FEI & WOONG
[2021] FamCAFC 2
•22 January 2021
FAMILY COURT OF AUSTRALIA
| FEI & WOONG | [2021] FamCAFC 2 |
| FAMILY LAW – APPEAL – LEAVE TO APPEAL – PROPERTY – Where the primary judge made an interim order that the parties be equally responsible for mortgage repayments – Where no formal application was filed by the wife in advance of the hearing – Where there is no articulation in the reasons of the juridical source of power the primary judge relied upon for making the order – Where a vast majority of his Honour’s reasons were dedicated to establishing the need for an order which would encourage settlement between the parties – Where the primary judge’s reasons as a whole support the wife’s argument that his Honour was guided by irrelevant considerations – Leave to appeal granted – Appeal allowed. FAMILY LAW – APPEAL – COSTS CERTIFICATES – Where both parties sought costs certificates – Where the wife contributed to the misdirection of the proceedings by failing to file a proper application and affidavit in advance of the hearing – Where submissions made by the husband’s counsel before the primary judge appear to have been instrumental in leading the primary judge into error – Where it is inappropriate to expect the public purse to meet any of the costs associated with these proceedings. FAMILY LAW – APPLICATION IN AN APPEAL – Adduce further evidence – Where the further evidence sought to be adduced is not relied upon to establish error on the part of the primary judge, but for the purpose of any re-exercise of discretion – Where matter remitted for rehearing – Application dismissed. |
| Family Law Act 1975 (Cth) ss 4(1)(e), 72, 79, 93A(2), 94AAA(3), 114 Family Law Rules 2004 (Cth) r 22.09(1) |
| Adamson v Queensland Law Society Incorporated [1990] 1 Qd R 498; [1989] QSCFC 145 Aldred and Aldred (1984) FLC 91-510; [1984] FamCA 14 Beecham Group Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618; [1968] HCA 1 Concrete Pty Ltd v Parramatta Design & Developments Pty Ltd (2006) 229 CLR 577; [2006] HCA 55 Dunwell & Dunwell [2011] FamCAFC 2 Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337; [2000] HCA 63 House v The King (1936) 55 CLR 499; [1936] HCA 40 Johnson v Johnson (2000) 201 CLR 488; [2000] HCA 48 Maldera & Orbel (2014) FLC 93-602; [2014] FamCAFC 135 Martiniello and Martiniello (1981) FLC 91-050; [1981] FamCA 21 Qantas Airways Limited v Fisher [2014] QCA 329 R v Dovey; Ex parte Ross (1979) 141 CLR 526; [1979] HCA 14 Royal Guardian Mortgage Management Pty Ltd v Nguyen (2016) 332 ALR 128; [2016] NSWCA 88 Russo v Aiello (2003) 215 CLR 643; [2003] HCA 53 Sands & Ralston (No 2) (2015) FLC 93-675; [2015] FamCAFC 216 Sieling and Sieling (1979) FLC 90-627; [1979] FamCA 23 Stowe and Stowe (1981) FLC 91-027; [1980] FamCA 92 Vakauta v Kelly (1989) 167 CLR 568; [1989] HCA 44 Wacando v The Commonwealth (1981) 148 CLR 1; [1981] HCA 60 Warren v Coombes (1979) 142 CLR 531; [1979] HCA 9 Wray and Wray (1981) FLC 91-059; [1981] FamCA 37 |
| APPELLANT: | Ms Fei |
| RESPONDENT: | Mr Woong |
| FILE NUMBER: | BRC | 13549 | of | 2019 |
| APPEAL NUMBER: | NOA | 21 | of | 2020 |
| DATE DELIVERED: | 22 January 2021 |
| PLACE DELIVERED: | Brisbane |
| PLACE HEARD: | Brisbane |
| JUDGMENT OF: | Kent J |
| HEARING DATE: | 1 September 2020 |
| LOWER COURT JURISDICTION: | Federal Circuit Court of Australia |
| LOWER COURT JUDGMENT DATE: | 11 March 2020 |
| LOWER COURT MNC: | [2020] FCCA 938 |
REPRESENTATION
| COUNSEL FOR THE APPELLANT: | Mr Bunning |
| SOLICITOR FOR THE APPELLANT: | KLM Solicitors |
| COUNSEL FOR THE RESPONDENT: | Mr Haddrick |
| SOLICITOR FOR THE RESPONDENT: | James Noble Law |
Orders
Leave to appeal from Order 6 made in the Federal Circuit Court of Australia on 11 March 2020 be granted.
The appeal from that order be allowed and Order 6 made on 11 March 2020 be set aside.
The proceedings be remitted to a Judge of the Federal Circuit Court of Australia other than the primary judge for rehearing of the issue.
The wife’s Application in an Appeal filed on 18 August 2020 be dismissed.
There be no order as to costs of the appeal proceedings.
Note: The form of the order is subject to the entry of the order in the Court’s records.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Fei & Woong has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
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 r 17.02 Family Law Rules 2004 (Cth).
| THE APPELLATE JURISDICTION OF THE FAMILY COURT OF AUSTRALIA AT BRISBANE |
Appeal Number: NOA 21 of 2020
File Number: BRC 13549 of 2019
| Ms Fei |
Appellant
And
| Mr Woong |
Respondent
REASONS FOR JUDGMENT
Ms Fei (“the wife”) applies for leave to appeal, and if leave is granted, to appeal from Order 6 of interim orders made by a judge of the Federal Circuit Court of Australia (“the FCC”) in property settlement proceedings between the wife and Mr Woong (“the husband”).
The husband does not oppose the grant of leave but opposes the appeal.
The order the subject of this appeal provides as follows:
6.That both parties shall be equally responsible for all mortgage payments of the properties situated at [C Street, D Town] and [F Street, G Town].
I note in passing that the inclusion of the reference to C Street, D Town (“the D Town property”) in the order is mistaken in that there is no mortgage on that property. Nothing turns upon that mistake for the purposes of this appeal.
The wife filed an Application in an Appeal to adduce further evidence on appeal pursuant to s 93A(2) of the Family Law Act 1975 (Cth) (“the Act”) however, on the hearing of the appeal counsel for the wife confirmed that the further evidence sought to be adduced is not relied upon to establish error on the part of the primary judge. Rather it is sought to be relied upon for the purpose of any
re-exercise of discretion.
The appeal was heard by me sitting as a single judge exercising the appellate jurisdiction pursuant to s 94AAA(3) of the Act. For the reasons which follow the wife ought be granted leave to appeal and her appeal allowed with the subject order being set aside. In the event, as will be discussed, it is necessary that the issue the subject of this appeal be remitted for rehearing by a judge other than the primary judge.
Background
The husband was born in 1976 and is 44 years old. He is a professional earning a high income of approximately $12,396 per week.
The wife was born in 1978 and is 42 years old. She is a professional earning a weekly employment income, as at the hearing before the primary judge, of approximately $200 per week, reduced by reason of her ill health and undertaking treatment for cancer.
The parties commenced cohabitation upon their marriage in early 2010. Their first child was born in 2010 and their second child was born in 2015.
In September 2009 the parties purchased the D Town property as tenants in common in equal shares for $563,000 without the need of any borrowing. In August 2019 the parties purchased the property at F Street, G Town (“the G Town property”) for $2,650,000 plus stamp duty and other purchase costs of about $400,000. A mortgage of approximately $2,100,000 was raised to fund this purchase and it is the mortgage repayments in respect of this mortgage that is the focus of the present proceedings.
Settlement of the purchase of the G Town property occurred some days after the date of the parties’ final separation in October 2019.
As at the time of the hearing before the primary judge the wife and children were continuing to live in the D Town property, which was the former matrimonial home, whilst the husband was living in the G Town property. Whilst this is not entirely clear it seems that for some period post-separation mortgage repayments for the G Town property were met from a joint account of the parties, but at least as at the hearing it seems the husband had been meeting the mortgage repayments. Notably, taken from his Financial Statement, even after making the monthly mortgage repayments in full the husband enjoyed a weekly excess of income net of expenses of a little over $3,000.
As at the time of the hearing before the primary judge the wife held approximately $146,000 in a bank account in her name plus shares with an estimated value of about $180,000. The husband held approximately $350,000 in his bank accounts and had shares and an investment fund with a combined estimated worth of about $120,000.
The substantive property applications
In the substantive property proceedings the husband contends for final orders equally dividing between the parties’ joint bank account funds and otherwise “that orders be made in the terms of the Binding Financial Agreement entered into by the parties on the 22 day of January 2010”.
The wife’s position is that the Binding Financial Agreement by its term that it terminates upon the expiration of ten (10) years from the date of the marriage (clause 137) ceased to have effect upon the expiration of that period. The wife seeks orders pursuant to s 79 of the Act for her to receive 70 per cent of the total net property of the parties.
I interpolate here that in circumstances where, under the terms of the Binding Financial Agreement for which the husband contends, unless otherwise agreed jointly owned property is to be sold with proceeds divided equally (clause 97); whilst the wife apparently does not seek to retain the G Town property as part of her property settlement; there would appear an obvious solution to ongoing mortgage repayments via sale of the G Town property. Having raised this point early in the hearing I adjourned the hearing of the appeal, as was sought by the parties, to provide them with an opportunity to explore the prospects of finding some resolution.
Unfortunately the parties were unable to resolve the matter and the appeal proceeded. However, I reiterate that it would be open to either party to seek an interlocutory order in the FCC for sale of the G Town property, with such a sale bringing to an end mortgage repayments of approximately $9,000 per month.
Approach of the primary judge
It ought be observed at the outset that the proceedings (parenting and property settlement) were listed before the primary judge only for a mention for the primary purpose of case management (at [5]). Review of the transcript of the hearing before the primary judge, and the reasons for judgment, confirms this was one of many matters before the primary judge in a busy duty list, with other matters apparently involving urgency including risk issues for children.
Further, no formal application was filed by the wife in advance of the hearing, nor was any affidavit in support filed, seeking any order with respect to mortgage repayments. The primary judge entertained an oral application by the wife’s counsel, by reference to draft orders handed up by counsel at the hearing, in the following exchange:[1]
[COUNSEL FOR THE WIFE]: The other issue is about the continued payments of the mortgages. And it goes to the same submission that I just made, about [the wife] not working.
HIS HONOUR: Well, are the mortgages being paid?
[COUNSEL FOR THE WIFE]: As I understand the husband is paying the mortgages. So all [the wife’s] seeking by order 1 is that that continue pending further order.
[1]Transcript 11 March 2020, p.10 lines 5–11.
Not assisted by any application which might reasonably have been expected to identify the juridical source of power for the order the wife sought, review of the transcript reveals that neither counsel identified any relevant juridical source of power for the orders sought by either party, nor presented any cogent identification of the principles applicable to such an identified source.
It was well open to the primary judge to refuse to entertain the application in the absence of a properly filed application, a matter to which the primary judge adverted at [6], [9] and [10]. The point of emphasis is that the matters referred to provide important context to appellate review of the primary judge’s approach and reasons.[2] It bears emphasis that whilst it is not the law that the reasons of a trial judge must recite well established principles whenever such principles are being applied, there must be sufficient explanation of how and why the decision ultimately made has been arrived at. As Henry J (with whom Muir JA and Mullins J agreed) observed in Qantas Airways Ltd v Fisher:[3]
… it is not the law that the reasons of trial judges must recite a well established matter of principle whenever it is being applied. Ultimately the purpose of reasons for judgment is not to provide a legal treatise on the area of law involved. It is to explain how and why the decision has been arrived at in sufficient detail to allow the parties to be able to test the decision on appeal.
[2]See, for example, Dunwell & Dunwell [2011] FamCAFC 2 per Thackray J at [192].
[3][2014] QCA 329 at [26] citing Adamson v Queensland Law Society Incorporated [1990] 1 Qd R 498, 508.
The essential contention of the wife before the primary judge was that she was not earning sufficient income to contribute to, let alone meet one half of, the mortgage repayments of about $9,000 per month from her income, whilst the husband had a demonstrated ample capacity to meet the whole of the mortgage repayments from his income and still retain significant surplus income. In other words, the mortgage repayments could readily be met from income rather than any resort to capital.
The essential contention of the husband before the primary judge was that the wife had sufficient financial resources in the form of funds held in her bank account together with her shares to meet half the mortgage repayments. Moreover, in the context that the parties were due to attend an ordered mediation within about three months of the hearing before the primary judge, counsel for the husband advanced this submission:[4]
Similarly, there’s no reason why you would disturb the current arrangements in respect of the obligations to pay the mortgage on the property. In fact frankly it would be of assistance, I think to both parties, if you left both parties responsible for the mortgage, because it adds incentive to the parties to get to an outcome in the mediation on 1 June. So they stop haemorrhaging money. There’s an incentive for this matter to drag on if one party isn’t happy to pay any of the costs associated with third parties in the proceeding. So we oppose the making of order 1 in my friend’s draft orders…
[4]Transcript 11 March 2020, p.16 lines 14–23.
It would seem, for the reasons further discussed, that the primary judge may have been led into error by this submission. Moreover this submission was not open. As will be further discussed there was no “incentive” provided to the husband by him being relieved of one half of mortgage payments he was comfortably meeting in full.
Turning to the reasons for judgment, the primary judge discussed the parties’ respective financial circumstances commencing at [18] and from [21] records, relevantly for present purposes, the following:
21.[The wife] says she should not have to pay for the jointly owned property and the mortgage in both names, because she is not working and earning moneys on the same scale as the husband.
22.Obviously, if the court concluded that [the wife] was impecunious, and the husband had the capability, the orders would naturally be that he shoulder all of the debt for an interim period.
23. The wife is not impecunious though.
24.[The wife’s] disclosure shows – and this is only about five days old – she has $146,446 in the bank and shares worth $183,000.
…
26.While that amount of money is nowhere near the yearly earning capacity of the husband, the court is still called upon, in his case, to state that [the wife] ought to be funding half of the mortgage which is in both names.
27. I am told the parties will be ready for a mediation in June 2020.
28.I have calculated, at most, there would be two to three mortgage payments required in that time.
29.In coming to a decision on whether the wife, who does have funds available, ought be contributing, I have considered the matter which has appeared before me to date in both the case with regard to parenting and the case with regard to property.
30. I have formed the view that disputes in this matter are continuing.
…
34.But I have formed the view that if orders are not made which actually bring home to the parties the importance of considering reasonable options which will no doubt be open to them to settle the property matters, then there is the probability that the court, at some stage in the future, will be required to make the decisions altering property interests.
…
36.Although not necessarily related to the property, although it also is in many ways – an example of the failure to compromise was the parenting decision which I had to make.
37. The wife claimed that the children feared the father.
38.Upon receiving expert evidence, it was apparent that the court was able to put into place orders whereby the children would have the benefit of a relationship with the father, because there was no expression of fear as stated by the wife in the evidence of the family consultant.
39.It may be the case – and possibly it is – that the parties are in such an anxious state that they might misunderstand a whole set of circumstances affecting their lives now, but the parties need to appreciate that the court will make orders upon evidence, and the court has already done so with regard to the children.
40.And I only use the reference in relation to the children as one of the issues in which no compromise could be reached at all in circumstances where I did not think such was justified.
…
49.In the meantime, though, the court is left with the position that both parties have the capability of paying for the mortgage which they undertook jointly, and I am going to order both parties equally pay that mortgage.
50. As well, both parties will fund the mediation.
51.That will bring home to the parties – and I say this with the purpose with which it is intended, that they do consider this particular matter carefully and they do weigh their options and take advantage of an early opportunity to resolve matters before it comes into the court system which will only cause further delays and, no doubt, a whole lot of anxiety for the parties.
52.In my view, both the Act and the Rules allow me to make such a decision.
(As per the original)
Beyond the general and, with respect to the primary judge, vague reference in [52] to “both the Act and the Rules” there is no articulation in the reasons of the juridical source of power the primary judge relied upon for making Order 6.
Source of power – applicable principles
The wife contends on appeal that the only available source of power for the order made is the power provided in s 114 of the Act to grant injunctions. Section 114(1) gives the Court power to make “such order or grant such injunction as it considers proper with respect to the matter …” whilst subsection (3) provides for the grant of an injunction “in any case in which it appears to the court to be just or convenient to do so …”
In circumstances where there is no suggestion the wife’s application was advanced by way of an order for maintenance under s 72 it would appear that s 114 is the only juridical source of power to support the making of the order the wife sought, or indeed Order 6.
Whilst counsel for the husband referred on the appeal to the “[o]bjects” provision in the Federal Circuit Court of Australia Act 1999 (Cth) (“the FCC Act”), and specifically the object expressed in s 3(2)(c) “to encourage the use of a range of appropriate dispute resolution processes”, that provision does not provide a juridical source of power for an order. It is well settled that whilst a preamble or objects section in a statute may provide assistance in ascertaining the scope or meaning of an operative provision, it is an operative provision to which regard must be had in identifying a source of power for an order.[5]
[5] See, Wacando v The Commonwealth (1981) 148 CLR 1; Russo v Aiello (2003) 215 CLR 643; Maldera & Orbel (2014) FLC 93-602.
There can be no doubt that the primary judge had the power to grant an injunction under s 114(1) given the circumstances of such an injunction arise out of the marital relationship and so fall within the definition of matrimonial cause in s 4(1)(e) of the Act (see, R v Dovey; Ex parte Ross)[6] or under s 114(3), given the existence of proceedings under s 79 of the Act (see, Sieling and Sieling).[7]
[6](1979) 141 CLR 526 at 532.
[7](1979) FLC 90-627 at 78,257 (“Sieling”).
The principles for the grant of such an injunction in the context of s 79 proceedings and for the purpose of asset preservation are well established on the authorities.[8]
[8] See, for example, Stowe and Stowe (1991) FLC 91-027 (“Stowe”); Martiniello and Martiniello (1981) FLC 91-050; Aldred and Aldred (1984) FLC 91-510.
The applicant must be able to show a reasonable claim under s 79 and the Court must have regard to both the merits of the claim involved and the degree of danger of any prejudice to the claim that will exist should an injunction not be granted.[9] In Wray and Wray[10] it was held that the Court need only be satisfied that the applicant has a bona fide claim under s 79 and that the applicant’s entitlement to bring such a claim and to obtain an order under s 79 needs to be protected by an injunction.
[9]Sieling; Stowe.
[10](1981) FLC 91-059.
As the Full Court in Sieling held (at 78,264):
The power to grant injunctions is, of course, a discretionary power, not to be exercised lightly. The Court must balance the hardship to each party of granting or refusing an order …
The High Court of Australia in Beecham Group Ltd v Bristol Laboratories Pty Ltd (1968) 118 CLR 618 at 622-623 said this about the principles of granting interlocutory injunctions:
… The Court addresses itself in all cases … to two main inquiries. The first is whether the plaintiff has made out a prima facie case … How strong the probability needs to be depends, no doubt, upon the nature of the rights he asserts and the practical consequences likely to flow from the order he seeks. Thus, if merely pecuniary interests are involved, “some” probability of success is enough
…
The second inquiry is directed to this aspect of the matter. It is whether the inconvenience or injury which the plaintiff would be likely to suffer if an injunction were refused outweighs or is outweighed by the injury which the defendant would suffer if an injunction were granted.
Notably the primary judge recorded a finding at [45] that the wife has “a reasonable claim … in relation to the alteration of interests on a final basis”.
It can thus be accepted that the wife advanced an application for injunctive relief under s 114 to preserve assets the subject of her s 79 claim by having mortgage payments met from the husband’s income, rather than from (in part) her capital.
Grounds of appeal
Before discussing the wife’s grounds of appeal, the husband in his Summary of Argument seems to contend that the wife seeks leave to rely on her Amended Notice of Appeal filed on 31 July 2020, albeit that the husband does not oppose such reliance. However, as is clear in r 22.09(1) of the Family Law Rules 2004 (Cth) (“the Family Law Rules”), the wife is entitled to file an Amended Notice of Appeal up to and including the due date for her Summary of Argument. Pursuant to orders made by the Appeals Registrar on 22 June 2020, the wife’s Summary of Argument was due to be filed on 31 July 2020. Therefore, the wife does not require leave to rely on her Amended Notice of Appeal.
Within that Amended Notice of Appeal, the wife raises three grounds of appeal. Though numbered 5 through 7 as a result of amendment, I will refer to them as Grounds 1, 2 and 3.
The wife’s grounds of appeal read as follows:
1.The learned Judge’s prior dealings with both parenting and property matters was immaterial to a determination of the issue of who paid the mortgage, however the learned Judge expressed his views on the evidence he had read and decisions he had previously made in relation to parenting matters in determining who paid the mortgage, the conflation of the previous Orders in relation to parenting and its effect on a property decision is an error of law.
2.In addition to the above, the learned Judge’s findings in relation to [the wife] and that she wouldn’t ‘compromise’ in relation to children’s issues, amounts to the learned Judge displaying an apprehended bias against [the wife].
3.The learned Judge’s reason for ordering the parties to pay half of the mortgage each, in order to make each of the parties consider ‘reasonable options’ in a potential settlement is an error of law in so far as it is a denial of natural justice.
(As per the original)
Given both that the wife’s Summary of Argument does not delineate her submissions into discussion of each specific ground and given Grounds 1 and 3 both ultimately devolve to complaints about the primary judge having acted upon wrong principle and taken into account irrelevant considerations, these grounds can be discussed together.
Ground 2 – apprehended bias
Authority dictates that a complaint on appeal of apprehended bias on the part of the primary judge must be dealt with first and prior to dealing with other substantive grounds of appeal.[11]
[11] Royal Guardian Mortgage Management Pty Ltd v Nguyen (2016) 332 ALR 128; Concrete Pty Ltd v Parramatta Design & Developments Pty Ltd (2006) 229 CLR 577.
By this ground, the wife argues that the primary judge’s reasons for judgment give rise to an apprehension of bias.
The wife correctly acknowledges that a contention of apprehended bias was not raised before the primary judge. In the circumstances where the wife was legally represented at the hearing, that would normally preclude the raising of a complaint of bias on appeal.[12] However, without specifically citing the relevant principle, the wife relies on the principle espoused in Vakauta that where an apprehension of bias arises for the first time from the reasons for judgment, such an argument may be advanced on appeal.
[12]Vakauta v Kelly (1989) 167 CLR 568 (“Vakauta”).
The test for apprehended bias is well known. In Johnson v Johnson,[13] the High Court of Australia stated it thus:
… whether a fair-minded lay observer might reasonably apprehend that the judge might not bring an impartial and unprejudiced mind to the resolution of the question the judge is required to decide.
(Footnote omitted)
[13](2000) 201 CLR 488 at 492.
In Ebner v Official Trustee in Bankruptcy,[14] the High Court of Australia elaborated on the principle, stating that apprehension of bias:
… requires two steps. First, it requires the identification of what it is said might lead a judge … to decide a case other than on its legal and factual merits. The second step is no less important. There must be an articulation of the logical connection between the matter and the feared deviation from the course of deciding the case on its merits.
[14](2000) 205 CLR 337 at 345.
Here, the wife does not specifically articulate the bases for each of those steps. However, the wife’s argument appears to be that the first step is satisfied by erroneous inferential findings that the wife is to blame for the parties’ inability to resolve the prior parenting dispute and the characterisation of the wife as “not compromising”. Next, the second step would be satisfied, on the wife’s case, by the appearance of the primary judge relying on those inferential findings to sheet home to the wife, the burden of half the mortgage payments in an attempt to encourage settlement of the matter at the mediation. This, the wife argues, would be supported by the clear superiority of the husband’s financial position as compared with the wife.
With all due respect to the wife, such an argument represents pure conjecture. There is nothing in his Honour’s reasons for judgment or in the transcript of the hearing which would support a finding that a fair-minded lay observer would have an apprehension of bias. The primary judge first made a finding, open on the evidence, that the wife was financially capable of affording half the payments. Once that position is accepted, as it is, by the wife, the superiority or otherwise of the husband’s financial position is irrelevant in this context. Secondly, the theoretical fair-minded lay observer would read the reasons for judgment as a whole and recognise them as an attempt to highlight, for both parties, the realities of continuing to rely on the Court to settle disputes where compromise from both of them would save them the time and money of consistent Court intervention.
At [30] to [35] of the reasons the primary recorded:
30. I have formed the view that disputes in this matter are continuing.
31.I have formed the view that it is really difficult for these parties to reach compromise on the main issues they are facing as to their futures with regard to both parenting and property matters.
32.I have not been told, but I would guess that both have expended, now, a good amount of money on legal costs.
33.That is their right and it is obviously required so that they are in the position to make informed decisions.
34.But I have formed the view that if orders are not made which actually bring home to the parties the importance of considering reasonable options which will no doubt be open to them to settle the property matters, then there is the probability that the court, at some stage in the future, will be required to make the decisions altering property interests.
35.While it is the right of the parties to insist the court do that, the court is also aware that expenditure simply because of an inability to compromise will simply result in moneys not being available to them later.
(Emphasis added)
Whilst the errors revealed in [34] will be addressed in dealing with the other grounds, on a fair reading of those paragraphs the primary judge was seeking to impress upon both parties, on the premise that each had probably already expended significant funds on legal costs, the prospect of further significant such expenditure if the case proceeded to a Court resolution in the absence of a compromise. That attempt was made in the context of a forthcoming mediation.
An allegation of bias or apprehended bias on the part of a trial judge is a serious allegation and is one not amenable to ready acceptance unless firmly established. In this case I am not persuaded, on balance, that there is merit in Ground 2.
Grounds 1 and 3
By way of context, given the FCC operates as a docket system, the dispute between these parties has required judicial adjudication of issues relevant to both parenting and property by the same Judge over the course of its life. More relevantly, the primary judge, in his Honour’s reasons for judgment, refers specifically to a determination which was required to be made by his Honour in light of allegations made by the wife that the children were fearful of the husband. Ultimately, expert evidence was obtained which did not support the wife’s allegations and the primary judge made orders which saw the children spend alternate weekends with the husband.
That issue was referred to by the primary judge in this way in his reasons for judgment:
29.In coming to a decision on whether the wife, who does have funds available, ought be contributing, I have considered the matter which has appeared before me to date in both the case with regard to parenting and the case with regard to property.
30. I have formed the view that disputes in this matter are continuing.
31.I have formed the view that it is really difficult for these parties to reach compromise on the main issues they are facing as to their futures with regard to both parenting and property matters.
…
34.But I have formed the view that if orders are not made which actually bring home to the parties the importance of considering reasonable options which will no doubt be open to them to settle the property matters, then there is the probability that the court, at some stage in the future, will be required to make the decisions altering property interests.
…
36.Although not necessarily related to the property, although it also is in many ways – an example of the failure to compromise was the parenting decision which I had to make.
37. The wife claimed that the children feared the father.
38.Upon receiving expert evidence, it was apparent that the court was able to put into place orders whereby the children would have the benefit of a relationship with the father, because there was no expression of fear as stated by the wife in the evidence of the family consultant.
39.It may be the case – and possibly it is – that the parties are in such an anxious state that they might misunderstand a whole set of circumstances affecting their lives now, but the parties need to appreciate that the court will make orders upon evidence, and the court has already done so with regard to the children.
40.And I only use the reference in relation to the children as one of the issues in which no compromise could be reached at all in circumstances where I did not think such was justified.
(As per the original)
The wife’s argument is that the primary judge’s reference to his Honour’s prior adjudication of aspects of the parenting dispute evidences, in itself, a consideration of an irrelevant consideration. Further, the wife argues that the purpose behind such reference, being to establish the wife as the party who has failed to cooperate with the husband, led his Honour to consider another irrelevant consideration, namely the encouragement of the parties to settle the property proceedings at a then upcoming mediation.
It is a central tenet to the exercise of a judge’s discretion that he or she not be guided by irrelevant considerations.[15]
[15]House v The King (1936) 55 CLR 499 (“House”).
In order to gauge that which is irrelevant to the primary judge’s task, this Court must bear in mind the principles relevant to the determination of an application for an interlocutory injunction. Crucially, the first aspect of a question to be tried has been established above. What remains, then, is the question of the balance of convenience. It is within the rubric of that consideration that the primary judge ought to have focussed his inquiry.
That is not to say that a primary judge dealing with property matters may not, if it is relevant, make reference to prior decisions in relation to a parenting dispute between those parties. Here, however, as will be further explained, the reference to such parenting dispute was for the purpose of establishing the wife as the party who had been unreasonable and uncooperative in that respect. Such a consideration, in this context, is an error.
The primary judge does identify that the wife had the financial capability to afford half the mortgage payments (at [23]–[26]), a finding not challenged on appeal. His Honour is also cognisant of the husband’s superior financial position (at [18] and [26]). I note here that the primary judge states at [18] that there was no evidence before his Honour as to the husband’s outlays. That is, with respect to his Honour, plainly wrong. On 28 November 2019, around four months prior to the hearing, the husband filed his Financial Statement in which he deposes to his expenditure of around $9,000 per week. Moreover, before the primary judge on 11 March 2020, the wife’s counsel specifically drew that Financial Statement to his Honour’s attention and highlighted the $3,000 surplus income after the husband’s expenses.[16]
[16]Transcript 11 March 2020, p.17 lines 30–41.
In any event, as it seems to me, the primary judge’s reasons as a whole support the wife’s argument that his Honour was guided by irrelevant considerations. More specifically, his Honour is seen to highlight each party’s financial situations in six paragraphs at [18]–[24]. That is clearly a relevant consideration. Shortly, thereafter, at [26], is the only reference in his Honour’s reasons which could be said to be a consideration of the balance of convenience. His Honour said this:
26.While that amount of money [the wife’s cash at bank and share portfolio] is nowhere near the yearly earning capacity of the husband, the court is still called upon, in his case, to state that she ought to be funding half of the mortgage which is in both names.
(As per the original)
The remaining 27 paragraphs of his Honour’s reasons dedicated to determining the issue of the mortgage payments can be seen to follow this progression and, in my view, evidence his Honour’s consideration of irrelevant factors:
a)His Honour identifies that there is a mediation due to occur in June 2020 (at [27]) and that there would be, at most, two to three mortgage payments required the time from his decision to that mediation (at [28]);
b)His Honour notes that the disputes between these parties are continuing (at [30]) and that it is difficult for the parties to reach compromise in regard to both parenting and property (at [31]);
c)His Honour expresses the assumption that the parties have expended significant funds on legal fees (at [32]–[33]) and that unless the parties are made to realise the importance of considering settlement options, the Court will be required to determine their dispute (at [34]);
d)His Honour expressly records that “the court is also aware that expenditure simply because of an inability to compromise” (emphasis added) will deplete the funds available to the parties in such a property settlement (at [35]);
e)His Honour then goes on, in the immediately following paragraphs to discuss the parenting dispute his Honour had to determine which, evident on the face of his Honour’s reasons, the primary judge considered to be as a result of the wife’s unfounded claims that the children feared the husband (at [36]–[40]); and
f)After concluding that both parties ought pay the mortgage, his Honour said that such an order would bring home to the parties, the need for them to consider their options in light of the upcoming settlement and to “take advantage of an early opportunity to resolve matters” (at [51]).
The first point to make is that, clearly, a vast majority of his Honour’s reasons were dedicated to establishing the need for an order which would encourage settlement between the parties. Secondly, it is tolerably clear that his Honour was focussed more on that settlement than the consideration of the application on its merits. That view is fortified by his Honour’s reference to there only being an approximate two to three mortgage payments before the mediation, which consideration, when coupled with the overarching implication of his Honour’s reasons that the parties ought reach settlement at that mediation, highlights his Honour’s error.
To explain how that is so, one need only ask the rhetorical question of “what if the parties do not settle at mediation?” That is, his Honour seems to have given no consideration to the wife being responsible for half the mortgage payments over a period of time longer than “two to three mortgage payments”.
Though on appeal the husband highlights the objects of the FCC as set out in s 3 of the FCC Act, which relevantly includes encouraging the “use of a range of appropriate dispute resolution processes”, those objects do not overcome the explicit considerations relevant to the determination of a discreet application such as this.
It was the primary judge’s obligation to consider the relevant law and, in applying that law, take into account only those considerations relevant to its proper exercise. It is not relevant to the consideration of the balance of convenience in this case whether the primary judge considered the parties should reach settlement at the upcoming mediation or, indeed, which party his Honour considered more at fault for past disputes.
The second aspect of the wife’s argument which, in my view, is irresistible on reading his Honour’s reasons, is that whilst his Honour referenced both parties being unable to cooperate and imploring both parties to find settlement at the mediation, his Honour made an order which did not apply any incentive to the husband to settle the property proceedings. That is so because the husband had been paying the mortgage from his considerable income without difficulty and, indeed, after all his expenses (including the entire mortgage payment), the husband had a surplus of income over expenses of some $3,000 per week.
It is illogical, then, to reason that an order which would see the husband’s expenses reduce by approximately $1,000 per week could, in any way, “bring home to [the husband] the importance of considering reasonable options”. That illogicality necessitates the finding that, in fact, his Honour sought to “bring home” to the wife alone the need for compromise. Plainly, such a consideration is not relevant to the question his Honour was required to decide.
The husband seeks to emphasise that as a joint borrower on the mortgage the wife was in any event equally liable, with the husband, under the mortgage. However, this argument misses the point. In the context of s 79 proceedings the wife sought to engage the jurisdiction of the court to grant injunctive relief to preserve capital, the subject of her s 79 claim. The court was obliged to apply the applicable principles to that application. The primary judge did not undertake that task. Moreover, it is not the position that the primary judge declined to make any order at all. The primary judge made a curial order (Order 6) (potentially founding issue estoppel) in the terms of a mandatory injunction which order could only be founded upon the power to make an order or injunction under s 114. Necessarily, the applicable principles were engaged for an order in these terms to be made. However extensive the subject power may be, or how wide the discretion, the authorities do not support any proposition to the effect that it is legitimate to impose an injunction for the primary purpose of exerting some pressure on a party to compromise the party’s substantive claim.
As was discussed in the hearing of the appeal, this Court’s obligation to undertake a review on appeal extends to the correction of identified error, including any error that may not be specifically raised by an appellant or by a ground of appeal.[17]
[17]Warren v Coombes (1979) 142 CLR 531.
In terms of discretionary errors within the well-recognised categories identified in House, in my judgment the primary judge fell into error, in summary, in the following respects.
First, in making Order 6 the primary judge predicated the making of that order upon the identified need to “bring home to the parties the importance of considering reasonable options” (at [34]) or to “bring home to the parties … that they do consider this particular matter carefully and they do weigh their options and take advantage of an early opportunity to resolve matters before it comes into the court system which will only cause further delays and, no doubt, a whole lot of anxiety for the parties” (at [51]). The primary judge acted upon wrong principle.
The central question raised by the wife’s application was whether her s 79 claim might be prejudiced, in terms of asset reduction, if mortgage repayments were to be, in her case, sourced from capital rather than income given that her income was insufficient.
The primary judge observed at [42]:
42.There is no universal principle that a party’s capital, as it is sometimes referred to, is preserved simply on the basis that the spouse who earns a greater deal of money pays whatever debts the parties own jointly.
Whilst it may be true that there is no such “universal principle”, the question raised by the wife’s application in circumstances where her income did not permit her to contribute to mortgage repayments other than via capital, was whether capital otherwise available in respect of the s 79 proceedings ought be depleted, when the husband’s income was amply sufficient to meet the mortgage repayments in full. Relevant to that question or the exercise of discretion in relation to it is the feature that in an approximate 10 year marriage producing children the wife had obviously made contribution to the husband’s established high earning capacity.
Second, at [18] of the reasons the primary judge refers to the husband’s earnings of “about $700,000 a year” but further records “no evidence of the husband’s outlays was before the court”. That is a clear error given the content of the husband’s Financial Statement setting out his expenses, which was relied upon by the wife’s counsel for the submission to the primary judge that even after accounting for the mortgage repayments in full the husband “has an excess of income over expenditure of $3,000 a week”.
That error was material given that it was a material consideration that the husband’s level of income could readily meet mortgage repayments in full without the need for any resort to any capital of the parties or either of them, the subject of the s 79 claims. Finally, as earlier referred to, at [27] and [28] the primary judge records:
27. I am told the parties will be ready for a mediation in June 2020.
28.I have calculated, at most, there would be two to three mortgage payments required in that time.
Third, a material consideration was the prospect of the proceedings not resolving at the mediation (as in fact occurred). The primary judge appears to have assumed that only two or three mortgage repayments would need to be made and his Honour thus overlooked this material consideration.
In my judgment, aside from the misconceived complaint of denial of natural justice which is not established, there is merit in these grounds.
Conclusion and costs of the appeal
As earlier noted, the husband did not oppose the grant of leave to appeal and given the assessment of the grounds and their outcome leave to appeal ought be granted.
Having found merit in the wife’s appeal the appeal should be allowed and Order 6 of the orders made by the primary judge on 11 March 2020 ought be set aside.
On the hearing of the appeal both parties contended that this Court ought not
re-exercise the discretion, primarily because the wife seeks to rely upon her further affidavit in respect of which the husband seeks to have an opportunity to respond. Both parties seek that the subject issue be remitted for rehearing in the FCC. That order will be made together with an order formally dismissing the wife’s application to adduce further evidence on appeal.
In the event the appeal was to be allowed both parties sought costs certificates pursuant to the relevant provisions of the Federal Proceedings (Costs) Act 1981 (Cth) (“the Costs Act”) in respect of the appeal and for the rehearing. However, I do not consider the discretion conferred for the grant of certificates ought be exercised in favour of granting the parties’ requests in the circumstances of the case.
In the case of the wife, I consider she contributed to the misdirection of the proceedings that occurred by failing to file a proper application and affidavit in advance of the hearing, and in the failures referred to for her case to be properly articulated before the primary judge as to the juridical source of power and the principles applicable for its exercise. Moreover, the wife’s complaint of apprehended bias on the part of the primary judge did not succeed.
In the case of the husband, I have earlier referred to the submission made by his counsel before the primary judge which appears to have been instrumental in leading the primary judge into error.
I have also had regard to the substantial financial circumstances of both parties.
In all the circumstances I consider it inappropriate to expect the public purse to meet any of the costs associated with these proceedings.[18] I therefore decline to grant certificates pursuant to the Costs Act to either party.
[18]Sands & Ralston (No 2) (2015) FLC 93-675.
I certify that the preceding eighty-four (84) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Kent delivered on 22 January 2021.
Associate:
Date: 22 January 2021
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