Blaise & Blaise (No 2)
[2023] FedCFamC1F 524
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Blaise & Blaise (No 2) [2023] FedCFamC1F 524
File number(s): MLC 9534 of 2020 Judgment of: MCNAB J Date of judgment: 29 June 2023 Catchwords: FAMILY LAW – PROPERTY – Whether a party can seek to set aside orders made in their absence pursuant to Rule 10.13(1)(a) of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) – Whether there is a reasonable explanation for absence – Whether the setting aside of orders will prejudice the other party. Legislation: Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)) Cases cited: Allesch v Maunz (2000) 203 CLR 172
Barbey & Tuttle [2013] FamCAFC 44
Blaise & Blaise [2023] FedCFamC1F 135
Division: Division 1 First Instance Number of paragraphs: 37 Date of last submission/s: 6 June 2023 Date of hearing: 6 June 2023 Place: Melbourne Counsel for the Applicant: Ms Tulloch Solicitor for the Applicant: Kennedy Guy Lawyers Counsel for the Respondent: Mr Lethlean Solicitor for the Respondent: Kalus Kenny Intelex ORDERS
MLC 9534 of 2020 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MR BLAISE
Applicant
AND: MS BLAISE
Respondent
order made by:
MCNAB J
DATE OF ORDER:
29 June 2023
THE COURT ORDERS THAT:
1.The applicant husband’s application filed 26 April 2023 be dismissed.
2.The applicant husband pay the respondent wife’s costs of and incidental to the application on a party/party basis with the assessment of such costs to be referred to a registrar of the court in the event that the parties fail to agree on the quantum of costs by 20 July 2023.
3.The husband pay the costs referred to in Order 2 within 14 days of such costs being agreed or within 14 days of their assessment and in the event that he fails to pay the costs, the sum of costs outstanding may be deducted from any payment made by the wife pursuant to Order 13 of the final orders dated 3 March 2023 or the payment referred to in Order 18.3 of those orders.
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 the pseudonym Blaise & Blaise has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
By an application filed 26 April 2023, the husband seeks orders that the final orders made on 3 March 2023 be set aside pursuant to Rule 10.13(1)(a) of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021(“The Rules”). Alternatively, he seeks orders that there be a stay of the operation of orders 5, 6, 10, 12, 13, 14, 15, 16, 17, 18, 19, 20, 22, 25 and 30 of the final orders.
That application is opposed and the wife seeks orders dismissing the application and costs (including costs on an indemnity basis).
Rule 10.13(1)(a) provides:
(1) The court may at any time vary or set aside an order, if:
(a) it was made in the absence of a party; …
(2)Subrule (1) does not affect the power of the court to vary or terminate the operation of an order by a further order.
BACKGROUND
The final orders were in relation to a property pool of around $6.5 million, with an overall adjustment of the parties’ net property interests in the proportions of 70% in favour of the wife and 30% in favour of the husband. Reasons for judgment were delivered and they set out the circumstances and the reasons that the court made orders in the absence of the husband. The parties had conducted an agricultural business since about 2009. As was noted in the reasons at [26]:
The Court was provided with a business structure which shows a reasonably complex financial structure involving trustee companies and family trusts carrying on the business but, effectively, the business was divided into two parts. It is [an agricultural] business operated, on land owned by the parties through a company, [E Pty Ltd]. [E Pty Ltd] is the trustee of the [F Family Trust] (of which the parties are beneficiaries) and carries on the business of owning the land on which [produce] is grown and growing the [produce]. A company, [G Pty Ltd], of which the husband is the sole director, is in the business of [processing produce]. That is a short summary of the arrangements but should suffice for these purposes.[1]
[1]Blaise & Blaise [2023] FedCFamC1F 135.
The substantive property settlement proceedings to which the final orders relate commenced on 2 September 2020, resulting in ongoing proceedings between the parties for over two and a half years. The court formed the view that the husband had failed to provide full disclosure in relation to financial matters such that, at the time of trial, it was not possible to ascertain the extent and value of the matrimonial asset pool available for distribution.
On the basis of the husband’s non-disclosure and the subsequent uncertainty of the matrimonial assets at trial, the wife sought, and ultimately obtained on an undefended basis, orders that she receive 70% of the known matrimonial assets. Findings in relation to the husband’s non‑disclosure are set out at [33] - [37] of the Judgment.
The final hearing commenced on 1 March 2023. After opening submissions made by the wife’s counsel, the husband abandoned the remainder of the trial, emailing the court and the husband’s lawyers to advise of his non-attendance and to advise that he no longer wished to retain the assets held by the wife, but rather, sought a “complete liquidation”.[2]
[2]Applicant’s Outline of Case, Part D, Point 4, filed 6 June 2023.
The circumstances in which the matter proceeded in the absence of the husband are set out in the reasons at [4]- [8] in the following terms:
4.The Court adjourned at the conclusion of opening submissions made by the counsel for the wife at 1 pm on 1 March 2023, and upon resuming at 2.15pm, the Court was informed by counsel for the wife that the wife's solicitors had been notified by the husband that he no longer wished to take part in these proceedings. The husband did not return to Court and orders were made on 1 March 2023 that the matter be adjourned until the following morning at 10.30 am on 2 March 2023, and if the husband did not appear the matter would proceed on an undefended basis.
5.A notation was included in the orders adjourning the matter which included a reference to the email sent to the wife's solicitors that the husband was "withdrawing all applications and orders" and would not be participating in these proceedings. These orders were forwarded to the husband by the Court and the solicitor for the wife by email. On the evening of 1 March 2023 the Court received correspondence from the husband in the following terms:-
I do not wish to retain any of the assets or water or entities and in my earlier orders I never requested any of the machinery or plant and equipment.
I never wanted to retain the entities as I do not trust their validity or taxation requirements only your client knows the status of these.
At your clients requested 70% it’s not viable for myself to retain the property so I seek complete liquidation.
6. In further correspondence addressed to the court of the same date he stated:-
Apologies for not reappearing but I cannot defend myself without evidence and I’m not able to obtain information due to non-disclosure from the other side but I can’t prove they are not disclosing and finances I don’t have.
Im not an accountant and concerned there is more undisclosed debt.
I’ve done what I can against an opposition I’ve battled for 4 years where the fights are smoke an mirrors but I can’t prove where the money has gone and so many of my friends and family have been effected I don’t know how to move forward.
I didn’t mean to disrespect the court
I apologise to the Honourable Justice McNab but the money was taken in 2019 2020 and I still can’t find it.
I don’t know what else to do.
Please don’t make a ruling I’m left with scrap metal and no money I need to survive that’s all I ask once again my apologies.
7.Upon the matter resuming on 2 March 2023 the husband remained absent and orders were made that the matter proceed on an undefended basis. Orders were made at the conclusion on 2 March 2023 restraining the husband from dealing with the assets and property comprised in the matrimonial assets.
8.In light of this correspondence, counsel for the wife made submissions that she sought to amend the orders sought by her to be in broad terms that she have the right to elect to either retain the [property] which comprises the substantial asset of the marriage, and make payment to the husband once the value of the [property] had been assessed to reflect a 70/30 split in her favour, or that she have the right to liquidate the [property] assets and proceed to have those assets divided 70/30 in her favour. The hearing was adjourned to 3 March 2023 to provide the wife the opportunity to formulate proposed final orders. [3]
[3]Blaise & Blaise [2023] FedCFamC1F 135.
Accordingly, the wife submitted orders to be made to the court to largely give effect to the husband’s clear statement that he wished to have no role in the business, while allowing her to assume control of the property and its operations to give effect to settlement, and that she make an election to either retain the assets and pay out the husband, or liquidate all assets and pay the husband an amount equivalent to 30% of the known net assets.
Interim orders were made in the course of the final hearing, and served upon the husband, providing him with notice that if he did not attend the hearing, orders would be made on an undefended basis. The husband did not return, and accordingly, orders were made on an undefended basis in the terms of orders sought by the wife.
The approach that the court should take to applications to set aside orders made in the absence of a party are well established and uncontroversial. Matters relevant to the exercise of the discretion are:
(a)the reason for the non-appearance or absence and whether there is a reasonable explanation for the absence;
(b)material arguments available to the applicant that might reasonably lead to the making of an order different to that sought to be set aside; and
(c)whether there is prejudice to the party with the benefit of the orders sought to be set aside that is not able to be adequately addressed by the court;
(d)whether there has been delay. if any, in bringing the application to set aside and whether, if during the period of delay, the successful party has acted on the judgment or third parties have acquired rights by reference to it;
(e)the conduct of the applicant since the judgment or order sought to be set aside was made.
The discretion to be exercised is unfettered, but nonetheless to be exercised judicially and bearing in mind the public interest in there being an end to litigation. The court is not bound to give one matter more weight than another: Barbey & Tuttle [2013] FamCAFC 44 at [90].
CONSIDERATION
In support of his application, the husband relied his affidavit filed 4 May 2023 and an outline of case filed 6 June 2023.
In relation to an explanation as to why he absented himself from the hearing the husband stated at [28]- [29]:
28.When we returned into Court, [the wife’s] barrister spoke again about [the wife’s] proposal that she receive 70% of our assets. …[4]
26. I told the court that if our assets were divided 70/30 in [Ms Blaise’s] favour we would need to “liquidate everything” … I could not afford to retain our business …[5]
After the court adjourned on 1 March 2023 I felt that I could not continue. I felt overwhelmed by the morning and defeated. I felt that [Ms Blaise’s] barrister was saying things about me which were not correct but I could not properly articulate a response.[6]
[4]Applicant’s affidavit dated 21 April 2023 at [28].
[5]Applicant’s affidavit dated 21 April 2023 at [26].
[6]Applicant’s affidavit dated 21 April 2023 at [29].
The transcripts records that on the return to court counsel for the mother stated:
[speaking about the applicant] he has just packed up and gone … I haven’t had heard any updated instructions at this stage … I can say, for what it’s worth, your Honour, it doesn’t surprise my client … [the] position that he’s taken. It’s a position that he raised with us on Monday in terms of saying – and he said this in open court – “If it’s any more than 50/50, then just liquidate the lot or sell the lot, I’m done.” That was at a time when he was put on notice in relation to our position being a 70/30 adjustment.” [7]
[7]Transcript of Hearing, FCFCOA Melbourne, 3 March 2023, page 104 at [35].
I do not accept that the husband’s reasons for being absent from court are an adequate reason on their own for setting aside the order. Proceedings in court are stressful, particularly family proceedings, however the husband has pointed to no conduct from either the wife and her legal representatives or the court which meant that he had no effective choice but to withdraw. No medical evidence has been referred to which would provide a basis for finding that there was some medical imperative for him to withdraw from the proceedings. The allegations that he had failed to make proper final disclosure were of relative longstanding and had been raised in previous court hearings in the same or very similar terms.
Counsel for the husband submitted that a copy of the orders should have been sent to the husband despite the fact that he left court and said he was ‘done’. Counsel said the husband was self-represented and that there was a duty for him to be informed about the updated orders. He believed it to be the responsibility of the wife and her counsel to ensure he had notice of the form of final orders given that they differed from the terms of the orders sought at the commencement of the hearing.
I reject that submission. The husband was at all times aware that orders would be sought by the wife for a 70/30 division of assets and was aware why that was the case. As to the balance of the orders, these orders give effect to the husband’s clear statement that he wished to have nothing further to do with the operation of the business. The orders provide the necessary machinery orders for that to occur. He was on notice that this might occur by reason of his own invitation for orders of that kind to be made. Further, the court did not deny the applicant husband the right to be heard, he chose to be absent. As was noted by Kirby J in Allesch v Maunz (2000) 203 CLR 172 at [38]- [40]:
38.… Having regard to the circumstances in which the initial proceedings took place in the absence of Mr Allesch (the appellant), it is worth emphasising that the principle just described does not require that the decision-maker actually hear (or receive the submissions of) the party potentially liable to be adversely affected. Sometimes, through stubbornness, confusion, misunderstanding, fear or other emotions, a party may not take advantage of the opportunity to be heard, although such opportunity is provided. Affording the opportunity is all that the law and principle require.
39.Decision-makers, including the courts, cannot generally force people to protect their own rights, to adduce evidence or other materials, to present submissions or to act rationally in their own best interests. This consideration may be especially relevant in relation to the Family Court where emotions, often engendered by the highly personal issues involved, can sometimes cloud rational thought.
40.Nor are courts obliged to delay proceedings indefinitely because one party, although proved to be on notice of the proceedings, refuses or fails to appear in person or to be represented by a lawyer or some other individual permitted to speak for them who can explain the need for an adjournment. The rights of other parties are commonly involved. In the Family Court, the rights of non-parties (especially children) may be affected. Additionally (as this Court has accepted), the rights of the public in the efficient discharge by courts of their functions must be weighed against unreasonable delay in concluding litigation.
Counsel for the husband submitted that the applicant did not know the terms of the orders and that these orders have “triggered unforeseen issues”. One issue raised by counsel was that the orders do not transfer the directorship of G Pty Ltd to the wife – they leave directorship with the husband. It was submitted that the orders of the court do not finally deal with all the assets of the parties and the applicant has been left in a position where he may be liable as a director of a company where he has no control over the operation of the business as a result of the orders.
The husband is the sole director of G Pty Ltd. By his affidavit in support of his application at [36] – [38], the husband seeks to introduce evidence in relation to debts owing by G Pty Ltd to third parties including Z Pty Ltd.[8] These matters were not raised by the husband in the proceedings. G Pty Ltd was a company controlled by him, he had knowledge of its affairs and he did not raise those matters in the affidavits filed in the trial. In relation to the debt to Z Pty Ltd, the husband at [36] (c)(iv) refers to a debt owed by G Pty Ltd in the sum of $234,084 which is the subject of final orders in Z Pty Ltd’s favour and which he personally guaranteed. The wife deposes at [53] of her affidavit in opposition filed 25 May 2023 that proceedings were issued against G Pty Ltd, with the husband as second defendant and her as third defendant pursuant to personal guarantees signed prior to separation. She states that Z Pty Ltd supplied equipment and provided packaging materials to G Pty Ltd. The debt claimed by the is asserted to have arisen as a result of invoices issued by it to G Pty Ltd between September 2022 and March 2023, during which time was the husband was solely managing the operations of G Pty Ltd and its income and expenditure. This is a debt that the wife was not provided notice of in the course of these proceedings.
[8]Applicant’s affidavit dated 21 April 2023.
The husband’s position in a Minute of Orders provided to the court at final hearing sought that G Pty Ltd cease trading by no later than 31 March 2023. The husband did not seek orders that he receive a share transfer of shares in G Pty Ltd. The husband did not provide details of amounts owed by G Pty Ltd other than funds owed to W Bank and capital finance. The updated balance sheet for G Pty Ltd which was provided to the wife on 8 February 2023 did not detail other liabilities including the Z Pty Ltd liability.
On 8 February 2023, the husband disclosed to the wife a profit and loss statement for G Pty Ltd for the year ending 31 December 2022 showing a net profit of nearly $550,000. No explanation has been given by the husband as to why the Z Pty Ltd debt has not been paid by G Pty Ltd, given that it is a G Pty Ltd debt.
Further, the bank statements of G Pty Ltd which were tendered show that the bank accounts continue to be used, with accounts for March 2023 to April 2023 showing an opening balance of $23,422.44, total deposits of $195,605.94 and withdrawals of $169,521.64 leaving a closing balance of $49,506.74.[9] The aged receivable summary for the company as at June 2023 has receivables of $201,600.[10]
[9]Exhibit R 1.
[10]Exhibit A1.
G Pty Ltd was a company controlled by the husband and the evidence at trial was that he maintained the business records of that company. There were substantial issues about his disclosure regarding the operation of the business conducted by that company. It is within his capacity as a director to take steps in relation to whether that company is wound up or otherwise ceases trading.
The husband submits that final orders sought to be set aside on the basis that there were items of plant and equipment included in the expert valuation of Mr D that were considered by the court to be assets of the entities that the wife retains that were in fact assets of G Pty Ltd or third parties. He lists those items at [39] (f) of his affidavit in support.[11] The question of what assets were or were not matrimonial property was the subject of pre-trial applications. On 31 January 2023 orders were made that the wife be at liberty to proceed with the valuation of plant equipment included in the list provided to the husband without the husband signing a joint letter of engagement if he refused.[12] The husband did not adduce evidence in relation to the specific items proposed to be valued or adduce evidence as to any third-party ownership of any of the items. Otherwise I refer to the evidence of the wife at paragraph 16.2 of her affidavit in response relation the circumstances of the valuation of assets.[13] The husband had the opportunity to place material before the court in relation to these matters and chose not to.
[11]Applicant’s affidavit dated 21 April 2023.
[12]Orders, The Honourable Justice McNab, 31 January 2023, Order 5.
[13]Respondent’s affidavit dated 25 May 2023.
The husband has not raised any proper ground to set aside orders on the basis of the orders operating unfairly as they deal with assets. The husband has not raised matters sufficient to warrant setting aside the final orders on the basis that a difference result would have followed had he raised the information that he now raises before the court in relation to third party debts or the ownership of plant and equipment. The wife must advise the father of any assets that are disposed of pursuant to the final orders.[14]
[14]See Order 21 of the final orders dated 3 March 2023.
In determining whether to set aside orders pursuant to rule 10.13, the Court must consider whether doing so would cause prejudice to the wife that costs cannot address.
Since final orders were made the wife has been in control of the business and has taken steps in accordance with those orders. The orders proposed by the husband are simply that the orders be set aside, there is no coherent alternative set of orders or arrangements proposed so that the assets comprised in the business may be preserved.
The husband told the court through his counsel that he does not have funds and there was no proposal put forward as to how he might pay costs thrown away if the orders were set aside. He did not convey that he was in the position to manage and maintain the business pending further order in the event that the final orders were set aside.
Upon being pressed in relation to this matter by the court, counsel for the husband then proposed that the wife continue to run the business but that the orders relating to the distribution of assets be set aside; and that he then be able to put forward material so as to justify a different distribution of assets being 55/45 in the wife’s favour. In that proposal he would not manage the business and the wife would be required to continue in that role whilst he mounted a challenge to the orders distributing the assets. No submission has been made which might persuade me that there any reasonable prospects of an appeal against the orders in relation to the division of assets. No legal error has been identified. No sufficient evidence has been identified that would persuade me that the court is likely to exercise its discretion differently if the matter was reheard.
The husband has not put forward a proposal which adequately deals with prejudice suffered by the wife in terms of costs thrown away in the event that final orders are set aside and the matter is reheard, nor is he in the position to provide any security to persuade the court that he has the wherewithal to continue to manage the business or to meet a costs order.
The costs of reopening this proceeding would be substantial and there has been insufficient material placed before the court to persuade it that there is a sufficiently arguable case to warrant the orders being set aside, particularly in circumstances where the husband abandoned the proceedings.
There has been significant delay in the husband bringing the application. The husband has acted in accordance with the final orders by resigning as a director and transferring his shareholdings to the wife in various entities which is consistent with his position after abandoning the hearing on 1 March 2023. Orders were made on 3 March 2023 and the application to set aside orders was not made until 26 April 2023.
The husband has received funds being $194,577 and $2,761.62 from the joint funds held on behalf of the parties pending final orders being made and has returned some items of plant and equipment pursuant to the final orders (albeit not all). To that extent the parties have acted in accordance with the orders.
The wife has assumed control of the business pursuant to the final orders, has sought to sell produce to cover debts and has managed to reach an accommodation with the major creditor, the ANZ bank, on the basis of the final orders as made. Setting aside those final orders and re‑entering into litigation may cause significant prejudice if arrangements with the ANZ bank with it forestalling action fall away. There is an element of speculation on this point however it is likely that the uncertainty caused by setting aside the final orders will cause prejudice as it will require the wife to enter into further negotiations with the bank and the outcome of those negotiations are not certain. The husband does not have the funds to compensate for any loss that may arise if the bank was to take action.
For each of these reasons. both singularly and in combination. the court refuses the application to set aside the final orders.
The husband has been wholly unsuccessful in his application. For that reason, court will make orders that the husband pay the wife’s costs of and incidental to this application on a party/party basis and that such costs be assessed by registrar in the event that the parties fail to reach agreement on the quantum of those costs within 21 days of these orders. The wife sought orders that the husband pay costs on an indemnity basis. Nothing arises from the circumstances of this application or the manner in which it was conducted which persuades me that indemnity costs should follow. Costs should be paid within 14 days of these costs being agreed or assessed and if unpaid at that time they may be deducted by any payment made by the wife pursuant to Order 13 or the payment referred to in Order 18.3 of the final orders.
I certify that the preceding thirty-seven (37) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice McNab. Associate:
Dated: 29 June 2023
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