Goh v Ren
[2020] FamCA 881
•22 October 2020
FAMILY COURT OF AUSTRALIA
| GOH & REN | [2020] FamCA 881 |
| FAMILY LAW – NATIONAL ARBITRATION LIST – proceeding referred to the NAL judge for directions under s 13F of the Family Law Act – need for procedural fairness – arbitrator determining procedural steps without hearing both parties – problematic – need for procedural fairness – content of obligation explained. |
| Evidence Act 1995 (Cth) s 128 Family Law Act 1975 (Cth) ss 13E, 13F, 13G, 13K, 44(3) Family Law Regulations 1984 (Cth) regs 67E, 67I(2) |
| Annetts v McCann (1990) 170 CLR 596 Australian Broadcasting Tribunal v Bond (1990) 170 CLR 321 Commissioner for Australian Capital Territory Revenue v Alphaone Pty Ltd (1994) 49 FCR 576 Dranichnikov v Minister for Immigration and Multicultural Affairs (2003) 77 ALJR 1088 Emerald Grain Australia Pty Ltd v Agrocorp International Pte Ltd [2014] FCA 414 Gissing v Gissing [1971] AC 886 Kioa v West (1985) 159 CLR 551 Mobil Oil Australia Pty Ltd v The Federal Commissioner of Taxation (1963) 113 CLR 475 Moses v Macferlan [1760] 97 ER 676 Norwest Holst Ltd v Secretary of State for Trade [1978] Ch 201 Pettitt v Pettitt [1970] AC 777 Plaintiff S10/2011 v Minister for Immigration and Citizenship (2012) 246 CLR 636 R v Local Government Board, ex parte Arlidge [1914] 1 KB 160 Re Minister for Immigration and Multicultural and Indigenous Affairs;ex parte Lam (2003) 214 CLR 1 Salemi v MacKellar (No 2) (1977) 137 CLR 396 TCL Air Conditioner (Zhongshan) Co Ltd v Castel Electronics PtyLtd (2014) 232 FCR 361 TCL Air Conditioner (Zhongshan) Co Ltd v Judges of the Federal Court of Australia (2013) 251 CLR 533 Voinet v Barrett (1855) 55 LJQB 39 |
| Australian Law Reform Commission, Traditional Rights and Freedoms—Encroachments by Commonwealth Laws (Report No 129, December 2015) The Honourable Justice Alan Robertson, Natural Justice or Procedural Fairness (2016) 23 Australian Journal of Administrative Law 155 S. de Smith & R. Brazier, Constitutional and Administrative Law (Penguin Books, 8th ed, 1999) |
| APPLICANT: | Ms Goh |
| RESPONDENT: | Mr Ren |
| FILE NUMBER: | PAC | 2296 | of | 2019 |
| DATE DELIVERED: | 22 October 2020 |
| PLACE DELIVERED: | Melbourne |
| PLACE HEARD: | Melbourne |
| JUDGMENT OF: | Wilson J |
| DATE OF LAST SUBMISSION: | 20 October 2020 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Not applicable |
| SOLICITOR FOR THE APPLICANT: | Mr P. Lofitis |
| COUNSEL FOR THE RESPONDENT: | Not applicable |
| SOLICITOR FOR THE RESPONDENT: | Not applicable |
Orders
The arbitrator must conduct a further preliminary conference in this arbitration in which both parties are heard on a timetable that will be adopted for the filing of documents.
The arbitration is to resume forthwith in order to determine those procedural matters.
The arbitration must be concluded by 15 February 2021 and the arbitral award must be registered on or before that date.
The further hearing of this proceeding is listed before me at 9:30am on 15 February 2021.
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 Goh & Ren 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).
| FAMILY COURT OF AUSTRALIA AT MELBOURNE |
FILE NUMBER: PAC 2296 of 2019
| Ms Goh |
Applicant
And
| Mr Ren |
Respondent
REASONS FOR JUDGMENT
Introduction
The issue for my determination is whether the arbitrator’s alteration to a timetable previously agreed between the parties in circumstances where the applicant was not given an opportunity to be heard on the changes to that timetable was a valid discharge of the arbitrator’s obligation to conduct the arbitration in accordance with procedural fairness.
Synopsis
For the reasons that follow, in my view it was not. I order the arbitrator to conduct a further preliminary conference in this arbitration in which both parties are heard on a timetable that will be adopted for the filing of documents. I order the arbitration to resume forthwith in order to determine those procedural matters.
Relevant history
By undated arbitration agreement made between the applicant, the respondent and the arbitrator, the parties agreed to submit to arbitration the subject matter of this property proceeding.
This proceeding was commenced on 20 May 2019 in the Federal Circuit Court of Australia and it was transferred to this court pursuant to orders made by his Honour Judge Dunkley on 27 August 2020. The applicant is the de facto wife of the respondent who is the de facto husband of the applicant. In her initiating application the applicant sought orders for the sale of two parcels of land and the division of the net proceeds from those sales as to 60% in her favour and the balance to the respondent. She also sought orders in relation to motor vehicles.
The respondent filed his response on 7 August 2019. In it he sought the dismissal of the applicant’s initiating application.
His Honour Judge Myers heard limited argument on 13 August 2019 and made orders for disclosure, the issue of subpoenae and his Honour adjourned the proceeding to 17 December 2019.
On 17 December 2019 his Honour Judge Myers made orders pursuant to s 13E of the Family Law Act referring the totality of the proceeding to arbitration. His Honour left it to the parties to agree on the identity of the arbitrator. His Honour also ordered the parties to execute an arbitration agreement which, in the absence of agreement, was to take the form of the AIFLAM Arbitration Kit August 2016. His Honour adjourned the proceeding for directions to 27 April 2020. Curiously, ahead of the parties even giving evidence, his Honour granted each a certificate under s128 of the Evidence Act. That was a curiosity because s 128(1) is enlivened when a witness objects to giving particular evidence on the ground that the evidence may tend to prove that the witness has committed an offence under an Australian law or is liable to a civil penalty. One wonders how that provision would be enlivened at a directions hearing.
The date on which the arbitrator was nominated was not given in evidence. However, the undated arbitration agreement was raised before me as part of the documentation attached to a Form 7 made under Regulation 67E of the Family Law Regulations and dated 31 July 2020. It mentioned in paragraph 4 of the arbitration agreement that a preliminary conference in the arbitration was convened on 30 April 2020. The record of the preliminary conference was set out in paragraphs 4 and 5 of the arbitration agreement. That was also curious as paragraph 4 did not impose any obligations of a promissory nature. Paragraph 49 of the arbitration agreement was to the effect that the timetable recorded in schedule A of arbitration agreement governed the steps anterior to the arbitral hearing. Yet pursuant to paragraph 5 of the directions recorded in schedule A, the arbitrator did not intend to convene a hearing and instead intended the award to be determined solely on the papers.
The arbitrator’s directions recorded that the award would be determined on the papers but only after several steps had been undertaken. Those were –
a)the provision of a minute of the orders each party sought, “no later than 7 days prior to the arbitration hearing”;
b)the provision of each party’s “case summary document no later than 7 days prior to the arbitration hearing”; and
c)the provision of each party’s “single consolidated affidavit” and that of any witness on whose evidence each wished to rely “no later than twenty one (21) days prior to the arbitration hearing”.
Then, in an entirely circuitous manner the second of two paragraphs 4 provided that the arbitration hearing would commence seven days after the provision of the minute of orders sought and the provision of the case summaries. Yet the date for the provision of those documents was to be ascertained by reference to the “arbitration hearing” and no specific date for that was set. In fact, the date for the filing of the minute of orders sought and case summaries was linked to the date of the arbitration hearing and the arbitration hearing date was fixed by reference to the date of the provision of the minute of orders sought and the case summaries.
The arbitrator made orders under s 128 of the Evidence Act. It seems that the power to do so was challenged as his Honour Judge Harman answered affirmatively that the arbitrator did have the requisite power to make that order. In my view, for the reasons already mentioned, that conclusion was curious, to say the least.
According to documentation on which the applicant relied on this application before me, on 6 July 2020 the arbitrator made directions in the nature of a timetable that was recorded as schedule A to the arbitration agreement. In the passages above I have already commented on the circuitous nature of many of those directions. On 22 July 2020 the arbitrator made other directions that became the genesis of this application before me.
On 22 July 2020, on the application of the respondent the arbitrator extended by seven days all compliance dates previously ordered. The revised dates were set out in the document marked with the letter “C” to the Form 7 filed by the applicant. Those were ordered by the arbitrator on 25 July 2020. The revised timetable provided for the following steps to be done by the dates corresponding to each activity –
a)24 July 2020 – arbitrator to determine whether the wife was required to execute a freedom of information request;
b)31 July 2020 – parties to file and serve a notice to admit facts and to a notice to produce and the parties are to comply with the notice by 31 July 2020;[1]
c)28 August 2020 – the parties to file any further affidavit material on the issue of the separation date and submissions;
d)4 September 2020 – interim award to be published on the separation date;
e)18 September 2020 – the wife to prepare a first draft of the balance sheet;[2]
f)25 September 2020 – the husband to complete the joint balance sheet;
g)2 October 2020 – the wife to submit the joint balance sheet to the arbitrator;
h)2 October 2020 – the parties to file any amended initiating application or response, updating financial information, any further affidavit material not exceeding 10 pages in length and written submissions not to exceed five pages; and
i)23 October 2020 – publication of arbitral award on the papers.
[1] Two dates for compliance were given – 31 July 2020 and 14 August 2020 so it was not clear which was the operative date.
[2] This order is expressed to be predicated on the following – “If the matter is allowed to proceed on a final basis” yet the timetable was silent on the issue of when a determination on that matter was to be made and on what grounds.
The solicitor for the wife received an email from the arbitrator on 29 July 2020 following an email from Mr Lofitis seeking clarification of the directions made by the arbitrator on 25 July 2020. Relevantly recorded, that email read as follows –
Thank you for your email of even date seeking clarification on the directions I have made.
I confirm that my directions include the following, noting now my amended direction in items 3 and 10.
1The parties are to file any further affidavit on the issue of the separation date, rather than a consolidated one.
2The affidavits previously filed in the proceedings are to be read together with the further one to which the direction relates.
3The parties are permitted to file affidavits (no more than two affidavits of no more than 10 pages) from persons other than the party himself or herself, in connection with the date of separation.
4In the event that either party has evidence to present beyond that which capable offitting into an affidavit of 12 pages on the issue of the separation date, that party is unable to present that evidence.
5In the event that either party has annexures or exhibits which they wish to put into evidence on the issue of the separation date, that party will be unable to present those annexures or exhibits except in so far as they do not exceed 10 pages.
6There is a limit of 3 pages for submissions on the issue of the separation date.
7There are to be separate submissions addressing the exercise of discretion under Section 44 (3) of the Family Law Act and there is a limit of 2 pages on those submissions.
8The parties are to file any further affidavits, rather than a consolidated one, in relation to what is described in the Arbitrator's Directions as the Final Determination.
9The affidavits previously filed in the proceedings are to be read together with the further ones to which the direction relates, in connection with the Final Determination.
10The parties are permitted to file affidavits (no more than two affidavits of no more than 10 pages) from persons other than the party himself or herself, in connection with the Final Determination.
11In the event that either party has evidence to present beyond that which capable of fitting into an affidavit of 10 pages for each witness, in connection with the Final Determination, that party is unable to present that evidence.
12In the event that either party has annexures or exhibits which they wish to put into evidence in connection with the Final Determination, that party will be unable to present those annexures or exhibits except in so far as they do not exceed 10 pages.
13There is a limit of 5 pages for submissions in connection with the Final Determination.
The chain of emails provided as attachments to the Form 7 did not in all instances reveal dates on which emails were sent. The details extracted immediately below is an illustration. The arbitrator wrote as follows –
Thank you for your email and attachments. There really is no need to be so formal when addressing me, I am quite comfortable with ‘Mr B’.
I direct both parties to provide me all the relevant material on which they wish to rely. My objective is to establish the facts from the material so that I can provide a lawful, fair and just Award in a timely way. This really need not be an overly complex or formal matter. Remember that Arbitration can operate in a way that is far less formal that (sic) a court. Please advise whether you want me to apply the rules of evidence in this matter or not.
Of course, in the spirit of ADR and settling the matter without the need for me to make an Award, I encourage both parties to continue attempting to settle the matter by agreement.
I must apologise but I am currently quite unwell with a server (sic) cold/bronchitis and have limited capacity for work at the moment. Fortunately, I do not have Coronavirus and anticipate being back at full capacity after a few days on antibiotics.
Of course, do not hesitate to email me if you have any questions at this stage.
The applicant’s contentions
Before addressing the legal issues that this application has presented, it is useful to set out the gravamen of the wife’s position on this application before me.
In essence, she contended that the arbitrator’s directions made 29 July 2020 were procedurally unfair. Specifically, she says –
a)all parties agreed on a timetable for the conduct of the arbitration and that the agreed timetable was embedded in the arbitration agreement;
b)pursuant to that agreed timetable each party’s affidavit material was to be mutually exchanged, or, as Mr Lofitis wrote, “it would be a simultaneous exchange”;
c)the parties agreed to simultaneous exchanges of affidavit evidence so as to prevent either party having the advantage of seeing the other party’s evidence before that party presented his or hers;
d)if the arbitrator’s proposed new timetable is adopted, provision should be made for reply affidavit material;
e)a major factual dispute exists in this arbitration, namely, the date of separation, the respondent contending it was December 2003 whereas the wife is contending that it was 18 March 2019;[3]
f)that 16 year difference is important in this case by reason of s44(3) of the Family Law Act and contributions;
g)the applicant has at least five witnesses from who she wishes to lead evidence about the date of separation;
h)the arbitrator’s current rulings, in effect, render the evidence about separation capable of being given by the applicant and the respondent only whereas other witnesses can and are willing to attest to the indicia of separation;
i)directions given by the arbitrator limiting her evidence on affidavit to 12 pages constrains her in the evidence she wishes to adduce;
j)directions given by the arbitrator limiting the number of annexures on which she can rely circumscribes her in the evidence she can adduce;
k)dividing the case into evidence about separation on the one hand and contributions on the other as the arbitrator has done will lead to duplication and repetition;
l)the issue of contributions is of immense importance in this case, especially having regard to the fact that the two parcels of real estate in issue are registered in the sole name of the respondent;
m)in assessing contributions, the applicant intends to put before the arbitrator a large number of bank deposit slips, more than 10 in number, and the current directions of the arbitrator prevent her from doing that; and
n)directions need to be given for the valuation of the two parcels of real estate;
[3] In the wife’s initiating application filed on 20 May 2019 the date of final separation was recorded as 21 October 2018.
The respondent’s contentions
On 6 August 2019 the respondent swore his affidavit in which he deposed to his evaluation of the assets in issue in this case. The net position, so he deposed, was $1,164,000 of “his assets”. He asserted that the applicant’s assets were valued at an amount estimated to be $100,000.
He affirmed an affidavit on 29 September 2020. In it he did not give evidence of any description in relation to any contributions the applicant made.
In an undated document that does not resemble an affidavit (but which may have been produced on 7 October 2020) the respondent asserted that the applicant had not contributed to any of the respondent’s investments.
It is readily apparent that contributions generally are in issue in this case.
This application to the National Arbitration List
In the mentions before me on 18 September 2020 and 2 October 2020, Mr Lofitis, the applicant’s solicitor, informed me that the arbitration has been held in abeyance pending the determination of the issue Mr Lofitis now raises.
The applicant has invoked s 13F of the Family Law Act on this application. Section 13F is in the following terms –
A court that has jurisdiction under this Act may, on application by a party to relevant property or financial arbitration, make orders the court thinks appropriate to facilitate the effective conduct of the arbitration.
The applicant has filed a Form 7 filed pursuant to Regulation 67E of the Family Law Regulations. That regulation is in the following terms –
(1)An application, under section 13F of the Act, for an order to facilitate the effective conduct of the relevant property or financial arbitration of a dispute must be in accordance with Form 7.
(2) For the avoidance of doubt, an application may be made:
(a) by a party to the arbitration; or
(b) jointly by all parties to the arbitration.
The Form 7 filed 5 August 2020 by the applicant returnable on 21 August 2020 duly complied with Regulation 67E.
In it, pursuant to s 13F of the Family Law Act, the applicant sought orders appropriate to facilitate the effective conduct of the arbitration. Unlike an application under s 13K(2) of the Family Law Act, an application under s 13E does not call for the demonstration of an award being obtained by fraud or that the arbitration was affected by bias or that there was a lack of procedural fairness. Section 13F is facilitative and it confers on the court power to “make orders the court thinks appropriate to facilitate the effective conduct of the arbitration.”
Relying on a variety of grounds, the applicant in this case contends that new directions must be ordered so as to “facilitate the effective conduct of the arbitration”. Mr Lofitis has contended that Regulation 67I(2) requires the arbitrator to conduct the arbitration with procedural fairness, for example, by giving each party to the arbitration a reasonable opportunity to be heard and to respond to anything raised by the opposite party. Mr Lofitis submitted that the arbitrator may have not observed or properly observed the mandatory obligation imposed upon him when the arbitrator, having heard that the timetable for directions should be altered, did not hear argument or submissions about new directions prior to making orders in relation to those new directions.
As has been recited above, the applicant says she is constrained in the evidence she wishes to adduce by the limits placed on the length of affidavits and the number of annexures. She says she wishes to be heard about dates for compliance.
The respondent’s primary position is that the applicant’s entire proceeding should be dismissed. He says the wife made no contributions. He says he and the applicant were separated under the one roof for a long period.
Turning first to the applicant’s contentions about the arbitrator making directions without hearing submissions from the applicant about proposed new orders and directions, I agree that the arbitrator should have done so before new directions were ordered.
Procedural farness in arbitrations conducted under the Family Law Act
It is no mistake that parliament included the reference to procedural fairness in s 13K(2) of the Family Law Act so as to introduce into family law arbitrations a doctrine having very specific legal principles. Yet the doctrine of procedural fairness is a stranger to family law,[4] its roots being deeply embedded in principles of administrative law. The metes and bounds of the content of the doctrine has vexed the High Court of Australia since the Court’s creation and until the doctrine was uniformly described by its current appellation it was called “natural justice”, a concept traceable to theological sources.[5] In his article Natural Justice or Procedural Fairness[6] the Honourable Justice Alan Robertson, then a sitting member of the Federal Court of Australia traced the origins of natural justice to Voinet v Barrett,[7] Moses v Macferlan,[8] R v Local Government Board, ex parte Arlidge[9] and more recently to Norwest Holst Ltd v Secretary of State for Trade.[10]
[4] Except in the context of superannuation splitting orders where the trustee is afforded procedural fairness before the order is made.
[5] Paul Jackson, Natural Justice (Sweet & Maxwell, 2nd ed, 1979).
[6] (2016) 23 Australian Journal of Administrative Law 155.
[7] (1855) 55 LJQB 39, 41.
[8] [1760] 97 ER 676.
[9] [1914] 1 KB 160, 199.
[10] [1978] Ch 201.
The overwhelming preponderance of Australian authority on the doctrine of procedural fairness is set out in factual scenarios of an administrative nature. Those include a taxation board of review in Mobil Oil Australia Pty Ltd v The Federal Commissioner of Taxation,[11] the Migration Minister in Salemi v MacKellar (No 2),[12] the delegate of the Minister for Immigration and Ethnic Affairs in Kioa v West,[13] the Australian Broadcasting Tribunal in Australian Broadcasting Tribunal v Bond[14] and the coroner in Annetts v McCann.[15] More recently questions have emerged about the applicability of principles of natural justice in the context of international commercial arbitration in TCL Air Conditioner (Zhongshan) Co Ltd v Castel Electronics Pty Ltd[16] as well as in Emerald Grain Australia Pty Ltd v Agrocorp International Pte Ltd.[17]
[11] (1963) 113 CLR 475.
[12] (1977) 137 CLR 396.
[13] (1985) 159 CLR 551.
[14] (1990) 170 CLR 321.
[15] (1990) 170 CLR 596.
[16] (2014) 232 FCR 361.
[17] [2014] FCA 414.
Section 13K(2) of the Family Law Act did not use the phrase “natural justice” and instead uses the phrase “procedural fairness”. The words “procedural fairness” appear in Regulation 67I(2) of the Family Law Regulations in the context of the duties of the arbitrator. In that regulation, the example of procedural fairness is given as being one of the arbitrator’s duties, namely, “giving each party to the arbitration a reasonable opportunity to be heard and to respond to anything raised by another party”.
Self-evidently, that regulation contains an example only. The content of procedural fairness is vastly more involved.
Arbitration is a newly revived alternative dispute resolution vehicle that is being actively promoted in the Family Court in its National Arbitration List (“NAL”). As the NAL judge, to my mind it is important to ensure that parties to arbitrations in the NAL and the arbitrators themselves are fully appraised of the content of the procedural fairness obligation under which each arbitration must proceed. In having that information to hand, the prospects of the court reversing or varying the arbitral award on the ground of there being a lack of procedural fairness in the way in which the arbitral process was conducted is commensurately diminished.
Curial support for arbitration
It is well established that when parties select arbitration as their chosen method of determining their lis pendens, absent vitiating factors, the court should and usually does support the arbitral award published in pursuance of the agreement to arbitrate. The 2014 decision of the High Court in TCL Air Conditioner (Zhongshan) Co Ltd v Judges of the Federal Court of Australia[18] makes good that proposition. Naturally, as that case concerned an international commercial arbitration observations of the High Court bearing upon family law arbitrations under Part IIIB of the Family Law Act need to be approached with a degree of sensitivity for the simple reason that commercial cases have a basic difference to family law cases, a point made long ago in the United Kingdom in the string of cases involving constructive trusts such as Gissing v Gissing,[19] Pettitt v Pettitt[20] and others. Yet the point remains, that curial support for arbitration underpins the success of the arbitral process, a matter on which Chief Justice Allsop and Justice Croft wrote in The Role of the Courts in Australia’s Arbitration Regime.[21] That is of considerable significance because the jurisprudence supportive of arbitration where the parties choose that method of dispute resolution is of immense veneration.
[18] (2013) 251 CLR 533.
[19] [1971] AC 886.
[20] [1970] AC 777.
[21] (FCA) [2015] FedJSchol 25.
Division 4 of Part IIIB of the Family Law Act – the arbitration provisions – was inserted by Act 46 of 2006. The second reading speech and the explanatory memorandum give some insight into the reasons for introducing arbitration into dispute resolution under the Family Law Act.
Section 13K(1) confers power on the Family Court to make a decree reversing or varying the arbitral award if satisfied under s 13K(2)(d) that “there was a lack of procedural fairness in the way in which the arbitration process…was conducted”. The “arbitration process” there mentioned is the specific process to which the parties to the arbitration agreement and the arbitrator agreed. In other words, the section invites attention to the procedural fairness in the “way in which the arbitration process as agreed between the parties and the arbitrator, was conducted”. The starting point in that analysis is the arbitration process agreed between the parties and the arbitrator. For the purposes of s 13K(2)(d) the next enquiry involves ascertaining whether and if so how a lack of procedural fairness occurred in the way in which the agreed arbitration process was conducted.
Lack of procedural fairness but not a breach of the rules of natural justice
It is unquestionably correct to speak of the two traditional rules of natural justice – the hearing rule, also known by the Latin appellation “auch alteram partem” and the bias rule, also known by the Latin nemo debet esse judex in propria causa. The hearing rule requires a decision maker to hear a person before making a decision that affects a person’s interests. The bias rule requires no person to be a judge in his or her own cause.[22] Those two pillars of the rules of natural justice were grounded in the common law that imposed on the judges a “duty to act fairly.”[23] In the final report of the Australian Law Reform Commission dated December 2015 entitled Traditional Rights and Freedoms – Encroachments by Commonwealth Law[24] it was pointed out that the common law usually implied, as a matter of statutory construction a condition to the effect that a power conferred upon the executive branch was to be exercised with procedural fairness to those whose interests may be adversely affected by the exercise of that power. The High Court’s decision in Plaintiff S10/2011 v Minister for Immigration and Citizenship[25] was cited in support.
[22] The Honourable James Allsop, Chief Justice of the Federal Court of Australia, International Commercial Arbitration - The Courts and the Rule of Law in the Asia Pacific Region (FCA) [2014] FedJSchol 22.
[23] S. de Smith & R. Brazier, Constitutional and Administrative Law (Penguin Books, 8th ed, 1999) p573.
[24] Australian Law Reform Commission, Traditional Rights and Freedoms—Encroachments by Commonwealth Laws (Report No 129, December 2015) [14.10].
[25] (2012) 246 CLR 636.
Justice Robertson in Natural Justice or Procedural Fairness[26] points out that procedural fairness is a more specific name for one aspect of natural justice in its more modern sense.
[26] Op cit.
A contraction in the proliferation of use of the phrase “natural justice” commenced with the High Court’s decision in Kioa v West.[27] There, Mason J spoke of the expression “procedural fairness” conveying “the notion of a flexible obligation to adopt fair procedures which are adapted to the circumstances of the particular case.” As little as five years later the High Court, in Australian Broadcasting Tribunal v Bond[28] Deane J held that it was customary and convenient to avoid references to “natural justice” and to speak instead of the “requirements of procedural fairness” when referring to the fairness and detachment required of a person entrusted with a statutory power or authority to make an administrative decision that may adversely and directly affect the rights, interest, status or legitimate expectation of another in his, her or its individual capacity.
[27] (1985) 159 CLR 551.
[28] (1990) 170 CLR 321, 366.
In international arbitrations, the rules of natural justice continue to operate as was held by Pagone J in Emerald Grain Australia Pty Ltd v Agrocorp International Pte Ltd.[29] It cannot be said that those observations apply to family law arbitrations.
[29] [2014] FCA 414.
The content of procedural fairness
It must be remembered that under s 13K(2)(d) of the Family Law Act the court may only make a decree reversing or varying the arbitral award if satisfied that there was bias or lack of procedural fairness in the conduct of the arbitration. What does that entail?
In Kioa v West[30] Mason J spoke of procedural fairness involving a flexible obligation to adopt fair procedures appropriate to the circumstances of a particular case. In Re Minister for Immigration and Multicultural and Indigenous Affairs;ex parte Lam[31] Gleeson CJ held that the law is concerned “to avoid practical injustice”.
[30] (1985) 159 CLR 551, 585.
[31] (2003) 214 CLR 1.
Various formulations have been distilled about the content of procedural fairness. In the Australian Law Reform Commission Report 129 the authors spoke of the hearing rule and the rule against bias. Each has been addressed above. So far as the hearing rule is concerned, the ALRC report concluded that the specific content of it will vary according to the statutory context in which it is set. However, it stated that a fair hearing will generally require the following –
a)the giving of prior notice that a decision will be made that may affect a person’s interest;
b)disclosure of the critical issues to be addressed and of information that is credible, relevant and significant to those issues; and
c)a substantive hearing – oral or written – with a reasonable opportunity to present a case –
i)depending on whether the issues can be presented fairly by written submissions alone; and
ii)in some circumstances there may be an obligation to allow a person to be legally represented at the hearing.
Justice Robertson catalogues four indicia of procedural fairness. To his Honour they are as follows –
a)prior and adequate notice of the decision;
b)adequate disclosure so that effective representations may be made;[32]
c)the real chance to present that person’s case to a tribunal or to make representations to the decision maker and the requirement that the tribunal considers the case or the representations;[33] and
d)whether there should be a hearing and, if so, the form it should take including whether or not representation should be allowed.
[32] His Honour cited Commissioner for Australian Capital Territory Revenue v Alphaone Pty Ltd (1994) 49 FCR 576.
[33] His Honour cited Dranichnikov v Minister for Immigration and Multicultural Affairs (2003) 77 ALJR 1088.
Issues with which an arbitrator will be most concerned
In an arbitration under the Family Law Act, the reasons for insisting on procedural fairness is as apparent as it is in public law. Justice Robertson identified those reasons in the following terms –
So procedural fairness may improve the quality of the decision. It may assist in imparting the sense that justice has been done,[34] and been seen to be done. Public acceptance of the decision may be enhanced. In some contexts, it may protect human dignity. It may promote objectivity and impartiality.[35] In my opinion it means that the perspective of the decision-maker must be altered so that instead of the only perspective being that of the person exercising the power, affording procedural fairness means that the perspective of the person affected must necessarily be taken into account.
[34] (R (Osborn) v Parole Board [2013] UKSC 61; [2014] AC 1115 at [68])
[35] (Harry Woolf et al, (eds) De Smithas Judicial Review (Sweet & Maxwell, 7th ed, 2013) 344-346).
Among the most important issues of procedural fairness in a family law arbitration are –
a)a reasonable opportunity for each party to present his or her case making all appropriate submissions; and
b)whether there should be a hearing and if so the form it should take.
Even in preliminary hearings prior to the main arbitral hearing it is vital that the arbitrator hears each party before making rulings about such matters as timetabling, the sequence of witnesses, or how experts are to present their evidence, for example. Self-evidently, where the case is a hard-swearing case where witness veracity must be tested, a hearing on the papers will most likely be an inappropriate vehicle.
It is essential for arbitrators to consider such matters so as to comply with the duties that the arbitrator must discharge under Regulation 67I(2) and to ensure there is no lack of procedural fairness in the way in which the arbitration process is conducted for the purposes of s 13K(2) of the Family Law Act.
Referral of question of law
A failure to comply with procedural fairness represents an error of law. Questions touching upon whether or not by adopting a particular procedure, or conversely, of not adopting a particular procedure an arbitrator is or is not complying with the arbitrator’s obligations in relation to procedural farness is a question of law for the purposes of s 13G(1). An arbitrator should refer a question of law for determination by the National Arbitration List Judge so that the arbitrator does not conduct the arbitration in such manner as to display a lack of procedural fairness.
Over decades the High Court has made a litany of observations about the nature and content of the obligations that fall under the rubric of procedural fairness. In the specific context of arbitration under the Family Law Act, procedural fairness in the conduct of the arbitration assumes considerable importance by reason of the court’s power to made a decree under s 13K(1) of the Family Law Act reversing or varying the arbitral award if satisfied under s 13K(2) that in the conduct of the arbitration there was a lack of procedural fairness as agreed between the parties.
In the arena of international commercial arbitrations the High Court in TCL Air Conditioner (Zhongshan) Co Ltd v Judges of the Federal Court of Australia[36] made observations about the embrace Australia has displayed towards arbitration. Of course, family law arbitrations have some, but few, parallels to international commercial arbitrations. Yet certain principles can be transposed. Writing extra-judicially the Honourable Chief Justice James Allsop and the Honourable Justice Clyde Croft in The Role of the Courts in Australia’s Arbitration Regime[37] cited the writings of John Lurie[38] who stated as follows –
In the absence of…[court] intervention the fair resolution of disputes before an impartial tribunal, without unnecessary delay or expense, may not be achieved…
The reality is that arbitration would not survive without the courts. Indeed, as Lord Mustill observed, it is only a court with coercive powers that could rescue an arbitration which is in danger of foundering.
[36] (2013) 251 CLR 533.
[37] (FCA) [2015] FedJSchol 25.
[38] John Lurie, Court Intervention in Arbitration: Support or Interference (2010) 76 The International Journal of Arbitration, Mediation and Dispute Management 447.
The learned authors addressed the High Court’s decision in TCL Air Conditioner (Zhongshan) Co Ltd v Judges of the Federal Court of Australia.[39] Then, they said this –
The approach of Australian courts is reflective of this balancing act between minimal intervention and appropriate support, and emphasises the consensual, party-driven nature of arbitration.
[39] (2013) 251 CLR 533.
Consistent with the enduring theme of arbitration generally, courts will ordinarily uphold the contractual promise that disputes be submitted to arbitration and that they be finally determined by arbitration.
That might tend to give credence to the observations of the arbitrator in this case when, on Saturday 25 July 2020, he addressed his email to the legal representatives then acting for the parties. In it, the arbitrator –
a)cited clause three of the arbitration agreement that provided “the arbitration plan may be changed by consent of the parties or by the direction of the arbitrator in order to effectively and efficiently conduct the arbitration”; and
b)cited clause 42 of the arbitration agreement that provided “any indulgence or forbearance granted by the arbitrator to either party to the dispute shall not render any part of this agreement void or voidable”.
The arbitrator then determined as follows –
In order for me to determine the dispute according to law in an effective and efficient manner and to arrive at a fair and equitable Award I make the following directions:
1.The timetable proposed by Ms C in her email dated 22 July is to be adopted and strictly complied with.
The wife complains that the arbitrator did not permit discussion on the proposed orders. Thereafter, on 29 July 2020 the 13 paragraph orders were pronounced. They include but were not limited to –
a)paragraph 3 by which each party is limited in number and length of affidavit on the issue of the date of separation;
b)paragraph 4 by which the arbitrator prohibited an affidavit of more than 12 pages;
c)paragraph 5 by which the arbitrator prohibited annexures beyond 10 pages in length;
d)paragraph 6 limiting submissions to three pages;
e)paragraph 7 limiting submissions on section 44(3) to 2 pages;
f)paragraph 10 by which the arbitrator limited other affidavits to 10 pages;
g)paragraph 11, falling into a similar category;
h)paragraph 12, limiting to 10 pages annexures; and
i)paragraph 13, limiting submissions.
Regulation 67I(2) requires the arbitrator to conduct the arbitration in accordance with procedural fairness. The example used in the regulation speaks of giving each party to the arbitration “a reasonable opportunity to be heard and to respond to anything raised by another party”. The applicant has stated that she wishes to adduce evidence from various witnesses whose affidavits may exceed 10 pages in length. She has said she wishes to adduce voluminous documentary evidence in the form of bank statements. She has said she was not given an opportunity to persuade the arbitrator out of the orders ultimately pronounced.
This is not a stop clock arbitration of the sort as is frequently used in international commercial arbitrations.[40] There is no requirement for the arbitrator to shoehorn the parties’ evidence into a predetermined number of pages or an arbitrary number of pages for exhibits. The procedural fairness obligation under Regulation 67I(2) requires the arbitrator to give each party a reasonable opportunity to be heard and to respond to anything raised by another party. By prescribing a number of pages for documentation to be relied on, the arbitrator is going beyond giving each party a reasonable opportunity to be heard and to respond to anything raised by the other. In addition, given the applicant’s statement of the importance of simultaneous filing, the arbitrator has largely ignored that.
[40] Albert A Monichino QC, Stop Clock Hearing Procedures in Arbitration (2009) Asian Dispute Review 76.
In my view a revision of the directions for the lead up to the arbitrator’s determination on the papers is required. In my view –
a)there should be no limitations in the page numbers of affidavits or annexures on which each party wishes to rely, nor on submissions;
b)there should be no limitations on the number of witnesses each party may wish to call;
c)the arbitrator must reformulate directions forthwith after hearing submissions from the parties; and
d)the arbitrator must bring this arbitration to finality.
The arbitrator has stated that this is to be an award determined on the papers. The arbitrator should carefully consider how the handing down of an award is to be achieved on the papers when the divergent positions of the parties are as apparent as they are in relation to the period of separation and contributions. While the conduct of the arbitration is a matter for the parties and the arbitrator, one might be forgiven for thinking that determining factually contested matters such as the two mentioned may very well call for an assessment of witness veracity and cross-examination.
This proceeding has been on foot for over a year and the issue of submission to arbitration was ordered in December 2019. This case should have been determined at arbitration by now.
I order the arbitration be concluded by 15 February 2021 and that by then the arbitral award must be registered. To ensure the parties remain on track I direct the further hearing of this proceeding is listed before me at 9:30am on 15 February 2021.
I certify that the preceding sixty-four (64) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Wilson delivered on 22 October 2020
Associate:
Date: 22 October 2020
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