Jess & Jess (No 3)
[2023] FedCFamC1A 2
•10 January 2023
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1) APPELLATE JURISDICTION
Jess & Jess (No 3) [2023] FedCFamC1A 2
Appeal from: Jess & Jess (No 4) [2022] FedCFamC1F 530 Appeal number(s): NAA 178 of 2022 File number(s): MLF 3444 of 2006 Judgment of: ALSTERGREN CJ, ALDRIDGE & AUSTIN JJ Date of judgment: 10 January 2023 Catchwords: FAMILY LAW – APPEAL – LEAVE TO APPEAL – Where the parties’ son and other corporations seek to appeal from orders setting aside property settlement orders made consensually between the parties pursuant to s 79A(1A) of the Family Law Act 1975 (Cth) (“the Act”) – Reasonable apprehension of bias – Whether the primary judge erred in finding that all parties to the proceedings in which the order was made consented – Consideration of relevant matters – Whether the applicants were “other persons interested” within the meaning of s 79A(2) of the Act – Where the applicants should have been regarded as interested persons entitled to be heard – Where no substantial injustice would flow if leave was not to be granted since the applicants will be able to defend substantial proceedings against them – Leave to appeal is refused – Applicant to pay the costs of the first respondent in a fixed sum.
FAMILY LAW – CROSS-APPEAL – LEAVE TO APPEAL – Where the cross-appeal is brought by the trustees of the bankrupt estate of the deceased husband on a conditional basis – Where if leave to appeal was granted, the appeal allowed and the appealed order set aside, then the trustees contend by cross-appeal that the appealed order should be upheld in a varied form by instead finding that the consent orders should be set aside under s 79A(1)(a) in lieu of s79A(1A) – Given that leave to appeal was dismissed, the cross-appeal does not require consideration – Leave to cross-appeal is refused.
Legislation: Family Law Act 1975 (Cth) Pts VIII, VIIIAA, ss 4, 65C, 79, 79A, 106, 106B, 117
Family Law Amendment Act 1983 (Cth)
Federal Circuit and Family Court of Australia Act 2021 (Cth) s 28
Explanatory Memorandum to the Family Law Amendment Bill 1983 (Cth)
Cases cited: Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170; [1981] HCA 39
Argos Pty Ltd v Corbell (2014) 254 CLR 394; [2014] HCA 50
Ascot Investments Pty Ltd v Harper (1981) 148 CLR 337; [1981] HCA 1
Balnaves and Balnaves (1988) FLC 91-952
Cantrell & North and Anor (2020) FLC 93-976; [2020] FamCAFC 175
Concrete Pty Ltd v Parramatta Design & Developments Pty Ltd (2006) 229 CLR 577; [2006] HCA 55
House v The King (1936) 55 CLR 499; [1936] HCA 40
Jess & Jess (2021) FLC 94-055; [2021] FamCAFC 159
Jess v Jess [2022] HCASL 24
Jess & Jess (2014) FLC 93-620; [2014] FamCAFC 227
Lancer & Lancer [2008] FamCAFC 112
Medlow & Medlow (2016) FLC 93-692; [2016] FamCAFC 34
Oastler and Oastler (1993) FLC 92-390
Patching and Patching (1995) FLC 92-585
Re the Will of Gilbert (1946) 46 SR (NSW) 318
Royal Guardian Mortgage Management Pty Ltd v Nguyen (2016) 332 ALR 128; [2016] NSWCA 88
Tooheys Ltd v Minister for Business and Consumer Affairs (1981) 36 ALR 64
Number of paragraphs: 134 Date of hearing: 7 November 2022 Place: Melbourne Counsel for the Applicants: Mr Myers KC with Mr Waller KC and Mr Mereine Solicitor for the Applicants: HWL Ebsworth Lawyers Counsel for the First Respondent: Mr Dickson KC with Ms Matson Solicitor for the First Respondents: Kenna Teasdale Lawyers The Second Respondent: No appearance Counsel for the Intervener: Mr Austin KC with Ms Papaleo Solicitor for the Intervener: Lander & Rogers
Table of Corrections 6 March 2025 In paragraph 126, the words “a refusal of leave” have been inserted after “sufficient to justify”. ORDERS
NAA 178 of 2022
MLF 3444 of 2006FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
DIVISION 1 APPELLATE JURISDICTIONBETWEEN: MR JESS JNR
First Applicant
MR BAN
Second Applicant
GGG PTY LTD (and others named in the Schedule)
Third Applicant
AND: MS JESS
First Respondent
MR J HIS CAPACITY AS THE LEGAL PERSONAL REPRESENTATIVE OF THE LATE MR JESS SNR
Second Respondent
PPP INVESTMENTS PTY LTD (and others named in the Schedule)
Third Respondent
MR K AND MR L AS TRUSTEES OF THE BANKRUPT ESTATE OF MR JESS SNR (INTERVENERS)
Intervener
ORDER MADE BY:
ALSTERGREN CJ, ALDRIDGE & AUSTIN JJ
DATE OF ORDER:
10 JANUARY 2023
THE COURT ORDERS THAT:
1.The application for leave to appeal the orders made on 29 July 2022 is dismissed.
2.The application for leave to cross-appeal the orders made on 29 July 2022 is dismissed.
3.The applicant is to pay the costs of the first respondent fixed in the sum of $39,303.54.
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).
IT IS NOTED that publication of this judgment by this Court under the pseudonym Jess & Jess (No 3) has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
Amended pursuant to r 10.14(b) of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) on 6 March 2025.
ALSTERGREN CJ, ALDRIDGE & AUSTIN JJ:
INTRODUCTION
On 29 July 2022, a judge of the Federal Circuit and Family Court of Australia (Division 1) ordered that property settlement orders made consensually between two spouses by another judge many years before, on 24 September 2009 (“the 2009 orders”), be set aside pursuant to s 79A(1A) of the Family Law Act 1975 (Cth) (“the Act”).
The subject order was made in these terms:
1.Pursuant to s 79A(1A) of the Family Law Act the consent orders made by the Honourable Justice Cronin on 24 September 2009 are set aside.
Subject to the grant of leave, an appeal and a cross-appeal have been taken from that order.
If leave to appeal is refused, or alternatively granted but the appealed order survives the appeal, the way is then clear for another exercise of property settlement discretion under Pt VIII of the Act between the surviving spouse (“the wife”), the legal personal representative of the deceased spouse (“the executor”), and the trustees of the bankrupt estate of the deceased spouse (“the trustees”).
Leave to appeal is sought by the deceased spouse’s adult son (“Mr Jess Jnr”), two other persons and seven corporations (“the applicants”), who jointly, but unsuccessfully, opposed the wife’s application before the primary judge to set aside the 2009 orders. If leave to appeal is granted and the appeal is allowed then, subject to the fate of the cross-appeal, the underlying proceedings are at an end as the 2009 orders will stand.
Leave to cross-appeal is sought by the trustees. They supported the wife’s application before the primary judge to set aside the 2009 orders, albeit on different grounds. If leave to cross-appeal is granted and the cross-appeal is allowed, then the appealed order setting aside the 2009 orders will prevail in a varied form, by instead stating the source of statutory power to set aside the 2009 orders to be s 79A(1)(a) in lieu of s 79A(1A) of the Act. Before the primary judge, the wife sought relief under either of those provisions in the alternative, but preferentially the latter, whereas the trustees supported her application pursuant to the former. The appealed order was intentionally made by the primary judge pursuant to the latter, as the wife wanted.
In these proceedings, the wife opposed the appeal, and the anterior grant of leave to pursue it, but was sanguine about the grant of leave for and the prospects of the cross-appeal.
The executor consented to the wife’s application before the primary judge, but did not actively participate in the appeal. The executor informed the appeal judicial registrar on 20 September 2022 that he would appear at the hearing but not make submissions, which is what he did.
For the reasons which follow, both applications for leave to appeal will be dismissed.
BACKGROUND
After the wife and the deceased separated many years ago, the deceased and Mr Jess Jnr entered into a deed concerning the proprietorship of certain assets. Amongst other things, it provided that Mr Jess Jnr was the beneficial owner of the 103 ordinary units and one Class D unit in the Jess Retail Unit Trust (“JRUT”) which were registered in the name of the deceased husband. The trustee was obliged to amend the register of unitholders to record Mr Jess Jnr as the holder instead of the deceased husband.
The deed purported to have been executed on 28 February 2002 (“the trust deed”).
Much later, in proceedings between the spouses in the Family Court of Australia (as the Court was then known) for financial relief under Pt VIII of the Act, on 15 November 2019, another judge found and declared this:
2.I declare that the Deed of Declaration of Trust dated 28 February 2002 was not executed on the date that it bears.
…
The trust deed was made to look as though it had been executed before the marital separation of the wife and the deceased, but it was executed afterwards.
An application for leave to appeal from that declaration was dismissed (Jess & Jess (2021) FLC 94-055) and the High Court later dismissed an application for special leave to appeal from the Full Court decision (Jess & Jess [2022] HCASL 24).
There was a live issue before the primary judge during the hearing in June 2022 about whether or not the trust deed was found by the first judge to have been a fraudulent attempt to portray the deceased’s divestiture of assets so as to try and put them beyond the reach of the wife in property settlement proceedings between the spouses under Pt VIII of the Act, because that issue was not settled by the express terms of the unsuccessfully appealed declaration made in November 2019. However, in the earlier appeal, the Full Court was satisfied a finding of fraud was made by the first judge (Jess & Jess (2021) FLC 94-055 at [73]–[79], [84] and [143]).
Financial proceedings between the wife and the deceased were first commenced in 2006. Relevantly for present purposes, the wife and the deceased consensually entered into the 2009 orders to resolve the financial cause under Pt VIII of the Act, with the wife then accepting (because she was unable to prove otherwise) that the trust deed was valid and binding and so Mr Jess Jnr owned assets which were formerly owned by the deceased.
Running in parallel with the litigation before the Family Court of Australia was litigation before the Supreme Court of Victoria, commenced by Mr Jess Jnr in 2007, seeking declaratory relief against both spouses concerning the validity of the trust deed and his ownership of assets the subject of the trust deed. On 20 September 2009, just four days before the 2009 orders were made by the Family Court of Australia, the Supreme Court proceedings were settled by deed (“the settlement deed”) (Wife’s affidavit filed on 1 April 2022, Annexure “MJ 1”), within which Mr Jess Jnr, the wife and the deceased all mutually acknowledged Mr Jess Jnr’s beneficial ownership of the assets the subject of the trust deed including the units in the JRUT. Days later, upon that premise, the 2009 orders were made between the wife and the deceased.
Four years later, in September 2013, the wife re-applied to the Family Court of Australia seeking relief from the 2009 orders pursuant to s 79A(1)(a) of the Act.
On the strength of the declaration made in November 2019 about the trust deed, following the validation of the declaration on appeal in August 2021, the wife filed an Application in a Proceeding in April 2022 seeking orders to set aside the 2009 orders.
The wife sought the determination of that discrete issue on an interlocutory basis, to smooth the way for a fresh exercise of property settlement discretion in a subsequent hearing. The application was entertained by the primary judge at the hearing in June 2022, despite the applicants’ contention that the s 79A dispute ought not be bifurcated and should be heard as a single indivisible issue at final trial in conjunction with her allied application for fresh property settlement orders under Pt VIII of the Act.
By the time of the hearing before the primary judge, the bilateral premise of the wife’s amended interlocutory application was: first, the 2009 orders could be set aside under s 79A(1A) of the Act because she, the executor and the trustees consented to that course, which was all that was required; and secondly, the 2009 orders had been procured by the deceased’s fraud, resulting in a miscarriage of justice – namely, the deprivation of her claim upon a greater pool of property than was thought to be available for division between the spouses when the orders were made – and so relief was also available under s 79A(1)(a) of the Act (Wife’s Amended Application in a Proceeding filed on 8 June 2022).
The primary judge deliberately made the appealed order on the former basis (at [157(a)], [159]–[160] and [164]), but observed an “arguable case” had been made out on the latter basis (at [157(f)], [157(h)] and [165]–[176]).
LEGAL CONSTRUCT
There is no better place to start than with the statutory provisions which were central to the primary judge’s decision.
Subsections 79A(1)(a) and 79A(1A) of the Act provide as follows:
79A Setting aside of orders altering property interests
(1)Where, on application by a person affected by an order made by a court under section 79 in property settlement proceedings, the court is satisfied that:
(a)there has been a miscarriage of justice by reason of fraud, duress, suppression of evidence (including failure to disclose relevant information), the giving of false evidence or any other circumstance; or
…
…
(1A)A court may, on application by a person affected by an order made by a court under section 79 in property settlement proceedings, and with the consent of all the parties to the proceedings in which the order was made, vary the order or set the order aside and, if it considers appropriate, make another order under section 79 in substitution for the order so set aside.
It can immediately be seen that the entitlement to seek orders under each subsection extends beyond the parties to the marriage and, indeed, the parties to the proceedings, to any person affected by the order made under s 79 of the Act. An obvious example is a creditor whose ability to recover a debt from one of the parties to a marriage has been adversely affected by a transfer of property made under the s 79 orders. See, for example Cantrell & North and Anor (2020) FLC 93-976 and the cases referred to therein.
As we shall explain more fully shortly, it would be an odd outcome if a person who was entitled to seek orders under these subsections, because they were a person affected by the s 79 order, was not entitled to be heard on an application under the same subsection brought by someone else.
The exercise of the discretion to vary or to set aside the s 79 orders under s 79A(1) is enlivened when the court is satisfied that one of the matters set out in ss 79A(1)(a)–(e) has been established. On the other hand, the discretion provided for by s 79A(1A) arise simply when all of the parties to the proceedings consent to the order being set aside.
The latter subsection was enacted by the Family Law Amendment Act 1983 (Cth). It was part of a suite of amendments to s 79A which were designed to widen its formerly narrow scope. According to cl 37 of the Explanatory Memorandum to the Family Law Amendment Bill 1983 (Cth), the purpose of s 79A was to enable s 79 orders to be varied or set aside “where all the parties to the section 79 proceedings consent”.
Section 79A(2) applies to both subsections and provides:
79A Setting aside of orders altering property interests
…
(2)In the exercise of its powers under subsection (1), (1A) or (1C), a court shall have regard to the interests of, and shall make any order proper for the protection of, a bona fide purchaser or other person interested.
…
Thus, in considering whether to vary or set aside orders made under s 79, the court is to have regard to the interest of bona fide purchasers and other interested persons and take that into account when considering what order is to be made. That is separate to determining whether an order should be made for the protection of that person. This is so because of the way the section is worded – the latter obligation is in addition to the first.
Further, the subsection refers to two separate categories – the phrases “bona fide purchaser” and “person interested” are to be read disjunctively (Balnaves and Balnaves (1988) FLC 91-952 at 76,887–76,888).
If the court is to have regard to the interests of a bona fide purchaser or other person interested, it follows that they must be heard in order to put that interest before the court. They do not need to be seeking an order for their protection before they can be heard.
LEAVE TO APPEAL
The parties were unanimous in the stance that the applicants required leave to appeal. We agree. The orders did not finally deal with any rights of the applicants.
The discretion to grant leave to appeal is given by s 28 of the Federal Circuit and Family Court of Australia Act 2021 (Cth) and is entirely unfettered. Again, it is accepted by the parties that that discretion is usually exercised by having regard to established principles.
The test posed in Jess & Jess (2014) FLC 93-620 and Medlow & Medlow (2016) FLC 93-692 for leave is conjunctive and the court must be satisfied that both of the following aspects of it are met before leave is granted. The limbs are:
·Whether the decision at first instance is attended by sufficient doubt to warrant it being reconsidered by the Full Court and
·Whether substantial injustice would result if leave were refused, supposing the decision to be wrong.
In Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170, Gibbs CJ, Aickin, Wilson and Brennan JJ said at 177:
Nor is there any serious dispute between the parties that appellate courts exercise particular caution in reviewing decisions pertaining to practice and procedure. Counsel for Brown urged that specific cumulative bars operate to guide appellate courts in the discharge of that task. Not only must there be error of principle, but the decision appealed from must work a substantial injustice to one of the parties. The opposing view is that such criteria are to be expressed disjunctively. Cases can be cited in support of both views: for example, on the one hand, Niemann v. Electronic Industries Ltd.; on the other hand, De Mestre v. A. D. Hunter Pty. Ltd. For ourselves, we believe it to be unnecessary and indeed unwise to lay down rigid and exhaustive criteria. The circumstances of different cases are infinitely various. We would merely repeat, with approval, the oft-cited statement of Sir Frederick Jordan in In re the Will of F. B. Gilbert (dec.):
“... I am of opinion that, ... there is a material difference between an exercise of discretion on a point of practice or procedure and an exercise of discretion which determines substantive rights. In the former class of case, if a tight rein were not kept upon interference with the orders of Judges of first instance, the result would be disastrous to the proper administration of justice. The disposal of cases could be delayed interminably, and costs heaped up indefinitely, if a litigant with a long purse or a litigious disposition could, at will, in effect transfer all exercises of discretion in interlocutory applications from a Judge in Chambers to a Court of Appeal.”
See also, Brambles Holdings Ltd. v. Trade Practices Commission; Dougherty v. Chandler. It is safe to say that the question of injustice flowing from the order appealed from will generally be a relevant and necessary consideration.
(Emphasis added) (Footnotes omitted)
The applicants submitted that the substantial injustice in this matter included:
·The applicants were denied the right to be heard on the question of whether the orders of 24 September 2009 should be set aside;
·The applicants have not been provided with a fully-particularised statement of claim setting out all the matters on which the wife relies to support her claims under s 79A(1)(a) and s 79A(1A);
·The applicants “have been denied a process” in which all the wife’s claims under s 79A(1)(a) and s 79A(1A) are dealt with in “one indivisible proceeding” (Applicants’ Summary of Argument filed on 21 October 2022, paragraph 3.3); and
·The applicants have been denied the opportunity to be heard as to whether another order should be made under s 79 of the Act in substitution for the order set aside “in circumstances where the primary judge’s conduct has given rise to a reasonable apprehension of bias” (Applicants’ Summary of Argument filed on 21 October 2022, paragraph 3.4).
These are matters raised by the proposed grounds of appeal to which we shall now turn.
There is, however, a preliminary observation to be made. Proceedings under s 79 are “property settlement proceedings” in which “the interests of the parties to the marriage in the property” may be altered. Such proceedings are defined by s 4 of the Act to mean proceedings with respect to:
(a)the property of the parties or either of them; or
(b)the vested bankruptcy property in relation to a bankrupt party to the marriage.
Thus, subject to Pt VIIIAA of the Act, which has not been invoked in this matter, the court cannot alter the interests in property of third parties (Ascot Investments Pty Ltd v Harper (1981) 148 CLR 337).
The wife has brought and foreshadowed claims made under general equitable principles and s 106B of the Act to set aside the settlement deed and the trust deed. Clearly, the applicants will be necessary parties to that application. That is where their interests lie and not in the appropriate division of property between the parties to the marriage or their executor or trustee in bankruptcy. That is so whether the deeds are set aside or not.
THE APPEAL
Did the conduct of the primary judge and statements made in his Honour’s reasons give rise to a reasonable apprehension of bias by reason of prejudgment? (Ground 5)
This ground must be dealt with first because if it succeeds the occasion does not arise to consider the others (Concrete Pty Ltd v Parramatta Design & Developments Pty Ltd (2006) 229 CLR 577 at [117]; Royal Guardian Mortgage Management Pty Ltd v Nguyen (2016) 332 ALR 128 at [9]).
The applicants rely on the outcome of the application under s 79A(1A) and also on a number of comments made in the reasons at [157(g)], [167], [169], [172], [174(c)] and [177] which could be seen as comments relevant to the outcome of the proceedings under s 79A(1)(a) and possibly the proceedings to set aside the settlement deed and trust deed.
The submission continued:
57.Accordingly, a fair-minded lay observer might reasonably apprehend that the primary judge might not bring an impartial mind to the rehearing of the applications under sections 79A(1)(a) and/or 79A(1A) of the Act such that the matter should be remitted for hearing before a different judge.
(Applicants’ Summary of Argument filed on 21 October 2022, paragraph 57).
The complaint is therefore not directed to any finding, or order the subject of this appeal, but rather directed at future matters. The grounds therefore, as articulated, are not competent because they do not seek to impugn the orders under appeal.
Further, although the primary judge set aside the orders made under s 79 and considered that some form of order should replace it, his Honour did not express a view as to what that order should be or, importantly so far as the applicants are concerned, the outcome of the application to set aside the settlement deed or trust deed.
This ground has not been established.
Did the primary judge err in finding that “all parties to the proceeding which was compromised agree to vary or set aside that earlier order”? (Ground 1)
It is obvious from the section itself that the discretion given by s 79A(1A) is enlivened only when all of the parties to the proceedings in which the order was made consent.
The applicants submitted that as they are now parties to the proceedings, having been joined by the wife, their consent was required to enliven the discretion to set aside the orders.
The task is to identify the proceedings in which the order was made. For the applicants, the answer is simple. They submit that there is but one set of proceedings bearing the same file number which include the original s 79 proceedings in which the consent orders were made as well as the present proceedings seeking to set those orders aside. Thus, the consent of all the parties, including those newly joined, such as the applicants, is required.
We do not agree.
We consider that the determination of what constitutes a proceedings is governed by identification of the separate causes of action on which one or more of the parties move and not by the administrative allocation of a file number to such causes of action. This gives recognition to the reality that many varying applications can be made in relation to a marriage. For example, matters come before the court involving both parenting and property. The former, but not the latter, could involve third parties who might be a grandparent or “other person concerned with the care, welfare or development of the child”’ (s 65C(c) of the Act). In such a case, in our view, there are two proceedings before the court – one property, one parenting. Resolution of the property matter would be between the parties to the marriage or other parties necessary to it and not, on the above example, a grandparent or other interested person. It could not sensibly be suggested that their consent would be required on any application of s 79A(1A).
This is confirmed by looking at the definition of “proceedings” contained in s 4 which is:
proceedings means a proceeding in a court, whether between parties or not, and includes cross‑proceedings or an incidental proceeding in the course of or in connexion with a proceeding.
Whilst that does not directly assist, the various definitions of “matrimonial cause”, “child-related proceedings”, “divorce or validity of marriage proceedings”, “Part VIIIAB proceedings”, “Part VIIIA proceedings”, “Part VIIIB proceedings”, “Part VIII proceedings”, “property settlement or spousal maintenance proceedings”, “property settlement proceedings”, “section 69GA proceedings” and “section 106A proceedings” contained within s 4 support the view that it is the nature and substance of the matter that defines the content of the proceedings. Each is defined as a separate proceeding.
Looked at in this way, in this matter there are at least two proceedings contained within the present file number. The first is the proceedings between the deceased husband and wife for orders under s 79 which were resolved by the 24 September 2009 property orders. The second is the proceedings under s 79A and s 106B taken by the wife against the present respondents. These are too significantly different in nature and substance to be the same proceedings.
Such an approach is consistent with the use of the words “was made” which direct attention to the structure and nature of the proceedings at the time the consent order was made.
It follows that the primary judge correctly found that the discretion under s 79A(1A) was enlivened by the consent of the parties to the proceedings at the time the order was made (which his Honour described as being “parties to the orders” (at [63])).
This is not to, in effect, insert the words “at that time” into s 79A(1A), as the applicants submitted. It is merely a reflection of the finding that the proceedings then on foot are not the same proceedings as those currently underway.
There is no merit in this ground.
Were the applicants “other persons interested” within the meaning of s 79A(2) of the Act? (Ground 2)
The applicants contend that they are other persons interested for the purposes of s 79A(2) and therefore were entitled to be heard on the issue of the s 79 orders being set aside under s 79A(1A). The primary judge held that they were not.
His Honour said:
161.There can be no dispute that the represented third parties will be affected by an order setting aside the s 79 consent order when a subsequent application is made contesting the parties’ interests in property, whether legal or equitable, in accordance with principles adumbrated in Stanford v Stanford. However, to my way of thinking, to say that a party may hereafter be “affected” by orders made in a s 79 application is quite different to saying that a party who was not a party to the litigation in which the consent orders were made, nor was that party heard on those consent orders, nor does that party propound orders for its protection on this application, is an “other person interested” in the making of the order under s 79A(1A) setting aside the 24 September 2009 consent orders. I find difficult to accept the submission advanced on behalf of the represented third parties that an interested person is a person who is interested in the application made and is not a person who is interested in the order in relation to which the application is made. In that context no differentiation is made about the nature of the asserted interest. At one end of the spectrum might be the existence of a financial interest. Along the spectrum might be some contingent property interest such as an equitable mortgagee. At the other end of the spectrum might be a person having nothing more than an intellectual desire to better acquaint himself or herself with the application being made, that is to say, a curiosity. In this application the represented third parties did not articulate the precise nature of the interest on which they sought to rely. Nor did they articulate the orders they sought for their protection. I confess to encountering very considerable difficulty in conceiving of factual circumstances in which the mere phenomenon of some abstract interest held by a person in the s 79A application could properly found the statutory interest to which s 79A(2) is directed. The analogy drawn in arguendo about the person sitting at the back of the court on the hearing of an injunction application and who asserts some interest in being heard is probably explicable on the basis that his or her “interest” is tied to the orders about to be made and in respect of which the judge must hear that person lest the judge erroneously makes an injunction impinging upon the rights of an innocent third party. That is very far from the circumstances of this case.
162.To my mind the better view is that the “other person interested” where those words appear in s 79A(2) is confined to a person, not being a bona fide purchaser, with an interest in the order to which s 79A is directed, namely, the earlier order under s 79, that being here the Cronin J orders made 24 September 2009. Were it otherwise, any person asserting an interest in the consequence of the setting aside order being made, could meddle in the orderly consideration of the question of whether to set aside the earlier order. To my mind, that would serve to invite illegitimate participation by busybodies in the determination of the single question under s 79A(1A) whether all parties to the proceeding which was compromised agree to vary or set aside that earlier order. Here, all parties do. The represented third parties were not parties to that earlier order.
(Footnotes omitted)
The applicants submitted that they were persons interested in the application under
s 79A(1A) because:
·The orders of 24 September 2009 were part of a wider settlement which was contained in the settlement deed involving the applicants;
·The settlement deed was, in effect, conditional on the 24 September 2009 orders being made and complied with;
·Upon compliance, the wife discontinued her Supreme Court proceedings against the applicants and released them from further claims;
·Thus, the 24 September 2009 orders were but a part of an overall settlement of dispute which included the applicants;
·The applicants would be exposed to a claim by the wife in equity and under s 106B if the 24 September 2009 orders were set aside which they would have to defend.
We consider that there is force in these points, but particularly in the last.
The essential question, however, is the extent of the meaning of “other person interested” within s 79A(2). The primary judge effectively restricted such people to those seeking an order for their protection or persons interested in the order itself as opposed, for example, to being interested in subsequent proceedings that might flow from the orders being set aside.
As the parties correctly identified, the question is to be answered by looking at the proper construction of s 79A(2) itself and the statutory context in which it sits.
Nonetheless, some assistance may be gleaned from cases that have considered the phrase “interested in” or its near twins “aggrieved by” and “affected by”.
In Tooheys Ltd v Minister for Business and Consumer Affairs (1981) 36 ALR 64, Ellicott J said that a “person aggrieved” did not mean any member of the public. His Honour said at 79:
I am satisfied, however, that it at least covers a person who can show a grievance which will be suffered as a result of the decision complained of beyond that which he or she has as an ordinary member of the public. In many cases that grievance will be shown because the decision directly affects his or her existing or future legal rights. In some cases, however, the effect may be less direct. It may affect him or her in the conduct of a business or may, as I think is the case here, affect his or her rights against third parties.
(Citation omitted)
Ellicott J was thus of the view that a person could be aggrieved by a decision even if it did not affect his or her legal rights but where the grievance arose beyond that of the general public.
Such an approach eliminates the prospect of interfering busybodies, which concerned the primary judge.
In Argos Pty Ltd v Corbell (2014) 254 CLR 394, Hayne and Bell JJ said:
61.The focus of the inquiry required by the words is upon the connection between the decision and interests of the person who claims to be aggrieved. The interests that may be adversely affected by a decision may take any of a variety of forms. They include, but are not confined to, legal rights, privileges, permissions or interests. And the central notion conveyed by the words is that the person claiming to be aggrieved can show that the decision will have an effect on his or her interests which is different from (beyond (84)) its effect on the public at large. Here, the effect was said to be economic.
62.It is inevitable that there will be cases where deciding whether a person’s interests are adversely affected by a decision will require judgments of fact and degree. …
Justice Gageler said:
76.To draw a conclusion that a person meets the statutory description of “a person whose interests are adversely affected” by a decision requires: first, identification of a decision of the designated kind; secondly, examination of the legal or practical operation of that decision; and, thirdly, the making of a judgment that the legal or practical operation of the decision has been to result in an adverse effect on identified interests of the person. The nature of the requisite interests, and the nature and degree of the requisite adverse effect, depend on the statutory context in which the description appears.
We now turn to the relevant statutory context which we have already discussed briefly.
Section 79A provides a set of limited circumstances in which the court may set aside or vary orders made under s 79. The right to apply for such an order is not limited to the parties to the marriage or the proceedings but extends to a person affected by an order made by a court under s 79.
That phrase does not appear in s 79A(2) which instead refers to a “bona fide purchaser” or “other person interested”. However, as the terms of that subsection make clear it is not concerned with who has a right to be heard on an application under s 79A(1A). Rather, the subsection requires the court, when hearing such an application, to have regard to the interests of bona fide purchasers or other interested persons. It is to do so to the extent of making an order proper for their protection.
Again, obviously enough, persons interested to the degree that they are seeking an order for their protection or likely to seek such an order would be entitled to be heard on an application under s 79A(1A). However, as we have said, persons interested go beyond those who are seeking orders for their protection. Included in those are categories of persons whose interests fall short of a legal right but where that person is affected to a greater degree than a member of the general public.
We return to a creditor, as an example. The s 79 orders may have obliged a party to seek an asset and use the proceeds to discharge a debt. The setting aside of those orders would adversely affect the creditor notwithstanding it acquired no rights under the orders.
Here the applicants and the wife were involved in a settlement of disputes that went beyond the settlement of a property dispute between deceased husband and wife. Mr Jess Jnr had sued the wife and the deceased in the Supreme Court of Victoria. There, proceedings were resolved by the settlement deed which also resolved the property proceedings and required the making of the consent order for it to continue to operate.
The recitals to the settlement deed referred to the proceedings in the Supreme Court of Victoria in which Mr Jess Jnr sought a declaration that on or about 28 February 2002, the deceased declared that he held his interests in the JRUT in trust for Mr Jess Jnr. The wife appeared in those proceedings and opposed the order sought (Wife’s affidavit filed on 1 April 2022, Annexure “MJ 1”). The recitals added that the parties to the deed wished to resolve all matters in dispute between them, of which the Supreme Court proceedings were but one (Wife’s affidavit filed on 1 April 2022, Annexure “MJ 1”).
The deceased agreed to pay the wife $17 million and transfer some properties with consent orders being made in the Family Court proceedings to that effect (cll 4, 5, 7 and 8). The deceased acknowledged that Mr Jess Jnr was the beneficial owner of the interests in the JRUT (cl 13(a)). Within 14 days of the payment of the sum just described, consent orders were to be made in the Supreme Court discontinuing them. The wife released Mr Jess Jnr from any claim she had against him or may have in the future, based on any fact or circumstance then existing (cl 28).
Many other provisions dealt with other aspects of the financial relations between the parties to the deed.
In short, the agreement resolved all the outstanding issues between all of the parties to the settlement deed which required, as essential elements, the payment referred to above and the making of the consent orders (cl 16).
The settlement deed resolved any dispute as to the ownership of the units in the JRUT held by Mr Jess Jnr. The effect was that the units were not the property of the deceased and not available for division between the spouses in the family law proceedings. The settlement deed and the orders under s 79 also finally resolved the property proceedings and forestalled the possibility of any steps being taken by the wife to have the deceased husband found to be the owner of the units in those proceedings.
The applicants have an interest in maintaining that overall settlement, including the consent orders. Therefore, contrary to the view of the primary judge, we are of the view that the applicants have an interest in whatever orders were or are made between the wife, the executor and the trustees under s 79 of the Act.
The setting aside of the consent orders invites a reconsideration of property settlement orders. Whilst the applicants are not directly involved in those proceedings, the wife has indicated that in them she will seek orders under general principles and under s 106B setting aside the settlement deed and trust deed. If successful, the interests transferred by them would become subject to division between the wife and the estate. This is the very thing they had endeavoured to avoid.
In short, the practical effect of the orders under appeal is that the applicants will now be the subject of proceedings to which they were previously immune. That, if nothing else, will involve them in considerable difficulty and expense. That risk of being exposed to such an action, in our view, gave the applicants a sufficient interest in the proceedings so as to entitle them to be heard.
That is so even though the legal rights of the applicants have not been altered by the orders made.
It follows therefore, that the primary judge erred by not regarding the applicants as interested persons entitled to be heard.
That is not the end of the matter, and in order for leave to appeal to be granted, the applicants must show that a substantial injustice would flow if leave was not to be granted.
The applicants submitted that they lost the opportunity to make the following submissions opposing the s 79 orders being set aside:
·There should not be a separate hearing to determine whether the consent orders should be set aside;
·The consent orders should not be set aside because:
·At the time the settlement deed was entered into, the wife was well aware of the fact that the trust deed may not have been entered into on the date it bore but decided to settle anyway, thus giving up her rights to seek to challenge the trust deed and
·The settlement deed and the consent orders were agreed to by all on the basis that the units in the JRUT were ascribed a value which was taken into account when agreeing on the total sum to be paid to the wife as part of the settlement sum.
The applicants’ contention is that they are entitled to put those submissions at the one hearing which would involve whether the consent orders should be set aside, whether the settlement deed and trust deed should be set aside and the property the subject of them returned to the deceased husband’s estate and the appropriate new s 79A orders made.
The applicants submit that the above submissions in opposition apply at each step. However, of course, the applicants would be entitled to have these submissions considered on only the one occasion. Once resolved, they could not be rerun. Even on interlocutory applications, the courts frown upon attempts to re-litigate decided issues.
The outcome of the primary judge’s orders is that the applicants will now face the proceedings just described except for the first step. Consideration will now be given to setting aside the settlement deed and trust deed and to what, if any, orders should be made under s 79. As explained earlier, it is the second step in which they are particularly interested because that step is the one that would see orders made that might adversely affect them.
At this stage, no orders have been made that have altered or affected the applicants’ rights in any way. Mr Jess Jnr remains the holder of the units in the JRUT. All that has happened is that the door has been opened to challenge that position.
It follows that as no orders have yet been made that affect the applicants’ rights, that such consideration is yet to come and that all the applicants’ submissions opposing that course are yet to be made and resolved. It is difficult to see how a substantial injustice arises from the error of the primary judge.
The applicants will be able to pursue all these arguments to defend the substantial proceedings against them – the application to set aside the settlement deed and the s 106B application.
Lest it be thought that the applicants have suffered a substantial injustice by not being able to deploy these arguments to avoid the consent orders being set aside, there are two matters to bear in mind. The first is that to avoid the orders being set aside, the applicants would need to satisfy the court that there was no point in doing so, because the application to set aside the settlement deed must fail, which would involve an examination of the merits of the wife’s claim. The second is that the applicants’ preferred approach, which was to have all matters heard at the same time, would have the same effect.
Thus, whatever way it is looked at, the applicants face a hearing on the substantive issues that affect them.
In short, they are no worse off as a result of the primary judge’s orders.
We are of the view that no substantial injustice would result if leave was not granted on this point.
Did the primary judge err by determining the application under s 79A(1A) in advance of and separate from determining whether it was appropriate to make another order in substitution for the order set aside? (Ground 3)
There are two aspects to the applicants’ submissions under this ground.
The first is that the authorities provide that, generally speaking, there should only be one hearing. In Patching and Patching (1995) FLC 92-585 (“Patching”) at 81,797 the Court said, referring to an application under s 79A(1)(a):
Here this involved four steps, namely whether there had been a suppression of evidence or “other circumstance” as alleged by the husband, whether that amounted to a “miscarriage of justice”, whether the Court, in its discretion, should “vary the order or set the order aside'” and whether it should make another order under s. 79 …
…
In Oastler and Oastler (1993) FLC 92-390 the Full Court emphasized that it is generally preferable to deal with all of the steps in the one hearing. The reasons for that are obvious, namely that even if the Court concludes that there have been circumstances which amount to a miscarriage of justice it must then consider whether in all the circumstances it should exercise its discretion to vary or set aside the orders and/or make a new s. 79 order. In exercising that discretion it will have regard to, inter alia, the degree and nature of the miscarriage in question, any delay, alterations in the parties’ positions in the meantime, and the extent to which, if at all, it is now appropriate to vary the original orders: [McIntyre and McIntyre (1994) FLC 92-468], provides an example of this. The last of those circumstances was important in this case for reasons which will subsequently become apparent. Of course there will be cases where it is convenient to divide the procedure into several hearings; for example, where there is a discrete issue under the first and/or second step and the property circumstances of the parties are complex.
That case was a graphic example of the difficulties that can arise from splitting the hearings. At a preliminary hearing the trial judge set aside the s 79 orders because of non-disclosure of a property. However, due to changes in property values, the s 79 orders that were subsequently made were nearly the same as the original orders. Thus the Court said the original orders should only be set aside where it was likely that “materially different” orders would be made (at 81,802). That was a completely different case to the present.
Two difficulties arise for the applicants. The first is the use of the words “generally speaking” in the authorities and the express recognition in Patching that there can properly be several hearings. Clearly, there is no absolute rule and a trial judge has a discretion to exercise.
That was made plain in Lancer & Lancer [2008] FamCAFC 112 (“Lancer”), where the Court discussed the matters to be taken into account in the following manner:
18.In addressing the question of whether or not to bifurcate the hearing of a section 79A application, a judge is likely to examine the degree of connection between the ground and the other questions which might need to be addressed, namely whether there has been a miscarriage of justice in the circumstances and whether the order should be varied or set aside, if so, to what extent it ought be varied or what order ought be made, if any, in lieu. That connection or degree of connection will vary from case to case.
19.Where, for example, an applicant relies upon a diminished capacity to appreciate rights and entitlements and the effect of the property order consented to, it may well be difficult to determine whether, even if established, that constitutes a miscarriage of justice and even more difficult to determine whether another order ought be made, without a full examination of the financial affairs of the parties and all other matters relevant to alteration of property interests.
20.On the other hand, the establishment of a ground involving suppression of evidence in relation to matters that arguably would have had a significant impact on valuation is highly likely to constitute a miscarriage of justice, whatever the current financial circumstances of the parties and whatever the history of contributions. The case before her Honour was much more of that latter character and was, on the spectrum of these matters one where real benefits might be seen to flow from bifurcation of hearing in relation to discrete issues.
The applicants did not articulate any error of the kind identified in House v The King (1936) 55 CLR 499. Rather, they submitted that a different decision should have been made. That does not identify an error.
Secondly, the only substantial change in the assets to be divided in this matter will be if the application to set aside the deeds succeeds. However, whether it does or does not, the applicants have no interest in what s 79 orders should then be made. That will be a matter for the wife and the estate. It is likely to involve difficult and expensive issues of valuation of the units in the JRUT.
That is a factor to be taken into account. That of course, may also be an argument in favour of splitting the proceedings, so that the application to set aside the consent orders and the applications to set aside the settlement deed and trust deed are to be dealt with separately from a consideration of what property orders should be made if the deeds were set aside. That way, all of the remaining issues involving the applicants would be heard at the one time.
Again the fact of the possibility or even desirability of a different order being made does not establish error.
We are not satisfied that the primary judge erred as contended.
The second aspect is that the applicants submit that there is but one discretion to be exercised under s 79A, whereas the primary judge’s orders give rise to the exercise of two discretions – whether the orders should be set aside and whether a further order should be made in substitution.
There is some force in this point.
As the Court explained in Lancer, there are two aspects to a hearing under s 79A(1)(a). The first is a fact finding exercise or threshold test (at [34]) as to whether one of the circumstances set out in the section has been established. The Court held, as did the Court in Patching and Oastler and Oastler (1993) FLC 92-390, that there could be separate hearings on that issue. That, of course, is not the exercise of a discretion to set aside or vary the orders, which is the second aspect of the enquiry.
The position under s 79A(1A) is somewhat different. The only prerequisite to the exercise of discretion under this section is that the parties to the proceedings consent. The exercise of the discretion is then at large. The court does not need to make findings such as a miscarriage of justice in order to make orders under the section.
However, as already explained, none of the applicants’ rights have been affected by the primary judge’s orders. Even if there was only one discretion to be exercised, the applicants would face the substantive hearing to set aside. The setting aside of the orders would not affect that position. Therefore, once again, even if error has been demonstrated, the applicants have not identified any substantial injustice.
Finally, the division of proceedings into separate hearings is very much a procedural one. As the well-established authorities make plain, a tight rein should be kept on appeals from such decisions so that the courts and the parties focus on determination of the substantive issues and not generate appeals on procedural matters on which minds can rightly differ. We refer again to Re the Will of Gilbert (1946) 46 SR (NSW) 318. In the absence of a clear injustice that would flow from a procedural order, courts should be reluctant to grant leave to appeal against them. In this matter this, of itself, is sufficient to refuse leave.
There will be no grant of leave under this ground.
Did the primary judge fail to take into account relevant matters? (Ground 4)
Under this ground the applicants raised issues under s 79A(1)(a) and s 79A(1A). As the relevant decision was based only under the latter section, we do not need to deal with the submissions under the first.
The applicants submitted that the primary judge failed to take into account the following evidence:
·The evidence of Mr Jess Jnr;
·The evidence of Mr CC; and
·Notes of a telephone conversation on 27 August 2009.
The applicants added that the above evidence demonstrates that the wife knew that the units in the JRUT were actually taken into account when determining the sums payable under the settlement deed and consent orders and that there was no unforeseen change of circumstances. This was, it was said, an issue that ought to have gone to trial.
The first and, possibly the second matter, would be relevant to issues such as whether there was a miscarriage of justice under s 79A(1)(a) but, as we have said, the exercise of jurisdiction under s 79A(1A) is not conditional upon such findings and, subject to all the parties to the relevant proceedings consenting, is unfettered. We have not been persuaded that his Honour took these matters into account in making the orders under the latter section. His Honour’s comments that touch on these matters clearly appear in the discussion of the application of s 79A(1)(a).
The applicants’ did not refer to any authority that suggests that a finding that there has been an unforeseen change in circumstances is a prerequisite to the exercise of the discretion under s 79A(1A). We are quite unable to see why the broad discretion provided by that section should be limited as suggested. It would impose an entirely unwarranted gloss upon the subsection.
Similarly to previous grounds, no substantial injustice arises under this ground. The applicants can rely on the above evidence in response to the substantive proceedings against them. They are no worse off other than having to defend the claims against them, but that was something that would occur however the proceedings are structured.
Should the primary judge have required the wife to file a statement of claim? (Ground 6)
The applicants submitted that a statement of claim was required because the wife ought to have “articulated, with the requisite clarity and precision, her case pursuant to section 79A(1)(a), including the ground(s) for the Court to exercise its discretion to set aside the 2009 Orders, and the new order that should be made in place of the 2009 Order” (Applicants’ Summary of Argument filed on 21 October 2022, paragraph 60).
There is no need to take this further because the appealed order was not made under s 79A(1)(a).
The applicants also submitted that the wife “did not articulate the ground(s) for the Court to exercise its discretion [under section 79A(1A)] to set aside the 2009 Order and the new order that should be made in place of the 2009 Order” (Applicants’ Summary of Argument filed on 21 October 2022, paragraph 61).
A fatal flaw in this ground is the lack of any ground of appeal directed to the issue of whether the primary judge identified the basis on which his Honour relied to set aside the 2009 orders. In that case, we do not see any relevance of a complaint that prior to that finding being made the wife should have articulated the grounds in writing.
In any event, the complaint is once again directed to s 79A(1)(a), which was not the provision under which the orders were made.
Further, it is difficult to identify a matter more quintessentially of practice and procedure than the formal articulation of claim in a statement of claim or points of claim. A tight rein needs to be kept upon proposed appeals of this nature. This consideration alone is sufficient to justify a refusal of leave.
It follows that leave to appeal will be refused.
The applicants also submitted that the deceased husband did not consent to the consent orders being set aside and that his estate cannot now do so because s 79A(1C) does not apply to proceedings under s 79A but only s 79. This was not the subject of a ground of appeal and seemingly was not raised with the primary judge. It is entirely misconceived, in any event, because that subsection commences with the words “before proceedings under this section in relation to an order made under section 79” (emphasis added). It clearly applies to s 79A.
In any event, the deceased certainly did consent to the orders being set aside when he was still alive, as he proposed relief to that effect in the Response to an Initiating Application he filed on 16 December 2013, which filed document is legitimately available to us as part of the Court record.
THE CROSS-APPEAL
The trustees curiously seek leave to cross-appeal only on a conditional basis. If the applicants are granted leave to appeal, their appeal is allowed and the appealed order is to be set aside, then and only then do the trustees contend by the cross-appeal that the appealed order should be upheld in a varied form – by instead finding that the consent orders should be set aside under s 79A(1)(a) in lieu of s 79A(1A).
As the application for leave to appeal will be dismissed, the cross-appeal does not require further consideration and the application for leave will be dismissed.
COSTS
The appeal and the trustee’s cross-appeal have been wholly unsuccessful (s 117(2A)(e) and s 117(2A)(g) of the Act).
Accordingly, an order will be made for the applicant to pay the first respondent’s costs fixed in the sum of $39,303.54.
The application for leave to cross-appeal has also been dismissed. Therefore it is appropriate that there be no further order for costs.
I certify that the preceding one hundred and thirty-four (134) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Chief Justice Alstergren and Justices Aldridge & Austin. Associate:
Dated: 10 January 2023
SCHEDULE OF PARTIES
MLF 3444 of 2006
NAA 178 of 2022Applicants
Fourth Applicant:
EEE PTY LTD
Fifth Applicant:
HHH PTY LTD
Sixth Applicant:
X CORPORATION PTY LTD
Seventh Applicant:
X-1 PROPERTIES PTY LTD
Eighth Applicant:
SSS PTY LTD AS TRUSTEE OF THE TTT INVESTMENT TRUST
Ninth Applicant:
VVV PTY LTD
Tenth Applicant:
MS C JESS
Respondents
Fourth Respondent:
AAA PTY LTD AS TRUSTEE OF THE BBB TRUST
Fifth Respondent:
CCC PTY LTD AS TRUSTEE OF THE DDD UNIT TRUST
Sixth Respondent:
JJJ PTY LTD
Seventh Respondent:
LLL PTY LTD
Eighth Respondent:
MMM PTY LTD
Ninth Respondent:
X HOLDINGS PTY LTD
Tenth Respondent:
X INTERNATIONAL PTY LTD
Eleventh Respondent:
X PROPERTIES PTY LTD
Twelfth Respondent:
X-1 PTY LTD
Thirteenth Respondent:
X PTY LTD AS TRUSTEE OF THE JESS RETAIL UNIT TRUST
Fourteenth Respondent:
NNN PTY LTD
Fifteenth Respondent:
OOO PTY LTD
Sixteenth Respondent:
QQQ PTY LTD AS TRUSTEE OF THE RRR FAMILY TRUST
Seventeenth Respondent:
Y (NZ) LIMITED
Eighteenth Respondent:
Y (WA) PTY LTD
Nineteenth Respondent:
Y INTERNATIONAL PTY LTD
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