Faldyn & Badenoch

[2021] FamCAFC 85

FAMILY COURT OF AUSTRALIA

Faldyn & Badenoch [2021] FamCAFC 85

Appeal from:

Badenoch & Faldyn [2020] FCCA 1530

Appeal number(s):

SOA 58 of 2020

File number(s):

HBC 184 of 2019

Judgment of:

STRICKLAND J

Date of judgment:

4 June 2021

Catchwords:

FAMILY LAW – LEAVE TO APPEAL – PROPERTY – Where the “facts” as pleaded by the appellant do not demonstrate that the decision is attended by sufficient doubt to warrant it being considered by the Full Court and that substantial injustice would result if leave were refused, supposing the decision to be wrong – Where there is no merit in any of the grounds of appeal – Application for leave to appeal dismissed – Appeal dismissed.

FAMILY LAW – COSTS – Where the respondent seeks costs – Where the appellant has been wholly unsuccessful – Where even impecuniosity is not a bar to making an order for costs where there are circumstances that justify an order for costs otherwise being made – Where it is appropriate to make an order for costs in favour of the respondent – Costs order made.

Legislation:

Family Law Act 1975 (Cth) ss 106B, 117

Cases cited:

Concrete Pty Ltd v Parramatta Design and Development Pty Ltd (2006) 229 CLR 577; [2006] HCA 55

D & D (Costs) (No 2) (2010) FLC 93-435; [2010] FamCAFC 64

Medlow & Medlow (2016) FLC 93-692; [2016] FamCAFC 34

SCAA v Minister for Immigration and Multicultural and Indigenous Affairs [2000] FCA 668

Division:

Appeal Division

Number of paragraphs:

64

Date of hearing:

3 December 2020 by video-link

Place:

Adelaide by video link

The Appellant:

In person

Counsel for the First Respondent:

Mr Foster

Solicitor for the First Respondent:

Murdoch Clarke Solicitors

The Second Respondent:

Did not participate in the proceedings

ORDERS

SOA 58 of 2020
HBC 184 of 2019

APPEAL DIVISION OF THE FAMILY COURT OF AUSTRALIA

BETWEEN:

MR FALDYN

Appellant

AND:

MS BADENOCH

First Respondent

MR A FALDYN

Second Respondent

ORDER MADE BY:	STRICKLAND J
DATE OF ORDER:	4 JUNE 2021

THE COURT ORDERS THAT:

1.The application seeking leave to appeal be dismissed, and for the avoidance of any doubt, the appeal be dismissed.

2.The appellant husband pay the costs of the respondent wife fixed in the sum of $3,200.

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 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to 17.02 Family Law Rules 2004 (Cth).

IT IS NOTED that publication of this judgment by this Court under the pseudonym Faldyn & Badenoch has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

REASONS FOR JUDGMENT

INTRODUCTION

1. On 15 July 2020, Mr Faldyn (“the husband”) filed a Notice of Appeal seeking leave to appeal, and if leave is granted, to appeal from an order made by a judge of the Federal Circuit Court of Australia on 22 June 2020.

2. The appeal was opposed by Ms Badenoch (“the wife”), and was not supported by the second respondent, Mr A Faldyn (“the husband’s father”), although he ultimately did not participate in the hearing of the appeal. I also note that he opposed the husband’s application which was before the primary judge, and sought that it be dismissed ([9]).

3. The order the subject of the Notice of Appeal dismissed an Application in a Case filed by the husband on 8 January 2020.

4. In that application the husband sought an order setting aside the sale and transfer of a property at Suburb T in New South Wales in 2018, pursuant to s 106B(1) of the Family Law Act 1975 (Cth) (“the Act”), and an order adding the wife’s father as a party to the proceedings.

5. The substantive proceedings before the court were property settlement proceedings commenced by the wife on 6 March 2019, and in respect of which the husband had filed a Further Amended Response on 20 September 2019.

6. In the wife’s Response to the husband’s Application in a Case, she sought that the application be summarily dismissed, and that was what her Honour was called upon to determine.

   BACKGROUND

7. The parties married in 2009, and separated in 2016.

8. There is one child of the marriage, namely X born in 2010. She lives with the wife in Tasmania, whereas the husband resides in New South Wales.

9. The subject property was sold by the wife in 2018, without giving the husband notice or seeking his consent. That of course was unnecessary given that the property was registered in the wife’s name, and no proceedings were then on foot.

10. Initially the property was listed for auction on 3 June 2018. However, before the auction the method of sale was changed to private treaty, and the sale price was advertised in the range of $340,000 to $360,000.

11. The property was sold in June 2018 for $340,000.

12. To repeat, the wife commenced property settlement proceedings on 6 March 2019, seeking an order that the net proceeds of sale of the property, namely $200,000, be paid to her. That was the only asset of the parties of any value.

13. On 3 September 2019, the court granted the application of the husband’s father for leave to intervene in the proceedings. He sought an order that the wife pay him $143,915.86.

14. After filing a Response on 11 June 2019, an Amended Response on 10 September 2019, the husband filed a Further Amended Response on 20 September 2019 seeking parenting orders, and an order that the proceeds of sale of the property be “placed in trust to be administered for and on behalf of the child and for her best interests”.

15. The purchasers of the property were not added as parties to the proceedings, but they were served with the husband’s application and the affidavit material in support of that application. They did not take any part in the proceedings.

    LEAVE TO APPEAL

16. The husband requires leave to appeal the order made by the primary judge. Unfortunately though, all that the husband, who is without legal representation did in that regard, is to set out as the “facts” relied on in support of the application, what he has pleaded as his grounds of appeal in the event that leave is granted.

17. What is required of course to obtain leave, is for the husband to demonstrate that the decision is attended by sufficient doubt to warrant it being considered by the Full Court, and that substantial injustice would result if leave were refused, supposing the decision to be wrong (Medlow & Medlow (2016) FLC 93-692 at [57]).

18. The “facts” as pleaded do not address this requirement. However, no point was taken about that at the hearing of the appeal, and I proceeded on the basis that the grounds of appeal should be addressed, and if merit is found, then leave should be granted, and vice versa.

    THE GROUNDS OF APPEAL

19. It is useful to set out the grounds of appeal in full, and then deal with each ground discretely, although for reasons which I will shortly explain, it will be necessary to address Ground 3f first.

20. Before doing that though, I note that the husband’s summary of argument filed on 28 October 2020 did not comply with Practice Direction 1 of 2017. Instead of addressing the grounds of appeal, as required, the summary of argument comprises a narrative where the husband ranges far and wide in outlining his complaints about her Honour’s decision. Unfortunately, the wife also failed to comply with the Practice Direction, and her summary of argument is also a narrative, but perhaps that failure to comply with the Practice Direction can be excused, because it was necessary for the wife to respond to the summary of argument of the husband as presented.

21. The upshot of the failure by the husband to comply with the Practice Direction, is that where his grounds of appeal are unclear, the required clarity is not to be found in the summary of argument.

22. In any event, it is the grounds of appeal that this Court must address, and not the wide ranging summary of argument, and the grounds of appeal are as follows:

    3.        [Her Honour] then erred in her Judgment of 22 June 2020 by;

    a.Narrowing the definition of “anticipated order” under s106B from an anticipation that an order in some form would be sought from the court, to an anticipation that a “particular order” would be sought (provision of trust in favour of child).

    b.Narrowing the scope of s106B to exclude operation of section on assets realized below market value (no cause of action where some value realized).

    c.Mischaracterizes and wrongly excludes evidence before her;

    (i)Title searches that evidence the purchasers own multiple property in the local area and cannot be characterised as mere unsophisticated homeowners.

    (ii)Property valuation clearly supports a conclusion that a reasonable cause of action exists on the basis that the property was sold undervalue.

    d.Misapplies the defence of bona fide purchaser under s 106B and misdirects herself that she may apply it at an interlocutory stage on summary dismissal where she has not received any evidence from the purchaser. In fact, evidence before her Honour, negatives the conclusion that there is no reasonable cause of action in the form of a departure from public auction to private treaty, revision downward of the description of the size of the home, and the very substantial undervalue of sale price compared to valuations.

    e.Misconstrues the purpose of joining of [the wife’s father], and proceeds on the basis that he may claim against Ms Badenoch solely which is incorrect in law. Further her Honour, wrongly concludes that [the wife’s father] makes no claim on the basis of statements by Ms Badenoch when she has clear evidence in the form of the second respondent Mr A Faldyn’s intervention that Ms Badenoch originally proceeded on the basis that Mr A Faldyn also made no claim for repayment and this was untrue.

    f.Biases her Judgment and her interpretation of evidentiary material before her so as to make it consistent with her earlier summary judgment, refusing transfer of this complicated matter to Family Court of Australia.

    (As per original)

23. Although it is unclear, Ground 3f can be interpreted as an assertion that the primary judge demonstrated bias in her reasons for judgment. As such, the authorities require that complaint to be addressed first, because if it is made out, it strikes at the validity of the trial process and its outcome. And even if the judge is found to be correct, the orders must be remedied (Concrete Pty Ltd v Parramatta Design and Development Pty Ltd (2006) 229 CLR 577 at 611).

    Ground 3f

24. In his summary of argument filed on 28 October 2020, the husband says this:

    31.Finally, the applicant submits that her Honour erred in this matter because she was biased by her earlier decision to refuse transfer of this matter to the Family Court of Australia because she decided that it was not complex or involved many parties. The applicant submits that because her Honour was improperly influenced by her earlier decision, she erred by misdirecting herself as to the law and misinterpreted the evidentiary material before her that clearly supports the s106B application and the joining of [the wife’s father] to this matter.

25. It seems that here the husband is suggesting that her Honour deliberately made errors in relation to the law and the evidence, to reach a result that conformed with her previous refusal to transfer the proceedings to the Family Court of Australia, because the proceedings were not complex and did not involve multiple parties.

26. Thus, the allegation is not only the equivalent of a claim of actual bias, but also suggests that her Honour has failed to comply with her Oath of Office.

27. It is an understatement to record that that is a serious allegation to make about a judicial officer, and as such would require incontrovertible and detailed evidence of such conduct to be revealed. However, there is no such evidence pointed to by the husband, and thus this outrageous allegation must fall at the first hurdle.

28. Even if it is addressed at the level of an allegation of actual bias, the authorities require the complainant to demonstrate that the state of mind of the decision maker, whilst exercising the decision making power, was so committed to a conclusion already formed as to be incapable of alteration, whatever evidence or argument may be presented (SCAA v Minister for Immigration and Multicultural and Indigenous Affairs [2000] FCA 668 per Von Doussa J at [76]).

29. Here, the husband has not even attempted to demonstrate that that is the case, and the complaint cannot be maintained.

    Grounds 3d and 3c(i)

30. Ground 3d is a ground that also has no merit.

31. When determining an application pursuant to s 106B, the court is required to have regard to the interests of, and shall make any order proper for the protection of, a bona fide purchaser (s 106B(3)).

32. Her Honour did that, finding as follows:

    58.There is no evidence of a lack of bona fides of the purchasers. They acquired an interest in the property for valuable consideration, the sum of $340,000. There is no evidence that the sale was not made in the ordinary course of business. A real estate agent was engaged to sell the property. The property was advertised for sale. There is no evidence that the purchasers had known or should have known that that [sic] there would be a property claim by the husband. There were no proceedings on foot at the time of the sale.

33. As can be seen in the ground of appeal, the husband suggests that her Honour “misapplie[d] the defence of bona fide purchaser” and “misdirecte[d] herself that she may apply it at an interlocutory stage on summary dismissal where she has not received any evidence from the purchaser”. However, it is not her Honour who has erred in either of the ways suggested; it is the husband who has misconceived the requirements of s 106B(3).

34. To repeat, her Honour was obliged to have regard to that subsection, and it is not explained how her Honour has “misapplie[d]” it.

35. As for there being no evidence from the purchasers, that is correct, but that could not and did not prevent her Honour’s consideration of the matters in s 106B(3) to the extent that she was able to, and that does not bespeak error.

36. Next, I note that the second half of the ground of appeal is incomprehensible, and does not call for any further comment.

37. In Ground 3c(i), the husband asserts as follows:

    Title searches that evidence the purchasers own multiple property in the local area and cannot be characterised as mere unsophisticated homeowners.

38. It is not apparent on the documents before this Court that her Honour excluded the title searches, but it seems that the purpose of that assertion is to suggest that because the purchasers owned other properties in the area, they were not bona fide purchasers. Indeed, her Honour recorded this at [37]:

    The husband asserted that the purchasers are investors, who are experienced in buying distressed sales, and in the circumstances of this case are not bona fide purchasers.

39. Her Honour did not take that submission any further, but it is not necessary for a trial judge to refer to and address every argument put by the parties in reaching the decision, and I see no error in her Honour not doing so. The plain fact of the matter is that even if the purchasers were investors, and even if they owned other properties, that says nothing about their bona fides in purchasing the property under consideration.

40. Thus, like Ground 3d, this Ground has no merit.

    Ground 3e

41. This is a ground that also has no merit whatsoever. The assertions made by the husband simply have no validity.

42. At first instance the husband was seeking to add Mr Badenoch, the wife’s father as a party, but her Honour was not persuaded that there was any basis for that to occur.

43. Her Honour was absolutely correct in that decision. There was no evidence put before her Honour that the wife’s father required payment of the loan that he made to the wife from the net proceeds of sale of the property, or that he was making a claim for payment in the proceedings. And that is the end of the matter. Indeed, there was a letter from the wife’s father to the wife which was annexed to the affidavit of the husband, which indicated that the wife’s father would be deducting the money that he lent to the wife from her entitlements under his will (paragraph 21, affidavit of the husband sworn 28 January 2020).

    Grounds 3a, b and c(ii)

44. I propose to address these grounds together.

45. Section 106B(1) provides as follows:

    In proceedings under this Act, the court may set aside or restrain the making of an instrument or disposition by or on behalf of, or by direction or in the interest of, a party, which is made or proposed to be made to defeat an existing or anticipated order in those proceedings or which, irrespective of intention, is likely to defeat any such order.

46. In applying that subsection, the relevant enquiry here was whether the sale of the property by the wife following separation, and at a time when no proceedings were on foot, was made to defeat an anticipated order, or which, irrespective of intention, was likely to defeat any such order.

47. Presumably, in an attempt to establish an intention to defeat an anticipated order, the husband submitted to her Honour that the property was sold under value to defeat his “legitimate claim”. This now seems to be the subject of Grounds 3b and 3c(ii). However, I can find no error in how her Honour addressed these contentions in finding that “there is no reasonable prospect of the husband proving the wife had an intention to sell the property to defeat an anticipated order” ([54]).

48. Her Honour found that there was no relevant evidence that the property was sold under value, and in making that finding, her Honour was absolutely correct. The husband sought to rely on a “profile report for the median price for a similar certified house in the area”, and a “valuation” of the property undertaken two years before the sale ([39]). Plainly, the “profile report” had no weight, and indeed, was more than likely inadmissible, and the “valuation” was outdated.

49. Further, the valuer did not inspect the property and the “valuation” was not complete. And significantly, the valuer, presumably and understandably for those reasons, recorded that the valuation was not appropriate for use in the family court proceedings.

50. There was also no basis to find that the method of sale demonstrated an intention on the part of the wife to defeat an anticipated order. Thus, there is no merit in Ground 3b to the extent that it can even be understood, or Ground 3c(ii).

51. That leaves Ground 3a.

52. It is correct that her Honour did find that the specific order sought by the husband to benefit the child of the parties, could not reasonably be anticipated by the wife ([56]), but that did not provide the basis of her Honour’s decision.

53. Her Honour correctly found as follows in [53]:

    I consider that having regard to the circumstances at the time of the sale, an application by the husband at some time with a consequent property order was objectively to be foreseen by the wife as being likely or reasonably probable. The husband had undertaken building works on the home and had made a contribution towards the property. His family had made contributions towards it.

54. That was the anticipated order her Honour referred to in [54] when addressing whether the wife had any intention to sell the property to defeat that anticipated order. And it was also the anticipated order that her Honour referred to in [55] when addressing whether irrespective of intention, the sale would be likely to defeat that anticipated order.

55. For completeness, I note that her Honour found that the sale would not be likely to defeat an anticipated property order, given that the sale did not have the effect of placing the asset about which an order is sought, beyond the reach of the husband. There was no evidence before her Honour that the $200,000 net proceeds of sale were not sufficient to meet an anticipated order, and thus be likely to defeat an anticipated order ([55]).

1. This ground also has no merit.

   CONCLUSION

2. Having found no merit in any of the grounds of appeal, there is no basis to grant leave to appeal, and that application must be dismissed, and for the avoidance of doubt the appeal must also be dismissed.

3. Her Honour’s conclusion that the husband has no reasonable prospect of success in prosecuting a claim under s 106B of the Act was entirely open, as was her Honour’s refusal to add the wife’s father as a party.

   COSTS

4. In the event that the appeal was dismissed, the wife sought an order for costs in the total amount of $3,610.10.

5. The husband opposed any order for costs because of his poor financial circumstances. He says that he receives a Centrelink benefit and has no assets. He also owes $80,000 in legal fees. For the wife’s part, she works part-time and has no assets or major liabilities.

6. Pursuant to s 117 of the Act, a court is able to make an order for costs if the circumstances justify it. Here, the fact of the husband being wholly unsuccessful in the appeal is a circumstance that justifies an order in the wife’s favour (s 117(2A)(e)).

7. Certainly, the court is obliged to take into account the financial circumstances of the parties, but there is ample authority that even impecuniosity is not a bar to making an order for costs, where there are circumstances that justify an order for costs being made otherwise (D & D (Costs) (No 2) (2010) FLC 93-435).

8. That is the case here, and it is appropriate to make an order for costs in favour of the wife.

9. However, as to the amount sought, that includes $411.85 for attending upon delivery of judgment. There is no requirement to attend to receive judgment, and thus the order will be that the husband pay the costs of the wife fixed in the sum of $3,200 (rounded off).

I certify that the preceding sixty-four (64) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Strickland.

Associate: 

Dated:       4 June 2021