TAHEMA & TAHEMA (No.2) - [2021] FCCA 634

FEDERAL CIRCUIT COURT OF AUSTRALIA

TAHEMA & TAHEMA (No.2)

[2021] FCCA 634

Catchwords:

FAMILY LAW – Application by Wife under Rule 16.05 of the Federal Circuit Court Rules 2001 to set aside Property Orders made in her absence - Orders made.

Legislation:

Family Law Act 1975 (Cth), s 75(2)

Federal Circuit Court Rules 2001, rule 16.05

Cases cited:

Malak & Malak [2016] FamCAFC 114

Weir & Weir (1993) FLC 92-338

Applicant:

MS TAHEMA

Respondent:

MR TAHEMA

File Number:

PAC 5860 of 2016

Judgment of:

Judge Newbrun

Hearing date:

22 September 2020

Date of Last Submission:

10 March 2021

Delivered at:

Parramatta

Delivered on:

30 March 2021

REPRESENTATION

Solicitors for the Applicant:

Stacks Law Firm

Solicitors for the Respondent:

Fox Taylor Mildwaters

ORDERS PENDING FURTHER ORDER

Pursuant to Rule 16.05(2)(a) of this Court’s Rules, the Court’s property related Orders of 10 May 2019, made in the absence of the Wife, are set aside.
The proceeding are adjourned for mention to 5 July 2021at 9:30am.
Permission is granted for the parties and their solicitors to appear via telephone.

NOTATION:

A.The Parties have agreed to attend upon mediation with Mr G on or before 31 ~~March~~ May 2021.
B.These orders have been amended pursuant to rule 16.05(2)(e) of the Federal Circuit Court Rules to show in Notation A, “May” in lieu of “March”.

IT IS NOTED that publication of this judgment under the pseudonym Tahema & Tahema (No.2) is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT PARRAMATTA

PAC 5860 of 2016

MS TAHEMA

Applicant

And

MR TAHEMA

Respondent

REASONS FOR JUDGMENT

This is the determination of the Wife’s Application in a Case filed 18 December 2019 seeking an Order pursuant to Rule 16.05(2)(a) of this Court’s Rules that the Court’s property related Orders of 10 May 2019, made in the absence of the Wife, be set aside. The Wife’s application is opposed by the Husband.

Material relied upon

The Wife relies upon the material set out on page 2 of her Outline of submissions filed 11 September 2020, and those submissions.
The Husband relies upon the material set out on pages 2 and 3 of his Outline of Submissions filed 14 October 2020, and those submissions.
The Wife relies upon her Reply to the Husband’s Outline of submissions filed 20 October 2020.

Legal Principles:

Rule 16.05 of the Federal Circuit Court Rules 2001 provides as follows:
(1)The Court may vary or set aside a Judgment or Order before it has been entered.
(2)The Court may vary or set aside a Judgment or Order after it has been entered if:
(a)the Order is made in the absence of a party; or
(3)This Rule does not affect the power of the Court to vary or terminate the operation of an Order by a further Order.
The Court refers to the decision in Malak & Malak [2016] FamCAFC 114 where the Full Court stated at [57]:
57. In Barbey & Tuttle (2013) FLC 93-534 the Full Court of the Family Court dealt with an appeal from a discretionary decision of a federal magistrate dismissing an application under r 16.05 to set aside final property Orders made in default of the Wife’s appearance.
58. The Full Court (May J, with Murphy and Kent JJ agreeing) said:
48. His Honour began by stating the Rule, and quoted from the case of Clifford & Mountford [2006] FMCAfam 450 as authority for the “usual, but not exclusive considerations” for an application under r 16.05 (2)(a) (at paragraph 5):
“34. From the abovementioned authorities, it seems to me that the following principles emerge in respect of applications under r. 16.05 (2)(a):
(a) The discretion to be exercised is unfettered, but nonetheless to be exercised judicially and bearing in mind the public interest in there being an end to litigation.
There are three criteria, each of which should usually be demonstrated before a judgment or Order is set aside under r. 16.05 (2)(a), namely:
i) a reasonable explanation for the applicant's absence at the trial or hearing;
ii) material arguments available to the applicant that might reasonably lead to the making of an Order different to that sought to be set aside; and
iii) no prejudice to the party with the benefit of the Orders sought to be set aside that is not able to be adequately addressed by the Court.
(b) Matters relevant to the three criteria set out above will include, but will not necessarily be limited to:
i) Whether a party with notice of proceedings disregarded the opportunity of appearing at and participating in the trial;
ii) Delay, if any, in bringing the application to set aside and whether, if during the period of delay the successful party has acted on the judgment, or third parties have acquired rights by reference to it;
iii) the conduct of the applicant since the judgment or Order sought to be set aside was made.”
59. Their Honours went on to say that the absence of reasonable excuse may not be fatal to an application to set aside Orders, especially where it can be demonstrated there has been a miscarriage of justice (at [54]).
60. The Full Court agreed with the Federal Magistrate that the applicant would have to “put a case to show the Orders would be different” and whether prejudice to the other party could be addressed by the Court (at [56]).
61. The Full Court concluded:
90. The discretion to set aside Orders made in default of a party’s appearance is unfettered. Regard should be given to the explanation for a failure to appear, the possibility of a different result, and prejudice to the other party (and how this may be addressed). His Honour did consider each of these matters, and did not err in his approach. He was not bound to give one matter more weight than another, and was correspondingly entitled to place significant weight on the Wife’s failure to establish a reasonable explanation for her failure to appear or to participate in the proceedings.
91. The arguable case consideration might have been established by contrary evidence in the Wife’s material. That his Honour did not hear submissions on this did not prevent him from properly considering the point. The onus was on the Wife to provide evidence, which she failed to do. No amount of submissions could have overcome the absence of evidence from the Wife.
92. The evidence which formed the basis of the add-back, the only genuinely controversial matter in the updated response/Orders sought by the Husband, was from the Wife’s own bank accounts, which had to be obtained under subpoena because of her own non-compliance. The Wife gave no explanation for that expenditure in her Affidavit in support seeking to set aside the Orders.
93. It was not apparent on the material before his Honour, what alternative Orders or distribution the Wife sought, or would seek if successful in her application to set aside. Nor was it suggested in her material before the Federal Magistrate or before us on appeal that the 80/20 distribution was incorrect or manifestly unjust.
94. In these circumstances, His Honour could not have made, even with further oral submissions, a determination that the Wife might obtain a different result, which the High Court expressed in Allesch v Maunz to be in effect a condition to the exercise of the discretion. He did, as was required of him, have regard to the issue. Accordingly, there can be no appealable error.
95. The issue of prejudice to the Husband was not addressed at all by the Wife. In the absence of evidence or argument from her, his Honour’s finding that the prejudice to the Husband was significant and could not be sufficiently addressed by costs, was entirely justified in the circumstances of this case.
………
96. We have previously identified the matters to which the Court must have regard in considering Rule 16.05(2). There are three criteria, each of which should usually be demonstrated before a judgment or Order is set aside, namely:
1. Is there an adequate explanation proffered by the absent party for their failure to appear? If not, principles of the importance of finality would ordinarily see the relief pursuant to the Rules refused (Nicholson v Nicholson [1974] 2 NSWLR 59 at [64]; Maxwell-Smith v Donnelly [2012] FCA 154).
2. The necessity for an applicant to demonstrate an arguable case for the relief sought. That is, a case which is credible with real prospects of success (Registrar of Aboriginal Corporations v Murnkurni Women’s Aboriginal Corporation (in liq) [1995] FCA 1413; (1995) 58 FCR 125). In other words, material arguments available to the applicant that might reasonably lead to the making of an Order different to that sought to be set aside.
3. No prejudice to the party with the benefit of the Order sought to be set aside that is not able to be adequately addressed by the Court.
97. It is relevant to the three criteria just set out that they would encompass whether a party with notice of the proceedings disregarded the opportunity of appearing at and participating in the trial, and any delay in bringing any application to set aside Orders (Barbey & Tuttle (supra)).

Discussion

The Court firstly deals with the Wife’s explanation for failing to attend Court for the final hearing.
The Court accepts that the Wife has provided an adequate explanation for her failure to appear at the final hearing of the property proceedings.
In this regard, the Court refers to the contents of the Wife’s Affidavit filed 14 April 2020 (56 page Affidavit). In particular the Court refers to the Wife’s evidence that prior to the final hearing:
(a)she had suffered from illnesses including a back condition and Crohn’s disease; that the Wife was ill in April 2019 when she was seeking to finalise her trial Affidavit with her former solicitor;
(b)that the Wife attended upon her former solicitor on 23 April 2019 to provide instructions for her trial Affidavit;
(c)that on 28 April 2019 the Wife was informed by her former solicitor that he intended to withdraw as her lawyer in the proceedings;
(d)that the Wife communicated with her former solicitor on 8 May 2019 with a view to picking up her Affidavit however that solicitor had told the Wife that upon receipt of her outstanding fees her father would be released to her;
(e)that the former solicitor did not provide the Wife with her Affidavit prior to the final hearing which the Wife had intended to file and serve had she received;
(f)that on the eve of the hearing on 9 May 2019, the Wife attended to arrange legal representation for the hearing and she contacted a solicitor in south-west Sydney to ask what she should do;
(g)that the Wife that experienced a Crohn’s relapse and her back was so painful and incomplete spasm that she did not have the strength to get out of bed. Further that she was unable to communicate with anyone even seek legal assistance due to her incontinence and severe lower back pain;
(h)that the Wife was unable to attend Court on 9 May 2019 because she was completely overwhelmed by her fear that she would become incontinent in Court and embarrassed. Further, the due to the Wife’s lack of knowledge of Court procedures and her former solicitor short notice that he would not be representing the Wife was totally overwhelming for her. Further, that the Wife had no means of transport to the Court, and she could not drive herself due to her Crohn’s relapse and acute back pain.
The Court also refers to paragraphs 51 to 55 and paragraph 56 in particular of the Wife’s draft Consolidated Affidavit attached to her Affidavit filed 14 April 2020 (containing 13 pages) relating to her chronic back injury, back surgery, and ill-health between February and April 2019. The Court observes that in the Wife’s Affidavit filed 1 September 2020 she confirms the contents of her draft Consolidated Affidavit are true and correct, apart from a date relating to the commencement of cohabitation.
The medical certificate of Dr H, dated 8 July 2019 certifying that the Wife was unable to attend Court on 10 May 2019 due to severe back pain requiring hospitalisation is supportive and consistent with the Wife’s above evidence relating to her state of health prior to the final hearing on 9 May 2019, albeit that there appears to be no independent documentary evidence that the Wife was hospitalised on or about 10 May 2019, and the Wife herself does not assert that she was hospitalised at this time. Nevertheless, Dr H would appear to have carried out a L4/5 laminectomy upon the Wife in about September 2018.
In any event, the Wife does give evidence of her incontinence just prior to the final hearing on 9 May 2019 and asserts her fear that she would become incontinent in Court and embarrassed had she attended Court on 9 May 2019. And there is a reference to the Wife’s incontinence being problematic for at least six months in the discharge referral of the Suburb J Health service dated 1 October 2019 (see page 19/56 of the Wife’s Affidavit filed 14 April 2020) (56 page Affidavit) which is supportive and consistent with the Wife’s above evidence relating to her state of health prior to the final hearing on 9 May 2019.
The Court rejects the Husband’s submissions relating to the Wife’s explanation for failing to attend the final hearing. Again the Court refers to the Wife’s sworn evidence and related documentary evidence, outlined above, which in the view of the Court provides an adequate explanation. In particular, the Husband’s submission that the Wife’s failure to adduce, inter alia, “compelling medical evidence” and which is thereby fatal to her purported explanation for failing to attend the final hearing is, with respect, without legal foundation.
Based on the Wife’s evidence contained in her Affidavit filed 14 April 2020 (Affidavit containing 56 pages), together with the evidence of her solicitor Mr Ian Graham filed 12 December 2019, the Court is of the view that the Wife, in all the circumstances, took reasonable steps to cause to have filed her Application in a Case on 18 December 2019 following the Court’s Orders of 10 May 2019.
The Court will now consider material arguments available to the applicant that might reasonably lead to the making of an Order different to that sought to be set aside.
At the outset, the Court observes that in its Reasons for Judgment dated 10 May 2019, relating to the undefended hearing, inter alia:
(a)it preferred the Husband’s evidence where in conflict with the Wife’s evidence, and found that the parties had a fairly short relationship over about four years;
(b)the Court assessed the parties contributions to non-superannuation assets at trial date to be 10% to the Wife and 90% to the Husband;
(c)it found that there should be an adjustment in favour of the Husband under section 75(2) of the Family Law Act 1975 (Cth) (“the Act”) of 2.5%, which resulted in an adjusted contributions finding for non-superannuation assets of 92.5% in favour of the Husband and 7.5% in favour of the Wife; and
(d)the Wife made no relevant contributions to the Husband’s superannuation entitlement and the Court found there was no call for an adjustment under section 75(2) by reason of the Husband’s superannuation entitlement.
The Court observes that the Wife sought property adjustment Orders, as set out in her Case Outline filed 4 November 2018, providing, inter alia:
(a)that the two properties in Queensland be sold and that the net proceeds of sale be divided equally between the parties;
(b)there be a superannuation split relating to the Husband’s superannuation entitlement and that $65,000 be allocated to the Wife;
(c)that the Husband transfer to the Wife 50% of all shares held by him in five different corporations;
(d)that the Husband pay to the Wife a sum equal to 50% of the net proceeds of sale of the property at Town E.
As to the date of separation, the Wife in her draft Consolidated Affidavit asserts that she commenced cohabitation (living with the Husband substantially during the working week but not on the weekends) with the Husband in about 2008. She asserts that they then separated from about mid-April 2014 to about June 2014 and then reconciled. She asserts that the parties finally separated in October 2015. Again, the Court observes that the Wife, in her Affidavit filed 1 September 2020, swears that the contents of her draft Consolidated Affidavit are true and correct. It can be seen that the Wife asserts that the relationship lasted about seven years, whereas the Court in its judgment found that the parties’ relationship was only about four years. Accordingly, the Court takes into account as a material argument available to the Wife that the relationship lasted about seven years and that her asserted contributions should be seen in that context.
The Wife contended that the values for the two properties in Queensland adopted by the Court, and based upon the asserted values for those two properties ($505,000 and $485,000) in paragraph 19 of the Husband’s Affidavit filed 29 April 2019, were the subject of dispute between the parties. The Wife, in this context, referred to the joint balance sheet of the parties filed 2 November 2018 and in which the Wife’s contrary values for the two properties were itemised at $620,000 and $595,000, being a combined difference of $225,000.
However, the Wife’s contended values in the joint balance sheet are not the subject of any evidence adduced by her in this Application. To the contrary of the Wife submissions, the Wife’s Affidavit filed 14 April 2020 (containing 13 pages) and annexing her draft Consolidated Affidavit prepared by her former solicitor for the final hearing on 9 May 2019 (paragraphs 28 and 29), does not refer to an asserted increase in value of these two properties, and Annexures J and L (referring to estimates of the “current selling price” of both properties) do not form part of that draft Consolidated Affidavit. Accordingly, these contentions are not supported by relevant evidence, and the Court would not regard the asserted higher values by the Wife in the joint balance sheet as relevant evidence of her contended higher values for the properties.
The Wife contends that her values ascribed to items 5 and 6 in paragraph 19 of the Husband’s trial Affidavit filed 29 April 2019, two bank account sums of $3,488 and $1,886, total $5,374, should be added back because, by reference to the joint balance sheet filed 2 November 2018, the Husband had expended these monies in legal fees. The Court takes this sum of $5,374 into account, in conjunction with other matters raised by the Wife, referred to below, as material arguments available to the Wife.
The Wife contends that the Husband failed to disclose monies which she had allegedly invested in New Zealand, “such providing the potential for a Black & Kellner” argument. The Court observes that that decision was referred to in the decision of the Full Court of the Family Court of Australia in Weir & Weir (1993) FLC 92-338 at page 79, 593 where the Full Court stated, inter alia:
It seems to us that once it has been established that there has been a deliberate nondisclosure, which follows from His Honour’s findings in this case, then the Court should not be unduly cautious about making findings in favour of the innocent party. To do otherwise might be thought to provide a charter for fraud in proceedings of this nature.
The Wife alleges that in early 2014, she overheard the Husband say to his sister in New Zealand that his relationship with the Wife was not going very well and he planned to transfer all of his money to his New Zealand bank account and that he needed his sister to help him hide as much of that money as possible. The Wife alleges that in August 2014 the Husband told her that he had deposited $80,000 into his New Zealand account. She alleges that in April 2015 the Husband told her that he had transferred about $100,000 to his New Zealand account. The Wife alleges that she is convinced that the Husband transferred money into a New Zealand bank account so that she cannot receive her “share of the property settlement”.

In the view of the Court, the Wife’s above allegations that significant monies (as much as $100,000 allegedly) being invested by the Husband in New Zealand, if ultimately accepted, may result in a finding that the Husband failed to disclose such sum in the proceedings, and that the Court should not be unduly cautious about making findings in favour of the Wife; the Court takes these matters into account in relation to material arguments available to the Wife.
The Wife makes various submissions in relation to the issue of the parties’ contributions.
The Wife asserts that her inheritance of $328,000 was utilised towards the purchase of the Wife’s property at Suburb F. The Wife alleges that part of that inheritance had been spent on the parties day-to-day living expenses and in this context she alleges that in October 2010 she had borrowed $49,400 from the CBA bank to finance the purchase of the above property because of this expenditure. The Court takes into account these assertions of the Wife, as material arguments available to her, in the context of her alleged contributions to the parties’ property.
The Wife also contends and alleges that in July 2012, at the Husband’s request, she established a redraw facility with the Commonwealth Bank mortgage over the Suburb F property. She refers to and alleges that when this property was sold in July 2014, the mortgage amount owing was some $100,000, and that the multiple redraws in relation thereto was spent on the parties day-to-day living expenses. The Court takes into account these assertions of the Wife, as material arguments available to her, in the context of her alleged contributions to the parties’ property.
The Wife contends making indirect financial contributions to the Husband’s property by reason of her work in the Husband’s business for which she was paid only a nominal wage. She alleges that she worked long hours from 7 AM until 7 PM, Monday to Saturday. The Court has not overlooked the Husband’s countervailing arguments in this context. Nevertheless, the allegations of the Wife in this context relating to her work in the business, for which she was allegedly poorly remunerated, if ultimately accepted, may well result in a significantly different contributions finding compared to the contributions finding of the Court in its judgment of 10 May 2019.
The Wife alleges that her homemaker contributions were greater than the Husband’s during the relationship. The Court had found in its judgment that the parties homemaker contributions to be about equal. The parties’ respective allegations in this context are diametrically opposed. The Wife alleges that the Husband did not contribute to the house chores at all and that she performed all household chores. The Court takes into account these assertions of the Wife, as material arguments available to her, in the context of her alleged contributions to the parties’ property.
The Wife contends that by reason of the present medical evidence before the Court adduced by her, in conjunction with the Wife’s allegations in her draft Consolidated Affidavit, that there is an available argument that the Court would make a different finding in relation to the Wife’s capacity for employment. Whereas the Court found its judgment that it was not clear to the Court that the Wife was incapable of carrying out any part-time work “by reference to the very limited medical evidence that she is placed before the Court”, the Wife now contends that there is a real prospect that the Court would ultimately find that she has no capacity for employment.
The Court has regard to all the material before the Court adduced by the Wife in relation to her health and asserted non-capacity for employment, including paragraphs 51 to 56 of the Wife’s draft Consolidated Affidavit relating to her ill health and incapacities, and it has regard to her assertions of permanent incapacity for work and receipt of a disability support pension in conjunction with her allegations of ill health referred to in her Affidavit filed 14 April 2020 (Affidavit containing 56 pages) and her annexed medical related evidence in that Affidavit (from page 14/56 to 28/56) including references to back surgery in 2018 and persisting back pain.
The Court would assess that there is a material argument available to Wife that she has no capacity for employment. In such circumstances, if such argument is accepted, the Wife may achieve a not insignificant section 75(2) adjustment in her favour. In this context, the Court observes that the Husband works as an allied health worker, allegedly part-time.
Taking into account the above discussed material arguments available to the Wife, and in accordance with legal principle, discussed above, the Court is of the view that the Wife has real prospects of obtaining Orders for property adjustment in her favour significantly in excess of the property adjustment Orders made in the Court’s judgment of 14 May 2019.
The Court now deals with the issue of prejudice to the Husband. The two items of real estate were transferred into the Husband’s sole name and they remain in his sole name. It would be open to the Court at any further property hearing to take into account any expenses thrown away by the Husband in refinancing the mortgages on the two items of real estate through the K Bank. The sum of $59,600 payable to the Wife under the Court’s judgment of 14 May 2019 was paid to the Wife’s former solicitor, however this payment can be taken into account at any further property hearing. The Court is not satisfied that there is any significant prejudice that will be occasioned to the Husband should the Court set aside its previous property adjustment Orders which cannot be remedied by, inter alia, a possible Order for costs against the Wife in relation to the Husband’s defence of the within Application by the Wife.
Accordingly, the Court’s previous property related Orders of 10 May 2019 should be set aside.

I certify that the preceding thirty five (35) paragraphs are a true copy of the reasons for judgment of Judge Newbrun

Associate:

Date: 30 March 2021