Costello and Condi & Anor (No 3) - [2012] FamCA 891

FAMILY COURT OF AUSTRALIA

COSTELLO & CONDI AND ANOR (NO 3)

[2012] FamCA 891

FAMILY LAW – PROPERTY – Application by husband and wife for amendment under the slip rule of a consent order made on 11 May 2005 dealing with their property and spouse maintenance – Order in preamble stated “property settlement pursuant to s 90C” – Whether obvious error – Amendment allowed for the preamble to the order to refer to s 79 and s 74 of the Family Law Act 1975 (Cth) and to add after “property settlement” the words “and spouse maintenance”

FAMILY LAW – PROPERTY – Application by a judgment creditor of the husband for extension of time to review the consent order made on 11 May 2005 and for review – No need – Determination that in all of the circumstances review of the consent order made on 11 May 2005 should be of the Court’s own motion but dealt with at the trial

FAMILY LAW – PROPERTY – Procedure – Two relevant files – Amalgamation not sought – But order made that slip rule application and application for review be dealt with as if filed in the earlier proceedings being the proceedings relating to the application for the consent order

Family Law Act 1975 (Cth) ss 37A(9), 37A(10), 71A(1), 74, 79, 90C, 90DA(1), 90K(3), 90K(1)(aa), 90KA(c)
Family Law Rules 2004 R 17.02, 17.03(b), 18.08

Brugman & Marley [2012] FamCA 106
Deputy Commissioner of Taxation v Healy [2003] WASC 38
Milham v Stanford (2001) FLC 93-073
Newmont Yandal Pty Ltd v The J Aron Corporation [2007] NSWCA 195
L Shaddock & Associates Pty Ltd v Parramatta City Council (1982) 43 ALR 473
Storey & Keers Pty Ltd v Johnstone (1987) 9 NSWLR 446
TheCommonwealth v McCormack (1984) 55 ALR 185
Vance & Vance [2011] FamCAFC 17

APPLICANT:

Mr Costello

FIRST RESPONDENT:

Mr Condi by his Case Guardian Mr E

SECOND RESPONDENT:

Mrs Condi

FILE NUMBER:

BRC

3380

2011

DATE DELIVERED:

26 October 2012
(Orders made 9 October 2012)

PLACE DELIVERED:

Brisbane

PLACE HEARD:

Brisbane

JUDGMENT OF:

O'Reilly J

HEARING DATE:

11 July 2012

REPRESENTATION

COUNSEL FOR THE APPLICANT:

Mr North SC with him Mr Waterman

SOLICITOR FOR THE APPLICANT:

Slater & Gordon

COUNSEL FOR THE FIRST AND SECOND RESPONDENTS:

Ms Carew

SOLICITOR FOR THE FIRST AND SECOND RESPONDENTS:

Rice Naughton Buckley

Orders (9 October 2012)

IT IS ORDERED

Proceedings BRC3380/2011

The application in a case by the husband and the wife filed 29 May 2012, the response of the judgment creditor filed 26 June 2012 and all affidavits in support of each be dealt with as if each had been filed in proceedings BRF1265/2005, however, that material not be removed from the file in these proceedings.

Proceedings BRF1265/2005

The order made on 11 May 2005 is amended pursuant to the slip rule by amending the preamble to the order so as to read:-
By way of property settlement and spouse maintenance pursuant to ss 79 and s 74 of the Family…

Grounds of appeal

[14] The appellant contends that the primary judge erred in finding that the respondent had discharged the onus of establishing the matters required under the relevant provision.

[15] It was submitted that his Honour failed to give adequate weight to the evidence of the second witness, and that the findings of fact were not reasonably open on the material before the Court.

[16] The respondent, for its part, submits that no error is disclosed, and that the conclusions reached were well within the range of outcomes available to the primary judge.

Consideration

[17] It is convenient to deal first with the question of construction, as the resolution of that issue informs the remaining grounds advanced by the appellant.

[18] For the reasons that follow, we are of the view that the appeal should be allowed in part and the matter remitted for further determination.

Keep reading for free

Create a free CaseChat account to read Costello and Condi & Anor (No 3) and more:

Read every judgment in full
Ask AI and get answers linked to paragraphs
See how each paragraph was cited in later cases
Download judgments as PDF or Word

Continue with Google

One click creates your free account or signs you in.

By continuing you agree to the Terms and Privacy Policy.

Details

Case: [2012] FamCA 891
Decision Date

CaseChat Overview and Summary

This matter concerned an application by a judgment creditor to review a consent order made by the Family Court of Australia on 11 May 2005. The judgment creditor alleged that the consent order, which dealt with property settlement and spouse maintenance, was made in circumstances where the Court was misled, including by the non-disclosure of significant financial liabilities of the husband, the dissolution of his legal practice, and the appointment of a receiver. The judgment creditor also sought to set aside a binding financial agreement entered into between the husband and wife, alleging it was made for the purpose of defrauding or defeating his interests.

The primary legal issues before the Court were whether the consent order of 11 May 2005 should be set aside under section 79A of the Family Law Act 1975 (Cth) or on the basis of the Court's inherent jurisdiction to correct its own orders, and whether the binding financial agreement should be declared invalid or set aside. The Court was required to determine if the facts alleged by the judgment creditor warranted a full hearing, and whether the issues raised could be conveniently dealt with at the trial of the substantive matters.

The Court considered the inherent jurisdiction of superior courts to correct orders that do not truly represent what the court intended to pronounce, as affirmed in *DJL v The Central Authority*. It noted that this jurisdiction extends to correcting errors arising from oversight by legal representatives, even after an order has been drawn up and entered. The Court also examined the provisions of section 90DA of the Family Law Act concerning the requirement for a separation declaration for certain provisions of a financial agreement to take effect, and the distinction between an agreement being "binding" and having "force or effect". The Court found that the factual issues surrounding the alleged fraudulent purpose of the financial agreement and the circumstances surrounding the consent order meant that a full hearing was necessary and that a review prior to trial would not likely narrow the issues.

The Court ultimately determined that the review of the consent order should be conducted as part of the trial proceedings, rather than as a preliminary determination. It accepted that the factual disputes required a full hearing and that the issues raised by the judgment creditor, including the alleged misleading of the Court and the validity of the financial agreement, were intrinsically linked to the substantive matters to be tried. The Court indicated that it would proceed on the basis that a correction of the consent order under the slip rule was likely, subject to further argument if opposed.

Orders

Orders of the court

Full text does not contain this section.

Background

Background to the litigation

Mr North SC and Mr Waterman however further conceded (written submissions, folio 44): 25.In raising this ground of review it is conceded that unless the facts are not in issue it would require a full hearing which could be conveniently dealt with at the trial, … I am very familiar with this matter. My Reasons for Judgment 16 May 2012. It seems to me impossible to think that in relation to, in particular, the judgment creditor’s reliance on s 90K(1)(aa)(i) and (ii) that “the facts” would not be in issue, particularly in the circumstances that what is squarely alleged is that the husband entered into the financial agreement for the purpose or for purposes that included the purpose of defrauding or defeating the judgment creditor; or with reckless disregard of the interests of the judgment creditor; most strenuously resisted by the husband. Ms Carew of Counsel, in oral argument on 11 July 2012, submitted that the s 71A(1)/s 90DA(1) matters, being matters of statutory interpretation, and dependant upon the facts as they may be found, also should await the trial and more fulsome submissions than available presently, in particular as to the statutory interpretation matters, by reference to extrinsic materials if necessary. There is merit thus in the approach of Counsel for the review to be conducted as part of the trial proceedings. Review prior to the trial of the substantive matters in the current proceedings would not (to borrow from the language of authorities dealing with preliminary determination of discrete issues) if decided one way be likely to put an end to the current proceedings or even to narrow the issues in the current proceedings. If the judgment creditor succeeds in having the s 79 order set aside under s 79A, then not only will a review of it not be required, but potentially the Court would not need further to consider setting aside the binding financial agreement unless the parties actually separated or one of them signed a separation declaration neither of which presently is foreshadowed. That is because the transfer document relating to the transfer to the wife of the husband’s interest in the former matrimonial home expressly was pursuant to the s 79 order, and not pursuant to or purportedly pursuant to the binding financial agreement. Thus, if the s 79 order is set aside, by consequential relief the Court will be enabled to order retransfer of the husband’s interest back to him. Potentially, any continued existence of the binding financial agreement would have no effect on that relief, it being of “no force or effect” until one of the requisite matters, as mentioned, should occur. On 11 July 2012 I had anticipated entertaining only the application by the husband and the wife under the slip rule. However, in the response of the judgment creditor, as mentioned, he has sought review of the 11 May 2005 order. During argument on 11 July 2012 Counsel agreed that I should and indeed invited me to deal with the application for review on the papers, which I have done.

Evidence

Evidence Before The Court

It will readily be seen (Reasons for Judgment 16 May 2012) that although the “tests” under s 79A and s 90K(1)(aa) are different, the evidence relevant to factual findings for both of those applications basically is likely to be the same so that, in my view, there would be no saving of trial time if there should be early and separate review. Mr North SC and Mr Waterman relied also on s 79(10)(a) as entitling the judgment creditor to have been a party to the 2005 proceedings, and raised as a further ground of review the question whether the Court was misled by the Application for Consent Orders when it made the consent order in circumstances where there was no reference in the filed Application for Consent Orders to the judgment creditor in respect of his unpaid wages; no reference to any other outstanding creditors; and/or liabilities in respect of the husband’s legal practice; and other matters including non-disclosure of the circumstance that the husband’s legal partnership had been dissolved on 3 May 2005 and a receiver appointed to it by the Supreme Court of Queensland on 4 May 2005. In respect of these matters, the Reasons for Judgment 16 May 2012 deal with them comprehensively: see, eg [91] – [99]. Mr North SC and Mr Waterman however further conceded (written submissions, folio 44): 25.In raising this ground of review it is conceded that unless the facts are not in issue it would require a full hearing which could be conveniently dealt with at the trial, … I am very familiar with this matter. My Reasons for Judgment 16 May 2012. It seems to me impossible to think that in relation to, in particular, the judgment creditor’s reliance on s 90K(1)(aa)(i) and (ii) that “the facts” would not be in issue, particularly in the circumstances that what is squarely alleged is that the husband entered into the financial agreement for the purpose or for purposes that included the purpose of defrauding or defeating the judgment creditor; or with reckless disregard of the interests of the judgment creditor; most strenuously resisted by the husband. Ms Carew of Counsel, in oral argument on 11 July 2012, submitted that the s 71A(1)/s 90DA(1) matters, being matters of statutory interpretation, and dependant upon the facts as they may be found, also should await the trial and more fulsome submissions than available presently, in particular as to the statutory interpretation matters, by reference to extrinsic materials if necessary. There is merit thus in the approach of Counsel for the review to be conducted as part of the trial proceedings. Review prior to the trial of the substantive matters in the current proceedings would not (to borrow from the language of authorities dealing with preliminary determination of discrete issues) if decided one way be likely to put an end to the current proceedings or even to narrow the issues in the current proceedings. If the judgment creditor succeeds in having the s 79 order set aside under s 79A, then not only will a review of it not be required, but potentially the Court would not need further to consider setting aside the binding financial agreement unless the parties actually separated or one of them signed a separation declaration neither of which presently is foreshadowed.

Decision

Reasons for decision

Spigelman CJ, after an exhaustive analysis of the authorities relating to the inherent jurisdiction, said:[77]In the joint judgment of the High Court in DJL v The Central Authority (2000) 201 CLR 226 at [34], Ivanhoe was referred to as authority for the following proposition:An order … might be made in the action for the correction of the records of the court to make certain that they truly represented what the court had pronounced or had intended to pronounce. [Emphasis added][78]The other authority cited for that proposition was Ainsworth v Wilding [1986] 1 Ch 673 at 678, where Romer J referred to Mellow v Swire as authority for the proposition that:… even where a judgment has been duly passed and entered it might still be altered by the Court if the Court saw that it did not truly represent the decision which the Court had pronounced or intended to pronounce.[79]This inherent jurisdiction has been expressly affirmed in DJL. Accordingly, the Supreme Court has jurisdiction to correct a duly entered judgment where the orders do not truly represent what the Court had intended to pronounce. This principle has been applied on numerous occasions. [citations omitted].[80]The formulation approved recently in DJL, should be accepted as authoritative. That formulation, I note, is in quite different terms to the slip rule. There may be other aspects of the inherent jurisdiction which also overlap with the slip rule, but it is unnecessary to consider them. (emphasis added) The Family Court of Australia has jurisdiction only in relation to matters vested by Parliament. However, as a superior court it has inherent control over its own process and thus inherent jurisdiction to correct orders in the manner described in DJL. I would refer also to Vance & Vance [2011] FamCAFC 17 at [13] - [18] per Boland J. Further, it is not in doubt that the slip rule extends to remedy a situation which may have arisen as a result of oversight by a party’s legal representative, and that this is so even if the order has been drawn up and entered: L Shaddock & Associates Pty Ltd v Parramatta City Council (1982) 43 ALR 473 at 475; The Commonwealth v McCormack (1984) 55 ALR 185 at 187; Milham v Stanford (2001) FLC 93-073 at [24] – [27]. The wife deposed that she intended that the consent order make provision for “property settlement and spouse maintenance”: affidavit filed 29 May 2012, par 2. The consent order, in its operative part, in fact made provision for property settlement and spouse maintenance. Section 90C of the Family Law Act 1975 (Cth) (the Act) is not a provision “pursuant to” which orders are made. Rather, it deals with the creation of a financial agreement during a marriage. There seems thus, at first blush, a plain error which is “obvious” on the face of the order, and “on reading” the order: Rule 17.02(2); with effect also that there was an “accidental slip” in the making of the order: Rule 17.02(3)(b). In my reasons for judgment 16 May 2012 I said: 3.There is dispute as to whether the reference “s 90C” in the order should be amended under the slip rule so as to read “s 79”. I will return to this later. Plainly however as a consent property order can only be made under s 79 that is the provision under which the order was made. …37.Ms Carew of Counsel, for the husband and the wife, submitted, and Mr Waterman of Counsel, and Mr Muller, solicitor, for the first and second applicants respectively refuted, that because a property order can only be made under s 79, and a spousal maintenance order can only be made under s 74, the order would be likely to be amenable to correction under the slip rule. For present purposes, limited to the summary dismissal application, I accept Ms Carew’s submission. Although at present no application is made under the slip rule, I thus will proceed on the basis that such correction upon any future proper application is likely to be made, subject however to hearing full argument later if any slip rule amendment sought is opposed.

Ratio Decidendi

Legal Principle Established

It is desirable to set out s 90DA.SECTION 90DA NEED FOR SEPARATION DECLARATION FOR CERTAIN PROVISIONS OF FINANCIAL AGREEMENT TO TAKE EFFECT90DA(1) A that is binding on the parties to the agreement, to the extent to which it deals with how, in the event of the of the , all or any of the or financial resources of either or both of the spouse parties:(a) at the time when the agreement is made; or(b) at a later time and before the termination of the marriage by divorce;are to be dealt with, is of no force or effect until a separation declaration is made.90DA(1A) Subsection (1) ceases to apply if:(c) the spouse parties divorce; or(d) either or both of them die.90DA(2) A separation declaration is a written declaration that complies with subsections (3) and (4), and may be included in the financial agreement to which it relates.90DA(3) The declaration must be signed by at least one of the spouse parties to the .90DA(4) The declaration must that:(e) the spouse parties have separated and are living separately and apart at the declaration time; and(f) in the opinion of the spouse parties making the declaration, there is no reasonable likelihood of cohabitation being resumed.90DA(5) In this section:declaration time means the time when the declaration was signed by a spouse party to the financial agreement.Definition of “declaration time” amended by No 115 of 2008, Sch 3, Pt 1[16].separated has the same meaning as in section 48 (as affected by section 49). (emphasis added) Mr North SC and Mr Waterman submitted that there is a clear distinction in the Act between a financial agreement being “binding” on the parties to it, and whether, if ever, it becomes of “force or effect”, by reason of a “separation declaration”. Thus, it was argued a financial agreement becomes “binding” when (but only when) the formalities under s 90G are fulfilled, but although “binding”, nonetheless is of no “force or effect” until there be a “separation declaration”; further that pursuant to s 71A(1)(a), the non application of Part VIII arises once there is a financial agreement that is “binding” on the parties to it, with effect that the binding financial agreement evidenced by and attached to the Application for Consent Orders has the necessary effect that on 11 May 2005 the Court had no power to make a s 79 property order. There is difficulty here I think, in the argument of Mr North SC and Mr Waterman, because, on the one hand, for part of the argument, it was submitted that as at 11 May 2005 there was a binding financial agreement between the husband and the wife, but, on the other hand, and for the converse part of the argument, and even if the s 79 order be set aside upon review, or under s 79A (as the judgment creditor seeks in the principal action) the judgment creditor seeks that the binding financial agreement be declared invalid and/or set aside as not complying with s 90G of the Act and/or be set aside pursuant to s 90K(1)(aa)(i) and (ii) of the Act, with consequential relief that the wife divest herself of the husband’s former right, title and interest in the matrimonial home by transferring it back to him: Reasons for Judgment 16 May 2012 at [11] and [122] – [148].