Callis and Callis
[2019] FamCA 750
•17 October 2019
FAMILY COURT OF AUSTRALIA
| CALLIS & CALLIS | [2019] FamCA 750 |
| FAMILY LAW – PROPERTY – Application to set aside or vary property Consent Orders pursuant to s 79A on the ground of miscarriage of justice – Where there is sufficient evidence to establish ground – Where father did not disclose his significant superannuation pension in the payment phase in the Application for Consent Orders – Where miscarriage of justice established – Where discussion of applicable principles – Where appropriate to exercise discretion to set aside Consent Orders. |
| Family Law Act 1975 (Cth) s 79A |
| Carron & Laninga [2019] FamCAFC 115 Clifton & Stuart (1990) 14 Fam LR 511 Gebert & Gebert (1990) Fam LR 62 Gilbert v. The Estate of Gilbert (1990) FLC 92-125 In the marriage of Kokl [1981] FamCA 60; (1981) 7 Fam LR 591 Lane & Lane [2016] FamCAFC 53 Pearce & Pearce [2016] FamCAFC 14 Perrin & Perrin [2018] FamCAFC 122 Suiker & Suiker (1993) FLC 92-436 Waterman & Waterman [2017] FamCAFC 23 |
| APPLICANT: | Ms Callis |
| RESPONDENT: | Mr Callis |
| FILE NUMBER: | PAC | 4029 | of | 2010 |
| DATE DELIVERED: | 17 October 2019 |
| PLACE DELIVERED: | Parramatta |
| PLACE HEARD: | Parramatta |
| JUDGMENT OF: | Foster J |
| HEARING DATE: | 19 July 2019 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Ms Druitt |
| SOLICITOR FOR THE APPLICANT: | Benetatos White Solicitors |
| COUNSEL FOR THE RESPONDENT: | Ms Eldershaw |
| SOLICITOR FOR THE RESPONDENT: | Craddock Murray Neuman |
Orders
The Consent Orders made on 21 September 2010 be set aside.
Note: The form of the order is subject to the entry of the order in the Court’s records.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Callis &Callis has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).
| FAMILY COURT OF AUSTRALIA AT PARRAMATTA |
FILE NUMBER: PAC 4029 of 2010
| Ms Callis |
Applicant
And
| Mr Callis |
Respondent
REASONS FOR JUDGMENT
The applicant wife in these proceedings seeks to set aside pursuant to s 79A of the Family Law Act 1975 (Cth) (“the Act”) property orders made by consent on 21 September 2010 as between herself and her former husband.
These proceedings were commenced by the applicant wife in her Initiating Application filed 12 October 2018. In her Amended Initiating Application subsequently filed on 1 February 2019 the wife seeks that the subject orders be varied and property adjustment as between her and the husband including a superannuation splitting order and various other orders as to implementation and enforcement be made.
The husband in his Amended Response filed 14 December 2018 to the wife’s application seeks orders that the wife’s application be dismissed and that she pay his costs.
On 5 April 2019 the Court determined that the section 79A application be heard as a threshold issue and the proceedings were listed for hearing 19 July 2019. It was also noted that one of the issues engaged in the section 79A application was the husband’s superannuation pension now in the payment phase and what financial arrangements will be made by the subject fund in the event of there being ultimately a splitting order should the wife’s application be successful. The husband’s solicitor was to make the appropriate enquiries of the subject fund.
At trial as to the s 79A threshold issue, the wife relied upon the following documents:
a)Her Amended Initiating Application filed 1 February 2019;
b)Her affidavit filed 2 April 2019; and
c)Her Financial Statement filed 12 October 2018.
The husband relied upon the following documents at trial:
a)His Response filed 14 December 2018;
b)His affidavit filed 1 April 2019; and
c)His Financial Statement filed 1 April 2019.
Context
The wife is presently aged 51 years and the husband 58 years.
In or around December 1998 the parties commenced cohabitation at a rented property located at 1 C Street, Suburb D.
At the commencement of the parties’ cohabitation, the wife was employed as a palliative care nurse on permanent night shift and the husband was employed as a policeman.
The wife asserts that at the commencement of cohabitation she had savings of approximately $60,000 and a motor vehicle. The wife asserts that the husband had no assets at the commencement of the parties’ relationship but had a car loan liability and owed $15,000 to his parents.
The parties married in 1999.
There are three children of the parties’ relationship: Mr B born in 2000 currently aged 19, X born in 2002 currently aged 17 and Y born in 2004 currently aged 15 who after separation resided primarily with the wife. The wife also has three children of a previous relationship as does the husband.
The wife says that she undertook the primary care of the children. She worked throughout the relationship save for time off by way of maternity leave.
On 19 August 1999 the husband suffered a hand injury during the course of his employment as a public servant and was thereafter unable to return to full work duties as a result. Subsequently, in October 2002, the husband was medically discharged from his employment. Upon discharge the husband became entitled to receive his F Superannuation benefit (“the F Super”) in the form of a fortnightly pension and has received these payments since this time.
In December 2000 the parties established a business called E Company, of which the husband was the only consultant. Both parties were directors of the company and the wife the secretary. In or around February 2011 the husband commenced full time employment with K Company. By this time, E Company had stopped trading.
The parties separated in mid-2007 with the mother moving out of the former matrimonial home in September 2007.
Early in the cohabitation the parties purchased a property at 2 C Street, Suburb D (“the 2 C Street property”) for $240,000. The wife provided her savings of about $60,000 to the purchase with the balance secured by way of mortgage.
Following separation in January 2008 the parties sold the 2 C Street property and the proceeds were applied to various mortgages and the purchase of the property at G Street, Suburb D.
Following separation the wife solely retained the property at H Street, Suburb D (“the H property”) which had a value of around $300,000. The husband retained a property at G Street, Suburb D (“the G Street property”) which also had a value of around $300,000. The wife says that she paid $20,000 for stamp duty on the purchase of the G Street property on the condition that the husband would pay her back this amount. Ultimately she was repaid $10,000 by instalments.
The wife sold her property two years after separation purchasing a property now with an estimated value of $600,000 subject to a mortgage of $200,000.
The wife says that the husband approached her in September 2010 some three years after the breakdown of their relationship with an Application for Consent Orders that he had prepared. She was told by the husband “I just need to fill in your income. It’s all ready for you. All ready to go. You just need to sign it and you can keep your home”. She told him her income was $800 per week and she signed the Application still standing in the doorway of her home without properly reading the Affidavit of the Respondent as she still trusted the husband and did not believe that he would do anything to adversely impact her interests.
The wife asserts that she did not realise she signed a statement that she had received independent legal advice and asserts that she did not receive any advice in relation to property settlement prior to signing the application. She says that the husband’s sister, Ms E Callis, had put her name down as a witness to the affidavit but was not in fact present when the wife signed that document.
The husband’s account of the circumstances surrounding the signing of the Application for Consent Orders differs considerably from that of the wife. The husband asserts that the wife assisted him in completing the Application for Consent Orders. He conceded under cross examination that despite indicating the contrary on the application, he also did not in fact obtain legal advice before signing the Application for Consent Orders.
On 21 September 2010 Consent Orders were made by this Court which provided, in summary, that:
a)The husband transfer title in the H Street property to the wife and she will be solely responsible for the mortgage owing on this property;
b)The wife transfer the title in the G Street property to the husband and he will be solely responsible for the mortgage owing on the property;
c)The parties are the sole owners of all items of property in their respective possession or control; and
d)The parties follow any directions of the Child Support Agency in relation to child support for Mr B, X and Y.
The nub of the wife’s case is the lack of disclosure by the husband as to the reality of his superannuation entitlements in the Application for Consent Orders. The parties both indicated in the Application for Consent Orders that they did not have any superannuation interest when, in fact, the husband had his Police Superannuation Scheme interest and a G superannuation fund with a value of $5,269 and the wife’s had a superannuation fund valued at about $40,826. The husband accepts the wife’s evidence that his super pension in the payment phase had a capitalised value of $986,932.45 as at the date of the Consent Orders. However, he submitted that this capitalised value was not disclosed as he had already done so by disclosing a weekly income of $1,500 which included the income he was receiving each week as a pension.
The wife acknowledged that she had been aware of the husband’s interest when he first began receiving the pension but that it had passed from her mind by the time the parties signed the Application for Consent Orders in 2010.
It is readily apparent that no one had turned their mind to this significant ongoing entitlement at the time of signing the Consent Orders.
The husband says that in about April 2011 the wife spoke to him and said words to the effect of “I do not believe it was fair that I did not get anything from your police superannuation”. He says that he offered to transfer to her what he asserts was his $5,000 accumulated superannuation interest and she indicated it was not enough.
The husband says that about two weeks later he offered the wife $10,000 in relation to his F Super entitlement. The husband says that in August 2011 the parties drew up another informal agreement to this effect after he obtained legal advice from a Mr H from J Solicitors. The husband annexes to his affidavit a copy of the second informal agreement. It provides:
Orders for settlement of property dated 21 September 2010 be varied by the following:
a.Mr Callis pay to Ms Callis the sum of $10,000 being of settlement of superannuation interests.
The document, such as it is, is of no legal effect.
The wife’s account of this agreement seems to indicate that she understood the payment was to be in relation to the stamp duty she had previously paid on the G property. The wife asserts that she was presented with forms by the husband and told “If you want some of that money, you need to sign here”. She asserts that she saw that the form the husband was asking her to sign referred to superannuation and that she was not happy that it only had the amount of $10,000, but that she needed the money so signed the form. The husband says that on 19 August 2011 he transferred to the wife $7,000 in part-payment of the agreed amount of $10,000. The wife contends that it took about six months for the full amount to be paid to her.
The wife says that in 2016 she realised that the details of the husband’s pension entitlements were not disclosed in the Application for Consent Orders and that the orders were not fair after she had a conversation with the husband in which he indicated his intention to retire by the age of 60.
In early 2017 the wife asserts that her then solicitors wrote to the husband’s legal representatives to discuss the omission of either parties’ superannuation entitlement from the original Application for Consent Orders.
In October 2018 for the first time a Form 6 Superannuation Information Form was obtained as to the husband’s superannuation interest as at September 2010. At that time his super pension was $53,211 per annum. No lump sum benefit is payable in the future. The superannuation interest is splittable but will result in a reduction of the husband’s pension. A later Superannuation Information Form valued the superannuation interest as at September 2016 in the sum of $1,034,954 with the husband’s pension having increased to $61,852 per annum.
The husband’s superannuation pension would be reduced pro rata by any lump sum splitting order in the proportion that the lump sum bears to the capitalised value of the superannuation interest at the time of the splitting order. Thus a lump sum splitting order of say $250,000 would result in a reduction of about 25 per cent in the husband’s pension: See Exh “E”.
The parties did not resolve their dispute and on 12 October 2018 the wife commenced proceedings in this Court seeking to set aside the Consent Orders.
The relief sought by the wife
The wife seeks orders that the Consent Orders be set aside under s 79A of the Act on the grounds that the husband’s failure to give any particulars of his State Super interest amounts to a non-disclosure which is sufficient in itself to be a miscarriage of justice.
Section 79A of the Act relevantly provides:
Setting aside of orders altering property interests
(1)Where, on application by a person affected by an order made by a court under section 79 in property settlement proceedings, the court is satisfied that:
(a)there has been a miscarriage of justice by reason of fraud, duress, suppression of evidence (including failure to disclose relevant information), the giving of false evidence or any other circumstance; or
(b)in the circumstances that have arisen since the order was made it is impracticable for the order to be carried out or impracticable for a part of the order to be carried out; or
(c)a person has defaulted in carrying out an obligation imposed on the person by the order and, in the circumstances that have arisen as a result of that default, it is just and equitable to vary the order or to set the order aside and make another order in substitution for the order; or
(d)in the circumstances that have arisen since the making of the order, being circumstances of an exceptional nature relating to the care, welfare and development of a child of the marriage, the child or, where the applicant has caring responsibility for the child (as defined in subsection (1AA)), the applicant, will suffer hardship if the court does not vary the order or set the order aside and make another order in substitution for the order; or
(e)a proceeds of crime order has been made covering property of the parties to the marriage or either of them, or a proceeds of crime order has been made against a party to the marriage;
the court may, in its discretion, vary the order or set the order aside and, if it considers appropriate, make another order under section 79 in substitution for the order so set aside.
(1A)A court may, on application by a person affected by an order made by a court under section 79 in property settlement proceedings, and with the consent of all the parties to the proceedings in which the order was made, vary the order or set the order aside and, if it considers appropriate, make another order under section 79 in substitution for the order so set aside.
(1AA)For the purposes of paragraph (1)(d), a person has caring responsibility for a child if:
(a)the person is a parent of the child with whom the child lives; or
(b)a parenting order provides that:
(i)the child is to live with the person; or
(ii)the person has parental responsibility for the child.
Section 79A is a remedial section intended to overcome miscarriages of justice. As such it should be construed liberally to reflect its intended purpose (see Gilbert v The Estate of Gilbert (1990) FLC 92-125). Even though a ground for variation or setting aside may be made out, the Court has a discretion as to whether to do so in all the circumstances.
In Pearce & Pearce [2016] FamCAFC 14 the Full Court in considering s 79A said at [34] to [35] (footnotes omitted):
In Gebert and Gebert, this Court, in the context of a s 79A application, held that “… the law fortunately still allows persons to form their own views as to the arrangement of their affairs”. More recently, the High Court has held that “[i]f both parties are competent, it can still be assumed that any necessary or desirable adjustments can be made to their property interests consensually”. The well-settled proposition that “… [a]greement to a consent order which may not adequately reflect a party’s entitlements under sec. 79 does not, of itself, show that there has been a miscarriage of justice”, derives from these precepts. Of course, “… [t]here may be cases where the order consented to is so far outside the ambit of what is just and equitable that the Court may infer that a party has acted under duress, in ignorance or as a result of incompetent advice”. It has been said that “[o]rdinarily, a failure to comply with that duty will amount to a miscarriage of justice”. Equally, however, “[i]t is not every failure of frank and full disclosure which would justify a court in setting aside an order …”.
In the case of consent orders, the related propositions just discussed intersect at a point where the requisite miscarriage of justice derives from a party’s consent not being a “free and informed consent”; where there is a failure to disclose matters relevant to the decision to enter the consent orders that are “… peculiarly within [the] knowledge” of that party or omissions which knowingly engendered, or permitted, a mistaken understanding on the part of the other party.
The Full Court later in Waterman & Waterman [2017] FamCAFC 23 said at [39]:
The consent to the order is itself part of the judicial process on which the court places reliance. If that consent is based on misleading or inadequate information, then there may be, in our opinion a miscarriage of justice either by reason of “suppression of evidence” or “by reason of any other circumstance.
The obligation on parties to an application for consent orders to provide full and frank disclosure is thus well settled. The non-disclosure of the F Super in the Application for Consent Orders of itself demonstrates that there has been a suppression of evidence whether by inadvertence or otherwise.
The wife further asserts that such a non-disclosure in conjunction with the circumstances in which the wife signed the Application for Consent Orders resulted in an outcome that was not just and equitable having regard to her initial and ongoing contributions to the relationship and s 75(2) factors.
In addition the parties’ falsely affirming that they had obtained independent legal advice before signing could be seen to amount to a significant misrepresentation to the Court. Such is relevant to the determination of whether there has been a miscarriage of justice.
The words “or any other circumstance” in the section are to be given their wide natural meaning. In In the marriage of Kokl [1981] FamCA 60; (1981) 7 Fam LR 591 at 599 Gee J said:
The question in the present case is accordingly whether there were, “any other circumstances”, which need not be ejusdem generis with those previously mentioned in section 79A(1) but which occurred before or at the time of the making of the order… and which resulted in an order being obtained contrary to justice.
In Gebert & Gebert (1990) Fam LR 62 at [67] the Full Court said:
The important matter that must be established for an application under this part of the section to succeed is that there has been a miscarriage of justice. It is, we think, clear as counsel for the appellant argued that the words `miscarriage of justice' should not be given a restrictive meaning, particularly when coupled with the words `any other circumstance' and that justice means justice according to law.
In Clifton & Stuart (1990) 14 Fam LR 511 the Full Court observed that a miscarriage of justice “by any other circumstance” must relate to the integrity of the judicial process.
In Suiker & Suiker (1993) FLC 92-436 the Full Court said that the “judicial process” is not limited to the hearing in the Family Court:
As regards the view expressed in Clifton and Stuart that the expression `miscarriage of justice' `relates to the integrity of the judicial process' we are of the opinion that this passage was not intended to refer only to the hearing in the Family Court, but that the expression `judicial process' can refer to a variety of matters and circumstances which had an influence on the outcome of the litigation. It is neither necessary nor desirable to attempt to define the matters which may amount to a miscarriage of justice by reason of any other circumstance in the relevant sense.
The Full Court in Lane & Lane [2016] FamCAFC 53 said:
69.In Suiker and Suiker (1993) FLC 92-436, which concerned proceedings to set aside an order entered by consent and where it was asserted that there was a suppression of evidence, the Full Court said, apropos the making of orders by consent, at 80,471:
In our opinion, the necessity for full and frank disclosure of financial matters to the Court and to the other party are basic to the process of the Court and the fundamental aims of the financial legislation contained in section 79 of the Family Law Act 1975.
70.That orders are made by consent does not relieve a court from compliance with the requirements of s 79(2): that the court shall not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to do so:
...but it may render compliance much less demanding. Provided that a court, or a Registrar, is adequately informed, where the parties are at arm’s length and are properly represented little more than consent may be needed to establish that the requirements of the section have been met.
(Per Dawson J in Harris v Caladine[1991] HCA 9; (1991) 172 CLR 84, 124) (Footnote omitted)
71.Thus the accuracy of the information attested to by the parties seeking that consent orders be made, is of single importance in maintaining the integrity of the judicial process. (emphasis added)
The husband submits that no miscarriage of justice occurred as had he separately disclosed the capitalised value of the superannuation as contended for by the wife this would have reduced the amount provided as his income within the application. Such may be the case, but a superannuation value at that time of about $986,932.45 would have enlivened a Registrar’s interest into the fundamental justice and equity of the proposed orders.
Thus the submission is simply wrong and ignores the impact on the question of “just and equitable” in the context of the Registrar’s discretion to make the consent orders as sought in assessing contributions and subjective matters including the significant financial resource available to the husband in the form of his pension for life: See Perrin & Perrin [2018] FamCAFC 122.
In Carron & Laninga [2019] FamCAFC 115 the Full Court said:
36.In property settlement proceedings, there is no need to ascertain the capitalised value of a superannuation interest, much less one in the payment phase being paid in the form of a non-commutable pension, unless a superannuation-splitting order is sought in relation to the interest (Welch & Abney (2016) FLC 93-756 … at [33]–[34], [61]; Surridge & Surridge (2017) FLC 93-757… at [30])…
37.The Act only provides that a superannuation interest must be valued before it is amenable to a splitting order (s 90XT(2)), for which purpose the Family Law (Superannuation) Regulations 2001 (Cth) (“the Regulations”) make provision for the manner in which different superannuation interests are valued. The Regulations empower the Minister to approve the manner in which certain growth phase and payment phase superannuation interests are to be valued (regs 38, 43A), but otherwise prescribe how certain superannuation interests are to be valued in a more generic way. Relevantly for present purposes, the Approval makes specific provision for the valuation of superannuation interests in the payment phase paid in the form of an MSBS pension (see Volume 2, Schedule 1, Part 4, Division 4.3, Item 1).
38.Although any valuation correctly ascribed to the wife’s MSBS pension pursuant to the methodology dictated by the Approval would be unimpeachable, as no superannuation-splitting order was sought by either party in respect of the pension, its “nature, form and characteristics” needed to be considered when both evaluating the parties’ contributions to its existence and how it would be taken into account when determining the nature of the final property settlement orders that should be made between the parties (see Semperton v Semperton [2012] FamCAFC 132; (2012) 47 Fam LR 626 at [154]- [197], [203]-[208]; Welch & Abney at [58]-[60], [63], [70]-[71]; Surridge at [29]-[34], [103]-[106]; Pates and Pates [2018] FamCAFC 171 (“Pates”) at [94]-[96]) (emphasis added).
In the circumstances of this matter there has been a miscarriage of justice by reason of the failure of the parties to disclose all relevant information in the Application for Consent Orders that fundamentally undermined the consent process.
Whether the Court in its discretion should vary or set aside the order
Relevant to the Court’s general discretion is the likely outcome of any s 79 proceedings if the orders were set aside and the parties re-litigated. It is likely that if the orders were set aside pursuant to s 79A the husband’s State Super would be treated as a significant financial resource in his hands.
The husband made contributions to the F Super fund from December 1980 until October 2002 when the pension entered the payment phase. The parties’ relationship commenced at some point in 1998 so at the most the wife made indirect contributions to his pension for close to five of the twenty two years the husband was making direct contributions.
The husband asserts that taking the wife’s case at its highest at most the wife’s contribution based entitlement to the husband’s F Super could be five per cent. Such a submission ignores the reality of this significant financial resource in the husband’s hands which would also be addressed properly in assessing a possible further adjustment under s 75(2) of the Act over and above contribution entitlements: See Perrin & Perrin [2018] FamCAFC 122.
As asserted by the husband also relevant to the Court’s general discretion is the costs the parties will incur in conducting s 79 proceedings under the Act. The solicitor for the husband submitted that each party would expend in the realm of $60,000 in re-litigating the proceedings. Such costs it is submitted would exceed what the husband asserts as being the wife’s potential contribution based entitlement to the F Super. However, it ignores the impact of the financial resource on any further adjustment as referred to above. The parties properly advised should readily be able to compromise the issue of final property adjustment. Otherwise, it appears to be little dispute as to the factual background that would necessitate other than a one or two day hearing.
Finally, the husband submits that the composition of the parties’ assets have changed since the Consent Orders were made in 2010 and as such any s 79 proceedings would be based on an exercise of tracing equities which they submit is an inexact and unsatisfactory way to evaluate the elements of s 79 entitlements. Such issues are considered by this Court on a regular basis.
In all of the circumstances the Court is satisfied that there has been a miscarriage of justice and that it is appropriate to set the orders aside. An order will be made setting aside the Consent Orders.
I certify that the preceding fifty nine (59) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Foster delivered on 17 October 2019.
Associate:
Date: 17 October 2019
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