Daily & Daily (No 4)

Case [2024] FedCFamC1A 185

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

(DIVISION 1) APPELLATE JURISDICTION

Daily & Daily (No 4) [2024] FedCFamC1A 185

Appeal from: Daily & Daily(No 3) [2024] FedCFamC1F 47
Appeal number: NAA 30 of 2024
File number: ADC 4606 of 2018
Judgment of: ALDRIDGE, TREE & CAMPTON JJ
Date of judgment: 17 October 2024
Catchwords:

FAMILY LAW – APPEAL – Property – Where the husband appeals from final property settlement orders – Superannuation – Where the husband contends the primary judge erred in not adopting the diminished value of his superannuation in the balance sheet due to his legal fees – Where the parties conducted the litigation from the common position that legal fees would be added back to the property pool – Where the matters the husband contends were ignored were explicitly taken into account – Where the appeal against the property settlement orders fails – Binding Financial Agreement – Damages – Where the husband appeals from the finding that he did not suffer any compensatory loss – Where notwithstanding the finding of hardship the husband’s claim for compensatory damages required assessment – Error identified – Appeal allowed in part – Damages assessment remitted for re-hearing – Costs certificates granted.

FAMILY LAW – CROSS-APPEAL – Binding Financial Agreement – Negligence – Where the husband’s former solicitors cross-appeal against the award of damages  – Whether the primary judge erred in finding that the husband’s contract claim was not statute barred – Consideration of Orwin v Rickards [2020] VSCA 225 and Davys Burton v Thom [2009] 1 NZLR 437 – Where the “damaged asset” characterisation of when damage is first sustained under a negligently drawn contract is neither binding nor persuasive when applied to Binding Financial Agreements – Where the advice of the solicitors was clearly inadequate – Where the cross-appeal fails – Cross-appeal dismissed.

Legislation:

Family Law Act 1975 (Cth) ss 75, 79, 90DA, 90K

Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) r 13.23

Limitations of Actions Act 1936 (SA) s 48
Cases cited:

Boensch v Pascoe (2019) 268 CLR 593; [2019] HCA 49

Chorn and Hopkins (2004) FLC 93-204; [2004] FamCA 633

Daily & Daily (2020) 61 Fam LR 75; [2020] FamCA 486

Daily & Daily (2020) FLC 93-999; [2020] FamCAFC 304

Daily & Daily [2023] FedCFamC1F 222

Daily & Daily (No 2) [2023] FedCFamC1F 858

Daily & Daily (No 2) (2023) FLC 94-151; [2023] FedCFamC1A 122

Davys Burton v Thom [2009] 1 NZLR 437; [2008] NZSC 65

House v The King (1936) 55 CLR 499; [1936] HCA 40

Metwally v University of Wollongong (1985) 60 ALR 68; [1985] HCA 28

Orwin v Rickards [2020] VSCA 225

Thompson v Schacht (2014) 53 Fam LR 133; [2014] NSWCA 247

Wardley Australia Ltd v Western Australia (1992) 175 CLR 514; [1992] HCA 55

Water Board v Moustakas (1988) 180 CLR 491; [1988] HCA 12
Number of paragraphs: 147
Date of hearing: 19 September 2024  
Place: Heard in Sydney, delivered…

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AGLC
Daily & Daily (No 4) [2024] FedCFamC1A 185
Case
[2024] FedCFamC1A 185
Decision Date

CaseChat Overview and Summary

This appeal and cross-appeal arise from protracted proceedings between Mr Daily and Ms Daily, a married couple who separated in 2018 after a relationship of over 21 years. The husband, Mr Daily, appeals against the final property settlement orders made by the primary judge, and the solicitors who advised him in relation to a Binding Financial Agreement (BFA) cross-appeal against the award of damages against them. The parties' relationship began in 1996, they cohabited from 1997, executed a BFA in mid-2005, married in late 2005, and separated in September 2018. They have two children, aged 15 and 18 years. The wife sought to set aside the BFA and claim a property settlement under s 79 of the Family Law Act 1975 (Cth). The husband opposed this relief. The primary judge set aside the BFA for uncertainty and considered the wife's s 79 claim, giving an indicative settlement, and found the solicitors liable in negligence but deferred the assessment of damages. The husband appealed the property settlement orders, arguing that the primary judge erred in not adopting the diminished value of his superannuation due to his legal fees. The husband contended that the primary judge failed to consider this aspect, but the court found that the matters the husband raised were explicitly taken into account. The appeal against the property settlement orders fails.

The husband also appeals against the finding that he did not suffer any compensatory loss. The court identified an error in the assessment of damages and allowed the appeal in part. The assessment of damages for the solicitors' negligence is remitted for rehearing before a different judge. The solicitors' cross-appeal against the award of damages fails as the advice they provided was clearly inadequate. The court grants costs certificates to both the husband and the solicitors.

Orders

Orders of the court

NAA 30 of 2024

ADC 4606 of 2018

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

DIVISION 1 APPELLATE JURISDICTION

BETWEEN:

MR DAILY

Appellant / Cross-Respondent

AND:

MS DAILY

First Respondent

AND:

R LAWYERS

Second Respondent / Cross-Appellant

ORDER MADE BY:

ALDRIDGE, TREE & CAMPTON JJ

DATE OF ORDER:

17 OCTOBER 2024

THE COURT ORDERS THAT:

1. The appellant’s Application in an Appeal filed 30 August 2024 is dismissed.

2. The appeal is allowed in part.

3. Order 6 of the orders of the Federal Circuit and Family Court of Australia (Division 1) made 9 February 2024 is set aside.

4. The assessment of damages for the second respondent’s negligence is remitted for rehearing before a judge of the Federal Circuit and Family Court of Australia (Division 1) other than the primary judge.

5. The second respondent’s Notice of Contention filed 8 March 2024 is dismissed.

6. The second respondent’s cross-appeal is dismissed.

7. The appellant is to pay the first respondent’s costs of the appeal in the sum of $24,800 within 28 days.

8. The appellant is granted a costs certificate pursuant to s 9 of the Federal Proceedings (Costs) Act 1981 (Cth), being a certificate stating that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the appellant in respect of the costs incurred by him in the appeal.

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

10. The Court grants the appellant and second respondent a costs certificate pursuant to s 8 of the Federal Proceedings (Costs) Act 1981 (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 the parties in respect of the costs incurred by them in relation to the rehearing.

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).

Background

Background to the litigation

For the reasons which follow, the husband’s appeal against the property settlement orders fails, the solicitors’ cross-appeal fails, but the husband’s appeal against the award of damages succeeds. BACKGROUND The husband is presently 52 years of age, and although he was employed as a finance professional, is currently not working. The wife is presently 49 years of age, and a public servant. The parties met in 1996, commenced cohabitation in 1997, executed a Binding Financial Agreement (“the BFA”) in mid-2005, married in late 2005 and finally separated in September 2018, thereby concluding a relationship spanning over 21 years. There were two children born to the marriage, who are presently 15 and 18 years of age.PROCEDURAL HISTORY The appeal and cross-appeal arise from complicated and protracted proceedings. By her Further Amended Response to Initiating Application filed 11 December 2019 the wife sought to set aside the BFA and in the event that occurred, thereafter claimed a property settlement pursuant to s 79 of the Family Law Act 1975 (Cth) (“the Act”). The husband opposed that relief. The proceedings were bifurcated, such that the validity of the BFA was determined first. For reasons given on 17 June 2020 (Daily & Daily (2020) 61 Fam LR 75) the primary judge ordered that the BFA be set aside, however the husband successfully appealed to the Full Court, who remitted the question of the validity of the BFA back to the primary judge (Daily & Daily (2020) FLC 93-999). Subsequently, to cover the eventuality the BFA was set aside, the husband joined the solicitors, who advised him in relation to the BFA, into the proceedings and claimed damages for breach of contract and negligence. On 31 March 2023, for reasons then delivered (Daily & Daily [2023] FedCFamC1F 222; “the March 2023 reasons”) the primary judge set aside the BFA for uncertainty, considered the wife’s s 79 claim, giving an “indicative settlement” (at [286]), and found that the solicitors were liable to the husband in negligence, but deferred the assessment of damages. His Honour also concluded that the BFA would have been set aside on the grounds of hardship under s 90K(1)(d) of the Act. An appeal against the primary judge’s characterisation of the basis for setting aside the BFA was unsuccessful (Daily & Daily (No 2) (2023) FLC 94-151). Accordingly, this appeal proceeds from the premise that the order setting aside the BFA for uncertainty was correct. Following the determination in the March 2023 reasons, the husband sought to adduce further evidence in the proceedings. For reasons delivered on 13 October 2023 (Daily & Daily (No 2) [2023] FedCFamC1F 858; “the October 2023 reasons”) the primary judge allowed the husband to lead further evidence relating to his legal costs, but otherwise refused to admit the proposed further evidence. Then, on 27 November 2023, the primary judge heard final submissions as to the appropriate final property settlement orders, and the assessment of damages against the solicitors.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Full text does not contain this section.

Ratio Decidendi

Legal Principle Established

Later at 532–533 they continued:In the result, we agree with the decision of von Doussa J. in S.W.F. Hoists & Industrial Equipment Pty. Ltd. v. State Government Insurance Commission. There the insured sued the insurer for loss suffered as a result of a misrepresentation as to the extent of the indemnity or liability coverage provided by a proposed contract of insurance. His Honour held that actionable actual loss (as opposed to a mere potential for loss) occurred only when the insured was called on by a third party to make payments against which it would have been entitled to be indemnified by the insurer under the contract as represented. When the events entitling the third party to make the demand for payment occurred and when the insurer indicated, prior to the making of that demand, that it would not indemnify the insured against any such demand, there was no more than a potential for loss. S.W.F. Hoists and Zoneff v. Elcom Credit Union Ltd. are to be distinguished from the English insurance cases Iron Trade Mutual Insurance Co. Ltd. v. J.K. Buckenham Ltd. and Islander Trucking Ltd. in that the policies of insurance in the Australian cases were worth what was paid for them.The conclusion which we have reached with respect to the time when the plaintiff first suffers loss in respect of contingent loss or liability accords with the comment of Gaudron J. in Hawkins v. Clayton [(1988) 164 CLR at 601]):“[I]f the interest infringed is an interest in recouping moneys advanced it may be appropriate to fix the time of accrual of the cause of action when recoupment becomes impossible rather than at the time when the antecedent right to recoup should have come into existence, for the actual loss is sustained only when recoupment becomes impossible.” (Emphasis added)Gaudron J. went on to point out [at 602]:“It would be too simplistic to restrict analysis of economic loss merely to a consideration of reduced value or increased liability.”The conclusion which we have reached is reinforced by the general considerations to which we referred earlier. It is unjust and unreasonable to expect the plaintiff to commence proceedings before the contingency is fulfilled. If an action is commenced before that date, it will fail if the events so transpire that it becomes clear that no loss is, or will be, incurred. Moreover, the plaintiff will run the risk that damages will be estimated on a contingency basis, in which event the compensation awarded may not fully compensate the plaintiff for the loss ultimately suffered. These practical consequences which would follow from an adoption of the view for which the appellants contend outweigh the strength of the argument that the principle applicable to the cases in which the plaintiff acquires property (or a chose in action) should be extended to cases where an agreement subjects the plaintiff to a contingent loss. In such cases, it is fair and sensible to say that the plaintiff does not incur loss until the contingency is fulfilled.(Bold emphasis added, footnotes omitted)