CAINE & CAINE (No.2)
[2020] FCCA 3473
•18 December 2020
FEDERAL CIRCUIT COURT OF AUSTRALIA
| CAINE & CAINE (No.2) | [2020] FCCA 3473 |
| Catchwords: FAMILY LAW– The Family Law Act 1975 (Cth) and related legislation – Marriage counselling, mediation and arbitration – procedural fairness – adequacy of reasons. |
| Legislation: Family Law Act 1975 (Cth), ss.13C, 13E, 13H, 13J, 13K, 117(2) |
| Cases cited: Bevan & Bevan (2014) FLC ¶93–572 Braddon & Braddon [2018] FCCA 1845 Brandt, In the marriage of (1997) 22 Fam LR 97 Calder & Calder (2016) FLC ¶93–691 Chapman & Chapman (2014) FLC ¶93–592 Dickons & Dickons (2012) 50 Fam LR 244 Ex Parte Fealey (1897) 18 NSWLR (L) 282 Goh v Ren (2020) 61 Fam LR 508 Gutherie & Gutherie (1995) FLC ¶92–647 Hala v Minister for Justice (2015) 145 ALD 552 Horsley v Horsley (1991) FLC 92-205 Kioa v West (1985) 159 CLR 550 Lovett v McGregor (2019) FLC 93-935 Marcon and Cussen [2017] FamCAFC 150 Merriman v Merriman (1993) FLC 92-422 Oil Basins Ltd v BHP Billiton Ltd (2007) 18 VR 346 Bremer Handelsgesellschaft mbH v Westzucker GmbH (No 2) [1981] 2 Lloyd’s Rep 130 Re Minister for Immigration and Multicultural and Indigenous Affairs; Ex Parte Lam (2003) 214 CLR 1 Scrymegeour & Scrymegeour (2014) FLC ¶93–600 Stanford v Stanford (2012) 247 CLR 108 Snedden v Minister for Justice for the Commonwealth of Australia (2014) 230 FCR 82 Westport Insurance Corporation v Gordian Runoff Ltd (2011) 244 CLR 239 |
| Applicant: | MR CAINE |
| Respondent: | MS CAINE |
| File Number: | BRC 6733 of 2017 |
| Judgment of: | Judge Jarrett |
| Hearing date: | 28 May 2020 |
| Date of Last Submission: | 28 May 2020 |
| Delivered at: | Brisbane |
| Delivered on: | 18 December 2020 |
REPRESENTATION
| Counsel for the Applicant: | Mr Crofts |
| Solicitors for the Applicant: | McKean Park Lawyers |
| Counsel for the Respondent: | Mr Alexander |
| Solicitors for the Respondent: | Evans Brandon Family Lawyers |
ORDERS
The third further amended application in a case filed on 30 April, 2020 be dismissed.
Any applications for costs shall be made by the applicant for any costs order filing and serving within 28 days of the date of these orders, written submissions specifying the orders for costs sought and the submissions in support of those orders together with any affidavit upon which the applicant for costs seeks to rely in the costs application.
In the event an application for costs is made, the respondent to such application shall, no later than 28 days from the date upon which the respondent is served with the documents required by order 2 hereof, file and serve written submissions specifying the orders sought by the respondent and the submissions in support of those orders together with any affidavit upon which the respondent to the costs application seeks to rely.
Any application shall be determined on the papers save where a party specifically requests an oral hearing on the question of costs in their written submissions filed in accordance with either order 2 or 3 hereof.
IT IS NOTED that publication of this judgment under the pseudonym Caine & Caine (No.2) is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT BRISBANE |
BRC 6733 of 2017
| MR CAINE |
Applicant
And
| MS CAINE |
Respondent
REASONS FOR JUDGMENT
The issues raised by this application are twofold. The first concerns the content of the duty upon an arbitrator conducting an arbitration pursuant to s.13E of the Family Law Act 1975 (Cth) to provide the parties with procedural fairness. More specifically, on the facts of the present case, did the duty to conduct the arbitration of this property adjustment dispute in a procedurally fair way require the arbitrator to notify the parties about and seek further submissions upon, his assessment of the parties’ contribution based entitlement where that assessment fell outside the parameters established by the parties submissions? The second concerns the content of the duty upon the arbitrator to give reasons for his award and whether, on the facts of the present case, the arbitrator’s reasons were sufficient to discharge that duty.
For the reasons that follow, I have concluded that the content of the procedural fairness duty upon the arbitrator in the present case did not require the arbitrator to notify the parties about and seek further submissions upon, his assessment of the parties’ contribution based entitlement notwithstanding that his assessment fell outside the parameters established by the parties submissions. Further, I have concluded that, in the circumstances of this case, the arbitrator’s reasons were sufficient to discharge the relevant duty to give reasons for his award.
Background
These proceedings commenced when Ms Caine filed an initiating application seeking property adjustment orders between herself and Mr Caine. The parties subsequently engaged in an unsuccessful mediation.
On 25 January, 2018 a judge of this Court made an order pursuant to s.13E of the Family Law Act 1975 (Cth), referring the whole of the proceedings to arbitration.
Before the arbitration, it appears that the parties entered into an arbitration agreement pursuant to reg. 67F of the Family Law Regulations 1994 (Cth) with the arbitrator. The whole agreement is not in evidence, save for some extracts that are in the respondent’s written submissions filed on 30 April, 2020. The extracts relate to:
a)clause 3 of the arbitration agreement which is said to require the arbitrator to “conduct the arbitration expeditiously, economically and with procedural fairness”; and
b)clause 8 of Schedule 2 of the arbitration agreement which is said to require the arbitrator to ensure “[t]he arbitration will be conducted in a way similar to a court hearing” (referred to as Schedule B in the applicant’s written submissions filed 30 April 2020, but clarified in oral submissions as Schedule 2).
The arbitration occurred on 21 and 22 June, 2018. Supplementary submissions were made on 25 June, 2018. An arbitral award was published on 24 September, 2018.
On 28 November, 2018 Ms Caine applied to have the award registered pursuant to s.13H of the Act. Mr Caine objected to registration of the award. The registration application was heard on 21 January, 2019 and judgment was reserved.
However, on 15 February, 2019 and before judgment on the registration application was delivered, Mr Caine withdrew his objection to the registration of the award. He nonetheless notified an intention to “appeal” the award. Consequently, the objection to registration of the award was dismissed and on 8 March, 2019 it was registered pursuant to s.13H of the Act.
Mr Caine commenced this application on 18 April, 2019. He has amended his application four times since then. The most recent was in accordance with orders made on 6 February, 2020. On that day I delivered written reasons for judgment in relation to an application to summarily dismiss Mr Caine’s second further amended application.
By his third further amended application in a case filed on 30 April, 2020 Mr Caine seeks to have the registered arbitral award reviewed pursuant to s.13J and set aside pursuant to s.13K(2)(d) of the Act. The respondent seeks that the third amended application be dismissed.
I have the benefit of a Court Book agreed between the parties which, although not filed, I have admitted as an exhibit in these proceedings (exhibit 1). The index refers to a Second Further Amended Response to an Amended Application in a Case (on behalf of the respondent) but none has been filed by the respondent. Counsel for the respondent indicated that none would be filed because the respondent was content to rely upon her most recently filed amended response which simply seeks the dismissal of Mr Caine’s application.
The statutory framework for the present application
In Caine & Caine [2020] FCCA 225 I set out the way in which arbitral awards might be reviewed under ss.13J and 13K of the Family Law Act with particular focus upon the present application. I will not repeat what I said there. It is sufficient to say that the foci of the present application, insofar as the application is made pursuant to s.13J, are the questions of law specified in the application. Insofar as the present application seeks relief pursuant to s.13K of the Act, relevantly, the question is whether there was a lack of procedural fairness in the way in which the arbitration process, as agreed between the parties and the arbitrator, was conducted. Neither enquiry requires that there are be an express finding that there was an error of law by the arbitrator.
In the context of the present application both the application pursuant to s.13J and the application pursuant to s.13K are related. They are related because both call up a consideration of the content of the procedural fairness obligations that an arbitrator is expected to accord parties in an arbitration.
It is appropriate to identify the questions of law said to be involved in the present application.
The questions of law
The following questions of law are set out in Mr Caine’s third amended application filed on 30 April, 2020:
a)first:
i)can an arbitrator conducting an arbitration for the purposes of s.13E of the Family Law Act reach a conclusion outside the range advocated for by the parties? and if so
ii)can the arbitrator do so without giving the parties an opportunity to be heard about the conclusion that the arbitrator proposes to reach?
b)second:
i)must an arbitrator conducting an arbitration pursuant to s.13E of the Family Law Act provide to the parties adequate reasons for any award made in the arbitration?
Alternatively Mr Caine framed the first questions of law as follow:
1C. Further and in the alternative the Applicant says that the Arbitrator:
a. Reached a conclusion outside the range advocated for the parties; and
b. Did so without giving the parties an opportunity to be heard about the conclusion the arbitrator proposed.
however, that is a statement, not a question and adds nothing to the questions of law stated in 1A and 1B of the Third Further Amended Application in a Case. It warrants no separate consideration.
Relevant aspects of the arbitration
To set the questions, issues and submissions in context it is necessary to consider aspects of the arbitration in question.
On 25 January, 2018 the entire proceedings then before the Court was referred to arbitration pursuant to s.13E of the Act with the consent of the parties. An arbitrator was nominated in the order. There was, evidently an agreement entered into between the parties and the arbitrator. It is not in evidence.
Directions were made for the conduct of the arbitration and on 21 and 22 June, 2018 a hearing was undertaken. The parties made both oral and written submissions to the arbitrator. Supplementary submissions were made by both parties on 25 June, 2018.
In his reason for the award, the arbitrator identified the principles to be applied to determine the matter before him. He referred to relevant authorities conveniently summarised in Fontana & Fontana [2017] FamCA 374 at [92] – [100].
The questions in the present application concern the way in which the arbitrator dealt with the parties’ contribution based entitlement – the second step (or the third step depending upon which authority one reads) of the four step process (or the three-step or the five-step process depending upon which authority one reads) described by the Full Court of the Family Court in cases like C & C (2005) FLC ¶93–220. It is the step that requires the Court to assess the parties’ contributions to the acquisition, conservation or improvement of their property by reason of the matters set out in s.79(4)(a) and (b) of the Act along with their contributions to the welfare of the family pursuant to s.79(4)(c) of the Act. The applicant’s submissions made clear that the “range” referred to in the first questions of law is the range of contribution based entitlement contended for by each of the parties, not the range of ultimate outcomes contended for by them.
In his document entitled Particulars of Award Sought dated 10 May, 2018, Mr Caine sought a non-superannuation asset pool division of 70% to himself and 30% to Ms Caine, of which both parties retained the property and chattels in their separate possession excluding artworks which were to be provided to Ms Caine. He also sought a superannuation splitting order. He sought a spousal maintenance order to be taken up as part of the cash sum to be paid to him for the parties’ non-superannuation asset pool. In her similar document, Ms Caine sought a base amount of superannuation of $94,460.83 be allocated to Mr Caine, that the listed artworks by provided to her, that the listed properties and chattels be allocated as sought, and that otherwise the properties and chattels be retained by each party. Both parties sought costs.
The arbitrator dealt with the parties’ respective claims concerning contributions at paragraphs 56 – 98 of his reasons. He made relevant observations about the parties and their evidence and findings about pertinent matters.
Ms Caine argued that she contributed significantly more financially to the relationship than Mr Caine. In her affidavit of 10 May, 2018 she deposed that she made much higher initial contributions than the applicant, and further deposes to having a much higher income, being somewhere in the range of $60,000-$230,000, during the parties’ relationship, tending towards the latter not long after the beginning of that relationship. Her case was that she contributed most of the money required for the purchase and maintenance of the properties acquired during the relationship.
Mr Caine disputed Ms Caine’s account that he did not contribute much initially or that he did not continue to do so by assisting in the day-to-day running of the parties’ business. Mr Caine argued that, though he accepted that he did not contribute as much as Ms Caine, he contributed initially through his ownership of vehicles and approximate savings of $10-15,000, and later through the sale of certain real property, through his lump sum payment from his employment due to a workplace injury and through his government benefits and assistance with Ms Caine’s business.
The arbitrator generally preferred the evidence of Ms Caine to that of Mr Caine. This was due to the clarity of Ms Caine’s evidence, which was corroborated by documentary evidence. The arbitrator was unimpressed with Mr Caine’s repeated inability to answer questions put to him under cross-examination. Moreover, his evidence was not generally corroborated by other evidence.
Ms Caine submitted that the arbitrator should find that the parties’ contribution based entitlement should be apportioned 60% to her and 40% to Mr Caine. Mr Caine submitted that the apportionment should be 55% - 60% in his favour.
At [98] the arbitrator said:
98. In my view, it is appropriate to assess the contributions of the parties as to 65% to the Applicant and 35% to the Respondent.
Upon consideration of s.75(2) factors, including Ms Caine’s higher expected income and younger age, and Mr Caine’s lower income, older age, injuries and present circumstances such as accommodation, the arbitrator considered in the circumstances a 10% adjustment in favour of Mr Caine was appropriate.
The arbitrator therefore concluded that a division of the parties’ nett assets of 55% to Ms Caine and 45% to Mr Caine was appropriate. This was not disturbed upon a final consideration of the justice and equity of the proposed division, as the arbitrator was satisfied with the consequential effect of the orders. Submissions about the form of orders to give effect to the arbitrator’s reasons were called for and provided.
An award was published on 12 November, 2018.
The applicant’s submissions
Mr Caine submitted that the arbitrator reached a conclusion on the question of the parties’ contribution based entitlement that was outside that advocated by either party. He did not provide the parties with an opportunity to be heard with respect to his proposed conclusion about the parties’ contribution based entitlement. Mr Caine also argued that the arbitrator provided inadequate reasons for his conclusion expressed in the following passage from his award:
110. I am satisfied that the payment to the Applicant of $741,473,19 will result in an adjustment that is just and equitable. I am conscious that from this sum the Respondent will have to meet his legal fees.
111. The Applicant will retain her Perth apartment, her shares, and a modest sum of cash. She will continue to earn a lucrative income.
112. The Respondent will receive a generous payment of cash that will enable him to maintain a standard of living that is appropriate, including being able to fund overseas trips to Country B if he wishes. The Respondent will also retain a number of chattels.
As to the first matter, Mr Caine argued that the conclusion on contributions was beyond that sought by either party. Procedural fairness required that the parties be given the opportunity to address the arbitrator on his proposed contribution based assessment given that it fell outside the range contended for by either party. He argued that the obligation to afford procedural fairness is not limited by the nature of arbitration, but rather that the standard of “procedural fairness for court is required for an arbitration unless specifically excluded by agreement”. In that respect, Mr Caine pointed to the express requirement within the arbitration agreement that provided that the arbitration would be conducted expeditiously, economically and with procedural fairness He underscored the point by referring to the clause that provided that the arbitration would be conducted “in a way similar to a court hearing”.
That there was a lack of procedural fairness, it is argued, results from two events. First, that by reaching a conclusion on the parties’ contribution based entitlement beyond that sought by either party, the arbitrator had significantly deviated from the arguments and submission put by the parties. Second, that by reaching his conclusion on this point without providing the parties with an opportunity to provide further submissions, the arbitrator denied them, and Mr Caine in particular, procedural fairness.
Mr Caine’s submissions took me to Lovett v McGregor (2019) FLC 93-935. He argued that where an arbitrator is subject to the same procedural fairness obligations as a judicial officer, if the arbitrator significantly deviates “from the parameters of the submissions expressed or implicit at trial” (Lovett at [47]) it was incumbent upon the arbitrator to “indicate to the parties what...was [contemplated] and to afford the parties the opportunity to lead further evidence and/or make further submissions about that arrangement.” (Lovett at [48]).
At paragraph 17 of his submissions filed on 30 April, 2020 Mr Caine contends that the arbitrator’s determination of a 65%/35% assessment of contributions against him was a significant deviation from the cases presented by both parties in that the assessment was “5% less” or “a $95,658 reduction in the value of the property to be received by” Mr Caine given that arbitrator found the “property pool” to have a value of $1,913,177. This is significant, he asserts, as it is “around 2 years income or 13% of his eventual share of property under the arbitral award”.
As to whether or not the arbitrator can reach a determination beyond the parameters set by the parties without affording them a further opportunity to address that determination, Mr Caine submits that the agreement between the parties as to the conduct of the arbitration required a procedure “similar to a court hearing”. In his written submissions he cited Kioa v West (1985) 159 CLR 550 at 585 in which it is observed that “a duty lying upon everyone who decides anything” was for that decision-maker to “fairly listen to both sides”. By denying “some right” to which a partisan is “entitled in the ordinary course of the proceedings” (see Ex Parte Fealey (1897) 18 NSWLR (L) 282 at 289) a process or determination may be said to “be contrary to natural justice and… a ground for interference of this court” (referencing the NSW Supreme Court).
Mr Caine argued that if an “officer of the Commonwealth” exercises power conferred by statute and fails to afford procedural fairness, this denial of procedural fairness is an error of law. To this point he argued that the same standard of “procedural fairness for a court is required for an arbitration unless specifically excluded by agreement”.
As to the question of law concerning the adequacy of reasons, Mr Caine submitted that, as in Horsley v Horsley (1991) FLC 92-205 and Merriman v Merriman (1993) FLC 92-422, where the reasoning of the arbitrator is unable to be ascertained, there is a breach of procedural fairness. That the arbitrator found a “payment to [Mr Caine] will result in an adjustment that is just and equitable” and that Mr Caine “will receive a generous payment of cash that will enable him to maintain a standard of living that is appropriate”, it is argued, does not reasonably provide (inferred or otherwise) a process of reasoning.
Under both grounds Mr Caine asserts a failure to afford procedural fairness.
The respondent’s submissions
Ms Caine’s submissions focused on the overall outcome of the arbitration rather than the contribution based entitlement (and its consequential effect upon the overall outcome) as Mr Caine’s submissions did. She submitted that the overall outcome reflected in the arbitral award was not beyond the parameters set by the submissions of either party and there was no need for the parties to be afforded any further opportunity to address the arbitrator on his proposed outcome. Further, she argued that the arbitrator’s reasons were not inadequate and thus the questions of law identified by Mr Caine revealed no error on the arbitrator’s part.
Ms Caine submitted that the arbitrator did not reach a conclusion beyond that sought by the parties, as property adjustment orders of a greater percentage than that awarded by the arbitrator had been sought by each party, though at separate times. She argued that the arbitration occurred in accordance with Clause 8 to Schedule 2 of the parties’ agreement.
Again, focussing upon the overall outcome of the proceedings Ms Caine submitted that Mr Caine’s procedural fairness argument failed on a factual level because both parties agitated for higher percentages in their respective favours than the eventual 65%/35% division. Ms Caine referred to the 70% sought in her initiating application filed 4 July, 2017 and the 70% of the non-superannuation pool sought by Mr Caine in his document “Particulars of the Award sought by the Respondent”.
As to the question of the adequacy of the arbitrator’s reasons, Ms Caine submitted, with reference to the “Bremer Test” (see Westport Insurance Corporation v Gordian Runoff Ltd (2011) 244 CLR 239 at [51] and Braddon & Braddon [2018] FCCA 1845) and Family Law Regulations 1984 (Cth) r.67P, that arbitrators are required to concisely state their “reasons for making the award” (r.67P(2)(a)) and their findings of fact in the matter” (r.67P(2)(b)). The former is argued as being satisfied by paragraphs 56-98 and 99-109 of the Award, the latter by paragraphs 56-98 of the Award. She argued that the arbitrator, having satisfied these statutory requirements, has not made the award in error. She argues the second question is without merit.
Consideration
The relevant law
Both parties accept that the arbitrator was required to provide them with procedural fairness. The obligation to accord the parties procedural fairness has two sources. The first is statutory. Regulation 67I of the Family Law Regulations 1984 (Cth) provides:
67I Duties of arbitrator
(1) In an arbitration, an arbitrator must determine the issues in dispute between the parties to the arbitration in accordance with the Act.
(2) An arbitrator must conduct an arbitration with procedural fairness (for example, giving each party to the arbitration a reasonable opportunity to be heard and to respond to anything raised by another party).
(3) An arbitrator must inform each party, in writing, if during the arbitration, the arbitrator becomes aware of anything that could lead to direct or indirect bias in favour of or against any party.
It will be observed that reg.67I(2) expressly imposes an obligation on an arbitrator to conduct an arbitration with procedural fairness. The regulation, however, provides nothing of the content of that obligation. As the authorities show, the content of a procedural fairness obligation will vary from case to case depending on the statutory background, the factual circumstances of the case at hand and the nature of the power being exercised: Re Minister for Immigration and Multicultural and Indigenous Affairs; Ex Parte Lam (2003) 214 CLR 1 at [34]; Hala v Minister for Justice (2015) 145 ALD 552 at [42]. “[F]airness is not an abstract concept … the concern of the law is to avoid practical injustice”: Lam (above) at [37].
In Snedden v Minister for Justice for the Commonwealth of Australia (2014) 230 FCR 82 the Full Federal Court observed:
177. The rules of procedural fairness do not have an immutably fixed content: Assistant Commissioner Condon v Pompano Pty Ltd (2013) 295 ALR 638 at [156]. There are no concrete rules as to what procedures a decision-maker must employ to provide procedural fairness in any particular case. What will be both sufficient and necessary to ensure a fair hearing in any given case will depend on, and vary with, the context in which a decision-maker acts, including any statutory or regulatory requirements or considerations: SZBEL v Minister for Immigration and Multicultural and Indigenous Affairs (2006) 228 CLR 152 (SZBEL) at [26], [29]; Saeed v Minister for Immigration and Citizenship (2010) 241 CLR 252 (Saeed) at [19]-[20]; SZQHH at [26]; see too Re Minster for Immigration and Multicultural Affairs; Ex Parte Miah (2001) 206 CLR 57 at [30]-[32]. The content of procedural fairness is flexible and adaptable to the circumstances of the particular case (Saeed at [18]) and must be approached on the basis of what is reasonable (Kioa at 627) and necessary to avoid “practical injustice”: Lam at [37]-[38].
As was observed in Goh v Ren (2020) 61 Fam LR 508, “The overwhelming preponderance of Australian authority on the doctrine of procedural fairness is set out in factual scenarios of an administrative nature”. Nonetheless, In Goh those rules bearing upon a reasonable opportunity for each party to present his or her case making all appropriate submissions were applied to an arbitration authorised by s.13E of the Act: Goh at [48].
The second source of the duty here is contractual. The arbitral agreement between the parties and the arbitrator provides that the arbitrator will conduct the arbitration with procedural fairness. Again, no content is given to the duty beyond the very general words of clause 3 of the arbitral agreement.
Subregulation 67I(1) requires the arbitrator to determine the issues in dispute between the parties to the arbitration in accordance with the Act. At the very least this must mean that the arbitrator is to apply the substantive law (both statutory and that derived from the cases) in the determination of the dispute at hand.
The first question
Here, both parties agree that the arbitrator applied the appropriate substantive law. The arbitrator recognised that the application with which he was dealing was one for property adjustment pursuant to s.79 of the Act. At paragraph 5 of his reasons the arbitrator identifies the relevant principles and a summary of them from Fontana & Fontana [2017] FamCA 374, which in turn summarised relevant aspects of Stanfordv Stanford (2012) 247 CLR 108 and Bevan& Bevan (2014) FLC ¶93–572; Chapman & Chapman (2014) FLC ¶93–592; and Scott & Danton [2014] FamCAFC 203. No complaint is made about the way in which the arbitrator identified the law he had to apply to the resolution of the case before him. In my view, none could be made.
Mr Caine’s case is that the arbitrator could not reach a conclusion about the parties’ contribution based entitlement that was outside of the parameters established by the parties’ submissions. I was taken to no authority that deals with this issue in the context of arbitration. However, the issue of judges adopting approaches not contended for by either party is not unknown in the context of decision making under the Family Law Act.
Ordinarily, a court asked to exercise the jurisdiction to make property adjustment orders under the Family Law Act will expect the parties to make submissions to it about how it ought to find the contributions made by each of the parties to the acquisition, conservation and improvement of their property, in percentage terms.
That is what the parties did here. Their submissions to the arbitrator were made orally but supplemented by written submissions. In his written submissions, Mr Caine submitted that he sought “to retain 55 - 60% of the pool based on contribution”. It is clear that this submissions were dealing with the contributions based assessment only. He sought a further adjustment in his favour of 10% - 15%. Thus the ultimate range of outcomes contended for by Mr Caine was 65% - 75% in his favour.
In her initiating application, Ms Caine sought a division of the parties’ assets 70% in her favour and 30% in Mr Caine’s favour. She maintained that in a document entitled Particulars of Award Sought dated 30 May, 2018. Ms Caine submitted after the conclusion of the arbitration that “a contributions based assessment would be 60% to the Wife and 40% to the Husband” and there might be a further adjustment of 10% in Mr Caine’s favour for future matters. Thus Ms Caine contended for an equal division of the parties’ assets.
As I have set out above, the arbitrator assessed the parties’ contribution based entitlements 65% in Ms Caine’s favour and 35% in Mr Caine’s favour. He assessed an adjustment to that apportionment of 10% in Mr Caine’s favour to take account of future matters. Thus, the assets as found by the arbitrator were divided 55% to Ms Caine and 45% to Mr Caine.
It is not in dispute that as a matter of principle, a trial judge determining a property adjustment application is not restricted to the outcome urged upon him or her by the parties. The making of a property adjustment order is the making of a discretionary order and minds may differ on the appropriate outcome. Provided the outcome is within the broad range of discretion available to a trial judge the orders will not be interfered with (all other things being equal): In the marriage of Brandt (1997) 22 Fam LR 97 at 107.
The contribution based assessment in a property adjustment case such as the present is one aspect of the process of determining a just and equitable order pursuant to s.79(2) of the Act. It is an aspect of the matter in respect of which each of the parties is entitled to be heard. An assessment of the parties’ contribution based entitlement must necessarily form the basis of any just and equitable order. But it is but one of the matters in respect of which the trial judge must exercise a discretion or make an assessment. There are many such matters that arise for assessment or determination in the course of a property adjustment case. Another example is whether the assessment ought be carried out on a global basis or an asset by asset basis.
In Calder & Calder (2016) FLC ¶93–691 the Full Court of the Family Court of Australia dealt with a submission that a trial judge had fallen into error when his Honour had adopted a “two pools approach” rather than a global approach as advocated for by each of the parties. No submissions had been made on the approach adopted by the trial judge and none had been sought by him. In disposing of the wife’s argument that the trial judge had fallen into appellable error in so approaching the case, their Honours of the Full Court said:
101. We accept that his Honour was not invited to divide the assets into two pools and that he did not foreshadow his intention to do so. Senior counsel for the wife submitted that this was a denial of natural justice, and argued that it was not possible for us to be satisfied that compliance with natural justice would have made no difference. In support of his proposition he cited Burchett J who held in Guse v Comcare (1997) 49 ALD 288 at 292 that:
the principle of natural justice does not place on [the appellant] any onus to show that an opportunity to be heard would have in fact proved fruitful. Natural justice stands on a higher plane than that.
102. We are not convinced that it is obligatory for a trial judge to advise the parties that he or she intends to adopt a two-pool approach where both parties have presented a global case directed to the entire pool of assets. In some respects, the approach of notionally dividing the assets into more than one pool is a matter of convenience for the author of the judgment. In our view, issues of natural justice only come into play where the trial judge’s approach leads to an outcome outside the parameters of the competing claims, or where the judge has adopted an approach to one of the pools which neither party had advocated: Guthrie and Guthrie (1995) FLC 92-647.
It will be noticed that the focus of the Full Court’s reasoning in the above paragraphs is on the outcome which is outside the parameters of the competing claims. Whether to deal with the case as a “one pool” or “two pool” case was one of the many discretionary matters to be determined by the trial judge in the course of the decision-making process leading to the determination of a just and equitable outcome. Notwithstanding the way in which the case was conducted, it was not something about which he needed to hear the parties.
A different conclusion was reached by the Full Court in Marcon and Cussen [2017] FamCAFC 150. At [28] – [29] the Full Court said:
28. At the outset of this discussion it is important to observe that the decision as to whether the property of the parties or either of them is considered globally or in separate pools is a matter for the trial judge (see Calder & Calder (2016) FLC 93-691 (“Calder”) at [102]). The thrust of the ground as we understand it is not so much the fact that the primary judge did not raise with either party his intention to consider the property in two pools, but that he did not afford the parties the opportunity of addressing him as to how the two pools were to be considered in the determination of contributions and, in the event of there being a further adjustment in recognition of the s 75(2) factors, whether that adjustment would be made from one or both pools.
29. The point made in Calder was that while in that case the trial judge did not foreshadow his intention to treat the property in two pools, there was no denial of procedural fairness because the appellant received the orders she sought albeit from only one of the two pools.
The point made by the Full Court in [29] served to distinguish the approach in Calder. In Marcon the appellant did not get the order she sought in the proceedings before the trial judge and the Full Court found that she had been prejudiced by the failure of the trial judge to foreshadow the approach he ultimately took in determining the case.
A similar conclusion was reached by the Full Court in Scrymegeour & Scrymegeour (2014) FLC ¶93–600. In that case, the parties each advocated for the determination of a property adjustment case by reference to one pool of assets and one pool of superannuation interests. Each made submissions to the trial judge about how those separate interests ought be divided between the parties. The trial judge, however, determined the case on a global basis and made assessments of the parties’ contributions to their assets and superannuation interests as a whole. She applied an adjustment to that assessment to take into account the parties’ competing needs into the future. The overall outcome was one in excess of that for which the wife had contended (she had done much better than either party contended she should do). The Full Court concluded that the husband had been denied procedural fairness and that the denial had worked an injustice to him because he “would likely have had considerably more to say on the matter if he had known the trial judge would adopt a different course to that consensually submitted by the parties and, just as significantly, expressly accepted as appropriate by the trial judge.” The ultimate outcome in the proceedings fell well outside the parameters argued for by either party. Thus, it was the outcome that was the focus of the inquiry in that case.
Those three cases serve to demonstrate two points. The first is that in reaching the ultimate outcome in a property adjustment proceeding a trial judge (or an arbitrator I venture to suggest) will be required to make a number of discretionary decisions and a number of findings of fact. Whether to deal with the matter on a global basis or on an asset by asset basis or on a single or multiple pool approach is but one example. The second is that it is the ultimate outcome in the property adjustment proceeding which is critical. The latter point has been underscored in a number of authorities. One example will suffice. In Dickons & Dickons (2012) 50 Fam LR 244 the Full Court pointed out:
67. Finally, it must always be borne in mind that the path dictated by s 79 (which has been described in the authorities as comprising a three-step, or four-step, process) is but a means of arriving at that which s 79 dictates, namely an adjustment of property, if any, that is just and equitable in all of the circumstances of the case.
68. Here, the Federal Magistrate addressed that central issue at [120] – [125] of her reasons. We find no fault with her Honour’s reasoning in that respect and, despite the errors earlier indentified, we are ultimately persuaded that the overall result arrived at by her Honour is just and equitable within the meaning of s 79. Ground 11 is, therefore, not made out.
Put in the context of the present case, the following emerges:
a)the focus of the proceedings before the arbitrator was the making of a just and equitable property adjustment order;
b)as part of that process, the arbitrator trod the path dictated by s.79 of the Act;
c)both parties were given the opportunity to make submissions about how the arbitrator should find the parties’ contribution based entitlement and both parties took up that opportunity;
d)there is no evidence before me about the positions adopted by the parties in oral submissions before the arbitrator;
e)on 22 June, 2016 (which I think ought to read 2018) the husband, by his counsel, delivered a document entitled Summary of the Factual Findings Sought by the Husband in which he contended for a contribution based assessment of 55 – 60% in his favour;
f)on 25 June, 2018 the wife, by her counsel, delivered a document entitled Summary of the factual findings sought by the Wife in which she contended for the contribution based assessment of 60% in her favour and 40% in Mr Caine’s favour;
g)the task of the arbitrator to assess the parties’ contribution based entitlement was an evaluative process not confined by the submissions made by either party;
h)the ultimate outcome reached by the arbitrator was within the range of outcomes set by the parameters of the parties’ cases initially; and
i)the ultimate outcome reached by the arbitrator fell outside of the range of outcomes set by the parameters of the parties submissions made post-arbitration by 5% of the pool of assets found by the arbitrator.
There is nothing in the material before me which suggests that at the time Mr Caine made his post-hearing submissions about the parties’ contribution based entitlement, he had any understanding of what the possible range of contribution based entitlement would be as set by the parties’ submissions. That is because Mr Caine’s submissions were made first and Ms Caine’s submissions came after his. Thus, it can be assumed, I think, that he said all that he wished to say in support of his argument that contributions ought to be assessed in the way in which he contended. It was not suggested before me that had the range or possible range of contribution based assessment been known to Mr Caine at the time he made his written submissions, his submissions would have been any different. It was not suggested that the arbitrator was bound by the range set by the party submissions and I was taken to no authority to that effect.
As I have indicated above, Mr Caine relied upon Lovett v McGregor but in my view, what emerges from that case is of no assistance in the present proceedings. That case and Gutherie & Gutherie (1995) FLC ¶92–647 concerned parenting proceedings and the orders that might be made for parenting arrangements post-trial. It is entirely understandable that where a judge is considering making orders which depart from those contended for by the parties in any significant way, it is necessary for the judge to hear the parties about those orders given the nature of parenting proceedings and the ongoing arrangements for children. The present proceedings are very different.
The parties’ right to be heard is not an entitlement to take issue with the assessments and thought processes of the arbitrator. Whilst Mr Caine framed his case in terms of an entitlement to be put on notice that the arbitrator intended to depart from the range of contribution based assessment set by the written submissions of the parties, it is simply not the case that the arbitrator was bound by the range so set. I was taken to no authority to that effect either in the context of judicial determination of property adjustment proceedings or, arbitral proceedings. Indeed, if it was the case that a decision-maker was so bound, it is not beyond imagination that in a particular case the making of a just and equitable order would be quite impossible.
Whether an arbitrator must raise with the parties that he or she is contemplating departing from the parameters of the dispute as set by the parties must necessarily depend upon the facts of the particular case at hand. In my view, on the facts of the present case as I have set them out in paragraphs 66 and 67 of these reasons, the duty to conduct the arbitration here in a procedurally fair way did not require the arbitrator to notify the parties about and seek further submissions upon his proposed assessment of the parties’ contribution based entitlement.
In terms of the questions of law posed by Mr Caine in his third further amended application in a case, the questions, in my view, must be answered as follows:
a)an arbitrator conducting an arbitration for the purposes of s.13E of the Family Law Act may reach a conclusion outside the range advocated for by the parties; and if so
b)depending upon the facts of the particular matter, the arbitrator may do so without giving the parties an opportunity to be heard about the conclusion that the arbitrator proposes to reach.
Given the answers to those questions of law, and having regard to the facts of the present case, it is apparent that the arbitrator has not made any error. Nor have the rules of procedural fairness been breached.
The second question
Regulation 67P(2)(a) of the Family Law Regulations provides that an arbitrator must include a concise statement setting out their reasons for making the award. In the context of a question concerning the adequacy of the reasons given by an arbitrator, the question must be considered by reference to that statutory requirement established by reg. 67P(2)(a).
An arbitrator is not a judicial officer. It would be inappropriate to hold an arbitrator to the same standards in terms of the reasons for decision to which a judicial officer is held. I was taken to no cases which equated the duty upon an arbitrator to deliver “adequate” reasons for decision with the duty upon a judge.
Counsel for the respondent took me to Westport Insurance Corporation & Ors v Gordian Runoff Ltd (above). In that case, amongst other things, the High Court was called upon to consider whether the reasons given by an arbitrator were adequate having regard to s.29(1)(c) of the Commercial Arbitration Act 1984 (NSW) (which for present purposes is in substantially the same terms as reg.67P(2)(a)). In that case the plurality found “no wholly satisfactory formula can be found to flesh out the requirement” for adequacy of reasons (at [54]). They determined that what an arbitrator is required to do is set out, on the arbitrator’s view of the evidence, what did or did not happen and then explain succinctly why, upon consideration of what happened, they reached their decision and what that decision is (at [49]-[56]). The adequacy of reasons will depend upon the nature of the dispute and the particular circumstances of the case (at [49]-[56], [167]-[170] citing Oil Basins Ltd v BHP Billiton Ltd (2007) 18 VR 346; Bremer Handelsgesellschaft mbH v Westzucker GmbH (No 2) [1981] 2 Lloyd’s Rep 130).
One thing is clear from the decision of the plurality in Westport and that is that the reference in Oil Basins Ltd to the giving by the arbitrators in that dispute of reasons to a “judicial standard” (and cognate expressions) placed an “unfortunate gloss upon the terms of s 29(1)(c) of the Commercial Arbitration Act”: Westport at 53.
The approach of the High Court in Westport to this issue has been applied in this court in Braddon & Braddon (above).
An arbitrator’s reasons will be inadequate where the reasoning process of the arbitrator is either entirely incapable of being understood, or where in the circumstances of the case a person reviewing the decision is unable to discern from the reasons how the decision maker arrived at that decision. Whether the reasons have reached the requisite standard will depend on the circumstances in the case.
In the present case Mr Caine’s complaints with the arbitrator’s reasons are set out in his third further amended application in a case as follows (shorn of marking up to indicate amendments and footnotes):
a. Failing to set out the reasoning for his "view" that "it is appropriate to assess the contributions of the parties as to 65% to the Applicant (Wife) and 35% to the Respondent (Husband)" in light of the matters at paragraph 1;
b. Failing to set out the reasoning for his "view" that only a "10% adjustment ... [for S75(2) factors] .. .is appropriate" having regard to the provisions of s.79(4)(a) to (c) and s.75(2) of the Act and especially the specific matters detailed in paragraph 2;
c. Failing to set out the reasoning for his findings that:
i. "the payment to the Applicant of $741,473.19 will result in an adjustment that is just and equitable";
ii. the Husband "will receive a generous payment of cash that will enable him to maintain a standard of living that is appropriate"
having regard to:
1. He was "satisfied' that "the payment to the Applicant of $741,473.19 will result in an adjustment that is just and equitable" in circumstances where the Arbitrator:
a. was "conscious that from this sum the [Husband] will have to meet his legal fees";
b. subsequently determined that the Husband pay the legal costs of the Wife fixed in the sum of $31,995.10;
c. also made the findings detailed at paragraph 5(c)(2) below.
2. He concluded that the Husband "will receive a generous payment of cash that will enable him to maintain a standard of living that is appropriate"38 in light of the Arbitrator's findings that:
a. the Husband was 59 years of age; and
b. the Husband's state of health when compared to the Wife and especially the Arbitrator's own findings that the Husband:
i. has a serious physical disability and has not worked outside the parties' business for many years;
ii. has a knee injury and back pain and suffers from an acute stress disorder and an adjustment disorder;
iii. has limited employment opportunities and may require a total knee replacement;
iv. was issued with a Serious Injury Certificate following the workplace accident in 2008 and has not worked in the open labour market since that time. and
c. the Husband's capacity to obtain appropriate gainful employment when compared to the Wife and especially the Arbitrator's own findings that;
i. the Husband has limited education and may have dyslexia;
ii. As to the Husband's health detailed at paragraph 5(c)(1 ), 2(a) and (b) above;
iii. The Husband is unemployed and in receipt of new start allowance;
iv. The Wife will remain employed as a professional with a current salary of $208,481.63 per annum and "will retain a much higher income earning capacity than the Respondent"; and
d. the commitments necessary to enable the Husband to support himself when compared to the Wife and especially the Arbitrator's own findings that:
i. the Wife would retain:
1. her Perth apartment which had an agreed value of $622,000;
2. her shares, and a modest sum of cash but would continue to earn a "lucrative income"; and
ii. In respect of the Husband the matters set out at paragraphs 5(c)and J5(b)(i) to (iii) above when the Husband otherwise retain only $119,456 after allowance for spousal maintenance during the period of separation.
3. The Arbitrator did not explain his acceptance of the Wife's speculation that at 38 years of age, and with no evidence that she was in any relationship, wished to have children and concluded "which will necessitate some time out of the workforce and then when she returns . . .. will lead to a likely reduction of income".
In his reasons, the arbitrator, at paragraphs:
a)1-2 explains that he conducted an arbitration and that there are statutory duties incumbent on him in relation to it;
b)3-4 presents the written evidence chiefly relied upon;
c)5-7 explains the legal principles by which the arbitral decision is made and succinctly describes the parties. He refers to the case of Fontana & Fontana (above) at [92]-[100], where Foster J summarises the legal principles derived from Stanford and Bevan;
d)8-55 begins the reasoning process by identifying and presenting valuations of the property in the context of the parties’ submissions and evidence;
e)56-98 continues the process by identifying and determining the contributions of the parties, again in the context of the parties’ submissions and evidence;
f)99-109 continues the process by considering the s.75(2) factors; and
g)110-112 finalises the process by considering the justice and equity of the outcome led by the prior reasoning.
The arbitrator set out the reasoning for his findings on contributions in detail, arguably in a more detailed fashion than required by reg.67P(2)(a). He did the same in respect of his consideration of s.79(4)(a) to (c) and s.75(2) of the Act.
The arbitrator considered the practicality of the proposed division of property and sought further submissions as to its composition. In arriving at his conclusion he has, correctly in my view, made findings as to the justice and equity of the proposed division.
Mr Caine’s complaints about the arbitrators reasons, as set out in the third further amended application in a case is an argument with the merits of the arbitrator’s decision rather than the adequacy of the reasons for which he made his award.
Further, to the extent that Mr Caine’s submissions before me point specifically to paragraphs 110 – 112 of the arbitrator’s reasons, it is clear that having regard to the balance of the arbitrator’s reasons, that those paragraphs summarise the arbitrator’s views about the effect of the outcome he has fixed upon.
Thus, in terms of the second question posed by the third amended application in a case, an arbitrator conducting an arbitration pursuant to s.13E of the Family Law Act must provide to the parties adequate reasons for any award made in the arbitration that conform with reg.67P(2)(a) of the Family Law Regulations.
The arbitrator’s reasons here, meet that description. No error is apparent.
Conclusion
The third amended application in a case will be dismissed.
I will make directions about any outstanding costs issues.
I certify that the preceding eighty-seven (87) paragraphs are a true copy of the reasons for judgment of Judge Jarrett delivered on 18 December, 2020.
Associate:
Date: 18 December 2020
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