IRVING & IRVING

[2013] FamCA 962

FAMILY COURT OF AUSTRALIA

IRVING & IRVING [2013] FamCA 962

FAMILY LAW – PROPERTY – Application to set aside consent orders pursuant to Section 79A of the Family Law Act 1975 (Cth) on ground of either miscarriage of justice or that it is impracticable for orders to be carried out – Whether there is sufficient evidence to establish either ground – Whether a judge making orders by consent in chambers is required to provide evidence that their determination is just and equitable.

FAMILY LAW – PROCEDURAL – Application for summary dismissal –Whether the application to set aside the consent orders had any reasonable grounds of success.

Family Law Act 1975 (Cth)
Family Law Rules 2004 (Cth)
Federal Magistrates Court Rules 2001 (Cth)

Friar & Friar [2011] FamCAFC 71
Holland & Holland (1982) FLC 91-243
Gebert& Gebert (1990) FLC 92-137
Smith & Smith (1984) FLC 91-152
Suiker & Suiker (1993) FLC 92-436

APPLICANT: Mr Irving

RESPONDENT: Ms Irving

FILE NUMBER: SYC 909 of 2012

DATE DELIVERED: 10 December 2013

PLACE DELIVERED: Parramatta

PLACE HEARD: Parramatta

JUDGMENT OF: Foster J

HEARING DATE: 15 November 2013

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Campton

SOLICITOR FOR THE APPLICANT: MacLarens Lawyers

COUNSEL FOR THE RESPONDENT: Mr Tilley

SOLICITOR FOR THE RESPONDENT: Matthews Folbigg Pty Ltd

Orders

1. That the husband’s application for relief under section 79A of the Family Law Act 1975 (Cth) be dismissed.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Irving & Irving 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 PARRAMATTA

FILE NUMBER: SYC 909  of 2012

Mr Irving

Applicant

And

Ms Irving

Respondent

REASONS FOR JUDGMENT

The Primary Proceedings 

1. The primary proceedings before the Court are the Applicant husband’s application, filed on 24 December 2012 and amended on 20 May 2013, to set aside orders for property settlement made on 20 March 2012 by consent in the Federal Magistrates Court, as it then was, at Sydney.

2. The primary application is made pursuant to the provisions of section 79A of the Family Law Act 1975 (Cth) (“the Act”). The Applicant relies on two grounds:

   1.That there has been a miscarriage of justice by reason of any other circumstances on the ground that the consent orders entered into by the parties are so unreasonable so as to give rise to an inference that the husband’s reasoning was affected so as to vitiate the orders [s 79 A (1) (a)]; and

   2.That it is impracticable for the orders to be carried out in that the fund established on account of payment of the parties taxation liabilities is inadequate to meet their liabilities [s 79 A (1) (b)].

Application for Summary Dismissal

1. The present application before the Court is the application by the Respondent wife for summary dismissal of the husband’s application. Her application is made pursuant to Rule 10.12 (d) of the Family Law Rules 2004 (Cth) on the basis that the husband’s application has “no reasonable likelihood of success”.

2. In Friar & Friar [2011] FamCAFC 71 the majority of the Full Court (Thackray and Watts JJ) reviewed the relevant principles and authorities:

   49. Rules 10.12(c) and (d) of the Family Law Rules 2004 (“the Rules”) relevantly provide that a respondent may apply for “summary orders” in relation to an application on the basis that it is “frivolous, vexatious or an abuse of process” or has “no reasonable likelihood of success”.

   50. The Rules are properly read as supplementing the power of the Court to dismiss frivolous or vexatious proceedings pursuant to s 118(1) of the Act. The Rules are also to be read in the context of the many cases confirming the Court’s inherent power to dismiss or permanently stay an application which cannot succeed, as to which see the authorities discussed in Bigg v Suzi (1998) FLC 92-799 at 84,974.

   51.      Kirby J outlined the principles governing summary dismissal applications in Lindon v The Commonwealth (No.2) (1996) 70 ALJR 541 at 544 – 545 as follows (our emphasis added):

   1.        It is a serious matter to deprive a person of access to the        courts of law for it is there that the rule of law is upheld, including        against Government and other powerful interests. This is why relief,      whether under O 26, r 18 or in the inherent jurisdiction of the Court,    is rarely and sparingly provided;

   2.        To secure such relief, the party seeking it must show that it is          clear, on the face of the opponent's documents, that the opponent        lacks a reasonable cause of action or is advancing a claim that is       clearly frivolous or vexatious;

   3.        An opinion of the Court that a case appears weak and         such    that it is unlikely to succeed is not, alone, sufficient to warrant summary termination. Even a weak case is entitled         to       the time of a           court. Experience teaches that the concentration of      attention, elaborated evidence and argument and extended time   for reflection will sometimes turn an apparently unpromising cause into a successful judgment [original emphasis];

   4.        Summary relief of the kind provided for by O 26, r 18, for      absence of a reasonable cause of action, is not a substitute for         proceeding by way of demurrer. If there is a serious legal question     to be determined, it should ordinarily be determined at a trial for the    proof of facts may sometimes assist the judicial mind to understand           and apply the law that is invoked and to do so in circumstances    more conducive to deciding a real case involving actual litigants          rather than one determined on imagined or assumed facts;

   5.        If, notwithstanding the defects of pleadings, it appears that a party may have a reasonable cause of action which it has failed to          put in proper form, a court will ordinarily allow that party to        reframe its pleading. A question has arisen as to whether O 26, r 18      applies to part only of a pleading. However, it is unnecessary in this           case to consider that question because the Commonwealth's attack   was upon the entirety of Mr Lindon's statement of claim; and

   6.        The guiding principle is, as stated in O 26, r 18(2), doing        what is just. If it is clear that proceedings within the concept of the       pleading under scrutiny are doomed to fail, the Court should dismiss    the action to protect the defendant from being further troubled, to    save the plaintiff from further costs and disappointment and to        relieve the Court of the burden of further wasted time which could          be devoted to the determination of claims which have legal merit.          (footnotes omitted)

   52.      While Kirby J expressed the test as requiring the applicant for summary dismissal to demonstrate, by reference to their opponent’s documents, that “the opponent lacks a reasonable cause of action or is advancing a claim that is clearly frivolous or vexatious”, the test has also been formulated in many other ways (see General Steel Industries Inc v Commissioner for Railways (N.S.W.) (1964) 112 CLR 125 at 129). However, for the purposes of an application for summary dismissal under the Act, the test is that laid down by the Rules, namely that the claim must be “frivolous, vexatious or an abuse of process” or has “no reasonable likelihood of success”.

   53.      Regardless of the formulation, “exceptional caution” must be used in applications for summary dismissal and the power should be “sparingly employed”: Barwick CJ in General Steel Industries (supra at 129).

The Husband’s Case

1. The husband relied upon his affidavit filed on 20 May 2013.

2. On 4 September 2013 the solicitors for the wife administered a request for answers to a request for further and better particulars in relation to the husband’s claim for relief under section 79A.

3. Answers were provided by the solicitors for the husband by letter dated 2 October 2013. The answers relevantly provided were as follows:

   The facts and circumstances giving rise to the conclusion that the Orders are so unreasonable as to give rise to an inference that the husband’s reasoning was affected.

   The effect of the Orders was to leave your client with the overwhelming majority of the assets of the parties including:

   1.        The entire equity in their home.

   2.        The entirety of their accumulated superannuation interests.

   3.        The entirety of their interest in the unit trust including the [P]          property.

   4.        The service company which supported the [professional services     firm] including its assets.

   5.        A significant proportion of the files and work in progress of the       [firm].

   6.        The parties’ furniture and household effects.

   The husband retained the following assets:

   1.        The balance of the [professional services firm] and its liabilities.

   The effect of the Orders is such on its own as to give rise to an inference that the husband’s reasoning was affected when entering into the Orders. The effect of the Orders is such that a Court properly informed could not and would not have found them to be just and equitable, and ought not have made them giving rise to a miscarriage of justice. The Orders were made by a Federal Magistrate in chambers without submissions or evidence from the husband.

   Further, the facts and circumstances asserted by the husband in relation to the events leading to the making of the Orders are such that it is not necessary to rely upon the inference, as there is positive evidence to support that the husband’s reasoning was affected. Those circumstances include:

   1.        The husband was in an upset, distressed and emotional state following the parties’ separation.

   2.        Immediately following separation, the husband gave instructions to           his solicitor to the effect that he had left the [professional services        firm], wanted           nothing more to do with it and wanted no contact         with the wife. She was to receive the entirety of their assets.

   3.        A Financial Agreement was prepared providing for the wife to          receive the entirety of the parties’ assets.

   4.        The husband was hopeful of reconciliation with the wife, and would          do anything to achieve that end, including giving her the entirety of      their assets.

   5.        The husband contemplated abandoning his career …

   6.        The husband signed the Financial Agreement prepared by the wife   giving effect to the transfer of the entirety of their assets to her.

   7.        The husband instructed his solicitors not to submit the signed          Financial Agreement, and proposed an alternate agreement pursuant     to which he would retain the [P] property and the [professional          services firm].

   8.        The husband’s emotional state was heightened by the wife’s admission to hospital.

   9.        In February 2012, the husband resolved to close the [firm] and gave           instructions to his solicitor accordingly. He then changed his mind   and … did not close the [firm].

   10.      The husband had been bleeding from the bowel, and was being        investigated for bowel cancer in and around February and March         2012.

   11.      Following the commencement of proceedings by the wife, the          parties convened a settlement conference at which the husband was       represented by his solicitor and the wife by her barrister. During the   conference, the wife cried on and off. The husband became          emotional and distressed and sought to achieve reconciliation.         Without legal advice, he proposed that the wife receive the entirety     of the parties’ assets, excluding his files from the [firm]. Terms of      settlement were prepared by the wife’s barrister and signed by       the      husband without reading or the benefit of mature reflection on           their content.

   The evidence relied upon by the husband is to be found in his Affidavit sworn on 16th May 2013. The history of the financial contribution of the parties is to be found in paragraphs 2 to 5 and 7 to 28. Evidence in relation to the effect of the Orders is found in paragraph 61 to 89. Evidence as to the husband’s actual reasoning and emotional state is found in paragraphs 29 to 60.

   Grounds pursuant to section 79 A(1)(b):

   The Orders provide for the parties to lodge Tax Returns in the best interests of the group and create a fund of $30,000.00 to provide for the payment of tax. The husband’s liabilities exceed the amount provided in the fund and no provision is made for that circumstance.

Background

1. The parties were married in 1984 and separated in late 2011 when the husband moved out of the matrimonial home.

2. There are three children of the marriage now aged 23, 19 and 12.

3. The parties were divorced on 10 December 2012.

4. Final orders as to property were made by consent in the Federal Magistrates Court, as it then was, on 20 March 2012.

5. The wife completed the requirements for professional employment in 1989 and the husband completed the requirements for professional employment in 1994.

6. In 1993 the professional services firm, I Firm, was established by the wife with the husband adjoining that firm in 1994 following the completion of the requirements for professional employment. Both parties were engaged in day to day work as professionals at all relevant times.

7. The assets are of the marriage were derived by the parties as a consequence of their joint endeavours. In the period from 2004 until 2008 the firm was struggling and the parties borrowed funds of about $165,000 from the husband’s sister, with $103,000 of that loan repaid following the receipt of a compensation verdict by the husband in 2009.

8. Following separation the husband stayed with his sister at her home at Suburb C. Shortly after 23 October 2011 he instructed a solicitor Mr Stojanovic to act on his behalf in relation to dealings with his wife.

9. The husband signed a power of attorney in favour of the wife and instructed his solicitor to forward it to the wife, informing her that he had left the parties’ professional services firm and wanted nothing more to do with it.

The Draft Financial Agreement

1. On 24 October 2011 the wife submitted a draft financial agreement to the husband’s solicitor.

2. In summary it appears that the assets of the relationship at about the time of separation, as set out in the draft financial agreement that was later signed by the husband, were as follows:

   1.The matrimonial home at Suburb V in the wife’s name valued at $1,400,000 with mortgage borrowings of $803,000 secured against the property;

   2.Furniture and household effects in the matrimonial home valued at $10,000;

   3.The parties shares in I Services Pty Ltd being the service entity for the parties’ firm with an overdraft of approximately $20,000;

   4.The parties’ firm I Firm with an overdraft of about $55,000 and some trade creditors;

   5.The parties’ interest in the I Services Trust, the primary asset of which was the real estate property at Suburb P having a value of $450,000 with a secured mortgage debt of $295,000;

   6.First Honda motor vehicle subject to debt with no equity;

   7.Second Honda motor vehicle subject to debt with no equity;

   8.The husband’s superannuation at $95,632;

   9.The wife’s superannuation at $99,695;

   10.Monies in the bank of $5,500;

   11.The balance of the husband’s motor vehicle accident claim at $15,000; and

   12.The wife’s AMP shares at $630.

3. Otherwise the draft financial agreement set out the other liabilities of the parties as follows:

   1.Australian Taxation Office (“ATO”) I Services $12,000;

   2.ATO husband $8,000;

   3.Anticipated ATO for March 2012 quarter I Services $9,000;

   4.Anticipated ATO liability for March 2012 quarter husband $9,000;

   5.GE Finance $10,000;

   6.Credit cards $45,000;

   7.Debt to X $65,000; and

   8.Liability for accrued benefits superannuation fund $195,327.

4. Overall, the asserted matrimonial pool had an asserted net value of $509,130.

5. The husband’s solicitor requested changes to the agreement following instructions from the husband and a revised agreement was forwarded on 28 October 2011.

6. The husband continued to attend the business premises of the parties’ firm each day bringing the work up-to-date and organising it on the basis that he would be absent for the next two months. The husband left file notes and memoranda for the attention of the wife. The husband thereafter travelled overseas and spent two months with the parties’ middle son, leaving the day-to-day conduct of the firm to the wife.

7. Following his return from overseas on 9 January 2012 the husband returned to the matrimonial home. The wife returned to the home on 10 January 2012 from holiday. The parties agreed that there would be no reconciliation and the husband moved out of the home again on 12 January 2012 to stay with his sister. The husband told the wife that she could have the matrimonial assets provided that she agreed to pay their debts and effect a re-finance by 30 June 2012.

8. The parties’ firm reopened on 16 January 2012 and the husband attended at the office each day. He says that he was emotional and distressed that there was to be no reconciliation. On the Thursday of that week he asked the wife whether she had prepared a financial agreement and informed her that he wanted to sign the agreement and leave the firm by the end of the week.

9. The husband did not attend the firm during the following week.

10. On 25 January 2012 the wife forwarded to the husband’s solicitor an email attaching an amended draft financial agreement incorporating amendments as sought by the husband. She further informed the husband’s solicitor that she was aware that the husband had revoked the previous power of attorney signed by him.

11. On 27 January 2012 the husband met with the wife at the office to again discuss the prospect of reconciliation. It is clear that the wife rejected those overtures and wanted the financial agreement signed. She informed the husband that she could pay $20,000 the following week to clear the overdraft debt of I Services. The husband then left the office but returned again that afternoon and informed the wife that he would remain at the office until all of the debts were refinanced as demanded by him. He further informed her that he would be attending upon his solicitor later that day to sign the financial agreement.

12. The husband forwarded to his solicitor an email at 12.01 pm on 27 January 2012 incorporating his comments in relation to the email of the wife of 25 January 2012. The husband confirmed that he would be attending upon his solicitor at 5.30 pm.

13. Prior to signing the agreement the husband had forwarded to his solicitor an email, that was copied to the wife, confirming his final instructions that the agreement should reflect that the wife receives all assets and takes over all debts and that the husband would remain in the business … until all debts and taxes in his name are repaid in full. The husband informed his solicitor that the agreement should be re-drafted accordingly as soon as possible as “we both want the agreement signed by me urgently”.

14. Following a query from the wife the husband informed her by email that he had made his final instructions clear to his solicitor and that all he wanted was for all debts and taxes in his name and his sister’s loan to be repaid. Once all this is done he would transfer the business to the wife and the quicker this is done the better for all.

15. The husband attended upon his solicitor later on 27 January 2012. The husband signed the amended agreement as settled by his wife with the agreement incorporating a declaration separately signed by the husband acknowledging separation on 26 September 2011 and that he did not believe there is a reasonable likelihood of cohabitation being resumed. The husband’s solicitor witnessed his signatures on the agreement and signed a certificate that acknowledged that he had provided to the husband independent legal advice prior to entering into the agreement as to the effect of the agreement on the rights of the parties and the advantages and disadvantages at the time that the advice was provided to his client of making the agreement.

The Husband’s Reconsideration of the Financial Agreement

1. The husband says that later that night he reflected on the terms of the financial agreement that he had signed.

2. On the morning of Saturday 28 January 2012 he informed his solicitor not to forward the agreement signed by him to the wife and forwarded detailed instructions to his solicitor in relation to a counter offer. He proposed that he would retain the I Services Trust and thus the P property, be liable for the I Firm overdraft of $55,000 and the GE credit card. He further proposed that he would remain the sole owner of I Firm and the wife would resign from the firm and that he would retain the second Honda car and be liable for the car loan.

3. He calculated that the wife would thus receive net about $450,000 and he would receive about $90,000 of the pool.

4. Later the same day the husband forwarded to his solicitor a second email instructing that he proposed no reconciliation with his wife, that he proposed as per the advice given to him the previous day that the net matrimonial assets be divided 60 per cent to the wife and 40 per cent to him. An email response from his solicitor suggested that they confer at a later time in relation to the matter.

5. The following Monday the husband attended at the firm premises and was informed that the wife had been admitted to hospital by ambulance with heart problems. She was discharged later that day and she returned to work on 6 February 2012.

The Husband’s Subsequent Proposal

1. On 8 February 2012 the husband forwarded to the wife a long email on the question of property settlement. He confirmed to the wife that a settlement would proceed by way of consent orders rather than financial agreement. He asserted that valuations would be obtained for the two real estate properties and the business. He acknowledged the wife’s right to seek advice as to his own solicitor’s advice as to the appropriate range of settlement and that the wife asserted that his legal advice was incorrect. He asserted that his proposal in his email of 28 January 2012 would see him with 26.5 per cent of the net assets.

2. The wife thereafter consulted her own solicitors and on 9 February 2012 they wrote to the husband’s solicitors by facsimile transmission requesting that all further negotiations be conducted through the parties’ respective solicitors.

Matters Preceding the Wife’s Application to the Court

1. By facsimile transmission on 14 February 2012 the husband’s solicitors wrote to the wife’s solicitors informing them, in the husband’s view, that in the current circumstances the professional service firm could not continue and that the husband would be contacting the relevant professional organisation for advice as to steps necessary to close the firm.

2. The parties were continuing to attend at the firm on a daily basis and the husband asserts that he remained upset, anxious and angry about the breakdown of the marriage and the circumstances relating to the firm. He says he was further concerned as a consequence of bleeding from the bowel that he may have bowel cancer.

3. The firm overdraft was running close to its limit and the parties were unable to make appropriate drawings. The husband redrew some funds from the parties’ housing loan to pay his secretary’s wages.

4. On 17 February 2012 the husband’s solicitors informed the wife’s solicitors that the husband proposed to write to all of the clients of the firm informing them that the firm would cease to operate from 6 March 2012 and that the clients could either collect their files from the office or instruct their files be forwarded to a firm nominated by them. Not unexpectedly the wife’s solicitors sought an undertaking that no such action would be taken.

5. Later that day the husband attended the firm’s premises where he found the wife was loading files into her car. There was a confrontation between the husband and wife in the presence of one of the children. The wife left the premises with the files she had taken possession of.

Interim Orders made

1. The next morning the husband’s solicitor informed him that the wife had commenced Court proceedings with the wife’s application listed at 9.30 am on Monday 20 February 2012. In support of her application the wife filed an affidavit and financial statement.

2. The husband attended Court later that morning and was advised that proceedings had been adjourned to 22 February 2012.

3. The husband attended Court unrepresented on 22 February 2012 and orders were made by consent, in summary, as follows:

   1.That the proceedings be adjourned to 9.30 am on 3 May 2012;

   2.That the parties have liberty to restore on 72 hours’ notice;

   3.That the husband cause his solicitors to file a Notice of Address for Service within seven days;

   4.That the wife file and serve her Amended Initiating Application, financial statement and affidavit by 4.00 pm on 7 March 2012;

   5.That the husband file and serve his Response, financial statement and affidavit by 4.00 pm on 28 March 2012;

   6.That the wife file and serve any reply and affidavit in support by       4.00 pm on 11 April 2012;

   7.The Court noted that the purpose of the adjournment was to consider the results of any roundtable settlement conference undertaken by the parties and that in the event that the parties remained in dispute whether the matter would benefit from a private mediation or conciliation conference;

   8.That the husband be restrained from doing anything to cause the closure of I Firm;

   9.That the husband be restrained from informing any person or entity of the proposed closure of the firm or communicating in any way any change in the state is of the firm;

   10.That the husband be restrained from distributing any client records and documents held by the firm;

   11.That should any authority be received in respect of the transfer of files that the husband be restrained from acting upon such authority without the wife’s consent, which will not be unreasonably withheld;

   12.That both parties be restrained from terminating any employee of the firm or its service company or discussing termination or terms of employment with any staff member or contractor;

   13.That the husband be restrained from removing the wife as signatory to the firm’s office account and trust account or any other account to which she is a signatory in relation to the firm, the service company, the unit trust and the superannuation fund;

   14.That the wife undertakes to the Court that she will return to the offices of the firm financial documents and archived financial material relating to the firm; and

   15.That the wife undertakes to the Court that she will not remove any files from the firm’s office without the husband’s consent, which will not be unreasonably withheld.

4. Both parties resumed attending at the firm.

5. On 28 February 2012 the wife’s solicitors put forward a further proposal as to property settlement. In summary, the wife proposed:

   1.That the matrimonial home be sold and after payment of sale costs, discharge of mortgage, payment of the firm’s overdraft, payment of the service entity overdraft, payment of any outstanding PAYG tax, payout of credit cards, the retention of $30,000 to cover PAYG tax for the 2011 and 2012 years, payment to the husband’s sister of $65,000, that the balance then remaining to be paid as to 32 per cent to the husband in the sum of about $49,600 and the balance to the wife;

   2.That the husband transfer to the wife his interest in the firm, the service entity, the unit trust and the superannuation fund and that the wife be liable for all liabilities relating to those entities;

   3.That the second Honda motor vehicle be transferred to the husband and he is to refinance the lease on that vehicle; and

   4.That the first Honda motor vehicle be transferred to the wife and she is to refinance the lease on that vehicle.

6. Subsequently on 1 March 2012 a settlement conference took place in the chambers of the wife’s counsel.

7. Prior to the conference the husband prepared a number of summaries and schedules in relation to the parties’ financial position. He provided these documents to the wife and her counsel at the conference.

8. In attendance were the husband, his solicitor, the wife’s counsel and the wife. The husband asserts that during the conference the wife was emotional. Initially the parties conferred for about two hours. The husband put a proposal that he was to receive his files from the firm and retain the firm’s name. The conference was adjourned for lunch. After lunch draft settlement documents were prepared and there were discussions between all present as to amendments. The final draft was provided to the husband’s solicitor for perusal. The final document was signed by all parties and the husband was informed that the terms of settlement would be presented to the Court the next day for the purposes of consent orders being made.

9. The husband says that at the time of the settlement conference he was scheduled to have a colonoscopy on 9 March 2012 and that issue was weighing on his mind by reason of his family medical history.

10. On 19 March 2012 the wife’s solicitors wrote to the husband’s solicitors confirming that the terms of settlement had been filed with the Court for the purposes of consent orders being made. They informed the husband’s solicitors that it was necessary to write a letter explaining the distribution of the assets as provided for in the proposed orders. A draft letter to the Court was provided setting out in detail the assets of the parties, much the same as was provided for in the draft financial agreement and setting out the assets to be retained by each of the parties.

11. On 20 March 2012 Final Orders for property were made by the Court in chambers pursuant to Rule 13.04 of the then Federal Magistrates Court Rules 2001 (Cth).

12. In summary, the Orders provided for a resolution between the parties in accordance with the wife’s proposal of 28 February 2012, except that:

    1.In lieu of a cash payment from the proceeds of sale of the matrimonial home, the husband would retain the name of the parties’ firm and his files from that firm;

    2.That outstanding liabilities for BAS, PAYG and GST for the firm and the service entity up to the quarter preceding the date of settlement (31 March 2012) be paid from the proceeds of sale; and

    3.That the preserved sum of $30,000 from the proceeds of sale of the home be applied in payment of outstanding taxation liabilities for the parties and their entities in respect of the 2012 financial year.

13. The husband says that he received a copy of the email and the draft letter on 21 March 2012 and he disagreed with some of the figures. He emailed his solicitor, the wife’s solicitors and the wife on 21 March 2012. Inter alia, he attached his amended estimates, complained that the matrimonial home had not been placed on the market for sale as proposed in the terms of settlement, that his sister had expressed some concern in relation to the repayment of the loan as provided for in the proposed terms of settlement. He requested confirmation as to when the terms of settlement were filed with the Court.

14. The husband then gives evidence as to the implementation by the parties of the Court’s Orders, including sale of the matrimonial home for the sum of $1,260,000, with the proceeds of sale being disbursed on 25 June 2012 in accordance with the order and priority provided for in the Orders. The retention sum of $30,000 was paid to the husband’s solicitors to be held in trust pending finalisation of the 2012 tax year for the parties and their entities. On settlement of the sale cheques totalling $1,133,839.75 were disbursed.

15. A 10 per cent deposit of $126,000 was held by the selling agent and the husband estimates that, after deduction of agent’s commission, the sum of about $103,000 net would have been received by the wife.

16. Subsequent to filing his 2011 tax return the husband received an assessment of income tax payable in the sum of $7,256.40 due on 5 June 2012. For the same financial year the wife was entitled to an income tax refund of $5,756.24.

17. The husband asserts that a March quarter BAS liability for the firm of $15,296.68 and $12,579.68 was paid from the proceeds of sale of the home as provided for in the Consent Orders. Income tax was owing for the service entity of $13,012.75 for the 2011 tax year. This sum was paid from the proceeds of sale of the home as provided for in the Consent Orders.

18. The husband on or about 1 November 2012 received an income tax assessment for the year ended 30 June 2012 in the sum of $25,635.85 due for payment by 21 March 2013.

Discussion

1. The husband relies upon his affidavit sworn on 16 May 2013 and filed on 20 May 2013.

2. His primary application in these proceedings was not filed until 24 December 2012.

3. The husband asserts that there have been ongoing difficulties as between himself and the wife in relation to the filing of tax returns for the various entities controlled by the parties and says that as far as he is aware 2012 tax returns for the service entity, the unit trust, the self-managed superannuation fund and the wife have not as yet been filed.

4. Accordingly, the liabilities that are the subject of the Consent Orders are not as yet known. The husband has not commenced any enforcement proceedings seeking to have tax returns filed.

5. The husband does not adduce any objective evidence in relation to his health or psychological state at the time of the Consent Orders being entered into and the Court is left to rely upon his assertions in his affidavit referred to above.

6. It is clear from the husband’s evidence that he was at all relevant times legally represented, that the negotiation process leading to the final Consent Orders was protracted, with each party changing their position at various times. The ultimate Consent Orders were framed as a consequence of a mediation involving the wife and her counsel and the husband and his solicitor. At the conclusion of that mediation it was the intention of the parties that terms of settlement would be filed on the following day with a view to Consent Orders being made by the Court without delay.

7. Subsequent to the Final Orders being made by the Court, the husband engaged in negotiations over the application of the net proceeds of sale of the home and the division of the professional services firm as between himself and the wife.

8. The husband, as a consequence of the Orders, retained the name of the firm that the parties had traded under for some years and various files from that firm.

9. Section 79A of the Act is a remedial provision intended to overcome miscarriages of justice and other specific difficulties or hardships set out in the section and it is well settled that the provisions of the section should be given a liberal interpretation to give effect to its remedial purpose.

The Section 79A(1)(a) Challenge

1. Section 79A(1)(a) provides that where the Court is satisfied that there has been a miscarriage of justice by reason of fraud, duress, the suppression of evidence, the giving of false evidence or any other circumstance, the Court may, in its discretion, vary the order or set the order aside and, if it considers it appropriate, make another order in substitution thereof.

2. The present primary application before the Court relies firstly upon s 79A(1)(a) and the term “any other circumstance”. Such circumstances must be those circumstances that existed at the time of the Order or before the Order was made.

3. The husband contends that the very nature of the Orders made give rise to the inference that his reasoning was so affected such as to vitiate the Orders.

4. By reason of the factual background set out above, as asserted by the husband, there is no evidence to support such a contention. The husband was at all relevant times legally represented. The husband was afforded advice from his solicitor as to that solicitor’s view as to an appropriate division of property. The husband and wife through their respective legal representatives made offer and counter offer and ultimately resolved the question of property at mediation.

5. Counsel for the husband referred the Court to the case of Holland & Holland (1982) FLC 91-243 where the Full Court said at 77,341:

   … To succeed in an application under sec. 79A, the wife must show some circumstance leading to a miscarriage of justice. Agreement to a consent order which may not adequately reflect a party’s entitlements under sec. 79 does not, of itself, show that there has been a miscarriage of justice. There may be cases where the order consented to is so far outside the ambit of what is just and equitable that the Court may infer that a party has acted under duress, in ignorance or as a result of incompetent advice.

6. There is no evidence from the husband that could possibly give rise to any such inference.

7. Counsel for the husband also referred the Court to the case of Gebert & Gebert (1990) FLC 92-137 where the Full Court said at 77,935:

   … there may be circumstances where the order is so unreasonable as to give rise to an inference that some matter has affected the party’s reasoning, which would vitiate the order. On the other hand, we think that it must be appreciated, as the Full Court said, that the fact alone of an apparently unreasonable order does not necessarily lead to such a conclusion. If the order is apparently unreasonable and there is no rational explanation of it having been agreed upon, then the inference referred to by the Full Court may be capable of being drawn. On the other hand there may be quite rational explanations for an order having been made. There may be many situations where a party acting perfectly rationally, for reasons of his or her own, is prepared to make a more substantial allowance to the other spouse than would normally be the case. Indeed, there may be some cases where a party will voluntarily concede the whole of the matrimonial property to the spouse (emphasis added).

8. The asset pool of the parties was modest. The ultimate resolution of the property dispute between the parties was favourable to the wife. However, there is no evidence adduced by the husband that would take this matter outside of those circumstances contemplated by the Full Court in Gebert (supra).

9. Counsel for the husband further contends that in the absence of evidence that the Court had satisfied itself in making the Consent Orders that they were just and equitable having regard to the various provisions of s 79 of the Act then orders which are unjust and inequitable must represent a miscarriage of justice, it being “a departure from the established rules of judicial procedure”.

10. The Orders made by the Federal Magistrate by consent, in the exercise of his power to make orders in chambers, are presumed to be a proper exercise of his judicial power to do so.

11. There is clear authority deriving from cases of the Full Court of the Family Court, adopting the approach taken in the United Kingdom, that the legal effect of a consent order derives from the court order itself, not from the parties’ agreement.

12. In Smith & Smith (1984) FLC 91-152, their Honours of the Full Court held at 79,164:

    Where a Court is asked to make consent orders under sec. 79 of the [Act], it is not required to examine the terms of the agreement made by the parties and to be satisfied that its provisions as to financial matters are proper … Courts will usually permit parties to make their own agreements.

    And:

    Where parties consent to an order, particularly when legally represented, they are to be taken as having given full and proper consideration to all the matters which lead up to the request to the Court to make an order by consent. That fact alone should, therefore, in the vast majority of cases, be sufficient to satisfy the Court that the order sought is just and equitable.

    Their Honours went on to say at 79,166:

    … To allow parties to resile from such agreements at a later stage would introduce considerable uncertainty into an area in which certainty is the best protection a Court can give to litigants…

1. Their Honours of the Full Court in Suiker & Suiker (1993) FLC 92-436 at 80,471 said “(t)he consent to the order is itself part of the judicial process on which the Court places reliance.”

2. The husband has adduced no evidence in support of this contention that in making the Consent Orders the then Federal Magistrate failed to turn his mind to whether the Orders were just and equitable having regard to the provisions of s 79 of the Act. Accordingly, this contention is rejected. In any event, if such a circumstance was the case, the remedy lies not in s 79A but otherwise.

The Section 79A(1)(b) Challenge

1. This section provides that if the Court is satisfied that circumstances have arisen since the order have made it impracticable for the whole or part of an order to be carried out then the Court may, in its discretion, vary the order or set the order aside if it considers it appropriate make another order under s 79 in substitution for that order.

2. The husband’s challenge is that it is his contention that the fund of $30,000 set aside pursuant to the Consent Orders and to be disbursed as provided for in Order 19 for the 2011/2012 financial year income tax liabilities for the husband trading as I Firm, the service entity, the wife, the unit trust and the parties’ self-managed superannuation fund will be insufficient to meet those liabilities. As a consequence, the husband contends that the Order is impracticable in the terms contemplated by this section.

3. The husband’s evidence is that his 2011 income tax liability was paid from the proceeds of sale of the home as was the 2011 income tax liability for the service entity.

4. The husband adduces no evidence other than evidence as to his 2012 income tax liability of $25,635.85 as to any other outstanding income tax liability of the other entities or the wife.

5. His evidence is clear that the funds presently retained are adequate to pay his outstanding income tax liability. There is no evidence before the Court to support any contention for relief under this provision.

6. Nevertheless, in the event that additional taxation liabilities accrue in excess of the retained sum, the available capital sum would be applied pro rata in payment of those liabilities so as to exhaust the fund.

Conclusion

1. The Court is mindful that the power for summary dismissal is a discretionary one that is rarely and sparingly used. However, by reason of the matters referred to above, the Court is satisfied that the primary application of the husband has no reasonable likelihood of success.

2. This is not a circumstance where the husband has a weak case or one that is unlikely to succeed. There is one where there is a complete absence of evidence to support the husband’s contention as to his entitlement to seek relief under s 79A of the Act.

3. Accordingly, the Court will order that the husband’s application for relief under s 79 A be dismissed.

I certify that the preceding ninety-three (93) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Foster delivered on 10 December 2013.

Legal Associate:      

Date:  10 December 2013