Pang & Qing
[2022] FedCFamC2F 768
Federal Circuit and Family Court of Australia
(DIVISION 2)
Pang & Qing [2022] FedCFamC2F 768
File number(s): SYC 7278 of 2020 Judgment of: JUDGE ELDERSHAW Date of judgment: 16 June 2022 Catchwords: FAMILY LAW –PROPERTY – Section 79 proceedings – Section 106B proceedings – Final orders by consent – Application for joinder – Where the proceedings have been finalised by consent – Costs – Costs awarded in favour of the wife Legislation: Family Law Act 1975 (Cth) Pt VIII, XIII & XV, ss 78, 79, 79A, 81, 85, 106A, 106B, 117
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) rr 12.13, 12.1, sch 3
Cases cited: Calderbank v Calderbank [1976] Fam 93 (CA)
Gable & Yardley (2008) 40 Fam LR 66; [2008] FamCAFC 162
Gould & Gould; Swire Investments Pty Ltd (1993) FLC 92-434; [1993] FamCA 126
InThe Marriage of Cullen (1980) 6 Fam LR 480
Inthe Marriage of Whittaker (1979) 5 Fam LR 769; (1980) FLC 90-81
Marriage of Florie (1988) 12 Fam LR 7; [1988] FamCA 26
Milligan & Milligan and Anor (2017) FLC 93-811; [2017] FamCAFC 218
Mullane v Mullane (1983) 45 ALR 291; 8 Fam LR 777
Rahman & Rahman (2020) 62 FamLR 73
Re Minister for Immigration and Ethnic Affairs of the Commonwealth of Australia; Ex parte Lai Qin (1996) 186 CLR 622
Division: Division 2 Family Law Number of paragraphs: 112 Date of hearing: 27 April 2022 Place: Sydney Counsel for the Applicant: Mr O’Connor Solicitor for the Applicant: Juris Cor Legal Solicitor for the First Respondent: Santo Family Lawyers Counsel for the Second Respondent: Mr Longworth Solicitor for the Second Respondent: Gordon & Barry Lawyers Pty Ltd ORDERS
SYC 7278 of 2020 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: MR PANG
Applicant
AND: MS QING
First Respondent
MS ZIE
Second Respondent
order made by:
JUDGE ELDERSHAW
DATE OF ORDER:
16 June 2022
THE COURT ORDERS THAT:
1.Orders 1 to 4 of the interlocutory relief contained in Mr Pang’s (“the husband”) Amended Initiating Application filed on 16 August 2021 be dismissed.
2.Within 28 days of these Orders, the husband shall pay the wife $4,829.50 by way of costs of and incidental to the s 79 proceedings with such payment to be made to such bank account as nominated by Ms Qing (“the wife”).
3.The wife’s Application in a Proceeding filed on 15 December 2021 be otherwise dismissed.
4.The wife’s Application in a Proceeding filed on 15 February 2022 be dismissed.
5.Any party who wishes to obtain a Costs Order in their favour for costs of and incidental to the proceedings on 27 April 2022 may do so by filing and serving written submissions not exceeding two (2) pages (12-point font, normal margins) by no later than 14 days from the date of these Orders.
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 a pseudonym Pang & Qing has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
JUDGE ELDERSHAW:
OVERVIEW
The Applications with which these Reasons are concerned relate to proceedings between Mr Pang (“the husband”) and Ms Qing (“the wife”) pursuant to s 79 of the Family Law Act 1975 (Cth) (“the Act”). There is no dispute that the s 79 proceedings between the spouse-parties were determined on 26 November 2021 by the making of Consent Orders. Those orders provided, inter alia, as follows:
(a)Within 60 days of the date of these Orders, the wife shall do all acts and things and sign all documents necessary to transfer whole right, title and interest in the property known as and situated at B Street, Suburb C (Folio: …69) (“the B Street, Suburb C property”) to the husband.
(b)Within 14 days of the date of these Orders, the wife shall do all acts and things and sign all documents necessary to instruct D Real Estate, Suburb C to pay to the husband the whole of the accrued rental income standing to the credit of the parties in their trust account.
(c)Subject to these Orders, the husband and the wife shall respectively retain all interests and entitlements to all personal and real property in their respective possession and control, all shares, debentures, units in trust units, bank accounts, building society and credit union accounts under their respective names or within their respective control, and all interests in insurance including life insurance policies and superannuation in their respective names.
(d)The husband shall retain all his business interests in E Pty Ltd to the exclusion of the wife.
(e)Each party shall be liable for their own liabilities to the exclusion of the other party and each party shall do all acts and things and sign all documents to indemnify the other party in the event of any tax or debt implications that would affect the other party in any way.
(f)In the event either party refuses or neglects to execute any deed, document or instrument necessary to give effect to all or any of these Orders, then the Registrar of the Court shall be appointed pursuant to s 106A of the Act to execute such deed, document or instrument in the name of the said party and do all acts and things necessary to give validity and operation to the deed, document or instrument upon the Registrar being provided with verification of such refusal by way of Affidavit.
(g)Pursuant to s 81 of the Act, these Orders shall finally determine all financial relations between the parties.
The second respondent in these proceedings is the wife’s mother, Ms Zie (“the second respondent”). The second respondent has filed a Response to Application in a Case, an affidavit and Response to Points of Claim in the context of her opposition to the husband’s application that she be joined a party. It was common ground that, at the hearing on 27 April 2022, the second respondent was not a party to the proceedings in any greater capacity.
The subject Applications are:
(h)The husband’s application that the second respondent be joined as a party to the proceedings (“Joinder Application”).
(i)The wife’s application that the husband pays her costs in the sum of $6,646.50 (“Costs Application”). The husband seeks that the Costs Application be dismissed; that he pays the wife $1,000.00 “as agreed and settled between the parties on 21 January 2022”; and costs.
(j)The wife’s application that she be removed as a party to the proceedings (“Removal Application”).
The Evidence
The husband relied on his:
(a)Outline of Case Document filed 21 April 2022;
(b)Initiating Application filed 14 October 2020;
(c)Amended Initiating Application filed 16 August 2021 (containing the Joinder Application and purported residual substantive orders sought at Orders 4 and 5 of the final relief therein);
(d)Response to Application in a Proceeding filed 8 April 2022 at 4.12pm (as to the Costs Application);
(e)Response to Application in a Proceeding filed 8 April 2022 at 5.29pm (clarified with the husband’s counsel to pertain to the Removal Application);
(f)Points of Claim filed 3 February 2022 (pertaining to the Joinder issue);
(g)Affidavit filed 14 October 2020 (“HAff-1”);
(h)Financial Statement filed 14 October 2020;
(i)Affidavit filed 16 August 2021 (“HAff-2”);
(j)Affidavit filed 8 April 2022 at 4.12pm (“HAff-3”);
(k)Affidavit filed 8 April 2022 at 5.29pm (“HAff-4”);
(l)Affidavit filed 12 April 2022 (“HAff-5”); and
(m)Affidavit filed 24 April 2022 at 6.36pm (“HAff-6”) (not admitted)
The wife relied on her:
(a)Outline of Case Document filed 21 April 2022;
(b)Application in a Proceeding filed 17 December 2021 (being the Costs Application);
(c)Application in a Proceeding filed 9 March 2022 (being the Removal Application);
(d)Affidavit filed 17 December 2021(“WAff-1”);
(e)Affidavit filed 15 February 2022 (“WAff-2”);
(f)Financial Statement of wife filed 1 December 2021; and
(g)Financial Statement of husband filed 14 October 2021.
The second respondent relied on her:
(a)Case Outline Document filed 21 April 2022;
(b)List of Objections dated 26 April 2022;
(c)Response to Application in a Proceeding filed 21 April 2022;
(d)Affidavit filed 2 March 2022;
(e)Response to Points of Claim filed 2 March 2022; and
(f)Affidavit of the wife, described in the Case Outlie as having been filed on 2 March 2022 but clarified with her solicitor to mean 24 February 2022 (“WAff-3”).
Objections to Evidence
The husband’s counsel invited me to read the material of the wife and the second respondent subject to weight, which I have done.
The second respondent formulated objections to aspects of the husband’s material. Objection was taken to the admission of HAff-4, HAff-5 and HAff-6 on the basis that they were all filed in breach of directions. That said, the second respondent’s counsel accepted that HAff-3, HAff-4 and HAff-5 could be admitted, subject to weight. The objection to the admission of HAff-6, effectively filed at 8.45am on 26 April 2022 was pressed on the basis of its lateness and prejudice to the second respondent in that it raised new evidence. For these reasons, HAff-6 was not admitted.
The wife objected to the admission into evidence of Annexure B to HAff-3. I have admitted that document for the reasons set out later in these Reasons.
Background
The husband was born in China in 1964. The wife was born in China in 1984.
The husband and wife’s relationship occurred between December 2019 and about mid-June 2020. They were married in 2020 and began living together in April or May 2020. The parties ceased cohabiting on 26 June 2020.
There are no children of the relationship.
At the time the relationship commenced, the husband was the 51% owner of a property at B Street, Suburb C in New South Wales with his former wife. The husband says that he acquired the whole interest in the B Street, Suburb C property from his former wife on about 29 March 2020 in the context of their property settlement.
The husband contends that the parties met on about 6 December 2019. He says that on 6 December 2019, he purchased a diamond ring for the wife for $33,181 and paid a further $10,100 to buy two designer handbags.
In mid-December 2019, the husband paid 800,000 RMB into bank accounts in the wife’s name in China, in three tranches. The husband says that he paid the money at the wife’s request, but there is no further context. The wife contends that the money represented a dowry to be paid into her bank accounts in China but “which was for the dowry he agreed to pay to my mother”.
On 20 December 2019, the husband paid about $146,000 for a Motor Vehicle 1 registered to the wife. The husband says that the vehicle was purchased as part of a joint venture agreement. The wife says that the vehicle was a gift.
The husband contends that, on 22 December 2019, he paid $5,700 for a wedding ring for the wife. This does not appear to be in dispute.
The husband contends that, at some point during the relationship, the wife took a diamond ring that he had bought for his ex-wife in 2017 for $29,700.
In 2020, the parties married.
On 6 February 2020, the wife transferred half of the ‘dowry money’, as referred to in paragraph 15, above, to the second respondent. She says that he used the other half to repay debts and so continued to owe the second respondent the other half of the ‘dowry money’.
On 14 May 2020, the wife was transferred onto the title of the B Street, Suburb C property as a joint tenant for no consideration. The parties began living together at about this time.
The parties separated in June 2020.
On 14 October 2020, the husband commenced proceedings for relief pursuant to s 79 of the Act. By that application, the husband sought final orders in terms that the wife would transfer her interest in the B Street, Suburb C property to him, that she would transfer the vehicle to him in specie or, that she pay him the sum of $140,000 in lieu, that the wife pay him 800,000 RMB and return the jewellery and handbags. He further sought to retain the whole of the rental income from the B Street, Suburb C property and that each party retain assets and liabilities in their respective names.
The proceedings were the subject of a first return before a Registrar on 3 February 2021. Inter alia, it was noted that the husband “has foreshadowed the possibility of joining the Wife’s mother to these proceedings and is considering his position in relation to this.” There is no context on the face of the Orders about why the husband was considering joining the second respondent and his affidavit evidence to that point, being only HAff-1, does not mention the second respondent. Nevertheless, the issue of joinder was within the husband’s contemplation at that time.
On 1 April 2021, the wife’s solicitor wrote to the husband’s solicitor recording her instructions, inter alia, that the wife had:
(a)On 15 October 2020, sold the vehicle for $117,500;
(b)On 20 October 2020, paid $93,028 of those monies to the second respondent in repayment of the alleged balance of the ‘dowry money’; and
(c)Transferred her shareholding in F Pty Ltd to the other shareholder for nil consideration.
On 14 April 2021, the matter was listed for further return before the Registrar. It is apparent from the face of the Orders that the husband pressed for the return or reimbursement of the vehicle, 800,000 RMB, and other chattels. The wife acknowledged that she had made no contribution to the B Street, Suburb C property. Neither party wished to engage in formal valuations prior to a Conciliation Conference and both pressed for such a Conference.
On 29 June 2021, the husband’s solicitor wrote to the wife’s solicitor raising the issue of inadequate disclosure by the wife.
On 5 July 2021, the wife’s solicitor wrote to the husband’s solicitor repeating her instructions, inter alia, that the wife had sold the vehicle for $117,500 and that, on 20 October 2020, the wife had paid $93,028 of those monies to the second respondent in repayment of the alleged balance of the ‘dowry money’ and expended the balance on living expenses.
On 6 July 2021, the parties attended a Conciliation Conference with a Registrar of the Court but did not resolve the dispute.
On 16 August 2021, the husband filed an Amended Initiating Application in which he:
(a)Sought interlocutory relief to enjoin the second respondent to the proceedings; and
(b)Amended the final relief sought by:
(i)Striking out the Orders against the wife for the return of the vehicle in specie or reimbursement of the same (Orders 2 and 3);
(ii)Seeking that the second respondent, instead of the wife, pay him 800,000 RMB (Order 4);
(iii)Seeking, as a new order, that the second respondent pay him $93,028 (Order 5); and
(iv)abandoning his claim for the return of the handbags and jewellery (Order 6).
On 3 November 2021, all extant interim applications were adjourned for hearing on 27 April 2022. Directions were made for the filing of Points of Claim, Response to Points of Claim and relevant affidavit material prior to the interim hearing.
On 24 November 2021, the husband and wife provided Consent Orders to the Chambers of His Honour Judge Monahan under cover of a joint email from the solicitors which included:
We advise the parties have reached agreement to resolve the dispute as between themselves on a final basis. We now attach the orders signed by both the applicant and respondent reflecting that agreement which the parties seek to be made in chambers. The parties seek this order to be made by way of final order.
The orders provide for the respondent to transfer to the applicant her interest in the [B Street, Suburb C] property to which she concedes she made no contribution towards. The orders also provide for the applicant to retain the whole of the funds in the real estate trust account which are the rental proceeds from the [B Street, Suburb C] property.
Each of the parties’ solicitors submit the orders are just and equitable.
On 26 November 2021, final consent orders were issued from the Court. The Court vacated the interim hearing on 27 April 2022 and discharged the directions at Orders three to eight made on 3 November 2021 as to the preparation of Points of Claim. The Orders were uploaded onto the Court Portal on 29 November 2021.
On 1 December 2021, the husband’s solicitor, without notice to the wife, wrote to the Associate:
…seeking reinstatement of substantive matrimonial funds from the joinder of [the second respondent], which is still pressed by the Husband and therefore supposedly should remain an active and outstanding issue to be determined […] We note following the consent order this matter has been taken off the active list of cases. We are under the impression that he joinder aspect of this matter might have been inadvertently overlooked, and we seek to reinstate it to be active as between [the second respondent]and our client …
On 6 December 2021, the Court amended the Consent Orders pursuant to the Slip Rule in terms that included:
All extant applications between the husband and wife be otherwise dismissed noting that the issue of joinder of the Second Respondent and whether property orders should be made as between the Applicant and the Second Respondent remains outstanding.
[…]
B. The matter remains listed for interim hearing on 27 April 2022 at 11am.
C. […] the matter has been restored to the active cases list. This matter was finalised following joint correspondence from the parties on 24 November 2021 indicating the matter has been settled between the parties on a final basis and it was unclear to the Court that the Applicant was pressing orders against a third party yet to be joined to the proceedings.”
On 8 April 2022, the husband deposed that:
… despite the lack of disclosure from the wife, at the encouragement of the Court as noted in Notation A of the orders dated 3 November 2021, I formally consented to a Final Order with the wife on 26 November 2021 after discussing with my lawyer. My consent was given in light of the impending interim determination as for the joiner [sic] issue concerning the second respondent.
Joinder Application
There is no dispute that the proceedings between the husband and wife pursuant to s 79 of the Act (“the s 79 proceedings”) were finally determined by the Consent Orders.
There is no dispute that the second respondent was not a party to the s 79 proceedings at the time the Consent Orders were made. There was no dispute that there is no matrimonial cause between the husband and the second respondent.
Despite the making of the Consent Orders, the husband contends that it remains open to him to press Orders 4 and 5 of the final relief sought in his Amended Initiating Application filed on 16 August 2021. Having regard to paragraphs 16 and 17 of the husband’s Points of Claim, those Orders are intended to operate pursuant to s 106B of the Act.
It is useful to set out the relevant amended parts of the husband’s Amended Initiating Application so that Orders 4 and 5 may be seen in context:
2.If these proceedings are to be finalised by Trial within 12 months as of the date of filing the Husband’s initiating application, that within 60 days of these Orders, the Wife shall do all thing and sign all documents to effect the Motor Vehicle 1 (Rego Number …) be transferred to the sole name of the Applicant Husband to the exclusion of the Wife.3.If these proceedings are to be finalised by Trial after 12months as of the date of filing of the Husband’s initiating application, that the Wife shall pay a total sum of $140,000 to the Husband in consideration forher retaining the Motor Vehicle 1 to the exclusion of the Husband.4.That within 60 days of the date of these Orders, the
Wife2nd Respondent shall transfer 800,000 RMB to an (sic) nominated account of Husband.5. That within 60 days of the date of these Orders, the second respondent shall transfer $93,028 to the Applicant.
Although Order 5 appears in the Amended Initiating Application as if part of the original text (i.e., not underlined), it was a new Order when compared to the Initiating Application.
From the outset of the proceedings, the husband sought the return in specie or by way of reimbursement of the vehicle and the cash payments made on 12 December 2019. There was a dispute between the husband and wife as to the character and purpose of the two classes of transaction.
There is no dispute that, in mid-December 2019, 800,000 RMB was transferred from the husband to the wife. The wife deposes that half of that money was transferred to the second respondent by her on 6 February 2020.
Nor is there any dispute that, in December 2019, the husband purchased the vehicle of in the name of the wife for a cost of about $146,000. The wife sold the vehicle in October 2020 for $117,500 and paid $93,028 of the sale proceeds to the second respondent.
The husband contends that these money transfers to the second respondent give rise to a resulting trust for the benefit of the husband and wife (Points of Claim at paragraphs 14 and 15). That is, the husband intended to claw-back from the second respondent, and so restore to the matrimonial pool for distribution pursuant to s 79 of the Act, the two categories of assets. This is clear from clause 15 of the Points of Claim which reads “…they were part of the matrimonial asset pool to be allocated in accordance with the orders of the court …”
At the commencement of the hearing on 27 April 2022, I posed a number of questions to the legal representatives to assist me to correctly identify the issues for determination. Those questions were to the following effect:
(a)Does the operation of s 106B of the Act, as against a third person, survive or persist after the substantive proceedings pursuant to s 79 between the spouse parties have concluded?
(b)Does the answer to (a) change where the third person was not a party to the proceedings at the time the s 79 proceedings were finalised?
(c)If s 106B does survive the making of final orders, is the husband for any other reason precluded from seeking relief against the third person, for example, does an estoppel arise?
Question (a): Does the operation of s 106B of the Act, as against a third person, survive or persist after the substantive proceedings pursuant to s 79 between the spouse parties have concluded?
The husband contends that the Consent Orders were intended to carve out the relief that he sought against the second respondent. Noting that there is no dispute that the majority of the car sale proceeds and the ‘dowry money’ (or part of it) had been paid to the second respondent, the husband submitted that the broad ambit of s 106B of the Act was engaged. It was said that the transactions were intended to, and did, reduce the matrimonial asset pool and that the concessions made by the wife were “more than enough” to enliven s 106B of the Act and to enjoin the second respondent to the proceedings. He added that the wife was thus a necessary party to the proceedings – i.e. that she should not be removed as a party.
When asked to identify “The proceedings under this Act” to which s 106B applied, the husband’s counsel contended that:
(a)If the proceedings were those under s 79, then the relief sought under s 106B could be “carved out”; and
(b)If the proceedings were those constituted under s 106B itself, such proceedings could stand alone because “they are proceedings under this Act”.
Were Orders 4 and 5 of the husband’s final relief carved out of the Consent Orders?
Counsel for the second respondent relied on the submissions in his Case Outline and, in his oral submissions, referred to the authorities which identified that, subject to the limited jurisdiction conferred by s 79A of the Act, the power of the Court to make an order under s 79 of the Act is confined and which, once exhausted (which may occur incrementally), renders the Court functus officio. Such submission is consistent with the authorities: Mullane v Mullane (1983) 45 ALR 291; 8 Fam LR 777; Marriage of Florie (1988) 12 Fam LR 7 at 13; Gable & Yardley (2008) 40 Fam LR 66 at [57]; Rahman v Rahman (2020) 62 FamLR 73 at [22], [25].
Order 4, in its original form, sought the refund of 800,000 RMB to the husband by the wife. In its amended form, “the wife” is struck out and replaced only with “2nd Respondent”. Absent any reference to the wife in that order, nor any other order addressing the 800,000 RMB, there is no connection between it and the claim pursuant to s 79 of the Act.
Order 5 of the Amended Initiating Application was new and sought the payment of a specific cash sum from the second respondent to the husband. Obviously, the cash sum of $93,028 relates to the portion of the vehicle sale proceeds that the wife says she provided to the second respondent on 20 October 2020, it being the exact amount paid to her. The husband deleted Orders 2 and 3 of the final relief contained in his original Initiating Application when he prepared the Amendment. In so doing, he severed the connection between the money sought from the second respondent and the subject matter of his claim against the wife in the s 79 proceedings.
There is no dispute that the Consent Orders disposed of all issues between the husband and wife. While Orders 4 and 5 existed as proposed orders, there was nothing to ‘carve out’ from the s 79 proceedings.
Looked at another way, if an issue is carved out from a set of orders, then what one must really mean is that the power under s 79 of the Act is not fully exhausted. That was not the case, it being common ground that the s 79 power was at an end by the making of the Consent Orders. This much is clear from the face of the Consent Orders which are introduced by the words: “The Court orders by consent and on a final basis”, and by Order 7.
Can section 106B operate as a stand-alone power, after the making of final orders under section 79?
Section 106B of the Act is located in Part XIII – Enforcement of Decrees. It relevantly provides:
(1)In proceedings under this Act, the court may set aside or restrain the making of an instrument or making of a disposition by or on behalf of, or by direction or in the interest of, a party, which is made or proposed to be made to defeat an existing or anticipated order in those proceedings or which, irrespective of intention, is likely to defeat any such order.
[…]
(2)The court may order that any money or real or personal property dealt with by any instrument or disposition referred to in subsection (1) […] may be taken in execution or charged with the payment of such sums for costs or maintenance as the court directs, or that the proceeds of sale must be paid into court to abide its order.
(3)The court must have regard to the interests of, and shall make any order proper for the protection of, a bona fide purchaser or other interested person.
(4)A party or a person acting in collusion with a party may be ordered to pay the costs of any other party or of a bona fide purchaser or other person interested of and incidental to any such instrument or disposition and the setting aside or restraining of the instrument or disposition.
Section 106B(1) only applies “In proceedings under this Act”.
The question is whether “proceedings under this Act” can also be stand-alone proceedings under s 106B.
The authorities on which the second respondent relied considered whether s 85 of the Act could operate on a stand-alone basis. That section was repealed in 2000 by the same instrument that inserted s 106B into Part XIII. Section 85 relevantly provided:
In proceedings under this Part, the court may set aside or restrain the making of an instrument or making of a disposition by or on behalf of, or by direction or in the interest of, a party, which is made or proposed to be made to defeat an existing or anticipated order in those proceedings for costs, maintenance or the declaration or alteration of any interests in property or which, irrespective of intention, is likely to defeat any such order.
(underlining added)
The underlined words indicate the differences between s 85, as it then was, and the current form of s 106B. Notably, s 85, which was located in Part VIII, applied to proceedings under Part VIII, whereas s 106B applies to proceedings under the Act as a whole.
Inthe Marriage of Whittaker (1979) 5 Fam LR 769 at 772; (1980) FLC ¶90-813 (“Whittaker”), Nygh J held:
It is clear that there must be in existence proceedings under Part VIII of the Act before section 85 [the precursor to section 106B] can come into operation: In the Marriage of Page (1979) 4 Fam LR 663 at 666 followed by Pawley J In the Marriage of Rickie (1979) 4 Fam LR 737; 24 ALR 507. It is obvious that such proceedings must be under Part VIII, other than proceedings under section 85, otherwise the introductory qualification “in proceedings under this Part” become meaningless.
At [774], of the same judgment, his Honour held:
For, as I have indicated earlier, proceedings under section 85 cannot stand by themselves and must be ancillary to the proceedings on foot or completed under Pt VIII of the Act.
InThe Marriage of Cullen (1980) 6 Fam LR 480 at 483-484 (“Cullen”), Treyvaud J held, after traversing the authorities, that:
The authorities interpreting section 85 merely continue, and apply, the principles to which I have adverted; although each is the decision of a single judge, and thus of merely persuasive authority, their ratio is strong and clear, namely that an offending transaction may anticipate proceedings and orders, but it cannot be set aside under s 85 unless there are on foot proceedings seeking orders which the transaction anticipated, and was designed to defeat […]. The relevant wording of section 85(1) is not difficult to interpret. The words “in proceedings under this Part”, when coupled with the words “in these [sic] proceedings” (the language of the section was “those”), in my view admit no other interpretation than that it is a pre-requisite to the exercise of the power contained in s 85(1) there must be in existence, at the time the application to exercise that power is made, an application which the offending transaction is designed to defeat.
I am mindful that whereas s 85 used the language “in proceedings under this Part” (being Part VIII), s 106B used the words “In proceedings under this Act” which widens its ambit.
Nevertheless, in Whittaker, Nygh J made it clear that the power under s 85 applied to proceedings “other than” proceedings under s 85. That is, it is a power that operates in aid of, or ancillary to, different proceedings. The same conclusion was reached in Cullen, being that the section insists on a separateness between, on the one hand, the operation of s 85 and, on the other, extant proceedings seeking orders which the transaction (which attracts s 85) was designed to defeat.
Indeed, if one construes the section grammatically, the word “those” is a demonstrative pronoun used to identify a thing or person which is at a distance to the subject. This relationship between “in proceedings under this Act” and “those proceedings” places “the proceedings under this Act” at a distance to the operation of the power under s 106B to set aside or restrain.
The foregoing analysis is adequate to conclude that s 106B is not a stand-alone power. It is a power that is ancillary to, and operates in aid of, the enforcement of an order made under the Act. Given the power under s 79 was spent by the Consent Orders and the facts have thereafter merged in them, there is nothing to which it can any longer attach or maintain an independent existence.
However, if more is required, s 106B only applies to an instrument or disposition that has defeated or may defeat an existing or anticipated order.
In Milligan & Milligan and Anor (2017) FLC ¶93-811 at 77,823 at [91] (“Milligan”), the Full Court of the Family Court of Australia– when considering s 106B in its current form - cited with approval Nygh J in Whittaker (supra) at 773:
…the disposition must be shown to have the direct effect, or the likely direct effect of defeating an existing … order in the sense that if the disposition had not taken place the order would have been effective. Hence, if an order was, or would in any event have been, defeated by other supervening circumstances, it cannot be said that the order was defeated by the disposition or was at any time likely to have been defeated by it.
At paragraph 92 of Milligan, the Full Court applied Gould & Gould; Swire Investments Pty Ltd (1993) FLC ¶92-434, where it was relevantly held:
…an applicant … may establish [the s 106B claim] by demonstrating that the pool of property of the parties has been diminished by the making of an instrument or disposition in question to an extent that is likely to have an impact on the anticipated orders.
When considering the Consent Orders, the only acts or things to be done to give effect to them were for the wife to transfer her right, title and interest in the B Street, Suburb C property to the husband (Order 1); and to instruct D Real Estate, Suburb C to pay the husband the whole of the accrued rental income standing to the parties’ credit in the firm’s trust account (Order 2).
Any disposition of assets which may have attracted s 106B could not defeat the Consent Orders given that the only acts or things that needed to occur for their full implementation was for documentation and authorisation to occur, both of which could be remedied, if necessary, by invoking s 106A pursuant to Order 6. No payment of money from one party to another was required. Thus, the Consent Orders were not defeasible in the manner contemplated by s 106B.
Finally, and for the avoidance of doubt, the use of the words “as between themselves” in the covering email to the Associate on 24 November 2021 does nothing to alter the result. That is because parties cannot invite the exercise of jurisdiction on the court beyond that which is permitted by the four corners of the statute, it being borne in mind that the husband’s relief against the second respondent was framed solely by reference to s 106B of the Act.
In light of the reasons contained above, the answer to Question (a) is ‘no’.
Question (b): Does the answer to (a) change where the third person was not a party to the proceedings at the time the s 79 proceedings were finalised?
No. If s 106B of the Act does not operate as a stand-alone cause of action after the final disposition of the substantive proceedings, it makes no difference to the ultimate determination whether the third person was a party to the proceedings at the time of the final orders or not.
Question (c): If s 106 does survive the making of final orders, is the husband for any other reason precluded from seeking relief against the third person, for example, does an estoppel arise?
It was common ground that this question did not need to be considered, although for differing reasons. Counsel for the husband contended that an estoppel did not arise, as there was no hearing of the matter between the husband and wife on the merits. Counsel for the second respondent indicated that an estoppel or like argument would be better asked and addressed at the commencement of any fresh proceedings.
Conclusion
For these reasons, I find that there are no proceedings to which the second respondent can be joined, the Court having exhausted its jurisdiction under s 79 of the Act. The Joinder Application is therefore dismissed.
The husband’s counsel identified an alternative position being that, if the Court decided against his client on the Joinder Application, that he may have leave to file an Application to re-open the s 79 proceedings. The husband does not require leave to file an Initiating Application and so I need not consider the matter further.
Costs Application
The wife sought costs in the sum of $6,646.50. This sum has been calculated according to the scale for Division 2 matters. The costs comprise fees and disbursements incurred until 3 November 2021, an ASIC Search and the filing fee of, it seems, the Costs Application itself.
The wife abandoned Order 2 of her Costs Application during the hearing, being the costs of the Costs Application.
The husband proposes that Order 1 of the Costs Application be dismissed. He sought, at Order 2 of his Response to the Costs Application, an Order that reads: “That the Respondent is to pay $1,000 to the Applicant as agreed and settled between the parties on 21 January 2022”.
Does the Court have jurisdiction to make a costs order between the husband and wife?
The first question to be resolved in this matter is whether the Court has jurisdiction to make a costs order.
The husband’s counsel submitted that the reference to s 81 of the Act in Order 7 of the Consent Orders meant that the parties intended that the Orders would extinguish both the substantive cause between the parties including any costs application. The wife’s legal representative identified that Order 7 was limited to the substantive dispute under s 79 of the Act but that the issue of costs was still open.
Section 81 of the Act reads:
In proceedings under this Part, other than proceedings under section 78 or proceedings with respect to maintenance payable during the subsistence of a marriage, the court shall, as far as practicable, make such orders as will finally determine the financial relationships between the parties to the marriage and avoid further proceedings.
Firstly, s 81 is located in Part VIII of the Act. “Proceedings under this Part” thus means proceedings under Part VIII, which deals with property arrangements between parties to a marriage. The closing words “… and avoid further proceedings”, in context, means further proceedings under Part VIII (subject to the stated exception of proceedings under s 78 or for maintenance). The power of the Court to make Orders in terms of costs is located in s 117 of the Act, within Part XV. The duty of the Court expressed in s 81 does not touch upon proceedings that may be constituted under a Part other than Part VIII (subject to the stated exceptions).
Secondly, r 12.13(3)(b) of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) (“the Rules”) permits a party to apply for costs by filing an Application in a Proceeding within 28 days after the final order is made. It would make no sense if the making of the “final order”, i.e. the orders pursuant to s 79 of the Act extended to finalise costs given that the Rule expressly contemplates that an application for costs can be made after the disposition of the substantive matter.
For these reasons, I find that the inclusion of Order 7 in the Consent Orders does not extinguish the Court’s jurisdiction to make a costs order under s 117 of the Act.
Are there circumstances that justify the making of a costs order?
Section 117(1) of the Act relevantly provides that: “Subject to subsection 117(2) […], each party to proceedings under the Act will bear his or her own costs.”
Section 117(2) relevantly provides that:
“If, in a proceeding under the Act, the Court is of the opinion that there are circumstances that justify it in doing so, the court may, subject to subsections (2A)[…] and the applicable Rules of Court, make such order as to costs […] as the court considers just.”
The wife contends that there are justifying circumstances within the meaning of s 117(2A) of the Act, namely that:
(a)For the purpose of s 117(2A)(f), she made offers of settlement to the husband in terms that were the same as the Consent Orders on 21 January 2021 (prior to the first return date), 1 April 2021 and 16 July 2021; and
(b)For the purpose of s 117(2A)(a), the husband is in a superior financial position to her, as demonstrated by the Financial Statements filed by each of the parties (and relied on in the proceedings before me), and the effect of the Consent Orders. Comparing the Financial Statements relied on by the parties at the hearing before me and the effect of the Consent Orders:
(i)The husband will retain about $3,031,532 in assets and no liabilities. He says his only income is $2,100 from the rent at B Street, Suburb C and that he has $143 of expenses per week; and
(ii)The wife will retain assets valued at about $854,059 in assets (using Part I of her Financial Statement and deducting Items 36 and 43, which were transferred to the husband under the Consent Orders), $55,859 in superannuation and about $817,077 in liabilities.
On the other hand, the husband’s counsel also referred Re Minister for Immigration and Ethnic Affairs of the Commonwealth of Australia; Ex parte Lai Qin (1996) 186 CLR 622 at 624-625 (“Lai Qin”), in which the High Court held at 625:
If it appears that both parties have acted reasonably in commencing and defending the proceedings and the conduct of the parties continued to be reasonable until the litigation was settled or its further prosecution became futile, the proper exercise of the costs discretion will usually mean that the court will make no order as to costs in the proceedings. This approach has been adopted in a large number of cases.
(footnotes omitted).
The effect of the husband’s submission was that this Court ought to decline to make a costs order because the circumstances of the settlement were apposite to facts of Lai Qin. If the relief sought by the husband in respect of the Costs Application were limited to its dismissal and the costs of the summons (to use the language of Lai Qin), I might have been more inclined to agree with him, consistent with the authority.
However, Order 2 of the husband’s Response seeks that the Court make a costs order in favour of the wife. Taking Orders 1 and 2 of his Response together, the husband has conceded liability and limits the issue to quantum.
This presents a distinction between the facts of this case and Lai Qin wherein the Minister did not proffer to pay the prosecutrix’s costs to any extent.
The fact that the husband has conceded liability for costs weighs in favour of the formation of my opinion that there is a circumstance justifying the making of a costs order. This opinion is bolstered by the fact that the final orders were made in terms that reflected not one but three offers of settlement, including one that was made prior to the first return date of the proceedings.
In the circumstances, I am of the opinion that there are circumstances justifying the making of a costs order.
What costs order should be made?
The method of calculating costs is set out in r 12.17 of the Rules and the scale of costs for Division 2 is contained in Schedule 3 of those Rules. I have a discretion as to the basis on which the costs may be calculated (r 12.17(1)) and am to have regard to the factors in r 12.17(3).
The wife has set out the basis of the costs, which were calculated according to the scale.
The husband proposes the sum of $1,000 in his Response, being the same sum that he offered to her in a letter dated 18 January 2022. In that letter, I find the rationale for the sum, being “a token of goodwill”. No objection was taken by the wife to the admissibility of this document.
The wife’s response to the husband’s offer of costs was adduced by the husband and was the subject of objection by the wife. The wife contended that I should not read the response (at HAff-3, Annexure B) because it was the subject of without prejudice privilege. The husband contended that the document was admissible because the privilege was “subject to costs”. Given the argument was a costs argument, the privilege was so confined and his client was at liberty to adduce the wife’s response.
The husband’s counsel cited the established principle in Calderbank v Calderbank [1976] Fam 93 (CA), being that offers of compromise are without prejudice save as to costs. Thus, the otherwise privileged communication about settlement negotiations is admissible when considering the costs of the subject matter of the negotiation.
The wife’s solicitor differentiated the document containing the wife’s response from the general rule on the basis, as I understood her, that the subject matter of the document was the settlement of the costs of the s 79 matter, not the settlement of the s 79 itself.
I do not to accept the wife’s analysis. The wife filed an Application in a Proceeding on 15 December 2021 seeking costs. That Application presented a cause of action (for want of a better phrase) in itself. That Application was then the subject of an offer of compromise. There was no objection raised by the wife to prevent me from receiving into evidence the husband’s offer of 18 January 2022, even though it was a document at recorded an offer of settlement as to the costs of the s 79 application, not the settlement of the s 79 application itself. To contend that I cannot receive into evidence the next piece of correspondence in the same chain of communication does not follow. For that reason, I have admitted the document recording the wife’s response to the husband’s offer, at HAff-3 Annexure B, into evidence.
Turning to the document, the wife accepted the husband’s offer of $1,000 and provided a Consent Order for his execution. The proposed Consent Order contained three orders: that the husband pay $1,000 to her by way of costs in 14 days, that interest and Court rates accrue on any unpaid portion and that the wife be removed as a party to the proceedings.
The husband’s evidence, being that “on 21 January 2022, the lawyer for Ms Qing replied with an email accepting the offer, stating “our client has instructed us to accept your client’s offer in relation to costs” is not an accurate reflection of the negotiations. That statement fails to identify that the wife’s acceptance of the $1,000 for costs was part of a wider proposal for the accrual of interest and her removal from the proceedings.
The husband continues to oppose the wife’s removal from the proceedings and does not proffer the accrual of interests on the costs payable to her. In those circumstances, it is not reasonably open to me to conclude that the wife was willing to accept $1,000 for costs simpliciter, as the husband would have me do. Her acceptance of that sum was part of a suite of orders which were not accepted by the husband. As such, there was no agreement between the parties about costs, contrary to the way that Order 2 of the husband’s Response is expressed.
Turning to the question of quantum, I have the discretion to make such costs order as I consider just.
The scale of costs is indicative, not prescriptive.
The sum of $1,000 proposed by the husband is inadequate.
The wife first made an offer that accorded with the final orders on 21 January 2021. Her protection for costs begins at that time. There is no doubt that it was appropriate for proceedings to issue given the parties held the B Street, Suburb C property as joint tenants and orders were required to end their financial relationship in that regard at least.
The wife says that she incurred (at scale) $2,357 “opposing an application up the completion of the first Court date.” The first Court date was 3 February 2021. The wife engaged her solicitor on or about 22 July 2020. I am unable to discern from the evidence what portion of the $2,357 was incurred between 22 July 2020 and 20 January 2021 and then between 21 January 2021 and 3 February 2021.
The costs claimed by the wife for fees and disbursements at paragraph 20(b) to (j) raise no issues. Those items add to $4,289.50. The wife is also entitled to her costs for the period 21 January 2021 to 3 February 2021, although I have no evidence as to what they comprise. In the circumstances, I am satisfied that it is just to make a costs order in favour of the wife in the sum of $4,289.50.
Removal Application
Having decided that the Joinder Application should be dismissed for the Reasons set out above, the wife’s Removal Application falls away.
That is, where is has been held that the Court is functus officio, such that there are no proceedings to which the second respondent can be enjoined, in the corollary, there are no proceedings from which the wife can be removed.
I certify that the preceding one hundred and twelve (112) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Eldershaw. Associate:
Dated: 16 June 2022
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