K Ltd & Naiman
[2022] FedCFamC1A 24
•23 February 2022
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1) APPELLATE JURISDICTION
K Ltd & Naiman [2022] FedCFamC1A 24
Appeal from: Naiman & Naiman [2021] FedCFamC2F 638 Appeal number(s): NAA 95 of 2021 File number(s): SYC 6945 of 2018 Judgment of: AUSTIN J Date of judgment: 23 February 2022 Catchwords: FAMILY LAW – APPEAL – JURISDICTION – Where the costs of an interim dispute in the Federal Circuit Court of Australia were reserved – Where the primary judge later transferred the proceedings to the Federal Circuit and Family Court of Australia (Division 1) before giving judgment in the reserved dispute – Where the primary judge later ordered costs in the reserved dispute, which orders are the subject of the appeal – Where the appeal proceedings were listed to afford the respondents the opportunity to be heard as to how the appeal could be resisted for absence of jurisdiction – Where it was contended s 138 of the Federal Circuit and Family Court of Australia Act (Cth) may save the appealed order from invalidity – Where the provision does not save defective orders from being set aside on appeal – Where the appealed orders were made in excess of jurisdiction and the appeal must be allowed – Appeal allowed – Costs certificates granted in relation to the appeal. Legislation: Family Law Act 1975 (Cth) Pt VII, s 117
Federal Circuit and Family Court of Australia Act 2021 (Cth) ss 28, 46, 138
Federal Proceedings (Costs) Act 1981 (Cth) ss 6, 9
Federal Court and Federal Circuit and Family Court Regulations 2012 (Cth) reg 4.02
Cases cited: Janssen & Janssen (2015) FLC 93-665; [2015] FamCAFC 168 Number of paragraphs: 15 Date of hearing: 23 February 2022 Place: Sydney (via video link) Counsel for the Appellant: Mr Sansom SC Solicitor for the Appellant: Lander & Rogers Counsel for the First Respondent: Ms Hamilton Solicitor for the First Respondent: Consort Family Law Solicitor for the Second Respondent: Barkus Doolan The Independent Children's Lawyer: Did not participate ORDERS
NAA 95 of 2021
SYC 6945 of 2018FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
DIVISION 1 APPELLATE JURISDICTIONBETWEEN: K LTD AS TRUSTEE FOR THE K TRUST
Appellant
AND: MR NAIMAN
First Respondent
MS NAIMAN
Second Respondent
INDEPENDENT CHILDREN'S LAWYER
ORDER MADE BY:
AUSTIN J
DATE OF ORDER:
23 FEBRUARY 2022
THE COURT ORDERS THAT:
1.The appeal is allowed.
2.The orders made by the Federal Circuit and Family Court of Australia (Division 2) on 2 December 2021 are set aside.
3.The appellant is granted a costs certificate pursuant to s 9 of the Federal Proceedings (Costs) Act 1981 (Cth), being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the appellant in respect of the costs incurred by it in relation to the appeal.
4.
The first respondent is granted a costs certificate pursuant to the provisions of
s 6 of the Federal Proceedings (Costs) Act 1981 (Cth), being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to him in respect of the costs incurred by him in relation to the appeal.
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 K Ltd & Naiman has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
EX TEMPORE
REASONS FOR JUDGMENTAUSTIN J:
The appellant is not a party to the proceedings below, litigated between the two respondent spouses for property settlement under Pt VIII of the Family Law Act 1975 (Cth) (“the Act”).
In May 2020, the first respondent (“the husband”) issued a subpoena requiring the appellant to produce certain documents to the Court. The appellant, which is a corporation controlled by the parents of the second respondent (“the wife”), filed a Notice of Objection to the subpoena, which the primary judge dismissed on 7 October 2020. The parties accepted that decision.
The parties incidentally sought costs orders against one another in respect of the dispute over the subpoena, but that aspect of the dispute was not determined by the primary judge in October 2020. Instead, his Honour ordered the parties to file written submissions as to costs, which procedural orders were attended by another order made in these terms:
6.The question of costs of the interim hearing be reserved for delivery on a date to be fixed.
Nearly 14 months later, on 2 December 2021, the primary judge ordered the appellant to pay the husband’s costs of $25,000 in respect of the dispute over the subpoena (Order 1), ordered the husband to pay the appellant’s costs of NZD $2,600 to comply with the subpoena (Order 2), and ordered the husband to pay the wife’s costs of $660 (Order 3). Reasons for the orders were delivered orally, but were later reduced to writing and published in January 2022.
The appellant appealed from only the first order.
The husband intended resisting the appeal, but the wife filed a Submitting Notice.
The first ground of appeal complains that the primary judge erred by making orders without jurisdiction since, after judgment in the costs dispute was reserved, the proceedings were transferred to the Federal Circuit and Family Court of Australia (Division 1) by the primary judge on 21 September 2021. Accordingly, when the appealed order was made in December 2021, the Federal Circuit and Family Court of Australia (Division 2) was not seized of jurisdiction and so the orders are flawed (Janssen & Janssen (2015) FLC 93-665 at [23]–[38]).
The appeal proceedings were listed to afford the husband the opportunity to explain how the first ground of the appeal could possibly be resisted. The husband could not bring himself to admit it could not be, but he could only conversely submit it was “possible” the appeal may fail on that point.
The husband’s hope in the failure of the appeal was pinned on the provisions of s 138 of the Federal Circuit and Family Court of Australia Act 2021 (Cth) (“the FCFCA Act”), which provides as follows:
Decisions to be final
A judgment or decision of the Federal Circuit and Family Court of Australia (Division 2) is valid and binding until set aside, even if it is given or made in excess of the Court's jurisdiction.
It was contended that, since the FCFCA Act was enacted after the Full Court determined Janssen & Janssen, s 138 therefore “may” now save the appealed orders from invalidity. The submission is rejected. The new statutory provision only saves defective orders made by the Federal Circuit and Family Court of Australia (Division 2) from collateral attack for nullity in other proceedings under the Act within original jurisdiction, but does not save defective orders from being set aside on appeal, since an appeal is the very vehicle by which defective orders are identified and discharged. That is evident from the Explanatory Memorandum to the FCFCA Bill, which provides:
Clause 138 – Decisions to be final
537.Clause 138 provides that a prospective judgment or decision in the FCFC (Division 2) is valid and binding until set aside, even if it is made in excess of the FCFC (Division 2)’s jurisdiction.
538.Under clause 10, the FCFC (Division 2) is a court of record. This is consistent with the Federal Circuit Court’s status as a court of record under section 8 of the Federal Circuit Court Act. The designation of the FCFC (Division 2) as a “court of record” rather than a “superior court of record” (as the FCFC (Division 1) is under clause 9), may lead to orders made by the FCFC (Division 2) being regarded as having the status of orders made by an inferior court, and as such, when made in jurisdictional error, would be void ab initio. In Janssen and Janssen, the Full Court of the Family Court stated that the significance of not designating a Court to be a superior court of record is that “unless [the Act] or another legislative provision provides that an order of that court made in excess of jurisdiction until it is set aside, the order is a nullity”.
539.This may be a particular issue in the context of enforcement of financial orders and obligations in family law and child support proceedings. Clause 138 makes clear that the legislative intention is for prospective orders made by the FCFC (Division 2), even if tainted by jurisdictional error, to not be void ab initio, and instead be valid and binding until set aside.
(Footnote removed)
The appealed order was made in excess of jurisdiction and the appeal must be allowed pursuant to s 46(1) of the FCFCA Act.
The appellant only brought the appeal from Order 1, but for the same reason, Orders 2 and 3 must also be set aside. Although those orders were not appealed, this Court has power to set them aside as the appeal is conducted by way of re-hearing and any patent appealable error must be corrected. Once the primary judge transferred the proceedings to another Court, his Honour divested himself of jurisdiction to entertain and decide the outstanding costs dispute.
Although the appellant sought leave to appeal from only the order adversely affecting it, the grant of leave is unnecessary since the costs order was final; not interlocutory (s 28(1)(b) of the FCFCA Act; reg 4.02(1)(a) of the Federal Court and Federal Circuit and Family Court Regulations 2012 (Cth)).
The appellant sought that, once the appeal was allowed, the underlying costs applications be then determined in the re-exercise of discretion under s 117 of the Act, but that is impossible because there has not yet been any valid exercise of discretion within original jurisdiction. The appeal succeeded because the primary judge made orders when bereft of jurisdiction. If the competing costs applications are still pursued, they must now be re-listed before and heard by a judge of the Federal Circuit and Family Court of Australia (Division 1) exercising original jurisdiction. The discretionary exercise of power under the Act to resolve a cause cannot be exercised for the first time on appeal. Commendably, the appellant conceded that was so when the issue was raised.
The parties sought costs certificates pursuant to the Federal Proceedings (Costs) Act 1981 (Cth), which they should have because the appeal succeeded by reason of an error of law.
I certify that the preceding fifteen (15) numbered paragraphs are a true copy of the ex tempore Reasons for Judgment of the Honourable Justice Austin. Associate:
Dated: 24 February 2022
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