SCRIBE AND SCRIBE
[2006] FamCA 1378
•21 December 2006
FAMILY COURT OF AUSTRALIA
| SCRIBE AND SCRIBE | [2006] FamCA 1378 |
PROPERTY – Section 79A – Application to vary or set aside consent order – Applicant received legal advice not to sign an Application for Consent Orders – Misrepresentation on face of Application as to the Applicant’s liability to pay child support - Miscarriage of justice established - Whether the Court’s discretion was correctly exercised in favour of the applicant
PROPERTY – Section 79A – Relevance of legal advice received by the applicant to the exercise of discretion to vary or set aside consent order where a miscarriage of justice has occurred
| Family Law Act 1975 (Cth) s 79A |
| Bigg v Suzi (1998) FLC 92-799 |
APPELLANT HUSBAND: SCRIBE
RESPONDENT WIFE: SCRIBE
FILE NUMBER: BRF 6523 of 2001
APPEAL NUMBER: NA 12 of 2005
DATE DELIVERED: 21 December 2006
PLACE DELIVERED: Melbourne
JUDGMENT OF: Bryant CJ, Finn and May JJ
HEARING DATE: 1 August 2005
LOWER COURT JURISDICTION: Family Court of Australia
LOWER COURT JUDGMENT DATE: 18 February 2005
COUNSEL FOR THE APPELLANT: Mr Griffin QC with Mr Smith
SOLICITOR FOR THE APPELLANT: Clapin Lawyers
COUNSEL FOR THE RESPONDENT: Mr Page SC with Mr Hanlon
SOLICITOR FOR THE RESPONDENT: O’Dwyer & Bradley
IT IS NOTED IN CONNECTION WITH THESE ORDERS that the judgment of the Full Court delivered this day will for all publication and reporting purposes be referred to as Scribe v Scribe.
Orders
That the appeal be allowed.
That the orders of the Honourable Justice Barry made on 18 February 2005 be set aside.
That the application of the respondent wife filed 21 October 2002 be dismissed.
That the Court grants to the appellant husband a costs certificate pursuant to the provisions of s 9 of the Federal Proceedings (Costs) Act 1981 being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the appellant husband in respect of the costs incurred by the appellant husband in relation to the appeal.
That the Court grants to the respondent wife a costs certificate pursuant to the provisions of s 6 of the Federal Proceedings (Costs) Act 1981 being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the respondent wife in respect of the costs incurred by the respondent wife in relation to the appeal.
| FAMILY COURT OF AUSTRALIA AT BRISBANE |
APPEAL NUMBER: NA 12 of 2005
FILE NUMBER: BRF 6523 of 2001
| Scribe |
Appellant Husband
And
| Scribe |
Respondent Wife
REASONS FOR JUDGMENT
introduction
This is an appeal by the husband against an order made by Barry J on 18 February 2005 whereby pursuant to the provisions of s 79A(1) of the Family Law Act 1975 (“the Act”) and on the application of the wife, his Honour set aside orders made on 19 November 2001 with the consent of the husband and the wife with respect to property settlement.
The following background matters are relevant to the appeal.
The husband and wife married in August 1988. They had two children born respectively in 1993 and 1996. They separated in April 2001.
On 19 November 2001 consent orders were made by a Deputy Registrar of this Court which, in substance, provided that:
· the wife would transfer her interest in the former matrimonial home to the husband;
· the husband would indemnify the wife “from payment of all income tax, and goods and services tax and other liabilities arising from the carrying on of the business known as [C] (“the business”);
· the husband would indemnify the wife “from payment of all capital and interest of the loan from Daimler Chrysler Financial Services”;
· the husband and wife would “retain absolutely all items of property now in their possession” and that the other would “relinquish any right, title or interest thereto”.
Relevantly in relation to the provisions of the consent orders, the application for those orders (Form 12A) which had been signed by both parties on 13 November 2001 and on the basis of which the consent orders were made, stated that:
· the former matrimonial home was valued at $130,000;
· the business was valued at $74,000 with each party having a half share;
· the liability to Daimler Chrysler Financiers of $24,000 related to a Mercedes vehicle in the husband’s possession, valued at $55,000.
That application form also showed the husband as having a gross weekly income of $510 and the wife an income of $940. However, we understood it to be conceded on behalf of the husband that at no time had the wife actually received an income of $940, but rather the figure of $940 included an amount of $510 which she notionally received from the business.
There was also material attached to the application form which indicated that in relation to the financial support to be provided for the children (Question 17(c) in the application form), the wife had transferred her half interest in the former matrimonial home to the husband in satisfaction of her future liability for the support of the two children of the marriage who were residing with the husband. The precise terms of that attachment were:
Refer to Question 17(e) – financial support
Father earns sufficient to adequately support the children. The father and mother jointly own ‘[C]’ and agree that joint ownership is to continue. The mother agrees to transfer to the father her half share of the former matrimonial home … valued at $65,000.
This sum is a provision of child support for the children … otherwise in the form of periodic payments. It is to be credited against any liability against the mother under the Child Support Assessment Act 1999. This form of child support has an annual value of $5,910 for 11 years and the annual rate of child support payable under any relevant administrative assessment is to be reduced by that amount.
It appears that prior to the filing of the application on the basis of which the consent orders were finally made, two such applications had been previously filed, one signed by the parties on 8 and 21 August 2001 and the other on 13 and 17 September 2001. The difference between the first two applications on the one hand, and the final application on the other, appears to have been the amount stated for the wife’s income. It also appears that the two earlier applications were rejected by the Court.
We understand it to be common ground that within a few weeks of the making of the consent orders, the wife ceased to have any involvement in the business, but that she received nothing on account of her half-share in that business, which, as mentioned above, had been valued in the application for the consent orders at $74,000.
On 21 October 2002 the wife filed an application seeking that pursuant to s 79A of the Act, the orders of 19 November 2001 should be set aside, and that in the event that that application was successful, she sought that the property of the parties should be divided 80/20 per cent in her favour.
Barry J heard the wife’s s 79A application from 31 January to 3 February 2005. At the commencement of the hearing, he was informed that the parties had agreed that the two children would reside permanently with the husband.
On 18 February 2005 his Honour delivered judgment and made the order which is the subject of this appeal. It should be noted that although in her application filed on 21 October 2002 the wife had sought relief under s 79A(1)(a) and (d), at the hearing before his Honour, she only pursued relief under s 79A(1)(a) (The provisions of s 79A(1) will shortly be set out).
By his orders, his Honour set aside the consent orders of 19 November 2001 and ordered the husband to pay the wife the sum of $166,048. The requirement that the husband pay that sum to the wife gave effect to his Honour’s determination that the net value of the parties’ property, being $586,741, should be divided in the proportion of 70 per cent – 30 per cent in the husband’s favour. That apportionment was based on a contribution assessment of 60 per cent – 40 per cent in the husband’s favour with a further 10 per cent adjustment in his favour on account of the s 75(2) matters.
It should be noted at this point that the husband’s appeal is only directed to the order setting aside the consent orders. However, if that last mentioned order is set aside, then it would follow that the new property settlement orders made by his Honour (after he set aside the consent orders) would be rendered nugatory and should, for the avoidance of any doubt, be set aside.
section 79a (1)
Before considering his Honour’s reasons for setting aside the consent orders, it will be useful to set out the terms of s 79A(1) as it was pursuant to this sub-section that his Honour set aside the consent orders:
79A (1)Where, on application by a person affected by an order made by a court under section 79 in property settlement proceedings, the court is satisfied that:
(a)there has been a miscarriage of justice by reason of fraud, duress, suppression of evidence (including failure to disclose relevant information), the giving of false evidence or any other circumstance; or
(b)in the circumstances that have arisen since the order was made it is impracticable for the order to be carried out or impracticable for a part of the order to be carried out; or
(c) a person has defaulted in carrying out an obligation imposed on the person by the order and, in the circumstances that have arisen as a result of that default, it is just and equitable to vary the order or to set the order aside and make another order in substitution for the order; or
(d) in the circumstances that have arisen since the making of the order, being circumstances of an exceptional nature relating to the care, welfare and development of a child of the marriage, the child or, where the applicant has caring responsibility for the child (as defined in subsection (1AA)), the applicant, will suffer hardship if the court does not vary the order or set the order aside and make another order in substitution for the order; or
(e)a proceeds of crime order has been made covering property of the parties to the marriage or either of them, or a proceeds of crime order has been made against a party to the marriage;
the court may, in its discretion, vary the order or set the order aside and, if it considers appropriate, make another order under section 79 in substitution for the order so set aside.
the reasons of the trial judge for setting aside the consent order
After commencing his judgment with a reference to the wife’s application which was before him, his Honour recorded the assets of the parties as set out in the Application for the Consent Orders (Form 12A) which was signed on 13 November 2001 and on the basis of which the consent orders were made. Those assets as recorded by his Honour were:
· the former matrimonial home valued at $130,000;
· a Mercedes vehicle in the husband’s possession valued at $55,000 with a liability to Daimler Chrysler Financiers of $24,000;
· furniture and effects valued for each party at $7,500 each;
· the interest in the business said to be valued at $74,000 with each party having a half share ($37,000 each).
In summary therefore, according to his Honour, the total assets of the husband as shown in the Form 12A application and as summarised by his Honour were $164,450 with a liability of $24,000 and the assets of the wife were $111, 230 with a liability for bankcard of $600.
His Honour went on to record that the income of the parties “revealed in the same Form 12A shows the husband having a gross weekly income of $510 and the wife’s income of $940”, and he went on to observe:
… In two previous Form 12A documents, dated August 2001 and September 2001 respectively, the wife’s income was shown as $430. It appears that, to the sum of $430 was added the sum of $510 as the wife’s share of the business income. The significance of this shall become apparent shortly. …
Having summarised the terms of the consent orders in terms similar to those used by us in paragraph 4 above, his Honour referred to the terms of the Attachment A to the Form 12A (which did not form part of the actual orders) and which we have earlier set out.
Then, having explained the orders which each party sought that he should make, his Honour explained that the wife’s primary argument for setting aside the consent orders was on the basis of duress. Although his Honour ultimately decided not to base his decision on a finding of duress, it is useful to set out what his Honour said about that matter:
9.The wife’s primary argument for setting aside the consent orders was on the basis of duress. She says she was harassed by the husband particularly in the period immediately after separation and such harassment was ongoing. She says that she could not afford proper legal representation. She did consult a solicitor who charged $20 for a 20 minute consultation. The advice she received was she should not agree to the terms of the consent orders. The wife further claims she was harassed by the accountant for the business, Mr [AB], and the husband’s solicitor engaged for the purpose of the property settlement consent orders, Ms [HB], the partner of [Mr AB].
10.The wife’s evidence of the husband engaging in a domineering controlling manner is corroborated by the evidence by her sister…. The evidence of this witness was not challenged other than the passage of the evidence in paragraph 9 of her affidavit to the effect that the husband had said to the witness that he would send “bikie friends” around to the wife’s partner’s residence to “sort him out”.
11.I have no reason to doubt the evidence of this witness. The primary reason why I do not doubt it is it was largely not the subject of any challenge by cross-examination.
12.In her affidavit, the witness details a protracted history of mental and verbal abuse by the husband towards the wife, the husband engaging in deceptive conduct after separation particularly in asserting the wife was suffering a nervous breakdown. He engaged in conduct which was designed to alienate the wife from other members of her family. He made allegations the wife was abusing alcohol and drugs and engaging in promiscuous behaviour. [The witness] says in paragraph 8 of her affidavit that the husband was phoning her residence every night for a period of time and thereafter was still phoning 2 to 3 times per week. He made serious allegations against the wife’s new partner. The witness believes that her husband informed the wife of all the allegations made and subsequently she had the opportunity to discuss with her sister her account of events.
13.I am prepared to find on the available evidence the wife was distressed by the husband’s behaviour and she was desperate to have matters resolved in the hope of having the pressure removed from her.
14.I do not for one moment downplay the fact that the husband, in all probability, was likewise distressed by the separation and was desperate for a reconciliation. There is evidence of the husband informing the wife via the children that he would pay her $20,000 by way of an inducement to return to the former matrimonial home.
15.I gained the distinct impression that the wife did not have a full appreciation – then or now – of what was going on in relation to property settlement issues other than the fact she had not received anything. By way of example, during the course of the hearing, in response to a question from myself, the wife was unable to differentiate the terms of the original application for consent orders and the amended application which was finally approved.
16.Generally speaking I found the wife a convincing witness. She did display passive-aggressive qualities. There were some questions put to the wife based on a diary she kept in 1993. The wife’s allegations in her affidavit against the husband that he failed to give support at the time of the birth of the older child are less than convincing in the light of the concessions she made that she had written certain entries in the diary.
17.The husband’s willingness to support the wife is indicated by the fact he took some 9 months off work at the time of the birth of his first child to assist the wife to support the new born child. The husband presents as an extremely intense person and I have little doubt that the intensity of his presentation could at times give the appearance of being overwhelming.
Importantly for purposes of this appeal, his Honour then referred to three concerns which he had regarding the making of the consent orders apart from duress:
18.Apart altogether from the issue of duress there are other factors which would lead a Court to seriously question the propriety of the consent orders being made in the terms that they were. There are 3 major concerns in this regard:
(a)The wife’s income was seriously overstated, being $940 as against $430. At no time did the wife ever receive a distribution from the profits of the business after separation nor was there any intention on the part of the husband that she was to receive an equivalent amount by way of drawings or share of profits as he was to receive after the making of the consent orders. I have little doubt that the figure of $940 inserted in the amended document was done by the husband on his own initiative or the husband in conjunction with his solicitor [HB]. The wife for reasons I cannot explain simply initialled the document where she was told to do so. I am more than satisfied she had no idea of the significance of this particular entry.
(b)The value of the business is shown as $74,000. This entry would lead any reasonable person to infer that the wife was to retain a half interest in an asset which the parties by agreement valued at $74,000. The attachment to the consent order provided that “joint ownership (of the business) is to continue”. The reality was within 6 weeks of the wife signing the consent orders, the business ceased to operate and the husband commenced what he claimed was a new business from the same premises, using the same phone number and much of the same equipment. I accept his evidence that he isolated much of the stock at that point in time but I find no particular relevance in this aspect. The stark reality is the wife received no income nor any capital payout on the business partnership ceasing operations.
(c)The wife’s obligation to pay child support pursuant to Attachment A of the Form 12 A was to be waived for a period of 11 years. Based on a weekly income of $940 (producing an annual income of $48,880) [HB] had informed the wife that her liability for child support would be in the order of $192 per week for the 2 children. Having regard to her limited income at that time, I have little doubt that this would have induced an even greater sense of panic and stress in the wife’s already distressed harassed condition. I am not confident that the figure of $192 is precisely accurate but I am satisfied that it is a close approximation of what one might expect the child support liability for 2 children to be on an income of $48,800. The child support which was waived was to be on a figure of $5,910 for 11 years (at $113 per week) which capitalised out at $65,010.
19.This equated to one half of the value of the unencumbered former matrimonial home. I have no doubt whatsoever that the calculations were done in reverse, namely having regard to the age of the older child, the amount of liable child support was reversed to enable the sum to be appropriately capitalised. I note that the older child…was born in September 1993. Having regard to the fact the orders were made in November 2001 for the wife to have child support liability waived for 11 years in fact meant that she would be paying child support for [that older child] one year into his adult status. This minor aspect appears to have been overlooked, both at the time of the making of the consent orders and during the course of the 4 day trial.
20.The wife’s taxable income for the financial year ending 2001 was $27,136 (Exhibit 12). For the financial years ending 2003 and 2004 her taxable income was $20,914 and $22,377 respectively.
21.Her child support liability for 2 children for each of these years would approximately have been:
(a) 2001 - $74 per week;
(b) 2003 – $41 per week;
(c) 2004 – $49 per week.
22.I am more than satisfied that in transferring her half interest in the house in return for capitalisation of child support, the wife has not received true value for money. Her liability for child support in the capitalization calculations was seriously over-estimated.
23.I leave aside at this point in time the fact that no child support agreement was ever registered nor was there every any application for a departure order by way of capitalisation of child support. In a legal sense, the wife’s rights to be protected have not been secured although in a practical sense, I accept that the husband would be as good as his word and would not attempt to renege on the agreement by making an application for child support.
His Honour next discussed aspects of the husband’s case. In the course of this discussion he reached the conclusion that there had been a miscarriage of justice:
25.In paragraph 14 of the respondent’s summary of argument document, the following passage appears:
“The applicant complains about receiving nothing but in effect she received a holiday from child support and a half interest in the business. Taken as a percentage of the net assets of the parties of about $257,000, this amounted to approximately 40% factoring in the business at $37,000 and the child support relief at $65,000. She also kept her modest superannuation, the amount of which was not disclosed but currently stands at about $6,000.”
26.I find these submissions seriously inaccurate in most respects. The reality is she did not receive a half interest in the business in any real sense and it is inaccurate to represent that she in any way received an asset to the value of $37,000. The so called holiday from child support far from being worth $65,000 over 11 years is on a realistic assessment likely to prove to have been less than a quarter of that figure.
27.The bottom line is that as a result of the consent orders on the parties’ own figures, the husband received the following:
(a) the former matrimonial home $130,000 (b) business $74,000
(c)car $55,000
(d)bank account $1,450
(e)furniture $7,500
(f)Total $267,950
(g)less liability on car $24,000
(h) Net assets received by husband $243,950
28.The wife would appear to have received the following:
(a) bank account $1,450
(b) superannuation (not disclosed) $6,000
(c) furniture (an unrealistic figure by any measure) $7,500
(d) cash $280
(e) Total $15,230
(f) less bankcard liability $600(g) Net amount received by wife $14,630
29.The wife received only a fraction of the intended benefit from the capitalisation of child maintenance provisions. Bringing the capitalised child maintenance into account at a notional figure of say $20,000 means the wife would have received total assets of $34,630. This equates to about 12 percent of the matrimonial pool.
30.Having regard to the length of period of cohabitation, the fact that the wife worked periods of time during the relationship and was homemaker and primary carer of 2 children, I find that consent orders that produced this result amount to a miscarriage of justice….
31.The husband disputes the business is worth $74,000 and says it is now less than $16,000. The husband was advised at the time by the business accountant and his own solicitor. He was responsible for nominating the value of the business at $74,000. I find the wife simply agreed with the value nominated without making any independent enquiry.
32.I accept that the wife wanted out of the business and the husband was well aware of this and willing to accede to the wife’s request which makes it all the more misleading to inform the Court that the wife’s half interest would continue with the obvious inference that she would have a secure independent income to add to her modest income from her employment.
His Honour then referred to the fact that the value of the matrimonial home was shown in the consent orders at a value of $7,500 less than its previously agreed value, and to the fact that the orders and/or accompanying documentation made no reference to the parties’ modest superannuation entitlements. However, he commented (in paragraph 33) that he would not “be minded to interfere with the consent orders” if one, or it would seem, both of these matters were the only ground or grounds relied on (in support of the application to set aside the consent orders).
His Honour then returned to the matter of duress, which, it will be recalled, he had earlier described as “the wife’s primary argument for setting aside the consent orders”, saying:
34.I have already indicated that I am satisfied the wife has made out the ground of duress in the sense that she was in a fragile emotional state at the time and was subjected to considerable pressure by the husband who himself was very anxious to have matters finalised. I reject the wife’s claim that she was subjected to harassment by either the accountant or the solicitor. They did not appear to me to be the sort of individuals who would engage in such conduct. I accept that there would have been some phone calls from the accountant requesting the wife to supply details of her gross income from her employment. In her then emotional state, the wife may not have been able to handle such requests and perceived it as the husband attempting to control her or harass her.
Having referred briefly to a then recent decision of Ryan FM, his Honour concluded that he would not base his decision to set aside the consent orders on a finding of duress, saying:
36.In the whole of the circumstances, I do not intend to base my decision on a finding of duress.
Rather, his Honour determined that he would set aside the consent orders on the basis of, and to use the precise words of s 79A(1)(a) “a miscarriage of justice by reason of … any other circumstance”. He explained his decision in this way:
37.I find that the misleading information placed before the Registrar in the 3 significant areas I have touched on are sufficient to vitiate the consent orders on the basis of “any other circumstance”.
38.Counsel for the husband submitted the wife could sue in the civil courts for monies due and owing from the winding up of the business and for unpaid sums from her share of the profits up to the date of the dissolution of the partnership. I do not intend to deal with such a submission at any length other than to note that I do not find it reasonable to expect the wife to litigate in another Court assuming that Court was satisfied it had jurisdiction.
39.I am satisfied on the evidence, notwithstanding the many errors in the material submitted by [HB], that she was not aware that the business was to be wound up imminently and the wife in fact would receive no ongoing income from the business nor would she receive any capital entitlement.
40.It may have been wise on her part to have made such enquiries, considering the fact that she had been informed by the wife she wanted no further part in the business.
41.I am more than satisfied the wife did not receive proper or detailed legal advice. It is not a requirement of law that she receive legal advice before entering into valid consent orders. The wife must take responsibility for the fact that the brief legal advice she did receive, she was advised not to sign. I accept she was also informed by [the husband’s solicitor] that:
(a) she should seek independent legal advice; and
(b) that it was likely she would be entitled to more.
There is no evidence to suggest the husband’s solicitor advised the wife to seek independent legal advice after the important amendments were made.
42.People settle litigation for all sorts of reasons. The wife at the particular time may have been feeling either guilty or stricken with grief at separation from her children. I am unable to speculate but I am under no doubt that she was under considerable pressure at the time. She is free to enter into an agreement which provides for a lesser entitlement than she may otherwise be likely to receive but such agreement must, in the whole of the circumstances, reflect a result which is just and equitable. That is the law. The law is designed to protect citizens, male or female, in cases such as this as it recognises the intense emotional pressure the parties are under in such circumstances.
43.I am satisfied the misinformation placed before the Registrar falls within the scope of “any other circumstance” in Section 79A. I find the result provided for in the consent orders amounted to a miscarriage of justice. I will set aside the consent orders….
His Honour then proceeded “to determine what amounts to a just and equitable distribution of assets between the parties having regard to the terms of Section 79 and Section 75(2)”. As no part of the appeal relates to the property settlement orders then made by his Honour, we need not refer to those orders nor to his Honour’s reasons for making them.
the issues arising on the appeal
It will be seen from the above analysis of his judgment, that having decided not to determine the wife’s application to have the consent orders set aside on the basis of duress, his Honour proceeded to set aside those orders on the basis of the misleading information provided to the Registrar, who made the consent orders, in relation to three significant areas, which in summary were the wife’s income, her interest in the business, and her capitalized child support liability.
It will also be seen that having set out the amounts which he considered each party had received under the consent orders and having referred to the length of the parties’ cohabitation and to the wife’s contributions as a home-maker, parent and some-time wage earner, his Honour concluded (at paragraph 30) that “[the] consent orders that produced this result amount to a miscarriage of justice”.
Later in his judgment and immediately after saying that he would not base his decision on duress, his Honour said in paragraph 37, that he found “the misleading information placed before the Registrar in the 3 significant areas which he had earlier “touched on” were “sufficient to vitiate the consent orders on the basis of “any other circumstance”.
Then in the last paragraph of his judgment (paragraph 43) which is relevant for present purposes, his Honour expressed himself as “satisfied” that “the misinformation placed before the Registrar” fell within the scope of “any other circumstance”, and that “the result provided for in the consent orders amounted to a miscarriage of justice”.
These conclusions on the part of his Honour were obviously expressed against the background of the provisions of s 79(A)(1)(a), being that where in relation to an order made in property settlement proceedings, the court is satisfied that “there has been a miscarriage of justice by reason of …. any other circumstance”, the court may in its discretion set aside the order.
We will where necessary later refer to the contents of the twelve grounds of the husband’s appeal. It is sufficient at this point to say that in endeavouring to persuade us that his Honour’s discretion miscarried in setting aside the consent orders, Counsel for the husband submitted that the three significant areas in which his Honour concluded that the Registrar had been mislead, all really amounted to only the one issue, being the wife’s interest in the business. This was submitted to be so, because her income at the time of the orders and the value of the relief given to her by the waiving of her child support liability related to her income, including her income from the business.
It was then submitted that the wife’s interest in the business had existed at, and was only relinquished after, the time when the consent orders were made, with it being submitted that the authorities establish that events occurring after the settlement is signed cannot impugn the integrity of the process that led to the signing of the consent orders. Thus, it was submitted, the consent orders in this case should not have been set aside on the basis of the wife’s loss of her interest in the business after the making of the consent orders.
Alternatively, it was submitted that if there was any misrepresentation to the Court concerning the parties’ financial circumstances, the wife should not be permitted to rely on her own conduct in participating in such misrepresentation. Similarly, the husband relied on the wife’s failure to obtain adequate legal advice, notwithstanding the warnings which she had to obtain such advice, and also on her delay in applying to set aside the consent orders.
A further submission made on behalf of the appellant was that it was not sufficient for his Honour to set aside the orders simply on the basis that he had concluded that there had been a miscarriage of justice. Rather, it was submitted the authorities require that having determined that there was a miscarriage of justice, the Court must then consider whether or not to exercise the discretion to set aside the order in question.
In his submissions in opposition to the appeal, Counsel for the wife contended that in determining to set aside the consent orders, his Honour had applied the proper principles and that all his findings were open to him on the evidence.
Events occurring after the consent orders were made
In Public Trustee v Gilbert (1991) FLC 92-211, the Full Court (Fogarty, Nygh and Wilczek JJ) after a relatively thorough consideration of the matter, ruled (at p78-428) that for the purposes of s 79A(1)(a) “a miscarriage of justice can only occur by reason of a fact or event which occurs before or at the time of the making of the order which is sought to set aside” (see also the subsequent Full Court decision of Bigg v Suzi (1998) FLC 92-799 at paragraph 6.39).
Thus Counsel for the appellant husband was correct insofar as he submitted that the exclusion of the wife from the business as a result of steps taken by the husband subsequent to the making of the consent orders could not constitute the necessary miscarriage of justice for an order under s 79A(1). However we do not read his Honour as finding that this miscarriage of justice occurred because of events which occurred after the making of the consent orders.
The misleading evidence
Rather, and as was apparently recognised by Counsel in his submissions in the alternative, his Honour made clear in paragraphs 37 and 43 of his judgment that it was the “other circumstance” of the misleading information which was put before the Registrar in relation to the three matters of the wife’s income, her interest in the business and the extent of her future child support liability, which caused the miscarriage of justice constituted by the terms, or result, of the consent orders.
The question, therefore, becomes whether his Honour was correct in concluding that there was misleading information provided to the Registrar about those three specific matters. In order to consider this question, it will be useful to repeat here his Honour’s findings about those matters.
The wife’s income
In relation to the wife’s income, his Honour found at paragraph 18 of his judgment:
(a)The wife’s income was seriously overstated, being $940 as against $430. At no time did the wife ever receive a distribution from the profits of the business after separation nor was there any intention on the part of the husband that she was to receive an equivalent amount by way of drawings or share of profits as he was to receive after the making of the consent orders. I have little doubt that the figure of $940 inserted in the amended document was done by the husband on his own initiative or the husband in conjunction with his solicitor [HB]. The wife for reasons I cannot explain simply initialled the document where she was told to do so. I am more than satisfied she had no idea of the significance of this particular entry.
It is no doubt technically correct, as is effectively asserted in the husband’s first ground of appeal, that the wife did, as a partner in the business, have an entitlement to the amount of the difference between the figure of $940 stated in the final application for the consent orders and her actual earned income of $430. However, the reality was, as his Honour recognised, that the higher amount was never received by her. In our view, her real income position needed to be known, if just and equitable property settlement orders were to be made.
But that is not the end of the matter. Rather, the question then becomes whether the wife was herself responsible for this misrepresentation to the maker of the consent orders. It will be seen that his Honour clearly concluded in the last three sentences of paragraph 18(a) of his judgment that she was not. However, the husband asserts in his second, third and fourth grounds of appeal that:
(2)There was no evidence to support the finding that the husband by himself or in conjunction with his solicitor inserted the figure of $940 per week as the wife’s income in the 12A document.
(3)The wife having initialled the entry of $940 per week was aware or ought to have been aware of what she was doing in that she provided part of the information to support that figure and His Honour erred in concluding that she had no idea of the significance of that entry.
(4)Further, and alternatively to paragraph 3, the wife was, at all material times, encouraged and/or had the opportunity to source legal advice to understand the significance (if any) of the entry but chose not to do so.
In relation to the assertion contained in Ground 2, Counsel for the wife sought to demonstrate in paragraph 13 of his written submissions that the finding that the solicitor for the husband, Ms HB, had inserted the income figure of $940 “was well open” to his Honour. We are not necessarily so convinced. But it matters little because the far more significant issues are those raised by Grounds 3 and 4, being essentially whether the wife should ultimately bear responsibility for signing the orders without taking proper independent legal advice as she had been urged to do by the husband’s solicitor. We will return later to these matters.
The wife’s interest in the business
As to the wife’s interest in the business, his Honour found:
18 (b)The value of the business is shown as $74,000. This entry would lead any reasonable person to infer that the wife was to retain a half interest in an asset which the parties by agreement valued at $74,000. The attachment to the consent order provided that “joint ownership (of the business) is to continue”. The reality was within 6 weeks of the wife signing the consent orders, the business ceased to operate and the husband commenced what he claimed was a new business from the same premises, using the same phone number and much of the same equipment. I accept his evidence that he isolated much of the stock at that point in time but I find no particular relevance in this aspect. The stark reality is the wife received no income nor any capital payout on the business partnership ceasing operations.
Relevant to these findings, and also indeed to the findings concerning the wife’s income in the first sub-paragraph of paragraph 18, are his Honour’s conclusions in paragraphs 32 and 38:
32.I accept that the wife wanted out of the business and the husband was well aware of this and willing to accede to the wife’s request which makes it all the more misleading to inform the Court that the wife’s half interest would continue with the obvious inference that she would have a secure independent income to add to her modest income from her employment.
…
38.Counsel for the husband submitted the wife could sue in the civil courts for monies due and owing from the winding up of the business and for unpaid sums from her share of the profits up to the date of the dissolution of the partnership. I do not intend to deal with such a submission at any length other than to note that I do not find it reasonable to expect the wife to litigate in another Court assuming that Court was satisfied it had jurisdiction.
We have already indicated that events subsequent to the making of the consent orders (including actions which might have been taken in light of such events) are not relevant to establishing whether a miscarriage of justice had occurred. However, it is clear, particularly from paragraph 32, that his Honour was concerned with and ultimately based his decision on the misleading information given to the Court by the parties, both of whom he found were at least considering the wife’s withdrawal from the business.
Given his Honour’s findings in paragraph 32 regarding each party’s state of mind, it was, in our view, open to his Honour to conclude that the information was misleading. To the extent that conclusion by his Honour is challenged in certain of the husband’s grounds of appeal (notably grounds 7 and 8), such a challenge cannot succeed.
But the question again becomes whether the wife should have been permitted to rely on such misrepresentation to the Court in order to set aside the consent orders to the detriment of the husband. Again, this is an issue to which we will return.
The wife’s child support liability
His Honour’s findings in relation to the wife’s child support liability were as follows:
18.…
(c)The wife’s obligation to pay child support pursuant to Attachment A of the Form 12 A was to be waived for a period of 11 years. Based on a weekly income of $940 (producing an annual income of $48,880) [HB] had informed the wife that her liability for child support would be in the order of $192 per week for the 2 children. Having regard to her limited income at that time, I have little doubt that this would have induced an even greater sense of panic and stress in the wife’s already distressed harassed condition. I am not confident that the figure of $192 is precisely accurate but I am satisfied that it is a close approximation of what one might expect the child support liability for 2 children to be on an income of $48,800. The child support which was waived was to be on a figure of $5,910 for 11 years (at $113 per week) which capitalised out at $65,010.
19.This equated to one half of the value of the unencumbered former matrimonial home. I have no doubt whatsoever that the calculations were done in reverse, namely having regard to the age of the older child, the amount of liable child support was reversed to enable the sum to be appropriately capitalised. I note that the older child … was born in September 1993. Having regard to the fact the orders were made in November 2001 for the wife to have child support liability waived for 11 years in fact meant that she would be paying child support for [the older child] one year into his adult status. This minor aspect appears to have been overlooked, both at the time of the making of the consent orders and during the course of the 4 day trial.
20.The wife’s taxable income for the financial year ending 2001 was $27,136 (Exhibit 12). For the financial years ending 2003 and 2004 her taxable income was $20,914 and $22,377 respectively.
21.Her child support liability for 2 children for each of these years would approximately have been:
(a) 2001 - $74 per week;
(b) 2003 – $41 per week;
(c) 2004 – $49 per week.
22.I am more than satisfied that in transferring her half interest in the house in return for capitalisation of child support, the wife has not received true value for money. Her liability for child support in the capitalization calculations was seriously over-estimated.
We share his Honour’s concerns about this matter, particularly as expressed by him in paragraph 22. We also share his concerns that the calculations were apparently wrong in respect of the length of time that the wife’s liability would exist for the older child as pointed out in paragraph 19.
It is important to note, as his Honour found, the child support calculations were the means by which the arrangement was presented, and accepted, as being just and equitable, in other words, a construct to obtain the Court’s imprimatur. If the wife were not required to pay what was said to be capitalised out at $65,010, then the orders as presented to the Registrar were plainly unjust, and amounted to the Court being misled about material facts.
We think the child support calculations (based as they were on the false premise that the wife was receiving income from the business) are at the heart of the assertion that a miscarriage occurred in this case. That being so it is important to look at how this calculation came to be included in the orders as it will directly bear upon whether there was a miscarriage of justice and if so, whether the Court’s discretion was correctly exercised in favour of the wife.
We note with some interest that neither the husband’s grounds of appeal, nor the submissions put in support of those grounds, appear to contain any challenge to any specific finding by his Honour in paragraph 18(c) or in paragraphs 19 to 22. However, we understand the general challenge, which is raised by the husband, being that that the wife by her failure to obtain proper independent legal advice is the author of her own predicament, is also directed to this matter.
Thus it can be seen that the fundamental questions in this appeal become whether the wife was the author of her own predicament, and whether she, rather than the husband, should bear responsibility for her actions.
The wife’s failure to obtain legal advice
Again, it will be convenient to repeat here his Honour’s findings that are relevant to these fundamental questions. Those findings are:
41.I am more than satisfied the wife did not receive proper or detailed legal advice. It is not a requirement of law that she receive legal advice before entering into valid consent orders. The wife must take responsibility for the fact that the brief legal advice she did receive, she was advised not to sign. I accept she was also informed by [HB] that:
(a)she should seek independent legal advice; and
(b)that it was likely she would be entitled to more.
There is no evidence to suggest the husband’s solicitor advised the wife to seek independent legal advice after the important amendments were made.
42.People settle litigation for all sorts of reasons. The wife at the particular time may have been feeling either guilty or stricken with grief at separation from her children. I am unable to speculate but I am under no doubt that she was under considerable pressure at the time. She is free to enter into an agreement which provides for a lesser entitlement than she may otherwise be likely to receive but such agreement must, in the whole of the circumstances, reflect a result which is just and equitable. That is the law. The law is designed to protect citizens, male or female, in cases such as this as it recognises the intense emotional pressure the parties are under in such circumstances.
His Honour was no doubt correct in concluding in paragraph 41 that the wife “did not receive proper or detailed legal advice”. But that conclusion, with respect, does not advance matters very much. As his Honour himself recognised by his further observations in paragraph 41, the wife had been advised not to sign (we understand this to be a reference to the twenty minutes of advice for $20 referred to in paragraph 12 of the wife’s affidavit sworn 27 January 2005), and she had also been advised by the husband’s solicitor, HB, that she should seek independent legal advice and that she would be likely to receive more. Indeed, his Honour himself made the important observation that the wife “must take responsibility for the fact” that she was advised not to sign.
However, his Honour appears to have counter-balanced, so to speak, this responsibility on the part of the wife against two, perhaps three, other matters, and thus to have concluded in her favour that the orders should be set aside.
The first such counter-balancing matter appears to be that when “important amendments” were made to the application for the consent orders, the wife was not then advised by the husband’s solicitor to obtain independent legal advice.
Secondly, there was the fact that at the time the wife “may have been feeling either guilty or stricken with grief at separation from her children” – although as his Honour appears to recognise this was speculation.
The third counter-balancing factor appears to have been that his Honour had “no doubt that she was under considerable pressure at the time”.
Whilst we agree his Honour was correct in stating in paragraph 41 that there was no evidence that the husband’s solicitor had advised the wife to seek independent advice after the important amendments were made, the amendments themselves and the wife’s willingness to sign the document incorporating them, has to be seen in context. The context was that as his Honour found she was informed by HB that she should seek independent legal advice. It appears that the last occasion on which this occurred was in a letter dated 12 October 2001 from the husband’s solicitor to the wife enclosing a letter from a Deputy Registrar of the Family Court of Australia dated 5 October 2001 referring to an application for consent orders filed on 4 October 2001 and raising issues regarding the wife’s interest in the business. Importantly, in her letter of 12 October 2001, the solicitor for the husband then advised the wife to seek independent legal advice (as indeed the solicitor had earlier done in a letter dated 4 June 2001).
The wife conceded that she had read the letter and importantly had read the passage advising her to seek independent legal advice. Her response when asked about what she thought when she read it was to say “I’d already sought it”. It is true as his Honour said that there is no evidence to show that she was invited to seek legal advice after the “important amendments” were made. The important amendments to which his Honour referred was the change in the wife’s income to $431 to $940 per week.
It is also true, as we have observed, the misrepresentation about her income and thus the child support liability appears to have been a misrepresentation that enabled the orders to be made. Again his Honour found, in our view properly, that the representation was inaccurate and did not represent the reality of the wife’s position. It thus undermined the calculation of the child support payment calculated to be owed by the wife and which was said to be offset against her interest in the former matrimonial home which she was transferring to the husband.
But to focus on the fact that she did not obtain legal advice after the amendment, would be to ignore the factual matrix in which the agreement had been negotiated and which the process to obtain orders was taking place. Whilst we have concluded that the court was mislead by the information in the application as to the justice and equity of the orders being made, the wife was not mislead by the addition of this information which came very late in the whole process of trying to obtain the Court’s consent to the orders. It was at all times the position of the wife, and the husband, that orders should be made which had the effect of:
·Transferring the wife’s interest in the former matrimonial home to the husband; and
·Relieving the wife from an obligation to pay child support to the husband.
This was the intent when the first application for consent orders was signed and remained the intent. The orders themselves did not change and the orders that were made on 19 November 2001 contain no reference to child support. It was the last application, filed after the Court had rejected earlier ones, which contained the information about the child support calculation. That calculation was done as we have indicated, in order to persuade the court that the terms of the order were just and equitable. From the wife’s perspective it mattered not how that argument was put to the Court because she at all material times wanted orders, in the form in which they were finally made, to be made. She was content to have those orders made without any reference to child support and had supported two earlier applications. Thus whilst the calculation of child support may have been material to the justice and equity of the orders the court was making, they were not material to the wife’s willingness to sign the application.
This is also clear from a passage of cross-examination of the wife. In the transcript at page 51 the following excerpt of cross-examination occurred:-
COUNSEL FOR THE HUSBAND: Yes. Okay. So you made the choice, didn’t you, to sign the 12A application on 13 November ? --- Yes
You made that choice? --- Yes.
Considering that you didn’t feel you were getting enough; correct? --- Yes,
Considering legal advice that you had that suggested that you shouldn’t sign it? --- Yes.
Correct? Considering numerous – when I say that – I withdraw that. Considering several oral and written urgings on the part of [HB] for you to get legal advice of an independent nature; correct? --- I’d already had it.
Yes, but I’m asking you the question that you signed these things even after [HB], right at the end, including that and previously, right at the end before you signed the last one, urged you to go and get legal advice?--- Yes.
Yes. And the urging to get legal advice, you knew that you were being urged by [HB] to get legal advice after the Court had knocked back the application; correct? The letter’s plain, isn’t it? --- It’s there, yes, it’s in writing.
Yes. So [HB] told you the orders have been knocked back. Go and get legal advice but you read that and you decided not to; correct?--- I read it. I did not go again because I had already seen it. They were exactly the same thing that I had shown someone previously so I did not think it was necessary to go again.
It is clear in our view that when the wife says that she had shown it to someone previously she was referring to the orders, which as we have pointed out, were at all times in the same form in which they were finally made.
In Gebert v Gebert (1990) FLC 92-137 at 77,937, the Full Court said:
The very expression "miscarriage of justice" used in sec.79A(1)(a) does not fit happily with the concept of a party of full age and with full knowledge of the circumstances entering into an agreement of this nature in circumstances where he had deliberately decided not to seek legal advice, although urged to do so. No doubt had the situation brought about by the order been imposed upon him, it may have amounted to a miscarriage of justice but the law fortunately still allows persons to form their own views as to the arrangement of their affairs. In the present case, there appears to be no doubt that this is precisely what the husband did. The fact that he later repented of that decision, in no sense elevates his original decision to consent to such an order to a miscarriage of justice nor should such order in our view be interfered with. On the contrary, we would regard it as a considerable miscarriage of justice from the wife's point of view if the husband's then conscious decision entered into free of duress, was now to be interfered with on a paternalistic view as to what might or might not have been in his best interests.
Commenting on that paragraph, Finn J in McIntyre v McIntyre (1994) FLC 92-468 at 80,856, made the following observation:-
I would suggest that what was said by the Full Court in the final paragraph of its decision in Gebert to the effect that the law still permits persons, who have deliberately decided not to take legal advice, to make their own arrangements, must be taken as applying only to situations where such persons have, in the language of the Full Court, “full knowledge of the circumstances".
Finn J’s comments were the subject of comment by the Full Court (Justices Fogarty, Kay & Mushin) in L & L (FCOA Full Court; 27 February 1996). In particular Fogarty J said:
The other matter I wish to mention is this, that it seems to me that the Full Court in Gebert's case correctly stated the principles to be applied and they emphasised the importance of parties being able to reach their own decision and the undesirability of a retreat from that.
I have two comments to make about that. Sometimes, unwittingly I think, this Court tends to adopt a paternalistic approach and that Gebert's case demonstrates that husbands sometimes are not as easily able to retreat as wives are. Now, there may be social background factors or individual factors in each case which would justify that, but I think it cuts both ways and there is an end point to these sorts of cases.
The second point is that Finn J in interpreting Gebert's case in her judgment in McIntyre may have overstated the position where she said that there must in effect be full knowledge of the circumstances. The balance of her Honour's judgment may suggest that her Honour may not have meant that in the precise sense that it is capable of being interpreted as meaning.
It does seem to me that it can be full knowledge or the opportunity to acquire full knowledge or a conscious decision not to obtain information or knowledge that was available.
We agree with his Honour’s comments which we interpret to mean that the law still permits persons who have deliberately decided not to take legal advice, to make their own arrangements, in circumstances where such persons have full knowledge of their entitlements, or the opportunity to acquire full knowledge of their entitlements, have made a conscious decision not to obtain information or knowledge about the entitlements or about the orders that was available, and have made a conscious decision to proceed in the face of advice that it would not be in their interests to do so.
We need not discuss further the fact that the wife may have been affected at the relevant time by guilt or grief, because as his Honour recognised, this was only speculation.
There remains then only the third matter of his Honour’s finding that the wife was “under considerable pressure at the time” – which is a finding apparently not challenged – to support his Honour’s conclusion that the wife should not bear responsibility for her failure to obtain proper independent legal advice.
We understand that pressure to include a misunderstanding by the wife, perpetuated by the husband’s solicitor, that she would be liable to pay child support in the vicinity of $190 per week.
The letter covering the first draft of the Consent Orders and sent to the wife by the husband’s solicitor on 4 June 2001 expressly states “[i]t is noted that you agree to transfer your share of the former matrimonial home to [the husband] in lieu of Child Support payments” (Annexure A to Affidavit of H B filed 17 November 2004). However there is no mention of any amount. The wife also gave evidence of a conversation with the husband’s solicitor on the date that she signed the last application for consent orders, namely 13 November 2001:
MR HANLON [COUNSEL FOR WIFE]: ..On the occasion you signed the application for consent orders did you speak to [ HB] personally?---Yes
Did you go into her office? ---Yes.
When you look at that document, it speaks of things about child support. Well, turn through the document. It’s called Annexure A, after the page you signed?---Oh, yes.
I’m going to ask you a question about that?--- Yes.
Did[HB], the solicitor, speak to you about child support at all?--- Yes.
What did she say to you about it?--- She told me that I would be paying around $130 a week for two children. There was no way that I could afford to pay that. I was flat out paying my rent at the time, which was $160, let along everything else plus $130 on top of that.
Why did you sign that particular application?--- I didn’t feel that I had any other option. I had been hounded for months to sign it. I was being told on the one hand that I was going to be paying $130 in – in maintenance and this was an option to not have to pay that much money – well, I couldn’t pay that much money anyway. I was being – [the husband] was on the phone constantly to me. AB would ring me up and say, “You have to sign this” or “What’s happening about this ?” to do with the business, and then HB would be ringing me, saying “Oh, have you signed these papers yet?” And there just seemed to be phone calls every few days – if not from one, from the other. There were threats that if I did not sign things and did not do certain things that I would not be allowed to see my children when I wanted. I was hardly seeing them at all and ---
Under cross-examination by Counsel for the Wife, the Husband’s Solicitor gave evidence that she advised the wife that with an income of $940 a week, she would be required to pay $194.61 per week to the husband for the child support of both children. However again, that discussion took place when the third application was being signed. It is to be noted that the first time the application in support of the consent orders mentioned child support was in the third application signed on 13 November 2001.
His Honour concluded (at paragraph 22) that the wife's liability for child support in the capitalization calculations was seriously overestimated and we agree with that conclusion. But, when regard is had to the fact that the orders being sought were at all times identical in each of the three applications filed, the wife was told on several occasions by HB to get her own advice and the child support calculations were discussed and included only in the last application, it does not appear to us that a conclusion that the wife was under pressure by reason of HB’s calculations about the child support can be sustained.
We accept (contrary to the submissions of Counsel for the husband) that the balancing exercise which his Honour appears to have undertaken in paragraphs 41 and 42 of his judgment could well be seen as the exercise of the discretion that authorities such as Morrison (1995) FLC 92-573 require to be undertaken after the conclusion is reached that a miscarriage of justice has occurred. However, the conclusions which we have just reached concerning the first two matters on which his Honour relied on to relieve the wife of responsibility for her failure to obtain independent legal advice, partially undermine the validity of the exercise of that discretion.
In both his written and oral submissions, Counsel for the appellant husband placed particular reliance on the following passage from the judgment of Mason J (with whom Aickin J agreed) in Taylor v Taylor (1979) FLC 90-674:
What s. 79A (1) does is to give the court a discretion to set aside an order when it has been obtained by false evidence. In such a case the court will be extremely reluctant to exercise its discretion in favour of setting aside the order unless something more appears than that false evidence has been given and has procured the making of the order. The importance of bringing an end to litigation and the evil of allowing cases to be retried on the same evidence are powerful deterrents against setting aside a judgment whenever it appears that it has been obtained by false evidence without more.… [our emphasis]
Notwithstanding some amendments to s 79A(1) since the decision in Taylor (supra), and notwithstanding that in this case only misleading as opposed to false evidence is relied on, we consider that the appellant’s reliance on Mason J’s observations are well placed and are matters to which regard should have been had in the exercise of the discretion in this case.
We note also that in Rohde v Rohde (1984) FLC 91-592 at 79,770, Gee J sitting at first instance, considered that in the exercise of the discretion under s 79A(1), he was bound to have regard to the principles stated by Mason J in Taylor (supra) and also to the following principle (at 79,770):
It is in the public interest, that parties who have been the primary contributors to their own financial troubles in the way the husband has been in the case, should not be allowed to relitigate matters with a view to getting themselves out of those troubles.
We think that that principle stated by Gee J could well be adapted and applied to the present case to support the conclusion that the wife should not have been permitted to rely on her own apparently unexplained failure to seek proper and full independent legal advice. Had the wife had such advice, the misleading information may not have been put before the Court.
But in any event, and leaving to one side the issue of the wife’s failure to seek legal advice, the possibility of her relinquishing her interest in the business and the true level of the income which she actually received were matters that must have been known to the wife herself.
True it is, that the husband must also bear responsibility for the misleading advice, but he was not the one who sought to set aside the consent orders.
Accordingly, notwithstanding the well-established principles which limit the interference with discretionary judgments, we consider that we should allow the appeal and set aside the order made by Barry J on 18 February 2005, which set aside the consent orders of 11 November 2001. For the avoidance of doubt, we will also set aside the new property settlement orders made by his Honour after he set aside the consent orders.
We consider it appropriate for the form of the orders to be as formulated by Counsel for the respondent wife in paragraph 1 of his written submissions.
costs
In the event that the appeal was to be allowed both parties sought costs certificates under the Federal Proceedings (Costs) Act 1981. We consider it appropriate to grant such certificates.
I certify that the preceding eighty-nine (89) paragraphs are a true copy of the reasons for judgment of this Honourable Full Court
Associate:
Date: 21 December 2006
Key Legal Topics
Areas of Law
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Family Law
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Civil Procedure
Legal Concepts
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Appeal
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Res Judicata
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Reliance
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Procedural Fairness
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Remedies