Henley & Bestari
[2024] FedCFamC1A 12
•21 February 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1) APPELLATE JURISDICTION
Henley & Bestari [2024] FedCFamC1A 12
Appeal from: Bestari & Henley (No 5) [2023] FedCFamC1F 783 Appeal number: NAA 285 of 2023 File number: CAC 2301 of 2021 Judgment of: MCCLELLAND DCJ, TREE & WILLIAMS JJ Date of judgment: 21 February 2024 Catchwords: FAMILY LAW – APPEAL – PROPERTY – Recusal – Where the primary judge was exposed to proposed property settlement orders which materially deviated from the formal position of both parties – Where an application for recusal was made and later refused by the primary judge – Consideration of the second step of the test outlined in Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337 – Where from the perspective of the fair-minded lay observer, knowledge of the proposed settlement orders and balance sheet might affect the primary judge’s future assessment of the evidence and the discretionary exercise of determining any adjustments to the parties’ property – Error identified.
FAMILY LAW – APPEAL – APPLICATION IN AN APPEAL – Where the appellant sought an extension of time to seek leave to appeal – Where a substantial injustice would be suffered by the appellant if he were denied the opportunity to prosecute a meritorious appeal – Leave to appeal granted – Appeal allowed.
Legislation: Family Law Act 1975 (Cth) Pt VIII, s 79
Federal Circuit and Family Court of Australia Act 2021 (Cth) s 28
Federal Proceedings (Costs) Act 1981 (Cth) s 9
Federal Court andFederal Circuit and Family Court Regulations 2022 (Cth) reg 4.02
Cases cited: 1 Bestari & Henley (No 3) [2023] FedCFamC1F 725
Bestari & Henley (No 4) [2023] FedCFamC1F 726
Charisteas v Charisteas (2021) 273 CLR 289; [2021] HCA 29
CNY17 v Minister for Immigration and Border Protection (2019) 268 CLR 76; [2019] HCA 50
Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337; [2000] HCA 63
Johnson v Johnson (2000) 201 CLR 488; [2000] HCA 48
Medlow & Medlow (2016) FLC 93-692; [2016] FamCAFC 34
Moorcroft & Moorcroft (2018) FLC 93-881; [2018] FamCAFC 253
QYFM v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs (2023) 66 Fam LR 369; [2023] HCA 15
Re JRL; Ex parte CJL (1986) 161 CLR 342; [1986] HCA 39
Silva & Phoenix (2018) FLC 93-825; [2018] FamCAFC 41
Stanford v Stanford (2012) 247 CLR 108; [2012] HCA 52
Watson & Watson (2013) FLC 93-530; [2013] FamCAFC 25
Webb v The Queen (1994) 181 CLR 41; [1994] HCA 30
Number of paragraphs: 51 Date of hearing: 2 February 2024 Place: Heard in Melbourne (via video link), delivered in Sydney Counsel for the Appellant: Mr Beaumont SC and Mr Macauley Solicitor for the Appellant: Abbott Delaney Lawyers The Respondent Submitting Notice filed 22 November 2023 ORDERS
NAA 285 of 2023
CAC 2301 of 2021FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
DIVISION 1 APPELLATE JURISDICTIONBETWEEN: MR HENLEY
Appellant
AND: MS BESTARI
Respondent
ORDER MADE BY:
MCCLELLAND DCJ, TREE AND WILLIAMS JJ,
DATE OF ORDER:
21 FEBRUARY 2024
THE COURT ORDERS THAT:
1.The appellant is granted an extension of time until 20 December 2023 to seek leave to appeal.
2.Leave to appeal is granted.
3.The appeal is allowed.
4.Order 2 of the orders of the Federal Circuit and Family Court of Australia (Division 1) made on 14 September 2023 is set aside.
5.The property settlement dispute contained in proceedings CAC 2301 of 2021 is remitted for rehearing by a judge of the Federal Circuit and Family Court of Australia (Division 1) other than the primary judge.
6.The Court grants to the appellant a costs certificate pursuant to the provisions of s 9 of the Federal Proceedings (Costs) Act 1981 (Cth) being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the appellant in respect of the costs incurred by the appellant in relation to the appeal.
NOTATION
A.The appellant’s solicitors will correspond with the Court to seek the following documents be removed from the Court file: reasons for judgment delivered by the primary judge on 23 August 2023 (Bestari & Henley (No 3) [2023] FedCFamC1F 725) and 14 September 2023 (Bestari & Henley (No 5) [2023] FedCFamC1F 783), Exhibits C2 (Proposed Property Orders), C4 (Schedule of Property) and C5 (Amended Property Orders), the appellant’s written submissions filed 31 August 2023, the transcript of the proceedings before the primary judge on 21, 22 and 23 August 2023, and the appellant’s Case Summary in the appeal filed 20 December 2023.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Henley & Bestari has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
MCCLELLAND DCJ, TREE & WILLIAMS JJ
By a Notice of Appeal filed 11 October 2023, the appellant appeals Order 2 of the orders made by a judge of the Federal Circuit and Family Court of Australia (Division 1) on 14 September 2023 (“the appealed order”). By that order, the primary judge refused the appellant’s disqualification application.
On 22 November 2023, the respondent filed a Submitting Notice.
Because leave is required to appeal a judgment rejecting an application for disqualification, s 28(3)(f) of the Federal Circuit and Family Court of Australia Act 2021 (Cth), on 20 December 2023, the appellant filed an Application in an Appeal which is referred to below.
For the reasons that follow, leave to appeal will be granted and the appeal will be allowed.
BACKGROUND
The extant underlying proceedings comprise an application for property settlement orders between the parties under Pt VIII of the Family Law Act 1975 (Cth) (“the Act”). The parties previously resolved, by consent, parenting proceedings.
On 21 August 2023 (day one), the final hearing of both property and parenting proceedings was listed before the primary judge. Rather than commence the hearing of the substantive property proceedings or the respondent’s adjournment application, his Honour appropriately afforded the parties an opportunity to engage in settlement discussions. The parenting proceedings were settled around midday. By early afternoon, the primary judge was advised the parties had an agreement in principle to settle property proceedings but required further time to document the agreement.
On the afternoon of 22 August 2023 (day two), final proposed parenting orders were made by the primary judge, and his Honour was provided with proposed property settlement orders. The proposed orders were not made by the primary judge because he was concerned some of them might be “uncertain in their effect”,[1] and may “offend against Stanford”.[2] It is accepted that was a reference to the decision of the High Court in Stanford v Stanford (2012) 247 CLR 108 (“Stanford”) which held that, pursuant to s 79(2) of the Act, before making a property adjustment order, the Court must first consider whether it is just and equitable to make the order. If the Court is so satisfied, the Court is then required to identify the existing legal and equitable interests of the parties in property. The parties were given time overnight to address his Honour’s concerns.
[1] Transcript 22 August 2023, p.33 line 9.
[2] Transcript 22 August 2023, p.37 line 9.
On 23 August 2023 (day three), the primary judge was informed the parties had “achieved a lot”,[3] and was provided with a balance sheet entitled ‘Schedule of Properties’ which was marked as Exhibit C4. The primary judge informed counsel he had “looked at the schedule of property” and proposed to “read the joint written submissions”.[4] Prior to the Court adjourning, counsel for the respondent informed the primary judge “if we can’t settle this, your Honour would have to recuse yourself at this point, unless we agreed that you continued with it, on the basis that we stuck to the percentages”.[5]
[3] Transcript 23 August 2023, p.44 lines 1–2.
[4] Transcript 23 August 2023, p.44 lines 24–25.
[5] Transcript 23 August 2023, p.45 lines 6–8.
Around mid-morning on day three, the primary judge advised counsel that having read the parties joint submissions, it was a “futile process” to continue executing proposed settlement minutes, refused to make consent orders, and delivered reasons:[6] Bestari & Henley (No 3) [2023] FedCFamC1F 725. Relevantly, his Honour held that there remained uncertainty as to the effect of the orders which precluded him from making the determination required by Stanford (at [6]).
[6] Transcript 23 August 2023, p.45 46 line 15 and line 19.
Immediately thereafter, the respondent’s counsel raised with the primary judge alternatives to recusal, including making the proposed property orders as interim orders, or the parties entering into a Binding Financial Agreement.[7] The primary judge then turned to consider whether he should direct the Principal Registrar to conduct contempt proceedings against the appellant in respect to an issue related to the parenting aspect of the proceedings and unrelated to the effect of the proposed property orders.[8] A short while later, the primary judge delivered reasons explaining why he believed such a direction was necessary: Bestari & Henley (No 4) [2023] FedCFamC1F 726.
[7] Transcript 23 August 2023, p.46 line 46 to p.47 line 6.
[8] Transcript 23 August 2023, p.48 lines 27–33.
Subsequent to the delivery of that judgment, the amended proposed property orders were handed to the primary judge and tendered as Exhibit C5. Shortly thereafter, counsel for the appellant made an oral application for the primary judge to recuse himself from hearing further aspects of the proceedings.[9] Counsel for the appellant sought, and was granted, seven days to provide written submissions about the recusal application.
[9] Transcript 23 August 2023, p.54 lines 5–21.
Shortly prior to adjourning at the end of day three, the primary judge raised with senior counsel for the respondent his prior submission, that in addition to the application for the primary judge to recuse himself as a result his referral of the possible contempt, his Honour might need to recuse himself as a result of his knowledge of the proposed property orders. The following exchange occurred:
HIS HONOUR: And you’ve also indicated that I may need to recuse myself as well, [to Senior Counsel for the respondent].
[SENIOR COUNSEL FOR THE RESPONDENT]: Well, I think that’s different – to the extent that if we don’t adhere to the percentage settlement, there’s fairly recent Full Court authority ---
HIS HONOUR: So that’s a down ---
[SENIOR COUNSEL FOR THE RESPONDENT]: --- where Justice ….. got in trouble on that very position.
HIS HONOUR: So that’s a down the track issue ---
[SENIOR COUNSEL FOR THE RESPONDENT]: Yes.
(Transcript 23 August 2023, p.58 lines 12–24)
After consideration of the written submissions for disqualification, the primary judge refused the application, made the appealed order, and delivered the reasons subject to this appeal.
LEAVE TO APPEAL
The test to be applied in applications for leave to appeal is whether, in all of the circumstances, the decision is attended by sufficient doubt to warrant it being reconsidered by the appellate court and whether substantial injustice would result if leave were refused, supposing the decision to be wrong: Medlow & Medlow (2016) FLC 93-692 at [57].
Because the merits of any proposed appeal are relevant to the success of the appeal, we will address the proposed grounds of appeal before returning to the question of leave to appeal. We will also deal with the Application in an Appeal filed 20 December 2023.
APPLICATION IN AN APPEAL
On 20 December 2023, the appellant filed an Application in an Appeal seeking an extension of time be granted to seek leave to appeal, pursuant to reg 4.02 of the Federal Court and Federal Circuit and Family Court Regulations 2022 (Cth), and that the application be heard together with the substantive appeal.
Prior to engaging senior counsel in early December 2023, the appellant was unaware leave to appeal was required to appeal from Order 2 of the September 2023 orders. The Application in an Appeal was filed shortly thereafter. The respondent did not seek to be heard on this issue.
The affidavits filed in support of the Application in an Appeal also addresses the discretionary rule to refuse to hear an appeal brought by an appellant who is in contempt of orders made in the same cause or proceeding, see Watson & Watson (2013) FLC 93-530 at [36]. In Moorcroft & Moorcroft (2018) FLC 93-881 at [18] the Full Court of the Family Court articulated the preconditions relevant to the exercise of discretion, namely a “deliberate and continuing contempt, which impedes the course of justice, for which there is no realistic and effective remedy”.
In this case, noting that there was no contradictor, we agree with the submissions of the appellant’s senior counsel that the rule should not apply because the appellant has made significant attempts to rectify the asserted contempt by seeking to discontinue or conclude proceedings in Country B that gave rise to the question of possible contempt. There is no issue of impeding the course of justice in this Court because the Country B proceedings deal with a parenting dispute, which has already been resolved in the Australian proceedings, and the appeal is concerned only with property.
We will permit the extension of time to seek leave to appeal as sought in the Application in an Appeal filed 20 December 2023, and will determine the leave application with the substantive appeal.
THE APPEAL
We now turn to the ground of appeal referred to in the Notice of Appeal filed 11 October 2023.
Ground 1 – His Honour erred at law in concluding that the Application for recusal in respect to the property proceedings should be dismissed.
The appellant contends in the appeal the primary judge ought to have disqualified himself from further hearing the property settlement proceedings because of his knowledge of the proposed property settlement orders submitted by the parties, which orders his Honour declined to make.
Where a question arises as to the independence or impartiality of a judge, the applicable principles are well established.
In Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337 (“Ebner”) the plurality of the High Court of Australia said (at [6]):
… a judge is disqualified if a fair-minded lay observer might reasonably apprehend that the judge might not bring an impartial mind to the resolution of the question the judge is required to decide. That principle gives effect to the requirement that justice should both be done and be seen to be done, a requirement which reflects the fundamental importance of the principle that the tribunal be independent and impartial. It is convenient to refer to it as the apprehension of bias principle.
(Footnotes omitted)
The application of the apprehension of bias principle involves a two-step analysis. First, the identification of what it is said might lead a decision maker to decide a case other than on its legal and factual merits, and second, the articulation of a logical connection between the matter and the feared departure from the judge deciding the case on its merits (Ebner at [8]). Per Ebner, once those two steps are taken, the reasonableness of the asserted apprehension of bias can then ultimately be assessed.
As to the first step, in Webb v The Queen (1994) 181 CLR 41 at 74 (“Webb”) Deane J identified “at least four distinct, though sometimes overlaying, main categories”, which include disqualification by interest, whether pecuniary or otherwise, conduct, association, or extraneous information.
In this case, the relevant category of disqualification in the first step of the requisite analysis of apprehended bias, is knowledge of extraneous information. That is, the primary judge’s knowledge of the proposed settlement, both as to variation of the formally asserted percentage divisions which both parties asserted would constitute a just and equitable division of their property, and the balance sheet together with the proposed in specie distribution of the assets. In his reasons, the primary judge correctly identified at [82], his exposure to the parties attempted terms of settlement of the property proceedings.
As to the second step and the reasonableness of the asserted apprehension of bias, senior counsel for the appellant helpfully referred to five propositions relevant to the nature of the inquiry, which can be extracted from the authorities.
First, the inquiry is objective (Johnson v Johnson (2000) 201 CLR 488 at [12] (“Johnson”)) and does not require a conclusion about the judge’s actual state of mind (QYFM v Minister for Immigration, Citizenship, Migrant Services and Multicultural Affairs (2023) 66 Fam LR 369 at [68]), secondly, all circumstances must be considered (Re JRL; Ex parte CJL (1986) 161 CLR 342 at 371. See also, CNY17 v Minister for Immigration and Border Protection (2019) 268 CLR 76 at [20]), thirdly, the criterion is concerned with “possibility (real and not remote), not probability” (Ebner at [7]), fourthly, the apprehension is from the perspective of a fair-minded observer, meaning “it is the court’s view of the public’s view, not the court’s own view” that is determinative (Webb at 52) and lastly, the qualities and attributes of the fair-minded observer must be taken into consideration.
These qualities and attributes include; an observer who is neither complacent nor unduly sensitive or suspicious, who is also taken to be reasonable, is all too aware of the reality that the judge is human, is not conceived of as a lawyer but a member of the public served by the courts and is not to be assumed to have a detailed knowledge of the law, or the character or ability of a particular judge (Johnson at [13] and [53]). Likewise, the person being observed is a professional judge whose training, tradition and oath or affirmation require them to discard the irrelevant, the immaterial and the prejudicial (Johnson at [12]).
Although the primary judge correctly recognised the factor or circumstance that might lead a decision maker to decide a case other than on its legal and factual merits, the appellant contended in the appeal that his Honour, albeit without the assistance of proper submissions, failed to undertake the second step of the requisite analysis. That submission, with respect, has merit.
The primary judge in his reasons at [83]–[86] referred to Silva & Phoenix (2018) FLC 93-825 (“Silva”) where it had been determined that the trial judge’s knowledge of the parties’ proposed terms of settlement precluded the judge from continuing to hear the matter. However, his Honour distinguished the facts of Silva from this case. In Silva, the trial judge had expressed a view that the proposed percentage division was not appropriate, whereas in the present case, his Honour did not express a view one way or the other. Whilst his Honour’s analysis was correct, and it is a relevant consideration, that exercise did not resolve the application of the second step of the test or the issue of apprehended bias.
We now turn to the second step, namely the logical connection between exposure to the terms of the proposed settlement and the objective apprehension the primary judge might not determine the property application on its merits. The appellant’s senior counsel relied on the five grounds referred to below.
First, the concessions made by the appellant in the proposed orders were material and a substantial deviation from his formal position. The primary judge was clearly aware of the appellant’s formal position as stated in his Amended Response to Initiating Application filed 11 August 2023 and his Outline of Case filed 18 August 2023 and that the proposed property orders were substantially more favourable to the respondent than the appellant’s formal position.
As can be seen from the transcript, the primary judge was first informed of an agreement in principle to settle the property proceedings at around 3.00 pm on the first day allocated for the trial.[10] Around 3.00 pm on the second day, senior counsel for the appellant advised the primary judge the parties had reached agreement and a Minute of the proposed property orders were tendered at that time as Exhibit C2.[11] Shortly thereafter, the primary judge informed counsel he was troubled by certain aspects of the orders.[12] His Honour also clarified the “overall thrust of the orders” and referred to the proposed percentage division of the property.[13] Paragraph 17 of Exhibit C2 refers to the proposed percentage division of property, for the “avoidance of doubt”.
[10]Transcript 21 August 2023, p.18 lines 4–5.
[11]Transcript 22 August 2023, p.25 lines 24–31.
[12]Transcript 22 August 2023, p.29 lines 14–21.
[13]Transcript 22 August 2023, p.29 lines 25–26. In light of the matter being remitted for re-hearing, the proposed percentage division has not been identified in these reasons for judgment.
For the next hour or so, prior to adjourning, the primary judge and counsel for both parties continued an exchange about the proposed orders which is replete with reference to the proposed percentage division as well as his Honour’s concerns about the mechanics and other specific aspects of the proposed orders.
Upon resumption of court the following morning, the primary judge referred to having looked at the schedule of property and proposed written submissions from counsel about the latest draft of proposed orders. There were some further exchanges between the primary judge and both counsel prior to his Honour declining to make the proposed property orders and delivering his reasons. Around midday on the third day, as we have previously noted, the amended property orders were tendered as an exhibit.
Given the above events which transpired over the course of two successive days, it is axiomatic the primary judge was well aware of both the appellant’s formal position, the compromised percentage division, the significant asset pool and what the compromise actually represented in monetary terms to each party. We accept the compromise was a material and substantial deviation from the appellant’s stated position.
Secondly, the primary judge did not consider the nature of the discretionary exercise in property proceedings, as to both weighing and assessing contributions and adjustment of property to achieve a just and equitable result. It would be forensically embarrassing for the appellant to contend at trial the settlement previously agreed and presented for approval, would not be just and equitable. We agree with that submission, in particular because of the significant monetary value of the appellant’s compromise and departure from his former position before the Court, it would be untenable for counsel for the appellant to contend at a subsequent trial, that his client’s formal position would be just and equitable and the compromised position would not be.
Thirdly, the proposed terms of settlement were not akin to ordinary evidence, which could be disregarded by the primary judge.
At [88] of the reasons for judgment, his Honour said:
Assuming, without determining, that at its highest the proposed terms are inadmissible on the trial of the matter pursuant to s 131 of the Evidence Act 1995, I would be required to disregard them, in the same manner that I am required to disregard objectionable evidence that is ruled upon and rejected in any trial. Such an approach would be well understood by the reasonable lay observer as ordinary judicial practice.
Whilst we accept that the primary judge may well be able to disregard objective evidence in certain cases, the particular facts of this case would make it almost impossible to do so. The primary judge’s prolonged exposure to and familiarity with the proposed property settlement orders and the exchanges with counsel over two consecutive days are not analogous to a judge disregarding an objectionable piece of evidence. That knowledge was central to the focus of the primary judge during the two relevant hearing days and is not a fleeting piece of evidence readily disregarded in the subsequent exercise of discretion. The potential subconscious effect of that knowledge to the evaluative exercise required by s 79 of the Act cannot be disregarded as it is fundamental to that exercise.
Fourthly, the primary judge was provided with detailed proposed orders revealing the percentage each party was to receive, who was to receive/retain which asset and a balance sheet which demonstrated in dollar terms, the percentage division of the assets. We have earlier addressed this submission.
Fifthly, the reasonableness of the apprehended deviation from impartiality, should be assessed in accordance with proper judicial practice (Charisteas v Charisteas (2021) CLR 289 at [12], citing Johnson at [13]). In this case, the transcript demonstrates counsel for both the appellant and the respondent informed the primary judge that he would need to disqualify himself from further hearing the property proceedings if he declined to make orders in accordance with the proposed settlement, prior to the oral application of the appellant’s counsel.
We agree with and accept the submissions of senior counsel for the appellant that there is a logical connection between the exposure to the terms of settlement and the objective apprehension. From the perspective of the fair-minded lay observer, knowledge of the proposed settlement orders and balance sheet over two days might, at the least, subconsciously affect both the primary judge’s future assessment of the evidence and his Honour’s ability to carry out the discretionary evaluative exercise required under s 79 of the Act, to determine adjustments of property.
We are therefore satisfied that a reasonable fair-minded lay observer, cognisant of all relevant facts, might reasonably apprehend the primary judge might not bring an impartial and unprejudiced mind to the hearing of subsequent property proceedings, such that his Honour should have recused himself from the proceedings.
For these reasons, the appeal must be allowed.
CONCLUSION AND COSTS
As noted earlier, given the merit of the appeal it is necessary to return to the question of leave.
We are satisfied that substantial injustice would be suffered by the appellant if he were denied the opportunity to prosecute a meritorious appeal. If leave were not granted, he would possibly face a relatively expensive property trial, the time and costs of which would be wasted if there is a subsequent finding of a legitimate apprehension of bias.
Leave to appeal will be granted, and the appeal allowed.
If the appeal succeeded, the appellant sought a costs certificate pursuant to s 9 of the Federal Proceedings (Costs) Act 1981 (Cth). As the appeal succeeds on an error of law, the appellant is granted a costs certificate in relation to the appeal.
I certify that the preceding fifty-one (51) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Deputy Chief Justice McClelland and Justices Tree & Williams. Associate:
Dated: 21 February 2024
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