Child Support Registrar & Nixon

[2007] FamCA 32

FAMILY COURT OF AUSTRALIA

CHILD SUPPORT REGISTRAR & NIXON [2007] FamCA 32

FAMILY LAW – APPEAL – PROPERTY SETTLEMENT ORDERS – APPLICATION TO SET ASIDE OR VARY UNDER S 79A – CHILD SUPPORT DEBT – consent orders made between the husband and wife in relation to property – application for consent orders did not disclose the husband’s significant child support debt in relation to children of a previous marriage and no notice of application given to Child Support Registrar - whether the Federal Magistrate having determined that there had been a miscarriage of justice because of the failure to notify the Registrar of the consent orders, then erred in refusing to exercise the discretion under s 79A to set aside the consent orders

Allesch v Maunz [2000] 203 CLR 136; (2000) FLC 93-033

Official Trustee in Bankruptcy v Donovan and Donovan and Stevens (1996) FLC 92-703
Prowse and Prowse (1995) FLC 92-557

Taylor and Taylor [1978-1979] 143 CLR 1, (1979) FLC 90-674

APPELLANT:

Child Support Registrar

1^ST RESPONDENT:

Nixon

2^ND RESPONDENT:

FILE NUMBER:

APPEAL NUMBER:

Nixon

BRM 4303 of 2004

  NA 18 of 2005

DATE DELIVERED: 2 February 2007

PLACE DELIVERED:

  Canberra

JUDGMENT OF:

  Finn, Holden and Warnick JJ

HEARING DATE:

  7 November 2005

LOWER COURT JURISDICTION:

  Federal Magistrates Court

LOWER COURT JUDGMENT DATES:

  16 March 2005

 12 October 2006

COUNSEL FOR THE APPELLANT:

SOLICITOR FOR THE APPELLANT:

Mr Dorney SC (with Ms Sweetapple)

Australian Government Solicitor

COUNSEL FOR THE 1^ST RESPONDENT

SOLICITOR FOR THE 1^ST RESPONDENT:

Mr Shoebridge

Simonios Shoebridge Lawyers

COUNSEL FOR THE 2^ND RESPONDENT:               Mr McGregor

SOLICITOR FOR THE 2^ND RESPONDENT:            Varro Clarke & Co

Orders

1. That the appeal be allowed.

2. That the order made by Federal Magistrate Baumann on 16 March 2005 be set aside.

3. That the application of the Child Support Registrar for the setting aside of the orders made by the Family Court of Australia on 24 November 2003 be remitted to a Federal Magistrate (other than Federal Magistrate Baumann) for re-hearing but only for the limited purpose of determining whether, given the finding of Federal Magistrate Baumann that there has been a miscarriage of justice in the making of the orders, the discretion should be exercised to set aside the orders.

4. That the Court grants to the first respondent a costs certificate pursuant to the provisions of s 6 of the Federal Proceedings (Costs) Act 1981 being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the first respondent in respect of the costs incurred by the first respondent in relation to the appeal.

5. That the Court grants to the first respondent a costs certificate pursuant to the provisions of s 8 of the Federal Proceedings (Costs) Act 1981 being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the first respondent in respect of such part as the Attorney-General considers appropriate of any costs incurred by the first respondent in relation to the new trial granted by these orders.

6. That the Court grants to the second respondent a costs certificate pursuant to the provisions of s 6 of the Federal Proceedings (Costs) Act 1981 being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the second respondent in respect of the costs incurred by the second respondent in relation to the appeal.

7. That the Court grants to the second respondent a costs certificate pursuant to the provisions of s 8 of the Federal Proceedings (Costs) Act 1981 being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the second respondent in respect of such part as the Attorney-General considers appropriate of any costs incurred by the second respondent in relation to the new trial granted by these orders.

IT IS NOTED IN CONNECTION WITH THESE ORDERS that the judgment of the Court delivered this day will for all publication and reporting purposes be referred to as Child Support Registrar and Nixon.

FAMILY COURT OF AUSTRALIA AT BRISBANE

APPEAL NUMBER:            NA 18 of 2005          

FILE NUMBER:                    BRM 4303 of 2004 

Child Support Registrar

Appellant

And

Nixon

First Respondent

And

Nixon

Second Respondent

REASONS FOR JUDGMENT

1. This is an appeal by the Child Support Registrar of the Commonwealth of Australia (‘the Registrar”) against an order made by Baumann FM on 16 March 2005. By that order his Honour dismissed an application by the Registrar for the setting aside or variation pursuant to s79A of the Family Law Act 1975 (“the Act”) of property settlement orders made by consent by the Family Court on 24 November 2003.

2. Those property settlement orders had been made in proceedings between Mr Nixon, who is the first respondent to this appeal, and his wife, Mrs Nixon, who is the second respondent to this appeal.

background

1. In August 1993 the Registrar had issued an assessment against Mr Nixon for the payment of child support in respect of two children (born respectively in 1988 and 1990) of Mr Nixon’s prior marriage.

2. In July 1998 Mr Nixon married Mrs Nixon, but separated from her in November 2002.

3. On 23 July 2003 the Registrar issued a notice of demand to Mr Nixon requiring him to pay $56,070.02 by way of outstanding child support by 31 July 2003.

4. On 1 August 2003 Mr Nixon and the Registrar entered into an agreement for the payment of the outstanding liability by weekly instalments of $100.

5. When Mr Nixon defaulted on this arrangement, the Registrar caused an enforcement summons to be issued against him on 24 September 2003 in relation to the sum of $54,714.74.  The summons was served on Mr Nixon on 25 October 2003.

6. On 13 November 2003 an application for consent orders was filed in the Family Court on behalf of Mrs Nixon as applicant and Mr Nixon as respondent.  The application stated that Mrs Nixon had property to the value of $129,543 and liabilities to the value of $52,000 and that Mr Nixon had property to the value of $100,005 and liabilities to the value of $48,505.  The bulk of each party’s property was their share in their former home and the bulk of their liabilities was the mortgage on that home.  Importantly for present purposes, there was no reference to Mr Nixon’s debt to the Registrar in the application.

7. On 17 November 2003 Mrs Nixon received notice from the Australian Government Solicitor on behalf of the Registrar that the Registrar proposed to seek orders with respect to the former matrimonial home of herself and Mr Nixon.

8. On 24 November 2003 consent orders were made by the Family Court.  Pursuant to those orders Mr Nixon was to transfer to Mrs Nixon his interest in the joint tenancy which he had with her in their former home.

9. On 26 November 2003 Mr Nixon transferred to Mrs Nixon his interest in the home.

10. On 4 December 2003 the hearing of the Registrar’s enforcement summons against Mr Nixon was adjourned to 6 February 2004.

11. On 6 February 2004 consent orders were made in relation to the future conduct of the enforcement summons, which was further adjourned to 26 March 2004.

12. Also on 6 February 2004 the solicitors for the Registrar informed the solicitors for Mr Nixon and for Mrs Nixon that instructions were being sought to bring an application under s79A of the Act to set aside the consent orders.

13. On 17 February 2004 Mrs Nixon entered into a contract to sell the home for $265,000.  That sale was settled on 18 March 2004.

14. On 20 May 2004 the Registrar filed an application in the Federal Magistrates Court seeking a final order “to set aside or vary orders of the Family Court dated 24 November 2003 under s 79A Family Law Act”.

15. Also on 20 May 2004 the Registrar filed an application in a case seeking a range of orders including the following:

    1.The Orders of this Honourable Court dated 24 November 2003 be varied under section 79A of the Family Law Act 1975 (as amended) as follows.

    2.The First Respondent has at all times be justly and truly indebted to the Applicant in the amount $54,714.74 (or such amount as may be owing at the date of final hearing) for unpaid child support liability.

    3.The Second Respondent Pay to the Applicant the amount of $54,714.74 (or such amount as may be owing at the date of final hearing).

16. On 26 July 2004 Mr Nixon through his solicitor filed a response seeking the dismissal of the Registrar’s applications, and on 27 August 2004 Mrs Nixon through her solicitor filed a response also seeking the dismissal of the Registrar’s applications.

17. The Registrar’s applications were heard by Baumann FM on 12 November 2004 with final oral submissions being made on 26 November 2004. At the commencement of the hearing on 12 November 2004 the Federal Magistrate made it clear that he was only dealing with the Registrar’s application under s 79A as the following passage from the transcript shows:

    FEDERAL MAGISTRATE: Well, can I say this. It seems to me that the first issue that I should be looking at is the application brought by the Registrar to set aside the order between Mr and Mrs [Nixon]. That absolutely turns on, in a sense, whether the Registrar is able to establish it seems to be that the consent order, either in terms of its nature of its timing or whatever, ought to be set aside in terms of section 79A, the onus resting upon the Registrar.

    And even if they can prove certain things it’s still a question of discretion… So in terms of the enforcement it really flows from that and the quantification is a different issue.

    MR McGREGOR [COUNSEL FOR THE WIFE]:  Well, there’s more than that because the first thing is whether the order is set aside.

    FEDERAL MAGISTRATE:  Yes.

    MR McGREGOR:  That doesn’t then give the agency the right to attach that money.

    FEDERAL MAGISTRATE:  Oh, no, no, no, I accept that, no.

    MR McGREGOR:  There then has to be a trial ---

    FEDERAL MAGISTRATE: No, no, I accept that.  No, I accept that.  I accept that setting it aside would only mean essentially that presumably [the husband and the wife] ---

    MR McGREGOR: (Indistinct) trial.

    FEDERAL MAGISTRATE: --- consensual agreement which was approved by a Court no longer exists depending on what the nature of the order is and, yes, there’s lots of other permutations. …

    It seems to me that if I was minded to set aside the order well then the issue if the injunction may come up if one’s looking at preserving assets for what might ultimately attach upon any share of the pool that might be properly the entitlement of the payer father, if that right?

    McGREGOR: It may do.  No notice had been given as I understand it that there’s going to be an application for an injunction or any other orders for that matter.

    FEDERAL MAGISTRATE:  Well, the first cab off the rank is the 79A application.

18. In advance of the hearing of final submissions on 26 November 2004, the legal representatives of all three parties filed written submissions.  Then at the hearing on 26 November 2004 only Counsel for Mr Nixon made any detailed oral submissions, with Counsel for Mrs Nixon and Counsel for the Registrar apparently being content to rely on their filed written submissions.

19. Somewhat curiously given his Honour’s intimation at the commencement of the hearing on 12 November 2004 that he was only proposing to deal with the application under s 79A to set aside the consent orders, the submissions on behalf of the Registrar stated at an introductory point that in addition to an order under s 79A of the Act, relief was also being sought under s 72C of the Child Support  (Collections and Registration) Act 1988, and also that an order was being sought that Mrs Nixon “is indebted to [Mr Nixon] for an amount equal to the [child support debt]”. However, the remainder of the submissions appear to be directed only to the s 79A application.

20. On 16 March 2005 Honour delivered his reasons for judgment and made an order in the following terms:

    That the application filed 20 May 2004 for an order setting aside the orders of the Family Court of Australia made 24 November be dismissed.

the reasons for judgment of baumann fm

1. His Honour commenced his reasons for judgment by setting out the factual background in similar terms to the background as set out by us above. In the course of setting out the background, his Honour referred to the fact that on 20 May 2004 the Registrar had filed an application against Mr Nixon and Mrs Nixon seeking to set aside or vary the orders made on 24 November 2003 under s 79A of the Act. Shortly thereafter he set out the terms of s79A(1) in part and also s79A(2).

2. It will be useful for us to here set out the parts of those provisions included in his Honour’s judgment:

   (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; 

   …

   the court may vary the order, set the order aside, or set the order aside and make another order under section 79 in substitution for the order so set aside[.]

   …

   (2)In the exercise of its powers under subsection (1), (1A) or (1C), a court shall have regard to the interests of, and shall make any order proper for the protection of, a bona fide purchaser or other person interested.

3. His Honour then expressed himself satisfied that the Registrar was a “person affected by an order” within the means of s79A(1) (and thus had standing to make the application under s 79A(1)).

4. In the context of considering whether a miscarriage of justice had occurred, his Honour found that:

   ·    the Registrar had not persuaded him that Mrs Nixon knew of the enforcement proceedings at the time she signed the consent orders and they were sent to the Court (paragraph 15);

   ·    Mrs Nixon’ evidence that she had not known of the enforcement proceedings until 17 “December” 2003 (-we assume his Honour meant “November” rather than “December”) was “believable” (paragraph 16);

   ·    after Mrs Nixon received notice on behalf of the Registrar (on 17 November 2003) she was not (in his Honour’s view) obliged to inform the Registrar of the consent orders – “She was not to know when the order would be processed and made by the Family Court” (paragraph 17);

   ·    the parties to the consent orders “did not act in collusion for the purpose of denuding [Mr Nixon] of assets to avoid his child support liability” (paragraph 21);

   ·    that the Registrar had not established fraud, duress or the giving of false evidence (paragraph 22);

   ·    that the failure of Mr Nixon to inform the court of the existence of the child support debt constituted a material suppression of evidence by him (paragraph 23);

   ·    that Mr Nixon had an obligation to disclose the child support liability in the application for the consent orders (paragraph 24);

   ·    had the court been aware of the debt, it may have required that notice be given to the Registrar (paragraph 25);

   ·    the debt represented about 45 per cent of the equity in the ultimate value of the home and over 58 per cent of the equity disclosed in the application for the consent orders (paragraph 26);

   · the failure to give notice of the proceedings to the Registrar as an unsecured creditor, by a person who might be “affected” by the order could constitute a miscarriage of justice for the purposes of s79A (paragraph 27);

   ·    that a miscarriage of justice had occurred (paragraph 28).

5. Even though he had found a miscarriage of justice, his Honour was not, however, prepared to exercise the discretion to set aside the orders.  He commented in this regard at paragraph 29 that where a miscarriage of justice has been found to exist, it is “not axiomatic” that the order in question will be set aside, and he cited Prowse and Prowse (1995) FLC 92-557.

6. His Honour then continued in paragraph 30 to refer to the submissions made on behalf of Mrs Nixon as to the reasons why he should not exercise the discretion to set aside the orders – these reasons were then adopted by His Honour as reasons for not setting aside the orders:

   30.The written submissions of Counsel for Mrs [Nixon] at paragraph 13 and 14 asserts [sic] that the discretion to set aside the orders should not be exercised for a number of reasons, but relevantly in my view:-

   a)The debt has been permitted to accrue since 18 March 1993

   b)When finally the DSCR decided to demand payment, a compromise was reached and latitude in its compliance by Mr [Nixon] afforded.

   c)No notice was given to Mrs [Nixon] “until after the event”.

   d)DSCR “has been dilatory in pursuing its rights and in trying to protect the available property it now seeks to be made available to it”.

7. His Honour appears to expand on the last mentioned reason when he went on to observe in paragraphs 31 to 34:

   31.In the absence of any further actions by the [Registrar], Mrs [Nixon] was entitled to carry on normally.  Even when the [Registrar] knew of the disposal by Mr [Nixon] of his interest in the house (by his Declaration of 4 December 2003), the Enforcement Proceedings were merely adjourned.

   32.By 6 February (2 months later) Mrs [Nixon] was represented by Ms Steen and discussion took place with her (and the Solicitor for Mrs [Nixon]) – see paragraph 14 of Affidavit of Ian Anderson sworn 14 May 2004.

   33.The Applicant was at that time well aware of the Respondent’s case (consistent with the evidence offered to me) that Mrs [Nixon] would say her Husband made no (or minimal) contributions to the house.  The [Registrar] knew (or ought to have known) at that date, there was no legal impediment on Mrs [Nixon] selling the house.  She in fact didn’t do so until some eleven days later.

   34.The [Registrar] says they did not become aware of the sale until 25 May 2004, yet the initial application that was made was to set aside the order.  By that time, the house had been sold and the funds dissipated.

8. His Honour again stated in paragraph 35 that in the exercise of his discretion he would not set aside the order.  But before saying this, his Honour gave some indication of his views of Mrs Nixon’s likely entitlement in any property settlement.  His Honour’s precise comments in this regard are as follows:

   35.There is at least a reasonable prospect that the claims by Mrs [Nixon] that she was the major (almost total) contributor to the mortgage would found a division of property significantly in her favour.  I am not required to make that decision, because I have decided that, in the exercise of my discretion I will not set aside the order. 

9. His Honour further observed in paragraph 36 that he had also taken into account a submission made on behalf of Mrs Nixon that the property was no longer available, having become vested in bone fide purchasers.

10. He then said:

    37.The best that could be achieved might be to try and ultimately seek to trace any claim which the CSR says Mr [Nixon] had in the house, through assets which still remain in the possession or control of Mrs [Nixon] principally:

    - her car

    - some shares.

11. We observe at this point that the matters referred to in paragraphs 30 to 37 of the Federal Magistrate’s judgment are the full extent of his consideration of the exercise of the discretion to set aside the order, at least under the heading enunciated.

the issues raised on the appeal

1. Although the appellant Registrar’s notice of appeal against his Honour’s orders dismissing the s 79A application contained some twenty-two grounds of appeal, Counsel for the Registrar informed us at the commencement of the hearing of the appeal, that the attack on the exercise of the discretion (that is, the exercise of the discretion not to set aside the orders, notwithstanding the finding of a miscarriage of justice) was based on a number of propositions to the following effect:

   1.That where third party rights have been affected by a miscarriage of justice (of the kind here in question), there is a prima facie right in the third party affected to have the order in question set aside.

   2.That even if a prima facie right to have an order set aside does not arise when an interested party is deprived of the right to be heard before an order is made, a miscarriage of justice affecting a third party should be given very significant weight when the exercise of the discretion to set aside orders is being considered; such weight was not given in the exercise of the discretion in this case.

   3.That his Honour had not applied the tests set out in Allesch v Maunz [2000] 203 CLR 136; (2000) FLC 93-033 concerning the setting aside of orders made in the absence of a party and had thereby failed to take into account relevant matters.

   4.That his Honour had taken into account irrelevant matters, being the four matters set out in paragraph 30 of his judgment and the matters referred to in paragraph 36 of his judgment.

   5.That his Honour failed to have regard to the “special” nature of the Registrar’s debt.

1. The orders sought in the Registrar’s notice of appeal were limited to the following:

   1.That the decision of the learned Federal Magistrate dated 16 March 2005 be set aside.

   2.That the consent orders of the Family Court made on 24 November 2003 be set aside.

   3.That the respondents pay the appellant’s costs of and incidental to the appeal.

2. There was considerable discussion at the hearing of the appeal as to whether in the event that the appeal was successful, the orders sought by the Registrar in the notice of appeal were appropriate.  This was particularly so in relation to the proposed order that the consent orders of 24 November 2003 be set aside, as such an order would effectively mean, given the nature of an application for consent orders, that no proceedings would be pending, and it would seem that neither Mr Nixon nor Mrs Nixon would be likely to have an interest in initiating any further property settlement proceedings.

3. Further, we understood it to be common ground that if this Court found that the Federal Magistrate’s discretion had miscarried, we would not be able to re-exercise the discretion ourselves. Accordingly, the relief most likely to be efficacious for the Registrar to obtain in this appeal would be a limited remission to Baumann FM or to another Federal Magistrate, of that part of the s 79A application which involves the exercise of the discretion to set aside or vary the original order and to make a new order under s 79.

4. It should be noted in this regard that there is no cross appeal or notice of contention by Mr Nixon or Mrs Nixon directed to his Honour’s conclusions that the Registrar had standing to bring an application under s 79A(1), or that a miscarriage of justice had occurred.

5. The appeal is therefore concerned only with the question of whether Baumann FM erred in the exercise of his discretion when he determined not to exercise the discretion to set aside the consent orders of 24 November 2003.  This question is to be answered by reference to the propositions put to us by Counsel for the Registrar which we earlier set out.

is there a prima facie right in the registrar to have consent orders set aside?

1. In support of the first two of his propositions, it was submitted by Counsel for the Registrar that the statement made by the Full Court in Prowse (supra) upon which his Honour had relied when commenting that it was “not axiomatic” that an order must be set aside where a miscarriage of justice had been found, had been decided without reference to the decision of the High Court in Taylor and Taylor (1978-1979) 143 CLR 1, (1979) FLC 90-674.

2. The passage in question in the Full Court decision in Prowse (supra) which, it must be remembered, was concerned with proceedings under s 79A between a husband and a wife and did not involve any issue concerning the right of a third party to be heard before the order sought to be set aside was made, is as follows (at 81,566):

   …However, we do not think it would be correct to say that there is even a prima facie entitlement to have the consent orders set aside once a miscarriage of justice has been established, because to do so would be to limit the discretion of the Court and to place an onus upon the respondent to show circumstances why the order should not be made. The better view, in our opinion, is that an applicant for an order under s. 79A(1) bears the onus of satisfying the Court that the original orders should be set aside or varied, and that includes the onus of satisfying the Court not just that there has been a ``miscarriage of justice'' but also that the appropriate exercise of the discretion is to so order.

3. In Taylor (supra) members of the High Court were concerned with an order made in the absence of one of the parties to a marriage and with the operation of s 79A in an earlier form which provided only that:

   Where, on application by a person affected by an order made by a court under section 79, the court is satisfied that the order was obtained by fraud, by duress, by the giving of false evidence or by the suppression of evidence, the court may, in its discretion, set aside the order...

4. While there was some difference of opinion within the High Court as to the operation of s79A in the form in which it then was, all members of the High Court recognised an inherent, but discretionary power (in the Family Court) to set aside an order made without notice to a party:

   …However, since the appellant in fact had no notice of the hearing, the court had inherent power to set the order aside. This power was a discretionary one, but there was no reason to refuse the appellant's application. The appellant had filed affidavit material which showed that the facts of the case were seriously in contest. The proper course was to set aside the order of Woodward J. and to reconsider the matter, as Hogan J. did. (per Gibbs J at 8-9)

   …

   Whatever power sec. 79A(1) of the Family Law Act 1975 may fortuitously have conferred upon Hogan J., it is, rather, upon the substantial ground that the respondent husband was deprived of any opportunity to present his case that the original order, insofar as it relates to the matrimonial home, should be disposed of. …I agree that Hogan J. had inherent jurisdiction, in the particular circumstances to vary that order. (per Stephen J at 10)

   …

   What sec. 79A(1) does is to give the court a discretion to set aside an order when it has been obtained by false evidence. In such a case the court will be extremely reluctant to exercise its discretion in favour of setting aside the order unless something more appears than that false evidence has been given and has procured the making of the order. The importance of bringing an end to litigation and the evil of allowing cases to be retried on the same evidence are powerful deterrents against setting aside a judgment whenever it appears that it has been obtained by false evidence without more. Where, however, more appears, as, for example, that the judgment was obtained ex parte without the benefit of the evidence to be given by one of the parties, then the court will the more readily exercise its discretion in favour of setting aside the judgment will not result in a retrial on the same evidence but in a trial on the evidence given by both parties.

   …

   As this is an appeal from the Full Court of the Family Court it is for this Court to make the order that should have been made by that Court in the light of the circumstances then established to exist. The Full Court had the advantage of knowing that the appellant's failure to appear before Woodward J. was due to no fault on his part and likewise that the respondent's failure to appear before Hogan J. was due to no fault on her part. The Full Court should then have approached the case on the footing that it was prima facie the right of each party to have the proceedings heard in his or her presence and that justice to both parties required that each party should be entitled to present his or her case. As Jenkins L.J. said in Grimshaw v. Dunbar , [1953] 1 Q.B. 408, at p. 416:

   ``... a party to an action is prima facie entitled to have it heard in his presence; he is entitled to dispute his opponent's case and cross-examine his opponent's witnesses, and he is entitled to call his own witnesses and give his own evidence before the court. Prima facie that is his right, and if by some mischance or accident a party is shut out from that right and an order is made in his absence, then common justice demands, so far as it can be given effect to without injustice to other parties, that that litigant who is accidentally absent should be allowed to come to the court and present his case — no doubt on suitable terms as to costs, as was recognized in Dick v. Piller , [1943] K.B. 497.''

   Although the Family Court is a court created by statute it none the less possesses an inherent jurisdiction to set aside a judgment obtained by default. Three members of this Court (Latham C.J., Rich and Williams JJ.) concluded in Cameron v. Cole (1944) 68 C.L.R. 571, at pp. 586, 589 and 607, that the Federal Court of Bankruptcy had an inherent jurisdiction to set aside its orders, notwithstanding that it was a statutory court and, further, that it was a court of limited jurisdiction. A jurisdiction to set aside its orders is inherent in every court unless displaced by statute. In my opinion the jurisdiction extends not only to the setting aside of judgments which have been obtained without service or notice to a party (Craig v. Kanssen, [1943] K.B. 256, at pp. 262-263 but to the setting aside of a default or ex parte judgment obtained when the absence of the party is due to no fault on his part. I can find no indication in the Family Law Act of an intention to displace this inherent jurisdiction. (per Mason J at 14-16)

   …

   A rule may be recognised that where (in the exercise of federal jurisdiction) an order has been made against a person who, through his own fault (or without the fault of the court or the other party) has not availed himself of an opportunity to be heard, the court may in its discretion set aside the order and allow the matter to be reheard. Such a rule may properly be characterised as a federal common law rule of judicial power. This rule should be excluded only by unmistakable language, that is, express words or necessary implication. Section 79A does not contain language unmistakably evincing an intention to exclude such a common law rule. The discretion to reopen should be applied only with caution. Factors to be considered are the presence or absence of some real explanation for failure to use the opportunity to be heard, delay, acquiescence, prejudice to the other party. (per Murphy J at 20-21)

   …

   The principle that parties to litigation are entitled to be present and heard, either in person or by a duly authorized legal representative, is of fundamental importance and involves the consequence that, where through no fault of his own, a party is deprived of that entitlement, prima facie any order of a court made against him may be set aside by that court. I can see no basis for confining the application of that principle to cases where there has been a failure to serve the process or give other appropriate notice.  (per Aickin J at 22)

5. More recently and, it is important to note, subsequent to the Full Court decision in Prowse (supra), the High Court majority in Allesch v Maunz (supra) discussed the operation of s 79A (in the form which for present purposes can be regarded as the same form in which it was at the time of Baumann FM’s decision in the present case) in a case where an order made in the absence of a party is sought to be set aside:

   25. There was discussion in the majority judgment of the Full Court as to whether the discretion to set aside the property settlement orders arose under the property settlement orders, themselves, pursuant to s 79A of the Act, or pursuant to the inherent power of the Family Court identified by this Court in Taylor v Taylor. Section 79A has been amended since the decision in Taylor and, by sub-s (1)(a), the Family Court may now, in its discretion, set aside a property settlement order, if satisfied that ``there has been a miscarriage of justice by reason of fraud, duress, suppression of evidence, the giving of false evidence or any other circumstance''. There can be no doubt that the expression ``any other circumstance'' is wide enough to encompass the situation in which an order has been made in the absence of a party. Accordingly, s 79A must now be construed as applicable to that situation.

   26. Given that s 79A(1)(a) now confers power on the Family Court to set aside an order made in the absence of a party, it may be doubted whether there is any longer any scope for the exercise of inherent power in that regard. And even if the husband's application to set aside the property settlement orders was made pursuant to those orders rather than pursuant to s 79A of the Act, the orders could not be set aside on any basis other than that directed by that section, namely, that the Court was satisfied that there had been a miscarriage of justice. However, nothing turns on the nature of the application or the source of the discretion which Finn J was called to exercise and which the Full Court exercised in dismissing the appeal from her Honour's judgment. That is because there is nothing in s 79A of the Act to suggest that the discretion thereby conferred is to be exercised on any different basis from that applicable in the case of an inherent discretion.

   27. In Taylor, Gibbs J, with whom Stephen J agreed, and Mason J, with whom Aickin J agreed, each viewed the discretion to set aside an order made in the absence of a party as a corollary to the requirement that, before a person can be adversely affected by a judicial order, he or she must be afforded an adequate opportunity of being heard. In that case the party's failure to appear was due to no fault of his own and Mason J expressed the view that the discretion to set aside the order made in his absence should have been approached ``on the footing that it was prima facie the right of each party to have the proceedings heard in his or her presence and that justice to both parties required that each party should be entitled to present his or her case.'' Murphy J saw the discretion to reopen as an aspect of federal judicial power which was to be exercised ``only with caution.''  The factors to be considered, in his Honour's view, were ``the presence or absence of some real explanation for failure to use the opportunity to be heard, delay, acquiescence, [and] prejudice to the other party.''  However, nothing presently turns on whether the inherent power to set aside an order made in the absence of a party is a corollary to the right of a party to be heard or is an aspect of federal judicial power.

   28. The consideration which informs the power conferred by s 79A of the Act is that the court be satisfied that there was ``a miscarriage of justice''. And whether exercising inherent power or a power of the kind conferred by s 79A of the Act, a court will, ordinarily, be satisfied that there has been a miscarriage of justice if a person has suffered an adverse order in circumstances where his or her failure to appear is adequately explained unless it also appears that no different result would be reached on a rehearing or that a rehearing would work an irremediable injustice to the other side. In this last regard, it should be noted that injustice will often be capable of remedy by the imposition of terms as to costs. However, where, as here, orders have been carried into effect, injustice may not be capable of remedy except on terms that those orders stand and that the matter be reopened only to a limited extent. [Footnotes omitted].

6. It is not clear to us precisely what counsel for the Registrar meant when he said in paragraph 15 of his written submissions that “… where third party rights have been affected by a miscarriage of justice… of this particular kind, a prima facie right to have those orders set aside should arise upon application by the third party affected”.  If counsel was submitting that there is an automatic right in a party to have an order made without notice to that party set aside and that there is no discretion in the Court to refuse to set aside the order, that cannot, in our view, be correct.  It seems to us on a reading of the judgments in Taylor (supra) that all the Justices recognised that such relief was discretionary.

7. But in any event it seems to us that the matter has been put beyond doubt in Allesch v Maunz (supra), with the majority there referring in paragraph 27 to “the discretion” to set aside an order made in the absence of a party.  Moreover the majority in Allesch v Maunz also suggests that the power to set aside an order made in the absence of a party is part of the power contained in s 79A(1) which, it must be remembered, was the power relied upon by the Registrar for the setting aside of the consent orders in this case. The concluding words of s 79A(1) make it clear that even after a miscarriage of justice has been established, there remains a discretion as to whether or not to set aside the orders. Thus we do not consider it helpful, to say the least, to use the expression “prima facie right” in a party to have a judgment made in that party’s absence, set aside.

8. However, given the emphasis placed by the High Court in both Taylor and Allesch v Maunz on the right of a party to be heard when an order is to be made affecting that party, we accept that where a party has not been given notice of the proceedings in which the order was made, and thus not been heard on the making of the order, that that is a matter which should be given very significant weight in the exercise of the discretion to set aside the order.   As his Honour did not refer to the fact that the order had been made without notice to the Registrar, it has to be assumed that he gave this fact no weight, and thus his discretion must be regarded as having miscarried on account of his failure to have regard to this important matter.

9. We add that we do not accept, as we understood to be submitted by the respondents, that a distinction should be drawn between a party to the proceedings as opposed to a third party.  As was said by the full Court in Official Trustee in Bankruptcy v Donovan and Donovan and Stevens (1996) FLC 92-703 (and as recognised by Baumann FM is paragraph 27 of his reasons):

   This Court has, on numerous occasions, emphasised the obligation of full disclosure of third party interests to the Court and the responsibility of notification to third parties. See Chemaisse and Chemaisse; Federal Commissioner of Taxation (supra), Re Chemaisse; Federal Commissioner of Taxation (Intervener) (supra), Deputy Commissioner of Taxation (WA) v Spanjich (supra), Rowell and Rowell; Deputy Federal Commissioner of Taxation (Intervener) (supra), Re Bailey and Bailey (supra), Semmens v Commonwealth of Australia and Collector of Customs (SA) (supra) and Biltoft and Biltoft (supra). The only finding open to the trial Judge on the evidence was that neither the Law Society, the Receiver of the husband's practice, nor the persons whose funds were misappropriated by the husband were notified of the return date of the relevant proceedings or that the parties intended, if possible, to seek that the duty Judge make final orders in relation to the wife's claim under s 79 on that return date, namely, 7 February 1986. Clearly, on the evidence, the ability of a claimant to recover a debt arising out of the husband's misappropriation was likely to be affected by the making of the final orders which were in fact made.

   In our judgment, in the circumstances of this case, there was an obligation to notify, and given the relevant statutory scheme, to notify the Law Society of the proceedings, the return date of those proceedings and that, if possible, final orders would be sought on that return day to enable the Law Society, if it so desired, to seek to intervene in the proceedings, or a stay of the proceedings or some other appropriate order. That obligation was not discharged by placing the relevant material before the Court.

   In the circumstances of this case, the failure to so notify amounts to a miscarriage of justice within the meaning of s 79A(1)(a).

the failure to take into account the matters in allesch v maunz

1. It was next asserted by Counsel for the Registrar that his Honour failed to apply or even refer to the tests or matters referred to in Allesch v Maunz. We understood counsel to be referring to the matters mentioned by the High Court majority in paragraph 32 of that judgment (in which the discussion was concerned with the matters to be taken into account in exercising the discretion under s 79A(1), albeit by the Full Court on a re-exercise of the discretion):

   32.…The matters taken into consideration by the Full Court were relevant to the question whether a rehearing would occasion the wife some injustice that could not be remedied by the imposition of terms, but that question was not answered. Nor did the Full Court determine whether a rehearing might result in some different outcome. These were issues which should have been determined if the Full Court was, itself, to exercise the discretion to set aside the property settlement orders by reference to circumstances as they then existed.…

1. In our opinion the learned Magistrate unduly truncated the enquiry into the orders that might have been made at the time that the orders attacked in the application before him were made or which the learned Federal Magistrate might have made had he set those orders aside.  As earlier seen, the only enquiry which the learned Magistrate made was really as to whether there was a reasonable prospect that the wife’s case on contributions might be accepted.

2. The learned Federal Magistrate thought himself relieved of any further enquiry about that because he had already decided not to set the order aside but further enquiry in our view was necessary before he reached that position.  This should have involved some consideration of the facts bearing upon the question of whether or not it was appropriate that the child support debt be deducted either in whole or in part in the process of ascertaining a net pool of assets.  Depending on the answer to that question, it might have been necessary to also consider the desirability of making any adjustment in the husband’s favour, on account of a need to meet that debt, if it was left as solely his responsibility and not included in the calculation of net assets.

3. Further, as to the orders that he might have made, while the learned Magistrate noted the assets that remained in the possession of the wife, he did not address their value comparative to the claim of the Registrar and the constituent parts of that claim.

4. Accordingly, this challenge to his Honour’s decision based on the matters canvassed in paragraph 32 of the High Court judgment in Allesch v Maunz and his failure to consider fully those matters also has substance.

the alleged irrelevant matters taken into account

1. It was also submitted for the appellant Registrar that the matters taken into account by his Honour in paragraph 30 of his reasons for not setting aside the orders were irrelevant.  It will be recalled that those matters were:

   30.      …

   a)The debt has been permitted to accrue since 18 March 1993

   b)When finally the DSCR decided to demand payment, a compromise was reached and latitude in its compliance by Mr [Nixon] afforded.

   c)No notice was given to Mrs [Nixon] “until after the event”.

   d)DSCR “has been dilatory in pursuing its rights and in trying to protect the available property it now seeks to be made available to it”.

2. We do not accept the assertions of Counsel for the Registrar that such matters could have no relevance.  However, we think that their relevance in this case is not more than slight.  As pointed out by Counsel, it is not as if the current debt existed in 1993 and no action had been taken in respect of it.  It is a debt that has accrued over the decade since the assessment was made. We think it unduly harsh on the Registrar to suggest that, because he entered into a compromise rather than pursue the half-interest of a parent in his residence, that that amounted to some dilatoriness.  Similarly, to argue that the Registrar failed to pursue a judgment for the debt and support it by a caveat is to criticise him for avoiding costs and an action which has aspects of heavy handedness.

3. The suggestion that no notice was given to Mrs Nixon until after the event depends of course upon what the “event” was.  As seen, a significant event, namely the making of the orders, occurred after she was given notice of the Registrar’s intention to pursue recovery against the husband’s interest in the real property.  In our view, his Honour should have taken into account the knowledge that Mrs Nixon did have concerning Mr Nixon’s child support liability and also the Registrar’s advice to her concerning his interest in the home, when deciding whether to exercise the discretion to set aside the orders.

the “special” nature of the debt

1. Counsel also urged upon us that the debt to the Child Support Registrar was a “special debt” being pursuant to statute and for the support of children of the husband, and that this was a consideration which should have been taken into account in the exercise of the discretion.  While we do not think that the debt ought be regarded as “special”, we do accept that the nature of, and circumstances which gave rise to, a debt may be relevant in a particular case in the exercise of discretion whether or not to set aside a property order, and that the nature of the debt in the instant case certainly has nothing about it which in any way detracts from the significance of the failure to notify the Registrar of the proposed consent orders altering property interests.

conclusion

1. Accordingly, though we do not accept all arguments for the Registrar, in our view his Honour’s exercise of the discretion has been shown to have miscarried in a way which, having regard to the authorities concerning appellate interference with discretionary judgments, would warrant our interference.  Thus the appeal must be allowed.

what orders ought then be made?

1. Possible courses open to us are:

   1. To allow the appeal and set aside the dismissal of the Registrar’s s 79A application, with remission of that application for rehearing either in whole or in part (in particular as to the re-exercise of the discretion of whether or not to set aside the consent orders, the miscarriage of justice finding remaining undisturbed).

   2.     To allow the appeal, followed by a re-exercise of the discretion by us as to whether or not to set aside the consent orders.  The difficulty with this is that we have found that the learned Magistrate truncated his consideration of certain matters and therefore we are without the benefit of findings in a number of respects.

2. As earlier mentioned, during the hearing of the appeal there was discussion between the bench and the bar table about the consequences of an order whether by us on a re-exercise or by the Federal Magistrates Court on remission, setting aside the consent orders, bearing in mind that the parties obviously did not then want to litigate the question of entitlement to property interests between them.  There seemed no reason to think that they would feel otherwise at this time or in the future.  Upon reflection, we do not think those observations affect the available courses, albeit relevant to the conclusion to which we on a re-exercise might come, or to which the Federal Magistrates Court on a rehearing might come.

3. We are of the view that the appeal ought be allowed, the order dismissing the Registrar’s application be set aside and the Registrar’s application under s 79A remitted for a limited rehearing to be conducted on the basis that a miscarriage of justice had been found, and that it is only the issue of whether the orders should be set aside that is required to be determined.

costs of the appeal

1. At the conclusion of the hearing of the appeal we invited and received submissions in relation to the costs of the appeal. 

2. In the event that the appeal was to succeed (as it has) we understood it to be common ground that there should be no order for costs, but rather that both respondents should be granted certificates in respect of the hearing of the appeal and of the re-hearing.  We agree with that approach.  We did not understand a costs certificate to be sought by the appellant Registrar.  However, it would remain open to the appellant Registrar to apply for such a certificate following the delivery of this judgment (if such a certificate is available to a Commonwealth instrumentality).

I certify that the preceding sixty-three (63) paragraphs are a true copy of the reasons for judgment of this Honourable Full Court

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