Cantrell & North and Anor

[2020] FamCAFC 175

FAMILY COURT OF AUSTRALIA

CANTRELL & NORTH AND ANOR [2020] FamCAFC 175

FAMILY LAW – APPEAL – PROPERTY – Appeals from orders made by a judge of the Supreme Court of New South Wales – Where transfers of a property from the husband to the wife and property settlement consent orders made in the Family Court of Australia were obtained to affect the first respondent’s claim for payment of a debt owed to him by the husband – Where the transfers of the property were declared to be void pursuant to s 37A of the Conveyancing Act 1919 (NSW) – Where the property settlement consent orders made in the Family Court of Australia were set aside – Where the property is to be sold to satisfy the debt owed to the first respondent – Whether the primary judge should have made the make available order – Failure to disclose and notify creditors – Where the failure to disclose and notify the first respondent as a creditor was of such magnitude to justify setting aside the consent orders – Appeal dismissed.

FAMILY LAW – APPEAL – PROPERTY – Cross-claim for property settlement orders pursuant to s 79 or s 79A of the Family Law Act 1975 (Cth) – Where the primary judge did not err by finding that the husband’s debts should be paid before the property was divided between the husband and the wife – Where any adjustment based on contributions and s 75(2) considerations could not improve the wife’s position as against the husband because she was to receive 100 per cent of the net assets in Australia – Where seeking recovery of the debt overseas from the husband would impose another miscarriage of justice upon the first respondent – Appeal dismissed.

Conveyancing Act 1919 (NSW) s 37A
Family Law Act 1975 (Cth) ss 75(2), 79, 79A, 86, 87, 90AE, 90SM
Judiciary Act 1903 (Cth) s 78B

Ascot Investments Pty Ltd v Harper (1981) 148 CLR 337; [1981] HCA 1
Barker v Barker (2007) 36 Fam LR 650; [2007] FamCA 13
Biltoft and Biltoft (1995) FLC 92-614; [1995] FamCA 45
Black and Kellner (1992) FLC 92-287; [1992] FamCA 2
Boensch v Pascoe (2019) 375 ALR 15; [2019] HCA 49
Browne v Green (1999) FLC 92-873; [1999] FamCA 1483
Calvin & McTier (2017) FLC 93-785; [2017] FamCAFC 125
Cantrell & North and Anor (2019) FLC 93-921; [2019] FamCAFC 127
Chan v Acres (2013) 51 Fam LR 90; [2013] NSWSC 1597
Commercial Banking Co of Sydney Ltd v Colonial Financiers of Australia Pty Ltd (1972) 20 FLR 220
Goldsmith & Stinson and Ors (2019) FLC 93-930; [2019] FamCAFC 230
Green v Schneller (2002) FLC 93-114; [2002] NSWSC 671
Houvardas v Zaravinos (2003) 202 ALR 535; [2003] NSWSC 387
Johnson v Johnson(No 1) (Bias issue) (2000) FLC 93-039; [1999] FamCA 369
Kowaliw and Kowaliw (1981) FLC 91-092; [1981] FamCA 70
Kuru v State of New South Wales (2008) 236 CLR 1; [2008] HCA 26
Lane & Lane (2016) FLC 93-699; [2016] FamCAFC 53
Metwally v University of Wollongong (1985) 60 ALR 68; [1985] HCA 28
Official Trustee in Bankruptcy v DonovanandDonovan and Stevens (1996) FLC 92-703; [1996] FamCA 58
Prince and Prince (1984) FLC 91-501; [1984] FamCA 7
Re Bailey and Bailey (executrix of the estate of Bailey) (1990) FLC 92-117; [1989] FamCA 45
Re Baxter; Ex parte Official Receiver v Baxter (1986) 10 FCR 398; [1986] FCA 117
Re Chemaisse; Federal Commissioner of Taxation (Intervener) (1990) FLC 92-133; [1990] FamCA 32
Rowell and Rowell (1989) FLC 92-026; [1989] FamCA 3
Royal Guardian Mortgage Management Pty Ltd v Nguyen (2016) 332 ALR 128; [2016] NSWCA 88
Semmens v Commonwealth (1990) FLC 92-116; [1989] FamCA 40
Silvera v Savic (1999) 46 NSWLR 124; [1999] NSWSC 83
Stanford v Stanford (2012) 247 CLR 108; [2012] HCA 52
Stead v State Government Insurance Commission (1986) 161 CLR 141; [1986] HCA 54
Suiker and Suiker (1993) FLC 92-436; [1993] FamCA 141
Trustee of the Property of Lemnos, A Bankrupt & Lemnos and Anor (2009) FLC 93-394; [2009] FamCAFC 20
Weir and Weir (1993) FLC 92-338; [1992] FamCA 69
Zaravinos v Houvardas (2004) 32 Fam LR 490; [2004] NSWCA 421

APPELLANT: Ms Cantrell

FIRST RESPONDENT: Mr North

SECOND RESPONDENT: Mr Cantrell

FIRST APPEAL NUMBER: EAA 64 of 2019

SECOND APPEAL NUMBER: EAA 67 of 2019

THIRD APPEAL NUMBER: EAA 73 of 2019

DATE DELIVERED: 23 July 2020

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Ryan, Aldridge & Austin JJ

HEARING DATE: 3 March 2020

LOWER COURT JURISDICTION: Supreme Court of New South Wales

LOWER COURT JUDGMENT DATE:

12 April 2018

15 June 2018
19 June 2019
22 July 2019

LOWER COURT MNC: [2018] NSWSC 441
[2018] NSWSC 890
[2019] NSWSC 712
[2019] NSWSC 934

REPRESENTATION

COUNSEL FOR THE APPELLANT: Mr Herzfield with Mr Reynolds

SOLICITOR FOR THE APPELLANT: Meridian Lawyers

COUNSEL FOR THE FIRST

RESPONDENT:

Mr Tregenza with Ms Goodchild

SOLICITOR FOR THE FIRST

RESPONDENT:

G J Gooden Solicitor & Notary Public

THE SECOND RESPONDENT: No appearance

Orders

1. Appeal No. EAA 64 of 2019 be dismissed.

2. Appeal No. EAA 67 of 2019 be dismissed.

3. Appeal No. EAA 73 of 2019 be dismissed.

4. Order 4 made on 23 July 2019 is discharged.

5. Any party seeking an order as to costs is to file and serve written submissions on the issue of costs within 21 days. Written submissions in response are to be filed and served within a further 21 days, with any submissions in reply to be filed and served seven days thereafter.

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 Cantrell & North and Anor 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).

THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT SYDNEY

Appeal Numbers:  EAA 64 of 2019; EAA 67 of 2019 & EAA 73 of 2019
File Number: 226458 of 2015

Ms Cantrell

Appellant

And

Mr North

First Respondent

And

Mr Cantrell

Second Respondent

REASONS FOR JUDGMENT

Introduction

1. Ms Cantrell (“the wife”) appeals against a number of orders made by a judge sitting in the Equity Division of the Supreme Court of New South Wales. The effect of the orders is that a property in Suburb CC owned by the wife (“the Suburb CC property”), and in which she lives, is to be sold to satisfy a debt owed by Mr Cantrell (“the husband”) to Mr North (“the first respondent”) and other members of the North family. However, the first respondent was the only plaintiff in the Supreme Court proceedings (although the primary judge did refer to “Mr North” and “the Norths” interchangeably) and is the only creditor respondent in the appeal.

2. On 12 August 2013, the husband as the sole registered proprietor, transferred the Suburb CC property to himself and the wife as joint tenants in equal shares (“the first transfer”). Pursuant to consent orders made in the Family Court of Australia on 8 May 2014, the husband’s remaining interest in the Suburb CC property was transferred to the wife on … June 2015, registered with effect from … July 2015 (“the second transfer”) (the first transfer and the second transfer are collectively referred to as “the two transfers”).

3. On 12 April 2018, the primary judge declared that the two transfers of the Suburb CC property by the husband to the wife and the consent orders made on 8 May 2014 were obtained in order to avoid the husband being forced to pay a debt that he owed to the first respondent. The two transfers were found to be void as against the creditors of the husband pursuant to s 37A of the Conveyancing Act 1919 (NSW) (“the Conveyancing Act”) (Orders 1 and 2 made on 12 April 2018). His Honour also set aside the consent orders made on 8 May 2014 (Order 5 made on 12 April 2018) and found that the second transfer was liable to be set aside under s 79A of the Family Law Act 1975 (Cth) (“the Act”). Consequently, in lieu of ordering the retransfer of the Suburb CC property to the husband, an order was also made on that day providing for the wife to make the Suburb CC property available to satisfy the debt owed by the husband to the first respondent (“the make available order”) (Order 3 made on 12 April 2018). There are no separate grounds of appeal which challenge Orders 8 and 9, which deal with costs.

4. Further orders were made on 15 June 2018 directing the first respondent to place an advertisement in a national newspaper asking creditors of the husband to come forward with their claims (Order 1 made on 15 June 2018) and appointing a receiver to the Suburb CC property with power to sell the land (Order 3 made on 15 June 2018). Orders 2 and 4 (which grant liberty to apply) and Order 10 (which deals with costs) are not the subject of separate grounds of appeal.

5. An appeal was filed from these sets of orders in the Family Court of Australia on 9 August 2019 (Appeal No. EAA 73 of 2019) after an application for the transfer of the appeal from the New South Wales Court of Appeal was dismissed because proceedings had not properly been commenced in that court ([2019] NSWCA 191).

6. On 19 June 2019, the primary judge dismissed the wife’s cross-claim for property settlement orders pursuant to s 79 or s 79A of the Act. The wife filed an appeal from these orders on 12 July 2019 (Appeal No. EAA 64 of 2019).

7. The wife filed a third appeal on 26 July 2019 (Appeal No. EAA 67 of 2019) against the primary judge’s orders made on 22 July 2019 refusing to extend a stay previously granted by his Honour. However, upon an urgent Application in an Appeal filed by the wife in the Appeals Registry on 23 July 2019, an order was made on that same day extending the stay until further order (Cantrell & North and Anor (2019) FLC 93-921). Thus, Appeal No. EAA 67 of 2019 no longer needs to be considered and will be dismissed. The stay order will also be discharged.

8. The husband did not participate in the appeals. On 28 August 2019, the husband filed a Submitting Notice in relation to Appeal No. EAA 73 of 2019. The Court was informed by counsel for the wife that the husband intended the Submitting Notice to extend to all of the appeals. We accept that this is so and proceed on the basis that the husband is willing to abide the outcome of the appeals.

9. In order to understand the matters before the Court, it is necessary to understand both the background and the complicated procedural history of the proceedings before the primary judge.

Background

1. The husband and the wife were married in 1976. They separated at some time between 2000 and 2006 and were divorced in 2013 ([2019] NSWSC 712 at [30]–[39]).

2. The husband and the wife have three children who are all now adults.

3. Throughout their marriage, the wife was the homemaker and predominantly cared for the children. The husband was the main income earner and his earnings were paid into a joint bank account used for household and family expenses, including mortgage repayments ([2019] NSWSC 712 at [47]–[49]).

4. The joint bank account was maintained until 2014. The wife contributed her earnings in the sum of approximately $122,571 to that account for the period of 2000 to 2006, which was when she returned to part-time employment, plus a superannuation payment in the sum of $10,000 received by her in about November 2009 ([2019] NSWSC 712 at [51] and [53]). All other contributions to the joint bank account were made by the husband.

5. The Suburb CC property was purchased in May 1997 and registered in the sole name of the husband. At that time, the wife was bankrupt.

6. Despite the wife’s evidence that she had carried out renovations to the Suburb CC property at a cost of $42,600 between 2006 and 2013, the primary judge found that the wife made no direct financial contribution to the purchase of the Suburb CC property ([2019] NSWSC 712 at [63]; [70]; [72] and [73]).

7. The wife has lived in the Suburb CC property ever since it was purchased in May 1997.

8. The husband has lived and worked in Vietnam since approximately 2000.

9. The wife is currently 71 years old and is not in good health. The Suburb CC property has been her family home for over 20 years. Her sole source of income is a pension of approximately $850 per fortnight.

10. The husband did not disclose his current financial circumstances at any stage during the hearing before the primary judge or on appeal. The husband attempted to file a Financial Statement but it was not accepted by the primary judge as evidence of any fact asserted in it ([2019] NSWSC 712 at [90]). No challenge has been made to that ruling.

The transactions

1. It is now necessary to look more closely at the impugned transactions.

2. The husband commenced proceedings in the Supreme Court of New South Wales against the first respondent and others in May 2004. The proceedings related to a deed by which the husband had agreed to transfer his shareholding in a company to the first respondent. The question before the Court was “whether [the husband] was entitled to a sum of $50,000 under the deed in addition to his superannuation benefits” ([2017] NSWSC 1689 at [28]).

3. In May 2012, judgment was delivered by Windeyer AJ in favour of the husband for $24,281.26 which comprised only part of his claim. In June 2012, Windeyer AJ ordered the husband to pay to the first respondent 90 per cent of the costs of the proceedings ([2017] NSWSC 1689 at [46]–[47]).

4. Further, the first respondent had filed a cross-claim against his previous solicitors “seeking damages in the nature of an indemnity from him against [the husband’s] claim under the deed, on the basis that the solicitor had been negligent in preparing the deed” ([2017] NSWSC 1689 at [28]). In June 2012, the husband was also ordered to indemnify the first respondent against the legal expenses that the first respondent was ordered to pay to his previous solicitors.

5. The primary judge found that because of the length of the proceedings, the husband became aware at the time that the costs order was made that he would owe the first respondent a very substantial sum in due course. His Honour said:

   48.[The husband] was in Court when the costs judgment was delivered. He would have understood immediately that the effect of the judgment would be a substantial net payment to the [first respondent].

   …

   68.… In my opinion, any reasonable person in [the husband’s] position would have appreciated that sooner or later the costs orders would be enforced. [The husband] conceded in cross-examination that he had no reason to think that the [first respondent] would not enforce the costs orders. Even if (which I do not necessarily accept) [the husband] had no express information at the time as to the progress of the costs assessment, he cannot have been unaware that the costs liability was hanging over his head.

   ([2017] NSWSC 1689)

6. On 22 May 2013, the husband and the wife lodged a joint application for divorce in the Federal Circuit Court of Australia.

7. On 12 August 2013, the husband effected the first transfer. The mortgagee (with a debt owed to it of approximately $100,000) would not agree to transfer the Suburb CC property to the husband and the wife jointly and the mortgage was then refinanced with a new mortgage from Westpac Banking Corporation which had a term of 12 years at a rate of $998 per month.

8. Meanwhile, the first respondent had resolved the dispute over the cross-claim with his previous solicitors and agreed to pay them $90,000. On 8 August 2013, the first respondent commenced proceedings against the husband in the Local Court seeking payment of that sum pursuant to the indemnity order made by Windeyer AJ.

9. Default judgment in relation to that indemnity order was entered against the husband in the Local Court proceedings on 24 December 2013 in the sum of $93,960.45 ([2017] NSWSC 1689 at [73]). A Sheriff’s officer visited the Suburb CC property on 26 February 2014 seeking to levy execution but left empty handed. The primary judge recorded the following:

   74.Remarkably, when cross-examined about this paragraph in her affidavit, [the wife] professed herself unable to recall anything about it. [The husband], in cross-examination, said [the husband’s and the wife’s son] had told him about the Sheriff’s officers in a telephone conversation. [The husband] could not recall the exact conversation, but eventually said that [the husband’s and the wife’s son] had told him that a man who was probably from the Sheriff’s office had come to the house looking for him.

   ([2017] NSWSC 1689)

10. On 4 March 2014, the husband’s and the wife’s daughter, on behalf of both her parents, filed an Application for Consent Orders in the Family Court of Australia. The orders sought were outlined in [2017] NSWSC 1689 at [76]:

    1.That the … Wife and … Husband will within 60 days of the date of these orders take all necessary steps and execute all necessary documents to transfer all of the … Husband’s right title and interest in the [Suburb CC] property … to the … Wife.

    2.That other than set out in these orders, the parties have the sole right, title and interest in any property which is at the date of these orders in their respective possession, title or name including but not limited to moneys held in bank accounts or other investments, shares or unit in public companies or trusts, and motor vehicles, and each party will be solely liable for and indemnify the other party against all personal liabilities.

11. If these orders were made, the wife would become the sole owner of the Suburb CC property and the husband would retain his assets in Vietnam where he had lived and worked for many years.

12. Whatever the assets and income of the husband were in Vietnam, they were enough to enable him to pay his costs of the proceedings against the first respondent (some $600,000) ([2017] NSWSC 1689 at [37]), as well as supporting him in Vietnam and the wife in Australia. For many years, the husband paid $2,000 per month (perhaps, USD2,000) into the husband’s and the wife’s joint bank account from which the mortgage repayments for the Suburb CC property were paid ([2017] NSWSC 1689 at [133] and [2019] NSWSC 712 at [54] and [56]).

13. The effect of the orders, if made, was that the husband would no longer have any assets in Australia to meet the debts that he owed to the first respondent, who then would have had to tread an uncertain and difficult path to chase whatever assets might be held by the husband in Vietnam. In practical terms, the proposed orders would thwart the first respondent’s entitlement to payment from the husband.

14. The Application for Consent Orders and supporting Statement of Truth were signed by both the husband and the wife.

15. Section 79(10) and s 90SM(10) of the Act entitle a creditor to become a party to property settlement proceedings “if the creditor may not be able to recover his or her debt if the order were made”.

16. Clearly, the first respondent was such a creditor.

17. It follows that question 19 of the Application for Consent Orders, which asked if there were creditors entitled to become a party to the case under s 79(10) or s 90SM (10) of the Act, was wrongly and misleadingly answered “No”.

18. No assets in Vietnam were disclosed in the Application for Consent Orders.

19. The primary judge recorded:

    81.Questions 50 to 57 in Part H required details of any liabilities of the [husband] and [the wife]. Under question 50, relating to any “[a]mount owing on home mortgage”, [the husband and the wife] disclosed the mortgage to [Westpac Banking Corporation], with liabilities of $48,500 each. Question 56 asked for “[a]ny other liabilities”. It was left blank for [the husband]. In cross-examination, [the husband and the wife’s daughter] said that at the time she had asked [the husband] what his liabilities were and that he did not tell her of any liabilities other than the [Westpac Banking Corporation] mortgage. [The husband] said he did not include the liability to the [first respondent] because they were only “[p]otential liabilities” and he “hadn’t been summonsed”…

    ([2017] NSWSC 1689)

1. The Family Court of Australia did not immediately make the consent orders and sought more information from the husband and the wife.

2. The husband then filed an affidavit in the following terms:

   1.… There is $30,603.22 left to pay off the joint home loan, that I will pay out in full once we receive the consent orders.

   …

   4.I have been living in Vietnam since 1994 for work. My ex-wife and I have lived separate lives since then, and whilst I was living in Vietnam, my ex-wife continued to live in Australia in the family home. Since 1975 until the beginning of 2014, I always supported my ex-wife financially as she stayed at home to look after our 3 children and our only granddaughter. All of our three children are adults: 30, 36 and 37 years old. Our granddaughter is 14 years old, and she lives 50% of the time in the family home with our youngest son and my ex-wife.

   5.Because of the years and distance apart, it was inevidable [sic] that we would eventually get divorced. I also now have another partner in my life.

   6.I have not been back to Australia since the end of 2012. My eldest son and daughter all live and work in Vietnam. My only grandson also lives with my daughter in Vietnam. Since I see my immediate family here on a regular basis, I do not feel the need to go back to Australia and I no longer have any other affairs or commitments to deal with in Australia.

   …

   (Husband’s affidavit filed on 23 April 2014) (As per the original)

3. This led to the primary judge finding that:

   93.The statement that [the husband] had no other “affairs or commitments” in Australia was false. It ignored the liability to the [the first respondent] which [the husband] was aware of…

   ([2017] NSWSC 1689)

4. His Honour then made the following conclusion:

   102.As I have already described, the information put forward in support of the application for consent orders was seriously misleading. The statement of [the husband’s] liabilities falsely omitted his costs liability from the 2004 proceedings. The statement that there was no person who might be entitled to become a party to proceedings, made in answer to question 19, was wrong. So was the statement in paragraph 6 of [the husband’s] affidavit that he no longer had any affairs or commitments in Australia. For reasons given below in connection with s 37A [of the Conveyancing Act], I am satisfied that [the husband] was aware of a claim being pursued against him by the [first respondent], and made the application at least in part in an attempt to defeat or delay such claims. However, it is not necessary to rely on that finding for the purposes of s 79A [of the Act]. Even if the statements made to the Family Court had not been deliberately incomplete or misleading, that would make no difference. The question is an objective one which depends upon the impact of inaccurate or misleading statements on the Court’s process of adjudication.

   103.Having regard to the principles stated by the Full Court in Semmens, I am satisfied that had proper disclosure been made, the Family Court would not then have proceeded immediately to the making of the orders. The Court would have been required to consider the impact on the [first respondent]. Further information would have been required and, probably, the [first respondent] would have been joined. It is not necessary to consider what orders would ultimately have been made if the [first respondent] had been joined to the Family Court proceedings. It is enough to say that orders would not have been made as they were on 8 May 2014: compare Chan v Acres (2013) 51 Fam LR 90 at 107 [94] (Kunc J). It follows that the orders must be set aside.

   ([2017] NSWSC 1689)

5. The consent orders were made in the Family Court of Australia on 8 May 2014. As mentioned earlier, the second transfer occurred on … June 2015 (registered with effect from … July 2015) with the husband’s transferring his remaining interest in the Suburb CC property to the wife.

6. The first respondent commenced proceedings in the Supreme Court of New South Wales in August 2015 challenging the transfers of the Suburb CC property by the husband to the wife.

7. On 6 February 2018, a costs assessment of the amount owing to the first respondent pursuant to the costs order made by Windeyer AJ (for the husband to pay to the first respondent 90 per cent of the costs of the proceedings) was obtained and further judgment for costs against the husband in the sum of $286,555.13 was entered.

8. On 12 April 2018, the primary judge declared that the two transfers of the Suburb CC property were void pursuant to s 37A of the Conveyancing Act. His Honour also set aside the consent orders made in the Family Court of Australia on 8 May 2014 pursuant to s 79A of the Act. Relevantly, two further orders were made which were:

   …

   3.Order that the [wife] perform all acts and concur in all things necessary to make the [Suburb CC] property available for satisfying the debts owed by the [husband] to the [first respondent] and to any other creditors of the [husband].

   …

   6.Direct that the [wife] pursue any claim for an adjustment of property pursuant to the Family Law Act, s 79A, by way of cross-claim in these proceedings, such cross-claim to be instituted within 28 days of today’s date.

   …

9. Subsequently, further orders were made by the primary judge as set out earlier.

10. At the hearing of the appeal, counsel for the wife informed the Court that the husband’s total liability to the first respondent “as at 7 December 2018 was $381,000 plus interest to that date of $55,000 accruing at about $80 per day” (Transcript 3 March 2020, p.4 lines 45–46).

Appeal No. 73 of 2019

1. Although the hearing before the primary judge and the appeals were conducted on the basis that there were three separate transactions which needed to be considered (the two transfers of the Suburb CC property and the consent orders made on 8 May 2014), there is much to be said for the proposition that there was only one transaction which had three steps and which was designed to pass the Suburb CC property to the wife so as to defeat the claims of the first respondent. The transaction only took the form that it did because neither the original mortgagee nor its successor was prepared to agree to the Suburb CC property, the subject of the mortgage, being transferred solely to the wife in 2013 ([2017] NSWSC 1689 at [55]).

2. This is consistent with his Honour’s finding at [169] which was:

   As mentioned, it appears that from 2013 onwards it was always intended to transfer the whole of the [Suburb CC] property to [the wife], and the transaction was only done in two stages because [the husband] needed time to pay off the debt on the property. [The wife] may well have seen the consent orders (which would lead to the second transfer) as part of the process which had begun with the first transfer in 2013. However, that does not mean that events after 2013 are not relevant to notice. In my view, once [the wife] knew, as she clearly did from the end of February 2014, that [the husband’s] creditors were chasing him, an onus lay on her to rebut any inference of a link between the transfer and the creditors’ claims. I find the evidence insufficient to rebut the interference establish a lack of notice.

   ([2017] NSWSC 1689)

3. Nonetheless, we shall approach the matter on the basis that there were relevantly three transactions.

4. It is important to recognise that although Order 1 and Order 2 made on 12 April 2018 declaring the two transfers of the Suburb CC property to be void were expressed to be made pursuant to s 37A of the Conveyancing Act, his Honour framed the ultimate conclusion slightly differently, giving prominence to the findings under the Act saying:

   172.For these reasons, I have concluded that:

   (1)the consent orders should be set aside under the Family Law Act1975 (Cth), s 79A(1);

   (2)in consequence of this, and also independently under the Conveyancing Act1919 (NSW), s 37A, the second transfer is liable to be set aside;

   (3)the first transfer is also liable to be set aside pursuant to the Conveyancing Act1919 (NSW), s 37A.

   ([2017] NSWSC 1689)

5. Grounds 1 to 4 challenge the primary judge’s findings made under the Conveyancing Act (Orders 1 and 2 made on 12 April 2018). Ground 5 seeks to impugn the setting aside of the consent orders made on 8 May 2014 (Order 5 made on 12 April 2018), whilst Ground 6 attacks the making of the order that the wife make the Suburb CC property available for the husband’s creditors (Order 3 made on 12 April 2018).

6. On 23 August 2019, the first respondent filed a Notice of Contention which sought to uphold the orders by asserting that the primary judge should also have found that the wife was not a “purchaser” within the meaning of s 37A of the Conveyancing Act and that the wife compromised her rights against the second respondent when she agreed to the consent orders.

7. At the hearing of the appeal, the oral submissions of counsel for the wife focused on the last two grounds of appeal (Grounds 5 and 6) and we shall deal with them first.

Should the consent orders made in the Family Court of Australia on 8 May 2014 have been set aside? (Ground 5)

1. The wife does not seek directly to challenge the findings in [2017] NSWSC 1689 at [102]–[103] (outlined at [42] above), save for the last two sentences:

   103.… It is not necessary to consider what orders would ultimately have been made if the [first respondent] had been joined to the Family Court proceedings. It is enough to say that orders would not have been made as they were on 8 May 2014: compare Chan v Acres (2013) 51 Fam LR 90 at 107 [94] (Kunc J). It follows that the orders must be set aside.

2. The wife submits that the primary judge erred in principle by not considering whether substantially different orders would have been made had there been proper disclosure (Wife’s Summary of Argument filed on 7 November 2019, paragraph 52). Relying on Lane & Lane (2016) FLC 93-699 (“Lane”) at [82]–[84] and Chan v Acres (2013) 51 Fam LR 90 (“Chan”) at [94], the wife submits that an order can only be made setting aside orders pursuant to s 79A(1)(a) of the Act, if the Court comes to the view that had there been proper disclosure, substantially different orders would have been made.

3. As we will now explain, we do not accept that where there has been a failure to disclose to the Court the existence of a significant creditor who was entitled to join the proceedings, the Court must proceed to consider what final property settlement orders would have been made under s 79 or s 90SM of the Act assuming proper disclosure and, whether the postulated orders would be substantially different to those that were made, in order to determine whether the orders should be set aside. This is because the creditor has been deprived of his, her or its right to intervene in the proceedings and assert whatever rights they might have or take steps in other jurisdictions to enforce payment. In such circumstances, the proceedings are thereby tainted with procedural unfairness. The Court has also been misled and has made orders on a false basis which cannot be permitted to stand.

4. Whilst it is ultimately a matter for determination on the facts in each particular matter, where consent orders have been obtained from the Court on the basis of false information for the purpose of defeating creditors, in most circumstances, this will be sufficient to justify an order varying or setting aside the order under s 79A of the Act.

5. Further, in such a circumstance, it is not easy to identify what final property settlement orders might have been made had the creditor been disclosed, save to say that the Application for Consent Orders would not have been considered until notice had been given to the creditor. Thereafter, all is not predictable, as the creditor might intervene in the proceedings, take recovery proceedings in other courts or commence bankruptcy proceedings. Identification of likely orders on the basis of proper disclosure is likely to be too speculative to be of value.

6. We accept, of course, that there is abundant authority that supports the wife’s contention that in many cases of non-disclosure, the Court should consider what effect the non-disclosure had on the orders, but they are cases involving non‑disclosure inter partes and not the deliberate failure to identify a person entitled to become a party when asking the Court to make consent orders. Subsection 79A(1) of the Act is in broad terms and is illuminated by more than one line of authority, reflecting the different nature of the cases to which it applies.

7. Subsection 79A(1) of the Act is in the following terms:

   (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.

8. The starting point for us, as it was for the primary judge, is Semmens v Commonwealth (1990) FLC 92-116 (“Semmens”).

9. In that case, the wife commenced property settlement proceedings. In an affidavit, the wife disclosed that the husband had been ordered to pay $87,910 by way of fines and reparations to the Commonwealth of Australia. The wife deposed that “[t]he husband and I have agreed that he will assume full responsibility for his fines” (Semmens at 77,763). A Deputy Registrar subsequently made the orders sought by the wife by consent. No notice of the proceedings or the proposed order was given to the Commonwealth of Australia.

10. The Full Court of the Family Court of Australia in Semmens quoted the primary judge in that case with approval, saying at 77,765:

    His Honour, after analysing the evidence, concluded that fraud within the meaning of sec. 79A(1)(a) had been established. His Honour said in relation to this:

    “The parties, by obtaining the order for property settlement, have clearly deprived the applicants of the opportunity of recovering from the husband the full amount due by him. I am satisfied that the conduct of the husband in applying for an extension of time for payment in the terms of the letters dated 13 and 19 May 1987 and in failing to mention the proceedings for property settlement, was deliberately dishonest. I find it difficult to believe that the wife was not aware of what the husband was doing. In this regard, I take into account all of the circumstances of the case and, in particular, the fact that she applied for dispensation with O. 7 r. 2(1)(b). I am satisfied that the wife knew or would have known what effect the making of the order would have on the ability of the applicants to recover the amounts due by the husband.”

    We have no reason to doubt the correctness of his Honour’s conclusion but, as we are satisfied that in any event the case falls squarely within “any other circumstance”, it is unnecessary for us to analyse this aspect in detail. Nor need we consider the question whether the fraud must be of both of the parties to the proceedings or need be of one party only.

    His Honour reached the conclusion that in the circumstances there had been a miscarriage of justice by reason of “any other circumstance”. Although this conclusion was challenged by counsel for the wife, it is in our opinion most irresistible given the circumstances which we have related.

11. There was no suggestion that any further consideration was required. Rather, the Full Court agreed with the primary judge in that case when his Honour said “I would be perpetrating another miscarriage of justice upon the applicants if I failed to make the orders sought by them” (Semmens at 77,765).

12. Having determined the appeal, the Full Court went on to note, with some dismay, that there had been a number of consent orders, or registration or approval of deeds under s 86 and s 87 of the Act, “the effect of which is to redistribute the assets of the parties to the marriage in such a way as to impact on the rights of third party creditors of one or both of those parties” (Semmens at 77,766).

13. This led the Full Court in Semmens to observe at 77,767:

    Whilst we think it inappropriate, in the absence of Rules of Court to this effect, to require notices to be given to third parties in all such circumstances, it must be recognised that the failure to do so in particular cases can severely impinge upon the “legitimate interests of third parties” and may almost inevitably in many cases constitute a “miscarriage of justice” within sec. 79A. Consequently, in our view, where in a proceeding under sec. 79, 86 or 87 it appears to either of the parties that there are interests of third parties which might be adversely affected by the orders which are being sought or the terms of the agreement, justice and common sense dictate that those third parties be given notice.

14. The observations by the Full Court in Semmens were consistent with Ascot Investments Pty Ltd v Harper (1981) 148 CLR 337. There, Gibbs J said at 354:

    … [I]t does not follow that the Parliament intended that the legitimate interests of third parties should be subordinated to the interests of a party to a marriage, or that the Family Court should be able to make orders that would operate to the detriment of third parties. There is nothing in the words of the sections that suggest that the Family Court is intended to have power to defeat or prejudice the rights, or nullify the powers, of the third parties…

15. Thus, in Rowell and Rowell (1989) FLC 92-026 (per McCall J at 77,393, Barblett DCJ at 77,394 and Baker J agreeing with both), which was also referred to in Semmens, it was held that in the circumstances, it was necessary to give notice of the proceedings to a creditor before final orders were made and that the failure to give notice to the creditor was a denial of natural justice.

16. In Re Bailey and Bailey (executrix of the estate of Bailey) (1990) FLC 92-117 (“Bailey”), the Full Court said at 77,774:

    The combination of the statement by the High Court in Ascot Investments and Harper and sec. 79A clearly indicates to us that it is not proper for the Court to proceed in a property application without due regard to liabilities of a party which are either established or in the process of being determined where the liabilities are of such magnitude as to be defeated by the order being sought in the Family Court.

17. The Full Court in Biltoft and Biltoft (1995) FLC 92-614 (“Biltoft”) said:

    4.There is an obligation on both parties to disclose any significant creditors or any significant claim against them by a third party. If, as a result of the order of the Court in the property proceedings, the ability of a creditor or claimant to recover his or her debt or claim is likely to be affected, notice of the Family Court proceedings must be given to that creditor or claimant. He/she may then intervene in the Family Court proceedings and either seek a stay of those proceedings or some appropriate order which recognises his/her rights.

    (Emphasis added)

1. The word “affected” used in Biltoft has a wide meaning and goes further than the ultimate recovery of debt as may be suggested by the word “defeated” which was used in Bailey and includes, for example, the ease with which the debt might be recovered and the consequential issues of cost, delay and uncertainty.

2. We have already referred to s 79(10) of the Act, which was inserted into the Act in 2005 to give statutory recognition to the concerns raised in these cases. It provides:

   The following are entitled to become a party to proceedings in which an application is made for an order under this section by a party to a marriage (the subject marriage):

   (a)a creditor of a party to the proceedings if the creditor may not be able to recover his or her debt if the order were made;

   (aa)a person:

   (i)who is a party to a de facto relationship with a party to the subject marriage; and

   (ii)who could apply, or has an application pending, for an order under section 90SM, or a declaration under section 90SL, in relation to the de facto relationship;

   (ab)a person who is a party to a Part VIIIAB financial agreement (that is binding on the person) with a party to the subject marriage;

   (b)any other person whose interests would be affected by the making of the order.

3. As the Full Court explained in Official Trustee in Bankruptcy v DonovanandDonovan andStevens (1996) FLC 92-703 at 83,419, disclosure of the debt or claim to the Court will be sufficient to discharge the parties’ obligation “if thereafter, the Court directed that appropriate notice of the proceedings be given to such creditor or claimant and such notice was in fact given”.

4. The essence of these cases and the 2005 amendments is that a significant creditor or claimant must be given notice of the property settlement proceedings so that the creditor or claimant may exercise the rights that they have, which includes the right to intervene in the proceedings so as to avoid the impact that those proceedings might otherwise have upon them. A creditor or claimant entitled to become a party under s 79(10) of the Act loses that right if the creditor or claimant is not given notice of the proceedings. Such proceedings include, of course, an Application for Consent Orders.

5. The point of the Application for Consent Orders asking for information about the parties’ creditors is not just to assist the Court to determine whether the proposed consent orders are just and equitable between the parties but also to see whether creditors should be afforded the opportunity to be heard on the proposed consent orders before they are made.

6. It is now well established that procedural unfairness strikes at “the validity and acceptability of the trial” in the same manner that a finding of apprehended bias does and that the remedy for this is a retrial (Royal Guardian Mortgage Management Pty Ltd v Nguyen (2016) 332 ALR 128 at [9]–[10]). Consistently, where a creditor has been denied procedural fairness because they have not been notified of the proceedings and where the debt has not been disclosed to the Court, thus affecting the right to recover it, the process leading to the consent orders being made is similarly invalid and unacceptable.

7. The wife’s submission, however, is that the Court should only act under s 79A(1)(a) of the Act if it is satisfied that the orders that should have been made, assuming proper disclosure, were substantially different to those that were made.

8. We do not agree. The Court should not readily be the vehicle by which the legitimate rights of third party creditors should be defeated or delayed. Such creditors are likely to have little knowledge of the parties’ matrimonial affairs and are not in a position easily to demonstrate what orders would be just and equitable as between the parties to a marriage or de facto relationship, taking into account the debt owed to the creditor. It is unreasonable to impose such a burden on them.

9. It must be recalled that an applicant for property settlement consent orders must establish that the order is proper and satisfies s 79(2) of the Act. The obligation on parties to give accurate and full disclosure is of single importance in maintaining the integrity of the judicial process. Where the integrity of the judicial process is trammelled by giving false evidence which affects the rights of third parties, the Court must intervene.

10. Further, s 79A(1)(a) of the Act itself imposes no such consideration. It requires a finding that there has been the relevant fraud, duress, suppression of evidence, giving of false evidence or any other relevant circumstance; and that in circumstances there was a miscarriage of justice which finally justifies varying or setting aside the order (Suiker and Suiker (1993) FLC 92-436).

11. The final step may involve a comparison between the orders that were made and those that were likely to be made, absent any relevant default, but that is not the only means by which a Court could be satisfied that it was just to vary or set aside the orders. A denial of procedural fairness of the kind just discussed is, in our view, sufficient to be able to justify such a course without such comparison, because the failure to disclose and notify the creditor is a circumstance leading to a miscarriage of justice which, of itself, justifies the setting aside of the orders.

12. This is not to say that every failure to disclose and notify a creditor, in any sum whatsoever, must lead to the setting aside of consent orders. Not every denial of procedural fairness leads to a new trial (Stead v State Government Insurance Commission (1986) 161 CLR 141 at 145).

13. It very much depends on the circumstances. In Barker v Barker (2007) 36 Fam LR 650 (“Barker”), the Full Court said:

    120.A miscarriage of justice under s 79A(1)(a) will occur if circumstances exist which “for some significant reason, make the order contrary to law and justice according to law as it relates to the integrity of the judicial process” (original emphasis) (Bigg v Suzi (above) in [4.5]). See also Suiker; Public Trustee v Gilbert). While cases such as Suiker; In the Marriage of Holland (1982) 8 Fam LR 223; (1982) FLC 91-243; and In the Marriage of Gebert (1990) 14 Fam LR 62; (1990) FLC 92-137 indicate that the words “miscarriage of justice” should not be construed narrowly and the phrase “integrity of the judicial process” should not be taken only to refer to the hearing in the court, the circumstances creating the miscarriage must nevertheless have been such as to have had an influence on the outcome of the litigation. As the Full Court said in Holland (above at 239):

    To succeed in an application under s 79A, the wife must show some circumstance leading to a miscarriage of justice. Agreement to a consent order which may not adequately reflect a party’s entitlements under s 79 does not, of itself, show that there has been a miscarriage of justice. There 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.

14. This is consistent with the position that we have set out above.

15. As to non-disclosure between parties to a marriage or de facto relationship, the Full Court in Barker continued:

    123.As previously discussed, in order for a claim under s 79A(1) to succeed, the court must be satisfied that a miscarriage of justice has resulted. It is not sufficient to merely establish the existence of one or more of the stated grounds, such as suppression of evidence. In Livesey v Jenkins, Brandon LJ had this to say about the nexus between non-disclosure and setting an order aside (at All ER 119; AC 445-6):

    I would end with an emphatic word of warning. It is not every failure of frank and full disclosure which would justify a court in setting aside an order of the kind concerned in this appeal. On the contrary, it will only be in cases when the absence of full and frank disclosure has led to the court making, either in contested proceedings or by consent, an order which is substantially different from the order which it would have made if such disclosure had taken place that a case for setting aside can possibly be made good. Parties who apply to set aside orders on the ground of failure to disclose some relatively minor matter or matters, the disclosure of which would not have made any substantial difference to the order which the court would have made or approved, are likely to find their applications being summarily dismissed, with costs against them, or, if they are legally aided, against the legal aid fund.

16. In Lane, Ainslie-Wallace and Ryan JJ quoted this passage with approval. We also agree with it. We consider, however, that this reasoning has a limited role to play where there has been a failure to disclose and notify a creditor. Chan, which was specifically relied on by the wife, is simply an application of this principle stated in Barker.

17. These cases fall short of establishing the proposition put to us by the wife. Rather, they point to consideration on a case by case basis of whether the non-disclosure was of such magnitude so as to justify the varying or setting aside of an order. Such a proposition is unremarkable.

18. We see no error in the application of principle by the primary judge. This ground of appeal does not succeed.

Should the primary judge have made the make available order? (Ground 6)

1. On 12 April 2018, the primary judge made the following order:

   3.Order that the [wife] perform all acts and concur in all things necessary to make the [Suburb CC] property available for satisfying the debts owed by the [husband] to the [first respondent] and to any other creditors of the [husband].

2. The wife’s first submission is that this order erroneously treats the first respondent as a secured creditor.

3. Self-evidently, it does not do so to the disadvantage of other creditors because the Suburb CC property was to be made available to all creditors of the husband, as confirmed by the orders made on 15 June 2018, which obliged the first respondent to place an advertisement in a national newspaper asking creditors of the husband to come forward with their claims (Order 1 made on 15 June 2018). Further, a receiver was appointed for the sale of the Suburb CC property with the proceeds of sale to abide the direction of the Court, as opposed to merely being paid to the first respondent (Order 3 made on 15 June 2018). Obviously, the intent was to deal with all creditors of the husband equally and was for their benefit generally.

4. Further, as the first respondent points out, the primary judge found that although the two transfers were void as against creditors, the appropriate order was not to return the Suburb CC property to the husband but to keep it in the hands of the wife, subject to their claims. Had it been the former, the wife would have had no interest as to how creditors were to be paid from that property. The effect of the latter order is however to the same effect, except that the wife and not the husband will retain whatever remains.

95.In any event, we see no difficulty even if the order had the effect of making the first respondent a secured creditor. Particular orders made to ensure payment, such as setting aside funds for payment or, the appointment of a receiver in aid of execution, can have that effect. See, for example, Commercial Banking Co of Sydney Ltd v Colonial Financiers of Australia Pty Ltd (1972) 20 FLR 220 at 223–224 and 225. As the primary judge explained in [2018] NSWSC 441 at [7]–[28], it was an order that could properly be made.

1. The wife’s second submission is that the make available order was erroneously made because it precluded her from obtaining any property settlement orders that were inconsistent with it. The essence of the wife’s claim under s 79 of the Act was that she should receive the Suburb CC property free from the claim of the first respondent who should be left to pursue payment from the husband and whatever assets were retained by him. In aid of that position, the wife sought a declaration that the husband’s indebtedness to the first respondent did not arise out of the marital relationship (Amended Statement of Cross-Claim filed on 13 December 2018, Prayer 2). The wife submits that the make available order, although unremarkable in itself, “effectively prejudged [the wife’s] property adjustment claim” (Wife’s Summary of Argument filed on 7 November 2019, paragraph 61). Thus, the real issue is whether the make available order should have been made at the time that it was or whether consideration of it should have been delayed until the hearing of the wife’s cross-claim pursuant to s 79 of the Act.

2. The primary judge accepted that the make available order was a final order which did affect the property settlement proceedings. His Honour said:

   135.Counsel did not, in their submissions, identify why the make‑available order was to be treated any differently. I do not think it could, or should, be. The effect of the order is to charge the property with the liability. In my view it is no different from any other charging order which could be made by way of enforcement. Once such an order is made the security interest is created and the order cannot be displaced unless the power under s 90AE [of the Act] can be invoked.

   136.For these reasons, the declaration sought in the cross-claim must be refused. While the make-available order stands, it constrains the exercise of any power under s 79 [of the Act]. In particular, it prevents the Court from making an order awarding a share of the property, free of the [first respondent’s] debt, to [the wife]. By parity of reasoning, the make‑available order also prevents the Court from recognising any proprietary interest [the wife] claims to have in the property, at least if there is any possibility of that prejudicing the [first respondent’s] recovery under the order.

   …

   152.I have concluded that:

   (1)the make-available order, while it stands, takes priority over any order the Court might otherwise make awarding a share in the [Suburb CC] property to [the wife]…

   ([2019] NSWSC 712)

3. It is necessary to return to the procedural history of the matter.

4. The make available order was made on 12 April 2018. The wife’s Amended Statement of Cross-Claim was filed on 13 December 2018.

5. In the primary judge’s reasons for judgment delivered on 12 April 2018 ([2018] NSWSC 441), his Honour spent some time considering the form of the orders that should be made pursuant to earlier findings made on 7 December 2017 ([2017] NSWSC 1689), which were that the two transfers and the consent orders made on 8 May 2014 should be set aside. In [2018] NSWSC 441 at [7]–[28], his Honour discussed whether the Suburb CC property should be reconveyed to the husband for the benefit of his creditors or whether the order should be that the wife make the property available to the husband’s creditors. The latter course was favoured.

6. The position under s 79A of the Act was considered in [2018] NSWSC 441 at [30]–[42] and his Honour concluded that if the consent orders made on 8 May 2014 were set aside, the wife should be permitted to pursue a property settlement claim against the husband in the proceedings before his Honour. Thus, directions for the filing of a cross-claim seeking such relief were made. The approach taken by the wife not to lodge a cross-claim that could be dealt with at the first hearing obliged the primary judge to deal with the question as to s 79A in two stages.

7. His Honour clearly had in mind that such an application “could impinge upon” the process of giving relief to the first respondent ([2018] NSWSC 441 at [38]). Thus, the orders provided for the hearing of an application to stay the orders made on 12 April 2018.

8. On 15 June 2018, the primary judge made further orders consequential to the make available order, including the appointment of a receiver. Both of these orders were stayed for a period of approximately six weeks only.

9. In the primary judge’s reasons for judgment delivered on 15 June 2018 ([2018] NSWSC 890), his Honour recorded a complaint by the wife as to the making of the make available order in the following terms:

   5.In written submissions filed before the hearing, counsel for [the wife] complained about these orders and the make-available order on which they are based. Counsel pointed out that [the first respondent] did not seek relief in the form of a make-available order, and accordingly that [the wife] had no opportunity to put submissions as to the appropriateness of an order in that particular form. Counsel objected that the order in effect treated [the first respondent] as a secured creditor when in fact his debt is unsecured. Counsel also contended that it was wrong for the orders to provide for other creditors to notify claims which could be made out of the property.

10. The wife’s contention was rejected as follows:

    6.It is true that the [first respondent] did not seek relief in the form of a make-available order prior to my decision of 12 April. As I described in my second decision at [7], the debate about final orders took place on the assumption that an order would be made to reverse the transfers by which the property had been transferred from [the husband] to [the wife], thus putting the property back into [the husband’s] name to face enforcement action. But counsel for [the first respondent] did seek orders for sale of the property, invoking the doctrine of “equitable execution”. My research on this aspect of the argument led me to authorities which showed that a make-available order had been the appropriate remedy under the Statute of Elizabeth in a case such as this. The effect of such an order is similar to the relief by way of “equitable execution” sought by counsel for [the first respondent], in that it provides for the property transferred in breach of s 37A [of the Conveyancing Act] to be used to discharge the transferor’s debts. In those circumstances, I did not consider it necessary to seek further submissions from the parties before proceeding to make the order.

    7.Rules of natural justice are concerned with avoiding “practical injustice” (see Re Minister for Immigration and Multicultural Affairs; Ex parte Lam (2003) 214 CLR 1 at 14 [1] per Gleeson CJ). When I asked counsel for [the wife] what orders he contended I should have made instead of the make-available order, he said that he “would struggle” to offer any alternative. On one view, the make-available order is more favourable to [the wife] than an order which it had been assumed would have been made for the retransfer of the property to [the husband]. The make-available order leaves the property, except to the extent necessary to satisfy [the husband’s] debts, in [the wife’s] hands. Counsel acknowledged this.

    8.Once it is accepted that a make-available order was appropriate, I do not think objection can properly be taken to the consequential orders for identifying other creditors of [the husband]. A transaction which contravened the Statute of Elizabeth was void against all creditors, not merely the creditor bringing proceedings to challenge it. Section 37A has the same effect. As I noted in my second decision at [18], orders identifying other creditors and quantifying their claims so that they could be paid out of the property in question were made by way of consequential direction under the Statute of Elizabeth. They remain appropriate in proceedings under s 37A.

    9.One of the reasons why I allowed for a period of time to consider what consequential orders should be made was to give [the wife] an opportunity to consider whether there was some alternative to an order for sale (perhaps by raising security on the property sufficient to cover the debts to the [first respondent]) which might allow her to continue to live at the property, or at least realise it without the expense of a receivership: see my second decision at [28]. Counsel for [the wife], however, confirmed that she does not wish to take this approach. It follows, I think, that there is no real basis for resisting consequential orders along the lines sought.

    ([2018] NSWSC 890)

1. His Honour then turned to the issue of the wife’s proposed cross-claim and said:

   18.[The wife’s] application for a stay of the substantive orders made on 12 April [2018] pending the determination of the Cross-Claim gives rise to separate considerations. The relief sought in the proposed Cross‑Claim is that [the wife] “is entitled absolutely and beneficially to the whole” of the [Suburb CC] property. Counsel explained that [the wife] hopes to continue to live at the property, where she has lived since 1997 (see my first decision at [22]). Counsel argued that if the make-available order was not stayed (together with any consequential orders for sale) she will be deprived of that opportunity.

   19.In response, counsel for [the husband] pointed out that if [the wife’s] cross-claim is less than fully successful (in that she is unable to establish an entitlement to the whole of the [Suburb CC] property) that property will have to be sold in any event. In counsel’s submission, the likelihood of [the wife] obtaining, on her cross-claim, an entitlement to the whole of the [Suburb CC] property is so remote that the Court should not grant a stay.

   ([2018] NSWSC 890)

2. His Honour said that the wife “will need to persuade the Court that the [Suburb CC] property should be quarantined from the claims of [the husband’s] creditors, potentially leaving them out of pocket” ([2018] NSWSC 890 at [21]).

3. The primary judge then reiterated his view of the effect of the make available order saying:

   27.Even if it would have been possible, had the [Suburb CC] property remained in [the husband’s] name, to have made an order requiring him to transfer it to [the wife] unencumbered, thus quarantining it from the [first respondent’s] claims, events have moved on. [The husband] has transferred the property to [the wife] and the make‑available order has now been made which compels [the wife] to apply that property in satisfaction of his debts to the [first respondent] (and his other creditors). No doubt it would still be possible for the Court as part of a property settlement to order [the husband] to discharge those debts from his own resources, thus making it unnecessary for [the husband’s] creditors to proceed under the make-available order. But if [the husband] lacked the resources to discharge the debts from other sources, it might be too late to overcome the effect of the transfer and the make-available order.

   …

   30.It is neither necessary nor appropriate to resolve this debate at this stage; it is sufficient to say that it is far from certain on the material currently before the Court that [the wife] would succeed in having [the husband’s] liability to the [first respondent] quarantined so as not to impinge upon the [Suburb CC] property.

   ([2018] NSWSC 890)

4. Nonetheless, a short stay of approximately six weeks was granted so that the wife could articulate her cross-claim for a property settlement.

5. Subsequently, the stay was extended until the determination of the wife’s cross‑claim on 19 June 2019, which is the subject of Appeal No. EAA 64 of 2019.

6. Pausing there, the primary judge recognised that the make available order, which was accepted to be a final order consequent to the orders made under the Conveyancing Act, would affect the outcome of the wife’s cross-claim as it would limit the exercise of discretion afforded by s 79 of Act, but resolved nonetheless to proceed to make it. However, recognising that the wife might be able to “succeed in having [the husband’s] liability to the [first respondent] quarantined so as not to impinge upon the [Suburb CC] property” ([2018] NSWSC 890 at [30]), the primary judge stayed the operation of the make available order until the determination of the wife’s cross‑claim, presumably with a view of reconsidering it at that time.

7. The primary judge was correct when his Honour found that the make available order would limit the exercise of discretion given to the Court by s 79 of the Act. Whilst the Court must take account of creditors of the parties when making property settlement orders, it is not mandatory for the Court to ensure that creditors are paid before the division of property between the parties, although ordinarily the Court will divide the net property of the parties and not act to the detriment of creditors. See for example, Prince and Prince (1984) FLC 91-501 and Re Chemaisse; Federal Commissioner of Taxation (Intervener) (1990) FLC 92-133 and the authorities discussed there.

8. In this case, where the wife asserted that the husband had sufficient assets to pay the debt owed to the first respondent without recourse to the Suburb CC property, it would have been a better course to have left the determination of where the burden of the payment of the debt would fall to the hearing of the wife’s cross-claim. However, if that consideration was, nonetheless, ultimately undertaken, then looking at the substance of the matter, no error will have been demonstrated. As we shall now explain, we are satisfied that the primary judge did, in the end, do so.

9. We must now turn to the reasons for judgment delivered on 19 June 2019 ([2019] NSWSC 712) so that this issue is not decided in a vacuum.

10. There, his Honour again considered the issue as to whether the debt owed to the first respondent should be paid before the division of the husband’s and the wife’s property or afterwards, and only from the property of the husband. After reference was made to Trustee of the Property of Lemnos, A Bankrupt & Lemnos and Anor (2009) FLC 93-394 and Johnson v Johnson(No 1) (Bias issue) (2000) FLC 93‑039 (“Johnson v Johnson”) (both of which were concerned with whether one or both of the parties should bear the burden of taxation penalties incurred by one of them), the primary judge said:

    119.The same reasoning is applicable in this case. I think there are three features of the case which are particularly important.

    120.First, the proceedings against the [first respondent] ultimately arose out of [the husband’s] employment ... That employment began in 1999 which in any view was before there was any separation between the parties.

    121.Second, as I have already explained, the date of separation adopted by the parties (some time in 2000) is arbitrary and artificial. It involves a degree of hindsight and fails to take account of [the wife’s] perception that it was only later that she and [the husband] came to lead separate lives. Furthermore, the joint relationship continued after 2000, at least in a financial sense. The parties continued to maintain the joint bank account right up to 2014, and [the wife] was regularly contributing to it, alongside [the husband], throughout the period from 2000 to 2006. While she was contributing her earnings, [the husband] was also making contributions, even if irregular ones. Those contributions must have come from [the husband’s] business.

    122.Third, after 2006 [the husband] was effectively supporting [the wife] in the former matrimonial home. Indirectly [the wife] was depending on [the husband’s] business activities to generate the funds he was paying into the joint bank account to sustain the mortgage payments and other expenses associated with maintaining the [Suburb CC] property as her home. And then when [the husband] paid off the remainder of the mortgage in 2013-2014, he did so in an attempt to put the [Suburb CC] property beyond the reach of the [the first respondent] as his creditors.

    123.It must be remembered that [the wife’s] claim is essentially a claim to the [Suburb CC] property. Whether [the wife] was involved in, or even knew the details of, [the husband’s] business activities in general and the litigation against the [first respondent], in particular, is not important. What is important is that without [the husband’s] contributions derived from his business, the equity in the property would not have been built up in the way it has been since 2000. It would be wrong for the Court to award [the wife] a share of that equity without taking into account [the husband’s] liability to the [first respondent].

    124.I therefore reject [the wife’s] contention that the costs liability to the [first respondent] should be excluded from consideration. Any division of assets between [the husband] and [the wife] for the purpose of s 79 should take place after settlement of that liability.

    125.This conclusion would not of itself prevent [the wife] from contending that, on a proper application of the relevant s 79 factors, the cost liability to the [first respondent] should fall on [the husband’s] share of the net matrimonial assets. But as already noted, no claim was pressed on behalf of [the wife] for orders requiring [the husband] to discharge the [first respondent’s] debts from his own resources. [The wife] was not seeking in these proceedings to have the Court make a full assessment of all of the matrimonial assets with a view to bringing assets owned or controlled by [the husband] offshore to account for the purpose of a s 79 assessment. All she really sought to do was to obtain the [Suburb CC] property, or the lion’s share of it, free of the debt to the [first respondent]. As that endeavour has failed, there is no basis for any further exercise of the Court's power under s 79. [The wife’s claim against [the husband] should be dismissed.

    126.Had I accepted the contention that the costs liability to the [first respondent] should be excluded from the s 79 analysis, it would have been necessary for me to go on to determine whether [the wife] was entitled to 75% of the matrimonial assets (on that analysis, consisting of the [Suburb CC] property, free of any liability to the [first respondent])…

    ([2019] NSWSC 712)

11. In Appeal No. EAA 64 of 2019, this finding is challenged on the basis that the debt owed to the first respondent was a post-separation debt of the husband which ought not to have been visited upon the wife.

12. The point, for present purposes, is that in these paragraphs, his Honour undertook consideration of the issue as to whether the debt owed to the first respondent should be borne by both the husband and the wife or just the husband. The conclusion that it should be borne by both the husband and the wife was reached by looking at the circumstances, rather than by finding that the issue had already been decided by the making of the make available order.

13. The primary judge then turned to the make available order and said:

    134.Counsel for [the wife] accepted that in exercising the power under s 79, the Court must take the assets and external liabilities of a party to a marriage as it finds them: Ascot Investments Pty Ltd v Harper (1981) 148 CLR 337 at 355 per Gibbs J. Counsel acknowledged that if liabilities the [first respondent] had, at the outset, been secured on the property, then the Court could not, by an order under s 79, displace the security. At most, the Court could order [the husband], if he had the resources and it was otherwise appropriate for him to bear the liability, pursuant to s 79, to discharge it.

    135.Counsel did not, in their submissions, identify why the make‑available order was to be treated any differently. I do not think it could, or should, be. The effect of the order is to charge the property with the liability. In my view it is no different from any other charging order which could be made by way of enforcement. Once such an order is made the security interest is created and the order cannot be displaced unless the power under s 90AE can be invoked.

    ([2019] NSWSC 712)

14. There, somewhat inconsistently, the primary judge found that the make available order did limit the exercise of discretion because it had, in effect, constituted the first respondent as a secured creditor over the Suburb CC property.

15. Finally, his Honour looked at whether the make available order could be set aside because it had been irregularly obtained. The primary judge said:

    145.Counsel did, however, faintly contend that the make‑available order was irregular because it was made without prior argument on that particular form of order. Counsel presented this contention very diffidently. As he put it in his oral remarks:

    ... if that log passes by in a flooded river that is one I would latch on to.

    146.As a result of [Uniform Civil Procedure Rules 2005 (NSW)] 36.16(3A), it would have been open to the parties, within fourteen days of the making of the make‑available order, to make an application to have it varied or set aside. Had counsel sought to reargue the question I would readily have permitted that course. It is most regrettable that it was not taken.

    147It was clear when I raised the question at the hearing that it had not occurred to either side’s counsel. The make-available one may have been an unusual form of order, and may have been outside counsel’s usual experience. But the inconsistency between that order and the relief later sought in the cross-claim was readily perceived.

    148.Having been party to an application for consent orders which resulted in the Family Court being misled, [the wife] is hardly well placed to seek indulgence from the Court in the further pursuit of property settlement orders under s 79. But the fact remains that counsel was not heard on the particular form of the make-available order before it was made. However doubtful it may be that any invitation to counsel to make submissions on the question at the time would have made any difference, it is a possibility.

    149.There is also the fact that counsel for [the first respondent] did not seek the make­available order either. From a practical point of view, the order was not for the [first respondent’s] benefit, but for [the wife’s]. Furthermore, counsel for [the first respondent] did not himself raise the inconsistency with the make-available order as a defence to the cross-claim.

    150.On balance, and with much hesitation, I think that the Court should not leave an order on the record where one party might arguably have been disadvantaged as a result of not being fully heard. Had it made any difference to the outcome of these proceedings, I would have been prepared to set aside the make-available order as irregular, and to order instead that [the wife] transfer the [Suburb CC] property back to [the husband], where it would be available to satisfy the debt to the [first respondent], but subject to [the wife’s] entitlements.

    ([2019] NSWSC 712)

16. The effect of these paragraphs is that the primary judge was open to reconsidering the make available order, “[h]ad it made any difference to the outcome of [the] proceedings”. As can be seen, the only alternative to the make available order that was expressly considered by the primary judge was the return of the Suburb CC property to the husband but that must be seen in light of the earlier finding that the property of the husband and the wife in Australia must bear the burden of paying the first respondent.

17. Thus, in a somewhat convoluted and belated manner, the primary judge did in fact undertake the consideration which the wife submits was not taken.

18. Although we are of the view that it would have been preferable for the primary judge to have delayed the consideration of the make available order until the hearing of the wife’s cross-claim, ultimately it was undertaken. Unless there is an error in that determination, which is the subject of Appeal No. EAA 64 of 2019 (discussed below), no injustice has resulted (Lane at [72]–[81]).

19. If we had reached the opposite conclusion then we would have set aside the make available order for consideration of it as part of the cross-claim, which itself would then have to be reconsidered. If we were to do so, we would find that the appropriate order, in all of the circumstances, would be for the wife to receive all of the property of the husband and the wife that has been identified, namely the Suburb CC property, but subject to the claim of the first respondent, thus leading to the same result reached by the primary judge.

20. The husband’s failure to disclose his financial position was of such magnitude so as to justify the order in favour of the wife (Black and Kellner (1992) FLC 92-287; Weir and Weir (1993) FLC 92-338 and Barker at [123]), and leaves the husband to retain whatever his property in Vietnam may be. Secondly, the husband did not identify any property or income of his from which the debt owed to the first respondent might be paid. It follows that no finding can be made that the first respondent is likely to obtain satisfaction of the debt from any source other than the Suburb CC property, irrespective of the difficulties of enforcing the debt against any property in Vietnam. It would not be just and equitable for orders dividing the property of the husband and the wife to deprive the first respondent from any reasonable prospect of payment of the debt owed to him.

21. The result is that, even on a re-exercise of the discretion, the same outcome would ensue.

22. It follows that this ground of appeal does not succeed.

Should the two transfers have been found to be void pursuant to s 37A of the Conveyancing Act? (Grounds 1, 2, 3 and 4)

1. It follows from what we have already written that this appeal must fail because the orders made by the primary judge were properly supported by his Honour’s findings under s 79A of the Act. Thus, the outcome of Grounds 1 to 4, which deal with the primary judge’s findings under s 37A of the Conveyancing Act are not relevant to the outcome of the appeal.

2. We are conscious that the High Court of Australia has previously encouraged intermediate courts of appeal to deal with all grounds of appeal, even if not all are relevant to its outcome (Kuru v State of New South Wales (2008) 236 CLR 1 at [12]).

3. However, in Boensch v Pascoe (2019) 375 ALR 15, Kiefel CJ, Gageler and Keane JJ, with the approval of the other members of the High Court of Australia, said:

   7.Though it would have been preferable for the primary judge to have made findings on all of the facts that were in contest before him, we would not criticise the Full Court for not addressing an issue raised before it which it did not consider to be dispositive. The principle that an appellate court should confine itself to determining only those issues which it considers to be dispositive of the justiciable controversy raised by the appeal before it is so much embedded in a common law system of adjudication that we have no name for it. In some other systems, it is known as “judicial economy”. Judicial economy promotes judicial efficiency in a common law system not only by narrowing the scope of the issues that need to be determined in the individual case but also by ensuring that such pronouncements as are made by appellate courts on contested issues of law are limited to those that have the status of precedent.

   8.Within the integrated Australian legal system, the mere potential for an appeal to be brought, by special leave, to the High Court provides no reason for an intermediate court of appeal to sacrifice those efficiencies. That is not to deny that there will be occasions when departure from judicial economy will enhance the overall efficiency of the system or that the prospect of an appeal being brought, by special leave, to this Court in a particular case can give rise to such an occasion. There is accordingly no reason to deny that, "although there can be no universal rule, it is important for intermediate courts of appeal to consider whether to deal with all grounds of appeal, not just with what is identified as the decisive ground". But a non‑universal rule making it important for intermediate courts of appeal to consider whether to deal with all grounds of appeal is quite different from a rule that always or even ordinarily requires those courts to deal with all grounds of appeal. It is important to the efficiency of the system as a whole that intermediate courts of appeal should not feel compelled to treat determination of non-dispositive issues in appeals before them as the norm.

   (Footnote omitted)

1. Grounds 1 to 4 raise a number of difficult issues which are compounded by the approach of treating the two transfers and the consent orders made on 8 May 2014 as separate transactions. As we have said, a better approach would have been to consider them as aspects of the one transaction. When that is done, each aspect of the transaction informs the other and it can be more readily seen that the clear effect of the overall transaction was to affect the first respondent’s claim for payment. The wife’s involvement, particularly in proceeding with the Application for the Consent Orders, is likely to be sufficient to preclude her from successfully asserting that she acted in good faith for the purposes of s 37A of the Conveyancing Act in relation to the two transfers.

2. These grounds of appeal raise the difficult issue as to whether a transfer of property which has been made pursuant to an express order to do so under s 79 of the Act can be declared void pursuant to s 37A of the Conveyancing Act, without the s 79 order first being set aside. This issue was the subject of a Notice of Constitutional Matter pursuant to s 78B of the Judiciary Act1903 (Cth) served on the Attorneys-General of the Commonwealth, States and Territories. Each declined to take part in the appeal.

3. This issue has been touched upon but not definitively decided in a number of cases (see Re Baxter; Ex parte Official Receiver v Baxter (1986) 10 FCR 398; Silvera v Savic (1999) 46 NSWLR 124; Green v Schneller (2002) FLC 93-114; Houvardas v Zaravinos (2003) 202 ALR 535 and Zaravinos v Houvardas (2004) 32 Fam LR 490).

4. Any discussion of this issue in this appeal would be obiter only as it would not be necessary for the resolution of the appeal given the findings that we have already made and would ultimately carry limited weight.

5. Given the complexity of the issues, the lack of any precedential value in the outcome and, our view that on the facts that the primary judge’s order made under s 79A of the Act setting aside the consent orders made on 8 May 2014 and effectively the second transfer are obviously correct, we consider that the better course having appropriate regard to judicial economy, is not to deal with the issues raised in the Notice of Constitutional Matter, the s 37A of the Conveyancing Act issues or the Notice of Contention.

Appeal No. EAA 64 of 2019

1. This appeal raises four grounds of appeal from the primary judge’s orders made on 19 June 2019 dismissing the wife’s cross-claim filed on 13 December 2018, which sought the following orders:

   1.In the event Order 3 of the Orders made on 12 April 2018 and consequential Order 3 of the Orders made on 15 June 2018 are not discharged pursuant to rule 36.15 of the Uniform Civil Procedure Rules 2005 (NSW) (Rules) or 36.16 of the Rules, the Court declare that the continuation of such orders does not preclude or constrain the power of the Court to make orders under section 79A fo [sic] the Family Law Act 1975 (The FLA) in accordance with the Cross‑Claim.

   2.A declaration that the indebtedness of the [husband] to the [first respondent] does not arise out of the marital relationship of the [wife] and the [husband].

   3.Pursuant to section 79A and/or section 79 of the FLA, the Court makes an order that the [wife] is entitled absolutely and beneficially to the whole of the property known as [the Suburb CC property].

   4.In the alternative to the relief sought in prayer 2, in the event that the Court orders that the [husband] has a legal or equitable interest in the Property the [husband] pays to the [first respondent], a sum equal to or less than the value of such interest as necessary to meet as much of his indebtedness to the [first respondent] as available, within thirty days of the Court’s order.

   …

   (Wife’s Amended Statement of Cross-Claim filed on 13 December 2018) (As per the original) (Emphasis removed)

2. In addition, orders were initially sought by the wife under s 90AE of the Act which had the effect of limiting the claim by the first respondent to whatever property the husband may have after the division of property between the husband and the wife. These claims were abandoned at the final hearing.

3. Although the orders sought by the wife do not purport to deal with the division of all of the husband and the wife’s assets, the intent is clear – the wife proposed that she receive the Suburb CC property, or part of it, free from any claim from the first respondent. So framed, the dispute was really between the wife and the first respondent because the husband, consistently with his earlier actions, was content for the wife to receive all of the Suburb CC property, free from any claim from his creditors or from him. The issue before the primary judge was, therefore, whether the first respondent should be paid from the Suburb CC property or by the husband from whatever assets and income that he might have in Vietnam.

4. A consequence of the matter being framed in this way was that his Honour did not proceed on the usual path of a property settlement hearing but instead focused on the issue as between the wife and the first respondent. Effectively, as the Suburb CC property was owned by the wife, subject to the make available order, the question was whether any property settlement order should be made at all.

5. We are compelled to say, at this stage, that there is an air of unreality about this appeal. The only property of the husband and the wife disclosed by the evidence was the Suburb CC property. Had the husband’s Financial Statement been accepted by the primary judge (see [19] above), it would have demonstrated that the husband held two home units in Vietnam, worth $265,000 in total, and $43,000 in his Vietnamese bank accounts ([2019] NSWSC 712 at [90]).

6. If the wife succeeded on the cross-claim, the first respondent would have been limited to seeking recovery of the debt from the husband in Vietnam. Even if the husband’s evidence as to his assets in Vietnam had been accepted, the husband had nowhere near enough funds to pay the debt that he owed to the first respondent. Further, the primary judge accepted that there were difficulties in enforcing a debt in Vietnam and that the practical effect was that it would not occur. In short, the first respondent would not be paid. Such a result does not, in the circumstances of this case, appear to be proper, and indeed, to use the words in earlier Full Court decisions quoted above, it would impose another miscarriage of justice upon the first respondent.

7. Whilst the primary judge did not expressly say so, we consider that his Honour implicitly found that it was not just and equitable to make any order to adjust the parties’ property interests, with the intent that each of them should retain the property held by them. Such an approach is consistent with s 79(2) of the Act as explained in Stanford v Stanford (2012) 247 CLR 108 at [35]–[41]. The finding required by s 79(2) of the Act need not be explicit; it can be inferential (Goldsmith & Stinsonand Ors (2019) FLC 93-930 at [39]), as it was here.

Did the primary judge err by including the debt owed to the first respondent in the assessment of the husband and the wife’s marital assets? (Ground 1)

1. Under Ground 1, the wife makes four submissions.

2. The first is that the primary judge misunderstood Kowaliw and Kowaliw (1981) FLC 91-092 (“Kowaliw”) because his Honour failed to consider how the consequences of the husband’s reckless, negligent or wanton behaviour in incurring the debt owed to the first respondent should be shared by both the husband and the wife (Kowaliw per Baker J at 76,644).

3. The primary judge did not find that the husband’s behaviour met the description in Kowaliw. However, we have already quoted his Honour’s reasons why he found that the division of assets between the husband and the wife should take place after the payment of the debt owed to first respondent ([2019] NSWSC 712 at [119]–[126] outlined at [115] above). No challenge is made to his Honour’s statement of principle and, in truth, the ground of appeal is a challenge to the discretionary finding that even if the proceedings against the first respondent were a frolic of the husband’s alone, the wife benefitted from the business which gave rise to the dispute with the first respondent. These were “compelling circumstances” which would lead to a different outcome that the direct application of Kowali would give.

4. In the circumstances of this case, that finding disposed of the issue as to how the debt owed to the first respondent should be borne by the husband and the wife, as between themselves, because there was only one asset available for division and it was agreed by the husband and the wife that the wife should receive it entirely, regardless of whether it was to be made available to pay the first respondent. The consideration asserted by the wife simply did not arise because the contest was not between the husband and the wife.

5. Secondly, the wife submits that the primary judge erred in including the debt owed to the first respondent in the s 79 assessment because it was not incurred during the husband and the wife’s marriage. The submission continues that the husband and the wife separated in 2000 which “predated the commencement of [the husband’s] litigation against the [first respondent]” (Wife’s Summary of Argument filed on 7 November 2019, paragraph 71) and, thus the debt owed to the first respondent should not have been taken into account.

6. The marriage ended in September 2013 when the husband and the wife were divorced. The primary judge found that the husband and the wife separated sometime between 2000 and 2006 but found that the exact date was not relevant, although “the joint financial relationship continued right up to, and after, their divorce in 2013” ([2019] NSWSC 712 at [39]). The wife asserts that payments made by the husband to the joint bank account after separation “should be understood as informal spousal maintenance” (Wife’s Summary of Argument filed on 7 November 2019, paragraph 72).

7. We do not accept this. Until June 2015, the Suburb CC property was owned by either the husband or the husband and the wife jointly and the outgoings on the Suburb CC property, including the mortgage repayments, were paid from a joint bank account into which both parties deposited funds.

8. The Court looks at the assets and liabilities of the husband and the wife at the time of the hearing in determining the net assets and liabilities to be divided between them, although particular assets and liabilities may be excluded or dealt with differently for many reasons, one of which is that an asset was obtained or a liability incurred, independently after separation (Calvin & McTier (2017) FLC 93-785). That was the course followed by the primary judge as is made plain in [2019] NSWSC 712 at [120]–[123] (outlined at [115] above).

9. Thirdly, the wife submits that as it was unlikely that the husband would have shared with the wife any of the proceeds of the action that he took against the first respondent, the wife should not bear any of the liability for the debt incurred in that litigation. As the above paragraphs makes clear, no such finding was made by the primary judge. The primary judge recorded that as the Suburb CC property, which until August 2013 had been in the sole name of the husband, was acquired and maintained by substantial financial contributions from the husband’s business, and as the wife was to receive a substantial part of that property, it would not be equitable to ignore obligations that arose from the conduct of that business. In our view, this is consistent with the reasoning in Johnson v Johnson and Browne v Green (1999) FLC 92-873. It was not necessary for the wife to be actively involved in the conduct of the proceedings for her to be obliged to bear the liability with the husband.

10. Finally, we accept that the Court has a wide discretion as to how the burden of particular debts is to be borne as between the husband and the wife. It is quite a different matter, however, when a creditor is a party to the property settlement proceedings and the parties to the marriage seek to cast the entire burden of the liability on the party to the marriage who cannot pay it, thus entirely defeating the creditor.

11. This ground of appeal does not succeed.

Did the primary judge err by finding that if the debt owed to the first respondent was to be included in the marital assets then it was unnecessary to make any further orders in relation to the wife’s cross‑claim? (Ground 2)

1. We commence by referring again to the wife’s cross-claim. The substantial orders that it sought were a declaration that the debt owed to the first respondent did not arise out of the marital relationship (Wife’s Amended Statement of Cross-Claim filed on 13 December 2018, Prayer 2) and that the wife receive the whole of the Suburb CC property (Wife’s Amended Statement of Cross‑Claim filed on 13 December 2018, Prayer 3) (outlined at [136] above).

2. Prayer 4 sought an order that, to the extent that the orders to be made gave the husband an interest in the Suburb CC property, the husband be required to pay to the first respondent a sum equal to or less than that interest (outlined at [136] above).

3. Prayers 5, 6 and 7 sought orders pursuant to s 90AE of the Act precluding the first respondent from enforcing the debt against the Suburb CC property, which claims, as we have noted, were ultimately abandoned.

4. Having decided that the debt owed to the first respondent should be paid prior to any division of assets between the husband and the wife ([2019] NSWSC 712 at [120]–[123]), the primary judge’s findings in [2019] NSWSC 712 at [124] and [125] (outlined at [115] above) disposed of Prayers 2, 3 and 4 as contained in the wife’s cross‑claim. The orders sought in Prayers 5, 6 and 7 were not pressed. His Honour thus dealt with the relief sought by the wife and declined to grant it. As we have observed earlier, this is consistent with declining to make any property adjustment between the husband and the wife at all.

5. The wife submits that the primary judge should, nonetheless, have considered whether a “protective order” should have been made in favour of the wife so as to ensure that she would be left with something at the end of the day. It was suggested that his Honour should have determined that the wife should receive a fixed sum from, presumably, the sale of the Suburb CC property and not taking into account the debt owed to the first respondent.

6. An insurmountable difficulty is that such a course was never suggested to the primary judge (Metwally v University of Wollongong (1985) 60 ALR 68 at 71).

7. A further difficulty was that the evidence showed, as unsatisfactory as it was, that at the time of the hearing before the primary judge, the debt owed to the first respondent was less than half of the value of the Suburb CC property so that the orders of the primary judge would see the wife retain more than half of it.

8. This ground of appeal does not succeed.

Did the primary judge err in the assessment of the wife’s financial and non-financial contributions and s 75(2) considerations? (Ground 3)

1. The effect of the primary judge’s orders was that the wife retained the Suburb CC property, subject to the claims of the husband’s creditors. Put another way, the wife was to receive 100 per cent of the net assets of the husband and the wife or, at the least the only asset identified in the evidence and, on any view, the only asset in Australia.

2. Any adjustment based on contributions and s 75(2) considerations could not improve the wife’s position as against the husband. The other findings made by the primary judge precluded such an adjustment reducing the entitlement of the first respondent.

3. There was thus no point in undertaking such as assessment as it was not material to the outcome.

4. Nonetheless, the primary judge did so “for completeness” and, no doubt for convenience, if any appeal against the earlier findings was ultimately upheld ([2019] NSWSC 712 at [126]). We accept that in making those findings, his Honour did not consider the wife’s non-financial contributions, contributions to the welfare of the family or s 75(2) considerations. However, that error had no impact on the orders and any error by the primary judge is of no consequence.

Was the dismissal of the wife’s cross-claim manifestly unjust and not open on the evidence? (Ground 4)

1. The wife’s submission is that the primary judge’s decision was unreasonable because “his Honour preferred the rights of a creditor to those of the wife” and all that the wife could hope to receive was “the leftovers” after the first respondent had been paid (Wife’s Summary of Argument filed on 7 November 2019, paragraph 95 and 97).

2. We would observe that these “leftovers” would, on the evidence, be in the order of approximately $500,000.

3. The issue that was put to the primary judge by the wife was whether the first respondent should be paid before or after the property of the husband and the wife was divided between them. No other position was put. We have found that there was no error made by his Honour’s finding that the husband’s debts should be paid first. Once that finding stands, it can be seen that the wife received all of the identified and available property of the husband and the wife. That is far from unreasonable.

4. What would be unreasonable in the circumstances, would be for the first respondent to be left to the questionable task of seeking to chase payment of the unquestioned debt in Vietnam, with the wife retaining all of the Suburb CC property.

5. This ground of appeal fails.

6. It follows that this appeal will also be dismissed.

Costs

1. Orders will be made for the question of costs to be dealt with by way of written submissions.

I certify that the preceding one hundred and seventy-two (172) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court (Ryan, Aldridge & Austin JJ) delivered on 23 July 2020.

Associate:

Date:  23 July 2020