Brouwer & Brouwer (No 4)
[2023] FedCFamC2F 1145
•31 July 2023
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Brouwer & Brouwer (No 4) [2023] FedCFamC2F 1145
File number(s): BRC 9061 of 2022 Judgment of: JUDGE PARKER Date of judgment: 31 July 2023 Catchwords: FAMILY LAW – PROPERTY – Review of exercise of delegated judicial power – application to set aside orders made in a party’s absence Legislation: Evidence Act 1995 (Cth), s 144
Family Law Act 1975 (Cth), ss 79, 75(2)
Federal Circuit and Family Court of Australia Act 2021 (Cth), ss 190, 191
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) , rr 1.33, 10.13(1)(a), 14.05(1), 15.16
Cases cited: Biltoft & Biltoft [1995] FamCA 45; (1995) FLC ¶92-614
Delgado & Soto [2021] FamCA 65
Doherty & Doherty (2006) FLC ¶93-256; [2006] FamCA 199
Gallo v Dawson [1990] HCA 30; (1990) 93 ALR 479
Hickey & Hickey & Attorney-General for the Commonwealth (Intervenor) [2003] FamCA 395; (2003) FLC ¶93-143
NHC & RCH [2004] FamCA 633; (2004) FLC ¶93-204
Re Chemaisse; Federal Commissioner of Taxation (Intervenor) [1990] FamCA 32; (1990) FLC ¶92-133
Sharaf & Nouri [2022] FedCFamC1F 898
Division: Division 2 Family Law Number of paragraphs: 125 Date of hearing: 31 July 2023 Place: Adelaide via Microsoft Teams Counsel for the Applicant: Self Represented Counsel for the Respondent: Mr Dodd Solicitor for the Respondent: Cherry Family Lawyers ORDERS
BRC 9061 of 2022 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: MR BROUWER
Applicant
AND: MS BROUWER
Respondent
ORDER MADE BY:
JUDGE PARKER
DATE OF ORDER:
31 JULY 2023
UPON APPLICATION MADE TO THE COURT by the Husband in person and Mr Dodd of Counsel for the Respondent (appearing by Microsoft Teams).
THE COURT ORDERS THAT:
The Review Application filed 7 June 2023 is dismissed.
The Wife file any further material upon which she intends to rely with respect to costs by no later than 4.00pm on 26 September 2023.
The Husband file any further material upon which he intends to rely with respect to costs by no later than 4.00pm on 10 October 2023.
That no later than 4.00pm on 17 October 2023 each party file and serve a Case Outline Document, with such Case Outline Document to include a summary of argument with respect to costs.
The Wife’s application for costs is listed for hearing before Judge Parker on 24 October 2023 at 2.15pm (ACDT) via Microsoft Teams.
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 has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
EX TEMPORE REASONS FOR JUDGMENT
JUDGE PARKER
INTRODUCTION
These reasons were delivered ex tempore and have been settled from the transcript. Grammatical errors have been corrected, citations have been added and amendments have been made to make the orally delivered reasons clear and easy to read.
The application before the Court is the Husband’s review of exercises of delegated judicial power resulting in orders made by a Senior Judicial Registrar on 1 March and 5 June 2023.
The orders made on 1 March 2023 were final property orders made pursuant to section 79 of the Family Law Act 1975 (Cth) (‘the Act’) on an undefended basis in the absence of the Husband. The orders made on 5 June 2023 were, most significantly, the dismissal of the Husband’s application to set aside a significant number of the orders made on 1 March 2023, pursuant to rule 10.13(1)(a) of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) (‘the Rules’).
Being a review of an exercise of delegated judicial power, the hearing before me proceeded by way of a hearing de novo.
BACKGROUND
In 1997, the parties married and commenced cohabitation. From that time, they lived on a property owned by members of the Husband’s family in Victoria (‘the property’).
The Wife’s evidence is that she worked as an educator and continued to do so throughout the parties relationship, applying her income to the purposes of the family, and that the Husband controlled the family finances. During the relationship, the parties had three children, all of whom are now adults.
In 2006, the property was sold and the Husband received a share of the sale proceeds. Those funds were applied to purchase a home at D Street, Town E, Queensland (‘the former matrimonial home’).
Following the sale of the property and the parties’ move to Queensland, the Husband commenced working in sales and started a business.
The Wife’s evidence is that in approximately 2008, the Husband borrowed against the equity in the former matrimonial home to fund the establishment of a business which was operated via the company F Pty Ltd as trustee for the Brouwer Family Trust (‘the Family Trust’). The Husband was the sole director of this company and the parties were equal shareholders.
In 2018, the Husband established the corporate entity Q Pty Ltd for the purposes of the subdivision of a large block of land at G Street, Town H, Queensland (‘the G Street property’). Both parties are directors of Q Pty Ltd and a shell company by the name of J Pty Ltd is the sole shareholder. The Husband is the sole director of J Pty Ltd and F Pty Ltd is its sole shareholder. The Wife’s evidence is that both F Pty Ltd and Q Pty Ltd were operated by the Husband with limited recourse to her.
The parties separated in May 2020. At that time, the Husband moved into a home that had been built on the G Street property and lived there at no expense to him. The Wife retained the care and primary responsibility for the support of the parties’ youngest child, Ms P, who was, at that time, under the age of 18.
The Wife alleges that following separation, the Husband refused to engage meaningfully in negotiations or make full disclosure of his financial circumstances, leaving her with no alternative but to commence court proceedings. That evidence is disputed by the Husband.
HISTORY OF PROCEEDINGS
On 27 July 2022, over a year prior to the hearing before me, the Wife issued the present proceedings. On the same day, orders were made in chambers requiring the Husband to file responding material. He did not do so.
On 29 July 2022, the Husband was served with the Wife’s application. It is not a matter of contention that he threw the documents in the bin.
It is also common ground that, at the time of the commencement of the proceedings, both F Pty Ltd and Q Pty Ltd were in dire financial circumstances. The Wife’s evidence is that the Husband had incurred or claimed to have incurred significant debts including substantial borrowings from family members without her knowledge or consent and had failed to demonstrate the legitimacy of many of those asserted loans. The mortgagee was starting to take action in relation to defaults on the mortgage encumbering the G Street property.
The first court hearing in the proceedings took place on 9 August 2022. The Husband did not attend. A copy of the orders made that day was served on the Husband by the Wife’s solicitor.
Two days later, on 11 August 2022, an urgent interim hearing was held before her Honour Judge Tonkin, at which orders were made on the Wife’s application requiring the parties, in their capacity of directors of Q Pty Ltd, to cause that company to complete a contract of sale of the G Street property and requiring the Husband to vacate that property, both of which the Wife asserts he had been threatening not to do. The Husband did not attend at that hearing.
In late 2022, F Pty Ltd was placed into liquidation.
During late 2022, the G Street property was sold. The net proceeds of sale were held on trust for the parties by K Law Firm, who previously represented the Husband in relation to family law matters, and who also acted on behalf of Q Pty Ltd in relation to the sale of the G Street property.
On 12 September 2022, a mention was held and the Husband, again, did not attend. The Husband was, again, ordered to file responding documents and, again, he failed to do so.
On 10 October 2022, a further mention was held. Again, the Husband did not attend. This was despite correspondence from his accountants, L Accountants, having been sent on 7 October 2022 and addressed ‘to whom it may concern,’ which demonstrated the Husband’s awareness of the hearing. A copy of that correspondence formed part of a bundle of documents tendered by the Husband at the hearing before me.[1]
[1] Exhibit H1 (documents attached to Review Application filed 7 June 2023).
On 5 December 2022, there was a further mention. On this occasion, the Husband did attend. Orders were, again, made for him to file responding documents. Again, he did not comply with those orders.
On 30 January 2023 there was a mention before a Judicial Registrar. The Husband, again, did not attend. On that date the matter was set down for an undefended hearing. The orders made that day include a notation explaining the nature of an undefended hearing. A copy of those orders were served on the Husband by the Wife’s solicitors on 3 February 2023.
UNDEFENDED HEARING
The undefended hearing took place on 1 March 2023. The Husband did not attend. On that date, final orders were made on an undefended basis by a Senior Judicial Registrar. Those orders are the first set of orders to which the present review relates.
As at that time, despite clearly having been on notice of the existence of the proceedings for an extended period of time, the Husband:
(a) had failed to file any documents other than a Notice of Address for Service;
(b) was in breach of numerous orders and obligations pursuant to the Rules; and
(c) had failed to attend at numerous hearings.
In those circumstances, pursuant to rule 1.33 of the Rules, the Wife was permitted to proceed on an undefended basis and the matter proceeded in the absence of the Husband.
The orders made on 1 March 2023 provided, in summary, that the funds held on trust on behalf of the parties by K Law Firm (being the proceeds of sale of the G Street property), be distributed as follows:
(a) the sum of $37,997.16 to K Law Firm for their fees with respect to the sale of the G Street property;
(b) the sum of $32,000 to be held on trust by the Wife for the child Ms P’s surgery;
(c) various payments to be made to creditors of Q Pty Ltd, such as to discharge all liabilities of that company, including a payment of $298,054 to the Australian Taxation Office for capital gains tax arising upon the sale of the G Street property;
(d) the sum of $607,469 to be paid to the Wife;
(e) the sum of $35,000 to be held on trust by the Wife’s lawyers pending agreement or assessment of the Wife’s entitlement to costs; and
(f) the sum of $32,640.66 to be paid to the Husband.
The orders provided that any shortfall or surplus was to be borne or divided equally between the parties.
The orders otherwise provided for the wind-up of Q Pty Ltd and the Family Trust and for a superannuation split with respect to the parties’ self-managed superannuation fund, the Brouwer Superannuation Fund, such that the Husband receive 100 per cent of the Wife’s interest, following which the self-managed superannuation fund was to be wound up.
Pursuant to the orders, the Husband was to retain and indemnify the Wife with respect to liabilities associated with Q Pty Ltd, F Pty Ltd and J Pty Ltd. Each of the parties was otherwise to retain all assets and liabilities in their respective possession.
The Senior Judicial Registrar’s judgment records that shortly prior to the hearing, the Husband had attempted to contact chambers requesting to attend the hearing electronically and had purported to put third party creditors of F Pty Ltd (which was in liquidation) on notice of the hearing, apparently asserting the existence of creditors who had not been informed of the proceedings. The request to attend electronically was refused.
The Husband did not attend the hearing. There was no evidence from the Husband before the Court (whether about alleged creditors or any other matters).
Although the ability of the Court to ascertain the financial circumstances of the Husband was hampered by the Husband’s persistent failure to comply with his disclosure obligations or the numerous sets of orders requiring to file documents and his failure to participate in the proceedings, the Senior Judicial Registrar was satisfied, on the basis of the Wife’s evidence, of the following:
(a) the parties’ relationship had subsisted for some 23 years during which they had had three children;
(b) the net assets and liabilities of the parties, to the extent that they were known to the Wife, totalled $1,370,597;
(c) the major assets of the parties were funds held on trust for them by K Law Firm in the sum of $1,181,435.77 and their interest in the self-managed superannuation fund being $117,154.53 held by the Wife, and $309,775 held by the Husband;
(d) the Wife also held approximately $100,000 in an accumulation superannuation fund;
(e) the Husband’s business had not been successful and its losses had subsumed any benefit derived by the parties from his contribution of his share of the proceeds of sale of the property. Those losses had culminated in the liquidation of F Pty Ltd;
(f) while both parties had made significant contributions throughout their long marriage, the assessment of contributions favoured the Wife, noting, in particular, her post‑separation care of the parties’ youngest child while the Husband remained in the G Street property without contribution; such that contribution should be assessed as 52 and a half per cent to the Wife and 47 and a half per cent to the Husband; and
(g) the Husband had reduced the value of the self-managed superannuation fund by causing it to transfer significant funds to another entity (C Pty Ltd) in a transaction which had not been at arm’s length and which had resulted in the funds being on-paid to F Pty Ltd, and as a result, a further two and a half per cent adjustment in the Wife’s favour pursuant to section 75(2) of the Act was appropriate having regard to this fact and also to aspects of the Husband’s financial circumstances including likely significant pre-separation losses imprudently incurred by him, the details of which were unknown and which were unable to be quantified as a result of the Husband’s lack of compliance with his obligations of disclosure and the orders of the Court.
As he was required to do, the Senior Judicial Registrar considered whether the orders proposed by the Wife were just and equitable in accordance with section 79(2) of the Act. Being so satisfied, he then adopted the approach laid out in a line of cases including Hickey & Hickey & Attorney-General for the Commonwealth (Intervenor).[2]
[2] [2003] FamCA 395; (2003) FLC ¶93-143.
The orders made by the Senior Judicial Registrar reflected the orders sought by the Wife. They were designed to provide, amongst other things, for the payment of debts owed by Q Pty Ltd and an overall division of 55/45 in the Wife’s favour of a single superannuation-inclusive net pool of assets and liabilities. This entailed the Wife retaining the sum of $607,000 from the funds held for the parties on trust, her industry superannuation of approximately $100,000, and funds that had already been received by her.
The Senior Judicial Registrar had specific regard, as he was required to do,[3] to the fact that the Husband was to retain most of his entitlements pursuant to the orders in the form of superannuation, but was satisfied that this was just and equitable in light of the Husband’s non‑participation in the proceedings and his apparent history of using the funds for his own purpose.
[3] See, for example, Doherty & Doherty (2006) FLC ¶93-256; [2006] FamCA 199.
The Senior Judicial Registrar was otherwise satisfied, largely in light of the Husband’s conduct in relation to the proceedings, that an order for costs was justified in the circumstances.
As at the time of the hearing before the Senior Judicial Registrar, the Husband had not filed a single document other than a Notice of Address for Service and had attended only one of six earlier hearings.
HUSBAND’S APPLICATION TO SET ASIDE ORDERS OF 1 MARCH 2023
On 29 March 2023, the Husband filed an Application in a Proceeding seeking to set aside the final orders made on 1 March 2023 on the basis of the ground set out in rule 10.13(1)(a), being that they were made in his absence. The Husband was legally represented at the time that application was filed.
The Husband’s application came before the Court on 20 April 2023. He was represented but his lawyers sought to withdraw. The Husband sought and was granted an adjournment.
Following the hearing, the Husband’s lawyers were re-engaged.
On 23 May 2023, the Husband filed an Amended Application in a Proceeding.
On 25 May 2023 the Husband’s Amended Application in a Proceeding came before a Senior Judicial Registrar and, once again, the Husband’s lawyers sought to withdraw. The Husband pressed his application without legal representation though I note he had been represented by solicitors at some points during the proceedings by that time and I infer that he had received legal advice.
I note also that the Husband had been legally represented in relation to family law matters prior to the commencement of the proceedings.
On 25 May 2023, the Senior Judicial Registrar’s judgment was reserved.
On 1 June 2023, while the judgment remained reserved, a Further Amended Application in a Proceeding was filed by the Husband without leave.
On 5 June 2023, the Senior Judicial Registrar delivered his judgment and made the second set of orders now under review.
The Senior Judicial Registrar made minor variations to the orders of 1 March 2023 pursuant to the slip rule to clarify, for taxation purposes, that the funds set aside for the child Ms P’s surgery were to be treated as funds received equally by the parties and the funds set aside for the purpose of the Wife’s costs were treated as funds received by the Husband. These amendments were described by the Senior Judicial Registrar as ‘obvious and self-evident.’
The Husband’s Application in a Proceeding was otherwise dismissed.
Provision was made for any costs applications to be filed within 28 days. In his judgment the Senior Judicial Registrar recorded that, in his view, nothing had been filed or submitted by the Husband that suggested that the 55/45 settlement provided for in the orders of 1 March 2023 was not just and equitable.
REVIEW APPLICATION FILED OUT OF TIME
On 7 June 2023, the Husband filed the review application that is now before the Court.
Though there was some lack of clarity as to whether the Husband, in fact, sought to review both the orders of 1 March 2023 and those of 5 June 2023 or simply the orders of 5 June 2023, giving him the benefit of the doubt because he is self-represented, I have treated his application as an application to review both sets of orders.
With respect to the orders of 1 March 2023, a review of a registrar’s exercise of delegated judicial power must, pursuant to rule 14.05(1) of the Rules, be filed within a period of 21 days. The review application in this case was filed well outside that time and leave is sought to pursue the application notwithstanding that fact.
The Rules do not enshrine a test to be applied for the determination of whether an application should be permitted to be brought outside the time prescribed in the Rules. The authorities[4] suggest that the test to be applied is the same test as that that applies in applications for leave to appeal out of time. That is the well-known test from the High Court’s decision in Gallo v Dawson [5] being, to paraphrase, the need to ensure that time limits do not become instruments of injustice. The discretion to extend time is given for the sole purpose of enabling the Court to do justice between the parties. This means that the discretion can only be exercised in favour of an Applicant upon proof that strict compliance with the Rules will work an injustice upon the Applicant.
[4] Such as Delgado & Soto [2021] FamCA 65 and Sharaf & Nouri [2022] FedCFamC1F 898.
[5] [1990] HCA 30; (1990) 93 ALR 479.
As such, in order to accede to the application before me, I must be satisfied that failure to do so will work an injustice upon the Husband. Relevant factors include the history of the proceedings, the conduct of the parties, the nature of the litigation and the consequences for the parties of the grant or refusal of the application to extend time.
In the present case the Husband’s conduct, prior to this review, has included failure to attend no less than five hearings and breaches of multiple orders of the Court requiring him to file documents. The Husband has, himself, created the circumstances in which he now finds himself.
Furthermore, the Husband has, running contemporaneously, his review of the dismissal of a subsequent application to set aside the orders, meaning that he has another opportunity to attempt to persuade the Court to set aside the orders and is not dependent upon the grant of an extension of time to pursue such a remedy.
In these circumstances I am not satisfied that it has been proven that any injustice would rise from a failure to grant the extension of time. That application is refused.
ORDERS OF 5 JUNE 2023
With respect to the orders of 5 June 2023, the Husband’s application is brought pursuant to rule 10.13(1)(a) of the Rules, which provides that the Court may vary or set aside an order if it was made in the absence of a party.
The Senior Judicial Registrar set out the principles applicable to applications of this nature at paragraph 26 of his judgment of 5 June 2023 as follows:
26.I adopt the outline of relevant principles of FM Jarrett as he then was in Clifford & Mountford [2006] FMCAfam 450 (cited in Barbey & Tuttle [2013] FamCAFC 44) where, after considering the relevant case law from paragraph 8, His Honour distils the following principles [at 34]:
a.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.
b.There are three criteria, each of which should usually be demonstrated before a judgment or order is set aside under r.16.05(2)(a), namely:
i.a reasonable explanation for the applicant's absence at the trial or hearing;
ii.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
iii.no 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.
c.Matters relevant to the three criteria set out above will include, but will not necessarily be limited to:
i.whether a party with notice of proceedings disregarded the opportunity of appearing at and participating in the trial;
ii.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;
iii.the conduct of the applicant since the judgment or order sought to be set aside was made.
I adopt that statement of the law.
Whilst I am considering this matter afresh, as I am required to do in a hearing de novo, the manner in which the Senior Judicial Registrar approached the application was logical, and for convenience I will consider the application in the same way and will make reference throughout these reasons to the manner in which it was approached in the Senior Judicial Registrar’s judgment.
Firstly, with respect to the question of whether there was a reasonable explanation for the Husband's failure to appear at the hearing, the Senior Judicial Registrar expressed a view, with which I agree, that it is necessary to consider the fact that prior to the hearing in question, the Husband had failed to appear at multiple hearings, had thrown the Initiating Application served on him in the bin and had failed to comply with multiple orders.
The Senior Judicial Registrar recorded that with respect to the hearing on 1 March 2023, about which the Husband had been on notice since 3 February 2023 (when he was served with a copy of the orders made on 30 January 2023 by the Wife's solicitor), the Husband had failed to engage until late on the day prior to the hearing at which time he had sent emails purporting to put third parties on notice of the proceedings and attempting to demand an electronic link, despite the fact that the hearing had been listed to take place in person and not electronically and leave to attend by electronic means had not been sought or granted.
At no time did the Husband file any of the documents he was required by multiple court orders and the Rules to file, other than a Notice of Address for Service. The Husband deposed that there were various reasons for his failure to participate in the proceedings. One of those asserted reasons was the combined effect of the dire financial circumstances of F Pty Ltd and Q Pty Ltd, his efforts to keep the businesses afloat and the need to deal with the liquidation. Whilst this may perhaps have excused an inadvertent failure to realise that one hearing or one filing deadline had passed, it is a completely inadequate excuse for a complete refusal to engage in court proceedings over the course of many months. I note that the Wife was likewise actively engaged with the liquidation and was likewise subjected to significant financial and other stress but she engaged properly in the proceedings from their inception.
The Husband asserted, but adduced no evidence to prove, that he had been unable to attend the earlier hearing on 30 January 2023 as a result of a hospitalisation. He provided no compelling evidence to demonstrate any inability to attend the hearing on 1 March 2023 by reason of medical issues or otherwise.
On the morning of the hearing, the Senior Judicial Registrar recorded that the Husband had communicated to the court that he was on medication and had been advised not to drive. He falsely asserted that he had been told only that day that he must be present in person. In fact, the orders of 30 January 2023 had expressly specified that the parties were to attend in person. That fact was also recorded on the Commonwealth Courts Portal, to which the Husband had access and on which he had filed his Notice of Address for service on 17 February 2023. On the morning of the hearing (well after the time provided for in rule 15.16 of the Rules), the Husband submitted a request to attend by electronic communication which gave the reason "some find this easier", which, of course, is not a reason at all. Unsurprisingly that request was not successful.
Apparently, on the morning of the hearing, the Husband attempted to file a number of documents which were rejected. None of them were in the proper form of a Response to Initiating Application, an Affidavit or a Financial Statement. Nonetheless, the Senior Judicial Registrar took these documents into account in determining the Husband's application to set aside the final orders. This was a significant indulgence extended to the Husband which the Senior Judicial Registrar was not required to extend, particularly in light of the numerous opportunities, and indeed obligations, to file documents which had been ignored by the Husband. The Senior Judicial Registrar recorded that those documents included medical certificates which were so heavily redacted as to render them of little or no utility to the determination of whether the Husband's apparent recalcitrance could be explained by medical issues.
At the hearing before me, the Husband tendered a bundle of medical documents[6] which demonstrated the he had suffered a medical condition and the effects of stress. Many of those documents post-dated the making of the final orders. Although these documents demonstrate that the Husband had suffered poor health, they do not, individually or collectively, prove that he was hospitalised or otherwise unable to participate in the proceedings or any of the numerous hearings up to and including the hearing on 1 March 2023 which he failed to attend.
[6] Exhibit H2.
The medical records produced by the Husband suggest that some of the difficulties experienced by him arose in reaction to the outcome of the proceedings rather than having been a cause of his earlier conduct. Before the Senior Judicial Registrar, the Husband relied on a general medical certificate dated 1 March 2023, which said that he was on medication which could impact driving and that he would be unable to attend his ‘normal duties’. The Husband asserted that the medication in question was prescription medication. He deposed that he had taken the medication on the day the final orders were made and sought that the Senior Judicial Registrar take judicial notice of the effect of the medication on his ability to drive. Quite properly the Senior Judicial Registrar did not do so; this not being a matter of common knowledge as required by section 144 of the Evidence Act 1995 (Cth) for the taking of judicial notice. It was noted by the Senior Judicial Registrar that it is the Husband's evidence that he drove for a full day the following day.
In any event, the Husband's actions in taking medication which he asserts made it unsafe for him to drive whilst having been on notice since 3 February 2023 of the need to attend an in‑person hearing, combined with his failure to make alternative arrangements to be in Brisbane for the hearing, such as another means of transport from Region M where he resides, or driving prior to taking the medication, are difficult to understand and were not adequately explained.
Amongst the bundle tendered this day was a medical certificate which post-dated the hearing on 1 March 2023 which said that the Husband ‘very reasonably’ had not attended the hearing as he had medication in his system which would have made it unsafe to drive. This medical certificate goes well beyond the proper role of its author and suggests that the Husband be given ‘lots of notice’ of court events in future. Its author was apparently unaware that the Husband had been on notice of the in person hearing since 3 February 2023. Furthermore, as submitted by counsel for the Wife, the certificate appears to be a rewrite of the contemporaneous certificate dated 1 March which was much more equivocal.
The Senior Judicial Registrar further noted that in an email to the court, the Husband had asserted that he had been hospitalised at the time of the hearing on 30 January 2023 which he had failed to attend, but that this was contradicted by his affidavit filed on 20 March 2023. I note that the assertion was also contradicted by the medical documents tendered this day.
The Senior Judicial Registrar formed the view that this inconsistency called for particular circumspection with respect to the Husband's explanation for his non-attendance on the date upon which the final orders were made, particularly when considered in light of his previous conduct in failing to participate in numerous court events. I agree. I would add that it is important that the Husband's non-attendance be considered in the context in which it occurred. It is of significance that the Husband's failure to appear on 1 March 2023 was not an isolated incident. The Husband had ignored and failed to attend at no less than five earlier hearings and had also flagrantly disregarded multiple sets of court orders, which suggests that his failure to attend on that occasion was part of an ongoing and deliberate course of conduct and not a result of an isolated incident, medical or otherwise.
The Senior Judicial Registrar further considered whether the Husband had a reasonable explanation for his failure to comply with orders of the Court and the Rules with respect to the filing of documents or with his obligations as to disclosure. He was not satisfied that he did. Nor am I.
Before the Senior Judicial Registrar, the Husband asserted that he had been struggling with stress and pressure from attempting to preserve matrimonial assets, that his physical health had been failing him requiring hospitalisation and that he could not afford legal representation and did not understand the Court process. The Senior Judicial Registrar noted the following:
a.there was no medical evidence before the court to support a finding that the stress and pressure described by the Husband impacted his ability to engage with the legal proceedings; and
b.any stress and pressure associated with preserving matrimonial assets would have been alleviated to a significant degree, albeit not in a fashion preferred by the Husband, by the sale of the [G Street] property and the liquidation of [F Pty Ltd] which had occurred over six months prior to the hearing on 1 March 2023.
While the Husband relied upon reports from general practitioners and specialists concerning a medical issue from which he suffers and records of hospitalisation in late 2022, and early 2023, there were no documents before the Court to support a finding that the Husband's physical health was failing him to any extent that might disable him from responding to the proceedings in a timely way and appearing at court events, none of which coincided with a period of hospitalisation. The documents tendered this day fall within the same category. The Senior Judicial Registrar further noted that an inability to afford legal representation was not a basis for failing to appear, noting that many litigants represent themselves in litigation, as the Husband did before the Senior Judicial Registrar on 25 May 2023, and, I note, has done before me this day.
The Senior Registrar also noted that the evidence reveals that the Husband possesses significant business skill and acumen and has a history of engaging in sophisticated business communications and transactions, including in relation to the liquidation, which did not sit well with his claim to be unable to understand court processes and suggests that he is a sophisticated litigant, notwithstanding his lack of representation; and that the Wife could ill-afford the additional expense of the proceedings created through the Husband's non-compliance with orders.
I adopt those observations and I would add the following:
(a)the tone and tenor of the Husband's communications to the Court during the relevant period, as recorded in the Senior Judicial Registrar’s judgment dated 25 May 2023, give the impression of a person who is making demands and attempting to dictate and control the court process, not a person who is struggling to understand it; and
(b)there can be no explanation for the Husband's conduct in throwing the documents with which he was served in the bin other than an immature and belligerent refusal to engage with the Wife, even if the Court were to accept his evidence that he was not told what the envelope contained, which I note is directly contradicted by the evidence of the process server.[7]
[7] Affidavit of Service of Peter Charles Wood filed 29 July 2022.
The Husband sought to attribute his lack of engagement with the proceedings to lack of knowledge of court dates and orders, but in fact the reverse is true. Had the Husband engaged properly from the outset and attended the hearings as he was required to do, he would have known exactly what was happening in the court proceedings and when. He would also have had this information had he contacted the court and enquired upon first being made aware of the existence of the proceedings rather than simply ignoring their existence. I note in any event that the Husband’s attention was specifically drawn to numerous court events which he failed to attend.
Furthermore, it is entirely unacceptable for a litigant to attempt to excuse his conduct by saying, as the Husband does, that he was unaware that the proceedings were nearing completion. Compliance with orders of the Court and appearance at hearings is required at all stages of the proceedings, not just the stage of completion. There was no basis for the Husband’s apparent assumption that he was going to be permitted to continue to ignore the Court without consequence for an indefinite period of time.
The Husband acknowledges that as at 17 February 2023, he was provided with assistance using the Commonwealth Courts Portal and had registered a login. He was also given copies of the documents he was required to complete and file. The Husband deposed to experiencing technical difficulties when trying to file an affidavit over 950 pages in length. This occurred from only seven days prior to the hearing date, being significantly past the time by which the Husband was required to file material pursuant to the Rules and the numerous orders with which he had failed to comply.
It is clear from the communications between the Husband and the Court that the documents the Husband attempted to file were not in proper form, despite considerable guidance having been provided by registry staff. The Husband also continually refused to copy the Wife’s solicitors into his communications with the Court, despite being advised multiple times that he was required to do so.
The Husband deposed that he was not trying to ignore the proceedings and was actively trying to engage in the process. If this purported engagement had not followed months on end of lack of engagement and flagrantly ignoring multiple orders of the Court, this assertion would be considerably less difficult to accept. Despite his claim that he ‘takes full responsibility’ for not fully participating in the proceedings and does not seek to blame others, the tenor of the Husband’s evidence is that his non-engagement with the proceedings is the collective fault of many people other than himself, including the Court. This suggestion is rejected.
None of the documents adduced by the Husband demonstrate that he lacked the capacity to participate in the proceedings. Furthermore, he admitted at the hearing this day that he had made a deliberate decision that he would not participate in the proceedings until the liquidation was finalised. That was a conscious decision to disobey orders of the Court, and is not, by any stretch of the imagination, a reasonable explanation for his failure to participate. It is not for parties to decide and dictate the terms upon which they will and will not engage with proceedings before the Court, or comply with orders of the Court.
It was unrealistic in the extreme for the Husband to assume that he could simply ignore the court proceedings until he deemed that it was an appropriate time for them to proceed, and that the Wife and the Court would simply fall into line and wait for him to deem that an appropriate time had arrived.
In any event, the Husband’s admission that his failure to participate until a time of his choosing had been a conscious choice undermined his effort to attribute his lack of participation to medical issues.
At the hearing of the review, the Husband made assertions and tendered documents to support the suggestion that the Wife had been in possession of the financial statements for F Pty Ltd, had been in communication with the company’s accountant with respect to mediation, had refused to attend a meeting which she considered premature, and had cancelled a mediation for which she considered the parties were not ready. All of this is said to have occurred prior to the liquidation or the commencement of the proceedings.
Even if all of that is accepted, and it is noted that the Wife did acknowledge from the outset that she had received some documents, and that she would be prepared to attend mediation once disclosure was complete, this does not excuse or ameliorate the Husband’s conduct with respect to lack of participation in the family law proceedings, or amount to a fulfilment of the Husband’s obligations of full and frank disclosure during the course of the proceedings, which include his obligation to file a Financial Statement.
The Husband alleged that the Wife and her solicitors had been ‘on a path of destruction.’ This allegation is simply not borne out by the evidence before the Court, including the evidence adduced by the Husband, but in any event, would not justify the Husband’s conduct, and indeed, if true, would form a sound reason why the Husband should have participated in the proceedings.
Overall, the Senior Judicial Registrar was not satisfied that there was a reasonable explanation for the Husband’s failure to attend at the hearing on 1 March 2023.
I am likewise satisfied that the Husband was on notice but disregarded the opportunity of appearing at the hearing on 1 March 2023, and that he has not established that there was a reasonable explanation for this.
With respect to whether there are material arguments available which might reasonably lead to the making of a different order, the Senior Judicial Registrar noted that the Husband’s position in this regard appeared to relate to the orders not having dealt with certain residual personal liabilities he asserted existed following the liquidation of F Pty Ltd.
In his review application, the Husband set out tables indicating the outcome he had proposed in the event that the orders were set aside. This proposal involved matrimonial funds being directed with priority to various entities and individuals which he asserted were unsecured creditors of the liquidated company F Pty Ltd, including his mother, in a specified priority and the Wife receiving a superannuation split equivalent to the balance of her member entitlement in the self-managed superannuation fund, and otherwise retaining her accumulation superannuation interest.
The Husband does not appear to challenge the percentage-based division underlying the final orders made by the Senior Judicial Registrar. Indeed, having regard to the factors relevant to the contributions of each of the parties and the section 75(2) factors as referred to earlier, that percentage-based division would appear on its face to have been just and equitable.
The Senior Judicial Registrar noted that despite the Husband’s efforts to put various alleged creditors on notice, none of them had sought to intervene in the proceedings, and with the exception of the Husband’s mother, there was no evidence to suggest any reasonable prospect that any of them would pursue the Husband personally with respect to any liability arising from or ancillary to the liquidation.
The Husband’s position as to the overall outcome of the proceedings appears, to a large extent, to conflate the liabilities of F Pty Ltd, which were dealt with in the liquidation, with the liabilities of the parties. As submitted on behalf of the Wife, the Husband appears to argue that to the extent that creditors of the company have not been reimbursed in full in the liquidation, the parties should personally reimburse them. His assertion that the liabilities of F Pty Ltd less the amount paid to creditors in the liquidation need to be included in the assets and liabilities divided between the parties or otherwise he would be pursued by the creditors personally, fails to appreciate the distinction between the liabilities of the company in liquidation, and the personal liabilities of the parties, and ignores the fact of the liquidation.
I note that there is some limited evidence before the Court that some personal liabilities may be owed by the Husband with respect to F Pty Ltd, being evidence of personal guarantees given by the Husband to business lender N Company dated 3 June 2021, 21 October 2021 and 15 February 2022.[8] These guarantees related to loans which the Husband caused to be taken by F Pty Ltd in the sums of $28,600, $23,640 and $152,576.42 respectively. There is also evidence of a Claim seeking the sum of $231,622.50 from the Husband, which was filed by B Pty Ltd trading as N Company in the Court in late 2022, being prior to the conclusion of the liquidation.[9] As submitted by Counsel for the Wife, there is no evidence to demonstrate that the Claim is being pursued in light of the subsequent outcome of the liquidation and the payment of part of the debt owed to N Company through that process, and if so, the extent of any potential residual liability that may be borne by the Husband.
[8] Affidavit of Husband filed 23 May 2023, pp 96, 131 and 166.
[9] Affidavit of Husband filed 1 June 2023, p 96.
There is also evidence of a personal guarantee having been given by the Husband to another business lender, O Company, dated mid-2021, with respect to a loan the Husband caused to be taken by F Pty Ltd in the sum of $35,000.[10] There is no evidence to demonstrate that the Husband is being pursued for the payment of any funds pursuant to this guarantee, nor of the quantum of his ultimate liability pursuant to this guarantee, if such a liability exists.
[10] Affidavit of Husband filed 29 March 2023, p 109.
The Husband asserts that he has also given a personal guarantee to the National Bank of Australia. He has not adduced any evidence to support that assertion. The Husband further says that he used a personal credit card to pay for business expenses of F Pty Ltd, in relation to which there is an outstanding balance of $16,852. There is likewise no documentary evidence before the Court to support this assertion.
I note that the personal guarantees of which there is evidence were all given, and the loans to which they relate were all incurred, well after the parties’ separation at a time when the Wife had no direct or indirect involvement in the Husband’s business operations and derived no benefit from them.
The Senior Judicial Registrar was not satisfied that the existence of liabilities pursuant to personal guarantees would in fact lead to a different outcome of the substantive proceedings in circumstances in which:
(a)firstly, the adjustment provided for in the final orders already represented a conservative view of the Husband’s conduct;
(b)secondly, there was evidence before the Court which could support a finding that the liabilities relied upon by the Husband had been incurred by him against the Wife’s express lack of consent; and
(c)thirdly, the Husband was on notice of the Wife’s position that any unsecured liabilities were post-separation liabilities incurred solely by the Husband without the Wife’s consent and ought not be visited upon the Wife, but had adduced no evidence to contradict that assertion.
I would add to this that the Wife’s evidence is that she has not been a director of F Pty Ltd at any material time, and was not involved in what she asserts was the Husband’s post-separation mismanagement of that company. Indeed, the Husband’s own evidence is that the Wife refused to cooperate with his post-separation finance applications with respect to F Pty Ltd.
The Husband asserts that the liabilities relating to F Pty Ltd are genuine joint matrimonial liabilities forming part of the matrimonial asset pool. However, the Husband has not pointed to any evidence that would justify the losses incurred through his post-separation conduct undertaken without reference to the Wife, and in the face of her express lack of consent, being visited upon her.
The Senior Judicial Registrar correctly referred to authority, including Biltoft & Biltoft (‘Biltoft’),[11] which suggests that liabilities can be excluded from consideration in circumstances including those which appear on the evidence before the Court to be the circumstances which exist in the present case, being unilaterally incurred post-separation debts. This is also supported by other authority, including NHC & RCH.[12]
[11] [1995] FamCA 45; (1995) FLC ¶92-614.
[12] [2004] FamCA 633; (2004) FLC ¶93-204.
The evidence before the Court did not and does not suggest that the outcome proposed by the Husband will be just and equitable, or that there is any realistic prospect of such an outcome being ordered by the court, noting in particular that there is no evidence to support the existence of any personal obligation to meet most of the liabilities owed to unsecured creditors, and the Husband’s proposal would have the effect of prioritising the interests of creditors over the interests of the Wife, rather than balancing the two, which is a position that is contrary to establish law, including Biltoft and also Re Chemaisse; Federal Commissioner of Taxation (Intervenor).[13]
[13] [1990] FamCA 32; (1990) FLC ¶92-133.
As to the debt said to be owed to the Husband’s mother, as the Senior Judicial Registrar noted, the Husband’s mother submitted a proof of debt in the liquidation, claiming that she was a creditor of the company to the full extent of the debt she now says is owed by the parties. She was paid the sum of $61,071 in the liquidation. The Husband relied upon a letter sent by solicitors on behalf of his mother to solicitors acting for each of the parties on 19 May 2023, [14] which is some two and a half years after the parties’ separation, and after the final orders had been made. He referred to this letter as a ‘Statement of Claim’.
[14] Affidavit of Husband filed 1 June 2023, p 50.
In the letter, it was asserted that the Husband’s mother had lent the parties (as distinct from the company) the sum of $545,294.48 and expected that it would be repaid to her. The letter alleged that it had been the parties’ choice as to how the funds were applied, and that the parties had ‘included the funds as a liability in a company which they set up,’ which had since been placed into liquidation. The letter asserted that the sum of $484,221.48 remained outstanding.
As the Senior Judicial Registrar noted, no evidence of a loan agreement was put before the Court, and the Husband’s mother’s somewhat conveniently timed demand for repayment, together with and her irreconcilable actions in submitting a proof of debt in the liquidation and then later claiming that the funds had been lent to the parties personally and not the company, cast significant doubt over the veracity of her assertions and the likelihood that they would be accepted by the Court if the orders of 1 March 2023 were set aside.
The most generous available interpretation of the Husband’s mother’s contradictory statements is that she, like the Husband, has failed to appreciate the distinction between the liabilities of the parties and the liabilities of the liquidated company.
Before me, the Husband sought to distance himself from the suggestion that his mother is a creditor of the parties personally, and emphasised that she was a creditor of the company. In those circumstances, there is no basis for any suggestion that the Court would order that the parties personally repay the debt owed to her if the orders of 1 March 2023 were set aside.
The Husband has also failed to satisfactorily address the Wife’s evidence that he directed significant sums from the parties’ self-managed superannuation fund to a related party (C Pty Ltd), which in turn advanced them to F Pty Ltd, in what the Wife alleges was a sham transaction. The Husband admitted that the transactions had occurred as alleged and admitted that he has no evidence of the Wife having consented to this having occurred, but asserted that the transactions were at arm’s length.
I accept the submission made on behalf of the Wife that this would likely be addressed by way of an addback if the matter were to be reopened. That would leave the Husband in no better position than that reflected in the orders of 1 March 2023.
The Husband expressed a grievance about the self-managed superannuation fund being wound up pursuant to the orders before the debt owed to the fund by the third party is repaid if the orders are not set aside. I note, however, that the debt owed to the superannuation fund, if legitimate, is an asset of the fund, and would therefore form part of the benefits held in the fund which are to be rolled over pursuant to the final orders. The orders do not prevent the loan from being called and in and repaid if that is necessary to give effect to their terms.
Before me, the Husband alleged that the proceedings had been an abuse of process. Despite being invited several times to explain this allegation, he did not point to any evidence or make any submission which would sustain such an assertion. The Husband is aggrieved by the freezing order that was made in late 2022, which he says led to the liquidation of F Pty Ltd. He is dissatisfied with the evidence put before the Court by the Wife as to the financial circumstances of the companies. He would have preferred that the matter not proceed until the financial accounts of F Pty Ltd had been finalised. These are all matters which were within his control to seek and address, by participating in the proceedings and putting evidence before the Court himself.
The matters about which the Husband complains are simply consequences of his deliberate failure to participate. They do not constitute an abuse of process. Indeed, these grievances simply represent more reasons why the Husband should have participated in the proceedings rather than taking the course he did. He appears not to appreciate that by doing nothing and allowing the proceedings to take place in his absence, he was not only depriving the Court of any additional evidence he believes should have been adduced, but was condoning the matter proceeding on the basis of the Wife’s evidence alone. That is not an abuse of process. It is simply a consequence of the Husband’s choices.
The Husband further asserted that the Wife had breached her obligations of disclosure. This was a remarkable position for him to have taken, in light of the fact that it was he who wholly ignored the court proceedings and his obligations with respect to them, including his obligations as to disclosure, throughout most of their duration. Furthermore, the allegation was not supported by any cogent evidence.
Finally, the Husband alleged that the Wife had received an inheritance which had not been taken into account in the final orders. There is no evidence before the Court to support this allegation.
Although it could not be said that there is no prospect whatsoever that a different outcome would result if the orders were set aside and the matter proceeded to trial, like the Senior Judicial Registrar, I am not satisfied that the Husband has met his onus of demonstrating that setting aside the final orders would lead to a different outcome.
Finally, the Senior Judicial Registrar considered the question of prejudice to the Wife if the orders were to be set aside. The Senior Judicial Registrar noted that there were serious deficiencies in the Husband’s conduct of the proceedings from the outset, which were entirely contrary to his obligations with respect to the overarching purpose set out in sections 190 and 191 of the Federal Circuit and Family Court of Australia Act 2021 (Cth), the Rules, and the Court’s Central Practice Direction.
These deficiencies included but were not limited to failure to engage meaningfully in the proceedings, failure to engage properly with the Wife’s solicitors, failure to comply with numerous orders of the Court, failure to comply with his obligations of disclosure, delaying the sale of the G Street property and in so doing requiring the Wife to make a court application, failure to engage properly with the liquidators and the solicitors conducting the sale of the G Street property, filing and attaching voluminous documents at the last minute, most or all of which should have been disclosed from the outset, engaging in pejorative commentary with respect to the Wife, her lawyers and various other professionals, and engaging in inappropriate communications with chambers.
All of these actions made pursuing the proceedings more difficult and expensive for the Wife than would otherwise have been the case, and some of these actions led to diminution of the assets and liabilities available for distribution between the parties. In turn, they caused prejudice to the Wife. Much of this conduct has continued in the manner in which the Husband has presented his case with respect to this review, and could reasonably be expected to continue if the orders were set aside, which would again be to the prejudice of the Wife. Furthermore, the Wife’s evidence is that she suffers severe anxiety, and that the ongoing applications in this matter are causing her significant stress, which, in turn, is having an impact on her health. Her life is effectively on hold.
The Husband correctly noted that there was no independent evidence to support the Wife’s evidence in this regard. However, I consider it to be self-evident that being subjected to the type of conduct and correspondence in which the Husband has engaged during these proceedings, including the serious allegations of matters such as perjury and abuse of process, would be extremely stressful. Noting the limited available liquid assets over and above what would appear to be the Wife’s entitlements, it is unlikely that the financial aspects of the prejudice to the Wife could effectively be redressed if the orders were set aside, and the non‑financial aspects of this prejudice could not be addressed by any means. These matters are relevant not only to the question of prejudice to the Wife, but to the consideration of the public interest in there being an end to litigation. Before me, the Husband conceded that the Wife would be prejudiced if the orders were set aside.
The Husband asserted in the hearing before me that he was ‘not asking for one cent’ from the proceedings. He claims that the likely prejudice to him is bankruptcy, resulting from being pursued by creditors of F Pty Ltd, but again, there is no evidence before the Court to demonstrate this asserted risk, or even to demonstrate that the Husband owes a personal liability to many of those creditors at all. Such personal liabilities as do exist are directly referable to the Husband’s unilateral post-separation conduct undertaken contrary to the Wife’s wishes. This goes not only to the question of prejudice, but to the likelihood that allowing the proceedings to be reopened would, in any way, address that prejudice. I am not satisfied that such a likelihood exists.
For the reasons outlined above, the Husband has not succeeded in meeting the onus of establishing that the orders ought to be set aside, and the review application is dismissed.
I certify that the preceding one hundred and twenty-five (125) numbered paragraphs are a true copy of the Ex Tempore Reasons for Judgment of Judge Parker. Associate:
Dated: 31 July 2023
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