Chen & Chen
[2024] FedCFamC1A 106
•8 July 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1) APPELLATE JURISDICTION
Chen & Chen [2024] FedCFamC1A 106
Appeal from: Chen & Chen [2024] FedCFamC1F 48 Appeal number: NAA 62 of 2024 File number: MLC 5805 of 2016 Judgment of: AUSTIN, KARI & CHRISTIE JJ Date of judgment: 8 July 2024 Catchwords: FAMILY LAW – APPEAL – PROPERTY – Where the husband appeals from orders made by the primary judge granting a remuneration application for costs relating to the liquidation and receivership of several corporations and trusts – Where factual errors made by the primary judge are not ultimately material – Where the husband prosecuted the appeal on the mistaken premise the primary judge was obliged to accept his allegations of the respondents’ misconduct as being truthful and correct – Where reasons for judgment do not need to mention every piece of evidence adduced and every argument advanced – Where the husband puts forward an incompetent ground of appeal because it asserts no recognisable form of legal, factual or discretionary appealable error – Where the primary judge had no statutory duty to refer any party or third party to any regulatory agency for investigation – Where the three interlocutory applications in the appeal filed by the husband are dismissed – Where leave to appeal is refused and the appeal is dismissed. Legislation: Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth)
Corporations Act 2001 (Cth) ss 600K, 1337C, Pt 5.2, Sch 2 - Insolvency Practice Schedule (Corporations) s 60-10
Family Law Act 1975 (Cth) Pt VIII, ss 105, 109A, 109AA, 117, 123
Federal Circuit and Family Court of Australia Act 2021 (Cth) ss 35, 56, 76, 272
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) rr 11.48, 11.49, Div 11.1.6
Cases cited: Allesch v Maunz (2000) 203 CLR 172; [2000] HCA 40
Attorney-General (SA) v Adelaide City Corporation (2013) 249 CLR 1; [2013] HCA 3
Australian Education Union v Department of Education and Children’s Services (2012) 248 CLR 1; [2012] HCA 3
CDJ v VAJ (1998) 197 CLR 172; [1998] HCA 67
De Winter v De Winter (1979) 23 ALR 211
DJL v Central Authority (2000) 201 CLR 226; [2000] HCA 17
Eastman v Director of Public Prosecutions (ACT) (2003) 214 CLR 318; [2003] HCA 28
Fox v Percy (2003) 214 CLR 118; [2003] HCA 22
Medlow & Medlow (2016) FLC 93-692; [2016] FamCAFC 34
Northern Territory of Australia v GPAO (1999) 196 CLR 553; [1999] HCA 8
Re Barokes Pty Ltd (ACN 079 714 579) [2020] VSC 555
Re Wealth Street Pty Ltd (in liq) [2023] NSWSC 1482
Whisprun Pty Ltd v Dixon (2003) 200 ALR 447; [2003] HCA 48
Number of paragraphs: 63 Date of hearing: 26 June 2024 Place: Heard in Melbourne, delivered in Newcastle The Applicant: Litigant in person Counsel for the First and Second Respondents: Mr Bearman Solicitor for the First and Second Respondents: KHQ Lawyers The Third Respondent: Litigant in person (did not participate) ORDERS
NAA 62 of 2024
MLC 5805 of 2016FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
DIVISION 1 APPELLATE JURISDICTIONBETWEEN: MR CHEN
Applicant
AND: MR OO AND MR UU IN THEIR CAPACITY AS JOINT AND SEVERAL LIQUIDATORS OF QUEN PTY LTD (IN LIQUIDATION), E PTY LTD (IN LIQUIDATION) AND F PTY LTD (IN LIQUIDATION)
First Respondent
MR OO AND MR UU IN THEIR CAPACITY AS JOINT AND SEVERAL RECIEVERS OF THE ASSETS AND UNDERTAKING OF THE QUEN FAMILY DISCRETIONARY TRUST, E FAMILY TRUST, AND F FAMILY TRUST
Second Respondent
MS QUEN
Third Respondent
ORDER MADE BY:
AUSTIN, KARI & CHRISTIE JJ
DATE OF ORDER:
8 JULY 2024
THE COURT ORDERS THAT:
1.The Application in an Appeal filed by the appellant on 17 April 2024 is dismissed.
2.The Application in an Appeal filed by the appellant on 5 June 2024 is dismissed.
3.The Application in an Appeal filed by the appellant on 11 June 2024 is dismissed.
4.The Application in an Appeal filed by the first and second respondents on 11 June 2024 is dismissed.
5.Leave to appeal is refused and the Notice of Appeal filed on 20 March 2024 is dismissed.
6.The Notice of Contention filed by the first and second respondents on 27 May 2024 is dismissed.
7.The first and second respondents’ oral application to vary the orders made on 27 February 2024 (as varied on 2 May 2024) pursuant to application of the slip rule is dismissed.
8.The first and second respondents’ oral application for the grant of leave nunc pro tunc to file a Notice of Cross Appeal from the orders made on 27 February 2024 (as varied on 2 May 2024) is dismissed.
9.Costs are reserved and, to enable the determination of any application for costs on the papers in chambers:
(a)any party applying for costs shall file and serve written submissions (confined to five pages) within seven days hereof setting out the nature of the order/s sought and the submissions made in support thereof; and
(b)the party or parties against whom any costs application is made shall file and serve written submissions (confined to five pages) within 14 days hereof setting out the submissions to resist the application.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
IT IS NOTED that publication of this judgment by this Court under the pseudonym Chen & Chen has been approved pursuant to subsection 114Q(2) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
AUSTIN, KARI & CHRISTIE JJ:
This appeal by the husband, subject to the grant of leave to bring it, lies from a series of interlocutory orders made on 27 February 2024 (but varied under the slip rule on 2 May 2024) by a judge of the Federal Circuit and Family Court of Australia (Division 1) in a complicated financial cause under Pt VIII of the Family Law Act 1975 (Cth) (“the Act”).
For the following reasons, leave to appeal is refused, though some aspects of the reasons for judgment by which the husband is confounded deserve an explanation.
BACKGROUND
The underlying financial cause was commenced by the wife against both the husband and the second respondent in June 2016, but has proliferated enormously since then. The proceedings now capture 10 respondents, including liquidators of corporations and receivers of trusts who were appointed in 2022 (the first and second respondents in the appeal).
According to submissions made by the husband in his Summary of Argument, he and the wife were married between 1982 and 2016, though he concurrently carried on a de facto relationship with the second respondent (the third respondent in the appeal) between 1998 and 2015. He admits voluntarily transferring substantial assets to the second respondent in or about 2015, which he alleges she has since spirited away beyond the reach of he and the wife.
In October 2023, the liquidators and the receivers (“the respondents”) jointly filed an Application in a Proceeding seeking declarations of their entitlement to remuneration for work done in the liquidations and the receiverships. The remuneration application was opposed by the husband, but no other party. The application was heard over two days in mid-November and early December 2023, with judgment then reserved.
On the second day of hearing (1 December 2023), the husband lodged with the Court for filing via the electronic portal an Application in a Proceeding which, inexplicably, was not then actually filed until more than a month later on 11 January 2024. The reason for that ostensibly unsatisfactory situation need not be explored in this appellate proceeding. Relevantly for present purposes, in that application the husband sought an order granting him “leave to request assistance from AUSTRAC” to trace and recover money he alleged the second respondent and numerous other third parties had illegally drained from the coffers of the corporations and trusts which are now under the stewardship of the respondents.
The husband filed one affidavit on 9 November 2023 (affirmed 8 November 2023) in opposition to the remuneration application and then another affidavit on 1 December 2023, the latter presumably in support of his lodged but unfiled application, which the primary judge took into account when dealing with the remuneration application. In the first affidavit, the husband asserted the remuneration application should not be granted before an investigation into the missing funds was completed by the “ATO and/or AUSTRAC”. In the second affidavit, he mostly reiterated the points already made in the first affidavit.
Judgment was delivered on 27 February 2024, though the orders were subsequently amended on 2 May 2024 by resort to the slip rule in a way which is irrelevant to the disposition of the application for leave to appeal. The remuneration application was granted in the terms sought by the respondents. The orders authorise the payment of fixed sums for remuneration for the work done and (at that point in time) yet to be done:
(a)by the liquidators – in the period between 1 January 2023 and 31 March 2024 (Orders 1, 2, and 3); and
(b)by the receivers – in the period between 25 August 2022 and 31 March 2024 (Orders 4, 5 and 6).
The respondents’ costs of and incidental to the remuneration application were declared to be costs of the liquidation and the receivership (Order 8) and such costs were referred to the registrar for separate assessment (Order 10).
Despite the primary judge’s awareness of the nature of the husband’s application for relief in the unfiled Application in a Proceeding (at [20]–[27]), his Honour made no dispositive order in respect of the application, either at the hearing on 1 December 2023 or as a component of the judgment delivered on 27 February 2024.
On 6 February 2024, some weeks before judgment was pronounced, the primary judge ordered that all “extant applications” be adjourned and re-listed on a date to be later advised. That order captured the pending Application in a Proceeding, which had by then been filed on 11 January 2024. So far as can now be discerned, that application has not yet been formally determined by any subsequent order and so remains extant.
FACTUAL ERRORS
The primary judge said this in the reasons:
50. …several things emerge –
(a)no allegation of any form of misconduct is alleged against the liquidators in this case;
…
57.No substantive opposition to the remuneration application was adduced by the [husband]. He deposed to wanting AUSTRAC being engaged. That does not address the [respondents’] remuneration.
Those statements are plainly incorrect because, first, the husband did allege misconduct, or at least professional incompetence, by the liquidators (though not the receivers), and secondly, he expressly resisted the remuneration application being granted before an official investigation into the allegedly missing funds was completed by regulatory agencies like AUSTRAC.
In his first affidavit (at [117]), the husband alleged the liquidators were complicit in the wrongful dissipation of assets which should be available for division between the parties in the Pt VIII proceedings. The husband also deposed in his first affidavit to the liquidators’ refusal to disclose documents in both hard and soft form and their refusal to investigate certain loans (at [98]–[116]). Those latter complaints may not rise so high as being complaints of professional incompetence, but are still an overt expression of his dissatisfaction with their work. Of course, the husband’s allegations against the liquidators might be misconceived, just as they contend, but that is yet to be established.
In his final set of written submissions, filed on 8 December 2023, the husband submitted this:
1.During the mention hearing on 1 December 2023, I submitted that the liquidators’ remuneration application should be refused on grounds that the work performed failed to meet main tests set out in section 60-12 of Schedule 2 of the Corporations Act; in particular…
The statement by the primary judge (at [57]) that the husband had no substantive opposition to the remuneration application is difficult, if not impossible, to reconcile with his Honour’s acknowledgement of his position at earlier points in the reasons for judgment in this way:
21.… the husband asserted that he opposed the [respondents’] remuneration application in reliance upon matters in his 30 November 2023 affidavit.
…
50.In this remuneration application the [husband] has asserted that the conduct of one or more of the directors of the insolvent entities detrimentally impacted upon the commercial operations of the companies in liquidation and such conduct should be examined with steps put in place to recover the funds allegedly laundered before the liquidators’ remuneration is approved…
(Emphasis added)
Nonetheless, the mistakes are not ultimately material (De Winter v De Winter (1979) 23 ALR 211 at 216–218) because the proposed appeal from the orders is without merit and the husband cannot meet the test for the grant of leave to appeal.
STANDING
The respondents raised a point in this appellate proceeding about the husband’s standing which they did not raise before the primary judge in respect of their entitlement to remuneration. The question of the husband’s standing was only raised in respect of the subsequent contest over their entitlement to the costs of the remuneration application pursuant to s 117 of the Act.
The primary judge recited the respondents’ submissions as to the husband’s lack of standing to contest their application for costs as follows:
75. …
(g)here, the [husband] makes no claim as a creditor in the various administrations in insolvency yet he wishes to preclude the [respondents] from having their costs met out of the insolvent administrations;
(h)the [husband] (so it was argued) has no standing to be heard on the question of costs because costs, if ordered in accordance with the applications made by the [respondents], will be born [sic] by creditors pari passu; …
His Honour then said this:
76.No contrary submissions were put in opposition to the contentions of the [respondents’] counsel. …
But it is untrue the husband put “no contrary submissions” to those advanced by the respondents. He did. He said this in his last set of written submissions to the primary judge:
37.….Counsel for the liquidators filed submissions on section 117 of [the Act]. At paragraph 7 of his first point of submissions he states “…the [husband] who has no claim whatsoever as a creditor in the liquidation…..” I reject this assertion.
38.I attended the creditors’ meeting held in June 2022 and voted as creditors representing [named corporation] in this liquidation. I continue to act for the [named corporation]. [The named corporation] made lengthy itemized claim against [the third respondent] and entities in liquidation for amount in excess of $4 million dollars. The statement of claim accepted by [senior counsel for the third respondent] representing [the third respondent] and the claim remain valid pending final court determination.
(As per the original)
The primary judge made no finding to determine the dispute over whether the husband was seized of standing to contest the costs application. Nor did his Honour make any finding about whether the husband had standing to contest the anterior remuneration application, because the point was not raised.
In the appeal, for the first time, the respondents asserted the husband had no standing to challenge their remuneration application at first instance and therefore had no standing to prosecute this application for leave to appeal from the orders granting their application. When that point was debated in the appeal, the respondents recanted and consented to the dismissal of both their Notice of Contention filed on 27 May 2024 and their Application in an Appeal filed on 11 June 2024. No more need be said about the issue.
APPLICATIONS IN THE APPEAL
The husband filed three interlocutory applications in the appeal – the first on 17 April 2024, the second on 5 June 2024, and the third on 11 June 2024 – principally seeking leave to adduce further evidence in the appeal pursuant to s 35(b) of the Federal Circuit and Family Court of Australia Act 2021 (Cth) (“the FCFCA Act”). Leaving to one side the question of whether the applications can be entertained during the anterior enquiry as to whether or not leave to appeal should be granted, an analysis of them reveals they would be dismissed in any event.
The first application seeks two forms of relief: first, permission to adduce the husband’s affidavit filed on 17 April 2024 as further evidence in the appeal; and secondly, an order compelling the liquidators to provide discovery.
The second application seeks four forms of relief: first, permission to adduce the husband’s affidavit filed on 5 June 2024 as further evidence in the appeal; secondly, the reference of the husband’s amorphous complaints of misconduct by others to the “Department of Home Affairs for investigation”; thirdly, an injunction to restrain the respondents and the second respondent from selling a parcel of real property; and lastly, an order compelling the respondents and the second respondent to provide discovery.
The third application seeks two forms of relief: first, permission to adduce the husband’s affidavit filed on 11 June 2024 as further evidence in the appeal; and secondly, an order compelling the liquidators to provide discovery.
The Full Court, exercising appellate jurisdiction rather than original jurisdiction, has no power to make discovery orders and injunctions as between parties to the underlying proceedings. Those are matters for the primary judge exercising original jurisdiction. Nor is it the function of the Full Court to refer the husband’s allegations about the misconduct of other parties to the proceedings and third parties to government departments for investigation.
The husband’s three affidavits are only designed to supplement his allegations of misconduct and to adduce evidence in support of the need for discovery orders, injunctions, and the referral of some form of complaint to the government department, in which event the evidence is of no use because it would not demonstrate any appealable error by the primary judge and would not produce a different result (CDJ v VAJ (1998) 197 CLR 172 at [109], [111], [140]–[151], [169] and [186.9]). The applications are dismissed.
LEAVE TO APPEAL
The husband acknowledges in the Notice of Appeal filed on 20 March 2024 that he requires the grant of leave to appeal from the orders made on 27 February 2024.
While discretion is unfettered, the grant of leave to appeal ordinarily requires the applicant to show the decision at first instance is attended by sufficient doubt to warrant appellate scrutiny and, additionally, substantial injustice would result if leave were refused, supposing the decision at first instance to be wrong (Medlow & Medlow (2016) FLC 93-692 at [44]–[57]).
The facts and circumstances relied upon by the husband to justify the grant of leave to appeal are his allegations of fraud, illegality and professional incompetence made against the second respondent, the second respondent’s former lawyers, numerous other individuals who are not even parties to the financial cause, the liquidators (but not the receivers), and a chartered accountant. For clarity, such allegations are not true merely because the husband honestly believes in them, but there could be little doubt about the vehemence of his belief.
Leave to appeal is refused because, as discussed below, the proposed grounds of appeal do not expose any appealable error in the judgment and the husband cannot establish how he will suffer substantial injustice by the orders being implemented so the respondents are paid for the work they were engaged to do. It is apparent from the husband’s submissions in these proceedings that he is aggrieved by his perception of the unreasonableness and disproportionality of the respondents’ approved remuneration, but he did not make that argument to the primary judge in isolation from his allegations of the liquidators’ misconduct.
THE PROPOSED APPEAL
Before turning to the proposed grounds of appeal, it is as well to say something about the legal foundation for the appealed orders, as the issue occupied considerable space within the reasons for judgment without being resolved.
The respondents posited several alternate sources of power for the approval of their remuneration claim (at [1], [31], [38], [46] and [47]). Having identified the alternatives, the primary judge then embarked upon a discursive discussion about the “inherent jurisdiction” of the Court (at [31]–[46]), but then said only this in the reasons to conclude the discussion on the point:
46.Before me, the issue of this court’s inherent equitable jurisdiction was not debated. …At no stage did [the husband] advance any argument about the jurisdiction of this court to entertain the liquidators’ application for remuneration. Nor did [the husband] make any submissions concerning the so-called inherent equitable jurisdiction of Division 1 of this court as a jurisdictional basis for the making of an order concerning the liquidators’ remuneration. In those circumstances, I take the view that this case is not the appropriate vehicle for me to express any view on the issue. Put simply, the matter was not argued.
…
50.…Whatever may be the proper resolution of any perceived conflict of authorities on point, several things emerge –
…
(c)the procedures for the determination of liquidator’s remuneration is a summary one, invoking this court’s jurisdiction to supervise its officers.
…
53.…The court exercises its own jurisdiction in approving the liquidators’ remuneration.
(Footnote omitted)
Though the reasons do not explicate either the jurisdiction invoked or the power wielded to make the orders, the text of the orders reveals the remuneration claim was granted on two different bases: pursuant to s 60-10(1)(c) of the Insolvency Practice Schedule (Corporations) (“the IPS”), being Schedule 2 to the Corporations Act 2001 (Cth) (“the Corporations Act”), for the liquidators; but pursuant to r 11.49 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) (“the Rules”) for the receivers.
No explanation is given for the selection of those sources of power for the orders or for why the selection differed between the liquidators and the receivers. However, it must follow from the text of the orders that the primary judge eschewed the respondents’ reliance upon the “inherent jurisdiction” of the Court as the possible foundation for the orders, in which case his Honour’s lengthy discussion of the topic may be disregarded.
As it transpired, the discussion of “inherent jurisdiction” only served to encourage the husband to claim in this appellate proceeding that the Court has inherent jurisdiction to grant the relief he sought. He said this in his Summary of Argument:
19. …
(2.)I cannot find a rule in the Family Court Act that gives the court power to refer case to AUSTRAC for investigation but at paragraph 47 of the reasons for Judgment made on 27 February 2024, the liquidators put “the inherent jurisdiction of the court” as part of the basis of their remuneration application. The inherent jurisdiction of the court also provides legal basis for ASUTRAC referral application.
(As per original)
The submission is rejected. Unlike the State Supreme Courts, federal courts like the Federal Court of Australia and the Federal Circuit and Family Court of Australia (Division 1) do not have “inherent” jurisdiction or power. Their jurisdictions are prescribed by federal statutes and their powers are conferred either expressly or impliedly by such legislation (Allesch v Maunz (2000) 203 CLR 172 at 187; DJL v Central Authority (2000) 201 CLR 226 at 241 and 268; Northern Territory of Australia v GPAO (1999) 196 CLR 553 at 648).
Despite the absence of any reasoned resolution of the issue, jurisdiction and power certainly existed to make the subject orders, which proposition the husband does not now challenge.
In respect of the liquidators, the primary judge had original jurisdiction under the Corporations Act (s 1337C) to exercise the powers therein concerning their appointment and remuneration, including those found within the IPS (s 600K).
The primary judge similarly had original jurisdiction under the Corporations Act to appoint the receivers to receive such property of the trusts as was held by their corporate trustees (Pt 5.2).
The receivers contended r 11.49 of the Rules governed their appointment, which proposition we reject. When they were appointed by the primary judge in August 2022, his Honour wrongly invoked s 272 of the FCFCA Act and r 11.48 of the Rules.
Section 272 of the FCFCA Act only enables the appointment of receivers by the Federal Circuit and Family Court of Australia (Division 2), to which power the primary judge could not resort as a judge of the Federal Circuit and Family Court of Australia (Division 1). While such power is available “at any stage of a proceeding”, mirroring the power available to the Federal Circuit and Family Court of Australia (Division 1) under the Corporations Act, it is to be contrasted with the more limited power granted by the Rules.
The Rules, made pursuant to statutory authority (s 56 and s 76 of the FCFCA Act; ss 105, 109A, 109AA and 123 of the Act), only enable the appointment and remuneration of receivers to receive the property of debtors to facilitate the enforcement of financial orders made in favour of creditors (Division 11.1.6 of the Rules). Such enforcement power was not engaged in this instance because no dispositive order has yet been made against the trusts, or the corporate trustees thereof, to resolve any financial cause in favour of another party to the proceedings.
Nevertheless, the errors as to the sources of power are immaterial because the power to appoint and remunerate the receivers arose instead under the Corporations Act. The citation of an incorrect source of power is immaterial if the orders are otherwise validly supported (Eastman v Director of Public Prosecutions (ACT) (2003) 214 CLR 318 at [124]; Australian Education Union v Department of Education and Children’s Services (2012) 248 CLR 1 at [34]; Attorney-General (SA) v Adelaide City Corporation (2013) 249 CLR 1 at [175]).
Grounds 1 and 2
These grounds are considered together because they collectively amount to a complaint that the primary judge determined the remuneration application by ignoring the husband’s allegations about the liquidator’s misconduct – the implication being that, had the primary judge taken his allegations into account, the remuneration application would then have been refused or the quantum discounted.
Ground 1 alleges the primary judge “failed to adequately consider the affidavits and submissions the [husband] submitted” and the orders were “unreasonable and unjust”, which language is redolent of discretionary error.
As elucidated in the husband’s Summary of Argument, this ground is the manifestation of the husband’s belief that his evidence and submissions were not “adequately consider[ed]”, which belief stems from him parsing the reasons for judgment to count the paragraphs in which his evidence and submissions are expressly mentioned and by then mathematically calculating the percentage amounts of his evidence and submissions discussed. He infers that the portions of his evidence and submissions which were not mentioned were disregarded. Of course, that is a fallacious approach because judges are not required to mention in reasons for judgment every piece of evidence adduced and every argument advanced (Fox v Percy (2003) 214 CLR 118 at [41]; Whisprun Pty Ltd v Dixon (2003) 200 ALR 447 at 463–464).
The primary judge expressly took the husband’s second affidavit into account by discussing its content (at [20]–[26]). The primary judge did not expressly mention the husband’s first affidavit, which contained his allegations of the fraud, illegality and professional incompetence upon which he relied to resist the remuneration application, but such allegations were repeated in summarised form in the husband’s second affidavit. The second affidavit actually incorporated parts of the first affidavit by reference. Moreover, the husband’s multiple written submissions merely repeated the allegations made within his affidavits.
Inferentially, the husband prosecuted the appeal on the mistaken premise that the primary judge was obliged to accept his evidence of such misconduct as being truthful and correct, but the primary judge was unable to rely upon his allegations as proven facts unless and until the evidence was either admitted by the respondents (which they did not do) or tested and, because the primary judge was conducting an interlocutory hearing, none of the evidence was tested by cross-examination. The liquidators deny the husband’s allegations of their professional incompetence or impropriety and would want to be heard in rebuttal of such claims at the appropriate time. They would be denied procedural fairness otherwise. The respondents only adduced evidence to vindicate their remuneration claims.
Ground 2 is simply an affirmatory statement that the remuneration application was granted even though the husband deposed and submitted that the respondents had “not performed adequately”, which is not a competent ground of appeal because it asserts no recognisable form of legal, factual or discretionary appealable error. As an aside, it is not true the husband alleged inadequate performance by the receivers, as his complaints were confined to the liquidators.
The primary judge was not satisfied the claim made by the respondents for their remuneration should be delayed until either the husband’s allegations of the liquidator’s professional incompetence was investigated or some wider investigation of the alleged fraud and illegality of other persons was completed by the prudential agencies (at [50]).
The primary judge cited conflicting authority on the point of whether remuneration claims made by external corporate administrators should be determined before, after, or in conjunction with claims of breach of professional duty (at [50]), but did not set out to reconcile the conflict. The primary judge perceived the task at hand to be limited in this way:
51.Consistent with authority, I take the view that my principle [sic] role on this remuneration application is to consider, in a summary manner, whether based on the material proffered, the remuneration claimed is fair and reasonable.
The approach adopted by the primary judge was consistent with the approach recommended by recent authorities which do analyse and rationalise antecedent conflicting views on the topic (Re Wealth Street Pty Ltd (in liq) [2023] NSWSC 1482 at [9]; Re Barokes Pty Ltd (ACN 079 714 579) [2020] VSC 555 at [32(a)], [66], [69] and [70]).
Re Wealth Street endorsed Barokes, in which this was relevantly said:
69.The court’s function in a remuneration application is solely to assess whether the external administrator’s fees are reasonable and to determine what those fees should be. However, it is not a forum to inquire into the conduct of an external administrator. Nor should it be used as a mechanism to discipline or punish an external administrator. Because the remuneration assessment procedure is a summary one, it is neither appropriate nor possible to examine whether there has been unsatisfactory conduct by an external administrator, including conduct lacking in propriety or tantamount to breach of duty. Were it otherwise, the process could encourage satellite litigation by aggrieved parties with an interest in the external administration. It could also provide an opportunity for a collateral attack on the actions of an external administrator by a party who is otherwise the subject of investigations or claims arising from the company’s affairs. Either scenario could unnecessarily delay the finalisation of an external administration. As previously noted, allegations of misconduct, misfeasance, or breach of duty need to be properly tested through evidence, and natural justice afforded to the external administrator. As discussed further below, there are other provisions within the statutory regime which better accommodate the ventilation of grievances by interested persons.
70.Whilst [named litigant] is correct in its submission that a liquidator has the onus of establishing that his / her remuneration claim is reasonable, a liquidator or other external administrator does not, in my view, bear the onus of disproving allegations of unsatisfactory conduct, misconduct, impropriety, or breach of duty as part of the remuneration claim. It is for the objecting party to make out such allegations in a separate and more appropriate legal proceeding, such as an inquiry under s 90-10 of the Practice Schedule or a review of an external administrator’s decision under s 90-15.
(Footnotes omitted) (Bold emphasis added)
The primary judge, therefore, did not fall into error by deciding the remuneration application in isolation from the husband’s complaints about the liquidators’ professional performance. Accordingly, Grounds 1 and 2 both lack merit.
The decision to grant the remuneration application brought by the respondents does not prevent the husband from pursuing other civil and professional disciplinary remedies against them if he remains inclined to do so.
Ground 3
Ground 3 simply states the primary judge “refused or failed” to refer the alleged “illegal money laundering and tax fraud activities” to AUSTRAC for investigation, despite the husband’s request for his Honour to do so. The statement is correct, but it is not an appealable error merely to deny the grant of a remedy sought by a litigant. Appealable error only occurs if the remedy is wrongly denied.
The primary judge had no statutory duty to refer any party or third party to AUSTRAC or any other regulatory agency for investigation, so the omission to do so was not an error. The Court is not a “reporting entity” providing a “designated service” under the Anti-Money Laundering and Counter-Terrorism Financing Act 2006 (Cth) and therefore has no obligation to report suspicious financial transactions to AUSTRAC. The husband does not need the primary judge’s imprimatur to press ahead with complaints he may wish to personally lodge with AUSTRAC.
DISPOSITION
The application for leave to appeal is refused and the Notice of Appeal filed on 20 March 2024 is dismissed.
Despite defending the validity of the primary judge’s orders, the respondents foreshadowed in their Summary of Argument making alternate applications to vary them by extending the dates for their payment of remuneration from 31 March 2024 to a date 60 days after the Full Court delivers judgment, either by resort to the slip rule or by granting them leave nunc pro tunc to file a Notice of Cross Appeal. They abandoned both applications during the hearing, accepting they were misconceived, in which event they can be formally dismissed.
In April 2024, the appeal registrar directed the parties to file costs schedules no later than seven days prior to the first day of the Full Court sitting if they anticipated making costs applications. The respondents filed a costs schedule, though slightly late. Assuming the dismissal of the application for leave to appeal (or the appeal), they applied for costs against the husband on an indemnity basis or alternatively a party/party basis but could not quantify either claim when pressed to do so. The complicated tabulations in their costs schedule were of no assistance. We will therefore make procedural directions for written submissions to be filed so any costs application can be determined on the papers in chambers.
I certify that the preceding sixty-three (63) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justices Austin, Kari & Christie . Associate:
Dated: 8 July 2024
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