Olsen & Rich
[2022] FedCFamC1F 324
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Olsen & Rich [2022] FedCFamC1F 324
File number(s): SYC5822 of 2018 Judgment of: WILSON J Date of judgment: 13 May 2022 Catchwords: FAMILY LAW – NATIONAL ARBITRATION LIST –husband’s application pursuant to s 106A for a registrar of this Court to execute the arbitration agreement – wife no longer consents to arbitration – held, arbitration must be a consensual process – orders made removing this proceeding from the National Arbitration List. Legislation: Family Law Act 1975 (Cth) ss 13E, 106A
Family Law Regulations 1984 (Cth) regulation 67F
Cases cited: Age Old Builders Pty Ltd v Swintons Pty Ltd [2003] VSC 307
Entezam v Devi (2021) 62 Fam LR 637
Goh & Ren (2020) 61 Fam LR 508
Kill v Hollister (1746) 45 ER 532
Pattison v Loomis (2021) 62 Fam LR 283
R v Mr Justice Ross-Jones, ex parte Green (1984) 156 CLR 185
Re Carus-Wilson and Greene’s Arbitration (1886) 18 QBD 7
Santos Ltd v Pipelines Authority of South Australia (1996) 66 SASR 35
Scott v Avery [1856] 5 AL Cases 811
Shoalhaven City Council v Firedam Civil Engineering Pty Ltd (2011) 244 CLR 305
Walton Stores (Interstate) Pty Ltd v Maher (1988) 164 CLR 587
Wyong Shire Council v Jenbuild Pty Ltd [2012] NSWSC 720
Clyde Croft, Drossos Stamboulakis and Marilyn Warren, International and Australian Commercial Arbitration (2022) LexisNexis)
David Sutton, Judith Gill QC and Mathew Gearing QC, Russel on Arbitration, 24th edn Sweet & Maxwell (2015)
Derek Roebuck, Arbitration and Mediation in Seventeenth –Century England, Holo Books, The Arbitration Press, Oxford 2017
Michael J. Mustill and Stewart Crauford Boyd, Commercial Arbitration, 3rd edn LexisNexis UK, London (2022)
Division: Division 1 First Instance Number of paragraphs: 46 Date of hearing: 2 and 10 May 2022 Place: Melbourne Solicitor for the Applicant: Not applicable Solicitor for the Respondent: Mr Knox of Newnhams Solicitors ORDERS
SYC5822 of 2018 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS OLSEN
Applicant
AND: MR RICH
Respondent
ORDER MADE BY:
WILSON J
DATE OF ORDER:
13 MAY 2022
THE COURT ORDERS THAT:
1.The referral of this proceeding to arbitration made under s 13E of the Family Law Act by his Honour Judge Monahan is forthwith terminated.
2.This proceeding is removed from the National Arbitration List.
3.This proceeding is referred to the Court’s National Assessment Team for allocation to the next available judge in Division 2 of the Federal Circuit and Family Court of Australia for trial, as a matter of urgency.
4.Any affidavit by the husband in support of an application for costs must be filed and served by noon on 27 May 2022.
5.Any affidavit in response to the husband’s application for costs must be filed and served by the wife by noon on 10 June 2022.
6.Both parties must file and serve written submissions by noon on 24 June 2022.
7.The costs matter will be determined on the papers thereafter.
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).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish 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 Olsen & Rich is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
WILSON J
An important issue has arisen in this arbitration with far reaching ramifications.
After consenting to this proceeding being referred to arbitration and after an order under s 13E of the Family Law Act was made on 15 March 2022 by his Honour Judge Monahan the wife revoked her consent to the proceeding going further to arbitration. The husband seeks orders holding the wife to her agreement to arbitrate. The wife says she proffered her agreement at an earlier stage of the litigation, when she was legally represented and she no longer wishes to arbitrate.
IN ESSENCE
The husband submitted that the wife should not be permitted to resile from the consent to arbitrate previously given by her. On his behalf, his solicitor in written submissions advanced the following propositions –
(a)the time at which a party is to be regarded as providing consent to arbitration is the time when the proceeding is referred to arbitration;
(b)it is in the public interest for parties to be bound by their agreement to arbitrate once they consent to arbitration;
(c)courts eschew the making of futile orders;
(d)principles applicable in the arena of commercial arbitration in relation to the binding nature of an agreement to arbitrate apply to family law arbitrations; and
(e)on the facts of this case, as this litigation has been on foot for nearly two years it is anathema to the justice of the situation for the case to be taken from arbitration and returned to the general ruck of cases awaiting a trial in Division 2 of this court.
For the reasons that follow, central to the operation of arbitration under the Family Law Act is the ongoing phenomenon of the parties’ agreement to arbitrate. When that agreement is rescinded or repudiated, the authority of the arbitrator evaporates and the referral under s 13E of the Family Law Act comes to an end. In this case after testifying her assent to the arbitration process by consenting to the making of orders under s 13E of the Family Law Act the wife withdrew her consent thereby putting an end to the consensus that underpinned the arbitral process.
In my view, the husband’s application for orders under s 106A of the Family Law Act for a registrar to execute an arbitration agreement in lieu of the wife must be dismissed.
RELEVANT FACTUAL SETTING
The order under s 13E of the Family Law Act was made on 10 March 2021 by his Honour Judge Monahan in the Federal Circuit Court of Australia (as it was then called) and was premised on the trial of the proceeding not being reached.
According to the husband’s written submissions, on 25 March 2022 the arbitrator conducted what the husband’s solicitor called “an arbitration planning meeting”. That was a curious use of terminology to describe a preliminary conference in the arbitration. At all events, in those submissions it was reported that the wife neither attended nor participated in the arbitration planning meeting. It seems that by the date on which the arbitration planning meeting was held, each party and the arbitrator had not executed the arbitration agreement. Having regard to there being no executed arbitration agreement, the precise status of the arbitrator’s directions was curious although that was not the subject of submissions. On 25 March 2022 this proceeding came before me in the National Arbitration List. The wife’s solicitors appeared and informed me that they had encountered trouble obtaining instructions from the wife. I adjourned the proceeding to 29 March 2022. The day earlier, that is to say, on 28 March 2022 the wife’s solicitors filed a notice of intention to withdraw. On 29 March 2022, when this proceeding was before me, the wife’s solicitors informed me that they no longer acted for the wife. I suggested that that arbitrator be notified of that. I adjourned the further hearing of the proceeding to 13 April 2022.
According to the husband’s written submissions, the arbitrator conducted a further planning meeting on 8 April 2022. It was not stated whether the wife attended or participated in the 8 April 2022 planning meeting. The husband’s written submissions stated that the wife failed to commit to the arbitration process and that she sought four to six weeks in order to execute the arbitration agreement. The arbitrator made orders requiring the execution of the arbitration agreement by 22 April 2022.
On 13 April 2022 this proceeding came before me on which occasion the wife was unrepresented. She submitted that she needed four further weeks to obtain advice about the arbitration agreement. I gave her two weeks.
On 22 April 2022 the wife announced that she did not consent to the arbitration process.
On 27 April 2022 I made orders requiring the respondent to file and serve written submissions by 4:00pm that day, which Mr Knox did.
On 2 May 2022 I heard the wife’s submissions to the effect that she withdrew her consent to the matter proceeding at arbitration. She said that she had not had an opportunity to read and consider the written submissions filed on behalf of the husband on 27 April 2022.
The husband contended that the wife should not be permitted to propound arbitration by agreeing to a s 13E order on the one hand, and then resile from it by not executing the arbitration agreement, on the other hand.
On 10 May 2022 once the wife had read and considered the husband’s written submissions filed on 27 April 2022, I heard brief verbal submissions from both parties. The wife restated that she did not wish to arbitrate this matter.
AGREEING TO ARBITRATION
Arbitration has been described as a “binding adjudicatory process”.[1]
[1] Clyde Croft, Drossos Stamboulakis and Marilyn Warren, International and Australian Commercial Arbitration (2022) LexisNexis) (at [1.1]).
In 17th century England, arbitration was in wide use and it embraced not only disputes over land but also commercial disputes as well as family law and inheritance disputes.[2]
[2] Derek Roebuck, Arbitration and Mediation in Seventeenth –Century England, Holo Books, The Arbitration Press, Oxford 2017.
An early concern about arbitrations, arising from Kill v Hollister,[3] was that arbitrations purported to oust the jurisdiction of the courts. That concern was dispelled, and thereafter laid to rest by Lord Campbell LC’s speech in Scott v Avery[4] where the Lord Chancellor famously held as follows –
I can see not the slightest ill consequence that can flow from such an agreement and I can see great advantage that may arise from it…public policy therefore, seems to me to require that effect should be given to the contract.
[3] (1746) 45 ER 532.
[4] [1856] 5 AL Cases 811.
His Lordship there was addressing an arbitration agreement.
The textbooks are mostly silent in the provision of any definition of “arbitration”, stating that the omission of a statutory definition was deliberate.[5] Certain tests have been developed over the centuries for the ascertainment of whether the parties intended to agree to arbitrate and whether that intention was reflected in the procedure adopted in reaching the decision made by the arbitrator. A classic formulation of that was expressed by Lord Esher MR in Re Carus-Wilson and Greene’s Arbitration.[6] It is utile to record it as follows –
If it appears from the terms of the agreement by which a matter is submitted to a person’s decision, that the intention of the parties was that he should hold an inquiry in the nature of a judicial inquiry, and hear the respective cases of the parties, and decide upon evidence laid before him, then the case is one of an arbitration. The intention in such case is that is that there shall be a judicial inquiry worked out in a judicial manner. On the other hand, there are cases in which a person is appointed to ascertain some matters for the purpose of preventing differences from arising, not of settling them when they have arisen and where the case is not one of arbitration but of a mere valuation. There may be case of an intermediate kind, where, though a person is appointed to settle disputes that have arisen, still it is not intended that he shall be bound to hear evidence or arguments. In such cases it may be often difficult to say whether he is intended to be an arbitrator or to exercise some function other than that of an arbitrator. Such cases must be determined each according to its particular circumstances.
[5] David Sutton, Judith Gill QC and Mathew Gearing QC, Russel on Arbitration, 24th edn Sweet & Maxwell (2015) (paragraph 1-001).
[6] (1886) 18 QBD 7, 9.
The learned authors of Mustil & Boyd’s Commercial Arbitration[7] indicate that anything in the nature of a comprehensive and prescriptive definition of “arbitration” is extremely difficult and instead they postulate essential attributes of arbitration. There must be evidence of consent by the parties to a process by which an impartial third party will –
(a)be chosen by the parties;
(b)finally decide their dispute;
(c)adopt a fair process in which only the parties and their representatives are involved; and
(d)have the intention that the decision reached will be binding on the parties and enforceable in law.[8]
[7] Michael J. Mustill and Stewart Crauford Boyd, Commercial Arbitration, 3rd edn LexisNexis UK, London (2022).
[8] Russell on Arbitration (op at) (at 1-001).
Other indicia of the existence of an enforceable arbitration was considered by Debelle J in Santos Ltd v Pipelines Authority of South Australia.[9] There, his Honour held that an arbitration involves an enquiry in the nature of a judicial inquiry and his Honour set out some indicia of such an enquiry to include –
(a)that the parties have a right to be heard if they so desire;
(b)the parties are each entitled to see and hear the evidence advanced by their respective opponents;
(c)the parties have the right to give evidence if they so desire; and
(d)each party is entitled to test by cross-examination or by other appropriate means the opposing case and to answer the opposing case.
[9] (1996) 66 SASR 35.
The statement by Lord Esher MR in In Re Carus- Wilson and Greene’s Arbitration has High Court support in Shoalhaven City Council v Firedam Civil Engineering Pty Ltd[10], and the decision in Santos Ltd v Pipelines Authority has support in Age Old Builders Pty Ltd v Swintons Pty Ltd.[11]
[10] (2011) 244 CLR 305.
[11] [2003] VSC 307.
Applying those authorities to the facts of this case, it may fairly be said that the wife’s agreement to go to arbitration has been extremely limited. She has agreed to an order under s 13E of the Family Law Act. She has agreed to very little thereafter. I am willing to infer that she somehow participated in the selection of Mr B as the parties’ arbitrator and in that context attended one conference (called a management meeting) although her involvement was limited to informing the arbitrator that she intended to agitate the proposition that she did not wish to participate in the arbitration for which the arbitrator extended her time so as to formulate her contentions on point.
On 2 May 2022 when I heard this proceeding, Mr Knox told me that the arbitrator had formally vacated the date he had earmarked for the hearing of the arbitration.
In his written submissions, and verbally, Mr Knox expressly denied that the husband relied in any shape or form on an argument based on acquiescence or upon an estoppel to the effect that the wife should be held to her agreement to arbitrate. I specifically questioned Mr Knox whether he was relying in any way on any of the observations of the High Court in Walton Stores (Interstate) Pty Ltd v Maher.[12] He said he was not. His written submissions say nothing of estoppel. Similarly, his written submissions said nothing of acquiescence.
[12] (1988) 164 CLR 587.
The learned authors of International and Australian Commercial Arbitration[13] suggest that both legal principles could support the existence of an agreement in favour of arbitration. Of the two the learned authors said the following –
It also bears noting that submission to jurisdiction is not necessarily a formal process. Taking unequivocal steps within an arbitral proceeding may be construed as submission to the jurisdiction of a tribunal. The reasoning is that a party has acquiesced to the tribunal’s jurisdiction either via their conduct, or lack of action where action would be supposed. Where this occurs, a party may be estopped from denying such submission to arbitrate, and hence from objecting to the tribunal’s exercise of jurisdiction. Although there is little Australian law on this precise point, it follows as a matter of logic from the ordinary principles of estoppel.[14] Although such an approach may appear to conflict with the principles of party autonomy upon which commercial arbitration is built, this is not necessarily the case. Indeed, all the work the doctrine of estoppel is doing is holding the parties to their objective or outward representation or manifestation of consent that another party has (reasonably) relied upon to their detriment. At that point of time, the objecting party can be taken to have consented – despite any subsequent protestations.[15]
[13] Croft, Stamboulakis & Warren (op at) at ([5.7] to [5.9])
[14] Following the ‘ordinary principles of estoppel’ as set out in the various judgments of the High Court in Waltons Stores (Interstate) Ltd v Maher (1988) 164 CLR 387.
[15] Caparo Group Ltd v Fagor Arrasate Sociedad Co-operative [2000] ADRLJ 254, noting that ‘the question is whether, on an objective view… [the party subsequently denying consent to arbitrate] intended to take part in any part’ of the arbitration.
As to acquiescence, the learned authors referred to the decision of McDougall J in Wyong Shire Council v Jenbuild Pty Ltd[16] as supporting the view that an arbitration agreement based on acquiescence may well be maintainable. However, as Mr Knox placed no reliance on point it would be inappropriate for me to address the point especially as Mr Knox did not rely on it.
[16] [2012] NSWSC 720.
It will be immediately apparent that many of the legal issues recorded above especially those arising from decisions made pursuant to commercial arbitration legislation have been included in my examination by reason of the parallels that Mr Knox submitted exist between family law arbitrations and commercial arbitrations. While I have earlier addressed certain of those parallels (for example in Goh & Ren[17]), nevertheless it is erroneous to transplant onto family law arbitration the whole of the domestic and international learning on the subject of commercial arbitration. The two are fundamentally different animals. Commercial arbitration has its sources partly in the common law but mostly in legislation. International commercial arbitration has more complex sources, especially having regard to its civil law influences running in tandem with English and Australian common law as well as statutory sources. Conversely, in family law arbitrations the source of the learning is predominately legislative.
[17] (2020) 61 Fam LR 508.
On the question of the arbitration agreement, Regulation 67F of the Family Law Regulations 1984 contains very detailed prescriptions about the form and content of the agreement itself. Regulation 67F(2)(a) mandates that the arbitration agreement is in writing. Among the matters that must be included in the written agreement, Regulation 67F(2)(f) stipulates that the arbitration agreement must contain information about how the arbitration is to be conducted. Regulation 67F(2)(g) stipulates that the arbitration agreement must set out the circumstances in which the arbitration may be suspended or terminated. Regulation 67F(2)(h) requires the arbitration agreement to provide a costs estimate.
The stipulation in Regulation 67F(2)(a) for the arbitration agreement to be in writing is mandatory. The agreement must also be signed by each party to the agreement, as Regulation 67F(2)(e) provides again in mandatory terms.
The details of Regulation 67F(2) would tend to point to the resolution of the question whether, in the absence of compliance with the precise stipulations in Regulation 67F(2) and Regulation 67F(3) an arbitration agreement can come into existence by acquiescence or estoppel. But this case is not the proper vehicle to decide that. Here, no arbitration agreement was executed. The furthest it can be taken that the wife assented to arbitration was her consent to orders made by his Honour Judge Monahan. That does not amount to some irrevocable submission to arbitration. Since then, the wife no longer consents to arbitration.
THE 106A ISSUE
So far as the separate question of the invocation of s 106A of the Family Law Act is concerned, to my mind that section has no application. By its terms, s 106A applies where a person has already been directed by an order made under the Family Law Act to execute a deed or instrument and the person so directed has refused or neglected to do so. In that eventuality, an officer of the court may be appointed to execute the relevant instrument.
In this case, no existing order has been made requiring the wife to execute an identified arbitration agreement. Further, there is no evidence that the wife has refused or neglected to execute any such agreement. In those circumstances, the necessary precursor to the making of an order under s 106A of the Family Law Act has not been established. I decline to make an order in the terms sought by the husband.
PATTISON & LOOMIS
Before leaving the issue of the consent required for a family law arbitration to be valid, I wish to make certain observations about statements made by a full court in Pattison v Loomis.[18] In that case, the judge[19] of the Federal Circuit Court of Australia (as it then was) made orders for a registrar of the court to execute the relevant arbitration agreement because the husband had earlier indicated that he would only agree to the proceeding going forward to arbitration if the wife provided full disclosure. Judge Harman described the husband’s assent as being “conditional.” A particular full court held[20] as follows –
It is also trite to emphasise that the time to determine whether there is consent or not is when the order for referral to arbitration is made and his Honour recognised that (at [81]).[21]
[18] (2021) 62 Fam LR 283.
[19] Judge Harman.
[20] (2021) 62 Fam LR 283 (at [45]).
[21] [2020] FCCA 345 (at [81]).
The position is very far from trite. Nowhere in that full court’s reasoning was any analysis given to the requirements of Regulation 67F. Nowhere in the legislation or in the subordinate legislation governing family law arbitrations is there any statement of principle about the precise point in time at which the parties’ consent is to be reckoned. To state that the point was trite is an oversimplification of bewildering proportions. If anything, the learning surveyed above reveals that in family law arbitrations, as with other forms of arbitration, a large number of propositions of practice and procedure referrable to the conduct of arbitrations is far from settled. For a commercial arbitration, for example, it may well be the law that parties may be estopped from denying the existence of an arbitration agreement, as was stated by Croft et al. above. Yet the point has not been determined by a court. In that same book, the learned authors have intimated that parties may in certain circumstances acquiesce in the phenomenon of arbitration. Whether those concepts apply in the highly technical and prescriptive atmosphere of an arbitration under the Family Law Act must await determination on some other occasion. I agree that the point in time at which consent is required for the making of a consent order under s 13E of the Family Law Act is the time of the making of an order under s 13E. However, without the formalities under Regulation 67F having been given proper effect, an arbitration agreement will not come into existence.
The point may be tested by simple illustration. Assume that a consent order were made under s 13E of the Family Law Act yet the identity of the arbitrator was not agreed, a mechanism for the ascertainment of the identity of the arbitrator was not agreed and nothing more was agreed at the moment of the making of the consent order under s 13E. It would be absurd to suggest that with nothing more than a consent order under s 13E, one of the parties to the consent order could compel the commencement of a family law arbitration and the running of it to award.
In my conduct of the National Arbitration List, once a judicial officer makes a consent order under s 13E, on the first return of directions upon the entry of the proceeding in the National Arbitration List I make a collection of orders to overcome the uncertainties that have arisen in cases such as Pattison v Loomis. Those orders include –
(a)if not already executed, a specific date by which the arbitration agreement is to be executed in such form as the requirements of Regulation 67F is incorporated;
(b)the identity of the arbitrator;
(c)a date for the conduct of the preliminary conference in the arbitration at which directions for the conduct of the arbitration may be agreed;
(d)the date for the conduct of the hearing of the arbitration;
(e)the latest date, absent further order, by which the award must be published in accordance with Regulation 67P; and
(f)the date on which the proceeding is next before me for the purpose of considering an application to register the award under s 13H of the Family Law Act.
Ordinarily I permit no more than four to six months to elapse from the making of the order entering the proceeding into the National Arbitration List to the making of an order under s 13H.
The National Arbitration List’s success lays in its close management by the judge-in-charge (me).
THE RELEVANCE OF CONSENT TO S 13E
In Entezam v Devi[22] I held that a valid basis for objection to the registration of an arbitral award existed where the objecting party did not consent to the arbitration. That decision does not identify the nature of the consent that might form the basis of the objection to registration. But in my view, it is likely to be highly problematic if, for example, parties consented to an order being made under s 13E then no further consent was offered by one party, as are the facts of this case. Any arbitration that followed with no more than consent to the making of the order under s 13E would almost certainly be defective as an “arbitration” for the purpose of the Family Law Act.
[22] (2021) 62 Fam LR 637.
QUO VADIS?
Having regard to my refusal to make an order for a registrar to execute some unidentified form of an arbitration agreement under s 106A, and also having regard to the wife stating that she does not consent to this proceeding going forward as an arbitration, the proceeding is no longer amenable to arbitration and the referral to arbitration should stop forthwith.
No provision in Division 4 in Part IIIB of the Family Law Act confers power on the Court to make an order halting an arbitration in circumstances where one party had once consented to an order under s 13E but consented to nothing thereafter so as to give effect to the reference to arbitration. Section 13E says nothing on point. Section 13F operates so as to confer power on the Court to make orders to facilitate the arbitration, not to end the reference to arbitration.
The court possesses inherent power to make orders to prevent its process from abuse.[23] In my view, the power conferred by s 13E carries with it a corresponding inherent power, in the control of its own process, to make an order terminating the reference to arbitration. In my view the making of such an order is appropriate in the circumstances of this case.
[23] R v Mr Justice Ross-Jones, ex parte Green (1984) 156 CLR 185.
That leaves the husband at a considerable disadvantage in terms of the speedy, or even timely, progress of this proceeding which was issued in 2018. The case is four years old. That is not an emblematic situation. The case has been prepared for trial. Very little needs to be done before the case is to be tried.
In those circumstances, in addition to making an order terminating the reference to arbitration under s 13E, I am of the view that the case must be referred to the Court’s National Assessment Team for allocation of a judge of Division 2 for urgent trial which I now order.
COSTS
In addition to the prolongation of this litigation by the wife’s approbation and reprobation on the question of arbitration, the husband has been required to expend legal fees subsequent to 10 March 2022 right up to this decision. If he wishes to apply for an order for costs under s 117 of the Family Law Act –
(a)any affidavit by the husband in support of an application for costs must be filed and served by noon on 27 May 2022;
(b)any affidavit in response to the husband’s application for costs must be filed and served by the wife by noon on 10 June 2022;
(c)both parties must file and serve written submissions by noon on 24 June 2022;
(d)the costs matter will be determined on the papers thereafter.
I certify that the preceding forty-six (46) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Wilson. Associate:
Dated: 13 May 2022
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