Colburn & Cleese
[2022] FedCFamC1A 147
Federal Circuit and Family Court of Australia
(DIVISION 1) APPELLATE JURISDICTION
Colburn & Cleese [2022] FedCFamC1A 147
Appeal from: Cleese & Colburn [2022] FedCFamC1F 282 Appeal number: NAA 120 of 2022 File number: SYC 2480 of 2016 Judgment of: MCCLELLAND DCJ, AUSTIN & GILL JJ Date of judgment: 23 September 2022 Catchwords: FAMILY LAW – APPEAL – PROPERTY – Jurisdiction – Declaration of de facto relationship – Where judgment was entered between the parties by consent in the Supreme Court of NSW (“the Supreme Court”) dividing their property interests pursuant to the Property (Relationships) Act 1984 (NSW) (“the State Act”) – Where the primary judge declared the de facto relationship existed during a period covered by the Supreme Court judgment – Claim estoppel – Where the right to property settlement relief had already been asserted and determined by the Supreme Court judgment – Issue estoppel – Where the respondent was estopped from contending the de facto relationship was still in existence at a time when the Supreme Court judgment was premised upon its cessation – Findings not open on the evidence – Where the findings of the primary judge were made in reliance upon the respondent’s uncorroborated evidence, which was inconsistent with facts incontrovertibly established before the Supreme Court – Accrued jurisdiction – Where resort to the use of power under the State Act to set aside the Supreme Court judgment in the exercise of accrued jurisdiction was not intrinsic to the disposition of the respondent’s federal claim – Whether the primary judge erred by finding the parties improperly procured the Supreme Court judgment and that it was an abuse of process – Where it was not reasonably open for the primary judge to find the parties intentionally misled the Supreme Court and abused its process – Error established – Appeal allowed – Costs certificates granted for the appeal and the re-hearing. Legislation: Commonwealth Powers (De Facto Relationships) Act 2003 (NSW) s 4
Family Law Act 1975 (Cth) Pt VIIIAB, ss 4AA, 90RD, 90RE, 117
Family Law Amendment (De Facto Financial Matters and Other Measures) Act 2008 (Cth)
Federal Circuit and Family Court of Australia Act 2021 (Cth) s 26
Federal Proceedings (Costs) Act 1981 (Cth)
Judiciary Act1903 (Cth) s 79
Limitation Act 1969 (NSW) s 17
Property (Relationships) Act 1984 (NSW) s 18
Supreme Court Rules 1970 (NSW) Pt 15, r 23
Uniform Civil Procedure Rules 2005 (NSW) rr 14.22, 14.23, 17.7
Cases cited: ASIC v Edensor Nominees Pty Ltd (2001) 204 CLR 559; [2001] HCA 1
Chamberlain v Deputy Commissioner of Taxation (1998) 164 CLR 502; [1988] HCA 21
Clarence & Crisp (2016) FLC 93-728; [2016] FamCAFC 157
Clayton v Bant (2020) 385 ALR 41; [2020] HCA 44
Colburn & Cleese (2020) FLC 93-995; [2020] FamCAFC 278
Corporation of the City of Enfield v Development Assessment Commission (2000) 199 CLR 135; [2000] HCA 5
Crick & Bennett (2018) FLC 93-832; [2018] FamCAFC 68
Cuan & Kostelac (2017) FLC 93-801; [2017] FamCAFC 188
Dahl & Hamblin (2011) FLC 93-480; [2011] FamCAFC 202
Edwards v Noble (1971) 125 CLR 296; [1971] HCA 54
Fox v Percy (2003) 214 CLR 118; [2003] HCA 22
Harrison v Schipp (2002) 54 NSWLR 612; [2002] NSWCA 78
Jamieson v The Queen (1993) 177 CLR 574; [1993] HCA 48
Laws v Australian Broadcasting Tribunal (1990) 170 CLR 70; [1990] HCA 31
Lee v Lee (2019) 266 CLR 129; [2019] HCA 28
Lennon & Sanil (2020) FLC 93-962; [2020] FamCAFC 109
Licul v Corney (1976) 180 CLR 213; [1976] HCA 6
Minister for Immigration and Border Protection v SZVFW (2018) 264 CLR 541; [2018] HCA 30
Nord & Van (2018) FLC 93-833; [2018] FamCAFC 75
Reid v Lynch (2010) FLC 93-448; [2010] FamCAFC 184
Rizeq v Western Australia (2017) 262 CLR 1; [2017] HCA 23
Robinson Helicopter Co Inc v McDermott (2016) 331 ALR 550; [2016] HCA 22
Saravinovski v Saravinovska [2017] NSWCA 85
Schorel & Schorel (1990) FLC 92-144; [1990] FamCA 58
Sinclair & Whittaker (2013) FLC 93-551; [2013] FamCAFC 129
Smith v Smith (1986) 161 CLR 217; [1986] HCA 36
State of NSW v Kable (2013) 252 CLR 118; [2013] HCA 26
Tomlinson v Ramsey Food Processing Pty Ltd (2015) 256 CLR 507; [2015] HCA 28
Trustees for the Roman Catholic Church for Diocese of Bathurst v Hine [2016] NSWCA 213
Valceski v Valceski (2007) 70 NSWLR 36; [2007] NSWSC 440
Warren v Coombes (1979) 142 CLR 531; [1979] HCA 9
Weaver v Law Society of NSW (1979) 142 CLR 201; [1979] HCA 35
Zetta Jet Pte Ltd v The Ship Dragon Pearl [No 2] (2018) 265 FCR 290; [2018] FCAFC 132
Number of paragraphs: 88 Date of hearing: 1 September 2022 Place: Heard in Sydney, delivered in Newcastle Counsel for the Appellant: Mr Cox SC with Mr O’Brien Solicitor for the Appellant: Bryant McKinnon Lawyers Counsel for the Respondent: Mr McNally SC with Mr Stewart Solicitor for the Respondent: Dorter Family Lawyers & Mediators ORDERS
NAA 120 of 2022
SYC 2480 of 2016FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
DIVISION 1 APPELLATE JURISDICTIONBETWEEN: MR COLBURN
Appellant
AND: MS CLEESE
Respondent
order made by:
MCCLELLAND DCJ, AUSTIN & GILL JJ
DATE OF ORDER:
23 September 2022
THE COURT ORDERS THAT:
1.The appeal is allowed.
2.The Notice of Contention filed on 27 June 2022 is dismissed.
3.The orders made on 2 May 2022 are set aside.
4.The proceedings are remitted for re-hearing by a judge of the Federal Circuit and Family Court of Australia (Division 1) other than the primary judge, but only in so far as declaratory and substantive relief may be available to the parties under Pt VIIIAB of the Family Law Act 1975 (Cth) for the period after judgment was entered between them in the Supreme Court of NSW on 28 November 2006.
5.The appellant’s application for costs is dismissed.
6.The appellant is granted a costs certificate pursuant to s 9 of the Federal Proceedings (Costs) Act 1981 (Cth), 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 him in respect of the costs incurred by him in relation to the appeal.
7.The respondent is granted a costs certificate pursuant to s 6 of the Federal Proceedings (Costs) Act 1981 (Cth), 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 her in respect of the costs incurred by her in relation to the appeal.
8.Each party is granted a costs certificate pursuant to s 8 of the Federal Proceedings (Costs) Act1981 (Cth), being certificates that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise payments under that Act to each party in respect of such part, as the Attorney-General considers appropriate, of any costs incurred by each party in relation to the new trial granted by these orders.
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 Colburn & Cleese has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
MCCLELLAND DCJ, AUSTIN & GILL JJ:
This is an appeal from a judgment delivered by a judge of the Federal Circuit and Family Court of Australia (Division 1) on 2 May 2022, the principal aspect of which was to declare, pursuant to s 90RD of the Family Law Act 1975 (Cth) (“the Act”), that the parties were in a de facto relationship for five discrete periods, the first of which commenced in 1991 and the last of which ended in May 2014.
Ancillary orders were then made to enable the respondent’s pending application for property settlement relief under Pt VIIIAB of the Act to proceed to trial. To facilitate that process, the primary judge additionally set aside an earlier judgment entered between the parties in the Supreme Court of NSW (“the Supreme Court”) on 28 November 2006 (“the Supreme Court judgment”) dividing their property interests pursuant to the provisions of the Property (Relationships) Act 1984 (NSW) (“the State Act”), during what was found by his Honour to be the third phase of the de facto relationship.
For the reasons which follow, the appeal succeeds with costs and there is no reasonable option but to remit the proceedings for re-hearing.
background
The appellant is 75 years old and the respondent is 76 years old.
The appellant admits the parties were in a de facto relationship from 1995 until the end of 2000, but contends their legal rights arising from that relationship merged in the Supreme Court judgment in 2006.
The respondent, however, contends for a relationship of much greater length, beginning in 1990, subsisting when the Supreme Court judgment was entered in 2006, and not finally ending until May 2014.
The dispute over the length of the de facto relationship and the timing of its breakdown was fundamental to the establishment of jurisdiction to entertain the respondent’s application for property settlement under Pt VIIIAB of the Act, filed in April 2016, as one pre-condition to the existence of federal jurisdiction is that the de facto relationship did not end until after 1 March 2009. The primary judge duly found it did.
The primary judge found the relationship did not begin quite as early as the respondent alleged, but that it endured until May 2014, though punctuated by several periods of separation. The specific findings, as reflected in the declaration made, were that the de facto relationship existed during these periods:
(a)1991 to 1994;
(b)1995 to the end of 2000;
(c)September 2006 to July 2010;
(d)January 2011 to October 2012; and
(e)April 2013 to May 2014.
Such findings collided with the Supreme Court judgment, entered in November 2006 on the premise that the parties’ de facto relationship had broken down four years prior in November 2002, thereby enabling the consequential adjustment of their property interests under the State Act. Yet the primary judge contrarily found the parties’ de facto relationship broke down earlier than 2002 and was back in full swing before November 2006.
Realising that the Supreme Court judgment obstructed the grant of any subsequent property settlement relief under Pt VIIIAB of the Act covering the whole of the de facto relationship, which was declared to reach as far back as 1991, the primary judge accepted the respondent’s submission that his Honour was vested with power under the State Act to set aside the Supreme Court judgment and smooth the way for a fresh exercise of discretionary power, saying:
122.… This Court has jurisdiction to make orders altering property interests between the parties because there was a breakdown of a de facto relationship after 1 March 2009. The Court may then also exercise the powers afforded to it under the state law pursuant to its accrued jurisdiction, to make declarations and/or orders to grant relief so as to determine the whole of the justiciable controversy between the parties. This includes the power under s 41 of the State Act to vary or set aside the agreement as to judgment. …
…
126.It beggars belief that this Court could not appropriately intervene to remedy an abuse of process (because the parties had resumed their de facto relationship) in which both [Respondent] and [Appellant] were complicit, notwithstanding a comprehensive scheme of referral of powers that was driven by public interest, and intended to avoid a multiplicity of proceedings. The existence of a single justiciable controversy in this case is clear.
127.This Court is empowered to set aside the agreement as to judgment.
In purported exercise of power under the State Act, the primary judge determined to set aside the Supreme Court judgment (at [131]–[161]) and found there was no need to then consider the respondent’s alternate argument about the appellant being precluded by principles of estoppel from reliance upon the Supreme Court judgment (at [162]–[165]).
The primary judge did not conversely deal with the appellant’s proposition that principles of estoppel precluded the respondent and his Honour from going behind the Supreme Court judgment, which oversight is fatal to the validity of the judgment.
leave to appeal
The appellant sought leave to appeal, but there is no need. The Full Court has held on numerous prior occasions that declarations made under s 90RD of the Act are final, not interlocutory, decrees and so leave is not required to appeal from such declarations (Nord & Van (2018) FLC 93-833 at [10]–[12]; Crick & Bennett (2018) FLC 93-832 at [88] and [93]; Cuan & Kostelac (2017) FLC 93-801 at [103]; Dahl & Hamblin (2011) FLC 93-480 at [51]).
Such declarations finally determine the parties’ rights about the existence and timing of their de facto relationship, since the declaration transforms the factual finding into a binding pronouncement which estops further controversy over the issue, thereby meeting the defining criteria of a “final” order in the traditional sense (Licul v Corney (1976) 180 CLR 213), even though the declarations do not finalise the broader litigious dispute between the former de facto partners over the division of their property interests.
The Act expressly provides that declarations made under s 90RD take effect as a judgment of the Court (s 90RE(1)). The only purpose of a provision in those terms could be to place beyond doubt the finality of the declaration, making it a “judgment” which is amenable to appeal as of right (s 26(1) of the Federal Circuit and Family Court of Australia Act 2021 (Cth)).
Nor is leave needed to appeal from the separate order which sets aside the Supreme Court judgment, it too being final in nature.
the appeal
The fundamental issue in the appeal was what the primary judge could and should have done in the face of the Supreme Court judgment. The parties acknowledged that to be so, though they submitted for entirely different answers.
The appellant contended his Honour made a mistaken factual finding about the third phase of the de facto relationship (Ground 1), made mistaken findings about the fourth and fifth phases of the de facto relationship (Ground 8), erred in concluding he had power to set aside the Supreme Court judgment under the State Act (Ground 2), and erred by invoking the power under the State Act, even if seized of it (Grounds 3, 4, 5, 6 and 7).
The respondent filed a Notice of Contention, but only to meet the attack mounted against the appealed Order 2, which sets aside the Supreme Court judgment, by advancing reasons why that order should be affirmed even if the appellant’s assertions of error are established. However, the respondent did not purport to save the declaration about the periods of the de facto relationship if vitiated by error (Order 1). The respondent confirmed in her Summary of Argument that she did not press the Notice of Contention, so it is dismissed.
Estoppel
Before turning to the grounds of appeal, it is apposite to deal with the estoppel created by the Supreme Court judgment, which issue was raised at trial but not addressed at all in the reasons for judgment. Although raised indirectly by the appeal, it is an issue which assumes primary importance.
Before the primary judge, the appellant contended:
…the Court does not have jurisdiction to set aside the [Supreme Court judgment] and that an estoppel arises in relation to the first period the subject of [the alleged de facto relationship].
…
The Supreme Court orders are consent orders and as such operate as an estoppel as clearly articulated by the High Court in Clayton v Bant [2020] HCA 44.
The High Court endorsed the observations of the Full Court of The Family Court In the Marriage of Caddy v Miller (1986) FLC 91-720 at 75,233 where the plurality found that the law:
“…includes the rule that a party is precluded from adducing evidence in a case the object or effect of which is to dispute against another party the correctness of the merits of an earlier decision in proceedings between the same parties disposing of the same cause.”
(Appellant’s written submissions in reply filed 27 August 2021, p.1 and p.46–47)
The legal and factual premise upon which those submissions were made are not in doubt.
The Supreme Court judgment was the culmination of proceedings voluntarily commenced by the respondent in November 2004. In the Statement of Claim she filed to commence those proceedings for remedial relief under both the State Act and in equity by way of constructive trust, the appellant pleaded that the parties’ de facto relationship began in early 1990 and ended on 24 November 2002.
It was necessary for the respondent to verify the truth of her pleadings by affidavit (then under Pt 15, r 23 of the Supreme Court Rules 1970 (NSW), but the counterpart provisions now being rr 14.22(1) and 14.23 of the Uniform Civil Procedure Rules 2005 (NSW) (“the State Rules”)), which she duly did (at [135]). The appellant did not file any Defence to refute the respondent’s pleadings, so the pleaded facts were deemed admitted under the State Rules. The litigation was eventually settled and judgment was entered on 28 November 2006, with orders made for the parties to divide their real and personal property on an agreed basis.
There was no evidence that the respondent amended her pleadings at any time during the pendency of the Supreme Court proceedings so, when the compromise was consummated in November 2006 by the Supreme Court exercising its statutory power under the State Act to order the adjustment of the parties’ property interests, it was upon the premise of the jurisdictional facts within the verified and admitted pleadings (r 17.7 of the State Rules).
The fact the Supreme Court judgment was entered by consent does not deprive it of any legal force. Any res judicata or estoppel which results from the pronouncement of a final judgment applies equally to judgments made by consent (Chamberlain v Deputy Commissioner of Taxation (1998) 164 CLR 502 at 508; Trustees for the Roman Catholic Church for Diocese of Bathurst v Hine [2016] NSWCA 213 at [23], [65] and [66]; Zetta Jet Pte Ltd v The Ship Dragon Pearl [No 2] (2018) 265 FCR 290 at [27], [32] and [51]).
Importantly for present purposes, whenever the need arises to identify the questions or issues necessarily determined by a consent judgment, it is permissible to refer to the terms of the judgment, the pleadings or any other material showing the issues that were raised and decided (Trustees for the Roman Catholic Church for Diocese of Bathurst v Hine at [23], [65] and [66]).
The federal cause of action under the Act did not merge in the Supreme Court judgment by operation of res judicata in the strict sense, because it is a separate statutory cause of action from the one determined under the State Act. The federal cause of action did not then even exist. Although, by s 4 of the Commonwealth Powers (De Facto Relationships) Act 2003 (NSW), the State of NSW referred legislative power in respect of de facto relationship property settlement to the Commonwealth, that legislation did not commence until 22 September 2008 and rights under federal legislation did not become available until Pt VIIIAB of the Act was enacted by the Family Law Amendment (De Facto Financial Matters and Other Measures) Act 2008 (Cth).
However, the Supreme Court judgment created a “claim estoppel”. Any rights to property settlement relief that could be asserted in federal proceedings under Pt VIIIAB of the Act arising from any period of the de facto relationship before November 2006 are equivalent in nature to those rights that have already been asserted and determined by the Supreme Court judgment (Tomlinson v Ramsey Food Processing Pty Ltd (2015) 256 CLR 507 (“Tomlinson v Ramsey”) at [21]–[22]; Clayton v Bant (2020) 385 ALR 41 at [28], [30], [32], [34], [37], [40], [41], [56], [67], [68], [71] and [76]). There was substantial correspondence between the parties’ rights under both the State Act and the Act arising from their de facto relationship prior to November 2006. The Supreme Court judgment finally determined the parties’ financial rights against one another as former de facto partners and estopped their entitlement to re-litigate the alteration of their property interests consequent upon the existence of their de facto relationship at any point in time prior to the Supreme Court judgment.
Whilst ever the Supreme Court judgment stood undisturbed, the parties and the primary judge were estopped from enquiring behind it. Rights flowing from the parties’ de facto relationship in the period before November 2006 had already been determined and did not remain available to form part of the justiciable controversy before the primary judge. This characterisation in turn calls into question the primary judge’s entitlement to exercise power under the State Act to set aside the Supreme Court judgment, which is the subject of complaint under Ground 2.
Aside from the “claim estoppel” created by the Supreme Court judgment, the circumstances under which it was entered created an “issue estoppel”. The termination of the parties’ de facto relationship was an “issue”, resolution of which established a jurisdictional fact conditioning the grant of relief (s 18(1) of the State Act; Saravinovski v Saravinovska [2017] NSWCA 85 at [109]) and upon which the parties agreed and the Supreme Court relied to exercise statutory power to quell the dispute over their financial rights. The same issue could not be revived for contest between them in subsequent proceedings (Tomlinsonv Ramsey at [21]–[22] and [90]; Clayton v Bant at [69]). The respondent was estopped from contending before the primary judge that the de facto relationship had been revived before, and was in existence at, the time of the Supreme Court judgment, as it was contingent upon the resolution of the issue in a contradictory way: the de facto relationship had ended.
It is well accepted that the principle of “issue estoppel” does not apply in parenting proceedings (Reid v Lynch (2010) FLC 93-448 at 85,102–85,104; Schorel & Schorel (1990) FLC 92-144), but these were not parenting proceedings. Nor was the decision under appeal even the product of an exercise of discretion. Rather, determination of the existence and timing of the de facto relationship was an evaluative factual decision (Lennon & Sanil (2020) FLC 93-962 at [8]), establishing the jurisdictional facts for the enlivenment of discretionary power to adjust the parties’ property interests (Corporation of the City of Enfield v Development Assessment Commission (2000) 199 CLR 135 at [28]). The establishment of those jurisdictional facts in the Supreme Court created an issue estoppel which bound the parties in the proceedings before the primary judge.
The policy underlying the operation of estoppel principles was explained by the High Court in Tomlinsonv Ramsey in the following terms, which is apt for present purposes:
38.… The operation of an estoppel, it must be remembered, is to preclude the assertion in a subsequent proceeding of what is claimed to be the truth.
39.The justice of binding to an estoppel a person who was a party to an earlier proceeding is readily apparent: the person has already had an opportunity to present evidence and arguments. …
In the teeth of the Supreme Court judgment, based as it was on the respondent’s verified pleadings about the de facto relationship having ended, she could not claim an alternate truth in the proceedings before the primary judge.
While no estoppel arises from a civil judgment procured by fraud (Weaver v Law Society of NSW (1979) 142 CLR 201; Harrison v Schipp (2002) 54 NSWLR 612 at 615–616), that was not the case here. The respondent indeed wanted the Supreme Court judgment set aside, but not because of any fraud. It was only because she regarded it as not being generous enough, she allegedly only assented to it under duress exerted by the appellant, and it was allegedly impracticable to implement. However, the primary judge found the appellant did not exert any duress upon her (at [134]) and the Supreme Court judgment has been fully executed, as the property and liabilities have since fallen according to the terms of the judgment, so it was not impracticable to implement. Her retrospective dissatisfaction with the generosity of the agreement could not be enough to disturb it.
It follows that the appeal must succeed because the primary judge’s findings and the declaration as to the first three phases of the de facto relationship, together with the order setting aside the Supreme Court judgment, were all precluded by estoppel. It is not to the point that the grounds of appeal pursued by the appellant only raised this estoppel indirectly. The law confers a right of appeal, which should be a reality rather than an illusion, so if the decision at first instance is wrong it should be corrected (Warren v Coombes (1979) 142 CLR 531 at 553).
The respondent can have no truck with this outcome. Before commencing the proceedings below in April 2016, the respondent commenced fresh proceedings in the Supreme Court in October 2015 seeking orders to set aside the Supreme Court judgment. Then, in June 2016, she filed a motion seeking orders transferring the pending Supreme Court suit to the Family Court of Australia (as the Court was then known) for consolidation with the suit commenced there in April 2016. The motion was contested by the appellant and, in the upshot, the respondent voluntarily discontinued not just the motion, but the whole Supreme Court proceedings.
Whilst that motion was being contested, the respondent’s senior counsel had this interchange with the presiding judge:
[SENIOR COUNSEL FOR THE RESPONDENT]: The point about the [Pt VIIIAB] proceedings in the Family Court was that [the respondent] says, irrespective of whether the Supreme Court, was persuaded ultimately in the Supreme Court proceedings to set aside the agreement to judgment under section 41, the Family Court would have regard to that state of affairs.
HIS HONOUR: To what state of affairs, I am sorry.
[SENIOR COUNSEL FOR THE RESPONDENT]: Sorry, your Honour. The state of affairs brought about by the agreement to judgment made on 28 November 2006.
HIS HONOUR: Well, it must have regard to that because on one view of things it was a judgment within the jurisdiction of this Court at the time, and unless and until set aside is conclusive as to the matters that it necessarily decides.
[SENIOR COUNSEL FOR THE RESPONDENT]: I accept that. That is correct, your Honour.
HIS HONOUR: Both as to the precise subject matter by way of res judicata and more widely as deciding any issue necessarily comprehended by the judgment.
[SENIOR COUNSEL FOR THE RESPONDENT]: Quite, your Honour.
HIS HONOUR: Yes.
[SENIOR COUNSEL FOR THE RESPONDENT]: The point I was seeking to make, your Honour, is that in respect of the relationship between the parties which post date the judgment, the Family Court would have regard to those matters in reaching its conclusions about appropriate maintenance or property adjustment orders. In other words, if pursuant to section 41 of the agreement as to judgment was set aside, the Family Court would be dealing with the relationship between the parties on that basis.
HIS HONOUR: Yes.
[SENIOR COUNSEL FOR THE RESPONDENT]: And if it did not equally the Family Court would be having regard to the judgment, but then having regard to the circumstances post the judgment.
…
HIS HONOUR: Well, that is what is concerning me. But on the one hand, I have an inclination that, where there is a consent judgment in this Court, this Court is also the more natural forum for a determination of an application to set aside that judgment, it seems to me almost axiomatic. And I do feel some diffidence at telling the Family Court that it does or does not have jurisdiction in a matter.
[SENIOR COUNSEL FOR THE RESPONDENT]: Certainly, your Honour.
(Exhibit A133 Transcript of Supreme Court proceedings, 26 September 2016, p.4 line 17 to p.5 line 6; p.8 lines 28–35)
(Emphasis added)
In response to the respondent’s submissions to the Supreme Court, the appellant’s senior counsel contended the Family Court was unable to entertain any dispute over financial entitlements which had been concluded by the Supreme Court judgment, but acknowledged the Family Court did have jurisdiction and power to deal with any relationship and its financial consequences from any point after the Supreme Court judgment.
Following those interchanges, the respondent elected to discontinue the Supreme Court suit and paid the appellant’s costs in relation to it. The import of the respondent’s concessions about the need to initially confront the estoppel created by the Supreme Court judgment and the Supreme Court’s power to hear and determine that controversy are obvious.
The respondent sought to argue in the appeal that the Supreme Court lacked jurisdiction to give judgment between the parties in November 2006, as the de facto relationship had not truly broken down, thereby rendering the judgment null, but there are two flaws in the argument.
First, the Supreme Court judgment, being that of a superior court of record, remains binding and operable unless and until set aside on appeal or pursuant to another valid exercise of original jurisdiction (State of NSW v Kable (2013) 252 CLR 118 at [19], [32]–[33], [38], [41], [56] and [57]). The estoppel created by the judgment had to be addressed at the outset. The judgment could not be just conveniently set aside at the end of the proceedings, after the estoppel had been ignored (as it was), just to avert an inconsistency between it and the declaratory judgment of the primary judge.
Secondly, the argument hinges entirely upon the acceptance of the respondent’s controversial evidence given in the proceedings before the primary judge as being truthful and correct, to the effect the de facto relationship resumed before the Supreme Court judgment was entered and thereby deprived the Supreme Court of jurisdiction to enter the judgment. Such evidence should not have been adduced before the primary judge by reason of claim estoppel or issue estoppel – at least until the judgment was set aside by the Supreme Court (for lack of jurisdiction or some other reason). But the respondent voluntarily discontinued the suit she first brought before the Supreme Court for that express purpose.
Ground 1
This ground focuses on the finding and the declaration concerning the third phase of the parties’ relationship, being that they resumed their relationship in September 2006 and continued it until July 2010, which phase straddles the point in time when the Supreme Court judgment was entered, granting them property settlement relief.
Under this ground, the appellant contends the finding made about the existence of the parties’ de facto relationship during the third phase was erroneous because it was inconsistent with the facts incontrovertibly established by other evidence, namely:
(a)the consensual entry of the Supreme Court judgment on 28 November 2006 on the basis that their relationship had ended;
(b)the respondent’s admission to her solicitor on 24 November 2006, just prior to finalising the Supreme Court judgment, that she had vacated the appellant’s residence;
(c)the respondent’s representation to a bank, when applying for a loan in December 2007, that she was single;
(d)the parties’ establishment of separate self-managed superannuation funds in 2007 to hold their respective interests in one parcel of real property, the development and sale of which was governed by the terms of the Supreme Court judgment; and
(e)the respondent’s admission to her solicitor, reproduced in correspondence sent to the appellant’s solicitor on 7 November 2014, that the parties did not reconcile their relationship until July 2008.
Only the first of those facts need be considered to deal with this ground. While the other pieces of evidence do manifest admissions made by the respondent against her interests, they do not of themselves necessarily impeach the finding made by the primary judge about the timing of the third phase of the relationship. However, the premise of the Supreme Court judgment has an altogether different complexion.
It must first be acknowledged how the decision made about the existence and duration of a de facto relationship is factual rather than discretionary, but it is still one of degree and an appellate court will exercise considerable restraint when reviewing the correctness of declarations made at first instance about such facts (Lennon & Sanil at [8]; Clarence & Crisp (2016) FLC 93-728 at [55]–[61]; Sinclair & Whittaker (2013) FLC 93-551 at [54], [55], [65] and [95]). Nonetheless, the appeal entails a “real review” of the facts (Warren v Coombes at 538, 552 and 553; Minister for Immigration and Border Protection v SZVFW (2018) 264 CLR 541 at [30]–[32]), for otherwise it would be merely an artifice.
In the proceedings before the primary judge, the respondent adduced evidence which was irreconcilable with her verified pleadings in the Supreme Court. She deposed the de facto relationship resumed before the Supreme Court judgment was entered, though the parties invited the Supreme Court to enter judgment on the premise that their relationship had ended. The respondent also gave inconsistent evidence about the timing of its alleged resumption, saying it was in “around September 2006” and in “about October 2006”. She alleged the third phase of the relationship continued until July 2010, though interrupted for some months in 2008.
For his part, the appellant adduced evidence of the de facto relationship ending “towards the end of 2000”. More specifically, he alleged the parties did not cohabit as a couple between September and November 2006. He admitted intermittent sexual and social interaction with the respondent thereafter, but denied any resumption of the de facto relationship. Unlike the respondent, his evidence was not in conflict with any pleading or affidavit he filed in the original Supreme Court proceedings, save that he was deemed within those former proceedings to have admitted the de facto relationship ended on 24 November 2002, as pleaded.
Dealing specifically with the finding pertaining to the third phase of the parties’ de facto relationship, enduring between September 2006 and July 2010, the primary judge relevantly said this in the reasons for judgment:
34.… The [Respondent] contends that they were in a de facto relationship in the period September 2006 to July 2010 and that she made contributions to this property by way of landscaping and gardening, and applied joint funds towards the property. The [Respondent’s] evidence about contribution made during this period is sparse, other than her own generalised assertions, but the present proceedings are under s 90RD and so this factor is neutral. Doing the best the Court can to understand the [Respondent’s] case, however, she was not contending that they were necessarily cohabiting in the same residence throughout this entire period. She had her home at [address 1] which, the Court accepts, was only a few minutes away from [address 2]. The [Appellant] denies that they were in a de facto relationship during this period, but seems to accept that they cohabited for some time during this period. As a result of cross-examination the Court formed the view that they had an intimate relationship until about mid-2010…
…
66.As foreshadowed above, the fact of these orders presents an interesting conundrum in relation to the state of any de facto relationship at the time the judgment was entered into by consent. [The Respondent] maintains that the relationship resumed in September 2006 through to July 2010. Viewed in isolation, it may seem implausible that the parties resumed a de facto relationship before 28 November 2006, given the agreement that they reached about their property settlement. On this view, the mere fact that the parties had dinner together at [address 1] on the evening when the orders were made in the Supreme Court, and indeed had sexual intercourse that night, does not of itself establish the resumption of their de facto relationship from that night. The composite picture, however, is more complex.
…
99.… This is a confusing period because the actions of both the [Respondent] and the [Appellant] in settling their Supreme Court litigation cannot be easily reconciled with a mutual commitment to a shared life. Indeed, quite the opposite is the impression formed when their relationship is viewed through the lens of that litigation. …
…
110.… Indeed, the task that the Court confronts is akin to seeking to contain jelly with bookends. Any boundary drawn around this relationship must necessarily be fluid. Law seeks to ascribe a certainty to the ebb and flow of human relationships which is at odds with the reality.
…
115.The [Respondent] contends, but the [Appellant] denies, that they then resumed their relationship between September 2006 and July 2010.
116.For reasons that have been set out at length above, the Court finds that they did in fact resume their de facto relationship notwithstanding the settlement of the Supreme Court proceedings.
117.The continuance of this relationship was evidenced by a range of factual matters. Their finances continued to be closely interwoven and indeed they were financially interdependent in relation to the property development at [address 3]. They borrowed money together. They established self-managed superannuation funds. They had the same accountant. The public aspects of their relationship continued. They were sexually intimate. They were involved with each other’s family. They travelled together on holidays. The [Appellant] entered into a family loan with the [Respondent’s] daughter. They consolidated loans into a joint loan. They attended counselling together in relation to their relationship. They cohabited.
118.The relationship ended in 2010 and it is plausible that the [Respondent’s] contention that it was July 2010 is correct.
(Emphasis added)
The underlying evidence upon which the primary judge relied to find that the de facto relationship resumed in September 2006 – before the Supreme Court judgment was entered in November 2006 – comprised only this:
(a)the parties took a holiday together with the appellant’s grandchildren in 2006 (at [106]) – but the evidence did not establish when in 2006 that occurred;
(b)the appellant attended the funeral held for the respondent’s mother in 2006 (at [69]), at which time the appellant told the respondent’s eldest daughter that he wanted the respondent to move back in with him (at [99]–[100]) – but such conversation necessarily meant the parties were still separated at that point in time;
(c)the appellant attended the respondent’s birthday party in 2006 (at [99]);
(d)the respondent admitted to her solicitor on 24 November 2006, when attending upon him to sign the documents to finalise the Supreme Court judgment, that she vacated the appellant’s home “yesterday”, which his Honour thought axiomatically meant she had been living at the appellant’s home for a period before then (at [67] and [76]) – but that also begs the question of the state of the parties’ relationship at that point in time if their cohabitation had ended as the respondent said;
(e)the parties had a sexual relationship in November 2006 (at [67] and [76]); and
(f)the parties were actively pursuing the development of a parcel of real property (at [76] and [102]) – though the terms of the Supreme Court judgment expressly required that they do so to ensure the severance of their interests in the property.
The remainder of the evidence upon which the primary judge relied to find the third phase of the de facto relationship extended until July 2010 related to incidents in their lives which occurred after the Supreme Court judgment was entered in November 2006.
As can be seen, the finding made by the primary judge about the existence of the de facto relationship before the entry of the Supreme Court judgment hinged entirely upon acceptance of the respondent’s uncorroborated evidence, but in circumstances where: first, her evidence on the issue was found to be “sparse”; secondly, her evidence was refuted by the appellant; thirdly, both parties’ credit was found wanting (at [10]); and lastly, her evidence was in direct conflict with her former verified representations of fact to the Supreme Court.
Asserted facts in pleadings do not ordinarily amount to admissions, but that is not so when the truth of the pleadings is verified by affidavit (Laws v Australian Broadcasting Tribunal (1990) 170 CLR 70 at 85–86; Jamieson v The Queen (1993) 177 CLR 574 at 579–581). The respondent’s verified pleadings, admitted by the appellant, were the premise for the Supreme Court judgment and incontrovertibly established these facts – the de facto relationship began in early 1990, ended on 24 November 2002, and did not resume before 28 November 2006.
The evidence put before the Supreme Court and the evidence put before the primary judge simply could not stand together. The jurisdictional facts established in the Supreme Court were agreed, whereas the evidence adduced before the primary judge was highly contentious. The primary judge appears to have presumed the parties’ intentional and complicit deception of the Supreme Court by pursuing their application for property settlement relief after having already resumed their de facto relationship, which his Honour characterised as an “abuse of process” (at [126], [133], [135]–[137], [147], [149] and [161]). But the Supreme Court may have been told the truth and the deceit or mistake may instead just as easily have been perpetrated in the proceedings before his Honour. The reasons for judgment do not reveal any reflection by the primary judge about the probity of the respondent commencing fresh proceedings in a second court seeking relief repudiating that already granted by another court on a body of evidence quite inconsistent with that she adduced before the first court.
The findings of the primary judge about the timing of the first, second and third phases of the parties’ de facto relationship were inconsistent with the facts incontrovertibly established before the Supreme Court. As the subject findings of the primary judge were made in reliance upon the respondent’s uncorroborated evidence, which was admittedly sparse and in some respects unreliable, they cannot stand in the face of the other incontrovertible evidence. They were made in error (Fox v Percy (2003) 214 CLR 118 at 127–129 and 138–147; Robinson Helicopter Co Inc v McDermott (2016) 331 ALR 550 at [43]; Lee v Lee (2019) 266 CLR 129 at [55]).
It was open for the primary judge to find on the evidence that the parties resumed their de facto relationship at some point after 28 November 2006, but not before. Ground 1 succeeds.
Ground 2
This ground, which should also succeed, contends the primary judge erred in finding he was vested with power under the State Act to set aside the Supreme Court judgment.
As already outlined, the primary judge concluded he was vested with such power in exercise of accrued jurisdiction (at [122] and [126]–[127]).
It will be evident from the discussion under Ground 1 that resort to the use of power under the State Act to set aside the Supreme Court judgment was not intrinsic to the disposition of the respondent’s federal claim for relief under Pt VIIIAB of the Act, meaning no jurisdiction under the State Act accrued to the federal jurisdiction being exercised by the primary judge. Any justiciable controversy about the parties’ rights arising from their de facto relationship prior to the entry of the Supreme Court judgment was foreclosed, unless and until the Supreme Court judgment was set aside. The issue of whether or not the Supreme Court judgment should be set aside was an isolated controversy reserved to the Supreme Court under the State Act. If and only if the Supreme Court judgment was set aside was the primary judge then freed from the constraints of estoppel and permitted to embark upon an unfettered factual enquiry about the specific phases and overall duration of the de facto relationship. Until then, it was only open to find the parties resumed a de facto relationship at some point after the Supreme Court judgment was entered, meaning there would be no inconsistency between the primary judge’s declaration and the jurisdictional facts upon which the Supreme Court acted.
The absence of any need to set aside the Supreme Court judgment as an indispensable incident of resolving the federal dispute and, hence, the non-accrual of State jurisdiction may be demonstrated in another way. The Supreme Court judgment has been unenforceable since 28 November 2018, as the enforcement limitation period is 12 years (s 17(1) of the Limitation Act 1969 (NSW)). When the appealed orders were made in May 2022, the Supreme Court judgment could not have been enforced. Neither party had sought to enforce the judgment because there was no need. They both performed their obligations under it. The respondent paid the appellant the sum of $20,700 as required and, of the five parcels of real property governed by the Supreme Court judgment, in accordance with its terms, the appellant retained two and the respondent retained two, though she later sold one to her daughters in 2014. The fifth was later sold, as was envisaged, but not until 2015 and perhaps not as profitably as was hoped.
This ground succeeds because the appellant successfully established that no State jurisdiction accrued to the primary judge. However, the appellant made a further submission about the impossibility of the primary judge exercising power under the State Act even if jurisdiction under the State Act had properly accrued. We reject that submission.
The State Act confers jurisdiction and power exclusively upon the Supreme Court, which the appellant contended excluded any scope for a federal court to exercise such power. In an earlier appeal between these parties, the Full Court theorised how it was possible for a federal judge exercising original jurisdiction under the Act to also wield power under the State Act, provided such jurisdiction was properly accrued as an integral aspect of the disposition of the federal matter (Colburn & Cleese (2020) FLC 93-995 at [17], [26] and [31]–[37]). The appellant sought to contest the validity of those observations in this appeal, citing High Court authority to assert it was impossible (Smith v Smith (1986) 161 CLR 217 at 236–238 and 250–251).
When properly seized of a “matter” arising under the Act, a federal court has jurisdiction and power to grant relief between the parties as is necessary to quell the justiciable controversy, even if the remedy is available under a State statute giving jurisdiction to only a State court. That is because s 79 of the Judiciary Act1903 (Cth) picks up the provisions of the State statute and empowers the federal court to make orders under it (Rizeq v Western Australia (2017) 262 CLR 1 at [14], [16], [21], [32], [63], [81] and [87]; ASIC v Edensor Nominees Pty Ltd (2001) 204 CLR 559 at [55] and [68]; Valceski v Valceski (2007) 70 NSWLR 36 at [37]–[41] and [52]). The High Court (ASIC v Edensor Nominees Pty Ltd at [59]–[60]) and Brereton J (Valceski v Valceski at [43]) explained how the circumstances in Smith v Smith may be distinguished.
We therefore conclude the primary judge could have exercised the power conferred by the State Act exclusively upon the Supreme Court to set aside the Supreme Court judgment, provided such jurisdiction properly accrued to the federal matter, but it did not.
Grounds 3, 4 and 5
These grounds collectively contend the primary judge should not have set aside the Supreme Court judgment in the discretionary exercise of statutory power under the State Act, even if it was available, but there is no need to address the grounds when the primary judge was unable to resort to such power in the first place. The respondent’s former assertions in the Notice of Contention about the proper use of such statutory power would have fallen away for the same reason.
The Notice of Contention could not have succeeded in any event because it depended upon positive findings being made as to the respondent’s entry into the Supreme Court judgment being induced by the appellant’s “duress” and the circumstances under which it was entered amounting to a “miscarriage of justice”. However, no such findings were made at first instance. In fact, the primary judge expressly rejected the respondent’s allegation of her duress by the appellant (at [134]) and his Honour’s musings about any miscarriage of justice depended upon the validity of the allied findings made about the timing of the third phase of the de facto relationship (at [132]), which were not open. His Honour ultimately determined to set aside the Supreme Court judgment by reason of it being impracticable to implement (at [139]–[144]), despite the parties’ property being distributed and their liabilities being borne according to the dictates of the Supreme Court judgment.
Ground 6
This ground contended the primary judge erred by finding the Supreme Court judgment constituted an abuse of process.
For clarity, the primary judge did not purport to find the Supreme Court judgment itself was an abuse of process, but rather the abuse of process was manifest from the parties’ complicit and improper procurement of the judgment when they had resumed their relationship beforehand and thereby deprived the Supreme Court of jurisdiction to grant such property settlement relief under the State Act (at [126], [133], [136]–[137], [147], [149] and [161]).
In reaching that conclusion, the primary judge wrongly presumed two things: first, the evidence given by the respondent about the resumption of the de facto relationship prior to the entry of the Supreme Court judgment was correct, meaning she and the appellant misled the Supreme Court; and secondly, the Supreme Court judgment was “unjustifiably oppressive” to the respondent. Neither of those assumptions could be validly made.
As to the first, we have already explained how the finding made by the primary judge about the resumption of the relationship prior to the entry of the Supreme Court judgment was not open on the evidence, even if not estopped.
As to the second, the primary judge said this in the reasons for judgment:
149.In this case, the Court believes that the use of the procedures of the Supreme Court of New South Wales to enter into final property settlement orders in circumstances where the parties had resumed their relationship would bring the administration of justice into disrepute. … In any event, [the Respondent] would, if she had turned her mind to this, no doubt submit that the use of the Supreme Court’s procedures on the facts of this case were unjustifiably oppressive to her.
How the Supreme Court judgment could be properly considered “unjustifiably oppressive” to the respondent remains unclear. The Supreme Court suit was voluntarily commenced by the respondent in 2004. She pleaded and verified the factual premise for property settlement relief, which the appellant did not contest. She was legally represented at all times during the Supreme Court proceedings and was independently advised by lawyers about the terms upon which the litigation was eventually settled two years later in 2006. The primary judge expressly rejected the respondent’s allegations of any duress exerted upon her by the appellant to settle that claim. Under the terms of the Supreme Court judgment, the respondent actually obtained more than she claimed in her originating Statement of Claim. Upon the material filed up until November 2006, the Supreme Court judgment was validly entered and the parties thereafter duly performed their obligations under the judgment.
It was not reasonably open for the primary judge to find the parties intentionally misled the Supreme Court and abused its process by procuring its judgment without there being a sound jurisdictional basis. The flawed finding was material because it influenced the decision to make the order setting aside the Supreme Court judgment. This ground succeeds.
Ground 7
This ground asserts the primary judge erred by finding that principles of conventional estoppel precluded the appellant’s reliance upon the Supreme Court judgment.
In fact, the ground over-states the finding. His Honour indicated only an inclination to agree with the respondent’s submission about the operation of estoppel against the appellant, but found it unnecessary to make any finding affecting the outcome (at [164]–[165]). It follows that the primary judge’s rumination was immaterial to the result and this ground fails.
Ground 8
This ground contended the primary judge erred by finding the parties were in a de facto relationship during the fourth and fifth phases, the former of which began in 2011 and the latter of which ended in 2014.
The gist of the appellant’s argument was that the primary judge erred by generalising, rather than making specific factual findings. It was submitted his Honour erred by elevating what was described as the “composite picture” emerging from the entirety of the evidence spanning some 25 years over other discrete pieces of contemporaneous evidence to make findings about the characterisation of the parties’ relationship in the two periods between 2011 and 2014.
Full Court jurisprudence has embraced the proposition that, in determining whether or not a relationship is to be characterised as a “de facto relationship”, judges should consider the “composite picture” produced by the synthesis of the evidence and the statutory considerations prescribed by s 4AA of the Act (Sinclair & Whittaker at [55]). However, the composite picture is only as good as the specific findings which form its foundation. The facts inform the impression, but the impression does not determine the facts.
The primary judge did indeed make several references to the “composite picture” and the “cohesive picture” (at [61], [69], [75], [119] and [120]), but made relatively few specific findings pertaining to the period between 2011 and 2014 (at [47], [75], [78] and [119]–[120]). The primary judge actually abstained from making factual findings in relation to some evidence concerning that time frame (at [43]–[46], [82]–[84] and [107]–[108]). However, we have already remarked upon the principles which exhort an appellate court’s reticence to interfere with factual findings and, more specifically, findings which amount to evaluative judgments about the existence and duration of de facto relationships.
The appellant’s complaints are effectively contained to contentions of insufficient weight being attributed to those parts of the evidence which he perceives to have been favourable to his case, but weight arguments cannot undermine factual findings, which are either open or not on the available evidence (Edwards v Noble (1971) 125 CLR 296 at 302–304 and 307). The evidence which the appellant sought to emphasise was taken into account and was not overlooked by the primary judge and so we are reluctant to accept that the findings made about the fourth and fifth phases of the de facto relationship were not open on the whole of the evidence. It is unnecessary to be more definitive about whether our reluctance transforms to refusal, because the appeal succeeds on other grounds.
disposition
The appeal is allowed.
The orders made by the primary judge must be set aside.
The appellant initially sought the outright dismissal of the respondent’s underlying application for relief under Pt VIIIAB of the Act, but conceded that could not properly occur. It was open for the primary judge to find the parties were in a de facto relationship, but only after the Supreme Court judgment was entered. It remains possible therefore that, upon aggregation of discrete periods of the parties’ de facto relationship after November 2006, the respondent may still be able to establish the factual premise for further relief under Pt VIIIAB of the Act. So much was admitted by the appellant in the second Supreme Court proceedings in September 2016.
Consequently, it is necessary to remit the proceedings for re-hearing, though the remitter will be conditional, so as to align with these reasons for judgment. The Supreme Court judgment still stands and the parties cannot go behind it. The residual dispute under Pt VIIIAB of the Act must be confined to any period of the parties’ de facto relationship which occurred after the Supreme Court judgment was entered on 28 November 2006. The parties agreed a different judge should re-hear the matter.
In his Notice of Appeal, the appellant sought his costs against the respondent should the appeal succeed. However, at the conclusion of the appeal hearing, orders were made requiring the parties to file and serve their short submissions concerning costs. The respondent complied, but the appellant defaulted.
The appellant’s application for costs is dismissed because he failed to comply with the Full Court’s orders (s 117(2A)(c)) and we are satisfied, from the timely submissions made by the respondent, that her financial circumstances are substantially inferior to those enjoyed by the appellant (s 117(2A)(a)). Nothing said for the appellant at the appeal hearing contradicted the respondent’s written submissions about the parties’ unequal financial positions.
Given the appeal is allowed for errors of law, we consider it appropriate to grant the parties costs certificates under the Federal Proceedings (Costs) Act 1981 (Cth) for both the appeal and the re-hearing.
I certify that the preceding eighty-eight (88) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Deputy Chief Justice McClelland and Justices Austin & Gill. Associate:
Dated: 23 September 2022
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