GANI & DRASHA
[2018] FamCAFC 164
•27 August 2018
FAMILY COURT OF AUSTRALIA
| GANI & DRASHA | [2018] FamCAFC 164 |
| FAMILY LAW – APPEAL – SLIP RULE – Where although the slip rule could be invoked here the amendments made to the orders go much further than that rule and the basis for applying it allows – Appeal allowed – Where it is not appropriate that the discretion be re-exercised – Matter remitted to the Federal Circuit Court of Australia for rehearing by the primary judge. FAMILY LAW – COSTS – Where the appellant husband sought an order for costs – Where that application was opposed – Held there be no order as to costs – Where both parties sought costs certificates – Where the appeal is allowed on a question of law and each party is to bear their own costs – Costs certificates granted. |
| Family Law Act 1975 (Cth) s 79A(1A) Federal Proceedings (Costs) Act 1981 (Cth) ss 6 and 9 Family Law Rules 2004 (Cth) Federal Circuit Court Rules 2001 (Cth) rr 16.05(2)(e) and (f) |
| Burrell v The Queen (2008) 238 CLR 218 Trask & Westlake (2015) FLC 93-662 |
| APPELLANT: | Mr Gani |
| RESPONDENT: | Ms Drasha |
| FILE NUMBER: | MLC | 7387 | of | 2015 |
| APPEAL NUMBER: | SOA | 75 | of | 2017 |
| DATE DELIVERED: | 27 August 2018 |
| PLACE DELIVERED: | Adelaide |
| PLACE HEARD: | Melbourne |
| JUDGMENT OF: | Strickland J |
| HEARING DATE: | 26 March 2018 |
| LOWER COURT JURISDICTION: | Federal Circuit Court of Australia |
| LOWER COURT JUDGMENT DATE: | 14 September 2017 |
| LOWER COURT MNC: | [2017] FCCA 2229 |
REPRESENTATION
| COUNSEL FOR THE APPELLANT: | Mr Levine |
| SOLICITOR FOR THE APPELLANT: | Midson & Associates |
| COUNSEL FOR THE RESPONDENT: | Ms Carter |
| SOLICITOR FOR THE RESPONDENT: | Cornish Lawyers |
Orders
The appellant husband have leave to rely on his Amended Notice of Appeal filed on 7 March 2018.
The appellant husband have leave to rely on his amended summary of argument filed out of time on 8 March 2018.
The appeal be allowed.
The orders made on 14 September 2017 be set aside.
The matter be remitted to the Federal Circuit Court of Australia for rehearing by Judge Harland.
There be no order as to costs.
The appellant husband is granted a costs certificate pursuant to the provisions of s 9 of the Federal Proceedings (Costs) Act 1981 (Cth), being a certificate 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 husband in respect of the costs incurred by him in relation to the appeal.
The respondent wife is granted a costs certificate pursuant to the provisions of s 6 of the Federal Proceedings (Costs) Act 1981 (Cth), being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the respondent wife in respect of the costs incurred by her in relation to the appeal.
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 Gani & Drasha 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).
| IN THE APPELLATE JURISDICTION OF THE FAMILY COURT OF AUSTRALIA AT MELBOURNE |
Appeal Number: SOA 75 of 2017
File Number: MLC 7387 of 2015
| Mr Gani |
Appellant
And
| Ms Drasha |
Respondent
REASONS FOR JUDGMENT
Introduction
On 7 March 2018 Mr Gani (“the husband”) filed an Amended Notice of Appeal against orders made by Judge Harland on 14 September 2017. The appeal is opposed by Ms Drasha (“the wife”).
The orders appealed against are orders made by the primary judge pursuant to the slip rule (r 16.05(2)(e) of the Federal Circuit Court Rules 2001 (Cth) (“the Rules”)), amending two orders made by her Honour on 5 April 2017 as part of a suite of final property settlement orders.
The matter came before her Honour as a result of both parties raising issues in relation to some of the orders her Honour made on 5 April 2017. There was no formal application filed, but there was a series of correspondence passing between the husband, the wife’s solicitors and her Honour’s chambers, raising these issues, and her Honour eventually listed the matter before her on the basis of there being a slip rule application by both parties to amend or vary the orders (Transcript 28.6.2017, page 2 lines 3 – 6, and page 16 lines 5 – 11).
It seems that the genesis of the applications was first, the investment property that her Honour ordered to be sold was then subject to a contract for sale for $115,000 more than the value of the property used by her Honour in her reasons for judgment, and in her calculations, and secondly, what was treated by her Honour as a “mortgage offset account” with a credit balance of approximately $95,000, and which her Honour divided between the parties, was said to in fact be $90,000, and to have been taken by the Bank and put towards the discharge of the mortgage over the former matrimonial home, which, pursuant to her Honour’s orders, was retained by the wife.
Separate to these events, the wife was suggesting that her Honour had made a mathematical error or errors in framing her orders, such that they did not provide for an overall division of the net assets of the parties of 62.5 per cent/37.5 per cent in favour of the wife. The husband was also alleging a mathematical error, and specifically in relation to the percentage division between the parties of the “mortgage offset account”.
It is apparent from the transcript of the hearing before her Honour that her Honour’s concern was to receive updated figures in order that she could recalculate what each party was to receive, but still on the basis of the overall percentage division of 62.5 per cent to the wife and 37.5 per cent to the husband, being the division fixed upon by her Honour as the appropriate division in her reasons supporting her final orders (e.g. Transcript 28.6.2017, page 4 lines 22 – 29, page 5 lines 28 – 44, page 8 line 36 – page 9 line 3).
To that end her Honour requested that the parties provide her with the details of the sale price of the investment property, the mortgage payout, and the expenses of sale, and her Honour would then recalculate the figures and send out amended orders. This was attended to, and on 14 September 2017 her Honour made the orders the subject of the appeal, namely:
1.Order 18(d) of the orders made 5 April 2017 be amended insofar as the net balance of the sale of the investment property be divided as to:
i)$29,438.40 to the wife; and
ii)$248,630 to the husband.
2.Order 19 of the orders made 5 April 2017 be amended insofar as the value of the mortgage offset account be amended to $90,000, that amount be added to the equity of [the former matrimonial home], and be included in the wife’s share of the net assets.
By way of comparison, the original orders provided as follows:
(18)That within 60 days of the date of these orders each party shall do all things and execute all documents necessary to cause the [investment property], be sold by private treaty at the earliest possible date and that the proceeds of sale be disbursed as follows and in that priority:
…
(d) The net balance then to be divided as to:
(i) 9% to the wife; and
(ii)the remainder to the husband less $5000 plus interest, being the amount of modified costs owing pursuant to [253] of the reasons, paid from the husband’s share to the wife
(19)That simultaneously with compliance with orders 15 & 17 the parties do all acts and things and sign all documents necessary to close the mortgage offset account and divide the proceeds as to 9% to the wife and 91% to the husband.
The appeal
In her amended summary of argument filed on 23 March 2018, the wife sought dismissal of the appeal on the grounds that the Amended Notice of Appeal was defective, and the husband’s amended summary of argument was non-compliant with the Family Law Rules 2004 (Cth), and/or the relevant Practice Direction, and was filed out of time.
There is no doubt that these claims by the wife are correct, but I am prepared to make allowances for the fact that the husband was without legal representation, and that these matters were not pressed at the hearing of the appeal. Further, at the hearing of the appeal the husband was represented by counsel and that assisted greatly in understanding the complaints that he was raising. Thus, to the extent necessary, I propose to allow the husband to rely on his Amended Notice of Appeal and his amended summary of argument as filed.
Although I am permitting the husband to rely on his amended grounds of appeal, unfortunately that does not make it any easier to understand the grounds of appeal. There are 10 grounds, but some of those grounds are incompetent, and others are simply repetitive. However, to repeat, I have had the assistance of counsel in understanding the husband’s case, and it seems to me that his complaints can be distilled as follows:
a)There was no error in the orders, and thus the slip rule has no application; what was before her Honour was the implementation and/or enforcement of her orders.
b)The orders, and particularly order (19) were not complied with by the wife.
c)It was not open to the primary judge to recalculate the figures as her Honour did and in particular the sale proceeds of the investment property should not have been included if the other house property, the former matrimonial home, was not to be revalued.
I will address these complaints in turn as follows:
a)The slip rule can only be invoked if the orders do not accurately reflect what was actually decided and intended. The error, mistake or omission, can then be corrected, but only where the proposed amendment is one upon which there is no difference of opinion; i.e. absent any controversy.
Further, the rule does not extend to correcting errors where the amendment would require the exercise of an independent discretion (e.g. see Burrell v The Queen (2008) 238 CLR 218).
The error suggested by the wife to her Honour was that her Honour’s orders did not in fact result in a 62.5 per cent/37.5 per cent division overall of the assets of the parties (excluding superannuation) as was intended by her Honour.
The error was said to be mathematical, and specifically in relation to the percentage division her Honour determined should be applied to what her Honour described as the “mortgage offset account” and “the proceeds of sale of the investment property”. At [255] and [256] of the reasons for judgment delivered on 5 April 2017, her Honour determined that the percentage division for those two items should be nine per cent to the wife and 91 per cent to the husband.
It is entirely unclear how her Honour arrived at that percentage division, but there is no doubt that applying that division did not result in an overall division of 62.5 per cent/37.5 per cent in favour of the wife.
As can be seen, the husband’s case is that there is no error, and thus the slip rule cannot be invoked. However, that flies in the face of the husband’s own submissions, as referred to above. The husband put to her Honour that the nine per cent should in fact be eight per cent, and he repeats that submission in his Amended Notice of Appeal and in his amended summary of argument.
Further, there was no challenge by the husband’s counsel during the appeal hearing to the proposition that her Honour’s orders did not result in a 62.5 per cent/37.5 per cent division of the assets of the parties (excluding superannuation).
Thus, this complaint by the husband cannot succeed, and it was open to her Honour to apply the slip rule if the other conditions were satisfied.
b)There is no question that the wife has failed to comply with paragraph (19) of the orders made on 5 April 2017. However, there was no formal application for enforcement of that order before her Honour. Her Honour does note at [46] – [48] that subsequent to the matter being heard by her the husband filed an Application in a Case seeking enforcement and costs, but her Honour left it to the husband to pursue that application. This Court is not aware of what if anything has happened to that application, and certainly this appeal has not been concerned with it.
However, the issue of the “mortgage offset account” has loomed large in the submissions of the parties, and in her Honour’s reasons. Indeed, it is informative to set out those reasons in full as follows:
The mortgage offset account
9.Throughout the proceedings the parties referred to two bank [offset] accounts: … . The evidence relating to these accounts was unclear throughout the proceedings. At [215] of my reasons for judgment [see Drasha & Gani [2017] FCCA 663]:
The husband failed to file an updated financial statement with his trial affidavit. The husband refers to approximately $95,000 being available in the parties’ offset account. The wife does not include this in her balance sheet. I suspect this is an omission on her part.
10.Due to the lack of clarity surrounding these accounts, at [212] of the reasons for judgment, I included the funds in the mortgage offset account as an estimated $95,000 of the parties’ legal and equitable interests.
11.In a letter to the Court dated 2 June 2017, Cornish Lawyers, the wife’s then solicitors, advised that the “$95,000 referred to as an offset account by the husband is actually a redraw facility of $90,000 that was available on the standard home loan for the said real property” and as such was absorbed by the bank during the discharge of the mortgage and refinancing of the [former matrimonial home] in the wife’s name.
12.The letter further sought:
Clarity as to the figure that is to be paid to the husband by the wife in replacement of the redraw amount. Our client will be able to pay some of that money to the husband by utilising her 9% share of the proceeds of sale of the investment property…She will need to borrow the balance due to the husband.
13.The wife handed up a letter from [the] Bank dated 21 June 2017 at the Mention Hearing which supported her statement that the offset account was in actuality a redraw account.
14.The husband handed up a print out of the … Bank accounts in which he pointed to the fact the accounts were named “Member Package – Ultimate Offset”
The first thing to note is that there was a dispute between the husband and the wife as to whether there was an actual account where the funds resided, or whether it was a redraw account to be applied in relation to the mortgage over the former matrimonial home.
The second thing to note is that in relation to this “account”, no error is identified such that it would justify the application of the slip rule, and a different treatment of the “account”.
In her Honour’s reasons delivered on 5 April 2017, her Honour treated it as a separate account, albeit containing approximately $95,000, and made a separate order about it (order (19)).
The only relevance to the application of the slip rule is what percentage each party should have of these monies to achieve the intended overall result of 62.5 per cent/37.5 per cent in favour of the wife.
However, her Honour saw fit to recalculate the asset pool, and the division of the assets, by including this amount in the list of assets to which the division of 62.5 per cent/37.5 per cent should be applied directly.
I consider that her Honour erred in so doing under the guise of applying the slip rule. First, the issue was contentious, secondly, no error was identified, and thirdly, the exercise undertaken by her Honour involved the exercise of an independent discretion. All her Honour could do was adjust the percentage division of that “account” as expressed in order (19) to ensure that the overall division resulted in a 62.5 per cent/37.5 per cent division. To repeat, that is not what her Honour did.
c)At the initial hearing, her Honour had before her valuations of the former matrimonial home and the investment property undertaken in January 2016 ([214] of the reasons delivered on 5 April 2017), and it was those valuations her Honour used in constructing the asset pool and determining what each party should be entitled to. However, because the investment property was to be sold, her Honour fixed the parties’ respective entitlements to the proceeds of sale by reference to a percentage based on the valuation figure, with a view to achieving the overall division of 62.5 per cent/37.5 per cent in the wife’s favour. Of course though, as identified above, that percentage was incorrect.
However, instead of just recalculating that percentage by still utilising the valuation figure, her Honour substituted the net proceeds of sale into a reconstituted asset pool to which she directly applied the overall percentage division of 62.5 per cent/37.5 per cent to arrive at the entitlement of each of the parties. Again, I consider that her Honour erred in so doing.
First, there was no error that was being addressed by the inclusion of the net sale proceeds. Secondly, it was controversial. The husband’s submission to her Honour was that for that to be done, there needed to also be an updated valuation of the former matrimonial home, and that would have maintained the integrity of the initial reasons for judgment. Thirdly, the exercise involved the exercise of an independent discretion. Thus, this exercise could not be justified as an application of the slip rule.
Conclusion
It is apparent that although the slip rule could be invoked here, because there was error, the amendments made by her Honour go much further than that rule, and the basis for applying it, allowed her to.
The wife submitted that the husband consented to the course undertaken by her Honour, and thus r 16.05(2)(f) of the Rules allowed her Honour to do what she did, but that is not borne out by the record.
The wife identifies a number of passages in the transcript where it is said the husband “clearly, repeatedly and unequivocally agreed to the [primary] judge recalculating the payout figure using the actual proceeds obtained from the sale of the investment property”. However, it is readily apparent that the husband neither appreciated, nor understood, what her Honour was proposing to do with those figures, and what basis there was for her Honour to use those figures. That is borne out by the fact that despite the husband’s apparent agreement with what her Honour said, he still raised with her Honour the unfairness of not revaluing the former matrimonial home if the sale proceeds of the investment property were to be included (Transcript 28.6.2017, page 9 lines 1 – 20). Her Honour attempted to respond to this concern, but, with respect, did so inadequately.
In these circumstances the appeal must succeed and the question then becomes whether the orders should be set aside and the matter remitted to the primary judge for rehearing, or whether it is open to this Court to re-exercise the discretion.
The husband seeks the latter, but the orders that he proposes on a re-exercise of discretion are entirely inappropriate, and indeed, improper.
If I were to re-exercise the discretion, then consistent with what I have said to date, I could only look to apply the slip rule to correct the failure by her Honour to ensure that the orders result in a 62.5 per cent/37.5 per cent division of the assets as then known and valued. However, that would be an artificial exercise because we now know what the net proceeds of sale of the investment property are, and we know that something has happened to the “mortgage offset account” such that it may no longer be available to be divided as a discrete item of property. There is also the question of the up to date value of the former matrimonial home.
Of course, these are all difficulties that stem from the original orders and reasons for judgment, and there is not yet an appeal from those orders. In that regard, I note that the Full Court in Trask & Westlake (2015) FLC 93-662 addressed the appropriate form of orders where a trial judge is attempting to maintain a certain percentage result where some properties are being retained, and others are being sold.
Given that, it seems to me that the best course to adopt is to remit the matter for rehearing by the same primary judge in the hope that the parties would be able to agree, under r 16.05(2)(f) or even by utilising s 79A(1A) of the Family Law Act 1975 (Cth), what amendments should be made to the original orders, taking into account the events that have occurred subsequently, whilst maintaining the integrity of the original decision to divide the assets of the parties 62.5 per cent/37.5 per cent in favour of the wife. Of course, if sense cannot prevail between the parties, then it would be up to the primary judge to this time appropriately apply the slip rule to the errors actually identified, and where there is no controversy.
Costs
At the conclusion of the hearing submissions were sought from the parties as to the question of costs depending on the result of the appeal.
In the event of the appeal being successful, the husband sought an order for costs, and in the alternative a costs certificate pursuant to the provisions of the Federal Proceedings (Costs) Act 1981 (Cth).
The wife opposed any order for costs but also sought a costs certificate.
There is no basis here for an order for costs to be made, but it is appropriate for costs certificates to issue to both parties. There will be no order as to costs, and the appeal will have succeeded on a question of law.
I certify that the preceding twenty-three (23) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Strickland delivered on 27 August 2018.
Associate:
Date: 27 August 2018
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