The Application
Although the application initially came before the Court on the basis that the Applicant sought directions the Respondents have cross applied for the application to be summarily dismissed on the basis that the Applicant has no reasonable prospect of successfully prosecuting the application.
The law concerning the approach to be adopted in such applications is now well settled. It was submitted by the Respondents that in order to succeed the substantive application is one which must be “doomed to fail”. The test articulated in Lindon v Commonwealth of Australia[2] is that the party seeking the relief must show that it is clear on the face of the documents that the opponent lacks a reasonable cause of action. The fact a case appears weak such that it is unlikely to succeed is not alone sufficient to warrant summary termination. The test is not quite the same as “doomed to fail” although such a case would clearly attract such an outcome. The Respondents’ contention (principally advanced by Ms Carew for the Second Respondent but in respect of which
Mr Linklater-Steel for the First Respondent also sought to rely) was that the application was doomed to fail because the Applicant could not demonstrate any of the three critical matters necessary for her to succeed on her application. Those matters were:
a)that she was a person “affected by an order”;
b)that there had been a miscarriage of justice by reason of “any other circumstance” as contemplated by section 79A(1)(a); and
c)even if the Applicant could satisfy (a) and (b) above the circumstances were such that it would not be appropriate to exercise the Court’s discretion to vary or set aside the orders.
[2] (1996) 136 ALR 251 at 255-256, per Kirby J. See also White Industries Aust Ltd v Commissioner of Taxation [2007] FCA 511 which decision deals expressly with the Federal Court Rules.
Affected by an order
Section 79A relevantly provides:
“79A Setting Aside of Orders Altering Property Interests
(1) Where, on application by a person affected by an order made by a Court under section 79 in property settlement proceedings, the court is satisfied that:
(a) there has been a miscarriage of justice by reason of fraud, duress, suppression of evidence (including failure to disclose relevant information), the giving of false evidence or any other circumstance; or…
the court may, in its discretion, vary the order or set the order aside and, if it considers appropriate, make another order under section 79 in substitution for the order so set aside.”
The meaning of the words “a person affected by an order” was examined by the Full Court of the Family Court of Australia in DeputyCommissioner of Taxation v Spanjich[3]. In her submissions Ms Carew for the Second Respondent referred to this passage of the Court’s judgment at 77, 049 where the Court stated:
“In Re Gasbourne Pty. Ltd. & Ors (1984) V.R. 801 Nicholson J. considered the meaning of the expression “person affected” at pp. 832-834. In that judgment Nicholson J. was construing the words “a person affected” contained in r. 8(1) of the Companies rules (Vic.). His Honour equated “a person affected” with “a person aggrieved”. He then considered the words of Lord Denning in Attorney-General of the Gambia v N’Jie (1961) A.C. 635 and went on to say:
“In my view, if the test proposed by Lord Denning in N’Jie’s case is adopted, then it is difficult to draw any practical distinction between the relevant phrases for present purposes. If on the other hand the words “a person aggrieved” are given a meaning in the context of a particular statute which extends to any member of the public as they were by the Full Court in the Australian Conservation case, then it may be conceivable that the words “a person affected” might have a narrower scope as Dean J. suggested in Miamo v. Lehmann. In the present case, I think that no practical distinction is to be drawn between the relevant expressions since either the Code nor the Rules suggest that an overly restrictive interpretation should be given to the words ‘person affected’ appearing in r. 8. On the other hand the words must be given some meaning and I think that their effect is to limit the class of persons who may appeal to those falling within the general category propounded by Lord Denning in N’Jie’s case.”
[3] (1988) FLC 91-974.
The dictum of Lord Denning upon which Nicholson J. relied reads:
“The words ‘person aggrieved’ are of wide import and should not be subjected to a restrictive interpretation. They do not include of course, a mere busybody who is interfering with things which do not concern him, but they do include a person who has a genuine grievance because an order has been made which prejudicially affects his interests.”
To assist us in determining the meaning of the relevant words we were provided with the dictionary meaning of “affected” from the Shorter Oxford, Macquarie and the Collins English Dictionary (Aust. edition). The last appears to be the most germane “Changed, esp. detrimentally”. The real question is whether if the effect of the order is to prevent the Deputy Commissioner from recovering tax due and owing is he thereby a person affected. In our opinion the “affect” may have relation to something more than strict legal rights and include the practical effect of the order on the recovery of moneys due and owing in the circumstances of this case. If the order has the effect of so reducing the property of the husband that the Deputy Commissioner is thereby unable to recover tax owing then it seems to us that he is a person affected by that order. Counsel for the wife conceded that the word “affected” may include more than an infringement or alteration of rights.”
The Respondents’ submitted that the effect of the authority in Spanjich was that the relevant time for consideration of whether or not a person was affected by an order was the time at which the order was made. I accept this principle as correct.
It was further submitted that in that context it was then necessary for the Court to examine whether or not at that time there existed a legal right on the part of the Applicant which entitled her to an order for the recovery of monies in a practical sense.
In this case the Applicant had at the time that the order was made two rights. The first was a statutory right to compensation pursuant to the provisions of the Criminal Offences Victims Act which such legislation provides for compensation ultimately payable from consolidated revenue; and second a common law chose in action for the tort of assault. At the time of the taking out of the property order the quantum of neither claim had crystallised[4].
[4] Although it is apparent that an award of criminal compensation was made on 16 June 2004 no material was placed before the Court concerning when that application was made. I infer from the absence of such material that the application was made on a date after 23 June 2006.
It follows that in respect of both the claim for statutory compensation and the common law claim, whilst the Applicant clearly had as at
23 June 2006an existing chose in action the chose itself had not perfected into anything beyond a “mere chance to obtain an award for damages”.
In submissions made on behalf of the Second Respondent it was submitted that for a person to be a person who is affected by an order it was necessary for there to be “more than a mere chance to obtain an award for damages”. She submitted the Applicant did not qualify as “a person affected” because her rights were amorphous because the quantum of her claim had not crystallised. She submitted that for a person to be detrimentally affected that person must have an existing right or debt (as at the date of the order), although not necessarily a right to immediate recovery.
In support of that contention the First Respondent submitted that upon its proper construction section 79A supports that contention. Adopting the observations of the trial judge in Spanjich she submitted that section 79A is expressed by the past participle “affected” rather than by the subjective “may be affected”.
As particular reliance was had upon the decision in Spanjich the authority warrants particular consideration. In Spanjich’s case the Deputy Federal Commissioner for Taxation (FCT) made an application to set aside orders made by consent of the parties after a four day hearing but before judgment was given. It appears that the effect of the orders would have been to deprive the FCT of an ability to enforce outstanding tax assessments. It seems apparent from the judgment of the Full Court that in the proceedings below there was evidence before the court to indicate that the parties were aware of the FCT’s claims as such matter was contained within the affidavits filed in the proceedings.
Accordingly the question in this case and, the point of distinction between this case and Spanjich is whether a mere chose in action yet to be quantified satisfies the dictum of Lord Denning in N’Jie’s case, as adopted by the Court in Spanjich, of being “a person who has a genuine grievance because an order has been made which prejudicially affects his interests”.
The Second Respondent’s argument was that unlike Spanjich where the FCT had effected an assessment which thereby quantified claim, in this case the Applicant’s claim is merely an unliquidated claim for damages. The distinction is a fine one. Despite its assessment it is clear that the FCT’s assessment in Spanjich remained merely a chose in action albeit in a liquidated amount as opposed to an unliquidated amount which is the subject of the present Applicant’s claim. The question is should that matter impact upon the principle?
Some assistance in the resolution of this issue can be derived by reference to the decision of the Judicial Committee of the Privy Council in Attorney-General (Gambia) -v- N’Jie[5]. Relevantly in that case the Court was concerned with the resolution of a preliminary point as to whether or not the Attorney-General had locus standi to petition for special leave to appeal in proceedings involving disciplinary conduct against a barrister instituted by a Court in respect of which he appeared amicus curiae. In that context Lord Denning adopted Lord Esher’s MR comments in Ex parte Official Receiver; In Reed, Bowen & Co[6] that: “The words “person aggrieved” are of wide import and should not be subjected to a restrictive interpretation. They do not include, of course, a mere busybody who is interfering in things which do not concern him; they do include a person who has a genuine grievance because an order has been made which prejudicially affects his interests”[7].
[5] [1961] AC 617.
[6] (1887) 19 QBD 174.
[7] At page 634.
The same issue arose for consideration in Coles Myer Ltd -v- O’Brien[8]. In that case the issue for consideration was whether or not the appellants, as would be objectors to the grant of a liquor licence to the First Respondent were persons aggrieved by the adjudication of the licensing court. At first instance the presiding Magistrate had refused to allow the appellants and others belatedly to appear as objectors to the First Respondent’s application and they were therefore not parties to the adjudication the subject of the appeal. They claimed to have an interest in the subject matter of the adjudication stemming from a commitment to temperance or liquor licensing reduction rather than from a desire to protect economic investment.
[8] (1992) 28 NSWLR 525.
In his decision Kirby P particularly noted that the Applicants had no economic interest in the outcome but rather were seeking to assert wider public interests and that such was the basis of their claim to be “persons aggrieved” by the adjudication in question.
In examining their entitlement of standing Kirby P with whom Sheller JA concurred noted[9],
“…Initially the English law, and its Australian reflections, resisted the widening of standing rights out of fear of opening the court doors to busy-bodies. Unsatisfied by the inhibitions to litigation presented by burdens of cost, delay and the majesty of the courts, numerous legal obstacles were placed in the way of litigants who could not show a personal, often economic, interest as parties in the subject matter of the proceedings. A good illustration of this attitude is found in Ex parte Sidebotham; Re Sidebotham (1880) 14Ch D 458. There the English Court of Appeal had to consider whether within, s.71 of the Bankruptcy Act 1869 (UK), a bankrupt or any of the creditors were entitled to appeal upon a refusal of the Court to act on a report by the Comptroller in Bankruptcy that the trustee in a bankruptcy had been guilty of misfeasance neglect or omission by which the bankrupt’s estate had sustained a loss. The court held that neither the bankrupt nor the creditors were entitled to appeal from such a refusal. James LJ (at 465) considered the meaning of the phrase “person aggrieved” in the Act
“…the Judge having come to a conclusion rightly or wrongly, that he ought not to make any order on the comptroller’s report, there ought not to be any appeal from his decision. There is nothing to form the ground of an appeal. It is said that any person aggrieved by an order of the Court is entitled to appeal. But the words “person aggrieved” do not really mean a man who is disappointed of a benefit which he might have received if some other order had been made. A “person aggrieved” must be a man who has suffered a legal grievance, a man against whom a decision has been pronounced which has wrongfully deprived him of something, or wrongfully refused him something, or wrongfully affected his title to something.”
There are many similar instances, in England, Australia and elsewhere, of the narrow construction of the phrase “person aggrieved”…
[9] At pages 527 and 528.
In more recent times, and particularly in matters of public law the wider public interests are often raised, Courts have developed a much more broader view of the notion of the phrase “person aggrieved”. Cases in the area of administrative law too numerous to mention abound on this point.
However the present case involves an instance of private law. Despite most of the authorities on this point considering the question of whether a person is an aggrieved person in the context of public interest litigation it can be seen from the reasoning of the courts that the category of “aggrieved person” is one which expands and contracts by reference to the circumstance. For instance in N’Jie it determined the Chief Law Officer was affected by decisions made concerning lawyers practicing within his jurisdiction; more relevantly for current purposes in Coles Myer the court accepted unquestionably that a person having a “personal, often economic” interest would qualify. Beyond that it was implicit that greater cause had to be demonstrated.
Adopting that logic, for a person to be a “person affected” within the terms of section 79A it is clearly arguable that the person’s claim need be no more than a mere “chose in action”. Nothing in the authorities supports the proposition that the claim has to be quantified. Whilst in Spanjich the claim had been quantified it appears by reference to the authorities upon which that decision was based the fact of quantification did not form part of the ratio of any supporting authorities.
It was further submitted by Counsel for the Second Respondent that to adopt such a broad approach to the definition of a “person affected” could, subject to statutory limitations, and the other matters required by section 79A, lead parties to a property settlement open to applications by inter meddlers long after they would otherwise have believed the class to be closed. Whilst that might strictly be correct it seems apparent from the drafting of s.79A that such a matter was considered by the Parliament for, as has been contended, determining if a person is an “affected person” is only part of a three step process.
Consistent with the broad parameters consideration must be allowed for the factual circumstances surrounding any particular claim. For instance in Spanjich’s case the matter had been prepared for trial and the trial had proceeded for four days before a settlement was achieved. It is reasonable to assume that given the nature and extent of the trial and having regard to the property which was to be distributed between the parties a great deal of effort had been undertaken in the preparation of the matter. That would have included identifying a creditor such as the FCT. In those circumstances there would quite clearly have been little room for doubt that the FCT would have been directly affected by a settlement structured to leave the FCT with no effective remedies against its effective debtor.
In this case the property settlement was conducted with a minimum of form. No financial statements were prepared and clearly no thought was given to the contingent liability that the Applicant’s claim would have constituted against the First Respondent (irrespective of whether that liability had been quantified or otherwise). The property settlement was effected with great expedition relative to the length of the marriage and the period of separation of the parties. Significantly it was effected against the background of the criminal proceedings where there ought reasonably have been an expectation of civil consequences. The Applicant herself was only sixteen years of age and not legally competent to enter into any binding arrangement with either the First or Second Respondent. Furthermore the Applicant had clearly acted within reasonable time in issuing her Notice of Intention to claim.
A strict timeframe applies in relation to applications under the Criminal Offences Victims Act and I assume by reason of the correspondence dated 13 October 2005 from the Criminal Injury Compensation Unit that she exercised her rights in that regard within the appropriate time limits provided for under that Act.
The effect of the s.79A order was to deprive her of an effective right to enforce a remedy which she had clearly intended to enforce and in respect of which the resolution of quantum would not be an unduly difficult exercise. By reason of the First Respondent’s plea to criminal offences her prospects of success in civil proceedings appeared assured. To that end I do not consider the Applicant to be an inter-meddler.
In all of the circumstances I consider that the Applicant does have reasonable prospects of demonstrating she is a person affected by an order made by a Court under section 79. She was effected at the date of that order.
Miscarriage of justice by reason of … “any other circumstance”.
The second matter the Second Respondent contended was required to be established to enliven the Court’s discretion was that there had been a miscarriage of justice by reason of, in this case, “any other circumstances”. It is accepted from the material that there is no evidence in this case of fraud, duress, suppression of evidence (including failure to disclose relevant information) or the giving of false evidence.
At its best the Applicant’s case appeared to be that “any other circumstance” arose by reason of the Applicant having a chose in action against the First Respondent which was defeated in a practical sense because of the First Respondent’s disposition of his interest in any property he held to the Second Respondent. In particular the Applicant relies upon the fact that the transfer of property occurred following the First Respondent’s conviction for an offence of indecent assault which put beyond doubt any question of liability in respect of the Applicant’s claim against the First Respondent for that tort.
The term “any other circumstance” is not defined. As a matter of proper construction it must be read by reference to the words which precede it being, “fraud, duress, suppression of evidence (including failure to disclose relevant information), (or) the giving of false evidence”. Upon application of the ejusdem generis rule of statutory construction it is apparent that the other circumstance contemplated by the draftsman was one which involved an element of dishonesty related to the making of the order under section 79 in property settlement proceedings. That element appears to be common to the class identified in the sub section. In other words, to succeed in her application the Applicant would be required to demonstrate, on the balance of probabilities, that the circumstances surrounding the agreement and orders made of 23 June 2003 were tainted by some element of dishonesty in the course of their being procured.
In the absence of any evidence to demonstrate that either the First or Second Respondent was aware that the Applicant intended to commence civil proceedings in respect of her common law rights the issue to determine is whether it can be inferred that there was any dishonesty associated with the procuring of the orders which would enliven the operation of section 79A(1)(a).
The meaning of dishonesty was discussed by the High Court in Peters v The Queen[10]. In particular there was useful discussion in the decision of Toohey & Gaudron JJ who noted:
"In a case in which it is necessary for a jury to decide whether an act is dishonest, the proper course is for the trial judge to identify the knowledge, belief or intent which is said to render that act dishonest and to instruct the jury to decide whether the accused had that knowledge, belief or intent and, if so, to determine whether, on that account, the act was dishonest. … If the question is whether the act was dishonest according to ordinary notions, it is sufficient that the jury be instructed that that is to be decided by the standards of ordinary, decent people. However, if “dishonest” is used in some special sense in legislation creating an offence, it will ordinarily be necessary for the jury to be told what is or, perhaps, more usually, what is not meant by that word”[11].
[10] (1998) 192 CLR 493.
[11] Para 18 at 504.
In this case the question arises whether the seeking of the consent orders in all of the circumstances could be regarded as dishonest according to ordinary motives. In that regard the particular conduct to be considered was the failure to inform the Court of the Applicant’s interest and the Applicant of the proposed property settlement.
Concerning the question of dishonesty it has in other circumstances been addressed as “fraud”. See for instance Official Trustee in Bankruptcy v Donovan & Stevens (No 2)[12]. In that case the Full Court in considering a claim by the Official Trustee in Bankruptcy seeking to set aside consent orders obtained by parties to a marriage determined that there was an obligation on a party to proceedings seeking orders affecting property of the parties to notify a person who might be affected by the orders sought. Indeed authorities suggest that the prospect of the Applicant as a contingent creditor should have been brought to the Court’s attention at the time the matter was before the Court for consideration of the consent orders: see Official Trustee in Bankruptcy v Donovan & Stevens (No 2) at 420.
[12] (1996) 132 FLR 407.
In this case there is no direct evidence that the application for property settlement was dishonestly motivated by an intention to defeat any subsequent claim made by the Applicant. To that end the Applicant’s claim to satisfy the second limb of section 79A is premised in part upon a circumstantial case. It is well settled that in civil cases that to establish a matter circumstantially “you need only circumstances raising a more probable inference in favour of what is alleged”. However “they must do more than give rise to conflicting inferences of equal degree of probability so that the choice between them is a mere matter of conjecture”[13].
[13] Jones v Dunkel (1959) 101 CLR 298 at 304-305.
It has been previously held that applications for property settlement should be stayed in circumstances where the parties to the application are or should be aware of the interests of third parties giving rise to a potential liability against the matrimonial pool. It has been held that it is not proper for a court to proceed in a property application without due regard to the parties’ liabilities that were either established or in the process of being determined where those liabilities were of such a magnitude as to be defeated by an order sought in the court. See In the Marriage of Bailey and Bailey[14].
[14] (1990) FLC 92-117.
In respect of that matter in the course of debate it was submitted on behalf of the Second Respondent that the Court should not accept the Applicant’s claim as giving rise to a contingent liability and be brought to book in the matrimonial estate. In that regard the Court in the Marriage of Bailey expressly noted,
“…In our view, it matters not whether the liabilities are actual, contingent, arising out of contract or tort.
Contingent liabilities raise difficult questions from a case where the liabilities are fixed or readily ascertainable. This question of assessment of debts and liabilities and the problems associated with it was referred to by Evatt CJ (as she then was) In the Marriage of Prince (1984) 69 FLR 150 at 167-168:
“The assessment of debts and liabilities is not necessarily arrived at by a strictly mathematical or accountancy approach in all cases. While some liabilities are charges upon the property which can be accurately assessed at a certain date, others are at large, or have not been precisely determined, for example, tax liabilities: In Marriage of Kelly (No 2) (1981) 7 Fam LR 762 at 767. In some cases the amount of the liability can only be estimated generally: In Marriage of Albany (1980) 6 Fam LR 461 at 466. The court can make an allowance for a particular liability if appropriate to do so. In some cases there are sufficient uncertainties as to the alleged liability to lead the court to disregard it entirely or partly (for example, a loan from a parent to the party not likely to be enforced: cf In Marriage of Petersens (1981) 7 Fam LR 402; Quirk (unreported, 1983). In other cases, the court may take the view that because of the circumstances surrounding the incurring of the liability it ought in justice and equity to be wholly or partly disregarded in determining the appropriate order to make under s 79 as between the parties to the marriage. Such a result could be reached where a spouse had incurred a liability in deliberate or reckless disregard of the other party’s potential entitlement under s 79.”
For the Family Court when exercising jurisdiction under s 70 to fail to take into account liabilities which term encompasses claims of all sorts as referred to above, would be to ignore and in many cases to defeat the legitimate claims of the third parties in respect of whom the liabilities had been incurred and this, in our view, it is not entitled to do.
In Ascot Investments Pty Ltd v Harper (1981) 148 CLR 337 at 354, Gibbs J (with whom Stephen Aickin and Wilson JJ agreed) in a well-cited passage said:
“The authorities to which I have referred establish that in some circumstances the Family Court has power to make an order or injunction which is directed to a third party or which will indirectly affect the position of a third party. They do not establish that any such order may be made if its effect will be to deprive a third party of an existing right or to impose on a third party a duty which the party would not otherwise be liable to perform. The general words of ss 80 and 114 must be understood in the context of the Act, which confers jurisdiction on the Family Court in matrimonial causes and associated matters, and in that context it would be unreasonable to impute to the Parliament an intention to give power to the Family Court to extinguish the rights, and enlarge the obligations to the other party, but it does not follow that the Parliament intended that the legitimate interests of third parties should be subordinated to the interests of a party to a marriage, or that the Family Court should be able to make orders that would operate to the detriment of third parties. There is nothing in the words of the sections that suggests that the Family Court is intended to have power to defeat or prejudice the rights, or nullify the powers, of third parties, or to require them to perform duties which they were not previously liable to perform. It is one thing to order a party to a marriage to do whatever is within his power to comply with an order of the court, even if what he does may have some effect on the position of third parties, but it is quite another to order third parties to do what they are not legally bound to do. If the sections had been intended to prejudice the interests of third parties in this way, it would have been necessary to consider their constitutional validity.
The position is, I think, different if the alleged rights, powers or privileges of the third party are only a sham and have been brought into being, in appearance rather than reality, a device to assist one party to evade his or her obligations under the Act. Sham transactions may always be disregarded. Similarly, if a company is completely controlled by one party to a marriage, so that in reality an order against the company is an order against the party, the fact that in form the order appears to affect the rights of the company may not necessarily invalidate it.”
In our view, this passage from the judgment of the High Court clearly requires the Family Court when dealing with applications under section 79, to have due regard to legitimate claims by third parties. But the Act itself gives further protection to the rights of third parties. Section 79A gives a person affected by an order the right to apply to set aside an order made under that section. Accordingly, should an order made by the court have an effect of denuding a party to the marriage of property which in turn might have the affect of a creditor being prevented from recovering his debt from that party, then the section recognises the right of that creditor as a “person affected” to set aside the property order.”
Clearly in this case the Applicant’s claim against the First Respondent enlivens a claim which is not far fetched or fanciful. Her rights remain intact and constitute a contingent liability. Respectfully I reject the submission that I should not take into account a contingent liability of the kind which arises by reason of the Applicant’s chose in action.
On the Applicant’s case alone there is in my view sufficient evidence to support a conclusion that the Respondents’ conduct was designed to defeat the Applicant’s interests and was done so dishonestly by reference to common standards. Given this is a summary dismissal application I am not required to resolve that factual contest at this time. However such a conclusion is not fanciful. In any event the rule only requires that there be no “reasonable prospect of successfully prosecuting the proceeding”. In my view there is a reasonable prospect and it should not be dismissed on that basis alone at this time.
In my view the Respondents cannot demonstrate the Applicant’s prospects on the second limb have no reasonable prospects of success.
Discretion
In her submissions Counsel for the Second Respondent contended that even if the Applicant’s application ought not be dismissed on the first two grounds three matters which militated against the exercise of the Court’s discretion in the Applicant’s favour.
Delay
It was contended that there had been significant delay in the bringing of this application. The Applicant was a minor until August 2006 although it has been submitted she was assisted by her father as litigation guardian and had been so assisted at least since 17 June 2003. It was noted that the Applicant had given notice of an intention to bring this application by letter dated 30 September 2003 but yet the application itself had not been commenced until 14 February 2007, a delay of approximately three years and four months.
It is well settled that the Applicant for orders under section 79A bears the onus of satisfying the Court not only that there has been a “miscarriage of justice” but that the appropriate exercise of the discretion is to set aside or vary the original orders[15].
[15] See In the Marriage of Prowse (1994) 118 FLR 135; Official Trustee in Bankruptcy v Donovan & Stevens (No 2) supra.
In the Marriage of Prowse and in the Marriage of Morrison[16] the Court considered matters relevant to the exercise of the discretion and in doing so, observed that issues such as delay and hardship are not necessarily decisive of the outcome of the proceedings. This was affirmed in Official Trustee v Donovan[17] and Morrison & Morrison supra[18].
[16] (1995) FLC 92-573.
[17] At 426.
[18] At 81, 675.
Although three years and four months elapsed from the time when the application was foreshadowed to the bringing of the application and there is no explanation for that period of delay that matter is only one of other matters which need to be considered. In Morrison & Morrison adopting In the Marriage of McMahon[19] the Court observed
“It is usual in cases whereby a party seeks the exercise of a discretion of this nature after a substantial period has elapsed from the making of the orders, to give consideration, to the types of matters generally identified in McMahon & McMahon. Those matters include whether there is an adequate explanation for the delay, whether there is a substantial issue to be raised and whether there is an absence of hardship or injustice to the Respondent which cannot be compensated by orders as to costs or otherwise. The Full Court observed in Prowse’s case however at p81-572:
“…Whilst it is no doubt correct to identify those matters as ”factors” to be considered, and even as “the usual considerations,”, we believe that it would be in error to elevate those “factors” or “considerations” into an exclusive code within the confines of which the Court’s discretion to extend time must be exercised”.
[19] (1976) FLC 90-038.
As the Full Court said in Tormsen & Tormsen (1993) FLC 92-392 at 80,017:
“The fundamental issue in application [sic] for extension of periods of time prescribed by the Rules of Court is whether this will enable the Court to do justice between the parties;--“
In this case I am particularly cognizant of the fact that the Applicant has only recently achieved majority. Furthermore the nature of the injuries sustained by her are psychological. As is apparent from the report attached to her affidavit she suffers from significant ongoing trauma. As the reporter, Kay Morgan noted:
“Ms Barnard will suffer the effects of the abuse for the rest of her life. However, while there may be periods when Ms Barnard experiences some reduction in her symptoms, because of the episodic nature of re-exposure, Ms Barnard will remain vulnerable to further trauma.”[20]
[20] Affidavit of Ms Barnard filed 14 February 2007 Annexure AMB4 Report 18 May 2004 at page 4.
It follows that by reason of the nature of the trauma effected and the age of the Applicant despite there being an absence of explanation expressly postulated in her affidavit such an explanation appears apparent from the background facts. In my view it could not be said her prospects of persuading a Court to exercise its discretion on this point are so poor as to afford her no reasonable prospects on this point.
Hardship
The second basis raised by the Respondents is the question of hardship. As the Second Respondent’s Counsel noted the Respondents have moved on with their lives in the full expectation that the property settlement between them. She submitted that the wife had ceased employment and that she had sold her home and purchased another one, that being something she may not have done had these proceedings been on foot.
I note the wife is now presently aged 66. Given her current age she was beyond her notional retirement date at the time the consent orders and this application were initially foreshadowed. In those circumstances it does not seem at all unlikely that she may in any event have decided to retire from full time employment.
Concerning her personal alteration of real estate holdings the fact remains that it does not appear from the material that the holding has been exhausted leaving her with no prospect of repayment. There appears merely to have been a conversion of the asset from one form into another. The asset itself however does not appear to have been subject to diminution of value.
Save perhaps for some legal costs which may have been incurred in the sale and transfer of the original property and the subsequent acquisition of the later property it does not appear that the Respondents position could be said to have been materially altered in any adverse way on account of the Applicant’s failure to bring this application sooner than she did.
Further on this point it is submitted that the Applicant has already obtained an award of $18,750 in respect of criminal compensation. That sum does not appear to have been paid although it is presently the subject of an application for an ex gratia payment to the Applicant by the Queensland Government. It may or may not be paid but in any event I would expect the payment of any such sum would be brought to account in the event that the Applicant was successful in proceedings at common law against the First Respondent.
I am not satisfied that there has been demonstrated any sufficient hardship militating against the exercise of the Court’s discretion and this ground would necessarily justify the exercise of discretion against the Applicant.
Likely Award
Finally it was contended on the part of the Second Respondent that the Applicant’s claim against the First Respondent had not commenced and that there was no evidence as to how long those proceedings were likely to take or evidence as to the likely damages which may be made in the Applicant’s favour. It is apparent from the reports of Kay Morgan that the Applicant has suffered a mental shock (moderate) range type injury. Submissions have not been made concerning whether or not the application is one which is strictly governed by the operation of the Civil Liability Act and the tort reform associated thereto. However by reference to that Act and the description provided by Ms Morgan it is a relatively straightforward exercise to ascertain the likely range of the Applicant’s quantum for general damages. Obviously additional matters including economic loss have not been addressed but in any event given her personal circumstances as identified in the psychologist’s report it would not be unreasonable to infer the claim will not be a significant claim. It could not be said this matter would give rise to an unfavourable exercise of the discretion against her.
In all of the circumstances it could not be said that the Applicant has no reasonable prospects of successful prosecution of her application because the discretion would be exercised against her.
Summary
The Court should not exercise its powers under Order 13 to summarily dismiss the application. In this case I am satisfied that the application does have reasonable prospects of success and should not be dismissed at this time. I will hear the parties on an appropriate timetable to progress this matter to trial.
I certify that the preceding sixty-eight (68) paragraphs are a true copy of the reasons for judgment of Burnett FM
Associate: Bev Schmidt
Date: 3 May 2007
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