Melville & Dent

[2008] FamCA 926

FAMILY COURT OF AUSTRALIA

MELVILLE & DENT [2008] FamCA 926

FAMILY LAW – PRACTICE AND PROCEDURE – Undefended hearing – basis for seeking to proceed undefended – lack of compliance with orders and obligations of disclosure

Family Law Act 1975 (Cth)

Brown & Brown [2004] FamCA 1067
State of Queensland v JL Holdings 189 CLR 146
Tate v Tate (2000) FLC 93-047
Zane & Allan [2008] FamCAFC 115

APPLICANT: Ms Melville

RESPONDENT: Mr Dent

FILE NUMBER: MLF 3157 of 2006

DATE DELIVERED: 31 OCTOBER 2008

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: THE HONOURABLE JUSTICE CRONIN

HEARING DATE: 28 OCTOBER 2008

REPRESENTATION

COUNSEL FOR THE APPLICANT: MR STRUM

SOLICITOR FOR THE APPLICANT: MARSHALLS & DENT

COUNSEL FOR THE RESPONDENT: MS CAMPBELL

SOLICITOR FOR THE RESPONDENT: FORTE FAMILY LAWYERS

Orders

1. That all outstanding applications be adjourned for final hearing before me as the FIRST case in the list of defended matters for the period of 4 days commencing on 27 January 2009 at 10 am as a 1-2 day matter.

2. That the matter be listed for mention before me at 9 am on 12 January 2009 as to the issues of readiness and in particular, the husband’s compliance with orders.

3. That unless otherwise impracticable, Registrars Sikiotis and Kaur be appointed as the docketed registrars responsible for the management of the case.

4. That by 4 pm on 28 November 2008 the applicant file a document setting out with precision what orders are being sought.

5. That unless the applicant obtains a waiver of the relevant fee, the applicant pay the trial fee by 4 pm on 28 November 2008.

6. That all parties have liberty to approach the registrar responsible for the management of the court file to vary the obligations under these orders to ensure readiness for trial.

7. Should any party fail to comply with these orders or the ensuing amending directions of the registrar responsible for the file, that registrar shall:

   (a)If both parties are in default, be at liberty to move the case from the rolling list in its allocated place and either strike the case out of the list with a right of reinstatement upon conditions to be determined by the Registrar; or

   (b)       refer the case to me for directions as to its future management;

   (c)return the case to the Registrar’s docket on a date to be fixed for further management

   AND IT IS NOTED THAT all parties have been advised that a failure by one party to comply with these orders and those of the registrar responsible for the file may lead to the complying party seeking from the trial judge leave to proceed on an undefended basis.

8. That the practitioners for the parties file and serve electronically to my Associate by 4 pm on 23 January 2009 the following:

   (a)a concise set of orders to be sought if different from those already filed;

   (b)a list of the affidavits to be read and, if not the whole affidavit, the relevant paragraphs relied upon;

   (c)       a list of assets and liabilities; and

   (d)a bullet-point summary of argument in relation to the issues in dispute.

9. That each party provide to the court at the commencement of the hearing, a statement setting out the costs incurred to that date and from what source those funds have been paid and what costs are expected to be incurred until the completion of the hearing.

10. The wife’s costs of 28 October 2008 are reserved.

11. That the husband, his servants or agents, make available for inspection by the appointed representatives of the wife, the watches, gold coins, chattels and artwork referred to in his financial statement.

12. That the wife make available for inspection by the husband the chattels referred to in her financial statement.

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

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLF 3157  of 2006

MS MELVILLE

Applicant

And

MR DENT

Respondent

REASONS FOR JUDGMENT

1. This is an application by the wife to proceed with her application for final orders on an undefended basis because the husband has failed to comply with his obligations.

2. The husband opposes the wife’s application.

3. The husband is currently in prison in Hong Kong but wants the indulgence of more time.

4. There are also issues of the valuation and inspection of assets. I have made orders on 28 October about those when I heard argument.

5. It is a very serious step to preclude someone from participating in proceedings that may have a dramatic effect on that person’s life. What I have contemplated and will order is that the trial date be fixed leaving the husband with no misapprehension about his right to participate if he finally complies with my orders.

6. I need to make clear that I do not accept the husband’s imprisonment is a basis for him to claim incapacity to participate. I shall endeavour to explain why.

7. On 13 November 2006, the wife filed an application for final orders for both parenting and property issues. In respect of the property matters, she sought undefined orders and that she be excused from particularising her application.  The application was listed for hearing on 19 December 2006.

8. The Court’s file shows that in an affidavit of service, reference was made to solicitors having agreed to act for the husband and accepted service of documents on his behalf.

9. The first hearing of any kind seems to have been on 30 January 2007 before Registrar Kaur. The order noted that the wife’s practitioner attended but there was no appearance by or on behalf of the husband. However, the hand-written bench sheet records that a Ms Trimcevski appeared and sought leave to withdraw. That leave must have been given because the Registrar noted that there was no appearance of the husband. The Registrar then made orders for the husband to provide specific discovery and in particular, documents that had been requested by the solicitors for the wife a month earlier. The same orders provided for valuations to be done. Importantly for the Court’s case management purposes, an order was made that the husband file a response document and financial statement that complied with the Family Law Rules 2004 within 28 days of the order. Without those documents, the Court would have been entitled to presume that he was not opposed to or defending the orders sought by the wife notwithstanding she had not particularised her claim.

10. Now, almost 2 years after the proceedings were commenced, the argument is about whether those January discovery orders have been adequately complied with.

11. The proceedings were then referred by order, to a conciliation conference on 23 April 2007.

12. On 23 April 2007, the conference was held but there was no appearance by the husband nor of any legal representative on his behalf. The husband had not filed any documents as required by the orders of 30 January 2007. The Registrar placed the case in the list then to await a trial and directed the solicitors for the wife to serve a copy of the order upon the husband. That conference was treated as the final resolution event and the orders have been endorsed with the following notation:

    It is noted that the husband has failed to comply with orders made on 30 January 2007 and has failed to attend the conciliation conference this day. The solicitors for the wife are currently considering filing an interim application.

    For reasons which are not clear, the wife chose not to pursue an undefended hearing at that time.

13. The case remained dormant until 23 May 2008 when it was before the Court for directions. During the 12 month period prior to that, the husband was litigating in Hong Kong in what appears (in Australian Law terms) to have been a civil dispute but with criminal sanctions attached[1].

    i)[1] Wife’s affidavit filed 25.8.08 paragraph 28

14. Also during the 12 month period subsequent to the conciliation conference, the wife was involved in proceedings in the United States of America concerning one of the parties’ real properties as a result of foreclosure activities of the mortgagee. The wife was endeavouring to have the husband co-operate but he did not respond.[2] He did however contact the wife by letter during 2008 after he was imprisoned, indicating that he could receive unlimited letters. According to the wife, the husband told her that she could forward correspondence to his “personal assistant” and by July 2008, he was providing a mailing address and said that he had arranged for his lawyer to visit him in prison. Thus, to this point in time, the husband was aware of the proceedings but seemed to be ignoring them.

    ii)[2] Wife’s affidavit paragraphs 68-70

15. At the directions hearing on 23 May 2008, Ms Campbell appeared on behalf of the husband. Various orders were made including for the wife to file an amended application and for the husband to file any response by 10 June 2008. Other orders were made including a referral of the matter to another directions hearing on 30 June 2008.

16. By 10 June 2008, the husband had still not filed any material notwithstanding his apparent ease of communication to which he later referred in correspondence.

17. On 30 June 2008, the matter came again before the Court. The husband was represented by counsel. The record shows that the husband was serving a term of imprisonment in Hong Kong for a period of 4 months and that he was due for release on 28 November 2008. I am not sure where the four months figure came from because it was clear that he was imprisoned for 8 months but the 28 November date was quite clear.

18. Importantly, an order was made that the husband file his responding material by 31 July 2008. The case was then referred to me for a mention hearing on 27 August 2008. The purpose of that hearing was to list the case for final hearing if possible.

19. The husband did not comply with the order for filing documents.

20. On 4 August 2008, the husband filed an application in a case seeking an extension of time for him to comply with his obligations. He sought until to 30 September 2008. That application was supported by an affidavit sworn by his Melbourne solicitor.

21. On 27 August 2008, over opposition from counsel for the wife, I made orders directing the husband to file his response and financial statement and otherwise fully comply with the 30 January 2007 discovery orders by 30 September. I then adjourned the matter back to myself on 16 October for the purposes of determining whether, if the husband was still in default, the wife could proceed on an undefended basis and if the husband had complied with orders, to fix the matter for trial.

22. On 3 October 2008, the husband filed a formal response in which he sought specific orders and he also filed a financial statement.

23. For reasons that I explained to the parties at the time, I was unable to give the case any significant time on 16 October. However, the wife’s position was clear. Notwithstanding the husband had filed the two documents to which I have just referred, it was alleged that he had not complied with discovery orders. Counsel for the wife handed me a comprehensive schedule of what documents had and had not been provided.

24. The solicitor for the husband produced what appears on its face to be an order of the Immigration Department of the Government of Hong Kong directing that upon his release from prison, the husband be deported to the United States on the basis that his continued presence in Hong Kong posed a threat to law and order. That was apparently based upon the husband’s convictions for fraud.

25. In the intervening period between 16 October and 28 October, the husband provided further documents which were immediately forwarded to the solicitors for the wife.

26. Mr Strum for the wife pointed to the fact that despite the husband’s flurry of activity then and now, he still had not complied with the existing orders. Importantly, Mr Strum pointed to the fact that documents for the company N Limited had not been provided. The wife seems to have been tantalised by some documents but there were gaps in their sequences. For example, I saw an American Express account which is marked as 9 pages but there were only 3 provided. The lack of a cover sheet to that account meant that its date period was indecipherable. There were other documents as well but in some respects they do not matter as much. For example, the wife sought documents evidencing contributions made at the commencement of cohabitation. If the husband fails to produce those, it is hard to see how he could establish any corroboration of his initial contribution if he intends to argue that there was one.

27. Ms Campbell for the husband said that in respect of some of the financial documents, a properly appointed single expert witness could pursue financial statements and records of the companies involved from the husband’s accountant. That does not explain why the husband did not give the accountant and his personal assistant instructions to provide all of the information and documents that they had if he were incapacitated by being in prison. It also does not explain why he did not send the documents or give instructions to those people during the period prior to his imprisonment. That is particularly so if he was and is, continuing to run the business. According to the wife, the husband has said that if he is excluded from Hong Kong, he will run the business from China.

28. Looking at previous orders, it can clearly be seen that the wife was pursuing documents not just for the purposes of valuation but also to attempt to establish the husband’s current financial position. That is an important issue for the purposes of s 75(2) of the Family Law Act 1975 (Cth) (“the Act”).

29. In that setting, the wife now pursues an order that the final hearing proceed on an undefended basis. Mr Strum said that the wife no longer pursued the valuation of the Hong Kong assets and would simply seek orders in relation to the remaining identifiable assets.

30. Ms Campbell argued that there was no justification for the husband being excluded because he had filed material desiring to participate albeit late. She said he had “substantially” complied but in my view, that is not compliance.

31. I find in this case that the husband has not complied with the orders of the Court on a number of occasions and albeit he has begun to gather pace now, there are many things unanswered about why all of these things were not done in a timely manner both as a requirement of the Family Law Rules and also of the orders of the Court. It is significant to point out that he had lawyers acting for him at the time when the proceedings began.

32. The power to proceed to hear a case on what is often described as an undefended hearing is set out in Rule 11.02(2)(c) of the Family Law Rules 2004 which provides:

    If a party does not comply with these Rules, the Regulations or a procedural order, the court may amongst other things:

    (c) determine the case as if it were undefended

33. An undefended hearing means literally that the respondent does not participate at all. In Tate v Tate (2000) FLC 93-047, the Full Court discussed the subject only briefly pointing out that as the appellant’s response had been struck out, from the court’s perspective there was no live issue between the applicant and the respondent. The Full Court referred to Australian Securities Commission v MacLeod (1994) 130 ALR 717 where Drummond J in the Federal Court said that there was no procedure for judgment being entered without the matter coming before that Court and evidence being called. As the Full Court observed, that applies in this Court but then went on to discuss what part the respondent could then play distinguishing the process of the Family Court from other courts of civil jurisdiction. The Full Court said:

    The Family Court of Australia is all too frequently confronted with litigants who fail in their duties of full and frank (and prompt) disclosure of their financial affairs.  Where such failure results in a Form 7A being struck out, as here, then that party ought have no further right to be heard without further order of the Court which is a matter for the judge in his or her discretion. 

    Accordingly it was open to the learned trial Judge to rule that the husband had no right to cross-examine and in the exercise of her discretion to refuse what may be loosely described as his application to do so.

    The attainment of justice is the over-riding objective in each individual case.  In the pursuit of such an objective the trial Judge was in this matter exceptionally well placed to weigh the issues and the factors affecting each litigant and make orders appropriate to the case before her.  We believe she did so.

    This was indeed an “exceptional” case.  The forfeiture of the right to cross-examine or indeed to make submissions, flowed from the earlier order.  We discern no error of law in what transpired and no miscarriage of her Honour’s discretion. 

34. The important principle arising from Tate is that the recalcitrant litigant, as here, is seeking a discretionary order. The question for determination of that discretionary judgment is whether justice will be done.

35. In Brown and Brown [2004] FamCA 1067, O’Ryan J said:

    What is very clear from the case law and the provisions of the 2004 Rules is that it is fundamental that the rules of Court and/or procedural orders must be obeyed and the Court should not be reticent about exercising the powers in r 11.02(2) in appropriate cases.  In my view, it is not necessary that the circumstances be “exceptional”.  No litigant, whether legally represented or not, should harbour any doubt that manipulation of the Court's processes, through disregard of and deliberate non-compliance with its orders and directions will attract other than the strongest measures from the Court.

    The case law prior to the 2004 Rules was relatively harsh in responding to non-compliance.  The new rules have adopted these case law principles as they place great importance on case management and the need to comply with court orders.  As such, in my view, the new rules provide severe sanctions for non-compliance.

36. In State of Queensland v JL Holdings 189 CLR 146 the High Court had to deal with a problem where a litigant had been refused permission to amend pleadings. Dawson, Gaudron and McHugh JJ said:

    Justice is the paramount consideration in determining an application such as the one in question. Save in so far as costs may be awarded against the party seeking the amendment, such an application is not the occasion for the punishment of a party for its mistake or for its delay in making the application. Case management, involving as it does the efficiency of the procedures of the court, was in this case a relevant consideration. But it should not have been allowed to prevail over the injustice of shutting the applicants out from raising an arguable defence, thus precluding the determination of an issue between the parties.

37. Kirby J was more expansive saying:

    No rigid pronouncements can be made of the way in which a discretion to permit an amendment of pleadings should be exercised. The Rules of Court affording the power to permit (or refuse) amendment are typically expressed in the widest language. This is to afford a large discretion to the judge to whom the amendment application is made. It would be unwise, and contrary to principle, to fetter such a discretion with rigid rules. Nevertheless, it may be helpful to direct the mind of the decision-maker to some of the considerations which have been found relevant.

    The basic principle controlling the exercise of a power granted by statute, or under the authority of statute, is that the power must be exercised for the purpose for which it was afforded by the legislature. In the case of Rules of Court, it may be assumed that the power was granted out of the recognition of the traditional role of the judges to do justice according to law. In courts with a large inherent jurisdiction, this is part of the function of judges inherited, historically, from the royal prerogative. In courts created by legislation, it is implied in the very functions of a court and in the office of a judge.

    …

    In some jurisdictions, such changes have been sustained by special Rules of Court made under legislative authority. But even where special Rules have not been provided, alterations to the judicial role have been accommodated within the broad discretions conferred by Rules expressed in unqualified terms. Whilst such Rules may not be limited by particular language, they do imply parameters which must be understood by reference to the conventional requirements of justice.

    …

    Whilst taking all of the considerations relevant to the circumstances of the case into account, the judge must always be careful to retain that flexibility which is the hallmark of justice. New considerations for the exercise of judicial discretion in such cases have been identified in recent years. But the abiding judicial duty remains the same. A judge who ignores the modern imperatives of the efficient conduct of litigation may unconsciously work an injustice on one of the parties, or litigants generally, and on the public. But a judge who applies case management rules too rigidly may ignore the fallible world in which legal disputes arise and in which they must be resolved.

1. The Full Court’s decision in Zane & Allan [2008] FamCAFC 115 was brought to my attention but whilst it has some principles which I have considered, the facts were different and the decision of the trial judge was based on a different consideration which in turn gave rise to the Full Court’s approach to setting aside the trial judge’s order.

2. The Family Law Rules set out the power and the Full Court of this Court has made clear that the matter is a discretionary one enabling a judge to determine the extent of a litigant’s participation.

3. There are some matters here in favour of the husband which would at this point in time mean the rejection of the wife’s application to proceed on an undefended basis. The first is that the hearing date is sufficiently in the future to permit the husband to fulfil his obligations. The second is that the provisions of Part VIII of the Act require that a judge only make an order under s 79 if satisfied in all of the circumstances that it is just and equitable to make the order and in so making an order, to contemplate the matters set out in s 79(4) of the Act. Part of the consideration of the exercise of the discretion to allow a recalcitrant litigant to participate is whether justice can still be attained having regard to the obligations of the judge in s 79.

4. There are some matters militating against the husband having another such opportunity. The first is his failure to offer anything of relevance as to his recalcitrance. The second is the pressure the ongoing delay has on the wife. That is ameliorated by setting the matter down. A third is that the husband has caused significant inconvenience to the wife and added costs in the pursuit of information that should be voluntarily offered. That however can be ameliorated by an order for costs to some extent. A fourth point is the length of time that the proceedings have been pending before the husband began taking the proceedings seriously and that is something for which he should be strongly criticized. It is not just the waiting for a hearing that causes a litigant anguish but also the fact that there is no negotiation going on. Whilst that may be acceptable in some civil law jurisdictions, it is not acceptable in the personal lives of parties to a marriage breakdown; their lives are often literally on hold. This latter point also increases the congestion of court lists meaning that litigants who wish to proceed with their cases are often prevented from doing so expeditiously because resources are allocated to cases where a significant effort at resolution has not been made until the last moment. This in turn gives rise to criticism of the Court for failing to give definitive hearing dates. Finally, we are dealing with public resources which are scarce and spending time on management of cases where there is not a dedicated resolve to get ready and to fulfil obligations under Rules and orders has not only an impact on other litigants but also unfairly puts the Court in a position where it is criticized for its delays.

5. Here the husband has filed a response and financial statement and to that extent, he is waving the flag of desire to participate. Notwithstanding his recalcitrance, I think this is a case where he should be given an opportunity to participate if he satisfies the Court that he has produced all of the financial material that will enable the Court to either know exactly what his financial circumstances are or that the wife is able to have the Court draw inferences about his financial circumstances whereby she is not prejudiced. Here, the indulgence in favour of the husband should not be over-extended but he should have at least one last opportunity to show that he wants to participate in the way that the law expects.

6. I propose to list the matter and set a timetable for the case to proceed. If the husband does not file the material sufficient to satisfy the existing orders of this Court within those time frames, unless he can convince me by some strong material otherwise, it is possible that I will make an order that the matter proceed on an undefended basis. Just what that means and its extent will depend upon what course of action the husband follows until the mention date and what I hear from both parties.

I certify that the preceding Forty Three (43) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin

Associate: 

Date:  31 October 2008