Valder & Saklani

Case [2021] FamCAFC 142

FAMILY COURT OF AUSTRALIA

Valder & Saklani [2021] FamCAFC 142

Appeal from: Valder & Saklani and Anor [2020] FamCA 502
Appeal number: EAA 93 of 2020
File number: CAC 2098 of 2016
Judgment of: RYAN, ALDRIDGE & WATTS JJ
Date of judgment: 6 August 2021
Catchwords: FAMILY LAW – APPEAL – BANKRUPTCY – Appeal against summary dismissal – Where an application to set aside property settlement consent orders was dismissed by the primary judge – Where the appellant was a creditor to the bankrupt estate of the second respondent – Where the second respondent was since discharged from bankruptcy – Standing as a creditor under s 79A of the Family Law Act 1975 (Cth) – Person affected by consent orders – Effect of bankruptcy discharge – Where the primary judge erred in finding that the appellant did not have standing following second respondent’s discharge from bankruptcy – Appeal allowed – Matter remitted for further hearing.
Legislation:

Bankruptcy Act 1966 (Cth) ss 35, 58, 73, 74, 149, 153, 153A, 153B

Bankruptcy and Family Law Legislation Amendment Act 2005 (Cth)

Family Law Act 1975 (Cth) ss 79, 79A, 80, 106B

Family Law Rules 2004 (Cth) r 14.07

Explanatory Memorandum, Bankruptcy and Family Law Legislation Amendment Bill 2004 (Cth)
Cases cited:

Biltoft and Biltoft (1995) FLC 92-614; [1995] FamCA 45

Cantrell & North and Anor (2020) FLC 93-976; [2020] FamCAFC 175

Clyne v Deputy Commissioner of Taxation (1984) 154 CLR 589; [1984] HCA 44

Cummings v Claremont Petroleum NL (1996) 185 CLR 124; [1996] HCA 19

Daemar v Industrial Commission of New South Wales (No 2) (1990) 22 NSWLR 178

Fraser v Deputy Commissioner of Taxation (1996) 69 FCR 99; [1996] FCA 708

Grainger & Bloomfield and Anor (2015) FLC 93-677; [2015] FamCAFC 221

Official Trustee in Bankruptcy v Donovan and Donovan and Stevens (1996) FLC 92-703; [1996] FamCA 58

Pegler v Dale (1975) 1 NSWLR 265

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

Re Bailey and Bailey (executrix of the estate of Bailey (1990) FLC 92-117; [1989] FamCA 45

Rowell and Rowell (1989) FLC 92-026; [1989] FamCA 3

Semmens v Commonwealth of Australia and Collector of Customs (S.A.) (1990) FLC 92-116; [1989] FamCA 40

Zaravinos v Houvardas (2004) 32 Fam LR 490; [2004] NSWCA 421
Division: Appeal Division
Number of paragraphs: 54
Date of last submissions: 7 May 2021
Date of hearing: 14 April 2021
Place: Sydney
The Appellant: Litigant in person
Solicitor for the First Respondent: Holmes Donnelly & Co Solicitors
Counsel for the Second Respondent: Mr McGovern SC (direct brief)

ORDERS

EAA 93 of 2020
CAC 2098 of 2016

APPEAL DIVISION OF THE FAMILY COURT OF AUSTRALIA
BETWEEN:

MS VALDER

Appellant
AND:

MS SAKLANI

First Respondent

MR SAKLANI

Second Respondent

ORDER MADE BY:

RYAN, ALDRIDGE & WATTS JJ

DATE OF ORDER:

6 AUGUST 2021

THE COURT ORDERS THAT:

1.The appeal against Order 1 made on 19 June 2020 is allowed.

2.Order 1 made on 19 June…

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AGLC
Valder & Saklani [2021] FamCAFC 142
Case
[2021] FamCAFC 142
Decision Date

CaseChat Overview and Summary

The case before the Appeal Division of the Family Court of Australia involves an appeal by Ms Valder against the summary dismissal of her application to set aside property settlement consent orders. Ms Valder, the appellant, was a creditor to the bankrupt estate of Mr Saklani, the second respondent. The crux of the dispute was whether Ms Valder retained standing to challenge the consent orders after Mr Saklani's discharge from bankruptcy. The primary judge had dismissed the application, finding that Ms Valder's standing had ceased with Mr Saklani's discharge from bankruptcy.

The legal issues before the court centered on Ms Valder's standing under section 79A of the Family Law Act 1975 (Cth) and the effect of Mr Saklani's bankruptcy discharge on her status as a person affected by the consent orders. The court had to determine whether the discharge from bankruptcy extinguished Ms Valder's rights as a creditor and her standing to challenge the consent orders. The appeal hinged on whether the primary judge was correct in finding that Ms Valder's standing had been lost due to Mr Saklani's bankruptcy discharge.

The Appeal Division found that the primary judge erred in concluding that Ms Valder's standing was extinguished by Mr Saklani's bankruptcy discharge. The court reasoned that Ms Valder's status as a creditor and a person affected by the consent orders was not contingent on Mr Saklani's ongoing bankruptcy. The court held that the discharge of bankruptcy did not affect Ms Valder's standing as a creditor and her right to seek to set aside the consent orders. Consequently, the Appeal Division allowed the appeal, set aside the primary judge's order, and remitted the matter for further hearing. This decision ensures that Ms Valder's rights as a creditor are preserved, and she retains her standing to challenge the consent orders.

Orders

Orders of the court

EAA 93 of 2020

CAC 2098 of 2016

APPEAL DIVISION OF THE FAMILY COURT OF AUSTRALIA

BETWEEN:

MS VALDER

Appellant

AND:

MS SAKLANI

First Respondent

MR SAKLANI

Second Respondent

ORDER MADE BY:

RYAN, ALDRIDGE & WATTS JJ

DATE OF ORDER:

6 AUGUST 2021

THE COURT ORDERS THAT:

1. The appeal against Order 1 made on 19 June 2020 is allowed.

2. Order 1 made on 19 June 2020 is set aside.

3. The Notice of Contention filed on 30 July 2020 is dismissed.

4. The matter is remitted for further hearing.

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 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to 17.02 Family Law Rules 2004 (Cth).

Background

Background to the litigation

On 19 June 2020, a judge of the Family Court summarily dismissed the application because her Honour was of the view that, whatever may have been the case at the time the application was filed, the appellant no longer met the criteria of being a person affected by the order. This was because the second respondent had become a bankrupt on 6 March 2015 and was discharged from that bankruptcy on 7 March 2018. The primary judge found that upon that discharge, the second respondent was released from the debt he owed the appellant, who thereby ceased to become a person affected by the consent orders.BACKGROUND In order to understand the appeal it is necessary to identify some key dates. On 7 August 2009, the appellant sued the second respondent in the Supreme Court of New South Wales (“the Supreme Court”) seeking a declaration that she held an equitable interest in properties owned by him (“the Suburb W properties”) and the payment of equitable compensation. She was unsuccessful. The appellant appealed the orders setting aside her application in the Court of Appeal of the Supreme Court of New South Wales (“the Court of Appeal”). On 1 July 2011, the appeal was allowed and orders were made remitting the matter for rehearing. In December 2011, the matter was reheard by the Supreme Court. On 23 February 2012, judgment in those proceedings was delivered and orders were made dismissing the appellant’s claims. On 1 July 2013, the appellant successfully appealed against those orders. The matter was remitted to the Equity Division of the Supreme Court for the assessment of the appropriate equitable compensation. On 13 November 2013, the Family Court made the consent orders dividing all property of the first and second respondents. The effect was to transfer the second respondent’s interests in the Suburb W properties to the first respondent. It is an agreed fact that the respondents represented to the Family Court at the time the property settlement order was made that there was no person who might be entitled to become a party to the case under s 79(10) of the Act and that notice was not served on the appellant before that order was made (Appellant’s Verified Points of Claim filed on 30 May 2017, paragraphs 19–22; First Respondent’s Amended Response to Points of Claim filed on 8 May 2020, paragraphs 19–22; Second Respondent’s Response to Points of Claim filed on 30 April 2020, paragraphs 19–22 and r 14.07 of the Family Law Rules 2004 (Cth)). The second respondent obtained special leave to appeal to the High Court of Australia from the decision of the Court of Appeal, but his appeal was dismissed on 16 May 2014. On 18 September 2014, the Supreme Court found that the appropriate amount of equitable compensation to be paid by the second respondent to the appellant was $594,028.25, plus costs of the proceedings (which were in excess of $250,000). On 6 March 2015, the second respondent became bankrupt on his own petition. On 8 November 2016, the Federal Court of Australia gave the appellant leave pursuant to s 58(3)(b) of the Bankruptcy Act 1966 (Cth) (“the Bankruptcy Act”) to bring proceedings against the second respondent in the Family Court. The appellant filed her Initiating Application shortly after, on 19 December 2016 in the Family Court.

Evidence

Evidence Before The Court

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Decision

Reasons for decision

Thus, we are satisfied that the appellant remained a person affected by the consent orders, notwithstanding the second respondent’s discharge from bankruptcy.CONCLUSION The grounds of appeal have been made out. The order dismissing the proceedings will be set aside and the proceedings will be remitted for further hearing.

Ratio Decidendi

Legal Principle Established

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