Russell & Russell
[1999] FamCA 1875
•3 December 1999
[1999] FamCA 1875
FAMILY LAW ACT 1975
IN THE FULL COURT OF
THE FAMILY COURT OF AUSTRALIA
AT SYDNEY Appeal No. EA93 of 1998
File No. NC855 of 1998
IN THE MATTER OF:
LYNETTE JOY RUSSELL
Appellant/Wife
and
STEVEN CURTIS RUSSELL
Respondent/Husband
REASONS FOR JUDGMENT OF THE FULL COURT
BEFORE: Ellis, Finn and Mushin JJ.
DATE OF HEARING: 6 May, 1999
DATE OF JUDGMENT: 3 December, 1999
APPEARANCES:
Mr. Maiden of Counsel instructed by O’Sullivan Saddington, Solicitors, Level 4, 23 Watt Street, Newcastle, N.S.W. 2300 appeared for the Appellant Wife.
Mr. Givney of Counsel instructed by Mullane & Lindsay, Solicitors, DX 7865, Newcastle, N.S.W. appeared for the Respondent Husband.
APPEAL HEARING SUMMARY
MATTER: RUSSELL
NUMBER: EA 93 of 1998 (NC 855 of 1998)
CORAM: Ellis, Finn and Mushin JJ.
DATE OF HEARING: 6 May 1999
DATE OF JUDGMENT: 3 December 1999
CATCHWORDS: PROPERTY SETTLEMENT – mortgage attributed to wrong property by trial Judge in making orders to give effect to judgment
SLIP RULE - misapplication - amendment of judgment - O.31 r.6 of the Family Law Rules - general principles - Elyard Corporation Pty Ltd v DDB Needham Sydney Pty Ltd (1995) 133 ALR 206
This was an appeal by the wife against certain orders made by Chisholm J on 13 May 1998 and 16 October 1998 in relation to property settlement and spousal maintenance. The orders made on 16 October 1998 were purportedly made pursuant to the slip rule and had the effect of amending the orders made on 13 May.
In his property settlement judgment, the trial Judge found the net assets of the parties to be $347,943. He assessed the parties' contributions to their property as 55%:45% in the husband's favour, and then made an adjustment of 17% in the wife's favour on account of her lesser income earning capacity, her care of the children, and the husband's superannuation entitlements. In considering the award which he proposed to make to give effect to that percentage division, his Honour stated that the wife would have the former matrimonial home. His Honour ordered that the husband pay to the wife the sum of $10,486 and transfer the former matrimonial home to her. Such calculation was based on his incorrect attribution of the mortgage owed on the husband's property ($74,000) to the home.
When the matter was re-listed to address this issue, his Honour concluded that the error complained of could be corrected by the slip rule, saying "It involved no consideration of contested evidence; there were no submissions about it; there was no exercise of judgment. It was a slip; an assumption rather than a deliberate finding of fact. Had it been drawn to my attention at the time, the correction would have been made as a matter of course."
Subsequently, on 16 October, 1998, after receiving further written submissions, his Honour made orders amending his original orders to take account of the fact that the mortgage in question related to the husband's property. His Honour's amended orders provided that the wife had to pay to the husband the sum of $63,514 by way of property settlement, and for the provision for the sale of the home in default of payment.
There were three main parts to the wife's appeal against those orders, being:
a challenge to the trial Judge’s application of the slip rule to rectify the error with regard to the mortgage;
an appeal against the property orders; and
an appeal against the trial Judge’s dismissal of the wife’s application for spousal maintenance.
HELD, allowing the appeal on the basis of the misapplication of the slip rule, and remitting the applications for property settlement and spousal maintenance:
The general principle for the application of the slip rule is that an omission or mistake should not be treated as accidental if the proposed amendment requires the exercise of an independent discretion or is a matter upon which a real difference of opinion might exist: see Elyard Corporation Pty Ltd v DDB Needham Sydney Pty Ltd (1995) 133 ALR 206 at 209-211 and the authorities cited therein; see also Brew v Whitlock (No. 3) [1968] V.R. 504-7.
Steinmetz and Steinmetz (1981) FLC 91-079 and Patching and Patching (1995) FLC 92-585 referred to.
In the present case, it may well have been, as his Honour recorded in his judgment, that there was no contested evidence and no submission made on the question of the manner in which the parties' assets should be divided between them. However, the Full Court had difficulty in accepting that "there was no exercise of judgment" involved in determining that question.
Under his Honour's original orders, the wife was to retain the former matrimonial home and receive a payment of about $10,000, while under his amended orders, the wife, in order to retain the former matrimonial home (albeit presently unencumbered), had to pay the husband the sum of $63,574. Given the relatively small asset pool in this case and the fact that the wife was not in paid employment, it may well have been that she would have had to sell the home to meet the payment to the husband of $63,574 required under the amended orders. On any view of the matter, the two sets of orders were fundamentally different, even though they may have both given effect to the 62%:38% division of the parties' property.
In the Full Court's view, because of the impact which the amended orders would have had on the wife's financial position, the making of those orders must be said to have required an independent exercise of discretion. It must be remembered that under s.79(2) of the Family Law Act, the Court is required to be satisfied that it is the order to be made which is just and equitable, not just the underlying percentage division of the net value of the parties' assets. The Full Court took the opportunity to emphasise that in the consideration of whether the result is just and equitable, it is the justice and equity of the actual orders not of the percentage distribution which must be considered.
Accordingly, this was not an appropriate case for the exercise of the slip rule.
REPORTABLE
Directions made for written submissions as to costs.
INTRODUCTION
By an amended Notice of Appeal, the wife appeals the following orders made by Chisholm J:
"Orders 2 and 3 made on 13 May 1998 as amended by Order 1 of 16 October 1998";
Order 2 of the Orders made on 16 October 1998; and
Order 7 of the Orders made on 13 May 1998.
Orders 2 and 3 of 13 May 1998 were property settlement orders made in proceedings between the wife and the husband with respect to property settlement and spousal maintenance, and were, together with Order 1 of the same date which is also relevant for present purposes, in the following terms:
"1.That the husband do all acts and things and execute all documents necessary to transfer to the wife all his right, title and interest in the property situate at and known as 115 Aries Way, Elermore Vale in the State of New South Wales, being the whole of the land in Folio Identifier 164/263244 ("the home") subject to any mortgage on the said property.
2.That the wife indemnify the husband and keep him indemnified in respect of the mortgage (No 003515784) on the home and any other liability arising in respect of the home.
3.That the husband pay the wife the sum of $10,486 by way of further alteration of property interests."
Those orders were subsequently amended by his Honour, purportedly pursuant to the slip rule, by Order 1 of orders made by him on 16 October 1998. That last mentioned order was in the following terms:
"1.That the orders made on 13 May 1998 be amended so that Orders 2 and 3 are deleted and Order 1 reads as follows:-
1.1That by way of property alteration the wife pay to the husband $63,514 by 27 November 1998.
1.2That upon the wife's compliance with Order 1.1, the husband forthwith do all acts and things and execute all documents necessary to transfer to the wife all of his right title and interest in the property situate at and known as 115 Aries Way, Elermore Vale in the State of New South Wales, being the whole of the land in Folio Identifier 164/263244 ("the home").
1.3That should either party refuse or neglect to sign within 14 days of a written request to do so any documents necessary to implement these orders, the Registrar of the Family Court at Newcastle be appointed pursuant to s.84 of the Family Law Act 1975 to execute such documents on the husband's behalf and to do all things necessary to give validity thereto.
1.4That if the wife does not comply with Order 1.1, the husband and the wife do all acts and things necessary to sell the home on the following terms and conditions:
(a) Within 14 days of the date of default the parties shall agree upon a reserve price for the property and offer the property for sale by public auction at the earliest reasonable time with an agent agreed upon; and failing agreement the President of the Real Estate Institute of NSW shall be appointed to nominate an agent who will determine the reserve price;
(b) That upon the sale of the property the proceeds thereof shall be divided in the following order and priority:
(i) in payment of the agent's fees.
(ii)in payment of legal and other costs incurred in relation to the sale.
(iv)(sic)in payment of the balance to the parties in such proportions that the net assets of the parties, being for this purpose the net assets as determined in the judgment with the value of the home being adjusted to the actual selling price, are divided as to 38% to the husband and as to 62% to the wife."
Order 2 of 16 October 1998, which is also the subject of this appeal, concerns the costs of the proceedings between the husband and the wife and is in the following terms:
"2.That the wife pay one third of the husband's costs of and incidental to the proceedings so far as they relate to property adjustment and spouse maintenance, but not including proceedings subsequent to the delivery of judgment on 13 May 1998."
The final order which is the subject of this appeal is Order 7 made on 13 May 1998, whereby his Honour dismissed the wife's application for spousal maintenance.
His Honour delivered reasons for judgment for his original property settlement orders and his dismissal of the wife's spousal maintenance claim on 13 May 1998. We will refer to those reasons as "the property and maintenance judgment". He delivered his judgment in relation to the slip rule on 7 August 1998. We will refer to that judgment as "the slip rule judgment".
In addition, together with handing down the slip rule judgment, the trial Judge made certain orders. While those orders are not strictly part of the subject of this appeal, they are very material to the issues before us. We shall refer to them as "the slip rule orders".
[The background facts and a summary of the trial Judge's reasons for judgment in relation to property settlement (paragraphs 8 to 32 inclusive) have been omitted from this version of the Full Court's reasons for judgment.]
THE PERIOD BETWEEN THE PROPERTY AND MAINTENANCE JUDGMENT AND THE SLIP RULE APPLICATION
On 14 May, 1998, that is the day after the delivery of the property and maintenance judgment and the making of the property orders, the solicitors for the husband wrote to the solicitors for the wife. The letter noted “…that there appears to have been an oversight/slip by His Honour…” in the property and maintenance judgment. The letter continued:
“His Honour intends that the husband receive the sum of $132,218.00. In calculating how the husband is to receive this amount he assumes that the mortgage to the Newcastle Permanent Building Society is secured over the former matrimonial home, not the property at Yarran Close Edgeworth. Therefore he inadvertently assumes that the husband is receiving the whole of the home rather than the smaller equity in that property.
In essence, for the husband to receive the intended sum of $132,318.00 your client must pay to him the sum of $63,514.00.
It is therefore necessary that we relist this matter and bring it to the attention of His Honour Justice Chisholm.
I have today written to the Court seeking that the matter be relisted.
If you agree with my interpretation of His Honour’s Judgment then it may be possible that we ask His Honour to amend the orders under the slip rule to the effect tat (sic) your client pay to our client the sum of $63,514.00 within six weeks and upon that payment the husband do all acts and things and sign all documents necessary to transfer (sic) the wife all of his right title and interest in the property known as and situate at 115 Aries Way Elermore Vale.” (AB 179)
While we have not been referred to a specific letter or other communication from the wife’s solicitor, it is clear on all the material that the wife opposed the course which was proposed in that letter on behalf of the husband.
THE SLIP RULE APPLICATION
As a result of an application made on behalf of the husband, the proceedings were listed before the trial Judge in the Sydney Registry of the Court on 24 July, 1998. The application was made pursuant to Order 31 Rule 6 of the Family Law Rules (“the Rules”) which, insofar as it is relevant, is in the following terms:
“RULE 6 ERRORS IN RECORD OF DECREES
6(1) [Error to be drawn to Registrar's attention] If a party wishes to claim that the formal record of a decree contains an error, that party shall draw the attention of the Registrar of the filing registry to the matter as soon as possible.
6(2) [Rectifying error] The Registrar may rectify an error that appears on the face of a decree.
6(3) [Accidental slip or omission] Where it is claimed that the formal record of a decree contains an error, then, in a case of doubt or where it appears that the error arises from an accidental slip or omission, the Registrar or a party may, after giving reasonable notice to each other party to the proceedings in which the decree was made of the intention to do so, refer it:
(a) to the court; or
(b) to the Magistrate or Registrar who made the decree.
6(4) [Court, etc, may rectify decree] Where a decree is referred under subrule (3), the Court, Magistrate or Registrar to whom it is referred¾
(a) may rectify the decree, without an appeal; and
(b) may make or give such consequential orders or directions as may be necessary to ensure that justice is done between the parties.”
Sub-rule (2) empowers the Registrar to rectify an error in certain circumstances. However, sub-rule (3) clearly contemplates such an error to be “…an accidental slip or omission…”. In that latter case the Registrar is empowered to refer the question to the court. In this matter the parties quite properly took the matter directly to the trial Judge who is empowered to rectify the order in appropriate circumstances by virtue of sub-rule (4).
Prior to the hearing of the slip rule application, counsel for the wife provided Counsel for the husband with a copy of his written submissions which he had filed in court and which were before the trial Judge on the hearing (AB 386). Those submissions were not part of the Appeal Book. Counsel for the husband, being the applicant, was heard in response orally (AB 386-9) and counsel for the wife was heard in reply (AB 390-1).
It was common ground, both before the trial Judge and on this appeal, that his Honour had erred in treating the mortgage as being an encumbrance on Elermore Vale rather than Edgeworth. It was asserted that had his Honour correctly applied the mortgage of $74,000 to the husband’s assets rather than to those of the wife, the result of the property orders would have been a payment by the wife to the husband of $63,514 rather than a payment by the husband to the wife of $10,486. It was also common ground that that calculation was mathematically correct.
Counsel for the husband submitted that the trial Judge’s error was capable of being corrected pursuant to Order 31 Rule 6 quoted above. He submitted that there was evidence before his Honour as to the correct facts which, being an arithmetical error, “… under the larger application of the law your Honour could amend those figures pursuant to the slip rule or inherent jurisdiction which the court has to do that to rectify its error”. (AB 389)
In his oral submissions counsel for the wife submitted that it was “likely … that the home [Elermore Vale] would have to be sold”. He contended that the orders sought on behalf of the husband were “substantive” and not “machinery” orders and therefore the slip rule was not applicable. (AB 390)
Counsel for the wife further submitted that in the event that his Honour acceded to the husband’s application, it would be appropriate to make two other orders. They were:
the extension of the time within which the wife could file an appeal against the property orders; and
arising out of the need of the wife to pay the husband a large amount of money, interim maintenance for the wife in the sum of $200 per week.
THE SLIP RULE JUDGMENT
At the outset of the slip rule judgment his Honour referred to the fact that it was “…common ground that there is an error in the table of assets set out in the judgment”. His Honour correctly stated the error as having been the attribution of the mortgage to the wife’s assets rather than to those of the husband. The result was the assumption “…that the wife would have the obligation to make payments under the mortgage”. His Honour then stated (AB 019):
“It seemed common ground in the present application that the same distribution of assets should be made, except that if the wife were to be unable to make any necessary cash payment the former matrimonial home might have to be sold and the proceeds divided appropriately to achieve the overall division of net assets that had been determined. However this result would mean that the wife would receive the unencumbered former matrimonial home and the husband would retain his property subject to the mortgage. This result would lead to a very different cash adjustment: instead of the husband paying the wife $10,486, the wife would pay the husband $63,514.”
Counsel for the wife submitted to the trial Judge that this was a matter inappropriate for application of the slip rule. His oral submissions appear at AB 390.
Earlier in the slip rule judgment his Honour had considered “…whether the error can be corrected under the slip rule”. He reviewed a number of authorities, and in particular a statement by Mason CJ in Autodesk Inc v. Dyason (No 2) (1993) 176 CLR 300, 301, which we quote below. At AB 020-1 the trial judge stated:
“The language used in the authorities to identify the types of errors falling with in the slip rule varies somewhat. It has been said that the rule will be applied only where the applicant can show “first, that the judgment as passed and entered contained an error; secondly, that such error was due to an accidental slip or omission”. (Arnett v Holloway (1960) VR 22, at 24, per Adam J.) It has been said that the test of whether a mistate (sic) is “accidental” is whether, had it been drawn to the attention of the court at the time, the correction would at once have been made;(Hatton v Harris (1892) AC 547, 558, per Lord Herschell) or that the rule applies to inadvertent mistakes and not to mistakes that are the consequences of a deliberate decision.(Expo Aluminium (NSW) Pty Ltd v. Pateman Pty Ltd (No 2) (CA)(NSW) 29 April 1991, (unreported); cited in a paper by Baker J, “The Recall and Amendment of Judgments in the Family Court of Australia’ (undated).)
It is true that the authorities that allow re-opening often deal with the situation before orders are finally drawn up, and that this is not the situation in this case. But the rule is not limited to such cases. Thus in Shaddock the High Court applied the rule, after orders were drawn up, to include provision for payment of interest when the matter had not been adverted to in argument before the High Court due to an accidental omission on the part of counsel. (L Shaddock & Associates Pty Ltd and Anor v Parramatta City Council (1982) 56 ALJR 875 (HC); and see Barrell Insurance v. Pennant Hill Restaurants (1983) 58 ALJR 51; Commonwealth v McCormack (1984) 155 CLR 273, 277.) It has been said both that the rule is “surprisingly wide” (R v Cripps; Ex parte Muldoon (1984) QB 686, 695 (Donaldson MR). and that it is to be exercised “sparingly”,(Gould v Vegglas (1985) 157 CLR 215, 275 (Gibbs CJ) which two statements are in my view consistent, the first referring to the scope of the rule and the second to the exercise of discretion when applying the rule.”
His Honour then considered whether, in the light of the submissions made on behalf of the wife, this matter was one appropriate for the application of the slip rule. He stated the question in the following terms (AB 021-2):
“The argument makes it appropriate to attempt to identify with some precision the nature of the slip or error in this case. The substance of the judgment consisted of four stages. The first was the identification of the property of the parties. The error makes no difference to the findings as to the assets, or their values, or the net value of the property, which I found to be $347,943. The second was the assessment of the parties’ contributions, and the third the assessment of the s 75(2) factors. The error does not in any way affect these steps. They resulted in the conclusion that the net assets should be divided 62:38 in favour of the wife. The fourth step was to stand back and consider whether the result was just and equitable. In this step I focused essentially on the proportions in which the net assets should be divided. Again the error does not taint this step. Thus it does not affect what I regard as the substance of the judgment, namely the conclusions that the net assets are $347,943 and they should be divided in proportions 62:38 so that the husband receives $132,218 and the wife receives $215,725.”
Following the above discussion, the trial Judge noted that the hearing of the applications for alteration of property interests took place on circuit and the property and maintenance judgment and the property orders had been handed down and delivered in Sydney. He referred to the statement immediately prior to setting out the orders which he proposed to make at the end of the property and maintenance judgment (AB 016):
“Subject to any correction that needs to be made to give effect to this judgment the orders will be as follows:…”.
Counsel who appeared before his Honour at trial did not appear before him on the delivery of the property and maintenance judgment. It was his Honour's recollection that one or perhaps both parties were represented on that occasion by solicitors instructed as agents who were not in a position to make submissions about what orders should be made to give effect to the judgment. At AB 022 his Honour stated:
“In those circumstances, rather than cause further delay, I made the orders in the terms set out in the judgment. These circumstances, as well as the terms of the judgment, confirm my recollection that the substantive exercise of discretion concentrated on the net overall distribution of the assets, rather than the specific assets distributed to each party.”
His Honour referred to the statement in the property and maintenance judgment (AB 015), quoted above at paragraph 29 and emphasised by us, “That the wife…will have the home” and commented:
“I did not mean that there was any special significance in the former matrimonial home, and I am satisfied that my conclusions would not have been different had I contemplated the possibility that the home might have to be sold and the wife might have to find other accommodation, using her share of the proceeds of sale.”
At AB 022 his Honour referred to a submission on behalf of the wife that if the husband’s application to correct the error pursuant to the slip rule were granted, it would be necessary for the wife to sell the home. His Honour continued (AB 022-3):
“However there is no specific evidence that this will inevitably result from the contemplated orders. Secondly, there was no submission at the trial to the effect that the result should be affected by whether or not the property would need to be sold. The submissions were essentially about the percentage division of the assets. Thirdly, the submission assumes that the other assets would be distributed in accordance with the table. If the slip rule application succeeds, in my view it would be open to me to reconsider which assets should be transferred to each party, consistent with the substantive conclusions in the judgment as to the overall division of the net assets.
It was also submitted that the error cannot be corrected because it involves the question of spousal maintenance. However my conclusions relating to spousal maintenance were based entirely on the conclusions relating to the net assets and other evidence, and would not be affected by the alterations now in question.”
His Honour concluded the slip rule judgment by stating his decision as follows (AB 023):
“On balance, I consider that the error in this case falls within the scope of those that can be corrected under the slip rule. It involved no consideration of contested evidence; there were no submissions about it; there was no exercise of judgment. It was a slip; an assumption rather than a deliberate finding of fact. Had it been drawn to my attention at the time, the correction would have been made as a matter of course. It did not significantly affect any of the stages of the analysis described above. It affected only the formulation of the orders to carry out the substance of the judgment. There is no suggestion that any party has been prejudiced by actions taken in reliance on the judgement. It is true that correcting the slip will involve different consequences in terms of the allocation of specific items of property, but there were no submissions at the trial to the effect that this was a real issue. In my view in all the circumstances of this case the error can be corrected under the slip rule, and it is clearly appropriate and just that it should be.”
His Honour stated that he would “…give the parties an opportunity to agree or make submissions (in writing if they wish) on the form of orders appropriate to give effect to this judgment”. Subject to there being no change in the distribution of assets, his Honour stated himself as being “inclined (subject to agreement or argument) to order” (AB 024):
“1. That order 3 made on 13 May 1998 be set aside and in its place the following order made:
3. That within [a time to be determined] from the date of these orders the wife pay to the husband the sum of $63,514 by way of further alteration of property interests.
2. That the time within which an appeal may be lodged against the orders made 13 May 1997 and/or these orders, be deemed to be one month from the date of these orders.”
In fact, the order entered and signed by his Honour on 7 August, 1998, provided:
“1. That the parties have leave to file and serve written submissions relating to the form of orders to be made consistent with the judgment delivered today, and any submissions relating to costs, the applicant to file and serve such documents within 14 days of this order, the respondent to file and serve such documents within a further fourteen days; and the applicant to file and serve any such documents in response within a period of fourteen days.”
EVENTS FOLLOWING THE SLIP RULE ORDERS
Consequent upon the delivery of the slip rule judgment and the making of the slip rule orders, both parties made written submissions on matters arising from those orders. The submissions made on behalf of the husband (AB 174-82) sought that the wife pay the husband the sum of $63,514, that being in place of paragraph 2 of the property orders. It was submitted that that sum should be paid by 2 October, 1998, failing which the home was to be placed on the market for sale with consequential orders relating to that sale and the disbursement of moneys. Other submissions were made with respect to the question of costs which are not relevant to this appeal at the present time.
Written submissions in response to the husband’s submissions were filed on behalf of the wife (AB 183-92). It was submitted that any order for payment by the wife “…must therefore reflect her ability to pay that amount.” (AB 184). The submissions noted that the trial Judge had found in the property and maintenance judgment that the wife had savings “…in the vicinity of $49,000”. She had additional costs of the further proceedings. It was further submitted that “it would not be just and equitable that all her savings be used for the partial payment of property settlement” and “…that she has no borrowing capacity or capacity to pay by instalments because her present expenses are greater than her income”. There was no evidence that the husband was “in perilous financial circumstances if he does not receive the full amount of the order for alteration of property settlement forthwith”. It was therefore proposed that it would be “just and equitable” that the wife pay the sum of $25,000 within one month and the balance of $38,514 within a further two years without interest.
The submissions filed on behalf of the wife further asserted that the Court was “functus officio” and was not empowered to make self-executing orders for the sale of the home in the event that the wife failed to pay the moneys to the husband. Notice was given that the wife intended to appeal. It was asserted that a self-executing order would be a substantive order which could only be made under the provisions of s.79A of the Act, including by consent of the parties. It was submitted that the proposed amendment did not come within the slip rule. Again, further submissions were made with respect to costs which are not presently relevant.
By way of submissions in reply (AB 194-5) the husband joined issue with the submissions on behalf of the wife outlined above.
On 16 October, 1998 the trial Judge made the second slip rule orders in the following terms:
“IT IS ORDERED IN CHAMBERS:
1.That the orders made on 13 May 1998 be amended so that Orders 2 and 3 are deleted and order 1 reads as follows:-
1.1That by way of property alteration the wife pay to the husband $63,514 by 27 November 1998.
1.2That upon the wife’s compliance with order 1.1, the husband forthwith do all acts and things and execute all documents necessary to transfer to the wife all his right title and interest in the property situate at and known as 115 Aries Way, Elermore Vale in the State of New South Wales, being the whole of the land in folio Identifier 164/263244 (“the home”).
1.3That should either party refuse or neglect to sign within 14 days of a written request to do so any document necessary to implement these orders, the Registrar of the Family Court of Australia at Newcastle be appointed pursuant to s.84 of the Family Law Act 1975 to execute such documents on the husband's behalf and to do all things necessary to give validity thereto.
1.4That if the wife does not comply with order 1.1, the husband and the wife do all acts and things necessary to sell the home on the following terms and conditions:
(a) Within 14 days of the date of default the parties shall agree upon a reserve price for the property and offer the property for sale by public auction at the earliest reasonable time with an agent agreed upon; and failing agreement the President of the Real Estate Institute of NSW shall be appointed to nominate an agent who will determine the reserve price;
(b) That upon the sale of the property the proceeds thereof shall be divided in the following order and priority:
(i)in payment of the agent’s fees.
(ii) in payment of legal and other costs incurred in relation to the sale.
(iv)(sic) in payment of the balance to the parties in such proportions that the net assets of the parties, being for this purpose the net assets as determined in the judgment with the value of the home being adjusted to the actual selling price, are divided as to 38% to the husband and as to 62% to the wife.2.That the wife pay one third of the husband’s costs of and incidental to the proceedings so far as they relate to property adjustment and spouse maintenance, but not including proceedings subsequent to the delivery of judgment on 13 May 1998.”
That order was not included within the appeal book but was provided to us by counsel during the hearing of this appeal.
His Honour also made certain orders with respect to costs which are not relevant here and extended the time for appeal against all the orders, including the property orders, to provide that the time within which to file an appeal commenced on the day of the making of those orders, that is 16 October, 1998.
THE GROUNDS OF APPEAL
The Notice of Appeal was filed on 6 November, 1998. At the commencement of submissions on this appeal, we gave leave to counsel for the wife to amend the grounds of appeal. That amendment resulted in the abandonment of some of the original grounds and others of the amended grounds were abandoned at the commencement of counsel’s submissions. Accordingly, the appeal was argued on the following grounds:
1.That the Trial Judge erred in amending orders made on 13 May, 1998 by use of the ‘slip rule’.
2.That the Trial Judge had no power to make under the ‘slip rule’ the Order for sale of the home when such Order was not contemplated by the original Judgement.
3.That His Honour’s adjustment of 55%/45% for contributions in favour of the Husband was manifestly unjust to the Wife in that:
(a)His Honour did not give sufficient weight to the period of the parties cohabitation.
(b)His Honour did not give sufficient weight to the contribution of the Wife as a homemaker and parent.
(c)His Honour did not give sufficient weight to the contribution of the Wife from income to the household.
(d)His Honour did not given (sic) sufficient weight to the financial contribution that the Wife made from redundancy money received at the cessation of her employment.
(e)His Honour did not give sufficient weight to the contribution that the Wife had made to the welfare of the family as homemaker and parent.
4.[Abandoned.]
5.[Abandoned.]
6.His Honour failed to take into account in the adjustments under Section 75(2) to the Wife the disparity of assets in favour of the Husband as a result of the adjustment made for contribution.
7.His Honour’s adjustment of 17% under Section 75(2) to the Wife was Manifestly (sic.) unjust in that it did not give sufficient weight, collectively or Individually, (sic.) to the following factors:
(a)The disparity of assets in favour of the Husband as a result of the findings of contribution.
(b)The Wife’s responsibility to care for the two children of the marriage.
(c) The Husband’s significantly greater earning capacity.
(d)The Husband’s entitlement to superannuation and the quantum of such entitlements.
(e)The Husband’s entitlement to other employment benefits.
(f)The responsibility for the continuing care of the two children of the marriage, both of whom are of tender years.
8.His Honour erred in finding that the Wife had an earning capacity or the ability to work.
9.His Honour failed to take into account or to give adequate or sufficient weight to the Wife’s limited earning capacity in the future, because of her responsibility to care for the two children.
10.His Honour erred in finding that the Wife had a capacity to support herself.
11.His Honour erred in not taking into account the Wife’s desire to perform the role of homemaker and parent to the two children of the marriage.
12.His Honour erred in finding that the Husband was unable to support the Wife.
13.[Abandoned.]
14.If His Honour did not err in respect of the finding of the debt by the Husband to his parents, His Honour erred in finding that it would have to be repaid.
15.His Honour erred in failing to take into account that the Husband’s parents were a financial resource to the Husband.
16.[Abandoned.]
17.[Abandoned.]
18.[Abandoned.]
19.His Honour erred in law in failing to give adequate reasons for his final judgement”.
This appeal may be divided into three parts. They are:
a challenge to the trial Judge’s application of the slip rule to rectify the error with regard to the mortgage;
an appeal against the property orders; and
an appeal against the trial Judge’s dismissal of the wife’s application for spousal maintenance.
On one view of this matter, if we were to allow the appeal on the slip rule issue, it may become inevitable that the matter be remitted for further hearing. Accordingly, it is appropriate that we consider that issue first.
THE SLIP RULE – GROUNDS 1 AND 2
At the outset of our consideration of the issue relating to the slip rule, it is necessary to identify the nature of the error made by the trial Judge. In order to do that, we summarise the evidence which was before him on the issue of the mortgage as follows:
·at paragraph 114 of the wife’s affidavit of evidence in chief (AB 058) the wife deposed to the mortgage having been paid off in full by 1990;
·the wife’s financial statement (AB 105) showed a liability of a mortgage to Newcastle in respect of Elermore Vale with the statement: “mortgage paid off on 3/10/97”. In the column which requires the amount outstanding on the mortgage, there appears “NIL”;
·at paragraph 140 of his affidavit of evidence in chief (AB 124) the husband deposed to having borrowed $75,000 from Newcastle for the purchase of Edgeworth;
·in his Financial Statement (AB 170) the husband deposed to having a liability of $75,000 to Newcastle. However, he did not depose to the identity of the security in respect of that loan;
·a copy of the husband’s application for a mortgage loan from Newcastle was an exhibit in the proceedings before the trial Judge (AB 393). The application is dated 31 October, 1996 and seeks loan funds in the sum of $75,000 over 25 years. It shows the security as being “Lot 214 Yarran Close, Edgeworth”; and
·exhibit “H3” in the property proceedings before the trial Judge was the husband’s revised list of assets and liabilities. Under the heading of “liabilities” (AB 454) there appears: “Newcastle Permanent Building Society (Mortgage on Yarran Close) - $75,000.”
Accordingly, it is clear that the trial Judge made an error of fact in attributing the mortgage to Elermore Vale rather than Edgeworth. Both counsel who conducted this appeal before us acceded to that proposition.
An error of fact made by a trial Judge may, in appropriate circumstances, be the subject of intervention by an appellate Court. One of the most often quoted statements in this regard is that of Dixon, Evatt and McTiernan JJ in House v. The King (1936) 55 CLR 499, 504 in the following terms:
“The manner in which an appeal against an exercise of discretion should be determined is governed by established principles. It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so. It may not appear how the primary judge has reached the result embodied in his order, but, if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court of first instance. In such a case, although the nature of the error may not be discoverable, the exercise of the discretion is reviewed on the ground that a substantial wrong has in fact occurred." (emphasis added)
We have emphasised the phrase “if he mistakes the facts” to demonstrate the availability of the appellate process in such a situation. However, it is not every mistake of fact which calls for appellate intervention (De Winter and De Winter (1979) FLC 90-605).
Given that both parties agreed that the trial Judge had made an error of fact in the property and maintenance judgment which needed to be corrected, it was open to them to consent to varying or setting aside the orders pursuant to s.79A(1A) of the Act and the making of another order under s.79 of the Act. However, the parties did not avail themselves of that process and we accordingly turn to an examination of whether the remedy is also available pursuant to what is known as the “slip rule” or alternatively, Order 31 Rule 6 of the Rules.
A useful and relatively recent statement of the principles relevant to the operation of the slip rule is to be found in the judgment of Lockhart J. in the decision of the Full Court of the Federal Court in Elyard Corporation Pty Ltd v DDB Needham Sydney Pty Ltd (1995) 133 ALR 206 at 209-211. His Honour said as follows:
"Traditionally, a court's power to correct errors in orders arising from accidental slips or omissions is conferred by an express rule of court (e.g. Order 35 rule 7 of the Federal Court Rules); but it exists whether provision is made by express rule or not.
The slip rule is a qualification of the rule that a court may not vary a duly passed and entered order which brings a proceeding to an end because it is obviously desirable that the litigation should be brought to an end.
The rule is very wide in its scope; but is not available as a matter of course:
[L Shaddock Associates Pty Ltd v Parramatta City Council (1983) 151 CLR 590 at 597].Courts have an inherent or implied jurisdiction to amend judgments which do not correctly state what was actually decided and intended. Indeed, after a decree or order has been passed and entered a court will not, unless by consent, permit it to be altered without a rehearing, except in cases of mistakes or errors arising from accidental slips or omissions."
Having referred to certain observations by Gaudron J. in FAI General Insurance Co Limited v Southern Cross Exploration NL (1988) 165 CLR 268 at 289 and also to Seton's Forms of Decrees, Judgments, and Orders in the High Court of Justice and Courts of Appeal (4th ed., 1879), vol. 2, Pt 2, pp 1547-8; William Lawrie v George Lees [1881] 7 AC 19; Re Swire. Mellor v Swire (1885) 30 ChD 239; Henry William Hatton v Hugh Harris (1892) AC 547; Milson v Carter (1893) AC 638; MacCarthy v Agard (1933) 2 KB 417; and Gikas v Papanayiotou (1977) 2 NSWLR 944, his Honour continued:
"The slip rule applies where the proposed amendment is one upon which no real difference of opinion can exist. It does not apply where the amendment is a matter of controversy; nor does it extend to mistakes that are the consequence of a deliberate decision: see Arnett v Holloway (1960) VR 22; Re Army and Navy Hotel (1886) 31 ChD 644; and Ivanhoe Gold Corp Limited v Symonds (1906) 4 CLR 642.
The slip rule may be invoked irrespective of whether the order has been drawn up, passed and entered: Milson v Carter [1893] AC 638 at 640; Fritz v Hobson [1880] 14 ChD 542 at 560; Shaddock per Mason A.CJ, Wilson and Deane JJ at 594-5; Gould v Vaggelas (1985) 157 CLR 215; and Tak Ming Co Limited v Yee Sang Metal Supplies Co [1973] 1 WLR 300.
It is well settled that the application of the slip rule is not confined to giving effect to the intention of the judge at the time when the Court's order was made, or judgment given. It extends to the intention which the Court would have had, but for the failure that caused the accidental slip or omission: Symes v Commonwealth of Australia (1987) 89 FLR 356. The rule also extends to permit the correction of an order or decree where the omission results from the inadvertence of a party's legal representative: Fritz v Hobson (1880) 14 ChD 542 at 561-2; Chessum and Sons v Gordon (1901) 1 QB 694; Tak Ming Co Limited at 304; Shaddock per Mason A.CJ, Wilson and Deane JJ at 594-5; and Gould v Vaggelas at 274-275.
The circumstances in which the slip rule has been applied are numerous and varied. Examples of the application of the rule include amendments, to allow a proper order for costs: Armitage v Parsons [1908] 2 KB 410; to increase the amount of an award of damages: Storey and Keers Pty Limited v Johnstone (1987) 9 NSWLR 446; to permit a proper calculation of interest: Ninnis v Miller [1905] VLR 669; to permit a claim for interest to be added to the amount of the judgment: Shaddock; to order repayment of monies previously paid by the defendant where the subsequent appeal was upheld: Commonwealth of Australia v McCormack (1984) 155 CLR 273; to alter a wrong date or figure in the orders, where the parties and the Court both used the same wrong date or figure, but the correct figure had been available at the relevant time: Re J W Challand Pty Limited (1945) 62 WN (NSW) 166; and, to limit the time of an injunction's application: Shipwright v Clements (1890) WN 134. See also the Supreme Court Practice 1995 (UK) (the White Book) pp. 385-6, Notes 20/11/3 and 20/11/6."
In the circumstances of the present case, regard should also be had to the principle that for purposes of the operation of the slip rule, an omission or mistake should not be treated as accidental if the proposed amendment requires the exercise of an independent discretion or is a matter upon which a real difference of opinion might exist. In Brew v Whitlock (No. 3) [1968] V.R. 504-7 the Full Court of the Supreme Court of Victoria stated:
“In our view it is necessary that it should appear not only that the judgment was wrong, but also what could and should be done to it to make it right. Not only what was omitted, but what would need to be put in. It is impossible, in our view, to apply the rule to a case where, on the application to correct the judgment, it is necessary to exercise an independent discretion not only as to whether interest should have been awarded but also as to the rate at which it should run and as to the time from which it should run.”
That principle was affirmed by McHugh JA in Storey & Keers (supra at 453).
In Steinmetz and Steinmetz (1981) FLC 91-079, 76,562 Evatt CJ, with whom Ellis and Emery S.JJ agreed, considered the provisions of the Family Law Regulations which preceded the Rules in providing for matters of practice and procedure in this Court. The appellant sought an order for the addition of the words “and one-half of all necessary repairs” to one of the orders made by the trial Judge. Her Honour noted that that application had not been made to the trial Judge at the trial. Her Honour stated:
The Family Law Regulations do not contain a provision similar to O. 20 r. 11 of the English Rules of the Supreme Court. However, reg. 128(3) and (4) of the Family Law Regulations provide:
``(3) If a party wishes to claim that the decree as signed contains an error, he shall draw the attention of the registrar to the error as soon as possible.
(4) The registrar shall rectify any error on the face of the decree and in a case of doubt shall refer it to the Judge or Magistrate who dealt with the matter, who shall take such steps to rectify the decree as he thinks fit.''
Under those regulations an error, including an error of omission on the face of the decree, can be rectified, but only, in my view, where the error was due to an accidental slip or omission, or where clearly the decree, as signed, failed to express the intention of the Court.Additionally, however, where an error or omission arises by reason of an accidental slip or omission on the part of counsel, the decree may still be amended or rectified under the slip rule where, because of an accidental omission, the Court did not make the order which it should have made, if the accidental omission had not occurred (see Craigmyle v. Inchcape (1942) 1 Ch. 394)."
In Patching and Patching (1995) FLC 92-585; (1994-1995 18 Fam LR 675) a Full Court of this Court briefly considered the application of the slip rule in a fact situation very similar to that in the present appeal. The Court found that the trial Judge “… had made a number of errors …” in his findings with respect to the parties’ assets and liabilities. The Court held:
“His Honour was correct in concluding that that was not a matter appropriate for the application of the slip rule.” (FLC 81,800; Fam LR 681.)
(See also the decision of Mullane J. in Bailey (1990) FLC 92-145).
It is clear from his slip rule judgment that his Honour was well aware of, and had given consideration to, the authorities relevant to the operation of the slip rule and to the principles which those authorities establish. We agree with his Honour that "it may be that this matter falls in a somewhat grey area". We also share his Honour's concerns about subjecting parties to the cost of an appeal in order to correct "an obvious slip" (see AB 23).
Unfortunately however, we cannot accept his Honour's reasoning and ultimate conclusion that the error in this case falls within the scope of those errors which can be corrected under the slip rule. Earlier in paragraph 50 of this judgment, we set out his Honour's final conclusions but it will be convenient to repeat them here:
“On balance, I consider that the error in this case falls within the scope of those that can be corrected under the slip rule. It involved no consideration of contested evidence; there were no submissions about it; there was no exercise of judgment. It was a slip; an assumption rather than a deliberate finding of fact. Had it been drawn to my attention at the time, the correction would have been made as a matter of course. It did not significantly affect any of the stages of the analysis described above. It affected only the formulation of the orders to carry out the substance of the judgment. There is no suggestion that any party has been prejudiced by actions taken in reliance on the judgement. It is true that correcting the slip will involve different consequences in terms of the allocation of specific items of property, but there were no submissions at the trial to the effect that this was a real issue. In my view in all the circumstances of this case the error can be corrected under the slip rule, and it is clearly appropriate and just that it should be.”
It may well be, as his Honour records in this paragraph, that there was no contested evidence and no submission made on the question of the manner in which the parties' assets should be divided between them. However, we have difficulty in accepting that "there was no exercise of judgment" involved in determining that particular question. We also have difficulty in accepting that the error "did not significantly affect any of the steps of the analysis described above". We assume that his Honour was here referring to his earlier analysis of "the nature of the slip or error in this case". Again, we have set this analysis out earlier (in paragraph 45) but will repeat it here:
“The argument makes it appropriate to attempt to identify with some precision the nature of the slip or error in this case. The substance of the judgment consisted of four stages. The first was the identification of the property of the parties. The error makes no difference to the findings as to the assets, or their values, or the net value of the property, which I found to be $347,943. The second was the assessment of the parties’ contributions, and the third the assessment of the s 75(2) factors. The error does not in any way affect these steps. They resulted in the conclusion that the net assets should be divided 62:38 in favour of the wife. The fourth step was to stand back and consider whether the result was just and equitable. In this step I focused essentially on the proportions in which the net assets should be divided. Again the error does not taint this step. Thus it does not affect what I regard as the substance of the judgment, namely the conclusions that the net assets are $347,943 and they should be divided in proportions 62:38 so that the husband receives $132,218 and the wife receives $215,725.”
Although there might be some argument that the first step, being his Honour's identification of the parties' property, was affected by the error, in the ultimate analysis, the error did not impact upon the finding of the net value of the parties' property. It is certainly true that the mistake did not affect the next two steps, being the assessment of the parties' contributions and the application of the s.75(2) matters. It should also be pointed out that at the end of "the third step", having determined the proportions in which the parties should share their property, his Honour went on to say that "[o]f the net assets of $347,943, [the wife] should receive $215,725 and the husband $132,218". However, it needs to be noted that his Honour did not then proceed to formulate the orders. Rather he moved to the so-called "fourth step", being his consideration of whether the overall result was just and equitable, and in this regard he said:
"It leads to a position in which the wife’s asset position is better than that of the husband, but although the husband will be responsible for child support, he should be able to improve his position reasonably soon. The wife will have the home and other assets, and will, if she chooses, be able to increase her income by returning to the workforce. Overall, in my view this is a just and equitable result.”
It must be noted that his Honour made these comments before he formulated his orders, and it is far from clear whether "the result" which he was referring to was the 62%:38% division or the orders whereby the wife was to receive the home "subject to any mortgage" and a sum of about $10,000. However, his reference in the paragraph last quoted to "the home" suggests that the wife's retention of the home was part of the just and equitable result which he considered he had reached.
Under his Honour's amended orders, the wife, in order to retain Elermore Vale (albeit presently unencumbered), has to pay the husband the sum of $63,574. Given the relatively small asset pool in this case and the fact that the wife is not in paid employment, it may well be that she would have to sell the home to meet the payment to the husband of $63,574 required under the amended orders. On any view of the matter, the two sets of orders are fundamentally different, even though they may have both given effect to the 62%:38% division of the parties' property.
In our view, because of the impact which the amended orders would have on the wife's financial position, the making of those orders must be said to have required an independent exercise of discretion. Furthermore, it must be remembered in this regard that under s.79(2) of the Act, the Court is required to be satisfied that it is the order to be made which is just and equitable, not just the underlying percentage division of the net value of the parties' assets. Indeed we take the opportunity to emphasise that in what his Honour has termed "the fourth stage", that is, the consideration of whether the result is just and equitable, it is the justice and equity of the actual orders not of the percentage distribution which must be considered.
It may well be that had his Honour not made the mistake which he did regarding the mortgage, he would have made his original orders in the form of his later amended orders. But given his reference in the property and maintenance judgment to the wife's retention of the home, and given that that may well not have been possible under the orders in their amended form for this to occur, we cannot be certain that this would have been so. The mistake in this case has to be seen as having a fundamental effect on the content of the orders made.
Unfortunately therefore, we do not consider that this was an appropriate case for the exercise of the slip rule. It is therefore necessary that we allow this appeal on the basis of Grounds 1 and 2.
THE CONSEQUENCES OF ALLOWING THE APPEAL AGAINST THE USE OF THE SLIP RULE.
It is common ground that the immediate consequence of allowing this appeal on Grounds 1 and 2 on the basis of the misapplication of the slip rule is to set aside the second slip rule orders. It is also common ground that setting aside those orders does not have the effect of reviving the property orders. Accordingly, by allowing the appeal on the issue of the slip rule, there remains no extant final order for alteration of property interest pursuant to s.79 of the Act. It follows that only one of two remedies is available, namely, either remit the matter for further hearing by a single Judge of the Court, or this Court exercise its discretion in place of the trial Judge.
Counsel for the wife submitted that we should remit the applications for alteration of property interests for rehearing. He asserted that various matters relevant to the wife's financial position needed to be considered as part of the further issues raised by this appeal. He submitted that it would be necessary to call further evidence on at least some of those issues, perhaps most importantly those relating to the financial consequences of the wife’s need to sell Elermore Vale.
Counsel for the husband submitted that in the event that we allowed the appeal on the issue of the slip rule, we should re-exercise the discretion ourselves and in the process of doing so, correct the trial Judge’s error. Further, he submitted that in correcting that error it would be an appropriate exercise of the discretion to arrive at the same result as the trial Judge had determined by way of the property orders as amended by the second slip rule orders.
The issue of a possible sale of Elermore Vale was clearly raised by the husband’s proposal to the trial Judge seeking a sale in the event that the wife was unable to pay the lump sum sought by him to give effect to the proposed alteration of property interests. Despite that, the questions of the wife’s ability to pay such a lump sum either with or without selling Elermore Vale, together with the consequences of those alternatives, were not the subject of any evidence at the trial. In our view, such evidence is fundamental to a consideration of the exercise of the discretion which results from the allowing of this appeal. No application has been made by either party to this appeal to call further evidence. In any event, it would be inappropriate for this Court to conduct a trial by way of hearing substantial, probably disputed, evidence. Accordingly, in our view, the only course open to us to remit the matter for rehearing by a single Judge other than Chisholm J. Having reached that conclusion, it is not necessary for us to consider the remaining grounds of appeal. However, given that conclusion and the fact that the trial Judge, in dismissing the wife's claim for spousal maintenance, took into account the property orders, the appeal against the dismissal of that application should also be allowed and that application remitted for rehearing.
COSTS
In addition to the matters discussed above, there is also an appeal against paragraph 2 of the second slip rule orders with regard to costs.
That appeal could not be argued before determination of the substantive matters considered in these reasons for judgment. During the hearing of this appeal it was agreed that we should make orders for the filing of written submissions with regard to all questions of costs including the costs of this appeal.
ORDERS
THAT the appeal be allowed.
THAT the following orders be set aside:
(a)paragraphs 4, 5, 6, 7 and 8 of the orders made on 13 May, 1998; and
(b)paragraph 1 of the orders made on 16 October, 1998.
THAT all extant applications for alteration of property interests and spousal maintenance be remitted for rehearing before a single judge of the court other than Chisholm J with such priority as the List Registrar may direct.
THAT the parties be at liberty to file written submissions with regard to:
(a)any appeal against paragraph 2 of the order made by Chisholm J on 16 October, 1998; and
(b)the costs of this appeal.
THAT written submissions in accordance with paragraph 4 hereof be filed in accordance with the following timetable:
(a)on behalf of the appellant wife within twenty-one days of the date hereof;
(b)on behalf of the respondent husband in response thereto within twenty-one days thereafter; and
(c)on behalf of the appellant wife in reply thereto within seven days thereafter.
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