Hudson & Baxter
[2024] FedCFamC2F 1639
•19 November 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Hudson & Baxter [2024] FedCFamC2F 1639
File number(s): PAC 4757 of 2023 Judgment of: JUDGE DUNKLEY Date of judgment: 19 November 2024 Catchwords: FAMILY LAW - Leave to review out of time orders made by consent considered - alternate application under s 79A considered Legislation: Family Law Act 1975 (Cth) s 79A Cases cited: Gallo v Dawson [1990] HCA 30
Re Gilbert and the Estate of Gilbert (Dec’d) (1990) FLC 92‑125
Division: Division 2 Family Law Number of paragraphs: 81 Date of hearing: 14 and 15 October 2024 Place: Heard in City E, delivered in Parramatta Counsel for the Applicant: Mr Coleman SC Solicitor for the Applicant: McIntosh McPhillamy & Co Counsel for the First Respondent: Mr Alexander Solicitor for the First Respondent: Campbell Paton & Taylor Counsel for the Second Respondent: Ms Van Oosterom Solicitor for the Second Respondent: Cheney Suthers Lawyers ORDERS
PAC 4757 of 2023 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: MR HUDSON
Applicant
AND: MS BAXTER
First Respondent
MR C HUDSON
Second Respondent
ORDER MADE BY:
JUDGE DUNKLEY
DATE OF ORDER:
19 NOVEMBER 2024
THE COURT ORDERS THAT:
1.Leave out of time is granted to Mr Hudson to review orders made by Judicial Registrar Bistolaridis in proceedings PAC3349/2022 on 30 November 2022.
2.In the alternative to order 1 hereof, the orders made by Judicial Registrar Bistolaridis in proceedings PAC3349/2022 are set aside.
3.The Amended Response filed by the wife on 29 February 2023 is dismissed.
THE COURT FURTHER ORDERS THAT:
4.Mr Hudson shall file, within 21 days of the date hereof in PAC4757/2023, an Amended Initiating Application particularising the property settlement orders sought by him.
5.Ms Baxter and Mr C Hudson shall each file an Amended Response within 21 days of there being compliance with order 4 hereof.
6.On or before 49 days of the date hereof, Mr Hudson shall provide a copy of each of the Amended Initiating Application and both the Amended Responses to his sister, Ms D, and his brother, Mr B.
7.If either Ms D or Mr B wish to be joined to this case, they are to file and serve on or before 70 days of the date hereof, a Response to which they annex any relevant statement of claim.
8.This case is listed for further directions at 9.30am on 27 March 2025 in City F.
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).
Part XIVB of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish an account of 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 a pseudonym has been approved pursuant to subsection 114Q(2) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
JUDGE DUNKLEY
Mr Hudson (the husband) and Ms Baxter (the wife) were married in 2001, separated in November 2020, and were divorced in early 2023. The only child of the marriage is now an adult.
On 30 November 2022 property settlement orders were made by consent by Judicial Registrar Bistolaridis in proceedings PAC3349/2022. Those proceedings having commenced some time earlier.
The husband is in default of the provisions of those orders in that he has not paid the wife instalments as due. Interest is accruing.
To achieve enforcement the wife commenced bankruptcy proceedings against the husband. That bankruptcy application is now stale.
On 8 September 2023 the husband filed an Initiating Application seeking orders under s 79A(1)(b) and (c) and sought:
1.Pursuant to Section 79A(1)(b) and (c), Order 2(a) of the Consent Orders made on 30 November 2022 in the Federal Circuit and Family Court of Australia (Division 2) proceedings number PAC3349/2022 be varied to provide that the husband shall pay the wife the sum of $800,000 within 90 days from the date of the hearing of this Application.
On 23 October 2023 the wife filed a Response seeking dismissal of the husband’s Initiating Application.
On 31 January 2024 the husband filed an Amended Initiating Application which sought in addition to the pleaded s 79A(1)(b) and (c) orders, an order that interest due to the wife pursuant to order (2)(a) of the consent orders made on 30 November 2022 be waived.
The wife, by Amended Response filed on 29 February 2023, sought dismissal of the husband’s applications and also sought pursuant to s 79A(1)(c) the following orders:
3.Pursuant to s 79A(1)(c) of the Family Law Act 1975, vary the final orders made on 30 November 2022 as follows:-
IN ORDER 1, INCLUDE THE FOLLOWING DEFINITIONS:
(a)"Auto Consol […]" means the land contained in folio identifiers […] and […].
(b)"NAB Mortgage" means mortgage […] registered over "[Town G]" and "Part [Town G]" and security for the Partnership's National Australia Bank borrowings:
(c)"New [Town G]" means that part of the land formerly known as "[Town G]'' less that part which has been subdivided from It known as "Part [Town G]" (defined below) and comprises all that land contained within Auto Consol […] and proposed Lot […] in an unregistered plan being part of Lot […] in Deposited Plan […] and part of Lot […] in Deposited Plan […], jointly held between the Husband and Second Respondent;
(d)"Part [Town G]" means that part of the land formerly known as "[Town G]" now comprising proposed Lot […] in an unregistered plan and comprising part of Lot […] in Deposited Plan […] and part of Lot […] in Deposited Plan […]. jointly held between the Husband and Second Respondent:
(e)"[P Bank] Mortgage" means mortgage […] registered over " [Town G] " and "Part [Town G]" and security for the Partnership's [P Bank] borrowings
INCLUDE NEW ORDERS 18, 19 AND 20 AS FOLLOWS:-
Sale of "New [Town G] " and "Part [Town G] " to meet Wife’s entitlements
18.That in the event of default by the Husband in paying the sums in order 2 and in the event the net proceeds of sale of “[Town H]” are or will be insufficient for the Husband to comply with Order 2, then pursuant to section 79A(1)(c) the Husband and Second Respondent shall forthwith do all things necessary to cause the sale of “New [Town G]” and “Part [Town G]” (whether simultaneously or sequentially, as the case may be) by public auction on the following terms:
(a)the agent shall be [J Real Estate];
(b)McIntosh and McPhillamy shall act on the conveyance:
(c)The auction shall take place within 10 weeks of the date of these Orders:
(d)The reserve price shall be as recommended in writing by the agent:
(e)The Wife is authorised to obtain information and documents as she may reasonably request from the agent:
(f)The Husband and Second Respondent shall cooperate with the agent including but not limited to:
(i)Allowing inspection of "New [Town G] " and "Part [Town G] " at reasonable times requested by the agent;
(ii)Doing or saying nothing to hinder or prevent a sale being effected;
(iii)Ensuring "New [Town G]" and "Part [Town G]" is in good, neat and presentable condition at the time of inspection;
(iv)Attending the auction,
(g)In the event the bidding at the first auction of "New [Town G] " and "Part [Town G]" does not reach the reserve price:
(i)The Husband and Second Respondent shall use his best endeavours to negotiate with the highest bidders or any other interested person and effect a sale of "New [Town G]" and "Part [Town G]" at a price 5% less than the reserve price or as otherwise recommended by the agent
(ii)Should no sale be effected within 7 days of the first auction, the Husband and Second Respondent shall do all things necessary to list "New [Town G]" and "Part [Town G]" for sale by public auction again on a date nominated by the agent within 12 weeks of the first auction and at the second auction the reserve price shall be 5% less than the reserve price:
(iii)If "New [Town G]" and "Part [Town G]" remain unsold after the second auction, the Husband and Second Respondent shall do all things necessary to continue to relist "New [Town G]" and "Part [Town G] " for sale by public auction at 12-week intervals and at each successive auction the reserve price shall be 5% less than the reserve price of the immediately proceeding auction:
(h)The sale proceeds of "New [Town G]" and "Part [Town G]" shall be applied as follows:
(i)In payment of the proper costs of sale including agent's commission and conveyancing costs;
(ii)In payment of the amount necessary to discharge the NAB Mortgage;
(iii)In payment of the amount necessary to discharge the [P Bank] Mortgage; and
(iv)Of the remaining net proceeds of sale.
(1)Half to be paid to [Mr C Hudson]; and
(2)Out of the remaining half, the Wife is to be paid the amount required to give effect to Order 2 of the Orders made 30 November 2022 in full. together with interest at the applicable rates prescribed by the Family Law Rules. and the balance thereafter to be paid to the Husband.
19.Pending payment to the Wife of the amount required to give effect to Order 2 of the Orders made 30 November 2022 in full, together with interest at the applicable rates prescribed by the Family Law Rules, the Husband is restrained from further encumbering "New [Town G]" or "Part [Town G]" without the Wife's prior written consent.
20.Pending payment to the Wife of the amount required to give effect to Order 2 of the Orders made 30 November 2022 in full. together with interest at the applicable rates prescribed by the Family Law Rules. the Husband shall:
(a)ensure "New [Town G]" and "Part [Town G]" have adequate insurance policies;
(b)ensure statutory rates and charges for "New [Town G]" and "Part [Town G]" are paid as and when they fall due;
(c)use his best endeavours to ensure the NAB mortgage and [P Bank] Mortgage are serviced, and all payments made as and when they fall due.
By so doing the wife was seeking to enforce payment of outstanding monies by causing a sale of property.
On 19 August 2024 the husband filed a further Amended Initiating Application changing tack somewhat, in that he now sought orders under s 79A(1)(a) and an order for leave to review out of time the consent orders made by Judicial Registrar Bistolaridis on 30 November 2022 in proceedings PAC3349/2022.
By order dated 20 March 2024, by consent, the husband’s brother, Mr C Hudson, was joined as the second respondent. On 20 March 2024 the case was adjourned to 19 July 2024. A further adjournment was granted on 19 July 2024. The hearing commenced on 14 October 2024.
An overview of the former and current proceedings, and the basis of the respective applications pursuant to s 79A and joinder of the husband’s brother, is neatly and concisely set out in the case outline filed on the wife’s behalf on 19 March 2024 and is reproduced below:
1.The Amended Initiating Application was filed on 31 January 2024. It seeks two Orders.
2Their Response was filed on 29 February 2024. It seeks a miscellany of Orders.
3.It is submitted that both the application and the response should be adjourned. A mediation, also, should be ordered.
4.The Court, on 30 November 2022, ordered the Applicant to pay the Respondent $800,000, a part-payment of $2,000,000 by 15 April 2023. He failed to do so.
5. He has, however, affected two ‘conditional' sales. He has sold:
a)‘[Town H]’ a rural property, for $2,142,857 (this property had an agreed value of $3,217,500 [early] last year); and
b)A subdivision of ‘[Town G]’ of [acreage] for $557,143.
6.The sale of the landlocked ‘[Town H]’ is subject to the registration of an easement. It is anticipated settlement will be effected [mid year].
7.The sale of the subdivision block of ‘[Town G]’ is subject to approval by the [Region K Council] of the subdivision and once approval is obtained for registration at Land Registry Services. It is anticipated settlement will be effected [mid year].
The second respondent, Mr C Hudson, filed a Response on 1 July 2024. He opposes the orders sought by the respondent wife insofar as they relate to him.
On 19 July 2024 the case was listed for hearing.
Each of the husband, the wife, and the second respondent were represented.
The husband and second respondent sought and were granted an adjournment, and it was ordered:
1.This case is adjourned for hearing at 10am on 14 and 15 October 2024 in [City E].
2.The application by the applicant, supported by the second respondent, to adjourn the hearing on 19 July 2024, is granted.
3.The applicant is to file and serve by 19 August 2024 a Further Amended Initiating Application particularising his application under s 79A and any affidavit in support of that application.
4.The applicant and second respondent are to value the property descried as New [Town G] located at [L Street, Town G] and cause that valuation to be filed by 19 September 2024.
5.At first instance, the applicant and second respondent are to pay the costs of the valuation with any contribution sought to be made by the first respondent, to be determined at hearing.
6.The applicant and second respondent shall obtain from the National Australia Bank and the [P Bank] documents setting out the debts owed to those companies as at 15 September 2024, with those documents to be provided on or before 30 September 2024.
7.The applicant shall pay to the first respondent, within 30 days of the date hereof, indemnity costs assessed in the sum $22,700 relevant to the costs incurred by the first respondent between 20 March 2024 and today and costs thrown away because of the adjournment.
8.In the event that applicant does not make that payment, the liability can be enforced against each of the applicant and second respondent.
9.The first respondent is file and serve, if she determines necessary, any affidavit in reply by 15 September 2024.
10.Any further affidavit material sought to be relied on by the second respondent is to be filed by 19 August 2024.
11.The parties shall, as best they can, prepare a balance sheet and cause that balance sheet to be available at the commencement of the hearing, with any value disagreed highlighted.
12.The parties are to settle and have available on first day of hearing, an agreed statement of fact relevant to the contract that has been exchanged for the sale of part [Town G].
On 14 and 15 October 2024 the hearing of the proceedings actually commenced and proceeded to conclusion with judgment reserved.
DOCUMENTS
The husband (who is the applicant) at the final hearing relied upon the following documents:
·Further Amended Initiating Application filed 19 August 2024
·Affidavits of Mr Hudson filed 8 September 2023, 31 January 2024, 17 July 2024 and 4 October 2024
·Financial Statements filed 8 September 2023 and 8 March 2024
·Affidavit of Mr M filed 19 September 2024
·Case Outline
Counsel for the applicant husband helpfully as part of his case outline provided an aide‑memoire relevant to the financial issues.
The wife (who is the first respondent) at the final hearing relied upon the following documents:
·Amended Response filed 29 February 2024
·Affidavits of Ms Baxter filed 29 February 2024 and 28 June 2024
·Financial Statement of Ms Baxter filed 29 February 2024
·Case Outlines
Helpfully, counsel for the wife combined other relevant documents in an indexed and paginated tender bundle from which were extracted relevant documents which were marked subsequently as exhibit D.
Mr C Hudson (the second respondent and brother of the applicant) relied upon the following documents:
·Response filed 1 July 2024
·Affidavit of Mr C Hudson filed 1 July 2024
·Financial Statement of Mr C Hudson filed 19 July 2024
·Tender bundle
·Case Outline
He also sought to rely on affidavits of Mr B and Ms N.
The first respondent objected to those affidavits, and for reasons given ex tempore on 14 October 2024, permission to rely on those affidavits was not given.
CONDUCT OF HEARING
Only the first respondent wife and Mr M (a property valuer) were cross-examined during the final hearing.
It was conceded by counsel for the first respondent, if either of the applicant’s prayers for relief, being the leave to review out of time or his prayer under s 79A(1)(a) succeeded, the wife’s s 79A application would “fall away” as would the enforcement orders she seeks.
Only the determination of the leave out of time to review and the applicant and first respondent’s respective s 79A applications were heard on 14 and 15 October 2024 as a “threshold hearing”.
EXHIBITS
The following documents became exhibits during the hearing on 14 and 15 October 2024:
·Exhibit A - Probate and Will of Ms O
·Exhibit B - Contract Sale for Property
·Exhibit C - Deed of Rescission dated 23 August 2024
·Exhibit D - Highlighted documents relied upon in the Tender Bundle
BACKGROUND
The husband and his brothers, Mr C Hudson (second respondent) and Mr B, farmed properties in NSW and are in partnership.
There is an intergenerational aspect to their landholdings (see exhibit A).
The wife had a relationship prior to her relationship with the husband and from that prior relationship she has adult children. She has also recently re‑partnered.
The husband and his brothers (as partners) borrowed money from both P Bank and the National Australia Bank (hereinafter NAB) to fund their farming enterprise.
The orders made by consent by the Judicial Registrar on 30 November 2022 were made after a mediation between the husband and wife only.
The orders made on 30 November 2022 provided for the husband to pay the wife the sum of $2,000,000 by three instalments, with the first instalment of $800,000 to be made by 15 April 2023, the second instalment of $600,000 was due by 15 April 2024, and the third instalment of $600,000 was due by 15 April 2025.
It is an agreed fact the husband was late in paying the wife the first instalment, and has not to date paid the second instalment.
As a consequence of the husband’s default, a sale clause in the orders made on 30 November 2022 relevant to his property ‘Town H’ was triggered as was an interest clause in those orders.
The husband and his brothers borrowings from NAB went into default as evidenced by a letter from NAB dated 15 September 2023 (page 33 of exhibit D).
Eventually the husband was able to sell ‘Town H’ for just over $2,100,000.
Those funds were on or about mid-2024 disbursed as follows:
·$100,669 to P Bank in partial payment of their loan;
·$1,101,790.68 to NAB in part payment of their loan (plus $6,514.44 in further part payment);
·$800,000 to the wife on account of the first instalment due to her;
·the balance of the sale proceeds was paid on conveyancing and related expenses (see pages 51‑52 of exhibit D).
The husband has received no contribution from either of his brothers as a consequence of him partially paying their joint debt to the NAB and P Bank.
In late 2024, another property known as Q Street, Town G being part of the ‘Town G’ property was sold for just over $550,000. Town G was subdivided to allow this sale to proceed.
Town G was owned jointly by the husband and the second respondent.
The sale proceeds were paid:
·as to $251,725.24 to NAB (in repayment the balance of the NAB loan);
·$128,218.26 being the second respondent’s half share of the balance sale proceeds as held in the trust account of the husband’s solicitors;
·$128,218.26 being the husband’s half share of the balance sale proceeds as held in the trust account of the husband’s solicitors
On page 13 of exhibit D is a map showing the various properties before and after sale.
The husband and second respondent still retain farming property as depicted in that map.
If either of the husband’s prayers for relief:
·being leave to review out of time the consent orders made by the judicial registrar on 30 November 2022; or
·his s 79A(1)(a) application,
succeed, a hearing de novo in respect of the review prayer or a hearing of a property settlement application relevant to his s 79A prayer will ensue.
If both the husband’s prayers for relief fail, and the wife’s s 79A application succeeds, only the enforcement type orders will be made.
Complicating the decision, is the provision of s 90AF because the husband’s sister and his brother, Mr B, remain living in a home on one of the properties, she being a residual beneficiary along with her brothers of her late mother’s estate. Her brothers, the husband and second respondent had the right to buy out her interest. (See Will in exhibit A)
Since the making of the consent orders by the Judicial Registrar, it has always been noted as a possibility that the sister might have some type of interest in one of the remaining properties. She has never joined the proceedings although in all likelihood is aware of the current proceedings.
Another issue to determine is the meaning to be given to the words “just and equitable” in s 79A(1)(c). It was submitted for the first and second respondents that those words do not have the same meaning as the same words in s 79(2) and mean something different. Reference was made to page 749 Annotated Family Law Legislation 7th Edition as published by LexisNexis.
The interest currently due the wife pursuant to the orders made on 30 November 2022 was as at 15 October 2024, $273,008.15 (see page 12 exhibit D).
DETERMINATION
Is leave out of time to be extended to the husband to Review the orders made on 30 November 2022 by Judicial Registrar Bistolaridis?
The Federal Circuit and Family Court Rules (rule 14.05) allow a period of 21 days to seek review of order made by a judicial registrar.
It matters not whether those orders were made by consent.
The applicant is out of time to review the orders as of right.
As at 14 October 2024, counsel for the wife submitted the husband was 96 weeks out of time. I have not separately confirmed that submission but it was not cavilled with by counsel for the applicant.
The court has a power to extend the time to file the review. This is not disputed by any party.
The decision of Justice McHugh in Gallo v Dawson [1990] HCA 30 sets out all that needs to be considered in deciding a leave out of time/extension of time issues including:
·this discretion to extend time is given for the sole purpose of enabling a court or Justice to do justice between the parties;
·the application for leave necessitates the applicant to prove strict compliance with the rules will work an injustice to the applicant;
·to decide whether the rule 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.
Unlike in Gallo there is no necessity for me to consider the prospects of the applicant in any potential Review as all Review hearings proceed as a hearing de novo.
As to the reason for delay of some 96 weeks, the husband says basically “I did not know I could” until it is assumed just before his further Amended Initiating Application was filed on 19 August 2024.
Whilst he may not have known, his solicitor would be well aware of the time limits. His solicitors at this hearing were the solicitors who acted for him before the Judicial Registrar who made the consent orders and continued to act for him between the date of the consent orders and this hearing (see correspondence in exhibit D).
To accept the husband’s assertion, I have to accept he did not ask those solicitors for advice about a Review and they did not volunteer that information to him.
I am not persuaded by his explanation for delay given the continuous engagement of his solicitors. Whilst he may not have known, those that were continuously acting for him certainly would have. His explanation is therefore without merit.
At the time the orders were made by the Judicial Registrar on 30 November 2022, the husband and wife believed ‘Town H’ had a value of $3,217,500 and 50% of Town G had a value of $3,506,750.
When eventually contracts were exchanged on ‘Town H’ and its sale completed in mid-2024, it sold for just over $2,100,000.
When part of Town G was sold, that part sold for just over $550,000, the part of Town G that sold was less than 50% of its total area.
Hardship has been occasioned to the applicant by the significant decrease in the value of ‘Town H’ in the period from the making of the consent orders on 30 November 2022 and the eventual settlement date in mid-2024, being a period of just under 20 months.
It is submitted for the applicant the wife has not established she suffered hardship. I am satisfied she has experienced hardship, delay, stress, and costs, being some of her hardship.
Such a dramatic fall in value brings into question the justice of the outcome that will now result. The wife will retain the terms of “her bargain” albeit late whilst the terms of the “husband’s bargain” will be significantly eroded.
The interests of a third party, who had no input into the consent orders, have also been significantly impacted to the detriment of that third party, that is, Mr C Hudson. He no longer owns the total acres he once owned.
For the above reasons, on balance, leave out of time should be extended to the husband to review the consent orders made on 30 November 2022.
Is s 79A(1)(a) to be applied in favour of the husband?
Having decided to grant leave it would not ordinarily be necessary to consider this aspect of the case but I do so for reason of completeness.
The focus of submissions for the husband in this aspect of the case was in the terms of s 79A(1)(a) upon the words “miscarriage of justice” … “or any other circumstance”.
I accept the submissions by senior counsel for the husband, that s 79A is a remedial provision to be construed beneficial. The case law cited in his written submissions is persuasive of the above.[1]
[1] Re Gilbert and the Estate of Gilbert (Dec’d) (1990) FLC 92‑125
The significant decrease in the value of ‘Town H’ over a 20 month period of about a little over $1,000,000 in a nett pool of about $5,000,000 as at the date of the consent orders, is of significance and bespeaks of a circumstance of miscarriage of justice if the orders are enforced.
Not joining Mr Hudson at the time of the consent orders might at that time have been appropriate given the values the husband and wife were then working with. However, given the decrease in value over time of ‘Town H’, and the decision by the banks to “target” ‘Town H’ to reclaim their monies, meant recourse to other property including a property part owned by the second respondent has become another circumstance creating a miscarriage of justice. The original consent orders never envisaged the above possibility.
I am therefore, for the above reasons, satisfied the husband has made out his case under s 79A(1)(a).
CONCLUSION
The practical working out of the above, is that property settlement proceedings between the husband and the wife and any other party that becomes interested, including but not limited to the second respondent, will need to be heard on their merits.
It matters not whether it is a hearing de novo, because of the grant of leave out of time or a hearing due to the setting aside of the consent orders.
Both orders will be made but in the alternative.
The orders sought by the wife will be dismissed due to “the success” of the husband’s application.
Procedural orders will be made to move forward these proceedings.
I certify that the preceding eighty-one (81) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Dunkley. Associate:
Dated: 19 November 2024
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