Ryan & Ash
[2024] FedCFamC2F 973
•26 July 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 2)
Ryan & Ash [2024] FedCFamC2F 973
File number(s): CAC 117 of 2021 Judgment of: JUDGE MANSFIELD Date of judgment: 26 July 2024 Catchwords: FAMILY LAW – PROPERTY – Where the court made orders by consent – Where the wife commenced child-related proceedings the husband joined property proceedings by seeking to have the consent orders set aside.
FAMILY LAW – PRACTICE & PROCEDURE – Where the husband subsequently became and remains a bankrupt – Where the wife argued that the husband does not have a sufficient interest in the outcome to afford him standing – Where the husband found to have standing due to his interest in regulated superannuation funds – Sloane followed – Where the husband’s application under s 79A is summarily dismissed on the finding that the husband has no reasonable prospect of successfully prosecuting the proceedings.
Legislation: Bankruptcy Act 1966 (Cth) ss 35(1), 60, 60(2), 60(3), 60(5), 153B
Family Law Act 1975 (Cth) Pt VIII, ss 45A, 79, 79A, 79A(1)(a), 90SM, 102QAB, 116
Federal Circuit and Family Court of Australia Act 2021 (Cth) s67
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) Pt 12.2, rr 10.12, 12.13, ss 102Q, 102QAC(2)(d), 102QC(3)(c)
Cases cited: In the Marriage of H and R E Patching (1995) 18 Fam LR 675
Jess & Jess (No 4) [2022] FedCFamC1F 530
Lindon v Commonwealth of Australia (No 2) (1996) 136 ALR 251
Masih & El Saeid (No 2) [2023] FedCFamC1F 939
Massalski & Riley [2022] FedCFamC1F 36
Oastler & Oastler (1989) 16 Fam LR 674
Re Lofthouse (2001) 107 FCR 151
Sloane & Sloan [2018] FamCA 610
Division: Division 2 Family Law Number of paragraphs: 67 Date of last submission/s: 3 June 2024 Date of hearing: 3 June 2024 Place: Canberra Solicitor for the Applicant: Litigant in Person Counsel for the First Respondent: Ms Bridger Solicitor for the First Respondent: Foster Johnson Lawyers Solicitor for the Second Respondent: Australian Government Solicitor ORDERS
CAC 117 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 2)
BETWEEN: MR RYAN
Applicant
AND: MS ASH
First Respondent
OFFICIAL TRUSTEE IN BANKRUPTCY
Second Respondent
ORDER MADE BY:
JUDGE MANSFIELD
DATE OF ORDER:
26 JULY 2024
THE COURT ORDERS THAT:
1.All extant applications for orders pursuant to Part VIII of the Family Law Act 1975 are dismissed.
Harmful proceedings order –
2.The husband is prohibited from instituting proceedings under the Family Law Act 1975 against the wife without the leave of the court under s 102QAG of the Act.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Part XIVB of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish an account of proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under a pseudonym has been approved pursuant to subsection 114Q(2) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
JUDGE MANSFIELD:
The applicant husband and the respondent wife began living together as a couple in March 2004 and married in 2007. They have two children now aged 19 and 15 years. The husband is 42 years old. The wife is 40 years old.
The wife says separation occurred on 7 July 2020. On 7 October 2020 an Application for Consent Orders was filed. That application was incorrect as to form and another Application for Consent Orders was signed by the husband on 19 January 2021 and filed on 22 January 2021. On 27 January 2021, final orders were made. The wife submitted that:
(a)The pool (rounded) at that time consisted of:
(i)Non superannuation assets of $520,000 dominated by the former matrimonial home at $490,000;
(ii)Liabilities of $495,000 being a home loan secured by mortgage of $370,000 in joint names and $125,000 of loans and tax debt in the husband’s sole name; and
(iii)The wife’s superannuation entitlements of $130,000 and the husband’s superannuation entitlements of $195,000.
(b)The consent orders provided for the wife to retain the whole of the interest in the former matrimonial home subject to refinancing the mortgage with each party retaining all other assets they had at the time and assuming sole responsibility for their respective liabilities;
(c)The orders effected a division of the property, including superannuation interests, of 75% to the wife and 25% to the husband.[1] The circumstances as to why the party’s contributions were not the same were set out, including that without telling the wife, the husband had diverted about $248,000 during the relationship for his sole use and benefit.
(d)In January 2021, the children were 16 and 12 years old.
[1] Written submissions for the wife state the consent orders effected a split between the spouse parties of 53% to the husband and 47% to the wife which I cannot reconcile.
In February 2022, the husband became a bankrupt and he remains an undischarged bankrupt.
In 2023, the wife commenced parenting proceedings. By way of his Response filed in April 2023, the husband joined property proceedings by seeking to have the consent orders of 27 January 2021 set aside.
On 13 June 2023, the official Trustee in Bankruptcy (‘the OT’) was joined as the second respondent to the property proceedings.
The amount required to annul the husband’s bankruptcy appears to be $422,527.98.[2] The present value of the former matrimonial home is estimated by the wife at $700,000 with a mortgage of $340,000 leaving equity of $360,000.[3]
[2] According to the estimate of the OT stated in the Case Outline dated 31 May 2024.
[3] Wife’s Financial Statement filed 8 April 2024.
The parenting proceedings were resolved by way of consent orders made in September 2023.
On 7 December 2023, procedural orders were made including that:
(a)The husband be the applicant and the wife be the respondent;
(b)The parties file and serve material with respect to determining threshold issues of the husband’s standing, the wife’s application for summary dismissal and the husband’s application to set aside the orders.
By his Amended Response filed on 31 October 2023, the husband sought orders including that:
(a)The wife pay his costs;
(b)As an undischarged bankrupt – leave be granted to be heard;
(c)A declaration that he has standing to pursue Orders under s 79A of the Family Law Act 1975 (“the FLA”);
(d)The final property orders made on 27 January 2021 be set aside (“the s 79A application”);
(e)The Sequestration Order be annulled;
(f)The former matrimonial home be valued;
(g)The wife pay to the husband 50% of the equity in the former matrimonial home;
(h)The wife’s superannuation interests be split as to $30,000 in favour of the husband; and
(i)The wife deliver up to the husband a long list of chattels.
The husband contended:
(a)There has been a miscarriage of justice when he attested to the application for consent orders on the grounds that:
(i)He was suffering significant mental illnesses and physical injuries;
(ii)He was prescribed large volumes of medication;
(iii)He lacked the capacity and understanding of what was occurring at the time; and
(iv)He was subject to coercive control and emotional blackmail.
(b)The consent orders were made on 27 January 2021 but the marriage did not break down until 18 December 2021; and
(c)The property pool behind the January 2021 orders was misrepresented. The former matrimonial home and the wife’s superannuation were undervalued resulting in the real effect of the division of property being 77% in the wife’s favour.
By her Amended Response filed 29 May 2024, the wife seeks orders including that:
(a)The husband’s application of 31 October 2023 be summarily dismissed:
(i)Because the husband does not have standing; or
(ii)The husband has no reasonable prospects of success.
(b)Alternatively, the husband’s application be dismissed; and
(c)The husband be declared a vexatious litigant and/or be prohibited from instituting proceedings without leave; and
(d)Costs.
By written submissions filed on 31 May 2024, the OT contended:
(a)Section 60(2) of the Bankruptcy Act 1966 (“the BA”) provides that ‘an action commenced by a person who subsequently becomes a bankrupt, is upon his or her becoming a bankrupt, stayed until the trustee makes election, in writing, to prosecute or discontinue the action’.
(b)Section 60 of the BA has no operation in this proceeding because the husband commenced the property proceedings in April 2023 which was after his bankruptcy commenced in February 2022.
(c)The husband’s bankruptcy does not impact his standing to bring his application because the right to institute such proceedings is a personal right and not property vesting with the trustee.[4]
(d)The husband’s application to have the orders set aside pursuant to s 79A of the Family Law Act 1975 (“the FLA”) may be heard in the FCFCOA (Division 2) or the FCFCOA (Division 1). If successful, pursuant to s 35(1) of the BA the proceedings must then be transferred to Division 1 for determination of property orders under Part VIII of the FLA.
(e)The otherwise automatic vesting of after-acquired property in the OT is subject to any order made by the Court.[5] The OT would apply for orders that any property to be awarded to the husband be expressly ordered to be in favour of the OT.
(f)The husband has not met the mandatory requirements before an application to annul the sequestration order under s 153B of the BA can be heard.
[4] With reference to Marriage of R M O’Neill and P O’Neill & Ors (1998) 23 Fam LR 326.
[5] See sections 58 and 59A of the BA.
Accordingly, the legal representative for the OT appeared at the hearing, then sought and was granted leave to be excused, unless and until such time as the s 79A application was determined in favour of the husband.
By written submissions filed 31 May 2024 and oral submissions at hearing with respect to the husband’s standing, the wife contended [as summarised by me]:
(a)Any property received by the husband would likely vest in his trustee; and
(b)Even if the husband was ultimately awarded 100% of the present equity in the former matrimonial home, it would not be enough to annul his bankruptcy and leave any surplus available to him;
(c)Therefore, he cannot show a sufficient interest in the eventual outcome to give him standing.[6]
[6] See Masih & El Saeid (No 2) [2023] FedCFamC1F 939 [at 82].
THE ISSUES
The issues for determination are:
(1)Does the applicant husband have standing? If not, the proceedings are incompetent.[7]
(2)If so, should the husband’s s 79A application be summarily dismissed because it has no reasonable prospects of success?
(3)If not, should the husband’s s 79A application be transferred to Division 1?
(4)If not, should the husband’s s 79A application be granted? If so, the proceedings must then be transferred to Division 1.
(5)If not, should the husband be declared a vexatious litigant and/or be prohibited from instituting proceedings without leave?
(6)Costs.
[7] See Samootin v Shea [2010] NSWCA 371 [at 63-64].
THE HEARING
The matter came before me for hearing on 3 June 2024. The husband was self-represented. The wife was represented by counsel. The OT was legally represented. The husband made an oral application to adjourn the hearing which was dismissed for the reasons given ex tempore.
As aforementioned, an on the grounds contended for by the OT, the legal representative for the OT sought and was granted leave to be excused, unless and until such time as the s 79A application was determined in favour of the husband.
Evidence was received and submissions were made with respect to the first issue of standing as a finding on that issue is required to determine whether or not the proceedings continue.
Evidence was also received in relation to the second issue.
1. Does the applicant husband have standing?
The right to claim an alteration of property interests pursuant to s 79 of the FLA is personal to the bankrupt spouse and does not vest in the trustee, even if it produces after acquired property.[8] At this point the husband has standing. However, this does not determine the issue of standing.
[8] See Masih & El Saeid (No 2) [2023] FedCFamC1F 939 [at 77] and the authorities referred to therein.
If the property received by the bankrupt husband would vest in his trustee, then the husband could not then show a sufficient interest in the eventual outcome to give him standing.[9]
[9] See Masih & El Saeid (No 2) [2023] FedCFamC1F 939 [at 82] and the authorities referred to therein.
Standing to recover or claim property derives from an interest in the outcome; so irrespective of whether a right of action remains with the bankrupt unvested in the trustee, the bankrupt has no standing to pursue an action which will add vested property to the bankrupt estate to be administered by the trustee because the bankrupt has no interest in that property.[10]
[10] See Masih & El Saeid (No 2) [2023] FedCFamC1F 939 [at 84] and the authorities referred to therein.
At this point, the husband does not have standing. However:
(a)The husband’s claim includes an interest in regulated superannuation funds which is not available for division amongst the husband’s creditors pursuant to s 116 of the BA, and
(b)As stated by Gill J in Sloane & Sloan [2018] FamCA 610 [at 89]
The adjustment of parties’ superannuation interests is, like real estate, shareholdings or cash, within the ambit of property within both ss 79 and 90SM of the Family Law Act 1975. While there may be distinctions in how a Court deals with these different types of property, an adjustment falls to be determined in relation to them as a single discretion. They are each the objects of the same overarching discretion, a discretion that does not allow for different items of property to be considered in isolation from others, particularly given that any adjustment must be considered to be just and equitable in relation to the whole of the considerations contained within ss 79 and 90SM, not simply the considerations applied to a fraction of the property of the parties.
Therefore, because the husband claims in respect of superannuation, he has a sufficient interest in the proceedings to support his standing to continue them. That is the answer to the first question.
Lastly, as stated by Harper J in Masih & El Saeid (No 2) [2023] FedCFamC1F 939 [at 69]:
There is ample and consistent authority that the broad definition of “action” (“any civil proceeding, whether at law or in equity”) in s 60(5) [of the Bankruptcy Act] means that s 60(2) and s 60(3) require consideration in every civil proceeding, to give some protection to the bankrupt’s creditors and to protect respondents to a bankrupt’s proceedings from incurring unrecoverable costs. Gray J explained the reasons in Re Lofthouse (2001) 107 FCR 151 (“Lofthouse”) and concluded:
20. In my view, s 60 has been enacted deliberately as a broad provision, so as to encompass any proceeding brought by a bankrupt before bankruptcy. The exceptions have been expressed quite narrowly. The intention is that, once a bankruptcy occurs, no further costs should be incurred in a proceeding unless the trustee in bankruptcy makes an election to continue the proceeding …
In my view, the intention to give some protection to respondents to a bankrupt’s proceedings from incurring unrecoverable costs is just as applicable to proceedings commenced after becoming a bankrupt as it is to proceedings commenced before becoming a bankrupt.
Despite the ample and consistent authorities that the approach of the courts has been to regard the word "action" in s 60 as casting a net widely, there does not appear to be any authority where s 60 has been found to apply to proceedings commenced by a bankrupt after becoming a bankrupt. To do so would require extending the word “action” to include steps taken in a proceeding after becoming a bankrupt which is contrary to the plain reading of subsection (2) which reads “an action commenced by a person who subsequently become a bankrupt …”
In my view, the circumstances of this case are an appropriate vehicle to extend the application of s 60(2) of the BA such that despite the action having commenced after the husband becoming bankrupt, any further steps ought not be permitted until the trustee makes election to prosecute the action. Nevertheless, I am bound by the state of the law and that is not the state of the law. As such s 60(2) has no operation in this proceeding.
2. Should the husband’s s 79A application be summarily dismissed because it has no reasonable prospects of success?
The answer to this question is yes for the following reasons.
Summary dismissal
Section 102QAB of the FLA relevantly provides:
(2) The court may make a decree for the [defendant] against the [applicant] in relation to the whole or any part of proceedings if: (a) the [defendant] is defending the proceedings or that part of the proceedings; and (b) the court is satisfied that the [applicant] has no reasonable prospect of successfully prosecuting the proceedings or that part of the proceedings.
(3) For the purposes of this section, … proceedings or part of proceedings need not be: (a) hopeless; or (b) bound to fail; to have no reasonable prospect of success.
Section 102QAB is materially in the same terms as its recent predecessor at section 45A of the FLA.
On the law relating to summary dismissal, there is a plethora of authority on which I do not intend to write a treatise. I have had regard to and adopt what is said by Harper J in Massalski & Riley [2022] FedCFamC1F 36 [at 56 –76].
The husband’s case
On 3 October 2023, the husband was ordered to file and serve an Amended Response setting out with particularity the relevant sections of 79A that he sought to rely on. He has not complied with that order. The closest that the husband gets is at paragraph 5 of his affidavit of 25 March 2024 where he deposes:
I am making this application as I do not agree the final property orders were just and equitable, the relationship had not broken down at the time and I was highly medicated on prescription medication to head trauma and a chronic pain condition. In August 2020 I was was diagnosed with Major Depression Disorder (MOD), Post Traumatic Stress Disorder (PTSD), Substance Use Disorder, Gambling Disorder and Traumatic Brain Injury.
By his affidavits of 25 March 2024 and 17 April 2024, the husband repeatedly attests in various ways to the effect that he lacked the mental capacity to comprehend what he was agreeing to and signing due to chronic pain, overdosing on pain medication, and psychological disorders.
By his written submissions filed 30 May 2024, the husband contended:
19. On the Husband’s evidence, these are the circumstances of serious concern about the Court process that led to the Court making Orders pursuant to section 79 of the Act, to which it was under a statutory obligation to find the parties’ property division to be just and equitable:
•The Husband was not legally represented at that time.
•The Husband was at that time suffering serious mental health issues incl. diagnosed severe depression, PTSD, dental complications requiring pain and significant dental surgery coupled with prescription drug use and gambling disorders.
•The application for consent orders was plainly defective in the absence of salient information that would satisfy the Court that the division was just and equitable.
•The husband had been prescribed and taken between 2 October 2020 and the 22 October 2020 the following prescription medication. 40 Palaxia Instant Release 25mg tablets, 250 Panadeine Forte 500mg/30mg tablets and 20 Doxylamine 25mg tablets. This medication was prescribed by one treating doctor and the AOC was sent completed to the husband on the 2 October 2020 and signed on the 12 October 2020. (Husbands Exhibit book page 168-170)
•In relation to the second AOC in January 2021 the husband had been prescribed and taken between 29 December 2020 and 21 January 2021, 250 Panadeine forte 500mg/30mg Tablets. The January AOC was sent to the husband without any updated or changes from the October AOC on the 14 January 2021 and return four days later on the 18 January 2021 after the wife continued to pressure the husband to get it returned as she had now obtained finance and the husband was under a six month treatment plan for his criminal proceeding which the wife used against the husband. (Husbands Exhibit book page 168-170).
One of the points to the approach to be taken by the court to an application for summary dismissal stated by Kirby J in Lindon v Commonwealth of Australia (No 2) (1996) 136 ALR 251 at 255–256 is that “If, notwithstanding the defects of pleadings, it appears that a party may have a reasonable cause of action which it has failed to put in proper form, a court will ordinarily allow that party to reframe its pleading.”
There is no doubt that the husband in this case had been given ample opportunity to particularise his cause of action. He has failed to do so. Nevertheless, with reference to what he has said and regardless of which elements of s 79A(1)(a) of the FLA the husband may have put his case, findings in the husband’s favour with respect to the following material facts are critical to his case that there has been a miscarriage of justice:
(a)The consent orders were made on 27 January 2021 but the marriage did not break down until 18 December 2021;
(b)The property pool behind the January 2021 orders was misrepresented;
(c)The husband was suffering significant mental illnesses and physical injuries and was prescribed large volumes of medication such that:
(i)He lacked the capacity and understanding of what was occurring at the time; and
(ii)He was vulnerable to and subject to coercive control and emotional blackmail.
The husband’s evidence
On 20 July 2020, the husband was invoiced $144 for a 20 to 40 minute consultation for “preparation of a GP Mental Health Treatment Plan and additional mental health training.’ The GP notes recorded:[11]
[11] Affidavit of 25 March 2024, page 42.
New pt
Seen with partner [Ms Ash]
Several year history of gambling addiction and also addiction to prescription meds
Approx 4 years ago he had a fall and sustained multiple facial fractures requiring extensive surgery
Since then he has had a problem with prescribed opioids
Has been receiving large quantities of pan forte, endone and tramadol from a doctor in [City D]
Also has been gambling ++
A month ago he was charged with fraud - police involved, will be going to court
Not working - used to be in the PS, left in April
Also takes duloxetine 60mg and mirtazipine 15mg prn (to sleep}
Has decided he needs to tum his life around
Has not gambled or had an opioid for a week
Has developed some sores on back ot hands - ? codeine withdrawal
Otherwise he is coping OK
Bloods
GP MHCP
Refer to [Mr B]
Discussed diet, exercise, mental time out
RN 1/52
Reason for visit:
Prescription drug abuse
Gambling addiction
Depression/Anxiety
GP Mental Health Care Plan
Actions:
Request printed to [pathology]: FBC, EUC, LFT, TSH, BSL, CHOL, TG, HDL, LDL; FE STUDIES;
B12/FOLATE; ESR; CRP.
Letter to [Mr B] printed.
Letter written to [Mr B] re. 00 TSAJ Specialist Referral.
Letter printed.
Letter written re. GP Mental Health Care Plan.
At paragraph 13 of his 25 March 2024 affidavit where he deposes:
I suffered significant mental illness including on the 30 July 2020 I was assessed by Forensic Psychologist [Dr C] in Sydney. On the 4 August 2020 [Dr C] diagnosed me with, major depression disorder, gambling disorder, substance use disorder, anxiety, PTSD, and a traumatic brain injury from the 2016 accident.
This does not accurately nor fully represent or reconcile with what his GP said on 5 August 2020 nor Dr B’s report.
A referral letter dated 5 August 2020 from the husband’s GP included:[12]
Thank you for seeing [Mr Ryan], age 38 yrs, who presented with depression and anxiety secondary to a gambling addiction and addiction to prescription pain killers. He has recently done very well and has not gambled or taken medication for a couple of weeks. I have done a GP MHCP for him and I am grateful to you for seeing him.
[12] Affidavit of 25 March 2024, page 44
At pages 677-696 of the husband’s ‘Exhibit Book’ is a report dated 11 September 2020 from psychologist Dr C which was obtained for the purposes of the husband’s sentencing proceedings following his plea of guilty to charges of fraud. It includes:
[Mr Ryan] was assessed on 30 July 2020.
He described being devastated about [the wife’s] decision to end the relationship. He understood that the reasons pertained to a lack of trust on her behalf about his gambling and the charges against him.
There was no evidence of psychosis (i.e. through(sic) disorder, perceptual disturbance, or delusions). He denied active suicidality. He demonstrated no gross deficits in memory, although reported problems processing information. Although no formal testing was carried out, he did not manifest gross cognitive deficits related to executive function, for example, he could be interrupted, his mood(sic) was not grossly dysregulated, and he was not disinhibited.
[Mr Ryan] … currently meets the clinical criteria … of a Major Depressive Disorder ... possibly a manifestation of a lengthy period of stress and anxiety. He demonstrates early morning wakening and rumination; and an anxious mood, which, given the circumstances, is an understandable psychological reaction to his legal predicament and uncertainty.
He seems a sensitive man who had fixed beliefs about right and wrong and he was clearly dissonant about his actions.
It is possible that at the time of the offences [sometime between 2015 and 2019], he was consuming prescribed pain-killing medication which would have likely supported a diagnosis of Substance Use Disorder. This disorder appears in early remission.
Importantly for the purposes of this application, as at 11 September 2020, Dr C determined that the only condition that the husband required treatment for was gambling disorder due to his high risk of relapse.
The wife’s evidence
To the extent that it is the wife’s application for summary dismissal and thus the onus is on her, the wife’s evidence is as follows.
The wife’s evidence with respect to the consent orders process is set out in detail at paragraphs 85-98 of her affidavit filed 8 April 2024 including:
(a)The parties together prepared the first draft of the application on 24 July 2020;
(b)She obtained legal advice in August 2020;
(c)The circumstances that drove the approach to the division of property;
(d)The exchange of bank statements in September 2020 providing for updated balances;
(e)The wife deposed, “On 2 October 2020, my lawyers … provided him with several brochures, including brochures about disclosure, as well as the finalised draft Application for Consent Orders and proposed Consent Orders. My lawyers also strongly encouraged Mr Ryan to get his own independent legal advice but noted he was not required to do so.”
(f)On 7 October 2020, the husband signed the application, which was requisitioned due to it being the wrong version. On 19 January 2021, the husband signed the updated version.
(g)Item 5 of the ‘Statement of Truth of respondent’ is crossed by hand to the effect that the husband states he had independent legal advice;
(h)Throughout the relevant period from July 2020 to January 2021, the husband’s behaviour appeared to the wife to reflect an understanding and appreciation of the effect of their agreement and he did not appear to be under the influence of any substance nor be suffering from a mental illness.
The wife’s evidence with respect to the procedural history of these property proceedings is set out in detail at paragraphs 137-158 of her affidavit filed 8 April 2024 including:
(a)The husband did not comply with any of the pre-action procedures prior to initiating property proceedings;
(b)As at 8 April 2024, the wife remained unclear as to what the basis of the husband’s application was.
Determination of Issue 2.
With respect to the material facts identified as essential to the husband’s case, primarily from within the husband’s own evidence, I find as follows.
The marriage had broken down by at least 30 July 2020 when the husband represented to the psychologist assessing him for his sentencing proceedings that he was devastated about the wife’s decision to end the relationship.
The property behind the January 2021 orders was not misrepresented because:
(a)It was agreed to at the time as between the parties;
(b)Prima facie, the values were reasonably represented;
(c)Even now, the husband does not say that there were assets or liabilities of significance that were not included at the time;[13]
(d)The husband’s case amounts to his own lay opinion as to what the values should have been.
[13] See paragraph 60 of his affidavit filed 17 April 2024.
There is no doubt that that the contemporaneous and independent records in the husband’s evidence prove that the husband was labouring under physical and mental health ailments during the period July 2020 to January 2021. They do not however support the husband’s contentions that he lacked the capacity and understanding of what was occurring at the time because:
(a)On 20 July 2020, the husband consulted his GP where the GP recorded he decided he needs to tum his life around; has not gambled or had an opioid for a week; has developed some sores on the back of his hands (query codeine withdrawal); and, otherwise he is coping OK. The only outcome was preparation of a GP Mental Health Treatment Plan and additional mental health training.
(b)As at 1 September 2020, the husband was forensically assessed as suffering from Major Depressive Disorder situational to his criminal proceedings; a possible historical Substance Use Disorder appeared to be in remission; and, the only condition that the husband required treatment for was gambling addiction due to his high risk of relapse.
(c)Beyond the husband’s own lay opinion, there is no evidence that the husband’s ailments or conditions would have caused him to lack the capacity to understand what was occurring at the time.
I do not find that the husband was subject to coercive control and emotional blackmail perpetrated by the wife to the effect that he signed the applications under duress because:
(a)Beyond the husband’s own lay opinion, there is no objective evidence that the husband’s ailments or conditions would have caused him to lack the capacity to understand what was occurring at the time;
(b)A key plank of this argument is that the relationship had not in fact broken down and the wife was holding out to him a promise of restoration of their marriage which I have found was not the case on the husband’s own evidence;
(c)Not that corroboration is necessary, there is no objective evidence beyond the husband’s bare assertions; and
(d)My impression is that it is a retrospective argument made to forensically support the husband’s present position in this case two and a half years later.
The husband deposed that “I am making this application as I do not agree the final property orders were just and equitable.”[14] That does not assist him. The requisite test under his s 79A application is whether or not there has been a miscarriage of justice by reason of particular circumstances.
[14] Affidavit of 25 March 2024, paragraph 5
On a practical judgment of the aforementioned facts and circumstances, the husband has no more than a "fanciful" prospect of success. With all of the caution that the authorities repeatedly state must be taken, and having taken the husband’s case at its highest, in my view the husband does not enjoy any “real” prospect of success.
I am fortified in that decision when considering finality and the over-arching purpose at s 67 of the Federal Circuit and Family Court of Australia Act 2021, to which I am required to have regard.[15] Section 67 of that Act requires the court and the parties to facilitate the just resolution of disputes according to law and as quickly, inexpensively and efficiently as possible where:
(a)According to the recent Financial Statements filed by both parties, the only asset of significance is the former matrimonial home in which the wife lives with the parties’ 15 and 19 year old sons.
(b)Any award of property to the husband would likely vest in the OT;
(c)The husband’s only interests are in a split of superannuation entitlements and the value he seeks is $30,000;
(d)The husband’s interests are so disproportionate to the wife’s costs as to offend justice and equity;
(e)Exposure to an adverse costs order is usually the inherent mechanism that guards against unmeritorious proceedings. That is not applicable in the circumstances of this case. Whilst the husband’s present bankruptcy would not make a costs order futile, there are no prospects of the husband paying it and if pressed by the wife it would likely lead to another bankruptcy.
[15] Massalski & Riley [2022] FedCFamC1F 36 [from 110].
Lastly, pursuant to r 10.12 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021, the court may, at any stage in a proceeding on the application of a party, give any judgment or make any order.
3. Should the husband’s s 79A application be transferred to Division 1?
In light of my findings with respect to Issue 2, it seems that this question does not require determination. However I recognise that there may be an argument that this question ought to have been asked and determined prior to Issue 2 and for that reason I will answer it.
I start with adoption of the OT’s submissions in the Case Outline [at 22]:
It is possible for an application for order pursuant to s 79A of the FLA to be dealt with in two or more stages although this may create a difficulty because in exercising the discretion under s 79A of the FLA the court is entitled to consider the likely outcome of the s 79 of the FLA proceeding and so it is generally preferable to deal with the entire application in one hearing (Oastler & Oastler (1989) 16 Fam LR 674). However, it has been accepted where there are discrete issues or there are complexities, as there are in this matter, then the proceeding can be bifurcated (In the Marriage of H and R E Patching (1995) 18 Fam LR 675). In Jess & Jess (No 4) [2022] FedCFamC1F 530 [at 104] the Court bifurcated the hearing noting:
Of course, it must be said that no immutable rule of law or practice was prescribed by the court in Patching about the s 79A application being addressed in one or more hearings. The court said one hearing was generally preferable. In simple cases, the rationale for that cannot be gainsaid. Yet in complex cases involving difficult factual issues and complicated legal issues, unsurprisingly the court left open the possibility of the s 79A exercise being conducted in a manner “where it is convenient to divide the procedure into several hearings.” In other words, by no means could it be said that the court has foreclosed on the possibility of there being more than one hearing.
With respect to not transferring the proceedings to the FCFCOA (Division 1) immediately upon determination that the husband has standing:
(a)The material that the parties prepared in the proceedings to date in this Court includes all of the evidence in relation to the s 79A application and to that extent the application is already part heard before me;
(b)There are a significant number of discrete issues that present as factual disputes which are able to be determined in this Court;
(c)It would see the s 79A issue dealt with faster, more efficiently and less expensively which is consistent with the overarching purpose at s 67 of the Federal Circuit and Family Court of Australia Act 2021; and
(d)The husband retains a right of appeal to this Court’s decision on the s 79A application.
4. Should the husband’s s 79A application be granted?
In light of my finding with respect to Issue 2, this question does not require determination.
5. Should the husband be declared a vexatious litigant and/or be prohibited from instituting proceedings without leave?
It seems to me that the real (and entirely understandable) lament of the wife is the incurring of costs in having to deal with the husband’s application. As I have already noted, exposure to an adverse costs order is usually the inherent mechanism that guards against unmeritorious proceedings and that is not applicable in the circumstances of this case. Whilst the husband’s bankruptcy would not make a costs order futile, it would likely be hollow.
Prior to determination of the wife’s application for summary dismissal, the husband’s application has not had the characteristics of a vexatious proceeding (s 102Q). Any subsequent initiation of proceedings on the same or similar evidence may well do but that would be a matter to be determined at that time. For those reasons, I do not consider it appropriate, at this time, to declare the husband a vexatious litigant.
However, having regard to the matters in s 102QAC(2)(d) and s 102QAC(3)(c) of the FLA, I am satisfied that there are reasonable grounds to believe that the wife would suffer financial harm if the husband instituted further proceedings against her. Accordingly, a harmful proceedings order has been made.
Another factor that may operate in favour of the wife with respect to guarding against unrecoverable costs incurred due to future applications of the husband is application of Part 12.2 - Security for costs, of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021.
6. Costs.
By her Amended Response filed on 29 May 2024, the wife seeks an order that the husband pay her legal costs on an indemnity basis from 5 April 2023.
The wife has provided some evidence with respect to her costs in the section of her affidavit dealing with ‘Financial burden of continued legal proceedings.’ It is not a sufficient basis on which the order for costs that she seeks could be made. At this stage of the proceedings, there is insufficient evidence to determine either liability or quantum on the question of costs and no submissions have been heard.
I decline to make any order as to costs at this time.
The wife retains liberty to apply with respect to costs by operation of r 12.13 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021.
I certify that the preceding sixty-seven (67) numbered paragraphs are a true copy of the Reasons for Judgment of Judge Mansfield. Associate:
Dated: 26 July 2024
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