Lancer & Lancer - [2008] FamCAFC 112

FAMILY COURT OF AUSTRALIA

LANCER & LANCER

[2008] FamCAFC 112

FAMILY LAW - APPEAL – Leave to appeal – From decision of Family Court Judge – Parties obtained orders by consent altering property interests between them – An asset taken into account (owned by a trust entity) was a parcel of shares valued at $8 million – Orders provided that wife retain some fully paid ordinary shares at the value of $980,990 – The wife filed an application pursuant to section 79A of the Family Law Act 1975 (Cth) to vary one of the consent orders to the effect that she receive a further payment of some $4 million from the husband – Wife alleged suppression of evidence – Application before trial Judge – Issue for determination was whether the question of whether there had been a suppression of evidence should or should not be dealt with as a preliminary and separate issue – Trial Judge ordered that a separate hearing take place as to whether the threshold issue of section 79A(1)(a) was satisfied – No merits in application – Application dismissed

Family Law Act 1975 (Cth) s 79A, s 79A(1)(a)

Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170
Oastler v Oastler (1993) FLC 92-390
Patching v Patching (1995) FLC 92-585
The State of Queensland & Anor v J L Holdings Pty Ltd (1996)189 CLR 146

APPELLANT:

MS LANCER

RESPONDENT:

MR LANCER

APPEAL NUMBER:

10L

2008

FILE NUMBER:

PTW

6197

2003

DATE DELIVERED:

17 July 2008

PLACE DELIVERED:

Perth

PLACE HEARD:

Perth

JUDGMENT OF:

Bryant CJ, Warnick and Thackray JJ

HEARING DATE:

17 July 2008

LOWER COURT JURISDICTION:

Family Court of Western Australia

LOWER COURT JUDGMENT DATE:

7 March 2008

LOWER COURT MNC:

[2008] FCWA 29

REPRESENTATION

COUNSEL FOR THE APPELLANT:

Mr Rynne

SOLICITOR FOR THE APPELLANT:

Carr & Co Barristers & Solicitors

COUNSEL FOR THE RESPONDENT:

Mr McCusker QC

SOLICITOR FOR THE RESPONDENT:

Butlers Barristers & Solicitors

Orders

That the application for leave to appeal filed 12 March 2008 be dismissed.
That the appellant pay the respondent’s costs, to be agreed or in default of agreement as assessed by the Court.

IT IS CERTIFIED:-

That this is a matter appropriate for the attendance of senior counsel.

IT IS NOTED that publication of this judgment under the pseudonym Lancer & Lancer is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT PERTH

Appeal Number: WA10L of 2008
File Number: PTW6197 of 2003

MS LANCER

Appellant

And

MR LANCER

Respondent

EX TEMPORE

REASONS FOR JUDGMENT

WARNICK J: On 6 December 2005, Mr and Mrs Lancer obtained orders by consent altering property interests between them. An asset taken into account, owned by an entity known as the Lancer Trust, was a parcel of some 85,000, approximately, ordinary shares in B Financial Services Ltd, valued by the accounting firm X in April 2005 at $8 million. The orders provided that the wife retain 10,592 fully paid ordinary shares in B, they being valued at $980,990.
On 7 September 2007, the wife filed an application pursuant to section 79A of the Family Law Act 1975 (Cth) to vary one of the consent orders to the effect that she receive a further payment of some $4 million from the husband. She alleged, firstly, that at the time the orders were made the husband had deliberately suppressed evidence of anticipation that B would become publicly listed and, secondly, that the audited financial statements for the year ended 30 June 2005 showed an improved profit figure to that used by the accounting firm X in valuing in April 2005.
In that valuation, the author had discounted the Lancer Trust's interest in B by 15 per cent because it was a minority shareholding and further discounted the valuation by 30 per cent on account of lack of marketability. Presumably, if the company was floated, these difficulties would be overcome or reduced, and thereby the value affected.
The wife claimed that if the accounting firm X had been aware of the intended float and the actual profit performance of B, its valuation of the Trust's interest in B would have been more in the order of $20,600,000.
The husband denied that there had been a suppression of evidence.
The wife's application came before her Honour Penny J on 30 January 2008, when the issue for her determination was whether the question of whether there had been a suppression of evidence should or should not be dealt with as a preliminary and separate issue, rather than as part of a trial involving all of the evidence required for a determination, not just of whether a ground upon which an order might be varied or set aside existed but, if a ground was established, what order ought then be made. Penny J ordered that a separate hearing take place as to whether “The threshold issue of section 79A(1)(a) is satisfied.”
The application before this Full Court is by the wife, seeking leave to appeal the orders giving effect to that decision. We have before us, on the part of the applicant, what is described as an appellant's summary of argument and we also have appellant's amended submissions.
Mr Rynne, who appears before us for the wife, made fairly brief oral submissions, but relied upon both sets of written submissions and did not abandon any of them. We will therefore say something of the submissions in each of the written summaries.
In the written summary, reliance was placed on the proposition that the overarching principle of justice applies to decisions such as the one in question here, notwithstanding that it was a case management decision; in other words, one of practice and procedure.
Reference was made in the written summary to statements in decisions which related to the consideration, as a preliminary matter, of the viability of causes of action and, in particular perhaps, to applications for summary dismissal on the basis that no cause of action existed. We have also been referred by Mr Rynne to the decision in The State of Queensland & Anor v J L Holdings Pty Ltd (1996)189 CLR 146.
I of course accept what has been said in those cases, but regard the more directly applicable principle to be that quoted in the summary of argument for the husband, made in Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170 at 177. That is, “nor is there any serious dispute between the parties that appellate courts exercise particular caution in reviewing decisions relating to practice and to procedure”.
The only particularised error of principle asserted on behalf of the wife was that, during submissions and exchanges between bench and bar on the hearing of the application leading to the order which it is sought to challenge, the trial judge had asked of herself the wrong question.
It appears that the trial judge said; “Why do these people have to go back to when they met to do all of that when the issues all revolve round 2005 for the s 79A and what has happened in about 2005 or a couple of years earlier if there was a meeting at Margaret River sometime before”.
The short answer to this proposition is that no such reference appears in her Honour's reasons and I do not see any justification for a suggestion that her Honour's comment whilst taking submissions, even if it related to a matter of principle and was wrong, of neither of which am I satisfied, formed part of her reasoning for the orders which the wife seeks to challenge.
In her reasons for judgment, her Honour set out the relevant parts of section 79A(1), as follows:
“79A(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.”
and her Honour referred to passages from Oastler v Oastler (1993) FLC 92-390 and what was said of that passage in Patching v Patching (1995) FLC 92-585.
Her Honour said:
9.In relation to this section, Nicholson CJ, Fogarty and Jordan JJ in Patching and Patching (supra) stated at 81,797:
“Here this involves 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…”
10.The judges went on to consider the decision in Oastler and Oastler (supra) and stated in relation to that matter:
“the Full Court emphasized that it is generally preferable to deal with all of the steps in 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.”
11The Full Court, however, went on to say:
“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.”
Her Honour concluded that the matter before her fell within the exception to the general rule, as was stated in Oastler (supra). The passages to which her Honour referred are accepted statements of the relevant principle.
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.
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.
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 whole point of bifurcation, of course, is to allow the prospect of avoidance of the subsequent hearing after the preliminary matter has been determined and that might represent significant savings of time and costs.
The written summaries also assert that her Honour Penny J made findings unsupported by the evidence. In paragraph 13 of her reasons, her Honour said, in part:
A trial on this issue would not be lengthy and would only require an assessment by a judge of the evidence raised in the affidavits already filed. There is an obvious attraction in determining that issue as a preliminary one in that the costs of the parties would be significantly less than if there was a trial on all the issues associated with the parties’ financial relationship and the manner in which their property should be divided.
Two attacks were made on findings in this passage, namely that the trial on the issue would not be lengthy and would only require an assessment by the judge of the evidence raised in the affidavits already filed and secondly, that the costs of the parties would be significantly less than if there was a trial on all issues.
In a matter of this nature, in my view the trial judge could readily draw these conclusions from the essential nature of the issues raised before her and on the material before her. In any event, as appears from the paragraph which followed that containing the passages attacked, her Honour knew that the parties were married for 11 years, that they had purchased two homes and the husband was involved in a number of business dealings resulting in the parties' entitlement to the B shares.
She knew also that upon separation a number of other transactions had occurred in relation to those shares and presumably their value. Her Honour went on to say:
If it is determined that the section 79A application was to be heard at the same time as the property trial, not only the husband but the wife would have to file evidence in relation to contributions made to their assets both during the marriage and after. I have no doubt that this would involve the filing of affidavits by a number of people. None of this would be necessary if the wife does not succeed on her s 79A application. In addition, the parties' obligation to provide disclosure would be very significant; far greater than their obligation in relation to the section 79A application.
These latter findings are not the subject of criticism, but they support her Honour's findings about the comparative costs and length of hearing of the alternatives that presented to her. Her Honour added:
In addition to the matters mentioned above, the determination of the issues raised pursuant to section 79A may, if an order is made that the consent orders be set aside, mean that the parties will be able to negotiate a settlement in relation to their claims for property settlement. Without a determination of the section 79A issue this is highly unlikely to occur. This is another factor which convinces me that a trial on the issues raised in the section 79A application is appropriate.
Her Honour’s observations about prospect of settlement were one of the factors referred to in proposed ground of appeal 3, which suggested that her Honour wrongly exercised her discretion in ordering the separate hearing and gave too much weight to that factor, among others. Nothing has been said to us orally about that proposed ground. Assuming for the moment that placing too much weight on factors relevant to the exercise of the discretion can amount to an error of principle, I am by no means satisfied that the observation that her Honour made was in any way inaccurate or not available to her.
As to whether or not the orders caused the wife substantial injustice, the wife argued, seemingly in this respect, but also possibly in relation to the matter overall, that the application as it came before Penny J was only prepared at a very preliminary stage; the implication being that it was too early to make the decision reached.
As I have already said, the decision only relates to a method of proceeding. I see nothing in the orders made that indicates that what is expected is other than a fulsome trial of the question of whether a suppression of evidence occurred or not. There is nothing to indicate that in the preparation for that trial each party would not be able to put forward such evidence as they considered relevant, that proposed evidence ultimately to be tested, if at all, in the ordinary way. Nor is there anything to prevent each party using the processes for preparation, such as disclosure, to the full extent necessary for a trial of the question as earlier described, namely whether there had or had not been a suppression of evidence.
Ultimately in this matter, there might be a finding that there was a suppression of evidence. There might be a finding that that constituted in the circumstances a miscarriage of justice and there might ultimately be a hearing of all of the matters related to whether orders should be set aside or varied and, if so, what orders made in substitution or in what way existing orders varied.
And if all of that comes about, it may be that no saving of time or cost has been made and it may even possibly be that, if one could ever do the comparative exercise academically, costs might even be greater. But that, as I indicated some time ago, is not the point of the application before her Honour and not the point of her orders.
All of the positive benefits which she identified in relation to her decision are valid and offer the opportunity of, on her Honour's findings, very significant saving in costs and time to the parties, as well as the opportunity for settling any claim which might seem to follow from a ruling in relation to the preliminary matter.
In my view, there is no merit in the application. The tests of error of principle and/or substantial injustice have not been met and I would dismiss the application.
BRYANT CJ: I agree with Warnick J for the reasons given that the application for leave to appeal should be dismissed and I add only this. It is pertinent in my view to note that section 79A itself contains two aspects. One is essentially a fact-finding exercise, that is whether the applicant can establish on the relevant evidentiary standard, namely the balance of probabilities, that there has been a miscarriage of justice by reason of one of the matters set out; in this case, suppression of evidence. That is often referred to as the threshold test.
The second part which follows from a positive finding about the first is a discretionary one, namely that the court may in its discretion vary or set aside the original order and, if appropriate, make another order. The decision in each case about whether to hold a single hearing, will, as Warnick J has said, be a matter to be determined by the trial judge in the exercise of discretion having regard to the circumstances of each case.
Her Honour's decision in this case was that in the interests of justice there should be two separate hearings. Despite submissions by the appellant, nothing in her Honour's orders, in my view, prevents the appellant from putting before the court all relevant evidence, including evidence which emerges from appropriate pre-trial procedures such as discovery, relevant to the threshold issue.
I agree therefore with Warnick J that the appellant has not established that there has been an error of principle on the part of the trial judge, or that there is a substantial injustice to the appellant if leave is not granted and I agree that the application for leave to appeal should be dismissed.
THACKRAY J: I also agree with the reasons given by Warnick J and those given by the Chief Justice and I too would dismiss the application for leave.

I certify that the preceding thirty-eight (38) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court.

Associate:

Date: 28 July 2008