Sablan & Radcliffe & Anor
[2020] FamCAFC 139
•5 June 2020
FAMILY COURT OF AUSTRALIA
| SABLAN & RADCLIFFE AND ANOR | [2020] FamCAFC 139 |
| FAMILY LAW – APPEAL – PROPERTY – Where the appellant wife appealed against property settlement orders – Where the appeal was heard by the Full Court and the parties were directed to file further submissions as to the trustees, assets and liabilities of the parties’ family and property trusts as well as the asset pool established by the primary judge – Where the parties subsequently reached agreement and filed a Minute of Order which the Full Court now makes to finalise the appeal – Where the question of costs needed to be addressed by the Full Court – Appeal allowed – Matter remitted. FAMILY LAW – APPEAL – COSTS – Where the wife sought costs against the first respondent husband – Where neither party aided the primary judge in clarifying the values and inter-relationships of the parties’ corporate and trust entities – Where the parties sought costs certificates – No order as to costs – Applications for costs certificates dismissed. |
| Family Law Act 1975 (Cth) Part VIII Federal Proceedings (Costs) Act 1981 (Cth) |
| Stanford v Stanford (2012) 247 CLR 108; [2012] HCA 52 Warren v Coombes (1979) 142 CLR 531; [1979] HCA 9 |
| APPELLANT: | Ms Sablan |
| FIRST RESPONDENT: | Mr Radcliffe |
| SECOND RESPONDENT: | DA Pty Ltd |
| FILE NUMBER: | MLC | 7259 | of | 2015 |
| APPEAL NUMBER: | SOA | 68 | of | 2019 |
| DATE DELIVERED: | 5 June 2020 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Melbourne (via video link) |
| JUDGMENT OF: | Ainslie-Wallace, Austin & Tree JJ |
| HEARING DATE: | 7 May 2020 |
| LOWER COURT JURISDICTION: | Federal Circuit Court of Australia |
| LOWER COURT JUDGMENT DATE: | 24 October 2019 |
| LOWER COURT MNC: | [2019] FCCA 2985 |
REPRESENTATION
| COUNSEL FOR THE APPELLANT: | Dr Ingleby |
| SOLICITOR FOR THE APPELLANT: | Saxbys Lawyers |
| COUNSEL FOR THE FIRST AND SECOND RESPONDENTS: | Mr Duckett |
| SOLICITOR FOR THE FIRST AND SECOND RESPONDENTS: | Kingston Lawyers |
It is ordered by consent that:
The appeal be allowed.
The orders made by a judge of the Federal Circuit Court of Australia on 24 October 2019 be set aside.
The proceedings be remitted for rehearing to the Federal Circuit Court of Australia before a judge other than the primary judge.
It is further ordered that:
The orders made by the Full Court on 7 May 2020 for further submissions be discharged.
There be no order as to costs.
The parties’ respective applications for costs certificates under the Federal Proceedings (Costs) Act 1981 (Cth) be dismissed.
Note: The form of the order is subject to the entry of the order in the Court’s records.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Sablan & Radcliffe and Anor has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).
| THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT MELBOURNE |
Appeal Number: SOA 68 of 2019
File Number: MLC 7259 of 2015
| Ms Sablan |
Appellant
And
| Mr Radcliffe |
First Respondent
And
| DA Pty Ltd |
Second Respondent
REASONS FOR JUDGMENT
On 24 October 2019, a judge of the Federal Circuit Court made property settlement orders between Ms Sablan (“the wife”) and Mr Radcliffe (“the husband”) under Part VIII of the Family Law Act 1975 (Cth) (“the Act”). At the parties’ mutual request, the primary judge also made an order joining DA Pty Ltd, the family corporation, as a party to the proceedings.
After first settling numerous disputes over the items of property which would be subject to an adjustment of the parties’ interests, the intended effect of the orders was to divide the property in shares of 62 per cent to the wife and 38 per cent to the husband (at [297]). To achieve that outcome, the orders relevantly provided for, first, the former matrimonial home (owned by DA Pty Ltd) to be sold and its proceeds initially used to retire debt, and second, the husband’s acquisition of the exclusive interest in DA Pty Ltd and the two trusts, namely the family trust (“the RFT”) and the property trust (“the RPT”), subject to his indemnity of the wife against any liability arising from her association with DA Pty Ltd, and the trusts.
The wife appealed from those orders by way of an Amended Notice of Appeal filed on 14 April 2020, all but one ground of which the husband resisted.
As a party to the appealed orders, DA Pty Ltd was named as the second respondent to the appeal. Even though the parties are the joint directors and equal shareholders of DA Pty Ltd, it was represented by the husband’s lawyers and similarly opposed all but one ground of the appeal.
A short time after the appeal hearing concluded, the parties forwarded a Minute of Order signed by the parties’ respective solicitors on 11 May 2020 to the effect that the appeal be allowed, the orders of the primary judge be set aside and the further hearing of the applications remitted to the Federal Circuit Court for rehearing to be heard by a judge other than the primary judge.
The only outstanding issue as between the parties is costs and whether we will make orders for costs certificates, as sought by the parties in the alternative. It assists the understanding of the resolution of the appeal and the conclusion as to costs to give a brief background to the appeal.
Brief background
The parties are both now in their early 50s and two of their three children are adults. The husband and his new partner have two young children between them.
The parties separated in July 2014 after some 23 years of cohabitation.
During their marriage, the parties set up DA Pty Ltd, two trusts, and two businesses, within which structure they conducted their financial affairs. It aids the understanding of these reasons for judgment if those entities and their inter-relationships are made clear at this point.
The RFT was established in July 2003. It is a discretionary trust. The parties are the trustees and within a class of the RFT’s beneficiaries.
The RFT is the beneficial owner of a business providing medical services (which the primary judge called “D Pty Ltd”). As a business, D Pty Ltd is only an asset; not a separate legal entity in itself. The husband is the key professional employee in D Pty Ltd.
The RPT was established in February 2006. It is a discretionary trust. DA Pty Ltd, which should not be confused with the business D Pty Ltd, is the corporate trustee of the RPT. The parties are the joint directors of and equal shareholders in DA Pty Ltd and among the beneficiaries of the RPT.
The RPT beneficially owned separate assets, including Ms A's Business and parcels of real property.
Proceedings for property settlement relief were commenced by the husband in August 2015. As the litigation progressed, procedural orders were made for a court expert to give expert opinion evidence about the value of the two businesses and the two trusts. Later, the husband was granted leave to adduce adversarial expert evidence directed to the same issues. As it unfortunately transpired, considerable misunderstanding about the respective values of and the inter-relationships between the RFT, D Pty Ltd, the RPT and DA Pty Ltd permeated the proceedings before the primary judge.
It is only the parties’ proprietary interests which are amenable to adjustment under Part VIII of the Act and so, as the High Court has said in Stanford v Stanford (2012) 247 CLR 108 at [37]–[38] and [50], it is their property which must be identified, not the property of associated legal entities.
For all practical intents and purposes, it may be accepted that the parties were the two intended beneficiaries of the capital value of all trust assets, but the parties’ individual property interests which should have been identified here were: first, their respective equal shares in all the assets of the RFT, including D Pty Ltd, which they personally held on trust for all the beneficiaries of the RFT; and secondly, their respective 50 per cent shareholdings in DA Pty Ltd, which corporation held assets on trust for all the beneficiaries of the RPT.
The primary judge did not do that, but it must be said that her Honour received little help from the parties because they each advocated for similarly scrambled findings about the ownership of property available for division between them. As a consequence, the “asset pool” compiled by the primary judge comprised assets owned and liabilities owed variously by the wife, the husband, the parties jointly, the trustee of the RPT, the RPT and the RFT (at [252]).
Furthermore, it appeared that although the primary judge intended her orders to give effect to a division of property as between the parties as to 62 per cent to the wife and 38 per cent to the husband, in fact, her orders did not effect that result.
These anomalies were not the subject of any complaint or mention by the wife, either in the grounds of appeal or in her Summary of Argument filed on 14 April 2020, but that does not mean they should be ignored. In Warren v Coombes (1979) 142 CLR 531 at 553, Gibbs ACJ, Jacobs and Murphy JJ said:
… However, if the law confers a right of appeal, the appeal should be a reality, not an illusion; if the judges of an appellate court hold the decision of the trial judge to be wrong, they should correct it.
At the conclusion of the appeal hearing we brought these apparent anomalies to the attention of the parties. The wife was directed to provide further written submissions on these matters within nine days of the conclusion of the hearing, with the husband’s written submissions in reply due within seven days thereafter. Subsequent events overtook the need to make further submissions.
As we have said, prior to the appeal hearing the husband conceded the validity of Ground 1 of the wife’s grounds of appeal and subsequently conceded Ground 4.
Thus the parties have agreed that the appeal must be allowed, the primary judge’s orders be set aside and the applications be remitted for rehearing before another judge of the Federal Circuit Court. The only outstanding issue as between the parties was that of costs.
Costs
Counsel for the wife argued that the husband should pay her costs of the successful appeal because the concession of Ground 1 could have been made earlier. It was further submitted that the husband’s conduct in the primary proceedings led her Honour into the error which ultimately proved fatal to the orders.
We do not agree. It was not a foregone conclusion that the concession of Ground 1 would have led to the ultimate conclusion on which the parties have now agreed. Nor do we accept that her Honour’s errors resulted from the way in which the husband’s case was conducted before her. As we have already indicated, the confusion about the relevant corporate and trust entities and their individual values and inter-relationships commenced with the engagement of the expert valuers and continued during the hearing. Her Honour received no illumination from the submissions of either of the parties’ counsel.
We therefore will make no order as to costs.
Each party sought costs certificates, in the alternate, if an order for costs inter partes was not made. We do not propose to order costs certificates under the Federal Proceedings (Costs) Act 1981 (Cth) either for the appeal or any rehearing because the concatenation of confusion and misapprehensions that attended the valuation of the assets of the parties and associated entities, led to the identified errors and it could not be said that these errors should be laid at the feet of the primary judge alone.
I certify that the preceding twenty-six (26) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court (Ainslie-Wallace, Austin & Tree JJ) delivered on 5 June 2020.
Associate:
Date: 5 June 2020
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