Mihova & Mihova (No 2)
[2025] FedCFamC1F 284
•5 May 2025
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Mihova & Mihova (No 2) [2025] FedCFamC1F 284
File number: SYC 10253 of 2024 Judgment of: SCHONELL J Date of judgment: 5 May 2025 Catchwords: FAMILY LAW – PRACTICE AND PROCEDURE – Application by the first, second and third respondents for separate issues determination pursuant to r 10.10 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) – Where the applicant and fourth and fifth respondents opposed the application – Consideration of the approach to be taken having regard to s 95 of the Federal Circuit and Family Court of Australia Act 2021 (Cth) – Where dealing with such an issue separately would not give effect to the overarching purpose of family law litigation – Application dismissed. Legislation: Family Law Act 1975 (Cth) Pt VIII, s 95
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) rr 10.10, 10.11
Uniform Civil Procedure Rules 2005 (NSW)
Cases cited: ABB v Freight Rail [1999] NSWSC 1037
Australian National Industries Ltd v Spedley Securities Ltd (in liq) (1992) 26 NSWLR 411
City of Swan v Lehman Brothers Australia Ltd (2009) 73 ACSR 86; [2009] FCA 784
Crawley v Vero Insurance Ltd & Ors [2012] NSWSC 593
Cruden v Sae-Ung [2021] NSWSC 1070
Marley & Ormonde [2020] FamCA 1046
Southwell v Bennett [2010] NSWSC 1372
Tepko Pty Ltd v Water Board (2001) 206 CLR 1; [2001] HCA 19
Warragamba Winery Pty Ltd v New South Wales [2010] NSWSC 66
Division: Division 1 First Instance Number of paragraphs: 28 Date of last submissions: 23 April 2025 Date of hearing: 4 April 2025 Place: Sydney Counsel for the Applicant: Mr Sirtes SC Solicitor for the Applicant: Juris Cor Legal Counsel for the First Respondent: Mr Jones SC Solicitor for the First Respondent: Longton Legal Solicitor for the Second and Third Respondents: Ms Ham, Alton Legal Counsel for the Fourth and Fifth Respondents: Mr Ahmad Solicitor for the Fourth and Fifth Respondents: Brightstone Legal ORDERS
SYC 10253 of 2024 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS MIHOVA
Applicant
AND: MR MIHOVA
First Respondent
B PTY LTD
Second Respondent
C PTY LTD (and others named in the Schedule)
Third Respondent
ORDER MADE BY:
SCHONELL J
DATE OF ORDER:
5 MAY 2025
THE COURT ORDERS THAT:
1.The oral applications of the first, second and third respondents for a decision on an issue pursuant to r 10.10 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) is dismissed.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Part XIVB of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish an account of proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Mihova & Mihova has been approved pursuant to subsection 114Q(2) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
SCHONELL J:
The spouse parties and others are engaged in highly contested financial proceedings pursuant to Part VIII of the Family Law Act 1975 (Cth) (“the Act”) which were first commenced by the wife on 20 December 2024. The parties to the proceedings include two corporate entities, the parties’ son (the fourth respondent) and a company owned and controlled by the son (the fifth respondent).
Despite proceedings having only been on foot for approximately four months, there have already been numerous appearances before various judges of Division 1 of the Federal Circuit and Family Court of Australia, as well as Senior Judicial Registrars. The parties were most recently engaged in proceedings before Aldridge J wherein various injunctive orders were made in relation to the disposition of property and the imposition of various restraints upon the third, fourth and fifth respondents.
Despite his Honour making a suite of orders by consent on 31 March 2025, including making orders listing the matter for directions before myself on 4 April 2025, at the listing on that day the first, second and third respondents sought be determined an oral application for “a decision on an issue” pursuant to r 10.10 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) (“the Rules”). This was opposed by the applicant and the fourth and fifth respondents and accordingly directions were made for the parties to file written submissions with the matter to be determined in chambers. The last of those submissions were received on 23 April 2025.
The Submissions for the first respondent contend that the first respondent seeks a decision on the following issues:
(a)whether the fourth respondent holds the whole of his right title and interest in the property situated at and known as [D Street, Suburb E] in the State of New South Wales for the benefit of either the second respondent, or the applicant and/or first respondent (hereinafter referred to as the “Spouse Parties”) (and any consequential relief);
(b)whether the fourth respondent holds the whole of his right title and interest in the property situated at and known as [F Street, Suburb M], in the State of New South Wales for the benefit of Spouse Parties (and any consequential relief); and
(c)whether the fifth respondent holds the whole of their right title and interest in the properties situated at and known as Lots 1 and 2, [1 H Street], and [2 H Street], [Suburb K], in the State of New South Wales for the benefit of the second respondent (and any consequential relief).
The second and third respondents Submissions record that the second and third respondents seek a decision on the following issues:
10.The issues that [B Pty Ltd] seeks to have determined separately ([B Pty Ltd] Separate Issues) are as follows:
(a)To the extent that the Disputed Proceeds (of $10,866,000) are presently held (wholly or partly) in the Son’s [L Bank] Account, does the Son have an obligation to return such funds to [B Pty Ltd]?
(b)To the extent that the Disputed Proceeds (of $10,866,000) are presently held (wholly or partly) in the Wife’s [L Bank] Account, does the Wife have an obligation to return such funds to [B Pty Ltd]?
11.The determination of the [B Pty Ltd] Separate Issues will require the Court to determine the following matters:
(c)Where are the Disputed Proceedings ($10,866,000) presently held, and in particular, are those funds held wholly in the Wife’s accounts, wholly in the Son’s accounts, or partly in each of the Wife and Son’s accounts?
(d)Was the Wife validly appointed as a director of [B Pty Ltd] in [late] 2023 (or at any other time)?
(e)Did the Son have the authority of [B Pty Ltd] (being authority given by a director of [B Pty Ltd]) to transfer amounts totalling $10,866,000 from [B Pty Ltd]’s bank account to an account in the name of the Husband?
(f)Did the Son have the authority of [B Pty Ltd] or of the Husband to transfer the sum of $10,866,000 from the Husband’s Bank Account to the Wife’s [L Bank] account.
(g)If the Son did have authority from either the Wife or the Husband to transfer the Disputed Proceeds, did the giving of such authority to the Son constitute a breach of the duties owed by the authorising party to [B Pty Ltd]?
(h)What was the character of the transfers/payments of the Disputed Proceeds from the [B Pty Ltd] account to the Husband’s account (and the subsequent transfers of those funds), specifically were such transfer’s payments:
(i)unauthorised payments of [B Pty Ltd]’s funds;
(ii)gifts;
(iii)loans, dividends or payments of some other character?
SUBMISSIONS
The first respondent contends that a decision on the issues would narrow the number of issues for trial, result in a substantial savings of costs, and in the words of his senior counsel enable a “sensible reassessment of litigation risks which is generally likely to encourage some form of settlement discussions and with it the early resolution of the litigation” (written submissions of the first respondent filed 10 April 2025, paragraph 9).
Senior counsel for the first respondent contends that the estimated duration of the hearing would be two to three days, whereas a final hearing in the absence of a decision on the issues may take up to ten days.
The second and third respondents contend that the hearing on the issues is likely to be relatively brief. In their written submissions, they contend:
13.… There is a very narrow factual contest. The determination will (at least in large part) require the determination of legal questions which can be addressed fulsomely in writing.
The second and third respondents estimate that the matter would take no more than one day. They submitted that such a hearing would determine the entitlement of the second respondent to the monies the subject of dispute and bring their involvement in the proceedings to an end involving a substantial saving of costs. A resolution of the issue would enable the parties to determine the value of the shares in the second respondent and would, as contended by their written submissions:
15.
(b)…add substantial clarity to the quantum of the marital asset pool. This will almost certainly improve (and could only improve) the prospects of the matter settling prior to any final hearing and will almost certainly shorten (and could only shorten) the duration of the final hearing of the proceedings.
Each of the applicant and fourth and fifth respondents opposed the application.
The applicant submitted that there are no agreed facts upon which the Court could proceed to determine the issues and, given the respondents propose to call witnesses, there will be a contested hearing on disputed facts calling possibly for credit findings. Senior counsel for the applicant submits:
9.…It is impossible to conceive of a universe in which the Court will not be required to make credit findings in relation to the internecine relationships between mother, father and son in relation to various pieces of real property, as proposed by the First Respondent. And, of course, if those credit findings are made, it will mean that whoever hears the separate question will need to disqualify themselves from hearing the later part of the case. How that can be said to be an efficient use of Court resources beggars belief. It is the opposite.
The applicant submits that there would not be any time or cost saving and that it will not quell all the controversies.
Counsel for the fourth and fifth respondents submits that the three ‘questions’ posed by the first respondent “are broad contentions (made up of many mini separate questions) of fact and law that do little to commend a separate issue determination” (written submissions of the fourth and fifth respondents filed 23 April 2025, paragraph 3.2) and that there would not be the cost and time savings postulated by the other respondents, particularly given the history of the litigation to date and the manner in which it has been conducted.
Counsel for the fourth and fifth respondents further submit as follows:
3.7…the purported separate issues raised will very much depend upon determinations of multiple issues of fact turning on assessments as to credibility rather than discrete legal issues which suggest they are more properly dealt with together with the whole proceedings. In this respect a powerful reason against the ordering of a separate question is that if it is ordered, the likelihood that the credit of at least the husband (and possibly also the wife and the Fourt the respondent) will be in issue on both the separate questions and also at the subsequent hearing.
(As per original)
APPLICABLE LAW
Rules 10.10 and 10.11 are to the following effect:
10.10 Application for separate decision
(1) A party may apply for a decision on any issue, if the decision may:
(a) dispose of all or part of the proceeding; or
(b) make a trial unnecessary; or
(c) make a trial substantially shorter; or
(d) save substantial costs.
(2)An application under this rule must be made by filing an application in accordance with the approved form.
10.11 Orders that may be made under this Part
(1) On an application under this Part, the court may:
(a)dismiss any part of the proceeding; or
(b)decide an issue; or
(c)make a final order on any issue; or
(d)order a hearing about an issue or fact; or
(e)with the consent of the parties, order arbitration about the proceeding or a part of the proceeding.
(2)If the court makes orders against a party who is claiming relief against the party who obtains the orders, the court may stay execution on, or other enforcement of, the orders until determination of that claim.
It is to be noted that the Rules speak in mandatory terms requiring the filing of an application.
One starting point for the consideration of such an application is whether it sits conformably within the rubric of the overarching purpose of family law litigation as expressed in the Act and Rules. In that respect, s 95(2) of the Act speaks in the following terms:
(2)Without limiting subsection (1), the overarching purpose includes the following objectives in relation to proceedings under this Act:
(a)the just determination of all such proceedings:
(b)the efficient use of the judicial and administrative resources available for the purposes of courts exercising jurisdiction in such proceedings;
(c)the efficient disposal of the overall caseload of courts exercising jurisdiction in such proceedings;
(d)the disposal of all such proceedings in a timely manner;
(e)the resolution of disputes at a cost that is proportionate to the importance and complexity of the matters in dispute.
Rules 10.10 and 10.11 are in terms similar to provisions in the Uniform Civil Procedure Rules 2005 (NSW). In Marley & Ormonde [2020] FamCA 1046 Deputy Chief Justice McClelland cited with approval the observations of Hallen J in Southwell v Bennett [2010] NSWSC 1372 where his Honour observed as follows:
[15]
…
(e)As a general rule, the discretionary power to order separate determination of a question should be approached with caution: Perre v Apand Pty Ltd [1999] HCA 36 ; (1999) 198 CLR 180 at [436], per Callinan J; Tepko Pty Ltd v Water Board [2001] HCA 19 ; (2001) 206 CLR 1, at [168]–[170] per Kirby and Callinan JJ: Commonwealth Bank v Clune [2008] NSWSC 1125 at [6], per Johnson J; Bailey and Bailey v Director-General Department of Energy Climate Change and Water [2010] NSWSC 979 at [4] per Studdert AJ.
…
(g)Generally, all questions of fact and law should be determined at the one time: Tallglen Pty Ltd v Pay TV Holdings Pty Ltd (1996) 22 ACSR 130 at 141–42; SPI Spirits (Cyprus) Ltd v Diageo Australia Ltd [2006] FCA 14. If the court is to depart from that position, the party seeking the separate determination of a question must satisfy the court that it would be “just and convenient” for that order to be made: Reading Australia Pty Ltd v Australian Mutual Provident Society [1999] FCA 718 at [8]–[9], see also Energy Australia v Australian Energy Ltd [2001] FCA 1049.
(h)While it may appear attractive, superficially, to order the trial of a separate question, experience often shows that it will not be so, for example, because of the complications that can arise in relation to appeals, or to overlapping factual issues, or to questions of credit, if the same witnesses have to give evidence in relation to a question that is separated and those questions that are not: Idoport Pty Ltd v National Australia Bank Ltd [2000] NSWSC 1215 at [7(6)] per Einstein J.; Owners Corporation Sp 70672 v Trustees of Roman Catholic Church [2010] NSWSC 946 at [16] per Ball J.
(i)The experience of courts suggests that the separation of proceedings often does not result in the quicker and cheaper resolution of proceedings, but often has the reverse effect. It sometimes happens that it turns out to be productive of the disadvantages of delay, extra expense, appeals and uncertainty of outcome which it is intended to avoid: Idoport Pty Ltd v National Australia Bank Ltd; Tepko Pty Ltd v The Water Board at [168].
(j)Before a question is to be separately determined, it must be possible to clearly see that it will facilitate the quicker and cheaper resolution of the proceedings: Tallglen v Pay TV Pty Ltd at 142, per Giles CJ in Comm D; Parramatta Stadium Trust v Civil and Civic Pty Ltd; Century Medical v THLD (NSWSC, 27 August 1996, unreported).
(k)Where findings as to the credit of a witness is, or of witnesses are, or may be, involved in the consideration of the evidence relevant to the question, it is inappropriate to order a separate trial: ABB v Freight Rail [1999] NSWSC 1037.
(l)Often, a separate question is heard on the basis of:
(i) agreed statements of fact;
(ii) a narrow point to be determined; and
(iii)a hearing that is able to be conducted within a short time (or a short time relative to the total length if the hearing of the separate question were not to be dealt with).
(m)Factors that tend to support the making of an order, include that the separate determination of the question may:
(i)contribute to the saving of time and cost by substantially narrowing the issues for trial, or even lead to disposal of the proceedings: Tallglen v Pay TV Holdings;
(ii)contribute to the settlement of the litigation (CBS Productions Pty Ltd v O’Neill (1985) 1 NSWLR 602 per Kirby P at 607).
(n)It may be appropriate to determine a separate question, even if it will not resolve all the issues, provided that there is a strong prospect that the parties will agree upon the result when the core of the dispute has been decided, or if the decision will obviate unnecessary and expensive hearings of other questions: City of Swan v Lehman Brothers Australia Ltd [2009] FCA 784 ; (2009) 73 ACSR 86 at [27] per Rares J. The determination of the one question should enable a sensible reassessment of litigation risks, which is generally likely to encourage some form of settlement discussions.
(o)Relevantly, one factor that may tell against the making of an order would be where there is likely to be a significant overlap between the evidence adduced on the hearing of the separate question and at trial — possibly involving the calling of the same witnesses at both stages of the hearing of the proceeding: Reading Australia Pty Ltd v Australian Mutual Provident Society at [8]. There is always a risk of inconsistent findings arising from determination of separate questions.
…
(q)It is a relevant consideration to weigh the time likely to be taken in the hearing of a separate question and the availability of hearing dates for that purpose, against the time and expense of a substantive hearing and the length of time likely to elapse before such a hearing will take place: TVW Enterprises Ltd v Duffy at pp 4–5.
While in Crawley v Vero Insurance Ltd & Ors [2012] NSWSC 593 Beech-Jones J, cited in Cruden v Sae-Ung [2021] NSWSC 1070 at [42] by Hallen J, observed:
18Third, one real problem with ordering separate hearings is the potential for credibility findings to be made in one hearing in respect of a witness who may have to give evidence at the second hearing. This can create significant difficulties including, but not restricted to, the potential for the trial judge to disqualify themselves (see Warragamba Winery Pty Ltd v New South Wales [2010] NSWSC 66 at [10] to [14] per Harrison J).
19Fourth, the power conferred by rule 28.2 is not one that enables the severing of ‘issues’ but instead the isolation of “questions”. The question needs to be identified with precision. One advantage of doing that in advance of hearing a motion such as this one is that the various considerations for and against exercising the power can be considered against the precise question that is proposed to be determined separately. Many of the cases involving applications of this kind involve attempts to undertake a Solomon style severing of all issues of liability and quantum without any precise identification of what the “question” to be determined separately is. For the reasons discussed below I reject that approach here although I consider it appropriate to sever a relatively narrow question of quantum which might occupy a disproportionately large portion of the litigation battlefield.
20Fifth, one aspect of rule 28.2 that is not discussed in many of the cases is that it includes the power to order a question be decided after all other issues in the proceedings. Many of the cases where severance is sought involve an attempt to isolate some preliminary question which one of the parties hopes will give them a Hail Mary pass to the end zone of success. This approach runs the risk of promoting delay because of the potential for appeals from any adverse preliminary determination and the difficulties in isolating some discrete facts that enable the preliminary question to be resolved without overlapping with the balance of the proceedings. These adverse consequences are less likely where the separate question is relatively narrow and will be decided after all other issues in the proceedings…
DISPOSITION
The proceedings before the Court are at a very early stage. No party has filed any document whether by way of pleading or points of claim that articulates the respective positions of the parties. Consequently, no response to any such document has been filed narrowing if at all the issues. It is clear that disclosure remains an issue as articulated in the submission of the first respondent and affidavits on the issues have not been filed.
In those circumstances, any contention as to the ambit of the issues and the possible length of any separate hearing as opposed to a final hearing remains entirely speculative. I am not able to determine with any certainty, nor, with respect, could the parties, whether a decision on the issues would conclude as expeditiously as suggested by the first, second and third respondents. In that respect I note that at the listing of the matter on 4 April 2025, the representative for the second and third respondents suggested the decision on the issues would take five days, a far cry from the now contended brief hearing of a day. Nor am I able to determine for the same reasons whether the proceedings would take ten days if all issues were ventilated at the one time.
The parties have demonstrated to date an almost insatiable proclivity to litigate. I am not confident that a decision on the issues would finally determine each of the asserted issues or that the parties would accept the determination, leaving open the real spectre of appeals (City of Swan v Lehman Brothers Australia Ltd (2009) 73 ACSR 86 at [26] per Rares J)
The disputed factual contentions give rise to the possibility that there would be a need to make credit findings in relation to the parties and any witnesses. This heightens the risk of applications for recusal (Warragamba Winery Pty Ltd v New South Wales [2010] NSWSC 66 at [10]– [14])
There remains a risk in the event of a successful application for recusal or appeal the possibility of inconsistent factual findings (Australian National Industries Ltd v Spedley Securities Ltd (in liq) (1992) 26 NSWLR 411; ABB v Freight Rail [1999] NSWSC 1037).
On the basis of the submissions, I am not satisfied that a separate hearing is consistent with the overarching purposes of family law litigation in accordance with s 95 of the Act.
Having regard to the submissions of the parties and the authorities to which I have referred, I am not satisfied that the “utility, economy, and fairness to the parties are beyond question” (Tepko Pty Ltd v Water Board (2001) 206 CLR 1 at [170]).
For the above reasons, I am not satisfied that a decision on the issues as identified would, in all the circumstances, be proportionate to the costs involved in the final proceedings. The first respondent seeks various orders by way of disclosure. The Rules are clear as to the obligations imposed on all parties. In the event that there remains an issue about disclosure then its is appropriate it be dealt with by discrete application.
The oral applications of the first, second and third respondents will be dismissed.
I certify that the preceding twenty-eight (28) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Schonell. Associate:
Dated: 5 May 2025
SCHEDULE OF PARTIES
SYC 10253 of 2024 Respondents
Fourth Respondent:
MR X MIHOVA
Fifth Respondent:
C2 PTY LTD
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