Pearson and Coli

[2016] FamCA 854

FAMILY COURT OF AUSTRALIA

PEARSON & COLI [2016] FamCA 854

FAMILY LAW – Bifurcation:  where it is found premature to make that order and better for consideration by the trial judge.

Family Law Act 1975 (Cth)

Jeeves (2008) FamCA 277
Nyles & Nyles [2010] FamCA 363
Oastler & Oastler (1993) FLC 92-390

APPLICANT: Ms Pearson

RESPONDENT: Mr Coli

FILE NUMBER: DGC 1112 of 2014

DATE DELIVERED: 6 September 2016

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Cronin J

HEARING DATE: 6 September 2016

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Sweeney

SOLICITOR FOR THE APPLICANT: Mason Black Lawyer

COUNSEL FOR THE RESPONDENT: Mr Robinson

SOLICITOR FOR THE RESPONDENT: Berger Kordos Lawyers

Orders

1. That the application in a case filed by the husband on 12 April 2016 is dismissed.

2. That the application of the wife for interim orders as set out in her application initiating proceedings filed on 8 June 2016 is dismissed.

IT IS CERTIFIED:

1. That pursuant to Order 19.50 of the Family Law Rules 2004 it was reasonable to engage counsel to attend.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Pearson & Coli has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: DGC 1112 of 2014

Ms Pearson

Applicant

And

Mr Coli

Respondent

REASONS FOR JUDGMENT

1. In the pending substantive proceedings, Ms Pearson (“the applicant”) seeks to set outside property orders made with the consent of Mr Coli (“the respondent”). Those orders were made in May 2014 by a registrar of the Court. The jurisdictional basis of the applicant’s application is said to be twofold. First, she relies on section 79A of the Family Law Act1975 (Cth) (“the Act”) and although her application has not been pleaded with particularity, it would seem her argument is that there has been a suppression of evidence, including a failure by the respondent to disclose relevant information. She is said to be intending to rely on section 79A(1)(d).

2. A second basis is the review of the registrar’s decision to make the orders.  That application is obviously well out of time but it may be that a trial judge ultimately harbours concern under the delegated power for the registrar to have made the orders in the first place. 

3. Be that as it may, the two issues for determination today are whether the applicant’s application under section 79A should be bifurcated and, secondly, whether an order for costs should be made against the applicant for lodging caveats against properties which the respondent says she had no entitlement to do because they were his properties alone arising from the original property orders.

4. There is also an unresolved discovery issue which has been the subject of discussion but I am not asked to make any orders today.  I suspect that that issue will not go away. 

5. It is sufficient for my purposes to indicate that the applicant and the respondent went to the Family Court of Australia in Dandenong in 2014 without legal representation but with draft proposed orders that a registrar ultimately made.  The property of the parties or either of them, along with interests in various trusts, seems to have been in the millions of dollars.  Even on a cursory reading of the orders, the language seems to me – (and I am not so deciding) – to be vague and incomplete to the extent that the power to make some orders was questionable and others were not an alteration of property interests at all.  Those matters may be the subject of the trial judge’s interest in whether the orders should be set aside as an inappropriate exercise of the delegated power. 

6. In my view, of the two orders sought today, I should not make either and these are my reasons. 

7. The affidavits of the parties are comprehensive and extensive.  I have taken those into account, noting that I am not in a position to make any findings today at all. 

8. First, the bifurcation issue. Albeit that the applicant seeks the substantive relief, it was the respondent who sought bifurcation in the section 79A application. There are a number of bases for the application but essentially they boil down to the questions of the likelihood of incurring extensive costs and inconvenience in conducting the litigation. Of course, if the applicant’s application is successful, the costs thereafter may mount even more.

9. Both counsel relied upon a judgment that I had written in Jeeves (2008) FamCA 277 and neither suggested the authorities there relied upon were incorrectly interpreted. There I said:

   [13]As a matter of general principle, a hearing of an application pursuant to s 79A will generally not be split into two or more parts. To do so can create difficulties as described in the Full Court’s decision in Patching and Patching (1995) FLC 92-585. In Patching, the Full Court gave reasons behind the general principle pointing out the difficulty that a court faced in trying to exercise its discretion to set aside or vary orders in the absence of potentially relevant evidence.  The Full Court urged caution about dividing s 79 applications.

   [14]In Gordon and Gordon [2005] FamCA 1171 the Full Court, Kay, Warnick and Guest JJ said:

   [20].Whilst there appear to be strong arguments as to why it might be inappropriate to hold split hearings in s 79A applications to determine firstly whether there is any basis for interfering with the existing orders, and then if there is such a basis what order it is then appropriate to make, there can be no doubt that there is a discretion to make an order for a split hearing. In a case where the financial circumstances of the parties are very complicated, the cost of obtaining up to date valuations and of litigating over the size of the asset pool can be very substantial indeed. Much of the cost involved in preparing for such litigation would be entirely wasted in a s 79A application if the applicant is unable to satisfy the Court of the existence of one of the necessary pre-conditions to the Court varying or setting aside the original order.

   …

   [16]An analysis of the background of the facts in Gordon’s case is useful.

   [17]Joske J was asked by the respondent to the s 79A and s 90K applications to split the hearing in the same way as I am here. The basis of the wife’s application, inter alia, was that she had had problems with the English language which precluded her from fully participating in the hearing without an interpreter as well as understanding the true nature and effect of the consent orders that she signed. The same logic obviously applied to the financial agreement which was executed.

   [18]Joske J said that the splitting of the hearing had advantages for both parties and particularly the wife, if she failed to establish the facts which amounted to a miscarriage of justice.  He pointed out that a rehearing of the property application would “probably take up to ten sittings days and that the necessary preparation would be costly”.

   [19]Joske J referred to Patching in which the Full Court referred to s 79A(1)(a) and quoted the Full Court as referring to the four step process in a s 79A application. Those four steps were:

   a)whether there had been a suppression of evidence or “other circumstances”;

   b)whether that amounted to a “miscarriage of justice”;

   c)whether in the exercise of discretion, the court should “vary the order or set the order aside”; and

   d)whether it should make another order under s 79.

   The Full Court referred to Oastler (1993) FLC 92-390 where it emphasised that it is generally preferable to deal with all of the steps in the one hearing because even if the court concluded that there had been circumstances amounting to a miscarriage of justice, it had to consider whether in all of the circumstances, it should exercise its discretion to vary or set aside the orders and/or make a new s 79 order. The Court pointed out that in the exercise of that discretion, it would have to have regard for the degree and nature of the miscarriage of justice which included the alteration of the positions of the various parties subsequent to the making of the orders.

   [20]     Joske J referred to the Full Court in Patching as saying:

   Of course there will be cases where it is convenient to divide the procedure into several hearings; for example, where there is a discrete issue under the first and or second step and the property circumstance (sic) of the parties are complex.

10. In Nyles & Nyles [2010] FamCA 363 Mushin J dealt with a similar application. There his Honour said:

    [13]It is clear from Patching's case that I have a discretion in determining whether to hear the husband's substantive applications to vary or set aside the applications for alteration of property interests and the financial agreement in order of either -

    ·the first step, and if the husband is successful, followed by the second and third steps together at a second hearing;

    ·the first and second steps together, and if the husband is successful, followed by the third step at a second hearing; or

    ·all three steps in the one hearing.

11. Both of those decisions point to the discretionary nature of the determination but in my view, the best person to exercise or not exercise that discretion is the trial judge.

12. There is no apparent immediate need to engage in the exercise which concerns the respondent so much.  In addition, the allocated trial judge will have the opportunity over some three or four months out from the trial to canvas the issues that will face the Court, what evidence the parties will call and how long the trial might take.  Thus, in my view, contrary to what was submitted on behalf of the respondent, the trial judge is in a much better position to assess the issue and then set out a binding order.  I would be hesitant, if not reluctant, to bind another judge to a pathway where the Full Court in Oastler & Oastler (supra) said at 80,006:

    Whilst it is not necessary to lay down as an inflexible rule that such a course cannot be followed, prima facie at least the course adopted does not appear to be consistent with what the section envisages. The section provides that “the Court may, in its discretion, vary the order or set it aside and, if it considers it appropriate, make another order under section 79 in substitution for the order so set aside”. The power granted to the Court hearing the application under section 79A to vary the existing order strongly suggests that there should be one proceeding only in which the proceedings to vary or set aside the order and if appropriate, to make another order, should be disposed.

13. There is no doubt that the Court has a discretion. In Patching & Patching (supra), the Full Court considered Oastler and said:

    The reasons for (the one hearing) are obvious, namely that even if the Court concludes that there have been circumstances which amount to a miscarriage of justice it must then consider whether in all the circumstances it should exercise its discretion to vary or set aside the orders and/or make a new s 79 order. In exercising that discretion it will have regard to, inter alia, the degree and nature of the miscarriage in question, any delay, alterations in the parties’ positions in the meantime, and the extent to which, if at all, it is now appropriate to vary the original orders: McIntyre, supra, provides an example of this. The last of those circumstances was important in this case for reasons which will subsequently become apparent. Of course there will be cases where it is convenient to divide the procedure into several hearings; for example, where there is a discrete issue under the first and or second step and the property circumstance of the parties are complex.

14. In those cases, the Full Court was concerned about waste of costs, but as the property here seems largely to be real property and valuations were completed in 2014, that exercise ought not to be as large.  In addition, there is the distinguishing feature here, not apparent in Jeeves or Nyles, of the application to review the registrar’s decision out of time.  That was clearly not the situation in Nyles. 

15. The authorities in respect of extension of time are well-known and maybe a less significant hurdle here for the reasons I discussed during the hearing.  For these reasons, I decline the bifurcate the proceedings now. 

16. I turn, then, to the second issue relating to costs.  The applicant lodged caveats in respect of 24 properties and the respondent objected.  The claim for the caveatable interest was that the applicant had an interest arising from a constructive, resulting or implied trust.  The caveat was complained about by the respondent, who said in his affidavit filed in April 2016 that he had not given the applicant permission or authority to lodge caveats “over my properties”.  I remain unsure who owns these properties because they include companies which act as trustees of family trusts.

17. The ground for the caveat might very well be spurious but I am not in a position to make any finding and I do not have to here because it would seem that the applicant is the beneficiary of some of those trusts.  But whilst that might not give rise to a caveatable interest, the respondent set out a number of bases why she lodged the caveats, including that properties were being sold without her entitlement under the final orders having been met.  That too would not give rise, normally, to a caveatable interest, depending on what the order provided.  Here, remarkably, the orders were silent. 

18. The problem of the caveats was resolved between the parties on 13 April 2016 on the basis that the applicant would withdraw them but the respondent then agreed to an order that if he intended to sell anything, he would give the applicant notice in writing.

19. The notice provision obviated a determination of the Court that day but the matter was sent off to a registrar to fix the day for the respondent’s costs application to be heard.  That brings the costs dispute before me.

20. Section 117 of the Act provides that in proceedings in this Court each party shall bear their own costs unless there are circumstances to justify departure from that principle. The respondent must therefore point to some basis to depart from that principle. Counsel for the respondent submitted that the applicant had been wholly unsuccessful. I reject that because she extracted from the respondent the concession which is set out in paragraph 3 of the orders concerning the notice provision.

21. In my view, the application of the respondent was well-founded when it became apparent that the applicant was not going to budge from her position in relation to the caveats. As against that, with the pending section 79A and extension of time applications, the respondent also took a pragmatic view. The applicant had not been responsive to his legal argument but I am not in any position to say that she did not have an argument.

22. Thus, both parties achieved a result that they wanted on the hearing at the court in April 2016. Accordingly, the application for costs also fails because there is no justifiable reasons on those facts to depart from the principle in s 117.

I certify that the preceding twenty two (22) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin delivered on 6 September 2016.

Associate: 

Date:  5 October 2016