Fowles & Fowles (No 2)

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FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

(DIVISION 1) APPELLATE JURISDICTION

Fowles & Fowles (No 2) [2024] FedCFamC1A 115

Appeal from: Fowles & Fowles (No 4) [2023] FedCFamC1F 819
Appeal number: NAA 305 of 2023
File number: MLC 8587 of 2015
Judgment of: ALDRIDGE, CAREW & CAMPTON JJ
Date of judgment: 12 July 2024
Catchwords:

FAMILY LAW – APPEAL – Property – Where the final hearing took five and a half years to complete – Apprehended bias – Interventions by the primary judge during cross-examination – Whether the primary judge should have recused herself – Interventions insufficient to establish apprehended bias – Procedural fairness – Appellant alleges length of hearing and cross-examination and the primary judge’s interventions led to procedural unfairness – Where no complaint about the progress of the matter was made at trial – Where the appellant was free to communicate with his lawyers whilst under cross-examination – Where the primary judge’s interventions were not so excessive – No procedural unfairness established – Adequacy of reasons – Appeal dismissed.

FAMILY LAW – CROSS-APPEAL – Whether the primary judge erred in not ascribing a value to various items on the balance sheet – Whether the primary judge failed to take into account unvalued items – Further evidence required to establish error – Application for further evidence not pressed – No indication the unvalued assets were not taken into account – Challenge to exercise of discretion – No error identified – Cross-appeal dismissed.  
Legislation: Family Law Act 1975 (Cth) s 75 and s 79
Cases cited:

Bennett and Bennett (1991) FLC 92-191; [1990] FamCA 148

Chang v Su [2002] HCATrans 446

CNY17 v Minister for Immigration and Border Protection (2019) 268 CLR 76; [2019] HCA 50

Conway v The Queen (2002) 209 CLR 203; [2002] HCA 2

Cresswell v Conroy (No 2) (2023) 67 Fam LR 366; [2023] FedCFamC1A 201

Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337; [2000] HCA 63

Edinger v Duy (2023) 68 Fam LR 55; [2023] FedCFamC1A 194

Expectation Pty Ltd v PRD Realty Pty Ltd (2004) 140 FCR 17; [2004] FCAFC 189

Finch & Finch (2020) FLC 93-949; [2020] FamCAFC 60

Fowles & Fowles [2021] FamCA 368

Fox v Percy (2003) 214 CLR 118; [2003] HCA 22

GetSwift Ltd v Webb (2021) 283 FCR 328; [2021] FCAFC 26

Gollings and Scott (2007) FLC 93-319; [2007] FamCA 397

Goose v Wilson Sandford & Co (1998) 142 SJLB 92

Gronow v Gronow (1979) 144 CLR 513; [1979] HCA 63

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

Housing Commission of New South Wales v Tatmar Pastoral Co Pty Ltd and Penrith Pastoral Co Pty Ltd [1983] 3 NSWLR 378

Huda & Huda and Laham (2018) FLC 93-837; [2018] FamCAFC 85

Jess & Jess (2021) FLC 94-055; [2021] FamCAFC 159

Johnson v Johnson (2000) 201 CLR 488; [2000] HCA 48

Keach & Keach [2011] FamCA 192

Lee v Lee (2019) 266 CLR 129;

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Details
Case
[2024] FedCFamC1A 115
Decision Date

CaseChat Overview and Summary

The case of Fowles & Fowles (No 2) involves an appeal and a cross-appeal arising from family law proceedings. The appellant, Mr. Fowles, contests the final orders made by the primary judge, while the respondent, Ms. Fowles, cross-appeals certain aspects of those orders. The proceedings, which spanned five and a half years, focused on the division of property between the parties following their separation. The primary judge's orders provided for the wife to retain the X Street apartment and receive a payment of $1,240,231.

The legal issues addressed in the appeal included whether the primary judge should have recused herself due to apprehended bias and whether the length of the hearing and the judge's interventions during cross-examination led to procedural unfairness. The court found that the interventions by the primary judge during cross-examination were not excessive enough to establish apprehended bias and that there was no procedural unfairness as the appellant was free to communicate with his lawyers during the cross-examination and no complaint about the progress of the matter was made at trial. The adequacy of the primary judge's reasons was also considered, with the court concluding that no error was identified.

The cross-appeal challenged the primary judge's valuation of various assets, including the Fowles Family Trust, the 2017 DD Trust, and the W Group. The wife argued that the primary judge failed to ascribe a value to these assets, which affected the overall property division. However, the court found that further evidence was required to establish an error, and since the wife did not press for an application for further evidence, it was concluded that the primary judge had not failed to take into account the unvalued items. The adequacy of the primary judge's exercise of discretion was also examined, with no error identified.

The court dismissed both the appeal and the cross-appeal. The appeal was dismissed because the interventions by the primary judge were not so excessive as to establish apprehended bias or procedural unfairness. The cross-appeal was dismissed as the wife did not provide sufficient evidence to establish that the primary judge erred in valuing the assets or failed to take them into account. The final orders included the dismissal of both the appeal and the cross-appeal and outlined the procedures for determining costs between the parties.

Orders

Orders of the court

NAA 305 of 2023

MLC 8587 of 2015

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

DIVISION 1 APPELLATE JURISDICTION

BETWEEN:

MR FOWLES

Appellant

AND:

MS FOWLES

Respondent

ORDER MADE BY:

ALDRIDGE, CAREW & CAMPTON JJ

DATE OF ORDER:

12 JULY 2024

THE COURT ORDERS THAT:

1. The appeal is dismissed.

2. The cross-appeal is dismissed.

3. Within 14 days of the date of these orders, the parties are to confer in respect of costs and in the event an agreement is reached, the parties have liberty to approach the Southern Appeals Registry with a proposed minute of consent orders.

4. In the event of the parties being unable to reach an agreement in respect of costs, within 28 days of the date of these orders, the parties are to file written submissions of no more than five pages as to what costs order, if any, should be made in respect of both the appeal and cross-appeal.

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).

Part XIVB of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish an account of proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.

Background

Background to the litigation

Although the appeal focused on the delay in the proceedings (the hearing occupied 43 days and took five and a half years to be completed), which we will address shortly, and the adequacy of the primary judge’s reasons, it is helpful to have some understanding of the issues determined by her Honour.BACKGROUND At the time of the hearing, the husband lived in Australia, although he had spent various periods of time since separation in the United States of America which is where he was born. Interim orders made by the primary judge prohibited him leaving Australia for much of the hearing, however he was permitted to travel to the United States to attend his father’s funeral and spend time with his family following his father’s unexpected death. The wife was also living in Australia with the parties’ son, D, who was 20 years old at the time of judgment delivery. They lived in an apartment in X Street, Melbourne (“the X Street apartment”), owned by the husband. The husband unsuccessfully contended that the X Street apartment was encumbered by a charge in favour of his father to secure a loan. The husband conducted a business as a share broker, specialising in shares in United States companies. His Australian business operated through W Pty Ltd and the United States business through T Inc. The husband’s interest in the United States company was valued at $1,492,535. In 2014, the Fowles Family Trust was established in State FF. It is the owner of an apartment in City AW (“20 B Apartment”). The primary judge ultimately found that the Fowles Family Trust was the alter ego of the husband (at [306]), but it is unnecessary to detail the primary judge’s reasoning as her Honour was unable to ascribe a value to the Trust due to the husband’s non-disclosure. The husband’s uncle set up a trust known as the 1989 DD Trust with the husband’s father being within the class of beneficiaries. Again, in ways unnecessary to detail, the husband’s interest in that trust later became held by the 2017 DD Trust. Due to the husband’s non-disclosure, neither the nature of his interest in that trust nor its value could be identified (at [340]). In short, the orders made by her Honour provided for the wife to have the X Street apartment and a payment of $1,240,231.The delay The hearing commenced on 19 March 2018 and ran over 43 days until 10 September 2021. Written submissions were received between 22 August 2022 and 3 January 2023. Judgment was delivered on 6 October 2023. The husband was in the course of cross-examination for 22 days over a two-year period. However, that information is apt to mislead because the husband was not cross-examined on many of those days and many of the other days were part days. The next section of these reasons is a detailed analysis of the hearing which is essential as delay is the focus of the husband’s appeal. It is clear from our analysis that there were many reasons for the length of the hearing. The husband was a difficult witness. He continued to disclose significant documents and serve important evidence throughout the hearing. Counsel bickered constantly. COVID-19 intervened and the resultant Microsoft Teams hearings tended to follow the awkward pattern typical of them. We know from an aide memoire provided to us that these difficulties were aggravated due to the unavailability of counsel and the usual difficulties of obtaining future hearing dates.

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

The wife did not wish to proceed with her application for leave to adduce further evidence and it was subsequently dismissed.Did the primary judge err in her alteration of the parties’ property interests? (Ground 1) It is useful to set out Ground 1 of the cross-appeal in full. It too is in an unhelpful form, combining at least two distinct grounds.1.The primary judge erred by altering the legal and equitable property interests of the parties pursuant to s.79 of the Family Law Act 1975 in a manner that was not just and equitable. The primary judge erred:a.By significantly undervaluing the total value of the assets (legal and equitable interests) available for division to be adjusted between the parties as $6,900,840.00 ("Reasons") at [388]–[389]). The primary judge:i.Erred in finding as to [20 B Apartment], an asset beneficially owned by the [Fowles Family Trust]: “There is no valuation of or with respect to [20 B Apartment]” (Reasons at [268]);ii. Erred by failing to:1.Value the assets of the [Fowles Family Trust] as being at least $US 3.1 plus an additional US$1.1 for increase on evidence in the value of [20 B Apartment] from purchase to offer to sale; or alternatively 2.Value the assets of the [Fowles Family Trust] as being at least US$3.1M; or alternatively;3.Ascribe any minimum monetary valuation of the assets of the [Fowles Family Trust];iii. Erred by failing to:1.Value the assets of the 2017 [DD] Trust; or alternatively 2.Ascribe any minimum monetary valuation of the assets of the [DD] Trust;iv. Erred in finding:1.That the [W] Group was "not…appropriately valued as a going concern" (Reasons at [320]); or alternatively2.Ascribe any minimum monetary valuation of the assets of the [W Pty Ltd];b.When taking into account matters pursuant to section 75(2)(b) and/or 75(2)(o) the primary judge erred by failing to give any or alternatively proper weight to any of:i.the "substantial assets" found to have been concealed by the husband (Reasons for Judgment dated 6 October 2023 ("Reasons") at [387]), or ii.the "substantial" value of the [Fowles] Family Trust, or iii.the husband's interest in the 2017 [DD] Trust. (As per the original)Should the primary judge have ascribed a value to the Fowles Family Trust, the 2017 DD Trust or the W Group? First, the wife sought to ascribe a value to 20 B Apartment. There is force in her submission that it could be inferred from all of the evidence that the unit had a value of about USD2,200,000, in at least 2020 or 2021, leading to an Australian value of $3,013,698. However, the apartment is not owned by the husband. It is owned by YY Inc, which is a flow through entity to SS Company, which is a flow through entity to the Fowles Family Trust. In short, the apartment is held by the Fowles Family Trust. It is not known what other assets and, importantly, liabilities it has which must be taken into account when assessing its value. One of its assets cannot simply be taken in isolation as the value of the Fowles Family Trust.