Hearn and Woolcott

[2014] FamCA 42

FAMILY COURT OF AUSTRALIA

HEARN & WOOLCOTT [2014] FamCA 42

FAMILY LAW – MATRIMONIAL PROPERTY – CONSENT ORDERS – Where Consent Orders made by Registrar – Application by wife for leave to review Registrar’s exercise of power out of time – Wife made application eight months after Registrar made Consent Orders – Where neither party received independent legal advice prior to consenting to the orders – Whether setting the orders aside is necessary to do justice between the parties – Where Court not satisfied that Consent Orders were just and equitable – Where the interests of justice outweigh the prejudice to the husband

FAMILY LAW – REGISTRAR’S POWERS – Where Registrars exercise power delegated to them by the Court – Where the Court must have control over and supervision of exercise of power by Registrars – Where Registrar exercised discretion without regard to the principles in the Family Law Act – Whether granting leave to review orders would affect public confidence in the finality of Consent Orders made by Registrars – Where Consent Orders were inexplicable on their face

APPLICANT: Ms Hearn

RESPONDENT: Mr Woolcott

FILE NUMBER: SYC 1609 of 2012

DATE DELIVERED: 5 February 2014

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Rees J

HEARING DATE: 30 January 2014

REPRESENTATION

COUNSEL FOR THE APPLICANT: Ms Christie

SOLICITOR FOR THE APPLICANT: Watts McCray Lawyers

COUNSEL FOR THE RESPONDENT: Mr Miller

SOLICITOR FOR THE RESPONDENT: Barkus Doolan Kelly

Orders

IT IS ORDERED

1. That pursuant to section 37A(9) of the Family Law Act 1975 (Cth) the wife be granted leave to review out of time the Registrar’s exercise of power in making Orders by consent between the wife and the husband on 10 August 2012.

2. That the Orders made on 10 August 2012 be vacated.  

IT IS NOTED that publication of this judgment by this Court under the pseudonym Hearn & Woolcott has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYC 1609 of 2012

Ms Hearn

Applicant

And

Mr Woolcott

Respondent

REASONS FOR JUDGMENT

1. Before the Court is an application (“the present application”) by Ms Hearn (“the wife”) for leave to review out of time the making of Consent Orders for property settlement by a Registrar on 10 August 2012. The wife and Mr Woolcott (“the husband”) filed an Application for Consent Orders (“the Application”) on 3 August 2012.

2. The present application is opposed by the husband.

3. Both parties concede that, if leave is granted, then the orders should be set aside. That concession is properly made because, if leave is granted, the approval of the proposed Consent Orders proceeds as a hearing de novo and where the wife no longer consents, the orders could not be made.

4. The relevant assets of the parties were their home at M Street, Suburb N (“Suburb N”), which was registered in the sole name of the wife, and some minor personalty. Both had superannuation entitlements. The Suburb N property was encumbered by way of mortgage and the parties had other debts.

THE LAW

1. There is no dispute that the Registrar properly exercised power, which was delegated to her, when the Consent Orders were made.

2. In Harris v Caladine (1991) 172 CLR 84, Mason CJ and Deane J said in relation to delegated power:

   The first condition is that the delegation must not be to an extent where it can no longer properly be said that, as a practical as well as a theoretical matter, the judges constitute the court. This means that the judges must continue to bear the major responsibility for the exercise of judicial power at least in relation to the more important aspects of contested matters. The second condition is that the delegation must not be inconsistent with the obligation of a court to act judicially and that the decisions of the officers of the court in the exercise of their delegated jurisdiction, powers and functions must be subject to review or appeal by a judge or judges of the court. For present purposes it is sufficient for us to say that, if the exercise of delegated jurisdiction, powers and functions by a court officer is subject to review or appeal by a judge or judges of the court on questions of both fact and law, we consider that the delegation will be valid. Certainly, if the review is by way of hearing de novo, the delegation will be valid. The importance of insisting on the existence of review by a judge or an appeal to a judge is that this procedure guarantees that a litigant may have recourse to a hearing and a determination by a judge. In other words, a litigant can avail him or herself of the judicial independence which is the hallmark of the class of court presently under consideration.

3. The opportunity to review the exercise of delegated power is central to the validity of the delegation.

4. Thus there is also no dispute that the wife was entitled to seek to review the making of the orders within seven days. The present application was not filed within time and was not, in fact, filed until 6 May 2013, some eight months out of time.

5. A review of the exercise of delegated power by a Registrar proceeds by way of a hearing de novo. That is, a complete re-hearing of the matter. In circumstances where the wife no longer consents to the making of the orders, it follows that if the Court grants leave to extend the time within which the wife can file the present application, and then notes that the wife no longer consents to the orders, the orders must be set aside.

6. Section 37A(9)-(10) of the Family Law Act 1975 (Cth) (“the FLA”) states:

   (9)  A party to proceedings in which a Registrar has exercised any of the powers of the Court pursuant to a delegation under subsection (1) may, within the time prescribed by, or within such further time as is allowed in accordance with, applicable Rules of Court made by the Judges or a majority of them for the purposes of this subsection, apply to the Court to review that exercise of power.

   (10)  The Court may, on application under subsection (9) or of its own motion, review an exercise of power by a Registrar pursuant to a delegation under this section and may make such order or orders as it considers appropriate with respect to the matter with respect to which the power was exercised.

7. Rule 1.14 of the Family Law Rules 2004 states:

   (1)  A party may apply to the court to shorten or extend a time that is fixed under these Rules or by a procedural order.

   (2)  A party may make an application under subrule (1) for an order extending a time to be made even though the time fixed by the rule or order has passed.

   (3)  A party who makes an application under subrule (1) for an extension of time may be ordered to pay any other party's costs in relation to the application.

8. The High Court dealt with the principles which apply in an Application to Extend Time to file a Notice of Appeal in Gallo v Dawson (1990) 93 ALR 479. Although the rule under consideration was a rule of the High Court, the principles apply to an application in the Family Court. McHugh J. said:

   That rule provides that the Court or a Justice may enlarge the time appointed by the Rules for doing an act upon such terms, if any, as the justice of the case may require and that the enlargement may be ordered although the application is not made until after the expiration of the time appointed or fixed for doing the act. The grant of an extension of time under this rule is not automatic. The object of the rule is to ensure that those Rules which fix times for doing acts do not become instruments of injustice. The discretion to extend time is given for the sole purpose of enabling the Court or Justice to do justice between the parties: see Hughes v. National Trustees Executors and Agency Co. of Australasia Ltd. [1978] VicRp 27; (1978) VR 257, at p 262. This means that the discretion can only be exercised in favour of an applicant upon proof that strict compliance with the rules will work an injustice upon the applicant. In order to determine whether the rules will work an injustice, it is necessary to have regard to the history of the proceedings, the conduct of the parties, the nature of the litigation, and the consequences for the parties of the grant or refusal of the application for extension of time: see Avery v. No.2 Public Service Appeal Board (1973) 2 NZLR 86, at p 92; Jess v. Scott (1986) 12 FCR 187, at pp 194-195. When the application is for an extension of time in which to file an appeal, it is always necessary to consider the prospects of the applicant succeeding in the appeal: see Burns v. Grigg [1967] VicRp 113; (1967) VR 871, at p 872; Hughes, at pp 263-264; Mitchelson v. Mitchelson (1979) 24 ALR 522, at p 524. It is also necessary to bear in mind in such an application that, upon the expiry of the time for appealing, the respondent has "a vested right to retain the judgment" unless the application is granted: Vilenius v. Heinegar (1962) 36 ALJR 200, at p 201. It follows that, before the applicant can succeed in this application, there must be material upon which I can be satisfied that to refuse the application would constitute an injustice. As the Judicial Committee of the Privy Council pointed out in Ratnam v. Cumarasamy (1965) 1 WLR 8, at p 12; (1964) 3 All ER 933, at p 935: "The rules of court must prima facie be obeyed, and in order to justify a court in extending the time during which
   some step in procedure requires to be taken there must be some material upon which the court can exercise its discretion."

   The discretion to extend time is given for the sole purpose of enabling the court or justice to do justice between the parties: see Hughes v National Trustees Executors & Agency Co of Australasia Ltd [1978] VR 257 at 262. This means that the discretion can only be exercised in favour of an applicant upon proof that strict compliance with the rules will work an injustice upon the applicant... It follows that, before the applicant can succeed in this application, there must be material upon which I can be satisfied that to refuse the application would constitute an injustice.

9. That those principles apply in the present application is not disputed. In Tormsen & Tormsen (1993) FLC 92-392 the Full Court said:

   The fundamental issue in application` for extension of periods of time prescribed by rules of court is whether this will enable the court to do justice between the parties: Hughes v. National Trustee Executors & Agency Co. of Australasia Ltd [1978] VR 257 at 262 per McInerney J. cited with approval in Gallo v. Dawson (1990) 93 ALR 479 at 480 per McHugh J. In that connection the Court must weigh the right which the respondent to the application prima facie has to attain the benefit of the judgment: Vilenius v. Heinegar (1962) 36 ALJR 200 at 201, and the desirability that there be finality of litigation: Ratnam v. Cumarasamy [1964] 3 All ER 933 at 935. A failure to explain the delay adequately can certainly lead to a conclusion that justice demands that the application be dismissed: Shepperdson v. Lewis [1966] VR 418 at 421, 422 per O'Bryan J. But in appropriate cases the interests of justice may outweigh the absence of an adequate explanation.

10. The Court is required to consider the explanation for the delay in bringing the application, the history of the proceedings, the conduct of the parties, the nature of the litigation and the consequences for the parties of the granting or refusal of the extension.

11. On 4 November 2013 the matter was listed before me. The parties reached an agreement and orders were made by consent in relation to parenting matters. The remaining issue, that of the wife’s application for leave to review the making of Consent Orders out of time, was listed for hearing before me on 30 January 2014.

12. The wife relied on her present application filed 6 May 2013, an affidavit sworn by her 2 May 2013, an affidavit of Mr H sworn 2 May 2013 and a Financial Statement sworn 2 May 2013.

13. The husband relied on his Response filed 2 July 2013, an affidavit sworn 2 July 2013 and a Financial Statement sworn 2 July 2013. The husband tendered in his case documents annexed to that affidavit being marked RW1, RW2, RW 32 – 41 (except RW40) and RW 45.

EXPLANATION OF THE DELAY

1. The wife’s evidence is contained in her affidavit sworn 2 May 2013. She deposes that she received no legal advice before signing the Application and the Consent Orders.

2. The parties agreed to transfer Suburb N to the husband and they consulted a conveyancer who advised them that, in order to save the expense of stamp duty on the conveyance, they should enter into Consent Orders.

3. The wife received no advice at the time about the effect of entering into Consent Orders. The wife did not seek financial disclosure from the husband before completing and executing the documents. Both of the parties had superannuation interests but neither disclosed those interests in the Application. Each knew the other had superannuation. Neither deposed to knowing the value of the superannuation entitlement of the other.

4. The wife believed that the only purpose of entering into the Consent Orders was to receive an exemption from the payment of stamp duty. She was not aware of the consequences and effect of entering into Consent Orders.

5. It could not be assumed that a lay person, without legal advice, would be aware of the time limit for the review of a Registrar’s decision.

6. I am satisfied that the wife’s explanation of the delay between the making of the orders and 21 March 2013 is adequately explained.

7. The wife consulted her present solicitors on 21 March 2013. On 22 March 2013 a letter was written by the wife’s solicitors to the husband. The letter referred to the fact that no parenting orders had been made and dealt only with parenting issues.

8. The husband responded by letter dated 5 April 2013 in relation to the parenting issues raised on behalf of the wife.  

9. The wife’s solicitors wrote again to the husband on 8 April 2013 in relation to parenting issues only. The correspondence continued throughout April 2013.

10. There is no evidence from the wife to establish when she was advised of the effect of the Consent Orders.

11. The husband deposed that he became aware of the Application in relation to the Consent Orders for property settlement when he was served with the wife’s present application.

12. The next delay to be explained, is the delay from the date when she first consulted her present solicitors (21 March 2013) and the filing of the present application (6 May 2013).

13. The wife deposes that “some weeks” were required to provide to her solicitors copies of the application and the Consent Orders.

14. The wife’s present application was filed on 6 May 2013. It is supported by a Financial Statement and an affidavit sworn on 2 May 2013. The affidavit is lengthy and, while it deals mainly with the parenting issues, it annexes a number of documents in relation to the present application.

15. I am satisfied that, in all of the circumstances of this matter, the time taken to file the present application after the wife obtained legal advice was not unreasonable. It would, however, have been preferable if the husband had been given notice of the intention to make an application as soon as a decision had been made to file it.

THE HISTORY OF THE PROCEEDINGS

1. The parties separated in March 2011. In about August 2011 they reached an agreement in relation to both parenting and property matters. The agreement was reduced to writing by them in a document entitled “Binding Financial Agreement between (the husband) and (the wife).”

2. Both Counsel submitted that the document should not be treated as a Binding Financial Agreement (“the Agreement”) but as an agreement and that it had evidentiary relevance.

3. The Agreement states “We declare that we have received independent legal advice in regards to this matter”. Neither the husband nor the wife before me deposed to having received legal advice.

4. The Agreement provided for the sale of Suburb N with a reserve price of $1.6 million unless otherwise agreed. The proceeds of sale, after payment of some specified debts, were to be divided equally between the parties. The Agreement states that the wife makes no claim in relation to the husband’s superannuation in return for additional child support. In addition, the Agreement sets out the parenting arrangements for the children.

5. The Agreement was signed on 12 August 2011.

6. The wife vacated Suburb N and the husband moved in. The property was marketed but did not sell.

7. The parties recommenced negotiations and reached an agreement. The wife prepared the Application and completed the columns headed “Respondent”. She forwarded the Application to the husband who completed the columns headed “Applicant”.

8. The wife prepared the document headed “Consent Orders” and sent that document to the husband for execution. She filed the Application on 3 August 2012.

9. Neither party sought or received legal advice before signing the documents.

10. In the Application, which is hand written, the husband is the applicant and the wife is the respondent.

11. The Application set out the following matters:

    *The children then aged 11 and 9 years, live with the mother.

    *The husband earned $2,123 per week and the wife earned $300.

    *At questions 39 and 40 both parties state that no child support is paid or received.

    *The husband had gross assets of $6,000 and the wife $1,505,000.

    *Each party had liabilities (including the home mortgage) of $397,500.

    *The husband’s net assets were debit $391,500.

    *The wife’s net assets were $1,107,500.

    *The questions related to superannuation at page 17 of the Application were crossed out.

    *At question 67 the proposed percentage division of property is expressed to be 100 per cent to the husband and 0 per cent to the wife.

    *At questions 68 and 69 the contributions appear to be expressed as equal. The husband serviced the mortgage from his income. The wife worked part-time to care for the children.

    *At question 70 the parties agree that contributions were equal.

    *In Part I where the effect of the proposed orders is set out, the husband states that the home mortgage is $1,100,000 and that he has other liabilities of $50,000 resulting in his receiving net assets of $350,000 and the wife receiving $350,000.

    *At question 75 which requires the gross value of the parties’ superannuation to be set out, each has inserted a dash although both parties were aware that they each had superannuation.

    * Part J of the Application, although signed by each of the parties, is blank.

12. Even a cursory examination of the Application would have raised serious queries that the arrangement being proposed by the parties was just and equitable. On the face of the Application the discrepancies between the parties’ statements of their assets and liabilities and the effect of the orders sought are glaring and impossible to reconcile.

13. The Consent Orders made 10 August 2012 provide:

    1.Within 21 days of the date of these orders, the Wife (named) shall provide an executed transfer of all her right title and interest in the property (Suburb N) and the Husband (named) shall pay to the Wife the sum of $350,000. The Husband shall indemnify and keep indemnified the wife in respect of all liabilities in relation to the property whenever and however arising.

    2.The settlement referred to in Order 1 shall take place at the offices of Bankwest in Sydney within the stated period, and at a time and on a date which is convenient to both parties.   

14. While it is assumed that the parties intended the transferee to be the husband, that is not stated in the Consent Orders.

15. The Consent Orders are silent as to the treatment of the superannuation interests having the effect that the parties each retain their superannuation.

1. The Consent Orders are also silent as to the payment of the liabilities other than the mortgage, leaving the parties jointly liable for the non-mortgage liabilities.

2. The Consent Orders have been put into effect. The husband has paid the wife $350,000 which he was required to borrow. The husband, although not required to do so by the terms of the Consent Orders, has reduced their joint debts as will be discussed later in these reasons.

3. As was made clear by the High Court in Harris v Caladine (1991) 172 CLR 84, the making of Consent Orders for property settlement, particularly where the parties have not received legal advice, requires the exercise of discretion, with reference to the matters set out in section 79. In the present matter it is difficult to conclude that the Registrar could have determined that the effect of the orders sought by these parties, in the absence of legal advice, was just and equitable.

4. In order to determine whether the proposed orders provided a just and equitable result, the Registrar needed to know what the whole asset pool was. In omitting to include their respective superannuation entitlements, the parties chose not to provide that information.

5. Parties are entitled to make bad bargains with the assistance of legal advice. However, if the Registrar, exercising the delegated jurisdiction of the Court, is asked to determine whether the result is just and equitable, then the parties must make proper disclosure of their assets and liabilities. These parties did not do so.

THE CONDUCT OF THE PARTIES

1. Nothing in the history which has been set out in these reasons suggests that either of the parties has behaved unreasonably or done anything to protract the proceedings unnecessarily.

THE NATURE OF THE LITIGATION

1. The subject matter of the proceedings is the property of the parties acquired during their 15 year marriage which brought them two children now aged 12 and 10 years and the contributions which each of them made during and after their co-habitation.

2. Each has filed a Financial Statement. The wife has $221,000 in the bank, presumably remaining from the $350,000 paid to her by the husband and superannuation of about $45,000. She has no other significant assets. She has repartnered and she earns $150 per week. She has the primary care of the parties’ two children.  

3. The husband has Suburb N which he estimates to be worth $1,500,000 and superannuation of about $183,500. He has a mortgage over Suburb N of $1,125,000 and deposes to other personal debts. He deposes to total liabilities of $1,249.000. He deposes to net assets, including superannuation, of $445,000.

4. The paucity of information from the parties is such that I cannot comfortably predict a range of outcomes if an application for property settlement were determined. For the purpose of this application, it is sufficient that the wife has an arguable case.

THE CONSEQUENCES TO THE PARTIES

1. If leave is refused the wife will be denied the opportunity to pursue an arguable case.

2. Counsel for the husband submitted that the prejudice to the husband of allowing the issue of property settlement to be revived is severe. Section 81 of the FLA imposes an obligation to make orders that achieve finality. The husband believed that the Consent Orders were final.

3. The husband undertook substantial liabilities as a consequence of the Consent Orders. He borrowed $350,000 to pay to the wife.

4. Although the Consent Orders did not specifically require him to do so, he has made payments to reduce their joint debts. It is unlikely that he will be fully compensated for the exact amounts he has paid. Counsel for the husband submits that those matters will be “taken into account” and that is a further prejudice to the husband.

5. Counsel for the husband submitted that the principle of finality is defeated if the Court readily allows applications to review decisions out of time. I accept that submission.

6. Counsel for the husband submits that there are implications for the day to day administration of the Court. He submits that a perception on the part of litigants that Consent Orders made by Registrars are easily reviewed will lead to a lack of confidence in the finality of orders made by Registrars. I also accept that submission.

7. However, those submissions have to be balanced against the fundamental necessity for decisions made pursuant to delegated power to be reviewable by a Judge. For that reason, leave to review out of time will be granted sparingly and only upon the Court being satisfied that the granting of leave is necessary to do justice between the parties and in the interests of the administration of justice.

8. In the event that the present application is allowed, the wife may be required to make an application pursuant to section 44(3) to institute proceedings. The parties disagree about the necessity to make a section 44(3) application. That is not a matter which needs to be determined here.

9. There could be little doubt that, if she does not ultimately receive more than she achieved by the Consent Orders, there would be an application for costs by the husband. Whether or not the application for costs would result in an order for costs would depend on the relative financial circumstances of the parties at the conclusion of the trial. Even if the husband satisfies the Court that costs should be ordered, it is unlikely that he will receive total recompense.

CONCLUSION

1. If the wife were granted leave then the inevitable consequence is that the Consent Orders must be set aside, since her consent would be withdrawn.

2. The Consent Orders, on the face of the Application, are inexplicable.

3. In all the circumstances of this case, I consider that the interests of justice in ensuring that delegated powers are exercised having regard to the principles set out in the FLA outweighs the prejudice to the husband.

4. Accordingly, leave will be granted to the wife to review the decision of the Registrar out of time and, to save the parties the costs of a further application, I will, as agreed by the parties in the event that leave is granted, set aside the orders.

I certify that the preceding seventy (70) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Rees delivered on 5 February 2014.

Associate: 

Date:  5 February 2014