Commissioner for Taxation and Worsnop and Anor (Extension of Time to Appeal)
[2008] FamCAFC 48
•22 April 2008
FAMILY COURT OF AUSTRALIA
| COMMISSIONER OF TAXATION & WORSNOP & ANOR (EXTENSION OF TIME TO APPEAL) | [2008] FamCAFC 48 |
| FAMILY LAW - APPLICATION TO EXTEND TIME - LEAVE TO APPEAL CHILD SUPPORT ORDERS AND FILE CROSS APPEAL – Where trial Judge dismissing wife’s application for a departure from child support assessment – Where wife failed to seek leave to appeal within time - Where satisfactory explanation for the delay - Consideration of principles applicable to exercise of discretion as discussed in Gallo v Dawson (1990) 93 ALR 479 and Sharman License Holdings Ltd v Universal Music Aust Pty Ltd [2005] FCA 802 - Where wife’s application brought on a “defensive basis” rather than on basis of any error of law – Where wife can apply for departure order and under s 123 of the Child Support (Assessment) Act1989 (Cth) for lump sum child support - No error by trial Judge in dismissing wife’s application for departure – extension of time refused - Where wife sought leave to cross appeal – Whether proposed grounds disclose likely prospects of success of appeal – Whether wife would be substantially prejudiced if an extension of time was not granted – Where an appeal is on foot - Where wife appears to have capacity to meet costs order if the cross appeal fails – Prejudice to husband and/or ATO by granting the extension of time outweighed by the prejudice the wife would suffer - Extension of time to file cross appeal granted. |
Child Support (Assessment) Act1989 (Cth) s 123
Family Law Act 1975 (Cth) s 79, s 94(1A), s 94(2D), s 94(2E), s 94(2F)
Family Law Rules 2004 r 1.4, r 22.02, r 22.03, r 22.12, r 22.42, r 22.46, Chapter 22
| Gallo v Dawson (1990) 93 ALR 479 Mackey and Mackey [2007] HCATrans 271 (28 May 2007) McMahon & McMahon (1976) FLC 90-038 Sharman License Holdings Ltd v Universal Music Aust Pty Ltd [2005] FCA 802 Tormsen & Tormsen (1993) FLC 92-392 | ||
| APPELLANT: | Commissioner of Taxation | |
| 1ST RESPONDENT: | Ms Worsnop |
| 2ND RESPONDENT: | Mr Worsnop |
| FILE NUMBER: | EA | 144 | of | 2007 |
| APPEAL NUMBER: | SYF | 2193 | of | 2006 |
| DATE DELIVERED: | 22 April 2008 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Boland J |
| HEARING DATE: | 29 February 2008 |
| LOWER COURT JURISDICTION: | Family Court of Australia |
| LOWER COURT JUDGMENT DATE: | 9 November 2007 |
| LOWER COURT MNC: | [2007] FamCA 1315 |
REPRESENTATION
| COUNSEL FOR THE APPELLANT: | Ms Rees |
| SOLICITOR FOR THE APPELLANT: | Australian Government Solicitor |
| SOLICITOR FOR THE 1ST RESPONDENT: | Ms Moy |
| COUNSEL FOR THE 2ND RESPONDENT: | Mr Gould |
| SOLICITOR FOR THE 2ND RESPONDENT: | LAC Lawyers |
Orders
The wife’s application for an extension of time in which to file a cross appeal be extended until 28 April 2008.
The wife’s application for an extension of time for leave to appeal the orders made by the Honourable Justice Rose on 9 November 2007 (the child support orders) is dismissed.
The costs of the wife’s application filed 24 January 2008 be reserved to the Full Court hearing the cross appeal.
The wife file and serve a draft cross appeal index on or before 4.00pm on 28 April 2008.
The wife is excused from filing a pre-argument statement in respect of the cross appeal.
The Appeal Registrar is directed to conduct a procedural hearing to settle the cross appeal book index and to make any other necessary procedural orders for the conduct of the cross appeal at a date and time to be notified to the parties.
IT IS NOTED that publication of this judgment under the pseudonym Commissioner of Taxation & Worsnop & Anor (Extension of Time to Appeal) is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| IN THE APPEAL DIVISION OF THE FAMILY COURT OF AUSTRALIA AT SYDNEY |
Appeal Number: EA 144 of 2007
File Number: SYF 2193 of 2006
| Commissioner of Taxation |
Appellant
And
| Ms Worsnop |
1st Respondent
And
| Mr Worsnop |
2nd Respondent
REASONS FOR JUDGMENT
Introduction
By application in a case filed on 24 January 2008 Ms Worsnop, (“the wife”) seeks an order to extend time in which to file an application for leave to appeal and/or cross appeal orders made by the Honourable Justice Rose on 9 November 2007, to the date of filing the application in a case.
The wife also sought an order in that application to the following effect:
That the wife/ Cross Appealant [sic] be granted leave to appeal from the orders made by his Honour Justice Rose on 9 November 2007 whereby the wife’s application for a departure from child support was dismissed.
Although the husband did not file any response to the wife’s application, his counsel orally opposed the wife’s application on two bases:
·An asserted failure to adequately explain the delay in filing the application; and
·A lack of substantive merit in the proposed grounds of appeal.
At the same time as I heard the wife’s application, I expedited the appeal by the Commissioner of Taxation, the intervener in the substantive proceedings under s 79 of the Family Law Act 1975 (Cth) (“the Act”) between the husband and the wife.
Background
In order to properly appreciate the issues in this application, it is necessary that I say something about the substantive proceedings, and record some background facts concerning the parties.
The wife was born in Australia in March 1965.
The husband was born in England in November 1965.
The parties commenced cohabitation, according to the wife, in late 1991 and, according to the husband, in 1992. They participated in a ceremony of marriage in December 1993. The marriage was a bigamous one, the husband not being divorced from his former wife at the date of the marriage, which fact was then unknown to the wife.
There are four children of the marriage, all of whom were under the age of 18 years at the date of hearing before the trial Judge. At the date of hearing the children were living with the parties in the former matrimonial home North of Sydney (“the matrimonial home”).
Throughout the parties’ marriage they purchased and sold various parcels of real property.
From 1996 the husband conducted his own business through a number of companies including his Australian corporate vehicle, C Holdings Pty Ltd (“C”). In about 2001 the husband’s conduct of the business changed. The trial Judge noted “he commenced to do business using off shore bank accounts and stock trading accounts” (paragraph 22).
The trial Judge further noted:
Between 5 January 2006 and 26 February 2007 the husband deposited in the account of his lawyers amounts totalling $1,250,943.57. The husband’s legal costs and disbursements are said to have been (during that period) $1,040,943.57, being the amount paid less $210,000.00 paid to the Australian Taxation Office (“the ATO”). (paragraph 33)
In February 2006 solicitors for the husband were instructed to make contact with the Australian Taxation Office (“ATO”) for the purpose of him making a voluntary disclosure of various matters, both on his own behalf and on behalf of C.
On 15 May 2006 an application was made by the Commissioner of Taxation to intervene in the proceedings. Various assessments were issued by the ATO. The trial Judge noted as at 11 April 2007 the husband’s total liabilities said to be owed to the ATO and claimed in the proceedings were $11,904,168.47. C’s liability to the ATO was asserted to be $421,756.43.
The trial Judge noted “the wife’s primary asset is the former matrimonial home. The property is valued at $4,750,000.00 and is unencumbered” (paragraph 52).
The trial Judge noted that since separation the wife continued to live with the four children in the matrimonial home, and the husband had lived there as well since about November 2006.
Evidence
The wife relied on the affidavit of her solicitor, Ms Jo-anna Moy (“Ms Moy”) sworn or affirmed on 22 January 2008.
Ms Moy deposed to acting for the wife in the proceedings before the trial Judge, and that on 5 December 2007 an unsealed copy of a Notice of Appeal filed by the intervenor was forwarded by facsimile transmission to her office.
Ms Moy said her office was closed from 15 December 2007 to 7 January 2008. On the latter date she received a sealed copy of the Notice of Appeal under cover of letter dated 18 December 2007 from the Australian Government Solicitor.
Ms Moy said on 10 January 2008 she attended and filed at the Court a Notice of Cross Appeal and an application in a case seeking a stay of the orders made by Rose J. The Notice of Cross Appeal which was not accepted for filing has been retained in the Court file.
Ms Moy explained in her affidavit the wife’s position in relation to the application for leave to appeal the child support orders deposing as follows:-
The wife would not have appealed the orders in Annexure “B” in relation [sic] the denial of a departure order from child support had the second respondent not appealed the decision in relation to the property orders. (paragraph 12)
Relevant statute law and rules
Section 94 of the Act provides for appeals to the Family Court from courts other than the Federal Magistrates Court. Section 94(1A) provides as follows:
An appeal under subsection (1) or (1AA) shall be instituted within the time prescribed by the standard Rules of Court or within such further time as is allowed in accordance with the standard Rules of Court.
Sections 94(2D), (2E) and (2F) are also relevant. They provide:
(2D) Applications of a procedural nature, including applications:
(a)for an extension of time within which to institute an appeal under subsection (1) or (1AA); or
…
(e)for an extension of time within which to file an application for leave to appeal; or
…
may be heard and determined by a Judge of the Appeal Division or other Judge if there is no Judge of the Appeal Division available, or by a Full Court of the Family Court.
(2E)The standard Rules of Court may make provision enabling applications of a kind mentioned in subsection (2D) to be dealt with, subject to conditions prescribed by the standard Rules of Court, without an oral hearing.
(2F)No appeal lies under this section from an order or decision made under subsection (2B) or (2D).
Chapter 22 of the Family Law Rules 2004 deals with appeals.
Rule 22.02 sets out how an appeal is to be commenced, namely by filing a Notice of Appeal (Form 20).
Rule 22.03 provides that a Form 20 must be filed within 28 days after the order appealed from is made.
Rule 22.12 provides that the filing of an appeal does not operate as a stay of the operation or enforcement of the order in respect of which the appeal is filed.
Rule 22.42 provides for an application to be made in respect of an appeal including an application for permission to appeal an order.
Rule 22.46 provides a party may file an application for permission to appeal within 28 days after the order appealed from was made. Pursuant to r 1.4 a party may apply for an extension of time to file an application for leave (or as it is described in the rules “permission”) to appeal to extend time to file such application.
Relevant legal principles – application for leave to appeal out of time
The relevant principles to be applied in deciding whether to extend time for lodging an appeal, or an application for leave to appeal, are set out in Gallo v Dawson (1990) 93 ALR 479. The granting of leave is not automatic but involves the exercise of discretion. The discretion to extend time is given for the sole purpose of enabling the Court to do justice between the parties. In determining whether the rules will work an injustice it is necessary to have regard to the history of the proceedings, the nature of the litigation, the proposed grounds of appeal and the consequences for the parties of the grant or refusal of the leave.
The principles have been referred to in a number of cases in this Court including McMahon & McMahon (1976) FLC 90-038 at 75,144, Tormsen & Tormsen (1993) FLC 92-392 at page 80,017 and Gallo v Dawson (supra) at 480 to 481 where McHugh J said:
The grant of an extension of time under this rule is not automatic. The object of the rule is to ensure that those Rules which fix times for doing acts do not become instruments of injustice. The discretion to extend time is given for the sole purpose of enabling the court or justice to do justice between the parties: see Hughes v National Trustees Executors & Agency Co of Australasia Ltd [1978] VR 257 at 262. This means that the discretion can only be exercised in favour of an applicant upon proof that strict compliance with the rules will work an injustice upon the applicant. In order to determine whether the rules will work an injustice, it is necessary to have regard to the history of the proceedings, the conduct of the parties, the nature of the litigation, and the consequences for the parties of the grant or refusal of the application for extension of time: see Avery v No 2 Public Service Appeal Board [1973] 2 NZLR 86 at 92; Jess v Scott (1986) 12 FCR 187 at 194 5 ; 70 ALR 185. When the application is for an extension of time in which to file an appeal, it is always necessary to consider the prospects of the applicant succeeding in the appeal: see Burns v Grigg [1967] VR 871 at 872; Hughes, at 263-4; Mitchelson v Mitchelson (1979) 24 ALR 522 at 524. It is also necessary to bear in mind in such an application that, upon the expiry of the time for appealing, the respondent has “a vested right to retain the judgment” unless the application is granted: Vilenius v Heinegar (1962) 36 ALJR 200 at 201. It follows that, before the applicant can succeed in this application, there must be material upon which I can be satisfied that to refuse the application would constitute an injustice. As the Judicial Committee of the Privy Council pointed out in Ratnam v Cumarasamy [1965] 1 WLR 8 at 12 ; [1964] 3 All ER 933 at 935:
The rules of court must prima facie be obeyed, and in order to justify a court in extending the time during which some step in procedure requires to be taken there must be some material upon which the court can exercise its discretion.
Discussion
I propose firstly consider the wife’s application for an extension of time for leave to appeal the trial Judge’s dismissal of her child support application.
In Sharman License Holdings Ltd v Universal Music Aust Pty Ltd [2005] FCA 802 Lindgren J dealt with an application in the Federal Court for an extension of time to seek leave to appeal from orders made by Wilcox J. At paragraph 22 of his Honour’s reasons he referred the criteria necessary for the granting of an extension of time noting:
1. There must be a satisfactory explanation for the delay…
2.The application for leave to appeal must have such prospects of success as not to render the extending of time an exercise in futility…
His Honour further explained:
2.…Since the test for the granting of leave to appeal from an interlocutory judgment is that the decision must be attended with sufficient doubt to warrant its being reconsidered by an appellate court, and that substantial injustice would result if leave were to be refused, supposing the decision to have been wrong (Décor Corporation Pty Ltd v Dart Industries Inc (1991) 33 FCR 397 at 398-400), in principle the question on an application for an extension of time is whether this test has sufficient prospects of being satisfied, to warrant granting the extension. In practice, the debate and treatment of the ‘arguable error’ question on an application for an extension of time, will be no different from what the debate and treatment of it would be on the application for leave to appeal itself.
Insofar as the question of delay in filing the relevant application is concerned, I am satisfied that the explanation of Ms Moy adequately explains the delay. I have regard to the comments of Heydon J in Mackey and Mackey [2007] HCATrans 271 (28 May 2007) where his Honour said, “While these events are regrettable, they are the kinds of events which can easily happen in professional practice. They are not events for which the husband was personally responsible”. His Honour’s remarks are apposite in this case.
The wife’s application in a case filed 24 January 2008 does not attach proposed grounds in respect of the appeal, if leave is granted, in respect of the child support departure application. However, in the Notice of Cross Appeal which the wife’s solicitor attempted to file on 10 January 2008, ground 5 of the proposed grounds of appeal is as follows:
That the trial judge erred in dismissing the application of the wife for child support departure orders.
The trial Judge dealt with the wife’s application for a child support departure order in paragraphs 261 to 290 of his reasons. The wife sought lump sum child support of $216,000.00 and payment of $275,307.00 for the cost of the children’s private school fees. His Honour found that the grounds for departure relied on by the wife were made out, but his Honour concluded that the wife had not satisfied the requirement that departure as sought would be “just and equitable” as regard the children and the parties and “otherwise proper” under the division.
At paragraph 288 of his reasons his Honour said:
I also give considerable weight to the financial position of the wife which is likely to occur in the near future following the sale of the former matrimonial home and in accordance with the terms of the orders that I have made pursuant to s79. The wife will have at her disposal funds of $2,375,000.00 less selling costs. The wife will have negligible liabilities. Whilst the wife will have to support herself, she will also be in a position to provide ongoing financial support for the three children the subject of the application, apart from support for the youngest child. In that regard, it will fulfil the wife’s joint obligation together with the husband to provide for child support. The level at which she may do so is a matter for her determination and acting upon commercial advice as she may seek to obtain.
I am unable to find any error of principle in his Honour’s reasons as asserted in the proposed ground 5, nor was any error of principle referred to by the wife’s solicitor at the hearing of this application.
I am further satisfied that no substantial injustice would be caused to the wife if an extension of time was not granted to permit her to bring an application for leave to appeal. I am satisfied a substantial injustice would not arise for the following reasons:
a)First, the application is being brought on a “defensive basis” in the event that the Commissioner’s appeal is successful and the wife does not retain her entitlement under the s 79 orders, rather than on the basis of any error of law by the trial Judge in dealing with the child support departure application.
b)Secondly, in the event that the Commissioner’s appeal is successful the wife, an administrative assessment having been made, can apply to a court for departure from that assessment and under s 123 of the Child Support (Assessment) Act1989 (Cth) for lump sum child support which can be considered in the light of the parties’ circumstances at that time. This is properly a matter to be dealt with at first instance, rather than by a Full Court hearing an appeal.
The wife’s application to extend time to cross appeal
I have already dealt with the question of delay by the wife in bringing her application and have concluded there are circumstances which satisfactorily explain the delay.
The wife’s proposed grounds of cross appeal are as follows:
1.That the trial judge erred in the exercise of discretion in failing to make an order that in the circumstances of the case was just and equitable in favour of the wife.
2.That the trial judge erred in failing to add back into the revised property of the parties in paragraph 136 of the judgment the amount of $1,040,943 being monies paid by the husband for legal costs.
3.That the trial judge erred in failing to give reasons for determining that the funds in the controlled monies account be paid to the intervenor
4.That the trial judge erred in dismissing the application of the wife for lump sum spousal maintenance.
It is not appropriate in dealing with this application that I should extensively examine the merits of the proposed grounds of appeal.
At paragraph 86 of his reasons for judgment the trial Judge noted that legal fees paid by the husband to his lawyers to meet the expenses of tax advice should be “added back” to the pool of property available for distribution. However, the table of assets and liabilities as found by the trial Judge at paragraph 136 of his reasons does not include any “add back” of legal fees. This omission may, of course, have been amenable under the slip rule in accordance with the well known authorities, but if the slip rule is not available this error would constitute a valid ground of appeal, and the wife would be substantially prejudiced if an extension of time was not granted.
I further take into account the fact that the appeal by the intervenor is on foot and that the parties will not be substantially prejudiced by way of costs in respect of the conduct of the proposed cross appeal.
I further take into account that prima facie the wife’s property entitlements indicate that, in the event the cross appeal was unsuccessful, the wife appears to have the capacity to meet an order for costs for any additional costs caused by the filing of the cross appeal.
In all of the circumstances any prejudice to the husband and/or the ATO by granting the extension of time is outweighed by the prejudice the wife would suffer, and in the interests of justice, an extension of time should be granted.
I certify that the preceding forty seven (47) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Boland
Associate:
Date: 22 April 2008
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