Vida & Vida

Case [2023] FedCFamC1A 175

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

(DIVISION 1) APPELLATE JURISDICTION

Vida & Vida [2023] FedCFamC1A 175

Appeal from: Vida & Vida [2022] FedCFamC1F 968
Appeal number(s): NAA 6 of 2023
File number(s): SYC 1533 of 2019
Judgment of: TREE, HARTNETT & SCHONELL JJ
Date of judgment: 18 October 2023
Catchwords:

FAMILY LAW – APPEAL – Arbitration – Where the appellant contended before the primary judge that the arbitrator failed to accord procedural fairness by not seeking further submissions and/or evidence as to the effect of capital gains tax that would fall on the appellant in paying the sum ordered to the respondent – Where the appellant argued that the ordinary principles of procedural fairness that apply in judicial disputes apply to arbitrations as well – Where the primary judge rejected the propositions advanced by the appellant and dismissed the review – Where the appellant’s failure to adduce evidence on the capital gains tax did not relieve the decision maker from making orders that were just and equitable – Where the orders made by the arbitrator did not achieve justice and equity in that the net assets retained by the appellant were not as contemplated when considering the capital gains tax that he would have to bear – Where ordinary notions of procedural fairness apply to arbitrations – Error of law established – Appeal allowed – Costs certificates issued. 

FAMILY LAW – CROSS APPEAL – Arbitration – Where the primary judge held that an arbitrator appointed under s 13E or s 10L(2)(b) of the Family Law Act 1975 (Cth) (“the Act”) does not have power to make an order pursuant to s 106B – Where the arbitrator was appointed pursuant to s 10L(2)(b) – Where amendments to the Act in 2000 moved the then s 85 and its renumbering as 106B from Pt VIII to Pt XIII – Where the legislative intention behind moving the section to Pt XIII is absent – Where s 10L(2)(b) when read with s 80 enables the making of an order under s 106B – Error of law established – Cross appeal allowed – Costs certificates issued.

Legislation:

Family Law Act 1975 (Cth) Pts VIII, XIII, ss 4, 10L, 13E, 13J, 13K, 75, 79, 80, 85, 106B

Family Law Regulations 1984 (Cth) reg 67I

Further Revised Explanatory Memorandum, Family Law Amendment Bill 2000 (Cth)

Revised Explanatory Memorandum, Family Law Amendment Bill 2003 (Cth)  
Cases cited:

Alcan (NT) Alumina Pty Ltd v Commissioner of Territory Revenue (2009) 239 CLR 27; [2009] HCA 41

Allesch v Maunz (2000) 203 CLR 172; [2000] HCA 40

Disorganized Developments Pty Ltd v South Australia (2023) 97 ALJR 575; [2023] HCA 22

Elgin v Elgin (2015) 54 Fam LR 31; [2015] FamCAFC 155

Hickey and Hickey and Attorney-General (Cth) (Intervener) (2003) FLC 93-143; [2003] FamCA 395

Lacey & Lacey [2020] FamCAFC 73

Russell v Russell (1999) FLC 92-877; [1999] FamCA 1875

Sydney Seaplanes Pty Ltd v Page (2021) 106 NSWLR 1; [2021] NSWCA 204

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Vida & Vida [2023] FedCFamC1A 175
Case
[2023] FedCFamC1A 175
Decision Date

CaseChat Overview and Summary

The case of Vida & Vida involved an appeal against an arbitration decision in a family law matter, specifically regarding the division of property between the appellant (Mr Vida) and the first respondent (Ms Vida). The primary judge had dismissed the appellant's review application seeking to overturn the arbitrator's award. The appeal focused on the arbitrator's failure to consider the capital gains tax implications of the orders and the applicability of procedural fairness principles in arbitrations. The cross appeal contested the arbitrator's jurisdiction to make orders under section 106B of the Family Law Act 1975 (Cth).

The key legal issues were whether the arbitrator erred by not considering the capital gains tax implications, and whether procedural fairness principles apply to arbitrations. Additionally, the court had to determine if the arbitrator had the jurisdiction to make orders under section 106B. The appellant argued that the ordinary principles of procedural fairness, as applicable in judicial disputes, should also apply to arbitrations. The court found that the primary judge erred in concluding that procedural fairness principles did not apply to arbitrations, establishing an error of law. Regarding the jurisdiction to make orders under section 106B, the court held that the arbitrator, appointed under section 10L(2)(b) of the Act, did have the power to make such orders, contrary to the primary judge's finding.

The court allowed both the appeal and the cross appeal, setting aside the primary judge's orders and remitting the review application for hearing by another judge. Costs certificates were issued to all parties in respect of the appeal, cross appeal, and the re-hearing.

Orders

Orders of the court

NAA 6 of 2023

SYC 1533 of 2019

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

DIVISION 1 APPELLATE JURISDICTION

BETWEEN:

MR VIDA

Appellant / First Cross Respondent

AND:

MS VIDA

First Respondent / Cross Appellant

MS B VIDA

Second Cross Respondent

ORDER MADE BY:

TREE, HARTNETT & SCHONELL JJ

DATE OF ORDER:

18 OCTOBER 2023

THE COURT ORDERS THAT:

1. The appeal is allowed.

2. The cross appeal is allowed.

3. The orders of the primary judge made 9 December 2022 are set aside.

4. The Review Application filed 17 February 2022 is remitted for hearing to a judge of Division 1 of the Court other than the primary judge.

5. The appellant / first cross respondent is granted a costs certificate pursuant to s 9 of the Federal Proceedings (Costs) Act 1981 (Cth), 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 in respect of the costs incurred by him in the appeal and cross appeal.

6. The first respondent / cross appellant and the second cross respondent are granted a costs certificate pursuant to s 6 of the Federal Proceedings (Costs) Act 1981 (Cth), being certificates that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the respondents in respect of the costs incurred in the appeal and cross appeal.

7. The appellant, first respondent and second cross respondent are granted a costs certificate pursuant to s 8 of the Federal Proceedings (Costs) Act 1981 (Cth), being certificates that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise payments under that Act to them in respect of the costs incurred by them in relation to the re-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 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.

Background

Background to the litigation

It is desirable to consider Ground 4 as it asserts error by the primary judge in concluding that the ordinary principles of procedural fairness have no application to arbitrations under the Act. As this is a matter we consider of importance to the future conduct of family law arbitrations, we propose to address the arguments in relation to this ground.BACKGROUND The appellant and first respondent commenced cohabitation in 2001 and married in 2002. The parties were at issue about the date of separation, which was found by the arbitrator to be July 2018. They were divorced in January 2020. Prior to cohabitation, the appellant established N Pty Ltd (“N Company”) in which the appellant held one third of the issued shares and his parents the remaining two thirds. Upon the death of the appellant’s father, the second respondent became the holder of two thirds of the issued shares. On 20 June 2007, the Vida Family Trust (“the Trust”) was settled by deed, with M Pty Limited (“M Company”) appointed as the trustee. Subsequently, the second respondent sold her shares in N Company to M Company for $1,206,939, with M Company borrowing the amount payable to the second respondent from N Company. The arbitrator found at [146] and [147] that by 30 June 2007, the second respondent had sold her interest in N Company and no longer held any legal or beneficial interest in the company. In November 2018, the corpus of the Trust was transferred to the second respondent. On 13 March 2019, the first respondent commenced proceedings in the Family Court of Australia (as it then was) seeking orders for financial adjustment. The second respondent was joined to the proceedings as the first respondent’s relief included orders pursuant to s 106B setting aside the November 2018 distribution of the corpus of the Trust. On 1 March 2021, an order was made referring the totality of the proceedings to arbitration pursuant to s 13E of the Act. The arbitrator raised with the parties a potential absence of jurisdiction to make orders pursuant to s 106B within the ambit of a s 13E arbitration. To resolve this issue, the parties by consent discharged the earlier order and agreed to participate in an arbitration pursuant to s 10L(2)(b), “so that all relief in [the] proceedings including the section 106B applications may be determined by way of a ‘relevant property or financial arbitration’ pursuant to the Act” (orders made 15 June 2021, Notation D). The arbitration commenced on 30 August 2021, with final written submissions on 15 October 2021. At the arbitration, the appellant sought the net assets be considered in two pools, with one pool containing real estate owned by him at the commencement of cohabitation to which he sought 100 per cent of the pool, and the other pool, being the balance of the net assets, to be divided as to 70 per cent to himself and 30 per cent to the first respondent. The first respondent for her part sought orders dividing the net assets as to 80 per cent to her and the balance to the appellant.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

On 14 January 2022, the award was registered.THE PRIMARY JUDGMENT On 17 February 2022, the appellant sought a review of the award pursuant to s 13J, which he subsequently amended to include additional relief under s 13K. Before the primary judge, the appellant argued eight grounds as well as what the primary judge described as “so-called other matters” (at [159]), including a contention that the arbitrator had no jurisdiction to make orders pursuant to s 106B. On 9 December 2022, the primary judge ordered that the appellant’s Review Application be dismissed, but that Order 2 of the arbitral award, being the order pursuant to s 106B, be set aside, having found that the arbitrator had no power to make orders under s 106B. In circumstances where the appellant’s appeal is narrowly confined to what were in essence the first two grounds before the primary judge and the cross appeal raises the issue of s 106B, we will confine ourselves only to the discussion of the issues before the primary judge which are the subject of the appeal and cross appeal.GROUNDS OF APPEAL The appellant’s Further Amended Notice of Appeal filed 22 March 2023 contended eight separate grounds as follows:1. His Honour misapplied the law set out in Elgin v Elgin (2015) 54 Fam LR 31 and Lacey & Lacey [2020] FamCAFC 73 and erred in finding at [48] and [51] that the arbitrator was not required did not have an onus, in making an order under s 79 that was just and equitable, to give the parties the opportunity to make submissions about the proposed form of orders, and/or the likely capital gains tax implications (including further evidence) the way in which the taxation burden should be shared.2. His Honour misapplied the law set out in Elgin v Elgin (2015) 54 Fam LR 31 and Lacey & Lacey [2020] FamCAFC 73 and erred in finding at [46] that the arbitrator did not make an error of law enlivening s 13J by failing to apply the principles in Rosati.3. His Honour erred in finding at [57] that the arbitration process as agreed between the parties and the arbitrator did not require the arbitrator to give the [appellant] an opportunity to address the arbitrator on the tax liabilities arising from an order, once the arbitrator had reached a conclusion as to what orders ought be made.4. His Honour erred in finding at [58] that the general principles of substantive law concerning procedural fairness did not apply to family law arbitrations.5. His Honour erred in finding that the arbitrator had regard to s 79, s 79(4)(e) and s 75(2)(n)(i).6. His Honour erred at [74] in finding that the Arbitrator did not fail to take into account the loss of rental income and the impact on the [appellant’s] earning capacity.7. His Honour erred in asserting that Rosati was not settled law in respect of how capital gains tax ought be taken into account when determining orders pursuant to s 79 Family Law Act 1975 (Cth).8. At [198], after correctly setting aside the paragraph in the Award which was purportedly pursuant to s 106B, and noting that the Court then ought consider whether the remaining paragraphs in the Award were just and equitable, his Honour erred in failing to vary the Award so that the remaining paragraphs were just and equitable. (As per the original)

Ratio Decidendi

Legal Principle Established

Section 10L(2) is to the following effect:(2) Arbitration may be either: (a) section 13E arbitration — which is arbitration of Part VIII proceedings, or Part VIIIAB proceedings (other than proceedings relating to a Part VIIIAB financial agreement), carried out as a result of an order made under section 13E; or (b) relevant property or financial arbitration — which is arbitration (other than section 13E arbitration) of: (i) Part VIII proceedings, Part VIIIA proceedings, Part VIIIAB proceedings, Part VIIIB proceedings, proceedings for an order under Part VIIIC or section 106A proceedings; or (ii) any part of such proceedings; or (iii) any matter arising in such proceedings; or (iv) a dispute about a matter with respect to which such proceedings could be instituted. Part VIII proceedings are defined in s 4 to be:Part VIII proceedings means proceedings under Part VIII for orders with respect to spousal maintenance or the property of parties to a marriage, but does not include any proceedings specified in the regulations for the purposes of this definition. The words “Part VIII proceedings” are only found in s 10L and s 13E, dealing specifically with arbitrations, and nowhere else in the Act. Accordingly, resort to the definition of ‘proceedings’ in s 4 for the purpose of interpreting s 10L detracts from a proper understanding of the section. It has no role to play in an interpretation of the section. To construe otherwise is to render the definition of ‘Pt VIII proceedings’ in s 4 redundant. The proceedings the subject of the arbitration were Pt VIII proceedings with respect to the property of the parties to the marriage, part of which included the property of the Trust. Part of the relief that the first respondent sought included orders pursuant to s 106B. Such relief unquestionably formed “part of such proceedings” (s 10L(2)(b)(ii)) or alternatively, was a “matter arising in such proceedings” (s 10L(2)(b)(iii)), namely the Pt VIII proceedings. The text of the statute is unambiguous; it could not be more transparent or clearly ascertainable. To construe otherwise would be to depart from the clear language of the statute. There is no ambiguity. In this appeal, the submissions of the appellant and the second respondent focus on the legislative history and what is said to be a clear legislative intent arising from extrinsic materials. The significance of context in the task of statutory interpretation was helpfully addressed recently in Sydney Seaplanes Pty Ltd v Page (2021) 106 NSWLR 1 where the New South Wales Court of Appeal observed: 27.The modern approach to statutory interpretation, as Sir Anthony Mason observed more than 35 years ago in K & S Lake City Freighters Pty Ltd v Gordon & Gotch Ltd (1985) 157 CLR 309 at 315; [1985] HCA 48, “insists that the context be considered in the first instance, especially in the case of general words, and not merely at some later stage when ambiguity might be thought to arise” (emphasis added). The importance of context has routinely been emphasised by the High Court in cases concerned with statutory interpretation: see, for example, Project Blue Sky at [69]; CIC Insurance Ltd v Bankstown Football Club Ltd (1997) 187 CLR 384 at 408; [1997] HCA 2; Network Ten Pty Ltd v TCN Channel Nine Pty Ltd (2004) 218 CLR 273; [2004] HCA 14 at [11]; Independent Commission Against Corruption v Cunneen (2015) 256 CLR 1; [2015] HCA 14 at [57]; and SZTAL v Minister for Immigration and Border Protection (2017) 262 CLR 362; [2017] HCA 34 at [14]. 28.More recent statements to the effect that the process of statutory interpretation must start and end with a consideration of the text of the statute (see, for example, Sons of Gwalia Ltd v Margaretic (2007) 231 CLR 160; [2007] HCA 1 at [116]; Commissioner of Taxation of the Commonwealth of Australia v Consolidated Media Holdings Ltd (2012) 250 CLR 503; [2012] HCA 55 at [39]; Maloney v The Queen (2013) 252 CLR 168; [2013] HCA 28 at [324]; and Alphapharm Pty Ltd v H Lundbeck A/S (2014) 254 CLR 247; [2014] HCA 42 at [85]) were not intended to and did not demote or relegate the importance of context in the process of statutory interpretation: see, for example, Jackmain (a pseudonym) v R (2020) 102 NSWLR 847; [2020] NSWCCA 150 at [13]–[15]. As was said in Consolidated Media at [39]: “[39] … The statutory text must be considered in its context. That context includes legislative history and extrinsic materials. Understanding context has utility if, and in so far as, it assists in fixing the meaning of the statutory text.”29. In SZTAL, Kiefel CJ, Nettle and Gordon JJ observed at [14] that:“[14] … Considerations of context and purpose simply recognise that, understood in its statutory, historical or other context, some other meaning of a word may be suggested, and so too, if its ordinary meaning is not consistent with the statutory purpose, that meaning must be rejected.” 30.It has also been emphasised that “context” is to be understood in a broad sense and not confined to the immediate context supplied by other provisions in a statute of which one or more provisions are the subject of the immediate inquiry by the court. Context extends to include the existing state of the law, legislative purpose and any mischief which the statute was intended to remedy: see, for example, CIC at 408; Maloney at [324]; SZTAL at [14]. 31. Words, whether used in a statute or more generally, always exist in and take their meaning from the particular context in which they are used. That context may expose any mischief which a statute is directed towards redressing and may reveal the purpose underpinning the enactment. That purpose, in turn, guides the preferred meaning to be given to the words being construed. The process of statutory interpretation may thus be seen as a holistic one or, as Campbell JA has identified both judicially and extra-judicially, as one involving something akin to hermeneutic reasoning: see Thomas v State of New South Wales (2008) 74 NSWLR 34; [2008] NSWCA 316 at [22]; Waugh Hotel Management Pty Ltd v Marrickville Council (2009) 171 LGERA 112; [2009] NSWCA 390 at [118]; AVS Group of Companies Pty Ltd v Commissioner of Police (2010) 78 NSWLR 302; [2010] NSWCA 81 at [133]–[137]; and J Campbell and R Campbell, “Why statutory interpretation is done as it is done” (2014) 39 Australian Bar Review 1. 32.In SAS Trustee Corporation v Miles (2018) 265 CLR 137; [2018] HCA 55 at [20], citing Gageler and Keane JJ in Taylor v Owners — Strata Plan No 11564 (2014) 253 CLR 531; [2014] HCA 9 at [66] and Gageler J in SZTAL at [38], the plurality said: “[20] … Where the text read in context permits of more than one potential meaning, the choice between those meanings may ultimately turn on an evaluation of the relative coherence of each with the scheme of the statute and its identified objects or policies.” (Emphasis added) 33.Emphasis on the importance of context in statutory interpretation at least overlaps with and reinforces the need for purposive construction. This is not so much a matter of “constructional choice” as legislative fiat because, by s 33 of the Interpretation Act 1987 (NSW), and its Commonwealth analogue (s 15AA of the Acts Interpretation Act 1901 (Cth)), it is provided that:“33 Regard to be had to purposes or objects of Acts and statutory rules In the interpretation of a provision of an Act or statutory rule, a construction that would promote the purpose or object underlying the Act or statutory rule (whether or not that purpose or object is expressly stated in the Act or statutory rule or, in the case of a statutory rule, in the Act under which the rule was made) shall be preferred to a construction that would not promote that purpose or object.” 34.Section 33 recognises that a statutory purpose or object may not always be found in the express terms of the statute being construed. As McHugh J observed in Saraswati v The Queen (1991) 172 CLR 1 at 21; [1991] HCA 21:“Sometimes the purpose of the legislation is expressly stated; sometimes it can be discerned only by inference after an examination of the legislation as a whole; and sometimes it can be discerned only by reference to the history of the legislation and the state of the law when it was enacted. It need hardly be said that a particular Act may have many purposes.” 35.Some statutes will identify the “Objects of the Act” or of a Part or Division of the Act. Others will explicitly spell out the purpose of the Act. These are not “exercise[s] in apologetics” but may give practical content to particular terms used in a statute which may otherwise be elastic in their meaning: Russo v Aiello (2003) 215 CLR 643; [2003] HCA 53 at [5].36.It will not, however, always be easy to identify or discern the purpose of any given statute or statutory provision, and care must be taken against ascribing an overly broad purpose based upon a priori assumptions as to the legislation’s intended reach: Palgo Holdings Pty Ltd v Gowans (2005) 221 CLR 249; [2005] HCA 28 at [28]. Furthermore, a statute may have multiple purposes and, as enacted, may (and often will) give effect to political and policy compromises such that the legislative purpose, whatever may have been intended originally, is obscured: see, for example, Australian Rail Track Corporation Ltd v Dollisson [2020] NSWCA 58 at [31]. As AM Gleeson observed soon after his retirement from the bench (“Statutory interpretation”, Justice Hill Memorial Lecture, Taxation Institute of Australia, Sydney, 11 March 2009):“Much legislation, including revenue legislation, involves compromise. Parliaments rarely pursue a single purpose at all costs. The problem of interpretation may be to decide how far Parliament has gone. Its general purpose may be clear enough, but the dispute may be as to the extent to which it has pursued that purpose. In such a case, to identify the general purpose may not be of assistance in finding the point at which a balance has been struck or a political compromise reached.”37.The purpose of a statute may also be expressed with such generality that it is not a useful or completely satisfactory guide to a court seeking to construe a particular statutory provision: Victims Compensation Fund Corporation v Brown (2003) 77 ALJR 1797; [2003] HCA 54 at [33]. On the other hand, the nature and context of a particular statute’s enactment may reveal its purpose.38.One example of this will be where a statute is passed in order to reverse, negate or accommodate the effect of a particular judicial decision. Examples of cases involving the interpretation of legislation which has been passed to reverse or accommodate dicta in judicial decisions can be multiplied but they include Residual Assco Group Ltd v Spalvins (2000) 202 CLR 629; [2000] HCA 33 and Thiess v Collector of Customs (2014) 250 CLR 664; [2014] HCA 12 at [32], in which the High Court noted that amendments to s 167 of the Customs Act 1901 (Cth) under consideration in that case were an “immediate prophylactic statutory response to the spectre of widespread fiscal confusion raised by Isaacs J” in Sargood Brothers v Commonwealth of Australia (1910) 11 CLR 258 at 301–303; [1910] HCA 45.39.The purpose of a statute or statutory provision, or the “mischief” which a statute is intended to address, may sometimes also be identified in an explanatory memorandum to a parliamentary Bill or in the second reading speech although these sources of potential enlightenment, particularly the explanatory memorandum, are frequently of limited utility in this regard, often being little more than summaries or paraphrases of provisions of the Bill. Although the occasions when such assistance will in fact be given have been said to be “rare”, they nevertheless sometimes present themselves: Lacey v Attorney-General for the State of Queensland (2011) 242 CLR 573 at 605; [2011] HCA 10 at [86]. 40.Statutory purpose may also be identified in the long title to an enactment: Duncan v Theodore (1917) 23 CLR 510 at 530; [1917] HCA 38; Gibson & Howes Ltd v Lennon (Secretary for Agriculture and Stock for Queensland) (1917) 24 CLR 140 at 150; [1917] HCA 74; Birch v Allen (1942) 65 CLR 621 at 625–626; [1942] HCA 17; Clunies-Ross v Commonwealth of Australia (1984) 155 CLR 193 at 199; [1984] HCA 65; and Amatek Ltd v Googoorewon Pty Ltd (1993) 176 CLR 471 at 477; [1993] HCA 16. See also Roads and Maritime Services v Desane Properties Pty Ltd (2018) 98 NSWLR 820; [2018] NSWCA 196 at [194]–[195]; Fearnley v Finlay [2014] 2 Qd R 392; [2014] QCA 155 at [46]–[50]; Van Heerden v Hawkins [2016] WASCA 42 at [93]–[103]; and Kelly v The Queen (2004) 218 CLR 216; [2004] HCA 12 at [103].41.Although s 34(1) of the Interpretation Act, which is in virtually identical terms to s 15AB of the Acts Interpretation Act, would appear to constrain the use of extrinsic materials such as explanatory memoranda and second reading speeches in the identification of statutory purpose and only permit recourse to them either to confirm the “ordinary meaning” of a statutory provision or in cases of ambiguity or obscurity or where giving effect to the ordinary meaning would lead “to a result that is manifestly absurd or is unreasonable”, the modern common law of statutory interpretation permits recourse to such extrinsic materials in the absence of ambiguity and has, perhaps somewhat surprisingly, been held to authorise such use even in circumstances where that use would not be permitted under the Acts Interpretation Act and, by parity of reasoning, the Interpretation Act: see Newcastle City Council v GIO General Ltd (1997) 191 CLR 85 at 99, 112; [1997] HCA 53; Consolidated Media at [39], quoted in [28] above; and see P Herzfeld and T Prince, Interpretation (2nd ed, 2020, Sydney, Lawbook Co) at [8.160], [8.200]. (Emphasis in original)