Spalla & Spalla
[2023] FedCFamC1A 87
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1) APPELLATE JURISDICTION
Spalla & Spalla [2023] FedCFamC1A 87
Appeal from: Spalla & Spalla (No 2) [2022] FedCFamC2F 1723 Appeal number: NAA 7 of 2023 File number: CAC 872 of 2020 Judgment of: CHRISTIE J Date of judgment: 8 June 2023 Catchwords: FAMILY LAW – APPEAL – PRACTICE AND PROCEDURE – Appeal against the primary judge appointing a case guardian – Where the ground of appeal does not comply with the Federal Circuit and Family Court of Australia (Rules) 2021 (Cth) r 13.02 – Where a ground of appeal is against an interlocutory order – No leave sought by appellant – Ground abandoned.
FAMILY LAW – APPEAL - PROPERTY – Estoppel – Where the parties entered into a Deed of Settlement following separation – Error by the primary judge in refusing to make a property adjustment order by reason of estoppel – Whether error was material – Error by primary judge did not result in a miscarriage of justice – Where primary judge found it was not just and equitable to make a property adjustment order – no error in applying principles in Stanford v Stanford (2012) 247 CLR 108– Evidentiary basis for the primary judge’s conclusion not squarely addressed by appellant – Appeal dismissed – Appellant to pay the respondent’s costs of the appeal.
Legislation: Family Law Act 1975 (Cth) ss 28, 79, 117
Federal Circuit and Family Court of Australia Act 2021 (Cth) ss 28 36
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) r 13.02
Federal Court and Federal Circuit and Family Court Regulations 2012 (Cth) reg 4.02
Cases cited: Berry v Andrews (2022) 65 Fam LR 183; [2022] FedCFamC1A 120
Bevan v Bevan (2013) 49 Fam LR 387; [2013] FamCAFC 116
Conway v R (2002) 209 CLR 203; [2002] HCA 2
Lane v Nichols (2016) FLC 93-750; [2016] FamCAFC 234
Woodcockv Woodcock (1997) FLC 92-739
Woodland v Todd (2005) FLC 93-217; [2005] FamCA 161
Number of paragraphs: 45 Date of hearing: 24 April 2023 Place: Sydney Counsel for the Appellant: Mr Masters Solicitor for the Appellant: Marjason & Marjason Solicitors Counsel for the Respondent: Ms Winfield Solicitor for the Respondent: Zali Burrows at Law ORDERS
NAA 7 of 2023
CAC 872 of 2020FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
DIVISION 1 APPELLATE JURISDICTIONBETWEEN: MR SPALLA
Appellant
AND: MS SPALLA
Respondent
order made by:
CHRISTIE J
DATE OF ORDER:
8 June 2023
THE COURT ORDERS THAT:
1.Appeal NAA 7 of 2023 is dismissed.
2.The appellant pay the respondent’s costs in the sum of $17,216.14 within 28 days.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Spalla & Spalla has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
CHRISTIE J:
This is an appeal from final property orders of a judge of the Federal Circuit and Family Court of Australia (Division 2) made 15 December 2022.
The appellant’s complaint is that the primary judge erred in construing a deed made between the parties as decisive of a property settlement within the meaning of the Family Law Act 1975 (Cth) (“the Act”) and in the alternative, that the primary judge erred in his application of s 79 of the Act.
BACKGROUND
The parties married in 1978 in Country B.
They are the parents of two now adult children, one of whom acted as case guardian for the respondent.
They acquired property in Australia including a house at T Street, Suburb U (“the Suburb U property”), which was purchased in August 2012 and registered in the names of the appellant (5 per cent) and the respondent (95 per cent).
The appellant was involved in legal proceedings with Insurer E, which resulted in the insurance company obtaining a judgment debt. Insurer E caused a writ to be registered on the title of the Suburb U property.
The parties entered into a Deed of Settlement and Release (“the Deed”) with the Insurer E in January 2014.
The primary judge found that the parties had separated by the time they entered into the Deed.
Insurer E were paid $50,000 and the writ removed from the title.
The Suburb U property was sold in July 2016 and the respondent applied the proceeds to the purchase of a rural property in her sole name which remained her home at the time of hearing. That rural property is the only asset of the parties in Australia.
THE TRIAL
The appellant sought final property orders in his Initiating Application filed on 7 May 2020.
The respondent led evidence that the parties signed a document on 31 January 2014 entitled “Deed of Settlement and Release” between each of them and Insurer E. The respondent asserted that this Deed acted as a property settlement between the parties and, of consequence, the appellant’s application should be dismissed.
There was evidence before the primary judge that the respondent suffered from Major Depression and as such her daughter Ms D was appointed as her case guardian by orders of 1 April 2022.
The issues for determination at the trial were:
(a)Date of separation between the parties;
(b)The effect of the Deed; and
(c)Whether it was just and equitable to make any adjustment to the parties’ ownership of assets.
The primary judge found (and no appeal lies against these findings):
(a)The parties were separated at the time they entered into the Deed;
(b)The parties thereafter lived separately and apart although they may have spent periods of time under the one roof;
(c)The appellant retained his superannuation;
(d)The parties sold a property at Suburb O in 2012 and divided the proceeds so that each received about $100,000;
(e)The respondent applied $100,000 to the purchase of the Suburb U property which was registered in the names of the appellant (5 per cent) and the respondent (95 per cent);
(f)The appellant was involved in proceedings against Insurer E, those proceedings were settled by a deed in which Insurer E was paid $50,000 and those funds were sourced by borrowings against the Suburb U property; and
(g)The appellant is cohabitating with a de facto partner who provides him with financial support.
THE APPEAL
The appellant filed a Further Amended Notice of Appeal on 29 March 2023 which amended the grounds in this appeal to the following:
1.That Court erred in appointing [Ms D] (daughter of the parties) as case guardian [for the respondent] on the basis of the medical evidence provided to the Court.
2.The Court erred in holding that the Deed of Settlement and Release dated 31 January 2014 (“Deed”) between the Appellant, the Respondent and [Insurer E] was decisive in relation [to] any claim for relief under the Family Law Act 1975.
3.The Court erred in holding that, by virtue of the Deed, the Appellant was estopped from seeking relief under the Family Law Act 1975.
4.The Court erred in not finding that it was just and equitable to make a property settlement order under section 79(1) Family Law Act 1975.
The respondent in turn seeks that the appeal is dismissed with costs.
Ground 1: The Court erred in appointing Ms D (daughter of the parties) as case guardian [for the respondent] on the basis of the medical evidence provided to the Court
Ground 1 relates to interim orders made by the primary judge on 1 April 2022 appointing the case guardian. The appellant’s Notice of Appeal was not an appeal against the orders of 1 April 2022. The appellant’s Notice of Appeal is against the orders of 15 December 2022.
Moreover, s 28(1)(b) of the Federal Circuit and Family Court of Australia Act 2021 (Cth) (“FCFCOA Act”) provides that an appeal from a ‘prescribed judgment’ of Division 2 of this Court requires leave from Division 1 of this Court. An interlocutory order falls within the definition of ‘prescribed judgment’ found within reg 4.02(1)(a) of the Federal Court and Federal Circuit and Family Court Regulations 2012 (Cth) (as amended) (“the Regulations”) as follows:
(1)For the purposes of paragraphs 28(1)(b) and (3)(e) of the Federal Circuit and Family Court Act, the following judgments are prescribed:
(a) An interlocutory decree (other than a decree in relation to a child welfare matter);
No leave to appeal was sought in the appellant’s Further Amended Notice of Appeal filed 29 March 2023, as required by r 13.02 of Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) (“the Rules”).
Consequently, counsel for the appellant conceded that Ground 1 was not a valid ground of appeal in the above outlined circumstances and that ground was abandoned.
Ground 2: The Court erred in holding that the Deed of Settlement and Release dated 31 January 2014 (“Deed”) between the Appellant, the Respondent and Insurer E was decisive in relation [to] any claim for relief under the Family Law Act 1975
Ground 3: The Court erred in holding that, by virtue of the Deed, the Appellant was estopped from seeking relief under the Family Law Act 1975
Both grounds effectively contend the same error and will be dealt with together.
On 31 January 2014 the parties executed a Deed to resolve the dispute between the appellant and Insurer E which had resulted in the writ on title of the property at T Street Suburb U.
The Deed provided at [2]:
2.1 [Mr Spalla] and [Ms Spalla] shall do all things and execute all such documents that may be required to transfer all of the right, title and interest in the Property [T Street, Suburb U] held by [Mr Spalla] to [Ms Spalla].
2.2 A refinance settlement of the Property to take place on 31 January 2014 at [Firm BD] or on such other date and such other location as agreed between the parties-and the incoming mortgagee [''Refinance Settlement"].
2.3 The Creditor shall execute an Application to Cancel Recording of Writ in line with s105D of the Real Property Act 1900 (NSW) which will be available in registrable form at the Refinance Settlement in preparation for filing with Land and Property Information.
2.4 The Creditor shall provide further documentation and answer any requisitions required of it after the Refinance Settlement, by the Land and Property Information in order to remove the Writ.
2.5 At the Refinance Settlement the Creditor shall receive a bank cheque for $50,000 [“Partial Settlement Sum”] in partial settlement of its claim against [Mr Spalla].
2.6The Creditor will waive any and all rights to pursue a claim against [Ms Spalla] arising from the Judgment Debt, including any claim pursued by a Trustee in bankruptcy, upon receipt of the Partial Settlement Sum.
2.7Within 28 days of settlement, [Mr Spalla] shall attend upon a solicitor for the purpose of entering into a Binding Financial Agreement with [Ms Spalla] pursuant to section 90C of the Family Law Act which shall state inter alia:
2.7.1That [Mr Spalla] share of the Property was released to The Creditor via the proceeds of the Refinance Settlement as set out under this Deed.
2.7.2That [Mr Spalla] has no further claims against [Ms Spalla] in relation to the Property or any other marital property in the possession and control of [Ms Spalla] or his personal maintenance.
(As per the original)
The primary judge found that:
… in accordance with the clear terms of Clause 2.7.2 of the Deed, the Husband must be, and is, estopped from making any further claim, after the date of the Deed (January 2014), against the Respondent Wife “in relation to the Property [i.e the Suburb U property] or any other marital property in the possession of control of [Ms Spalla] [the Wife] or his personal maintenance.”
(As per the original)
It was uncontentious that no financial agreement was subsequently entered into by the parties.
The primary judge noted that the parties did not address him on the legal principles relating to estoppel by deed as a barrier to relief under Part VIII of the Act in either oral or written submissions. Accordingly, the primary judge set out the law, as he understood it, relating to the operation of doctrine of equitable estoppel and in particular estoppel by deed.
The primary judge did not specifically address those cases in this Court which have examined the operation of the doctrine in a court of statute in his review.
In Woodcockv Woodcock (1997) FLC 92-739 (“Woodcock”) their Honours said:
… the Court’s jurisdiction to grant relief under s 74 or s 79 can only be ousted by court order or by an agreement approved pursuant to the provisions of s 87. It may be that the ability of a court to take into account the terms of an unapproved agreement creates in the words of Hoffman LJ “the worst of both worlds” as it will be impossible to predict from case to case, exactly what weight ought to be given to the agreement: Schokker v Edwards: agreement followed; cf Klesnik: agreement given little weight. However it is the dominant and unwavering thread of all of the cases that the parties cannot by their conduct or agreement oust the jurisdiction of the Court.
The Court’s reluctance to preclude a party from seeking property or maintenance orders simply because an agreement intended to regulate financial matters between that party and his or her spouse has previously been entered has not been swayed by the circumstance that the agreement is in writing; has been drafted with the intent that it be registered under s 86 (or, in some cases, has been registered); is intended to be approved under s 87; is wholly executory; is partly executed; or has been wholly carried out. Given the ability to commence or continue proceedings in the face of a formal document, it is difficult to perceive why more significant consequences should flow from agreements made without the intention of any such formal imprimatur. Indeed, it is untenable that an agreement, whether oral or in writing executory or executed, should have a more binding effect than a written agreement which is registered or remains unapproved pursuant to the provisions of the Family Law Act.
However the facts relied upon to establish the existence of circumstances where the doctrine of equitable estoppel might otherwise operate (that is, an agreement reached or a representation made and acted upon) may well be relevant to determine:
(a)whether it is proper to make an order for the provision of maintenance pursuant to s 74 of the Family Law Act;
(b)whether it is appropriate to make an order for the provision of maintenance pursuant to s 79(1) of the Family Law Act;
(c)whether it is just and equitable to make an order for alteration of property interests within the meaning of s 79(2) of the Family Law Act;
(d)whether it is necessary to make an order to do justice within the meaning of s 80(1)(k) of the Family Law Act;
(e)whether it is just and equitable to make an order with respect to the application for the benefit of all the parties to, and the children of a marriage of the whole or part of any property dealt with by anti-nuptial or post-nuptial settlements made in relation to the marriage within the meaning of s 85A of the Family Law Act.
(Emphasis in original)
The decision in Woodcock has been subsequently considered, approved and applied in Woodland v Todd (2005) FLC 93-217 and Bevan v Bevan (2013) 49 Fam LR 387.
His Honour did not have the benefit of submissions on the application of the principles in the authorities set out above. In broad terms the authorities provide:
(a)It is only possible to oust the jurisdiction of the Court by final order or a qualifying financial agreement (and previously by approved maintenance agreement);
(b)An agreement other than a financial agreement will be relevant as evidence of what the parties intended and of the financial arrangements in place at the time and subsequently;
(c)In that sense any agreement is relevant but not in and of itself determinative.
Accordingly, to the extent that the primary judge found that the terms of the Deed necessitated the dismissal of the appellant’s application, he was in error. However, the primary judge went on to undertake further consideration of the merits of the claim and for this reason while error has been shown, as discussed below, the appeal will nonetheless fail.
It is only where an error of law is material to the extent it causes a miscarriage of justice that it will lead to a new trial: Conway v R (2002) 209 CLR 203; Lane v Nichols (2016) FLC 93-750.
The Full Court recently held in Berry v Andrews (2022) 65 Fam LR 183 at [17]:
… there can be no doubt that the powers of this Court in exercise of its appellate jurisdiction conferred under s 36(1) of the Federal Circuit and Family Court of Australia Act 2021 (Cth) includes the power to dismiss an appeal in any case where an error of law, fact or other wrong has not resulted in any miscarriage of justice.
Section 36(1) of the FCFCOA Act provides:
(1)Subject to any other Act, the Federal Circuit and Family Court of Australia (Division 1) may, in the exercise of its appellate jurisdiction:
(a) Affirm, reverse or vary the judgment appealed from; or
(b) Give such judgment or make such order as, in all the circumstances, it thinks fit, or refuse to make an order, or;
(c) Set aside the judgment appealed from, in whole or in part, and remit the proceeding to the court from which the appeal was brought for further hearing and determination, subject to such directions as the Court thinks fit; or
(d) Award execution from the Court or, in the case of an appeal from another court, award execution from the Court or remit the cause to that other court, or to a court from which a previous appeal was brought, for the execution of the judgment of the Court.
Here the appellant cannot demonstrate appellable error because his Honour went on to consider and apply the principles in Stanford v Stanford (2012) 247 CLR 108 (“Stanford”), leading to the conclusion that it was not just and equitable to adjust the parties’ interests in property. As the effect of his Honour’s alternate pathway is the same – dismissal of the husband’s application, the error did not result in a miscarriage of justice.
Ground 4: The Court erred in not finding that it was just and equitable to make a property settlement order under section 79(1) Family Law Act 1975
After having found that the Deed was determinative the primary judge proceeded to consider the alternate basis for the relief that the respondent sought, namely that having regard to the arrangements which the parties put in place, the court would require “a principled reason for interfering with the existing legal and equitable interests of the parties to the marriage…”: Stanford, [41].
It is not controversial that the appellant received the benefit of the Deed in so far as $50,000 was raised and applied to his indebtedness to Insurer E. Thereafter the respondent dealt with the Suburb U property without reference to the appellant, selling it, via a power of attorney and acquiring a new property which has been her home. The evidence before the primary judge was to the effect that, apart from some limited occasions when the appellant has stayed at the home of the respondent, he has occupied separate premises including with subsequent romantic partners and has spent time overseas (as has the respondent). The factors which may ordinarily speak to the appropriateness of adjusting the parties’ interests in assets – namely the making of post-separation financial and non-financial contributions by the parties - are not available on the facts of this case, supporting the correctness of the primary judge’s alternate determination.
The primary judge proceeded at [191]-[203] to refer to the evidentiary basis for his conclusion that it would not be just and equitable to adjust the interests of the parties in the assets now in their respective possession. The primary judge set out at length the reasons for preferring the evidence in the respondent’s case. The most significant evidence in so far as the determination of the matter related to the date of separation and the manner in which the parties had organised their financial affairs at that time and subsequently.
There is no challenge to the primary judge’s finding that the date of separation is as set out in the Deed and confirmed in the husband’s subsequent representations to Centrelink. There is no challenge to the finding that various assets of the parties were realised in the period leading up to the separation, to retire business debts of the husband. There was no challenge to the finding that the husband had, as Ms F deposed, property in Country B. There was no challenge to the finding that the husband is cohabiting with another person who provides him with financial assistance. Each of these findings at [191] properly underpinned the primary judge’s conclusion at [190] that:
The Court here clearly recognised that the parties themselves may have, and are entitled to, “make their own arrangements” (so to speak) in relation to the division of their property. The High Court [in Stanford] also made plain that what is (and what is not) “just and equitable” is a conclusion, which can only be reached by proper consideration of the facts and circumstances before it, and in accordance with principle. To stress the point: at [41], the High Court recorded a central factor for any Court at first instance, namely that it was mandatory that the Court must “have a principled reason for interfering with the existing legal and equitable interests of the parties.”
Given this alternate analysis it is necessary for the appellant to demonstrate that this aspect of his Honour’s reasoning was in error for the appeal to be successful.
The submissions for the appellant do not squarely address this issue.
The appellant argued that the terms of the Deed are relevant to the court’s determination of whether it would be just and equitable to adjust the parties’ current interests in property. That is consistent with authority.
Accordingly, the appeal will be dismissed.
COSTS
The respondent sought her costs in the event that the appeal was dismissed. The appellant contended an incapacity to pay in submissions but acknowledged the operation of s 117(2A)(e) of the Act, which provides that the court may have regard to a number of matters including where a party is wholly unsuccessful. As the appeal will be dismissed the appellant has been wholly unsuccessful. The appellant made no submissions on quantum. Both parties filed costs notices as required by the Rules. In this appeal I accept that there are circumstances justifying the making of an order for costs on dismissal of the appeal and I will order the appellant pay the respondent’s costs calculated at scale in the sum of $17,216.14.
I certify that the preceding forty-five (45) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Christie. Associate:
Dated: 8 June 2023
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