Kallen & Alvin & Anor
[2014] FamCAFC 107
•20 June 2014
FAMILY COURT OF AUSTRALIA
| KALLEN & ALVIN AND ANOR | [2014] FamCAFC 107 |
| FAMILY LAW – APPLICATION IN AN APPEAL – Application for reinstatement of appeal pursuant to r 22.44 of the Family Law Rules 2004 - Where directions made that the appeal books be filed by a due date – Where the directions noted that the appeal would be deemed abandoned if the wife failed to file the appeal books within the time limit – Where the appeal was deemed abandoned by operation of r 22.21 after the wife failed to file the appeal books – Where the wife’s solicitor professed ignorance of the Family Law Rules – Where the husband submitted that the abandonment of the appeal was intentional – Where a detailed consideration of the merits of the appeal is not required – Where prejudice to the respondent is limited – Where the circumstances are such that a costs order would be of value – Application allowed. |
| Family Law Act 1975 (Cth) Family Law Rules 2004 |
| Bemert & Swallow (2010) FLC 93-441 Gallo & Dawson (1990) 93 ALR 479 Jackamarra v Krakouer (1998) 195 CLR 516 |
| APPLICANT: | Ms Kallen |
| RESPONDENT: | Mr Alvin |
| SECOND RESPONDENT: | Mr DD (as Trustee for the DD Unit Trust trading as B Law Firm) |
| FILE NUMBER: | BRC | 11120 | of | 2009 |
| APPEAL NUMBER: | NA | 55 | of | 2013 |
| DATE DELIVERED: | 20 June 2014 |
| PLACE DELIVERED: | Brisbane |
| PLACE HEARD: | Brisbane |
| JUDGMENT OF: | May J |
| HEARING DATE: | 1 April 2014 |
| LOWER COURT JURISDICTION: | Family Court of Australia |
| LOWER COURT JUDGMENT DATE: | 30 August 2013 |
| LOWER COURT MNC: | [2013] FamCA 648 |
REPRESENTATION
| COUNSEL FOR THE APPELLANT: | Ms Anderson |
| SOLICITOR FOR THE APPELLANT: | Johnsons Solicitors & Attorneys |
| COUNSEL FOR THE RESPONDENT: | Mr Hackett |
| SOLICITOR FOR THE RESPONDENT: | Michelle Porcheron Lawyers |
| SOLICITOR FOR THE SECOND RESPONDENT: | B Law Firm |
Orders
The application to reinstate appeal NA55 of 2013 be allowed.
The time for filing the appeal books as provided in paragraph 3 of the directions made 11 November 2013 be extended to 18 July 2014.
The directions made on 11 November 2013 in paragraphs 5 to 8 be discharged.
A further directions hearing in relation to paragraph 2 of the application filed 28 February 2014 being for a stay of the hearing of the appeal and any other necessary directions be fixed by the Appeals Registrar after the filing of the appeal books.
The applicant’s solicitors pay the costs of the respondent and the second respondents to this application, failing agreement, to be assessed.
The costs of the respondent and the second respondent in relation to appeal NA55 of 2013 otherwise be reserved to the Full Court hearing the appeal.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Kallen & Alvin has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT BRISBANE |
Appeal Number: NA 55 of 2013
File Number: BRC 11120 of 2009
| Ms Kallen |
Appellant
And
| Mr Alvin |
Respondent
And
Mr DD (as Trustee for the DD Unit Trust trading as B Law Firm)
Second Respondent
REASONS FOR JUDGMENT
On 26 September 2013 Ms Kallen (“the wife”) filed an appeal from property settlement orders made by Forrest J on 30 August 2013. Those orders provided in summary that:
·The wife pay to Mr Alvin (“the husband”) the sum of $708,971.49;
·From those monies, the husband pay to the M Superannuation Fund the sum of $14,000, and Mr DD (“the second respondent”) the sum of $55,380.55;
·The husband transfer to the wife his interest in and shall resign as director and secretary of N Pty Ltd;
·The wife indemnify the husband in relation to any liabilities and release the husband from the loan facilities held in the name of N Pty Ltd;
·The wife cause to transfer the benefit of a certain loan agreement relating to the sum of $165,681.00 and assign a debt of $20,000 to the husband;
·The wife transfer to the husband all her interest in a residential property at Suburb G;
·The husband refinance the security registered over the Suburb G property and release the wife from an unlimited personal guarantee in that security;
·The husband indemnify the wife and N Pty Ltd in relation to all liabilities of R Pty Ltd;
·The wife resign as director and secretary of J Pty Ltd;
·The husband indemnify the wife in relation to all liabilities of J Pty Ltd;
·The wife transfer to the husband her interest in and shall resign from any office held by her in Alvin Pty Ltd;
·The husband cause Alvin Pty Ltd as trustee for the Alvin Family Trust to transfer to the wife 100 shares in N Pty Ltd owned by the trust;
·The husband indemnify the wife in relation to all liabilities of Alvin Pty Ltd;
·The husband resign as trustee of the M Superannuation Fund;
·The M Superannuation Fund pay to the husband a certain sum representative of his member entitlement in that fund;
·The husband transfer to the wife certain investments in plantations and cattle; and
·The parties forgive certain loans between the entities that they control.
The wife filed a notice of appeal against those orders on 26 September 2013. The grounds of appeal were as follows:
1. In failing to deduct the estimated capitals gains tax and realisation costs for the properties known as [Building O] from the value of those properties or in the alternative in failing to make an adjustment pursuant to section 75(2)(o) in the wife’s favour by reason of the Order, the primary Judge misapplied the principles enunciated in Rosati & Rosati (1998) FLC 92-804 and thereby fell into error.
2. The determination of the ‘notional percentage division of the pool” in the proportion 77.5% by the wife and 27.5% by the husband was plainly wrong and manifestly unjust to the wife and accordingly the exercise of discretion has miscarried.
On 11 November 2013 the Regional Appeals Registrar made orders for the preparation of the appeal, including that the appeal books be filed by 4.00pm on 7 February 2014. Other directions relevant to this application are repeated below:
4.That pursuant to Rule 22.21 the appeal will be taken to be abandoned if the appellant fails to file the appeal books by the due date.
…
8.That the appeal be listed for hearing in the next available Brisbane Full Court sittings.
The wife has not filed the appeal books.
This is an application filed 28 February 2014 pursuant to r 22.44 of the Family Law Rules 2004 (“the Rules”) for reinstatement of the appeal consequent on the conceded failure of the solicitors to file the appeal books within the prescribed time.
Having not filed the appeal books, the wife on 24 February 2014 filed an application pursuant to s 79A of the Family Law Act 1975 (Cth). In that application the wife seeks the following relief:
A.That there be a finding that there has been a miscarriage of justice and the Orders of Justice Forrest dated 30 August 2013 be set aside pursuant to section 79A(a) in that those Orders do not reflect the reasons for judgment of Justice Forrest dated 26 July 2013.
B.In the alternative to paragraph A, that there be a finding that circumstances have arisen since the Orders of Justice Forrest dated 30 August 2013 which make it impracticable for the Orders to to [sic] be carried out and the Order be threfore [sic] set aside pursuant to section 79A(b).
Should that application be successful the wife seeks that a range of orders be substituted for those of Forrest J but of note, include that the sum the wife is to pay the husband remains the same as the order, that is $708,971.49.
It is intended that the trial judge, Forrest J, hear that application. The wife asks that should the appeal be reinstated, the hearing of the appeal be stayed pending the outcome of the s 79A application.
The husband opposes the reinstatement and filed an application on 13 March 2014 seeking costs of the abandoned appeal.
The second respondent, the former solicitors for the husband, Mr DD, asks in an application filed 14 March 2014, that the wife pay the solicitors costs of two appeals, this appeal – NA55 of 2013 and another appeal NA67 of 2013 being the wife’s appeal against the refusal of the trial judge to stay the property settlement orders.
As part of refusing to allow the appeal about the stay the orders, but giving the hearing of the appeal expedition, the Full Court determined on 20 December 2013 that there would be no order as to costs for the second respondent in relation to appeal NA67 of 2013. Thus that issue has been determined. It is asked that in the event the wife is granted an order reinstating the appeal, the wife pay the second respondent’s costs of and incidental to:
a.Those thrown away by abandonment of the Appeal, including but not limited to the Directions Hearing before Registrar Kane on 11th November, 2013; and
b.The costs of an incidental to the Application to reinstate the Appeal.
procedural history
Forrest J delivered the reasons for judgment in relation to the parties’ applications for property settlement on 26 July 2013. It was a complicated matter. The judge directed that the parties provide by 14 August 2013 an agreed minute of order “to be made in accordance with the determination set out in these reasons for judgment published this day”. The matter was to be mentioned on 16 August 2013 for the purpose of the orders being made finally.
In the hearing of this application submissions were made on behalf of the wife in relation to events which took place at the trial and prior to the final orders being made.
The solicitors for the wife filed an affidavit on 28 February 2014 in support of the application that the appeal be reinstated, one of the many annexures is the transcript of 16 August 2013. Counsel who appeared for the wife on that occasion asked for an adjournment to obtain advice from an accountant. In addition, submissions were made to Forrest J in relation to the parties liabilities and whether capital gains tax might be payable as a result of the orders. The matter was adjourned to 26 August 2013. The transcript of that occasion is also annexed to the solicitor’s affidavit.
On 26 August 2013 there remained a number of issues not agreed, to be decided by the judge. One was the time to be allowed for the wife to pay the husband the sum of $708,971.49. It was submitted on her behalf that property would need to be sold to make the payment.
The second issue raised was the imposition of capital gains tax arising from the sale of those properties. The judge, no doubt correctly, pointed out that there was no evidence before him at the trial in relation to potential capital gains tax. This it seems was, at least in part, because the wife’s case at trial was that she should not pay the husband any sum.
The question of capital gains tax is ground 1 in the appeal.
The second ground is that there was an error in the discretion exercised by the judge and the wife should have received a greater percentage of the property.
On 26 August 2013, the judge asked for reassurance that apart from the two issues, being the time for the capital payment and the imposition of capital gains tax, the proposed orders settled by counsel although not by consent, were in accordance with his reasons. It seems that he was so assured.
The wife filed her appeal from the property orders on 26 September 2013. The judge refused to stay the orders and the wife appealed from that refusal. As mentioned earlier, on 27 November 2013 the Full Court (May, Strickland & Ainslie-Wallace JJ) heard appeal NA67 of 2013 (“the stay appeal”) in relation to Forrest J’s refusal to stay the property orders made on 30 August 2013.
On 20 December 2013 reasons for judgment were delivered refusing the appeal. The Full Court made the following orders in dismissing the stay appeal:
·The application to expedite the hearing of the appeal be allowed.
·The appellant wife pay the husband’s costs of the appeal and of the application in an appeal, to be assessed failing agreement.
·There be no order as to the costs of the intervener.
Repeated below is part of the reasons explaining the position of the second respondent, called the intervener at trial.
6.It is relevant to note that included in the trial judge’s orders made on 30 August 2013 was provision for Mr [DD] (intervener in the first instance and now in the appeal proceedings) to be paid the sum of $55,380.55 (plus interest) in full and final settlement of the indebtedness of the husband to that firm. That debt arose by virtue of unpaid legal fees incurred by the husband prior to the trial, and was the subject of a judgment against the husband in the Magistrates Court at [S] By 29 October 2013 the amount of the debt had risen to $67,358.70.
7.The orders made on 24 October 2013 dismissing the wife’s application for a stay also provided that the order was made, “upon the undertaking of Mr [DD], solicitor, that he will abide by any order of the Full Court of this Honourable Court on the wife’s appeal filed on 26 September 2013”.
As mentioned at the commencement of these reasons, on 11 November 2013 the Appeals Registrar made directions.
It appears to be accepted that after the directions were made the solicitors for the wife made no contact with the solicitor for the respondents asking, for example, for an extension of time.
The appeal books were to be filed on or before 4.00pm on 7 February 2014.
It is also not controversial that at 3.24pm on 7 February 2014 the wife’s solicitors corresponded by email with the Court, copied to the other solicitors as follows:
We refer to the above matter and note that we act on behalf [of] Ms. [Kallen].
We advise that our client is in the process of making application pursuant to section 79A of the Family Law Act 1975 in respect of original proceedings to this appeal being matter number BRC11120/2009.
The outcome of the section 79A application may very well change the scope of the Appeal and thereby the contents of the Appeal Books.
In the circumstances, the Applicant seeks to have this matter listed for further alternate directions extending the time frames set out in the Order of Registrar Kane dated 11 November 2013.
The Respondents have already been served with a copy of our client’s draft Application. Following discussions with Counsel, there may be some amendments to the Orders being sought, but we anticipate we will be in a position to file the Applicant [sic] next Monday or Tuesday. We will forward a copy of the Application to be filed as soon as it is finally settle [sic] by Counsel.
A copy of this letter is being forwarded to the Respondents in this matter.
At 3.52 pm on 7 February 2014 the second respondent wrote to the solicitor for the applicant as follows:
I note that it appears that your client does not intend to comply with the Order setting the deadline under Rule 22.21 FLR, to file the Appeal Books.
In the writer’s view, the Appeal Books should be filed today and any further material can be the subject of a consideration if and when the same is brought into existence.
As of this afternoon, the Appeal will be deemed abandoned unless the Books are filed.
Your client has not raised any issue in relation to non-filing or extension until 3.24pm on 7th February, 2014, which appears to be about an hour before the Registry closes, despite knowing of the Orders and deadline since November, 2013.
At 4:52 pm on 7 February the solicitor for the applicant replied “[o]ur client is not abandoning the appeal. If required our client will make an application to the court under R 1.14 of the Family Law Rules”.
Application for reinstatement
The basis for the application is contained in the affidavits of the solicitor for the appellant wife filed 28 February 2014 and 27 March 2014.
Mr Johnson, the wife’s current solicitor, explains that there has been some delay in obtaining the file from the appellant’s previous solicitors. In addition, there has been correspondence with another firm who act as the professional indemnity insurer for the appellant’s previous solicitors.
There is no explanation in the affidavits for failing to file the appeal books as the directions required, other than not having the file available and wishing to further consider the prospects of success of an appeal. During submissions, it was conceded by counsel for the wife that the absence of a file was not the impediment to the preparation of the appeal books as the Appeals Registrar offered to make available the court file containing all the necessary documents.
It became apparent during submissions by counsel for the wife, who was quite candid, that the failure to comply with the direction was the solicitors own professed ignorance of the Rules. It was also submitted that this failure was not deliberate.
Even if that be correct, it is of some concern that there is no explanation for the absence of an application seeking an extension of time to comply with the directions prior to the appeal being deemed abandoned or even immediately afterwards. Again, it is said that this was due to the solicitor’s ignorance.
In the written submissions on behalf of the appellant, in support of the application, in paragraph 1.3 and also in paragraph 3 of the affidavit sworn by Mr Johnson it is said that he was “not familiar with the operation of Rule 22 of the Family Court Rules” and that had he been aware of the rule he “would have taken steps to preserve his clients rights before the Appeal was deemed abandoned”.
The following is a summary of the solicitor’s affidavits as they are relevant to the application for reinstatement:
·The solicitor has spent time considering the merits of the appeal;
·There have been discussions with the client in relation to events leading up to the final orders being made;
·The transcript of the hearings on 16 and 26 August 2013 have been obtained but not the transcript of the proceedings;
·There has been various correspondence with other solicitors in relation to the matter;
·The s 79A application was filed on 24 February 2014 which preparation was time consuming.
It is not explained in the affidavit when the wife will file the appeal books. The application for a stay of the hearing of the appeal is said to be the explanation, on the basis that there is no utility in filing appeal books if as a result of the s 79A application the wife does not pursue the appeal.
Thus it can be seen in this difficult matter that the explanation for the delay is said to be the solicitors ignorance of the Rules, there is no reference to the prospects of success nor the prejudice to the respondent. Not surprisingly, the application was resisted by the other parties.
principles
The central principle is that such applications ought be allowed where to do otherwise may cause a substantial injustice. In Gallo & Dawson (1990) 93 ALR 479 McHugh J said at [480]:
…The grant of an extension of time under this rule is not automatic. The object of the rule is to ensure that those Rules which fix times for doing acts do not become instruments of injustice. The discretion to extend time is given for the sole purpose of enabling the court or justice to do justice between the parties: see Hughes v National Trustees Executors & Agency Co of Australasia Ltd [1978] VR 257 at 262…In order to determine whether the rules will work an injustice, it is necessary to have regard to the history of the proceedings, the conduct of the parties, the nature of the litigation, and the consequences for the parties of the grant or refusal of the application for extension of time…When the application is for an extension of time in which to file an appeal, it is always necessary to consider the prospects of the applicant succeeding in the appeal…As the Judicial Committee of the Privy Council pointed out in Ratnam v Cumarasamy [1965] 1 WLR 8 at 12 ; [1964] 3 All ER 933 at 935:
The rules of court must prima facie be obeyed, and in order to justify a court in extending the time during which some step in procedure requires to be taken there must be some material upon which the court can exercise its discretion.
The principles relevant to a consideration of whether an appeal should be reinstated in the Family Court of Australia were discussed at length in Bemert & Swallow (2010) FLC 93-441 and do not require repeating.
In this matter, the application for reinstatement was particularly resisted on the ground that the delay had not been adequately explained. On the part of the second respondent it was asserted that the delay may have been intentional given the application pursuant to s 79A. Further it is argued that this Court should take into account that the wife has not complied with the orders despite failing in her appeal against the refusal to stay. The second respondent refers to other matters of prejudice.
The submissions of the first respondent are in similar terms. It was also asked that this application not be heard until after the determination of the s 79A application. While that approach has some attraction if reinstatement is to be allowed, the better course is to order that the appeals books be filed. It will be after that step that a better assessment of the merits of the appeal can be made which will allow for a consideration of whether the appeal itself should be delayed until after the s 79A application is heard or possibly an application that the hearing of the appeal be expedited.
conclusions
I intend to allow the application that the appeal be reinstated but not, for present purposes, that the hearing of the appeal be delayed.
The length of the delay is relatively short. The explanation for the delay is made but can hardly be said to be a satisfactory reason. It was submitted that the wife should not be “punished” for her solicitor’s error. Significantly, the error of a legal representative is one of the additional factors identified by Kirby J in Jackamarra v Krakouer (1998) 195 CLR 516 at [66]:
…Several others have from time to time been thought relevant. These include whether the delay was intentional or contumelious; or merely the result of a bona fide mistake or blunder; and whether the delay is that of the litigant or of its lawyers, with which the litigant should not be saddled. It may also be relevant, where the default is that of a party's legal representatives, to take into account any considerations personal to the party which might have affected its ability to safeguard its own interests, for example, by applying pressure to its lawyers. Similarly, the extent to which any such prejudice may be remedied by an appropriate costs order is another consideration that has sometimes been treated as relevant.
| (Footnotes omitted) |
The prospects of success, sometimes described as the question of a fairly arguable case, in the context of similar applications, is difficult to assess. It does seem there may be merit in the arguments associated with capital gains tax. Mr Hackett correctly submitted that the grounds are arguable but that they are weak. It must be appreciated, however, that there is support for the proposition that applications for extensions of time in appeals that have been properly filed, but not appropriately prosecuted, do not require a detailed consideration of the prospects of success of the appeal. See, for example, the comments of Brennan CJ and McHugh J at [7] of Jackamarra v Krakouer:
It is understandable that, where the applicant's right of appeal has gone,
courts should insist, as they do, that the time for appealing will not be extended unless the proposed appeal has some prospects of success.But once an appeal has been lodged, different considerations apply. An appeal, honestly lodged by a suitor within time, "must be investigated and decided in the manner appointed". If the appeal is frivolous, it can be disposed of summarily. If there is gross delay in prosecuting the appeal, it may be dismissed for want of prosecution. If it fails to comply with a particular rule, the rules of court may entitle the respondent to strike it out. But the merits of the appeal are not a relevant consideration where the application concerns an extension of time for taking a step in prosecuting the appeal unless, unusually, the Court can be satisfied that the appeal is so devoid of merit that it would be futile to extend time.
(Footnotes omitted)
Kirby J also considered this difference at [66] of that decision:
I would point out that Palata Investments was concerned with an application for an extension of time for appealing, not for extending the period within which an appeal, already lodged within time, might be entered for hearing. The distinction is important. In the latter case, the scope for review of the merits is necessarily more limited.
(Footnotes omitted)
It is not appropriate to consider the prospects of success of the s 79A application at this time other than to observe that should it be heard and be dismissed the wife would be deprived of any remedy other than an appeal from the s 79A decision. It is contended that there are serious difficulties with the orders being properly performed.
As to prejudice, the obvious is that the respondents who were entitled to conclude that the appeal was at an end now face the prospects of an appeal. As mentioned, there is some distinction between the failure to file a notice of appeal within time as opposed to filing a notice of appeal and failing to file appeal books as directed.
The parties’ circumstances are such that should the appellant fail an order for costs would be of value.
costs
The respondent and second respondent should have their costs of the application. The matters set out in the submissions on behalf of the second respondent in this respect are compelling. The respondent correctly makes the same claim. It was not suggested otherwise by the applicant that such an order should be made. In addition, it was asked that the order for costs be against the solicitor for the applicant.
I certify that the preceding forty-nine (49) paragraphs are a true copy of the reasons for judgment of the Honourable Justice May delivered on 20 June 2014.
Associate:
Date: 20 June 2014
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