GROSSO and GROSSO

[2013] FCWA 91

JURISDICTION : FAMILY COURT OF WESTERN AUSTRALIA

ACT: FAMILY LAW ACT 1975

LOCATION: PERTH

CITATION: GROSSO and GROSSO [2013] FCWA 91

CORAM: WALTERS J

HEARD: 27 AUGUST 2013

DELIVERED : 2 SEPTEMBER 2013

FILE NO/S: PTW 5041 of 2008

BETWEEN: KLAUDIA GROSSO

Applicant

AND

PAOLO GROSSO
Respondent

Catchwords:

FAMILY LAW - Practice and procedure - Where the wife seeks an extension of time to review the decisions of registrars to make orders by consent in relation to property - where the wife seeks to set aside property orders pursuant to s 79A of the Family Law Act 1975(Cth) - where the wife seeks to set aside the parties' financial agreement pursuant to s 90K - Where the issue for determination is whether the application for extension of time should be heard as "a stand alone issue" in a separate hearing - Discussion of "bifurcated" hearings and "blended" hearings - Consideration of the Full Court's decisions in Patching & Patching (1995) FLC 92-585and Lancer & Lancer [2008] FamCAFC 112 - Where a separate hearing is ordered

Legislation:

Family Law Act 1975 (Cth), s 79, s 79A, s 90K
Family Law Rules 2004 (Cth), Part 10.3, r 10.13, r 10.14

Category: Not Reportable

Representation:

Counsel:

Applicant: Mr K Wilson SC

Respondent: Dr R Ingleby

Solicitors:

Applicant: DCH Legal Group

Respondent: O'Sullivan Davies

Case(s) referred to in judgment(s):

L & L [2008] FCWA 29

Lancer & Lancer [2008] FamCAFC 112

Oastler & Oastler (1993) FLC 92-390

Patching & Patching (1995) FLC 92-585

VC & GC and Ors (2010) FLC 93-434

Wernham & Campagnola [2012] FamCAFC 137

WORDS IN SQUARE BRACKETS REPLACE WORDS USED IN THE ORIGINAL JUDGMENT - PARTIES’ NAMES AND IDENTIFYING DETAILS HAVE BEEN CHANGED

Introduction

1On 14 April 2011, a Registrar of this Court made orders, by consent, in the terms of a minute of consent orders. The minute had been signed by both parties and forwarded to the Court by their solicitors. The orders were made by the Registrar in chambers. I shall refer to these orders as "the 2011 orders".

2On 1 May 2012, a (different) Registrar of this Court made further orders, by consent, in the terms of a second minute of consent orders. The second minute of consent orders had been signed by the parties and included in a Form 11 application for consent orders, which application had been filed on 20 April 2012. These orders were also made by the Registrar in chambers. I shall refer to them as "the 2012 orders".

3The 2011 orders deal with parenting issues, as well as property and spousal maintenance. The 2012 orders deal with property only, and are expressed to be made pursuant to s 79A(1A) of the Family Law Act 1975 (Cth) ("FLA"): see the preamble above paragraph 1 of the orders contained in the minute.

4The wife contends that the 2011 orders "were or were effectively interim or partial property settlement orders and spousal maintenance orders" and that they "did not exhaust the powers of the Family Court of Western Australia pursuant to section 79 of the [FLA]": see Particulars of wife's claim as amended 31 May 2013 ("the Particulars") at [1] and [2]. The wife also contends that the 2012 orders (which she describes as "final orders") were "manifestly unjust and inequitable and/or inappropriate": see the Particulars at [27].

5Pursuant to the 2011 orders and the 2012 orders, the wife received a total of approximately $8 million by way of property settlement. She asserts, however, that her true entitlement was significantly greater than that amount, and perhaps as much as $28 million or $30 million (if not more): see the wife's Summary of Argument: Extension of Time ("the wife's Summary") at [198] and [201].

6The wife has mounted a comprehensive attack on the validity of the 2011 orders and the 2012 orders. Thus, she seeks (see the wife's third amended initiating application filed 12 July 2013) –

a)an extension of time within which to review the decisions of the two Registrars to make the orders;

b)subject to an extension of time being granted, a review of the 2011 orders and the 2012 orders;

c)that the 2011 orders and the 2012 orders be varied or set aside on the basis that:

i)there has been a miscarriage of justice by reason of fraud, duress, suppression of evidence (including failure to disclose relevant information), the giving of false evidence or any other circumstance: see FLA s 79A(1)(a); and

ii)a person has defaulted in carrying out an obligation imposed on the person by the orders and, in the circumstances that have arisen as a result of that default, it is just and equitable to vary the order or to set the order aside and make another order in substitution for it: see FLA s 79A(1)(c); and

d)that the financial agreement executed by the parties on 17 April 2012 (which financial agreement underpins the 2012 orders) be set aside on the basis that:

i)the agreement was obtained by fraud (including non-disclosure of a material matter): see FLA s 90K(1)(a); and

ii)the agreement is void, voidable or unenforceable: see FLA s 90K(1)(b).

7If she is successful in the attack she has mounted, the wife seeks fresh orders by way of property settlement and spousal maintenance. Relevantly, and most significantly, the wife seeks an order that she receive "an equal division of the net matrimonial assets" pursuant to FLA s 79: see paragraph 7 (incorrectly labelled paragraph 6) of the final orders sought in the wife's third amended initiating application filed 12 July 2013.

8The grounds relied upon by the wife in support of the orders that she seeks are detailed in the Particulars. There is no need for me to reproduce them in these Reasons; it is sufficient to refer to the following passages from the wife's Summary:

197.[The 2011 orders] were flawed because the husband did not fulfil his obligations to both –

(a)the wife, in terms of disclosure and specifically the disclosure of [an agreement, known as the [name omitted] agreement, pursuant to which the husband took steps to commission an agent to effect a sale of a group of companies with which he was involved, and in which he had a 50% interest, for an amount in excess of, and potentially well in excess of, $100 million];

(b)the court, by failing to update and correct his Form 13 financial statement or to inform the court of his then current financial position and of an asking price for [well in excess of $100 million for the sale of the group of companies with which he was involved and in which he had a 50% interest].

198.The court and the wife were induced to approve of and consent to orders that were unjust and inequitable and ... it is open to the court to find that the wife would never have consented to [the 2011 orders] had she known of the proposed asking price or that the orders would provide her with a settlement of approximately 14% to 15%.

199.[The 2012 orders] were predicated and built upon [2011 orders] which were based on the assumption as to the value of the parties' half share of [the group of companies with which the husband was involved] being approximately $25 million. The husband never –

(a)fully informed the wife of the sale price and other financial benefits accruing to him for the sale; and

(b)advised the court of the terms and conditions of the sale of [the group of companies with which the husband was involved] and the sale amount received and other significant matters relevant to his financial circumstances.

200.[The 2011 orders] and [the 2012 orders] were made, effectively, in an evidentiary vacuum as far as the court was concerned, save and except for the husband's affidavit and Form 13 filed in December 2008 and his statement in the Form 11 application for consent orders that the "company" had sold.

201.The end result was that [the 2011 orders] and [the 2012 orders" collectively and individually were both –

(a)unjust and inequitable when the overall effect was to have the wife receive approximately 14% to 15% of the asset pool; and

(b)were made pursuant to a flawed judicial process created by the husband's lack of candour and disclosure.

9The husband seeks that the wife's initiating application be dismissed, and that she be ordered to pay his costs. He asserts that the agreements reflected in the 2011 orders and the 2012 orders were negotiated over an extended period of time, and that the wife signed the minute forming the basis of the 2011 orders against the advice of the solicitor then acting for her: see the husband's affidavit sworn 12 July 2013 at [43]. He also asserts that the wife was given notice (twice) of the fact that he was going to sell his interest in the group of companies with which he was involved ("the Group"), and that the relevant notice was given pursuant to the relevant provisions of the 2011 orders. In addition, he asserts that the wife knew "the overall price of $119 million was going to be paid by [the purchaser of the Group]" and that he was to be paid "in a mixture of cash and shares": see the husband's affidavit sworn 12 July 2013 at [55]. Finally, the husband asserts that the wife willingly chose to have direct dealings with a solicitor (Mr [P]), whom she knew to have had dealings with the husband for a number of years in relation to commercial matters and whom she knew had been instructed by the husband to negotiate with her regarding a settlement between the husband and herself. According to the husband, she chose to have those dealings in spite of the fact that she had instructed another solicitor (Mr [C]) to act on her behalf in relation to matrimonial property matters, and in spite of the fact that Mr C had written previously to the wife about the involvement of Mr P: see the husband's affidavit sworn 12 July 2013 at [10], [11], [34], [37] and [55].

10In his financial statement sworn 12 July 2013, the husband asserts that he has net assets worth approximately $27.7 million, and that he controls a child maintenance trust holding assets worth slightly in excess of $4 million.

11A dispute has arisen as to whether the wife's application for an extension of time to review the decisions of the Registrars leading to the making of the 2011 orders and the 2012 orders ("the extension of time application") should be heard as "a stand alone issue" or, alternatively, as a matter to be dealt with together with all other aspects of the wife's initiating application as amended (including her application for relief pursuant to FLA ss 79A and 90K). The wife submits that the first alternative is to be preferred; the husband submits that the court should adopt the second alternative. I shall refer to the first alternative as involving a bifurcated hearing (see Lancer & Lancer [2008] FamCAFC 112); I shall refer to the second alternative as involving a blended hearing.

12The husband concedes that the "inevitable consequence" of the wife succeeding in her extension of time application is that the 2011 orders and the 2012 orders will be set aside: see the husband's submissions filed 22 August 2013 ("the husband's Submissions") at [5(a)]. It is clear, however, that the proceedings initiated by the wife will continue irrespective of the court's ruling on the extension of time application. If the extension of time is granted, the proceedings will continue as an application on the part of the wife for property settlement orders under FLA s 79; if the extension of time is not granted, the proceedings will continue on the wife's application for orders pursuant to FLA ss 79A and 90K.

The law relating to "bifurcated" hearings and blended hearings

13Dr Ingleby (for the husband) argued that a blended hearing is "the normal practice", at least in relation to applications pursuant to s 79A: see the husband's Submissions at [1(d)]. In support of that proposition, he referred to the decisions of the Full Court in Oastler & Oastler (1993) FLC 92-390, Patching & Patching (1995) FLC 92-585 and VC & GC and Ors (2010) FLC 93-434.

14In Oastler, the Full Court said (at p 80,006):

Whilst it is not necessary to lay down as an inflexible rule that [a bifurcated hearing should not be held], prima facie at least the course adopted does not appear to be consistent with what [s 79A] envisages. ... The power granted to the court hearing the application under s 79A to vary the existing order strongly suggests that there should be one proceeding only in which the proceedings to vary or set aside the order and if appropriate, to make another order, should be disposed of.

15In Patching, the Full Court said (at p 81,797):

In Oastler the Full Court emphasised that it is generally preferable to deal with all of the steps [in s 79A] in the one hearing. The reasons for that are obvious, namely that even if the court concludes that there have been circumstances which amount to a miscarriage of justice it must then consider whether in all the circumstances it should exercise its discretion to vary or set aside the orders and/or make a new s 79 order. In exercising that discretion it will have regard to, inter alia, the degree and nature of the miscarriage in question, any delay, alterations in the parties' positions in the meantime, and the extent to which, if at all, it is now appropriate to vary the original orders. ... Of course there will be cases where it is convenient to divide the procedure into several hearings ...

16The decision in VC & GC and Ors does not appear to be of relevance to the issue currently before the court, and it adds nothing of significance to the passages from Oastler and Patching referred to above – which passages are uncontentious and comprise "accepted statements of the relevant principle": see Lancer at [17].

17As the Full Court recognised in Patching, the fact that a blended hearing might be "generally preferable" does not mean that there will never be cases where it is convenient to have a bifurcated hearing (or, indeed, several hearings). For example, the Full Court declined to overrule orders for bifurcated hearings made by the judges at first instance in Lancer and Wernham & Campagnola [2012] FamCAFC 137.

18In Lancer, Warnick J said at [18]:

In addressing the question of whether or not to bifurcate the hearing of a s 79A application, a judge is likely to examine the degree of connection between the ground and the other questions which might need to be addressed, namely whether there has been a miscarriage of justice in the circumstances and whether the order should be varied or set aside, if so, to what extent it ought be varied or what order ought be made, if any, in lieu. That connection or degree of connection will vary from case to case.

19The other members of the Full Court in Lancer (Bryant CJ and Thackray J) agreed. The Chief Justice added at [35]:

The decision in each case about whether to hold a single hearing, will … be a matter to be determined by the trial judge in the exercise of discretion having regard to the circumstances of each case.

20The judge at first instance in Lancer (Penny J in L & L [2008] FCWA 29) had said at [18]:

... a determination of the issues raised pursuant to s 79A may, if an order is made that the consent orders be set aside, mean that the parties will be able to negotiate a settlement in relation to their claims for property settlement. Without a determination of the s 79A issue this is highly unlikely to occur. This is another factor which convinces me that a trial on the issues raised in the s 79A application [in other words, a bifurcated hearing] is appropriate.

21The Full Court was clearly of the view that her Honour's observation was relevant and appropriate: see Lancer at [27] and [32].

22In Wernham & Campagnola, the Full Court at [14] rejected the strenuous attempts of counsel for the appellant to persuade it to revisit the "line of authority relied upon in support of the availability of separate hearings" in s 79A proceedings. Coleman J, with whom Ryan and Ainslie-Wallace JJ agreed, found no reason to warrant the Full Court "revisiting the asserted line of authority, or deviating from it": Wernham & Campagnola at [14].

23Coleman J said at [15]:

... there is no basis for concluding that because jurisdiction under s 79A is discharged by a single exercise of power, that is, by the making of an order dismissing an application or allowing it, and setting aside or varying previous orders under s 79, that, as a matter of law or logic, the power cannot be exercised after a series of stages or steps, at which findings of fact are made.

24Ryan J referred to rules 10.13 and 10.14 in Part 10.3 of the Family Law Rules 2004. Part 10.3 is headed Summary orders and separate decisions. The rules are as follows:

10.13 Application for separate decision

A party may apply for a decision on any issue, if the decision may:

(a)dispose of all or part of the case;

(b)make a trial unnecessary;

(c)make a trial substantially shorter; or

(d)save substantial costs.

10.14 What the court may order under this Part

On an application under this Part, the court may:

(a)dismiss any part of the case;

(b)decide an issue;

(c)make a final order on any issue;

(d)order a hearing about an issue or fact; or

(e)with the consent of the parties, order arbitration about the case or part of the case.

Note: This list does not limit the powers of the court. The court may make orders on an application, or on its own initiative (see rule 1.10).

25Ryan J (with whom Ainslie-Wallace J agreed) said at [38] that –

... [Rule 10.13] comfortably accommodates the word “issue” having application to an issue of fact or an issue of law. Support for the correctness of this view is found in rule 10.14(d), which is a rule concerned with the nature of the orders that may be made pursuant to rule 10.13. Rule 10.14(d) clearly indicates that a discrete hearing may be ordered in relation to a matter of fact. In addition, as the note to the rule correctly states, the rule does not purport to limit the powers of the Court ... to order a discrete hearing on an issue of fact or law, or both.

26It follows from the decisions discussed above, and from the provisions of rules 10.13 and 10.14, that the Court clearly has a discretion as to whether bifurcated hearings or a blended hearing should be ordered. Indeed, the Court can order a series of hearings if it is minded to do so. Although a blended hearing is likely to be preferable in many applications for orders pursuant to s 79A, it is not possible to adopt a "one size fits all" approach. The Court should consider the "connection or degree of connection" between the various issues that it will be called upon to determine. That connection or degree of connection will vary from case to case: see Lancer at [18].

Discussion

27It is important to note that the wife's application is not based solely on s 79A. She is also applying for an extension of time within which to review the decisions of the Registrars who made the 2011 orders and the 2012 orders, together with orders pursuant to s 90K.

28As Dr Ingleby has conceded, the "inevitable consequence" of the wife succeeding in her extension of time application is that the 2011 orders and the 2012 orders will be set aside. In other words, there will be no need for the wife to pursue her application to set aside the orders pursuant to s 79A. Similarly, the wife's application for orders pursuant to s 90K will be otiose. All that will remain is the wife's application for alteration of property interests pursuant to s 79.

29Dr Ingleby argued that a separate hearing of the extension of time application is likely to be a lengthy and complex trial in itself. He estimated that the hearing would occupy some five or six days. He submitted that (see the husband's Submissions at [10]) –

by reason of the relevance of the wife's legal representation and deliberate decision by her not to follow the legal advice from that representation, the husband [will seek to] cross-examine the wife in relation to her affidavit.

30Dr Ingleby also argued that other witnesses (including the wife's former solicitor, Mr C) would be required for cross examination.

31In addition, Dr Ingleby submitted that all of the wife's arguments in support of the extension of time application can be relied upon in a blended hearing, and that such a hearing would not disadvantage her in any relevant manner.

32Dr Ingleby urged the Court to accept that a separate hearing of the extension of time application is unlikely to lead to any significant saving of time or costs – given that the proceedings will continue in one form or another, irrespective of the extension of time application.

33Mr Wilson SC (for the wife) argued that a separate hearing of the extension of time application could bring significant benefits. If the wife were to be successful, her application for orders pursuant to s 79A and 90K would fall away, and the subsequent hearing of her application for orders for alteration of property interests under s 79 would be shorter, less complex and less expensive for all parties. As a consequence, some pressure on judicial resources could be removed. If the wife were to be unsuccessful, one of the primary grounds upon which the wife had relied in support of her assault on the validity of the 2011 orders and the 2012 orders would have been determined – which would again lead to a shorter, less complex and less expensive trial for all parties (although, clearly, the time, costs and judicial resources savings would not be as great as they would have been if the application for extension of time had been successful).

34Mr Wilson also argued that a very significant benefit of hearing the extension of time application separately is that, if it is successful (and, as a result, the complex and emotionally charged issues inherent within the wife's application for orders pursuant to ss79A and 90K need no longer be ventilated) the possibility of a negotiated or mediated outcome may arise. It is clear from the Full Court's decision in Lancer that such a consideration is important.

Conclusion

35I prefer Mr Wilson's submissions. That is not to say that Dr Ingleby's submissions are without merit, but, on balance, I am persuaded that I should exercise my discretion in favour of directing that there should be a separate hearing of the extension of time application.

36In my opinion, a separate hearing is likely to lead to significant savings in time and costs, and a much more focused trial in terms of the issues that the Court will be called upon to determine. The extension of time application, and the review itself, focus, in essence, on the actions of the Registrars in determining to make the 2011 orders and the 2012 orders. The information available to the Registrars at the time of the making of the orders seems not to be in dispute. It follows that a separate hearing of the extension of time application is warranted because it has a lesser degree of connection with the behaviour of the parties and their legal advisers (including, but not limited to, issues relating to alleged fraudulent behaviour on the part of the husband and, perhaps, Mr P, duress to which the wife was allegedly subjected, suppression of evidence and the giving of false evidence) than the wife's application for orders pursuant to s 79A. I do not suggest, however, that it has no connection with those matters.

37Although Dr Ingleby argued that the separate hearing is likely to take some five or six days, I am not persuaded that it will take that long. Even allowing for cross‑examination of the wife and, perhaps, other witnesses, the hearing should not take more than three days (given that the spotlight, as it were, will be upon the information available to the Registrars at the time of the making of the orders – including the fact that the parties had consented to them – and not, or not to the same extent, upon the behaviour of the parties and their legal advisers directly). I accept, of course, that the Court will be required to deal with issues such as whether the wife has a prima facie case for relief, whether she has an adequate explanation for the delay in bringing her application for review and whether the denial of her claim would cause her hardship (and, if so, whether that hardship outweighs any prejudice to the husband). The reality is, however, that the wife has filed a detailed and comprehensive summary of argument relating to her extension of time application, together with a substantial bundle of documents relevant to those submissions. Those documents were filed on 16 August 2013 on the (mistaken) understanding that the Court would be dealing with the wife's application for extension of time on 27 August 2013. During the course of the hearing on that day, it became clear that the only matter for determination was whether the extension of time application should be dealt with at a separate hearing, or whether the proceedings in their totality should proceed to a blended hearing.

38The existence of the wife's comprehensive summary of argument means that the husband's advisers will be able to join issue on specific issues raised by the wife in support of her extension of time application. The clarity with which the wife's case has been presented in the Summary should ensure that the separate hearing can be concluded within the time frame that I have suggested.

39In particular, I accept Mr Wilson's submission to the effect that a very significant potential benefit of dealing with the extension of time application separately is that, if it is successful (and, as a result, the complex and emotionally charged issues inherent within the wife's application for orders pursuant to ss79A and 90K need no longer be ventilated) the possibility of a negotiated or mediated outcome may arise. It seems far less likely that such an outcome will be achieved if the matter is listed for a blended hearing.

40Bearing in mind the provisions of r 10.13 and r 10.14, I am satisfied that a separate hearing of the extension of time application will dispose of that part of the case and make the trial of the remaining issues substantially shorter than would otherwise be the case. Similarly, a separate hearing has the potential of saving the parties substantial costs. I accept that a separate hearing will not make a trial of the remaining issues unnecessary, but, in my opinion, it has the potential to open the door (as it were) to a negotiated or mediated outcome.

41In all the circumstances, therefore, I propose to make the following orders:

1.The wife's part-heard application for an extension of time within which to review the orders of 14 April 2011 and 1 May 2012 be placed into the defended list for the October callover for a trial before Walters J with an estimated hearing time of 2-3 days.

2.By not later than 4.00 pm on 24 September 2013, the wife must file and serve any further affidavits upon which she intends to rely upon at the hearing of the extension of time application.

3.By not later than 4.00 pm on 13 November 2013, the husband must file and serve any further affidavits upon which he intends to rely in response to the extension of time application.

4.The husband must file and serve his responding documents to the wife's children's application filed on 15 July 2013 within 28 days.

5.The wife's application for relocation filed on 15 July 2013 be adjourned for a directions hearing for programming orders on a date to be advised after 24 September 2013

6.Costs be reserved.

I certify that the preceding [41] paragraphs are a true copy of the reasons for
judgment delivered by this Honourable Court

Associate