Korsky and Bright & Anor (No 2)

[2007] FamCA 1512

FAMILY COURT OF AUSTRALIA

KORSKY & BRIGHT AND ANOR (NO. 2) [2007] FamCA 1512

FAMILY LAW - APPEAL – From decision of Family Court Judge –– PROPERTY – Summary dismissal of an application filed by the husband which sought that orders altering property interests be set aside because of an alleged miscarriage of justice – s 79A(1) of the Family Law Act 1975 (Cth) – Significant assets of the marriage – Division of property determined by Guest J when the parties were over eighty years of age – Those property orders were appealed by the husband and that appeal was dismissed – Whether there was any evidence upon which at trial a miscarriage of justice could be found and the property settlement orders set aside or varied – Argued that Brown J mistakenly found that a challenge to the justice and equity of an order only lay by way of appeal – Consideration of the concepts of a miscarriage of justice and an unjust and inequitable order and whether the concepts are synonymous – The husband’s s 79A(1) application depended on “further evidence” than that which was before Guest J – That “further evidence” as it was placed before Brown J is that which is central to this appeal – Failure by the trial Judge to identify the real issue raised by the husband’s application, that being his mistaken belief in relation to a claim to a property in Prague – Principles of summary dismissal were identified but not applied to the “real case” of the husband under s 79A(1) of the Family Law Act 1975 (Cth)

Family Law Act 1975 ss 79A(1); 117(2A)

Barker & Barker (2007) 36 Fam LR 650
Lindon v The Commonwealth of Australia (No 2) (1996) 70 ALJR 541; (1996) 136 ALR 251
Lowe & Harrington (1997) FLC 92-747; (1997) 21 Fam LR 583
M & M [2003] FamCA 1304

APPELLANT: MR KORSKY SENIOR

FIRST RESPONDENT: MS BRIGHT

SECOND RESPONDENT: MR KORSKY JUNIOR

FILE NUMBER: MLF 7714 of 2001

APPEAL NUMBER: SA 39 of 2007

DATE DELIVERED: 20 December 2007

PLACE DELIVERED: Brisbane

PLACE HEARD: Melbourne

JUDGMENT OF: WARNICK, MAY AND BOLAND JJ

HEARING DATE: 14 September 2007

LOWER COURT JURISDICTION: Family Court of Australia

LOWER COURT JUDGMENT DATE: 23 March 2007

LOWER COURT MNC: [2007] FamCA 245

REPRESENTATION

COUNSEL FOR THE APPELLANT: Mr North SC

SOLICITOR FOR THE APPELLANT: C Kyriacou & Associates

COUNSEL FOR THE FIRST RESPONDENT: Dr Ingleby

SOLICITOR FOR THE FIRST RESPONDENT: Kenna Teasdale Lawyers

COUNSEL/SOLICITOR FOR THE SECOND RESPONDENT: In person

Orders

1. That the appeal be allowed.

2. That orders 1 and 2 of the orders of Brown J made 23 March 2007 be set aside.

3. (a)      That paragraphs 2, 3 and 4 of the First Respondent’s Form 1A and Form 2A filed 25 October 2006 be dismissed.

   (b)That paragraphs 2, 3 and 4 of the Form 1A and Form 2A relied on by the Second Respondent be dismissed.

   (c)That the respondents pay the husband’s costs of and incidental to the appeal and the application before Brown J, as agreed and in default of agreement, as assessed.

4. That pursuant to Rule 19.50 of the Family Law Rules 2004 this matter reasonably required the attendance of counsel, including senior counsel.

IT IS NOTED IN CONNECTION WITH THESE ORDERS that the judgment of the Full Court delivered this day will for all publication and reporting purposes be referred to as Korsky & Bright and Anor

THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT MELBOURNE

Appeal Number: SA 39 of 2007
File Number: MLF 7714 of 2001

MR KORSKY SENIOR

Appellant

And

MS BRIGHT

First Respondent

And

MR KORSKY JUNIOR

Second Respondent

REASONS FOR JUDGMENT

1. Ostensibly at play in this appeal is the tension between two desirable ends: on the one side, finality in litigation and on the other, the provision of remedies for miscarriages of justice.  The appeal is against the summary dismissal by Brown J of an application by Mr Korsky Senior seeking that orders altering property interests between himself and his late wife, Ms T, be set aside, because of an alleged miscarriage of justice.  In actuality, the appeal turns on whether there was any evidence upon which at trial a miscarriage of justice could be found and the property settlement orders set aside or varied.  If there was not, the tension referred to does not arise.  If there was, the test for summary dismissal was not met.

2. Mr Korsky Senior and Ms T married in Czechoslovakia in 1949.  The following year they migrated to Australia.  Here, they raised two children and acquired significant assets.  However, their marriage broke down and they parted in early 2001.  They litigated over the division of their property, Guest J determining that issue in March 2003.  At the time his Honour delivered judgment, each party was 81 years of age.

3. Critically, with regard to subsequent proceedings, Guest J included in the “asset pool” real property in Prague in the Czech Republic.  Of this property, Brown J in her reasons for the orders under appeal said:

   5.… Guest J. found that the husband’s parents (who died in the mid 1950s) had previously owned the Prague property, which had been confiscated by the Nazis in 1939 and not restored to its rightful owners by the post-war Czechoslovakia communist government.  In 1993, the husband and wife travelled to Czechoslovakia and commenced proceedings for the return of that property to the husband, who later transferred funds to Czechoslovakia for the purpose of regaining possession and title to the property.  At paragraph 45 Guest J. noted that the husband deposed that approximately ten years earlier, original owners of confiscated property or their heirs became entitled to seek the return of their property.

4. As Brown J also recorded, the husband had appealed Guest J’s orders and among other grounds, had challenged the inclusion of the Prague property in the asset pool. The appeal was dismissed. The husband sought special leave to appeal to the High Court of Australia. The High Court refused leave. In late 2005, the husband filed an application and other material seeking to set aside Guest J’s orders, citing s 79A(1) of the Family Law Act 1975 (Cth) (“the Act”) “to rectify the miscarriage of justice”.

5. On 9 January 2006 Ms T, the wife, died.  Subsequently the parties’ children, who were the joint executors of her estate, Ms Bright and Mr Korsky Junior, were substituted for their deceased mother as respondents to the husband’s application.  The order for summary dismissal was made by Brown J on 23 March 2007.  Her Honour also ordered that the husband pay the wife’s costs.  The husband appeals that order as well.

6. As to the primary order and Brown J’s reasons, counsel for the husband, Mr North SC in his written summary said:

   3.Her Honour’s error is to have proceeded on the premise that the only proper avenue for redress for an outcome that is demonstrated not to have been just and equitable in all the circumstances is by way of appeal.

7. We will return to that contention after setting out something of the proceedings before Guest J, and of his Honour’s reasons, for it is in those proceedings that the husband alleges the miscarriage of justice occurred.

8. We will also, before dealing with the arguments on appeal, discuss the reasons of the Full Court for dismissing the husband’s appeal.  While not directly bearing on the question of whether there was any miscarriage of justice in the proceedings before Guest J, those reasons are part of the context in which Brown J dealt with the question of summary dismissal.

The proceedings before Guest J

1. At the hearing before Guest J both parties were legally represented.  Before Brown J, the husband raised no issue about the competence of his representation before Guest J.

2. As to the credibility of the wife, Guest J said:

   26.The oral evidence of the applicant was direct and there was nothing, in my view, that detracted from the force and detail of that which she had to say.  The cross‑examination was broad but failed to demonstrate to the requisite standard of persuasion that her evidence was not acceptable, believable, nor unreasonable.  The applicant, both through her affidavit and oral evidence impressed as a reliable and truthful witness.

3. But as to credibility of the husband, he said:

   76.I found the evidence of the respondent, when given in the witness box, to be of serious concern to me.  He was offered every opportunity to inform the court of his version of the events relating to the facts in issue.  No complaint was made by his counsel that he was not afforded both procedural fairness and regularity.  I was most concerned to hear what he had to say, and without any recourse whatsoever to earlier proceedings in this court and in which he had been involved.  I have listened earnestly and I make my assessment of his evidence and credibility solely upon what he had to say before me and otherwise arising from his Order 30 Affidavit of evidence‑in‑chief. 

   77.In the result, and for good reason, I find he is not a reliable witness.  Where his evidence conflicts in a material way with that of the applicant and those other witnesses upon whom she relies by way of corroboration, I have no hesitation in accepting the evidence of the applicant.  He was evasive.  He was non-responsive and had to be cautioned several times.  I gained the very clear impression that he had a marked propensity to simply say anything that he believed best suited his cause and made up answers as he went along.

4. As to the Prague property, in his reasons, Guest J quoted from the husband’s affidavit, in which he had deposed to forwarding $50,000.00 to the Czech Republic in late 2002 “to assist in having my ownership of the property restored”; and that the funds were provided for the purpose of maintenance and improvement to the property and were to be applied for that purpose, provided its ownership was given back to his family.  Guest J recorded that the husband’s oral evidence was that he expected the value of the Prague property to be something in the vicinity of about $800,000.00.  Guest J said:

   147.Secondly, the ownership of the Prague property.  I do not accept, by any measure, that the respondent has been frank with the court in relation to his dealings with this property.  His abysmal failure to discover any documents at all or call relevant witnesses in respect of it persuades me, in the exercise of my discretion and to the requisite standard of persuasion, that he has an entitlement to and will assume ownership of that property.  He told the applicant, so it was put by her, that it was worth $1 MILL AUS.  In an affidavit deposed by him, (Exhibit “W4” and filed 20 May 2002) at par 13 he described the property as being worth “$1 million”.  That is his sworn testimony.  In his affidavit material he claims it is worth about $800,000 AUS and that is the value, for the purposes of these proceedings, that I propose to ascribe to it.  That too is the approach of the parties.

   148.The respondent’s non-disclosure of any document or documents associated with the court proceedings in Prague is breathtaking and utterly unacceptable and from which it is open for me to infer that he has something to hide.  Given his commercial and financial expertise, it is both fanciful and beyond credulity to suggest he has not retained any correspondence concerning the court proceedings or any of the documents associated therewith.  In my view, he has been less than frank with the court in this regard.  He has demonstrably failed to bring any witness to court, and in circumstances whereby he has the wealth and means to do so, such witnesses would include Mr [V] [sic], his solicitor in Prague, or any other local expert from Czechoslovakia to explain the situation, the court processes and to produce relevant judgments in the proceedings to date.  This case resonates with their absence and silence.

   149.In these circumstances it is open to me, as submitted by Mr St John, to draw appropriate inferences as explained in Jones v Dunkel… .

   …

   151.Furthermore, and persuasively, the respondent when giving evidence before Registrar Wilson on 19 July 2002 was asked “but you're pursuing a claim for a reinstatement of this property to yourself.  Is that right?  His reply was “I'm expecting that the government will transfer the property to me, yes”.  In his affidavit filed on 3 January 2002 he said, par 19:

   “The return of the said property is due soon now pending on the Court of Appeal decision.”

   152.In addition, as I said, on the respondent's evidence he remitted $50,000 to Prague to assist in facilitating the transfer back into his name what is rightfully his and wrongfully confiscated by the communists in about 1948 during those past straitened and morally reprehensible times.  The respondent is a shrewd businessman.  He is meticulously careful with his finances and deals in withdrawals of vast sums of cash in order to achieve a collateral saving of interest.  It is fanciful to suggest that his alleged remission of $50,000 to Prague was undertaken in pious hope or whim.  It would have been a purposeful decision on his part and adds to all the separate indices to which I have referred so as to demonstrate to me that he has something to hide.

   153.Returning to the general principles as explained in Jones v Dunkel (supra), I am satisfied that the respondent's failure to call any witness or to produce any documents whatsoever associated with the proceedings in Prague is because he "fears to do so" and the fear is, that any witness called or documents produced would expose "facts unfavourable" to him.  He has failed to offer any explanation which would make "some other hypothesis a more natural one", than his fear of exposure.  As I have earlier made clear, he is in a financial position to call the relevant witness or witnesses.  He would be aware of what that witness could say or what the contents of a relevant document would reveal.  He is not a litigant in person, but represented by practitioners experienced in the jurisdiction of family law.  Finally, it is painfully obvious that such evidence would be relevant to the fact in issue. 

   154.I have been greatly troubled by the non-disclosure of any documents relating to the Prague proceedings and the manner in which I should treat this property in this application.  The issue of non-disclosure was pressed upon the respondent by Mr St John and not just in respect of these documents, but generally in relation to a whole spectrum of financial documents.  Full and frank disclosure and production of documents lies at the very heart of property proceedings and the discretionary jurisdiction of the Family Court.  (See Briese v Briese [1986] FLC 91-713 per Smithers J affirmed by the Full Court in Oriolo v Oriolo [1985] FLC 91-653).

   155.What is the position if one party fails to fulfil that obligation to make full and frank disclosure?  Should, and as rhetorically posed by the Full Court in Giunti v Giunti supra at p. 75-555, the respondent then be able to rely on the absence of satisfactory evidence to prevent the making of an order against him which justice and equity would require?  I think not.  Or, as the Full Court there said:

   “It would be simple if that were the case to evade the jurisdiction of the court, not by outright refusal, which would attract sanctions, but by obfuscation and evasion.”

   (See also Black v Kellner supra).

   156.I have carefully considered the drawing of an adverse inference in these proceedings and explained in Jones v Dunkel (supra).  In addition to those matters that I have carefully considered, I am quite satisfied that it is both open and proper for me in the exercise of my discretion, and in the particular circumstances of this case, to draw that inference.  By way of analogy, and as the Full Court said in Weir v Weir (supra), when dealing with non-disclosure of financial documents, p. 79-593:

   …

   It seems to us that once it has been established that there has been a deliberate non-disclosure, which follows from his Honour's findings in this case, then the court should not be unduly cautious about making findings in favour of the innocent party.  To do otherwise might be thought to provide a charter for fraud in proceedings of this nature.”

   157.It is those circumstances for the reasons stated I propose to add the value of the Prague property to the pool of assets for distribution.

The Full Court’s judgment of 9 December 2003, on appeal from Guest J

1. After setting out passages of the reasons of Guest J dealing with his findings about credit, the Full Court said:

   14.Counsel on behalf of the husband did not challenge those findings before us.

   The appeal

   15.Mr Hoult, on the husband’s behalf, told us that the appeal was really about the Prague property.  He sought to persuade us that it was not open to the trial Judge to include the Prague property in the pool of assets for the purposes of determining what order should be made in favour of the wife.  In the alternative he sought to have admitted into evidence further material that would throw into doubt the value placed upon the Prague [sic] by the trial Judge.

   …

   19.The thrust of the submissions on behalf of the appellant husband was that, at best, the finding of the trial Judge ought to have been that the husband had no more than an expectancy to acquire the Prague property and that accordingly it should have either been left entirely out of the calculations or brought in at a heavily discounted figure.  The difficulty with that approach is that the unchallenged finding of the trial Judge was that the husband had not disclosed to the Court everything that he knew about the property.  The natural inference to be drawn from the lack of disclosure was that the husband was in possession of material that would not have assisted the proposition that he was trying to put before the Court.

   20.Had the husband established any lingering doubts concerning his ownership of the property then it may well have been appropriate for the trial Judge to make some allowance for the contingencies involved.  Where, however, the husband was found to have been entirely uncooperative in respect of the exercise, in our view it was open to the trial Judge to proceed as he did and draw adverse inferences against the husband.

This appeal

1. Section 79A(1) provides:

   (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

   …

   the court may, in its discretion, 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.

2. As earlier set out, in his summary Mr North SC crystallised  the essential challenge to Brown J’s judgment as:

   3.Her Honour’s error is to have proceeded on the premise that the only proper avenue for redress for an outcome that is demonstrated not to have been just and equitable in all the circumstances is by way of appeal.

3. As we will further discuss, we think this focus on the justice and equity of Guest J’s orders, which was similar to the approach before Brown J, tended to obscure the real issue in the husband’s application and appeal.  The grounds of appeal better identified the issue, those grounds being:

   1.Her Honour erred in determining at [43] that the argument sought to be advanced by the Appellant in reliance upon s79A was an argument that had been before the Full Court in 2003.

   2.Her Honour misapplied the decision of House v King (1936) 55 CLR 499 in that the “facts” referred to in the reasons of Dixon Evatt and McTiernan JJ and cited and emphasised by her Honour were “the facts as appearing on record.

   3.Her Honour erred in failing to accept that the Appellant while proceeding upon an acceptance that no appellable error had been demonstrated in the judgment of Guest J was at liberty to demonstrate a miscarriage of justice having occurred by reason of an “element beyond what appeared on the record” and that it was at least arguable that the evidence relied upon by the Appellant before her Honour was capable of establishing such a miscarriage.

   4.Her Honour erred in determining that the facts upon which the Appellant relied could not establish a miscarriage of justice by reason of any other circumstance.

   5.Her Honour erred in failing to determine that the evidence relied upon by the Appellant, if accepted, established that at the time of trial before Guest J the Appellant did not own a property at […] Prague in the Czech Republic and further had no prospects of owning the same.

1. Returning to the basic point that Mr North SC at least initially sought to make before us, namely Brown J’s alleged view that a challenge to the justice and equity of an order only lay by way of appeal, in the paragraph of his written submissions preceding the one in which he made that point, Mr North SC said:

   2.The error is to be found at paragraphs [44] – [46] of her Honour’s reasons for judgment.

2. We set those paragraphs out below, with some other paragraphs to provide context:

   35.The essential component is a miscarriage of justice.  The question is not whether the order made arises from an inappropriate exercise of the original discretion;  that is a matter for appeal. 

   36.It is well established that the notion of a miscarriage of justice concerns the integrity of the judicial process;  the miscarriage must arise out of that process;  see Clifton  and  Stuart (1991) FLC 92-194, Bigg  v.  Suzi.  In Suiker  and  Suiker (1993) FLC 92-436 at 80,472 the Full Court observed that the expression “judicial process” can refer to a variety of matters and circumstances which had an influence on the outcome of the litigation and that it is neither necessary nor desirable to attempt to define the matters which may amount to a miscarriage of justice by reason of any other circumstance in the relevant sense.

   37.It is also well established that a miscarriage of justice can only occur by reason of a fact or event which occurs before or at the time of the making of the order which is sought to be set aside;  see Bigg  v.  Suzi;  Barker  v.  Barker [2007] FamCA 13. 

   38.To succeed in a s.79A application an applicant in the husband’s position must show that something which occurred prior to or at the time the orders were made resulted in the exercise of judicial power miscarrying. The degree of inappropriateness of the order may be relevant in assessing the degree of miscarriage and the exercise of the s.79A discretion: see McIntyre (1994) FLC 92-468. But events which occur after the order is made cannot provide the foundation for an order to be set aside pursuant to s.79A(1)(a).

   …

   42.Senior counsel for the husband submitted that an essential and express pre-requisite for the exercise of judicial power granted under s.79 is for the Court to have been satisfied that in all the circumstances it is just and equitable to make the order. If the object of s.79 is to obtain a just and equitable determination of the dispute between the parties to the litigation, and if it appears that a just and equitable determination has not been achieved, then the judicial process whereby the power has been exercised will, in all likelihood, have miscarried.

   43.Senior counsel elucidated the point in these terms  (transcript, p.20) :

   Your Honour, it would be open for a court following determining the application under section 79A to reach the conclusion that although no appealable error took place, a judgment has been delivered by a judge of this court intending to divide the property between the parties on a fifty-fifty basis because such a division was the just and equitable outcome between these parties given the length of the marriage found. That included in the assets left with the husband an asset that did not exist and that that happened without appealable error.

   Now, in my submission that of itself is a miscarriage of justice.  I’ll come to whether it is a miscarriage of justice by reason of any other circumstance.  The miscarriage is that where the just outcome was an equal division, the division in fact that took place was $800,000 short of equal in the parcel that came to my client.

   . . .

   . . . But we accept that that all happened without appealable error.  But again that’s irrelevant.  The outcome of the appeal is quite irrelevant to the proceedings under 79A because they’re a different enquiry.  We’re enquiring about whether it arose as a result of a circumstance relating to the judicial process that doesn’t appear in the record.  The circumstance relating to the judicial process that gives rise to this appealable error is that the court was left being entitled to draw an inference that is contrary to the true facts.

   44.In my view there is a flaw in the argument advanced by senior counsel which is fatal to its success, which is that the place in which to make the argument he advanced in this case, summarised in the two preceding paragraphs, was before the Full Court when it considered the husband’s appeal against Guest J’s orders in 2003.

   …

   46.A litigant who contends that final property orders are not, in all the circumstances, just and equitable is entitled to put that case to the Full Court.  It is then for that Court to consider the relevant evidence and submissions, and determine the point.

   …

   49.However elegantly expressed, the complaint adumbrated by senior counsel for the husband is a complaint that the discretion of the trial judge miscarried.  It is a complaint that the outcome of the exercise of the discretion by Guest J. is not fair and equitable.  It is a complaint that, to use his words, “the court was left being entitled to draw an inference that is contrary to established facts”. 

   …

   51.The husband now seeks to re-litigate that point, and challenge that and a handful of other findings of Guest J. relating to assets the husband submitted should have been included in the pool, and the value of another real property.  The other findings should have been challenged (if he sought to challenge them) in the course of the appeal.  He did challenge the inclusion of the Prague property in the pool of relevant assets;  he was unsuccessful in that challenge.  He was also unsuccessful in an attempt to adduce evidence of a December 2002 valuation (which he seeks to rely on in these proceedings) and a ruling in the legal proceedings in Prague.

   …

   58.I am mindful of the caution necessary before depriving a person of access to the Court; only in the clearest of cases should an application be summarily dismissed. However, considering the husband’s s.79A case at its highest (and ignoring inconsistencies in his own evidence and his evidence that his appeal to the High Court (or its equivalent) in Prague is still pending) I am satisfied he is advancing a claim in this Court that is doomed to failure. I am satisfied that the facts on which he relies cannot establish a miscarriage of justice by reason of any other circumstances for the purposes of s.79A. The Court should dismiss the application now, to protect the respondents from the burden of continuing litigation. That will also save the husband from further costs, frustration and disappointment although it is unlikely he will see the outcome as beneficial.

3. In our view, Brown J correctly identified that, while the justice and equity of an order may in some circumstances bear upon the question of whether a miscarriage of justice affected the order, a miscarriage of justice and an unjust and inequitable order are not synonymous concepts.  A miscarriage of justice may have occurred though an order is just and equitable.  An order may be unjust or inequitable, but not because of a miscarriage of justice.

4. Thus, if evidence coming to light subsequent to a trial shows that a fact found at trial was wrong, then that may be a circumstance which establishes a miscarriage of justice at trial. A consequence of the erroneous fact may be that an order was not just and equitable, but it is not that aspect that enlivens s 79A(1).

5. Another situation may arise, in which subsequent developments show that the outcome of a trial has become “unjust and inequitable”. That situation of itself will not normally attract the operation of s 79A(1).

6. In the circumstances of the instant case, there were elements of both the factual situations just postulated.

7. In post-order developments, the legal proceeding in the Czech Republic had met with reversals.  Of itself, that event would not demonstrate a miscarriage of justice in the proceedings before Guest J.  This was especially so in the instant case, because a further legal avenue remained open.

8. But there was another aspect.  As recorded by Brown J, Mr North SC argued that Guest J “…was left being entitled to draw an inference that is contrary to established facts.”  We will return to the submission as it was put to Brown J later.

9. In short, before us Mr North SC contends that Guest J’s finding that the property of the parties included the real estate in Prague, at a value of $800,000, was wrong for one or more of three reasons.

10. Firstly, the husband did not own the property at the time.

11. This point is, in our view, clearly flawed.  Whilst Guest J included in the asset pool “[…] (Near Prague) $800,000” his Honour clearly understood that what the husband had was a claim at law, a chose in action which on the state of the evidence before him Guest J did not discount, but took at full value as if the chose in action was realised.  As apparent from the earlier quotation from its judgment, the Full Court hearing the appeal from Guest J’s orders found no error in what his Honour had done with regard to the Prague property.

12. Secondly, evidence of the results of legal proceedings in the Czech Republic since the trial before Guest J demonstrate that the husband has not (and therefore never had) an enforceable legal right to the Prague property.  Insofar as, since the hearing before Guest J, the husband’s application in the Czech Republic had been heard in 2005 and dismissed, and on appeal from the District Court of Prague to the Court of Appeal in Prague in 2006, also dismissed, these developments do not of themselves show a miscarriage of justice at the time of the hearing before Guest J.  It might well be that as a result, the husband’s chose in action would now be valued quite differently, indeed heavily discounted and the probability be that it will not be able to be converted into real property.  But that does not show that a correct assessment of the value of the chose in action at the time before Guest J, on any material then available, was wrong.

13. Thirdly, and the critical point, Mr North SC argues that evidence has come to light that at the time of trial before Guest J the husband was in error in his belief as to the factual basis of his claim to the Prague property.

14. As is obvious, the husband’s s 79A(1) application depended on “further evidence” from that which was before Guest J. That “further evidence” as it was placed before Brown J is that which is central to this appeal.

15. This differed from the further evidence which the husband had attempted to put before the Full Court on the appeal from the orders of Guest J and which the Full Court rejected.  Of that, Brown J, clearly appreciating the nature of the evidence before the Full Court and its treatment of the application that it receive the evidence, said:

    10.… The Full Court’s judgment makes it clear that in the course of the appeal the husband sought to adduce further evidence, in the form of two documents.  The first was a form of (unsworn) valuation of the Prague property, dated 31 December, 2002, and the second, an order dated 4 March, 2002 made at the District Court at Prague.  As best as the Full Court could interpret, the latter appeared to be a procedural ruling in the midst of litigation relating to the Prague property.  For reasons set out in paragraphs 27 to 45 of its judgment, the Full Court declined to admit either document into evidence.

16. As to the “further evidence” placed before Brown J, in an affidavit relied upon by the husband, he deposed that the application in the Czech Republic had reached the stage where “a final decision on appeal from the District Court of Prague to the Court of Appeal in Prague was not heard until March 2006”, that he believed an appeal had been lodged by Dr [V] on his behalf to ‘the equivalent of the High Court in Prague’ but Dr [V] believed the chances of success to be minimal; and that he never believed that the property would be returned to him and had stated so on several occasions during the trial.

17. Importantly, annexures to the husband’s affidavit included a letter from his solicitor in the Czech Republic, Mr [V].  The letter said:

    Concerning your request of the 30. May 2006 in the matter of the property claims of [Mr Korsky], born [in 1922], domiciled at [Rindwood], Victoria, Australia, we advise the following (I apologize beforehand, that this communication was not prepared in the English language, fearing a belated delivery, I did not have time to have it translated).

    The named made a claim to the Czech Courts for the return of family property – an apartment house, errected [sic] on allotment lot no. [X] together with this allotment – located in the cadastral territory of Vrsovice, urban section Prague 10 and municipality Capital City Prague, Czech Republic.

    This, formerly the property of the parents of Mr[Korsky], was in a judicial process for a debt which was due on the house, transferred by an executive action in the year 1979 to the State of the Czech Republic.

    After the fall of the Communist Regime, I represented Mr. [Korsky] in a claim in a court action for the return of this property, as he was of the opinion, that the takeover by the State was an injustice, which emanated precisely from illegal actions of Communist Justice.

    After a process lasting several years, the claim for the return of the property to Mr [Korsky] was rejected, first by the District Court for Prague 10, dated [August 2005], under the document mark [X]/95.

    We then lodged an appeal to this decision, but the rejection was confirmed by the Court of Appeal, by a decision of The Urban Court in Prague dated the [March] 2006, document mark [X]/2005, and the claim for the return of the matter was therefore also rejected by the Court of Appeal.

    This decision is final from the point of view of Czech Legal Regulations, within the framework of due corrective means.

    Understandably I still made use of the possibility to achieve a change of the mentioned rulings by means of an extraordinary corrective device – an appeal to the Highest Court of the Czech Republic, but I consider the chance of success only as veryminimal [sic].

    The negative decisions of both courts in general agree in their conclusions, that in the case of Mr [Korsky] the takeover of the property by the State occurred in agreement with legal requirements, and therefore is not an injustice for which reparation can be requested after the fall of the Communist Regime.

    The property was not valued within the framework of the stated court proceedings, and I can not provide you with information concerning the present actual value.

    I apologize once more for not providing an English translation, and wish you much success with this matter.

    In Prague dated 26.June 2006

    (emphasis added)

18. In his affidavit sworn 3 October 2006 the husband had also deposed:

    11.That during the trial of these proceedings I believed that the Communist government had illegally confiscated the said property, and although I had lodged an application I had no expectations and never believed that the property would be returned to me and stated so on several occasions during the trial.

    …

    22.The division of assets was made on the mistaken belief that the property in Prague had been illegally confiscated by the Nazis and subsequently by the Czech authorities. … The Prague property did not belong to my parents since 1979 and therefore there was no enheritance [sic] that I could receive.

19. As to the application and evidence before her, Brown J said:

    13.… On 29 September, 2005 the husband filed another form 2 application seeking, among other orders, that :

    The Family Court order of 24/3/03 in proceedings MLF7714/01 ought to be changed to rectify the miscarriage of justice and husband’s loss of $800,000 following changes of the order of 24/3/03 are requested.

    14.… In support of that application he filed an affidavit sworn by him on 28 September, 2005; in the first paragraph he deposed to making the affidavit “as my evidence in support of my application under section 79A1 of the Family Law Act 1975”. In the affidavit he deposed to a valuation of the Prague property in December 2002 (being one of the documents the Full Court declined to grant leave to adduce), alleged fraud on the part of the wife’s solicitor and counsel in the proceedings before Guest J., and asserted that it was impracticable for Guest J’s orders to be put into effect.

    …

    22.On 4 October, 2006 the husband filed an amended form 1 application in which he reformulated his claim in the terms of s.79A of the Family Law Act 1975 (“the Act) [sic]. In it he sought that the orders of Guest J. of 24 March, 2003 be set aside, varied or discharged and the Court make another order or orders in substitution. That application asserted that there had been a miscarriage of justice by virtue of a suppression of evidence, or a miscarriage of justice by virtue of any other circumstances. No circumstances were specified. …

    23.On 4 October, 2006 the husband also filed an affidavit, sworn by him on 3 October, 2006.  A number of documents were annexed to it. …

    24.Much of that affidavit is in the nature of a submission.  The husband deposed :

    ·     that Guest J. erred in including the Prague property in the assets available for distribution;

    · that the Prague property was not property as defined by s.79 of the Act;

    ·     that his application in the Czech Republic was made “on the remote chance” the Republic would return the property to him;

    ·     that the Czech application was not heard until 2005 and “a final decision on appeal from the District Court of Prague to the Court of Appeal in Prague was not heard until March 2006”;

    ·     that he believed an appeal has been lodged by Dr. [V] on his behalf to “the equivalent of the High Court in Prague” but Dr. [V] believed the chances of success to be minimal;

    ·     that he never believed that the property would be returned to him and stated so on several occasions during the trial;

    ·     that since the orders of 24 March, 2003 he had been left with no assets and no cash reserves.

    …

    33.Senior counsel for the husband made it clear that the application of the husband was to set aside the orders of 24 March, 2003 pursuant to s.79A(1)(a), and that the alleged miscarriage of justice arose by reason of “any other circumstance”. He did not press any of the other grounds which may have been foreshadowed by the husband in his affidavits, including alleged fraud and impracticability, or the other ground referred to in the amended application filed 4 October, 2006, being alleged suppression of evidence.

    …

    39.Much of the husband’s evidence went to events after the orders were made on 24 March, 2003.  He was unsuccessful in his application to adduce further evidence before the Full Court.  Insofar as his evidence relates to events prior to trial, it is a continuation of his attack on Guest J’s findings, and particularly the findings which resulted in Guest J. including the Prague property in the pool.

    40.The expression “any other circumstance” encompasses a miscarriage of justice whereby orders are unjustly obtained or obtained contrary to the justice of the individual case.

20. We think that her Honour failed to identify the real issue raised by the husband’s application ie. he mistakenly believed that the Prague property had been illegally confiscated by the communist government and that he had a claim based on that illegality.  There is some evidence that his belief was wrong.  However, Guest J took up that belief in his findings about the action for recovery of the property.  As earlier seen, he found:

    152.… on the respondent's evidence he remitted $50,000 to Prague to assist in facilitating the transfer back into his name what is rightfully his and wrongfully confiscated by the communists in about 1948 …(emphasis added)

1. While we have said that we think the submissions by Mr North SC, focusing on the injustice and inequity of the orders of Guest J, may have obscured the real point, in oral submissions to Brown J Mr North SC had said:

   MR NORTH: … There’s a translation of the letter from his solicitors which is annexed to his affidavit.  In my submission what the evidence establishes is that yes, he has not concluded his appeal grounds but he has lodged one, his advisers in Prague don’t have much hope but they’ve done it, and that the determination there is that he doesn’t own it.  The property has been confiscated and was in fact confiscated for reasons he was unaware of at the time he was before his Honour.

   It was confiscated because someone hadn’t paid a debt and it was sold to repay the debt. … (emphasis added)

2. In her reasons, her Honour did not discuss the point as framed by Mr North SC before her and before us as above.  Part of the relevant discussion has been earlier set out, but we include it again together with other passages.  Her Honour said:

   47.In a brief reply, senior counsel for the husband formulated the issue by reference to the obligation on a trial judge to make final orders which are just and equitable, submitting (transcript, p.27 to 28) :

   The miscarriage of justice that we rely on here is that in the judgment where the intention after the consideration of all the factors under s.79(4) to provide a just and equitable settlement between these parties was to divide their property fifty-fifty, gave rise to a division whereby my client received as part of his 50 per cent an $800,000 that didn’t exist; substantially less than 50 per cent with the intention of the court exercising its discretion and mindful of the obligation under 79(2) was to give him 50 per cent.

   …

   49.However elegantly expressed, the complaint adumbrated by senior counsel for the husband is a complaint that the discretion of the trial judge miscarried.  It is a complaint that the outcome of the exercise of the discretion by Guest J. is not fair and equitable.  It is a complaint that, to use his words, “the court was left being entitled to draw an inference that is contrary to established facts”. 

   50.In its judgment the Full Court found that the natural inference to be drawn from the husband’s lack of disclosure about the Prague property was that the husband was in possession of material that would not have assisted the proposition he was trying to put before Guest J.  The Full Court held that in circumstances where the husband had failed to establish any lingering doubts concerning the ownership of the Prague property, and had been found to be entirely unco-operative in respect of the exercise, it was open to the trial judge to proceed as he did and draw adverse inference against the husband.  Even though there were some doubts surrounding the husband’s entitlement to the property, given the husband’s lack of co-operation in relation to the production of documents, it was open to the trial judge to assume that those doubts would be resolved unfavourably to the husband.  It declined to interfere with Guest J’s inclusion of the Prague property in the pool at a value of $800,000.

   51.The husband now seeks to re-litigate that point, and challenge that and a handful of other findings of Guest J. relating to assets the husband submitted should have been included in the pool, and the value of another real property.  The other findings should have been challenged (if he sought to challenge them) in the course of the appeal.  He did challenge the inclusion of the Prague property in the pool of relevant assets;  he was unsuccessful in that challenge.  He was also unsuccessful in an attempt to adduce evidence of a December 2002 valuation (which he seeks to rely on in these proceedings) and a ruling in the legal proceedings in Prague.

   52.Senior counsel for the husband submitted that there were some analogies with the issue which was before the Court in Marzec [2003] FamCA 1304. …

   53.In dismissing her appeal, the Full Court held that the mistake was part of the judicial process;  the integrity of the judicial process was clearly undermined by the innocent mistake of counsel.

3. Brown J then quoted passages from Lowe & Harrington (1997) FLC 92-747 and M & M [2003] FamCA 1304 and continued:

   56.… It is true that in Marzec the Full Court held that identifying the party at fault in relation to a mistake is not an essential step in determining whether or not there has been a miscarriage of justice for the purposes of s.79A. But the problem the husband faces in meeting this application to summarily dismiss his s.79A application is not the fact the he could be said (as conceded by his counsel) to be the architect of his own misfortune, in the sense that it was his lack of disclosure which ultimately led to the relevant finding. That could well be a relevant factor were a court to hear the s.79A application and might preclude relief; as senior counsel conceded, there is some authority to the effect that if the alleged miscarriage has arisen as a result of the fault of the applicant to set aside, that may be an impediment to success; see Rohde  v.  Rohde (1984) FLC 91-592 at 79,768. However, that is not a relevant matter at this stage; the applicants for summary dismissal must meet a much higher threshold, satisfying the court, on the husband’s documents, that he lacks a reasonable cause of action or is advancing a claim that is clearly frivolous or vexatious.

4. Earlier in her judgment, Brown J had discussed the principles related to summary dismissal, referring to the judgment of Kirby J in Lindon v The Commonwealth of Australia (No 2) (1996) 70 ALJR 541 at 544-5; (1996) 136 ALR 251 at 255-256 and to discussion of the judgment of Kirby J in subsequent decisions of the Full Court of this Court.

5. We think her Honour correctly identified those principles and no argument about that is raised on this appeal.

6. However, as explained, we think her Honour did not apply those principles to the “real case” of the husband under s 79A(1).

7. In Barker and Barker (2007) 36 Fam LR 650, the Full Court of the Family Court of Australia said:

68.A difference in value of something in the region of $200 per acre would lead to a difference in value of $1,780,080.  We agree with the submission of counsel for the wife to the effect that the sale of “AW” at a value of $2,650,000 was corroborative of the value of the property at the date of hearing (as established by the “TD” and “AB” sales) and not a factor to be disregarded because it had occurred after the making of the orders.

…

70.We agree with the submission of counsel for the wife that his Honour appears to have taken account of the sale of “AW” after the making of the consent orders as an indication that there were changes in the value of the property subsequent to the orders.  In paragraph 61 his Honour says:

Changes in the value of property subsequent to settlement are not only common, they are inevitable.  Indeed, in recent times, stark fluctuations in real estate values over relatively short periods of time have been the subject of wide publicity.  There are many reported decisions relating to fluctuations in value and such circumstances have never, by themselves, provided a basis to set aside final property orders.

71.We think this misunderstands Mr J’s evidence that the relevance of the sale of “AW” was not that the price had increased since settlement but rather that it was corroborative of the value of the property at the date of settlement established by the sale of “TD” and “AB”.  We conclude that his Honour was not entitled to dismiss Mr J’s evidence in the letter of 14 April 2004 about the effect of the sale of the “AB” property as “mere speculation” and to ignore the corroborative effect of the sale of “AW” to a purchaser who was apparently not anxious, so soon after settlement.

…

118.We are mindful of the fact that for the purpose of s 79A(1)(a) “a miscarriage of justice can only occur by reason of a fact or event which occurs before or at the time of the making of the order which is sought to be set aside” (Public Trustee (as executor of the estate of the late Gilbert) v Gilbert (supra). See also Bigg v Suzi (1998) FLC ¶92-799 at para 6.39). Counsel for the wife relied upon what he asserted to be the disparity between “real value” and the value the Court had acted upon at the time of the consent orders, such a value being established in part by the events which had occurred before the orders were made and in part by the subsequent sale. Counsel for the wife’s point was that although the sale occurred after the orders were made, the circumstances which enabled the sale at $2,650,000 had already occurred by the date of hearing approximately a month earlier. We do not consider that his Honour properly addressed this point.

119.We agree that his Honour at paragraph 61 of the reasons for judgment appears to have considered the sale of “AW” as a change in the value of the property subsequent to the orders. We accept the submissions of the wife’s counsel that the proposition being put to his Honour was that the subsequent sale was not because property values had increased after the orders were made, but because it was confirmatory of changes to the value of the property occasioned by the facts that had occurred prior to the making of the orders, in particular the sale of “TD” and the sale of “AB”, coupled with the offer to purchase “AW” for $2,300,000.

1. There are clear difficulties facing the husband in succeeding in his s 79A application, particularly at the discretionary stage. However, as Kirby J said in Lindon (supra) in the passage quoted by her Honour, “An opinion of the Court that a case appears weak and such that it is unlikely to succeed is not, alone, sufficient to warrant summary termination…” (at 544-5).

2. The husband may also face difficulties in obtaining evidence in admissible form, but the enquiry in a “summary dismissal” application is not so much about whether a party can prove every point of a claim, but whether an arguable claim appears.

3. In our view, the husband’s application under s 79A(1) met that test at the time of Brown J’s summary dismissal of it.

4. Accordingly, in our view, the appeal should succeed.

5. The correct order should have been that the application for summary dismissal of the husband’s s 79A application be dismissed.

Brown J’s costs order

1. In view of the successful appeal against the summary dismissal order, a significant reason for which Brown J ordered the husband pay the wife’s costs of the s 79A application and the application for summary dismissal, her Honour’s cost order ought be also set aside.

Costs

1. In view of the result, which, of the factors referred to in s 117(2A) of the Act, we consider of major significance in this instance, the wife’s legal personal representatives should pay the husband’s costs of the appeal and of the application before Brown J.

2. As to the latter application, apart from the fact of its failure, the “elective” nature of the application, is relevant and supports an order that the husband receive his costs.

I certify that the preceding fifty-one (51) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court.

Associate: 

Date:  20 December 2007