Phoenix and Silva
[2017] FCCA 1436
•27 June 2017
FEDERAL CIRCUIT COURT OF AUSTRALIA
| PHOENIX & SILVA | [2017] FCCA 1436 |
| Catchwords: FAMILY LAW – Property – application listed for trial – parties submit proposed minute of consent orders – court requests statement of agreed facts – agreed facts disclose payment to wife equal to 9.82% of asset pool – application listed for directions – further submissions do not warrant approval being granted – necessity for compromise to be just and equitable – application listed for trial – respondent files application in a case seeking recusal of judge from hearing – use of comparable decisions as guide to likely property adjustment – certainty and consistency of decision making – apprehended bias – relevant principles – application refused. |
| Legislation: Family Law Act 1975 (Cth), ss.79, 81 |
| Cases cited: Amero & Croft [2010] FamCAFC 118 Luck v University of Southern Queensland [2009] FCA 479 Luck v Secretary, Department of Human Services [2017] FCA 540 Reynolds & Moore [2014] FamFC 1174 Stenning v Sanig [2015] NSWCA 214 Articles: Bell, Judicial Expression of a Preliminary View (2015) 5 Fam L Rev 73 |
| Applicant: | MS PHOENIX |
| Respondent: | MR SILVA |
| File Number: | MLC 11499 of 2015 |
| Judgment of: | Judge A Kelly |
| Hearing date: | 23 June 2017 |
| Date of Last Submission: | 23 June 2017 |
| Delivered at: | Melbourne |
| Delivered on: | 27 June 2017 |
REPRESENTATION
| Solicitor for the Applicant: | Mr DeGama |
| Solicitors for the Applicant: | Vernon DeGama & Associates |
| Counsel for the Respondent: | Mr Thomas |
| Solicitors for the Respondent: | Ravi James Lawyers |
ORDERS
That the Application in a Case filed 9 May 2017 is dismissed.
IT IS NOTED that publication of this judgment under the pseudonym Phoenix & Silva is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLC 11499 of 2015
| MS PHOENIX |
Applicant
And
| MR SILVA |
Respondent
REASONS FOR JUDGMENT
Introduction
This matter has been set down for hearing on 25 September 2017. Application was made on 23 June 2017 that I recuse myself for apprehended bias. I refuse that application. My reasons follow.
The circumstances giving rise to the application arose from an application by the parties that the court should approve, in chambers, proposed consent orders giving effect to the compromise of an application by the wife for an adjustment of property interests. By that proposed compromise the wife was to receive a payment of $30,000 in final property settlement following a marriage of nearly 3 years duration. I declined to make that order in chambers, or as matters evolved, in open court following the making of further oral submissions.
It is as well to set out the procedural history.
The property application was filed on 7 December 2015. On 1 March 2016, consent orders were made that the parties attend a conciliation conference on 15 April 2016. The matter was listed for a final hearing on 22 June 2016. The matter did not proceed on that date.
On 8 July 2016, an order was made appointing a litigation guardian for the respondent husband. The guardian, who is the respondent’s father, had sworn an affidavit on 20 June 2016 deposing that the respondent had suffered a stroke in December 2015 and that, as a result of his injuries, the respondent’s behaviour had become erratic. The guardian exhibited to his affidavit letters from his treating general practitioner, Dr H, and a psychiatrist, Dr V. In a letter dated 20 June 2016, addressed ‘To Whom it May Concern’, the opinion expressed by the psychiatrist was that the respondent, then aged 35 years, had poor concentration, short term memory loss and difficulties making decisions such that he was unable to make decisions concerning the current proceedings or to look for any paid employment in the foreseeable future.
The parties have prepared trial affidavits and financial statements. The asset pool is modest. At an indicative level, there is real property in which there may be equity of some $230,000. There are ancillary assets having a value of about $45,000. In addition, the husband has accumulated superannuation of $54,000. The current values of these assets are not confirmed by contemporaneous evidence.
An amended application and response has been filed. The relief sought by the applicant wife is that, of the total matrimonial assets, there should be an adjustment of interests as to 20% to the wife and 80% to the husband. I cannot conclude that the wife’s application is over-reaching. The amended response of the husband sought dismissal of the application and this was confirmed during submissions before me. I was told the guardian’s position was that the applicant should get ‘nothing’. It was submitted that this was a commercial compromise.
A further trial date (of 17 August 2016) was adjourned and the matter was then listed for 1 February 2017. On that date the matter was again adjourned with orders being made to regulate the filing of medical evidence as to the husband’s current condition and for a valuation of the parties’ home. Those orders have not been complied with.
The matter was then listed for final hearing before me on 18 April 2017. Shortly before that date, on 11 April 2017, the parties’ lawyers submitted a minute of consent orders seeking that orders be made in accordance with those minutes without the need for an attendance at court.
I directed that the parties file an agreed statement of facts.
The following may be derived from the parties’ agreed facts:
a)the applicant is aged 32 years and the respondent is aged 36 years;
b)the parties were married on (omitted) 2010;
c)the parties separated on 20 September 2013;
d)there remained unresolved questions whether the respondent has withdrawn monies from the parties bank accounts, and if so, what sums;
e)the asset pool comprised assets of $251,000;
f)the respondent had superannuation of $54,000;
g)the respondent had made the majority of financial contributions;
h)the applicant is in generally good health (although she suffers a hearing disability and is currently unemployed);
i)the respondent had been employed with (employer omitted) before December 2015 when he suffered a stroke, as a result of which he was an in-patient for a brief period following which he underwent 4 weeks rehabilitation;
j)the respondent has recovered fully but continues to suffer poor concentration, memory loss and difficulty in decision making;
k)the respondent remains dependent on rental income from the property. The applicant is on unemployment benefits.
The parties’ agreed statement indicated that under the proposed compromise, the applicant was to receive 9.82% of the pool represented by payment of a fixed sum of $30,000 and that “[o]therwise the parties will retain all assets and liabilities in their name and control.”
On those agreed facts I concluded that I could not, without more, make a final property order approving the parties’ proposed compromise.
In those circumstances, I directed that the matter be listed for mention. The parties’ appeared before me on 21 April 2017. For present purposes it is sufficient to set out the following exchanges, part of which were relied upon by the respondent husband in the present application:
Thank you. I asked that this matter be mentioned and I’m particularly grateful to you for your attendance and for your ensuring that your clients are here also. There are, fundamentally, three matters that I wish to raise with the parties today. The first of those is that for there to be an approval, a court order, in relation to a resolution of any property adjustment, the court has to be satisfied that it’s just and equitable for the orders that are being proposed to be made. There are two aspects of this which are of immediate concern to me
The first is that I see that the respondent has a medical condition; he has suffered an ischaemic stroke. I understand – someone’s phone is on. I understand from the agreed facts that the respondent husband suffered that stroke in December 2015 and at the moment I have no information about his current condition, it being some nearly 16 months later, and I will not be able to make any order in this matter until I am satisfied as to what his current medical condition is. That will require medical evidence
. . .
The other aspect of it concerns the proposed division. When the proposed orders were first put before the court for approval, there was no statement of agreed facts. There now is a statement of agreed facts and that indicates that the wife is to receive less than 10 per cent.
. . .
On any view of the authorities, that is, in my view, manifestly inadequate. Now, there are two aspects to this, either or which or both of which commend themselves for consideration. One alternative is that the parties inquire of the registry whether there is available an opportunity for mediation by a court registrar and, if assistance is needed to obtain that appointment, this court will see what can be done to do that.
The further matter that commends itself to me, in the circumstances that this matter was put up for approval on a statement of agreed facts, does indicate to me the very real desirability of the applicant wife considering, at the least, that she have a conference with a suitably experienced member of the junior bar who practises in family law who is able to provide her with advice in conference about what her prospects are. . . .
. . . I am concerned that an award of nine per cent for even a relatively brief marriage is not just or equitable and I cannot approve it and will not approve it. Now, that is all I wanted to say at this stage in this proceeding. The matter will be adjourned and I think the appropriate course is to allow the parties perhaps three to four weeks to arrange for medical evidence that can be put before the court, exhibited to an affidavit from the treating practitioner and if there’s a treating specialist. I need to understand what the future needs of the respondent are and the same period will be sufficient, I think, for the applicant wife to obtain advice about this matter. . . . (emphasis added)
The court was informed that the parties had in fact been represented by counsel in the course of some negotiations for their property settlement.
The matter was then stood down for the better part of 2 hours. When the matter was re-mentioned I stated:
. . . if parties cannot themselves come to a resolution, then it is necessary for the court to hear and determine the application and to determine what in all the circumstances of their relationship and their dispute is a just and equitable adjustment of their property rights, if any.
I then indicated that the matter would be relisted for trial. Discussion ensued as to the need for updated medical reports and current valuation of the property. The parties were asked to agree regarding those matters and submit minutes. As events occurred, this became problematic. Ultimately, on 2 May 2017, orders were made that the matter be relisted for final hearing on 25 September 2017.
On 9 May 2017, the respondent’s guardian filed an application in a case supported by an affidavit sworn on that date, by which orders were sought that I should disqualify myself from further involvement in the matter. The return date of this application was brought forward at the respondent’s request.
In addition, the respondent’s father tendered an order of the Guardianship and Administrative Tribunal made on 5 April 2017 which confirmed that he had been appointed as an administrator pursuant to the Guardianship and Administration Act 1986 (Vic). As the applicant wife’s solicitor pointed out, the orders of that tribunal recorded in express terms that the application for a guardianship order was dismissed by reason that, on the evidence presented, a guardian was not required. I pause to observe that the court was not informed of the evidence that was adduced before that tribunal on 7 April 2017 in relation to that application.
Although the affidavit foreshadowed that the guardian would rely upon a transcript of the proceedings on 21 April 2017, the transcript was not exhibited to the affidavit. When a copy of it was provided to me at the hearing, it became evident that the respondent relied upon two aspects of the transcript referred to above, excerpts of which I restate:
There now is a statement of agreed facts and that indicates that the wife is to receive less than 10 per cent. . . On any view of the authorities, that is, in my view, manifestly inadequate.
. . .
I am concerned that an award of nine per cent for even a relatively brief marriage is not just or equitable and I cannot approve it and will not approve it.
On those facts, it was submitted, I should recuse myself from the hearing and determination of this application.
Mr Thomas, identified three authorities which, he said, supported the submission that I had pre-judged the matter such that I should recuse myself. I have now obtained and examined those authorities:
(a)first, reference was made to Reynolds & Moore [2014] FamFC 1174, a decision of the Full Court of the Family Court of Australia in which a wife was awarded 10% of certain assets where the parties had had a short relationship and there were no children of the marriage. The result of that appeal is distinguishable from the present in at least the following respects: (1) the 10/90 adjustment was of non-superannuation assets only; (2) the parties divided the accumulated superannuation ~ 50/50; (3) the husband had paid numerous post separation benefits to the wife. By contrast, here, there is no suggestion of numerous, post separation benefits to the wife. Nor does the current proposal in this case comprise a 90/10 division of non-superannuation assets plus a 50/50 adjustment of superannuation assets;
(b)secondly, in Hurst & Weber [2009] FamFC 137, the parties had been in a short relationship, being of less than one year. Warnick and Boland JJ (with whom O’Ryan J agreed), considered an appropriate starting point to be that the wife should emerge from the relationship in much the same position as she had entered it. For that reason orders were made that would, in effect, leave her debt free and then make a modest allowance to her of $100,000. The Full Court held that it entailed no error to not apportion an asset pool on a percentage basis. The identified error was that dismissal of the wife’s application had not been just or equitable. Again, the case is distinguishable. The present marriage was of nearly three years duration. This relationship was nearly three times the length of that in Hurst’s case. The concept that parties to a short marriage should emerge from their relationship in much the same position as they had entered it may be accepted in some instances, but where it applies it should be applied to both parties – any other approach would be asymmetric. And so, the investigation of and determination how each party had entered a relationship would necessarily form part of the foundation for any compromise or any order made pursuant to s 79;
(c)thirdly, the appeal in CCD v AGMD [2006] FamFC 1291 concerned a property adjustment following a brief relationship. There the couple were aged 78 and 52 years respectively and the property division concerned a property pool of some $3.46 million. Warnick J concluded that a just and equitable result was one in which the liabilities of the wife were discharged and she received 10% of the asset pool. Finn and May JJ agreed. The property adjustment recognised the significant accumulation of an asset pool before the 78 year old husband had entered the relationship. The case bears no comparison with the present.
I do not discount that real assistance may be obtained from looking to the results of decided authorities; however, I consider that the guidance which is of particular relevance is to be derived from the statement and application of principle to the facts of each such claim. The further importance of having regard to comparable cases is that the adoption of that process “serves a principle central to the exercise of a wide discretion, namely, that like cases should be treated alike”: see Wallis & Manning [2017] FamCAFC 14, [45] (Thackray, Ainslie-Wallace and Murphy JJ). In that appeal, at [56], the Full Court underlined that:
. . . if comparable cases are used to inform the discretion, some analysis of those cases so as to ascertain their comparability should be undertaken . . . .
Wallis & Manning confirms the importance of considering whether the identified authorities were in truth comparable: see also at [62]ff.
The discretion conferred by the Act with respect to the making of orders that effect a property adjustment falls to be applied in a wide variety of circumstances. And so in the present case, in achieving consistency in decision making in property applications involving parties to a relationship of short duration and a modest asset pool, regard may be had to a range of authorities: cfKiefer & Kiefer [2008] FamCAFC 197; Hinkley & Morgan [2009] FamCAFC 135; Amero & Croft [2010] FamCAFC 118; Zagari & Habib [2010] FamCAFC 159; Greer & Mackintosh [2013] FamCAFC 16. No doubt other cases may also be identified and a decision made whether the facts of a particular case are sufficiently comparable and so of utility in the determination of what discretionary order should be made.
Sub-section 79(2) of the Family Law Act 1975 (Cth) proscribes that the court shall not make an order under that section unless it is satisfied that, in all the circumstances, it is just and equitable to do so. Viewed from that perspective, in my opinion the court must be clear about what is not just and equitable when being asked to form a view whether to approve a proposed property adjustment. On 21 April 2017, I determined that it was not just or equitable to approve the proposed compromise because:
(a)I was not satisfied by the parties’ agreed facts, that a payment of $30,000 to the wife was a fair adjustment of the asset pool;
(b)I did not have current evidence that addressed the husband’s medical condition or prognosis (and so his future needs);
(c)there was no evidence as to the current value of the real property – on one view, the payment of a fixed sum ($30,000) without regard to the present value of the property, entailed the payment of a static amount as against an asset held in a rising market;
(d)no account or investigation has occurred as to the withdrawal of sums following separation for which adjustment ought be made;
(e)no consideration has been made of the benefit to the husband of the rental income that he has received from the property since separation or, by contrast, that the wife was on unemployment benefits during that same period;
(f)the accumulated superannuation appears to be quarantined in the overall compromise;
(g)nothing that was submitted to me on 21 April 2017 provided any basis for a conclusion that the proposed compromise should be approved as one which provided a just, equitable and final adjustment of property rights between these parties.
The principles governing the making of orders under s 79 are not rendered inapplicable by reason that the order is one sought by consent. see generally, Harris v Caladine (1991) 172 CLR 84, 124 (Dawson J).
I am fortified in that conclusion in light of the husband’s submissions made on 23 June 2017 that the wife ought get ‘nothing’ and that the payment to her of $30,000 represented a commercial compromise. Such an approach appeared to me to entail a conclusion divorced from the appropriate analysis for which Part VIII of the Family Law Act1975 (Cth) provides and that was devoid of a reasoned approach as to what was a just and equitable adjustment of the parties’ asset pool.
In the present case, the parties appeared to accept that the principles applicable to the determination of an application for recusal on the grounds of apprehended bias were settled. The test for recusal on the ground of apprehended bias is to be determined by whether: “a fair-minded lay observer might reasonably apprehend that the judge might not bring an impartial mind to the resolution of the question the judge is required to decide”: Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337, [6], [33]; see also Johnson v Johnson (2000) 201 CLR 488, [11]; Luck v Secretary, Department of Human Services [2017] FCA 540, (Kerr J). The two elements of the test were stated in Ebner by Gleeson CJ, McHugh, Gummow and Hayne JJ who stated:
The apprehension of bias principle admits of the possibility of human frailty. Its application is as diverse as human frailty. Its application requires two steps. First, it requires the identification of what it is said might lead a judge (or juror) to decide a case other than on its legal and factual merits. The second step is no less important. There must be an articulation of the logical connection between the matter and the feared deviation from the course of deciding the case on its merits. ... Only then can the reasonableness of the asserted apprehension of bias be assessed. (at [8])
As those principles fall to be applied here, I confirmed with the respondent’s counsel that my observations, made on 21 April 2017, as to the propriety of approving a 9.82% adjustment of property interest in favour of the wife indicated that I might not bring an impartial mind to the determination of the property application if it were brought to trial.
I consider that this submission fails to recognise that on 21 April 2017 there was before the court an application for approval of a compromise. There was no determination – or trial – of the factual or legal issues in dispute as to what adjustment of property interests was just and equitable as between these parties. I did not and have not embarked upon that process. To the contrary, the application for approval of a compromise of a property application might be thought to entail quite distinct considerations. Put broadly, when a court is asked to approve a compromise it is required to determine what is ‘within the range’ of a just and equitable property settlement. At that level, a conclusion that a proposed compromise is outside the range of what is just and equitable does not trench upon, or entail any pre-judgment concerning, what is appropriate to the determination of an application for a property adjustment on its factual and legal merits. To the contrary, it only involves recognition that a compromise that is beyond the range of what is just and equitable will not be approved and, by extension, would not fall within the realms of the discretionary judgment that is required for an order pursuant to s 79.
For those reasons also the present case is distinguishable from the case to which I was referred and have now located, Mistral International Pty Ltd v Polstead Pty Ltd [2002] NSWCA 321. In that appeal, Sheller JA (Meagher and Beazley JJA agreeing), remitted a claim for re-trial because of remarks made during the course of the trial that were critical of evidence given by a party’s expert witness. The importance of the decision in Mistral International is that is it not enough for a judge to prefer the opinion of one expert over another without giving reasons: see Stenning v Sanig [2015] NSWCA 214, [64] (Hoeben JA, Macfarlan and Gleeson JJA agreeing).
In the present case, I have not embarked upon a trial or ventured any criticism of any witness. Thus far, I have noted that orders made earlier in this proceeding have not been complied with and that approval of the proposed compromise would require some evidence of the husband’s present medical condition and prognosis and as to the current value of the property. Without such information, a final property order for payment of $30,000 to the applicant is inappropriate. The conclusion that such compromise was outside the scope or range of a permissible consent order does not entail any pre-judgement of what order ought properly to be made in the exercise of discretion. Rather, what it does involve is consideration whether the terms of the compromise that is being proposed are outside an appropriate range.
Turning to the second, important step posed in Ebner, no attempt was made to articulate any logical connection between the husband’s allegations and a fear that there would be a deviation from the requirement to decide the property application on its merits. For the reasons stated earlier, I do not accept that there has been any pre-judgment of the property application. To the extent that I have involved myself in the case management of the application, I have identified and raised with the parties the shortcomings in the evidence.
To adapt the reasoning of Graham, J in Luck v University of Southern Queensland [2009] FCA 479, [10], if the making of an observation in the course of a proceeding as to what did not constitute a fair, equitable and final adjustment of property interests, was “sufficient to lead a judge to decline to hear or decide a case, the system would soon reach a stage where, for practical purposes, individual parties could influence the composition of the bench. That would be intolerable (see per Gleeson CJ and McHugh, Gummow and Hayne JJ in Ebner at [20]). So here, a decision to refuse to give approval to a proposed compromise marks out the judge’s decision as to what is not within the range of a just and equitable final adjustment of those interests.
More recently, and to similar effect, in Luck v Secretary, Department of Human Services [2017] FCA 540 at [91], Kerr J stated:
As was noted by L’Heureux-Dube and McLachlin JJ in R v S (RD) [1997]3 SCR 484 at [119]:
...the duty to be impartial ‘does not mean that a judge does not, or cannot bring to the bench many existing sympathies, antipathies or attitudes. There is no human being who is not the product of every social experience, every process of education, and every human contact with those with whom we share the planet....
The informed fair minded observer would know that the judicial oath taken by all judges requires them to determine all matters on their legal and factual merits.
For the avoidance of doubt, I record that on 21 April 2017 I was invited to provide an indication of what I considered to be an appropriate compromise. I declined that invitation. While it may be accepted that the judicial expression of a preliminary view is a matter that requires caution, that is not to say that it is preferable that a judge should remain silent: cf Bell, Judicial Expression of a Preliminary View (2015) 5 Fam L Rev 73; Antoun v R [2006] HCA 2; (2006) 224 ALR 51, [29]-[32], [53]; Johnson v Johnson (2000) 201 CLR 488, [46(2)]. In particular, in this case, the court was first asked by the parties to approve, on the papers, a proposed compromise for the adjustment of property interests. At that point, remaining silent on the matter was not an option. The intent of the parties’ application was that the court should make orders approving a property adjustment and that those orders would finally determine the parties’ financial relations: see s 81. However, the invitation to express a preliminary view as to the range within which a property settlement would be just and equitable is an altogether different matter from being asked to approve a compromise. It would have been inappropriate, in my view, to provide an indication of what I considered to be an appropriate compromise and I did not do so. I did not do so, because I was not prepared to move beyond my conclusion that the current proposal was outside the range of a property adjustment that was just and equitable.
For those reasons, I refuse the present application.
I certify that the preceding thirty-five (35) paragraphs are a true copy of the reasons for judgment of Judge A Kelly
Date: 27 June 2017
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