Safi & Rafiq

Case [2023] FedCFamC1F 692

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

(DIVISION 1)

Safi & Rafiq [2023] FedCFamC1F 692

File number: SYC 436 of 2022
Judgment of: CAMPTON J
Date of judgment: 22 August 2023
Catchwords:

FAMILY LAW – ARBITRATION – PRACTICE AND PROCEDURE – Application to adjourn the hearing of the husband’s objection to register an arbitral award after the service of a notice on the Attorney General pursuant to s 78B of the Judiciary Act 1903 (Cth) – Whether referral to arbitration and registration and recognition of an arbitral award pursuant to the Family Law Act 1975 (Cth) (“the Act”) contravenes Ch III of the Constitution – Consideration of the constitutionality of s 13E and s 13H of the Act – Where the Court does not accept that the husband has identified a constitutional question that is a live issue in the proceedings – Adjournment refused.

FAMILY LAW – REGISTRATION OF ARBITRAL AWARD – Where the husband objects to the registration of an award pursuant to reg 67Q of the Family Law Regulations 1984 (Cth) – Consideration of circumstances in which a Court would not register an award – Determining an objection to the registration of an award is a judicial function of the Court – Registration must not be refused unless it is established on the evidence that an award was made outside of the authority conferred on the arbitrator by the legislation or outside of the terms of the arbitration agreement – Objection refused – Award registered.
Legislation:

Constitution ch III, ss 71, 72

Family Law Act 1975 (Cth) Pts II, IIIB, VIII, ss 10L, 10M, 13A, 13E, 13H, 13J, 13K, 79

International Arbitration Act 1974 (Cth)

Judiciary Act 1903 (Cth) s 78B

Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)

Family Law Regulations1984 (Cth) regs 67B, 67F, 67Q, 67R

UNCITRAL Model Law on International Commercial Arbitration

Convention on the Settlement of Investment Disputes between States and Nationals of Other States (1965)

Cases cited:

Australian Competition and Consumer Commission (ACCC) v CG Berbatis Holdings Pty Limited (1999) 95 FCR 292; [1999] FCA 1151

Brandy v Human Rights & Equal Opportunity Commission (1995) 183 CLR 245; [1995] HCA 10

Entezam & Devi (2021) 62 FamLR 637; [2021] FamCA 25

Harris and Caladine (1991) 172 CLR 84; [1991] HCA 9

Hoult v Hoult (2013) FLC 93-546; [2013] FamCAFC 109

Kingdom of Spain v Infrastructure Services Luxembourg Sàrl (2023) 97 ALJR 276; [2023] HCA 11

Loomis & Pattison (2020) 61 Fam LR 415; [2020] FCCA 345

McLaughlin & McLaughlin (No 2) [2023] FedCFamC1F 516

Pavic & Pavic [2018] FCCA 3386

Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355; [1998] HCA 28

Re An Application by Public Service Association of New South Wales; Re Industrial Union of Employees (Commissioned Police Officers) Award (1947) 75 CLR 430; [1947] HCA 31

TCL Air Conditioner (Zhongshan) Co Ltd v Judges of the Federal Court of Australia (2013) 251 CLR 533; [2013]…

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AGLC
Safi & Rafiq [2023] FedCFamC1F 692
Case
[2023] FedCFamC1F 692
Decision Date

CaseChat Overview and Summary

The case involves the husband objecting to the registration of an arbitral award made by an arbitrator appointed under the Family Law Act 1975 (Cth). The husband and wife had agreed to arbitrate their property adjustment dispute and had appointed an arbitrator. The wife applied to register the arbitral award as an order of the court, which the husband opposed. The husband's objection was dismissed and the award was registered. The husband also sought an adjournment of the hearing of his objection, which was refused. The husband had notified the Commonwealth Attorney General and the Attorney General for New South Wales of a constitutional matter, but the Court found that the husband had not identified a live constitutional issue in the proceedings.

The legal issues before the Court were whether the referral of the dispute to arbitration and the registration of the arbitral award were constitutional, and whether the Court should grant an adjournment of the hearing of the husband's objection. The Court found that the referral to arbitration and the registration of the award were constitutional, as the process was consensual and the arbitrator was not exercising judicial power. The Court also found that the husband had not identified a live constitutional issue in the proceedings, and that the husband's objection was simply a dissatisfaction with the outcome of the arbitration. The Court found that the husband's purported withdrawal of consent to arbitrate was futile and of no consequence, as the agreement to arbitrate ended when the parties had done all that the agreement required of them.

The Court's reasoning was based on the distinction between judicial power and arbitral authority, which depends on the voluntary agreement of the parties. The Court found that the arbitral award was binding and enforceable subject to the judicial safeguards as prescribed within the Act and regulations. The Court also found that the husband's objection was not a reason as contemplated by reg 67Q(3) to prevent the registration of the award. The Court refused the adjournment of the hearing of the husband's objection, as the husband had not identified a live constitutional issue in the proceedings.

The final orders of the Court were that the husband's objection to the registration of the arbitral award be dismissed, the arbitral award be registered, and directions be made for any costs applications and case management. The Court also made directions for any proposed amendments to the husband's relief sought and for the listing of any applications for costs and case management.

Orders

Orders of the court

1. Paragraph 1 of the Application in a Proceeding (also identified as a Response to an Application in an Arbitration) filed by the husband on 31 July 2023, seeking dismissal of the wife’s Application to Register Arbitration Award filed 30 June 2023, be dismissed.

2. Pursuant to reg 67Q of the Family Law Regulations 1984 (Cth) (“the Regulations”) and s 13H of the Family Law Act 1975 (Cth) (“the Act”) the arbitral award issued on 21 June 2023 (“the award”) be and is registered.

3. Should either party seek costs of and incidental to this determination, on or before 30 August 2023, that party shall file and serve the following:

(a) An Application in a Proceeding setting out the orders for costs as sought;

(b) An affidavit in support; and

(c) Written submissions of no more than two pages.

4. Should a costs application be filed and served in accordance with Order 3, on or before 6 September 2023, the other party shall file and serve the following:

(a) A Response to the Application in a Proceeding;

(b) An affidavit in support; and

(c) Written submissions of no more than two pages.

5. In the event the husband proposes to amend the relief sought in paragraphs 2, 3 and 4 of his Application in a Proceeding filed 31 July 2023, he is to file and serve such amended document and any affidavit in support thereto on or before 30 August 2023.

6. If the husband elects to amend his relief sought pursuant to Order 5, then the wife is to file and serve any such Amended Response together with any affidavit in support thereto on or before 6 September 2023.

7. The following applications be listed on 15 September 2023 at 10.00 am by Microsoft Teams:

(a) For hearing any application for costs filed pursuant to Order 3 and any response thereto; and

(b) For case management, paragraphs 2–4 of the husband’s Application in a Proceeding filed 31 July 2023, or any such amended relief as filed by him pursuant to Order 5, and any response of the wife thereto.

Background

Background to the litigation

During the course of the hearing, the husband advised that he is likely to amend the relief as currently articulated in paragraphs 2, 3 and 4 of his Application in a Proceeding filed 31 July 2023. Directions will be made to accommodate that course. Both parties sought costs of an incidental to this determination. Each required further time to marshal their evidence on that subject matter. Directions will be made facilitating that process and listing any costs applications for hearing.BACKGROUND The husband and wife married in 2004. They separated on 31 December 2020, but are not yet divorced. They had one child together, who was born 2006 and is now 17 years old. On 26 January 2022 the wife filed an Initiating Application in what was then the Federal Circuit Court, seeking orders for property adjustment pursuant to Pt VIII of the Act. The husband filed a Response to that Initiating Application on 8 March 2022, seeking different orders for property adjustment. It was uncontroversial for the purposes of this determination that the arbitrator was as defined by s 10M of the Act and reg 67B of the Regulations, that the parties agreed to him conducting the arbitration and that they entered a written agreement with him as to the arbitration. It was not suggested that the arbitration agreement failed to meet the matters identified in reg 67F of the Regulations. That written agreement was not tendered into evidence by either party. The husband relied upon the following documents:·A Case Outline filed 10 August 2023 (Exhibit 2);·Application in a Proceeding filed 31 July 2023;·His affidavit filed 31 July 2023; and·The award (Exhibit 1). The wife relied upon the following documents:·A Case Outline filed 9 August 2023 (Exhibit 3);·The Application to Register Arbitration Award filed 30 June 2023; and·An affidavit of service filed 8 August 2023.THE ADJOURNMENT APPLICATION The husband sought and was granted (absent objection from the wife) leave to make an oral application to adjourn the hearing of his application objecting to or resisting the registration of the award. On 11 August 2023 the husband’s oral application for adjournment was dismissed. The reasons for that determination were reserved. These are those reasons. On 9 August 2023, two days prior to the hearing, the husband sent to the Commonwealth Attorney General and the Attorney General for New South Wales what he contended to be a notice of a constitutional matter pursuant to s 78B of the Judiciary Act 1903 (Cth) (“the Judiciary Act”). The notices were Exhibit A and Exhibit B in the hearing of the adjournment application. The notices do not particularise the challenge arising under the Commonwealth constitution or involving its interpretation. They assert:The parties agreed to an Arbitration of their dispute and in accordance with the procedures contained within the Family Law Act, an Arbitrator was appointed, he conducted an Arbitration, and an Award was published on 21 June 2023.The wife has sought to have the decision of the Arbitrator registered as an Order of the Family Court. The husband opposes this application based, inter alia, on Harris v Caladine on the basis that it is impermissible for the Family Court to delegate the judicial powers conferred upon a Judge of that Court, to an Arbitrator.Accordingly, the [husband] hereby gives you notice pursuant to s.78B of the Judiciary Act 1903 (Commonwealth) that the cause pending involves a matter involving the interpretation of the Constitution. (Bold emphasis added)

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

The husband did not make any meaningful submission as to how a withdrawal of consent after the arbitration concluded and the award published would equate to a reason as contemplated by reg 67Q(3), or how it reconciled with the scheme of the Act and the reasoning of the High Court in Westport Insurance as recorded earlier. I find that an agreement to arbitrate ends when the parties have done all that the agreement required of them. This is the case here. The now purported withdrawal of the husband’s consent is futile and of no consequence. It not available as a reason as contemplated by reg 67Q(3) prevent the registration of the award.CONCLUSION As was frankly conceded by the husband in the closing of submissions, the reality of his objection is that he is dissatisfied with the product of the arbitrator’s determination. He makes no complaint as to the fact or conduct of the consensual arbitration process. He simply wants to have another hearing about the same subject matter determined by the arbitrator, in the hope that the outcome of that hearing will be more favourable to him. There are a number of policy considerations and objectives as to why an arbitration should not be considered an opportunity to obtain a quote. I find that the husband has not established on the evidence a finding of fact to demonstrate a reason why the Court should not register the award. Paragraph 1 of his Application in a Proceeding filed 31 July 2023 will be refused and is dismissed. Although not applicable in the circumstances of this case, a question arises as to whether the purported withdrawal or revocation of consent to arbitrate, without both good reason and without notice and where no challenge is made to the integrity of the original s 13E consent order or the arbitration agreement, is a course envisaged by the legislation. Dependant on the particular facts and circumstances of the case, the ability to withdraw consent during the arbitration hearing and hence terminate the process (perhaps because a party dislikes the flow of evidence when being cross-examined, or perceives the advocate for the other party to be superior to their own) would seem to circumvent the purpose of the legislation to hold parties to their agreement to arbitrate and to the determinations of the arbitrator. This may be a matter for consideration on another day, or require the attention of the Full Court or Parliament. It is important for all arbitration stakeholders that a reality exists so that an arbitrator’s determination is binding and enforceable subject to the judicial safeguards as prescribed within the Act and regulations.

Ratio Decidendi

Legal Principle Established

It may be thought that there is some superficiality in this distinction. However, dealing with each aspect in turn is appropriate given the manner in which the husband prosecuted his objection. Section 13E of the Act – referral to arbitration In support of his contention that the arbitration scheme under the Act contravened ch III of the Constitution, the husband placed significant reliance on the High Court’s determination in Harris and Caladine (1991) 172 CLR 84 (“Harris and Caladine”), and in particular the following two statements of the reasons of Mason CJ and Deane J (at 94–95):The limitation is that the legislative power and the power of delegation cannot be exercised in a manner that is inconsistent with the continued existence of the Family Court as a federal court constituted under Ch. III. In other words, both the legislative power and the power of delegation must be exercised in conformity with the requirement that the Court's federal jurisdiction, powers and functions are to be exercised by a court whose members are judges appointed pursuant to s. 72 of the Constitution. …The importance of insisting on the existence of review by a judge or an appeal to a judge is that this procedure guarantees that a litigant may have recourse to a hearing and a determination by a judge. In other words, a litigant can avail him or herself of the judicial independence which is the hallmark of the class of court presently under consideration. The husband’s emphasis on these paragraphs reveals what I understood his submission recorded at [16(b)] above. The legislative provisions of Pt II and Pt IIIB of the Act and the Regulations are so different from those involved in Harris v Caladine so as to preclude that decision from having any direct relevance to the subject matter of this determination. I shall attempt to engage with the gravamen of the husband’s submissions in any event. This involves first answering whether it is permissible for the Court to refer proceedings to be determined by an arbitrator, being a person who is not a judge. This in turn hinges on whether the arbitrator in determining a dispute is exercising judicial functions. Section 13E provides:(1)With the consent of all of the parties to the proceedings, a court exercising jurisdiction in:(a)Part VIII proceedings; or (b)Part VIIIAB proceedings (other than proceedings relating to a Part VIIIAB financial agreement);may make an order referring the proceedings, or any part of them, or any matter arising in them, to an arbitrator for arbitration.(2)If the court makes an order under subsection (1), it may, if necessary, adjourn the proceedings and may make any additional orders as it thinks appropriate to facilitate the effective conduct of the arbitration. The essential constitutional ingredient to family law arbitration is that the process is consensual. The High Court confirmed in TCL Air Conditioner (Zhongshan) Co Ltd v The Judges of the Federal Court of Australia (2013) 251 CLR 533 (“TLC Air Conditioner”) the constitutionality of the consensual arbitration process being based in the voluntary agreement of the parties to be bound by the determinations of the arbitrator (albeit the relevant law under consideration was the UNCITRAL Model Law on International Commercial Arbitration (“the Model Law”), having force under the International Arbitration Act 1974 (Cth)). In that matter, the High Court said the following:28.……..Judicial power “is conferred and exercised by law and coercively”, “its decisions are made against the will of at least one side, and are enforced upon that side in invitum”, and it “is not invoked by mutual agreement, but exists to be resorted to by any party considering himself aggrieved”. 29.Therein is the essential distinction between the judicial power of the Commonwealth and arbitral authority……..based on the voluntary agreement of the parties. The distinction has been articulated in the following terms:“Where parties agree to submit their differences for decision by a third party, the decision maker does not exercise judicial power, but a power of private arbitration. Of its nature, judicial power is a power that is exercised independently of the consent of the person against whom the proceedings are brought and results in a judgment or order that is binding of its own force. In the case of private arbitration, however, the arbitrator’s powers depend on the agreement of the parties, usually embodied in a contract, and the arbitrator’s award is not binding of its own force. Rather, its effect, if any, depends on the law which operates with respect to it.” (Footnotes omitted)