FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Vida & Vida [2022] FedCFamC1F 968
File number(s): SYC 1533 of 2019 Judgment of: WILSON J Date of judgment: 9 December 2022 Catchwords: FAMILY LAW – NATIONAL ARBITRATION LIST – review application – s 13J and s 13K invoked – eight grounds asserted – no questions of law postulate.
FAMILY LAW – NATIONAL ARBITRATION LIST – orders made by arbitrator in pursuance of s 106B of the Family Law Act – jurisdiction of arbitrator in s 10L arbitration to make orders under s 106B – extensive examination of history of arbitration under the Family Law Act – held, no jurisdiction for arbitrator to make s 106B order.
Legislation: Courts (Mediation and Arbitration) Act 1991, Act no 113 of 1991 ss 19D and 19E
Family Law Act 1975 (Cth) ss 10L, 13E, 13J, 13K, 75, 79, 106A and 106B,
Family Law Amendment (Shared Parental Responsibility) Act, Act 46 of 2006
Cases cited: Air Canada v Secretary of State for Trade [1983] 2 AC 394
Aitken & Aitken (No 3) [2022] FedCFamC1F 496
AK v Western Australia (2008) 232 CLR 438
Al-Medinni v Mars UK Ltd [2005] EWCA Civ 1041
Amaca Pty Ltd v Werfel [2020] SASCFC 125
Anisminic Ltd v Foreign Compensation Commission [1969] 2 AC 147
Assistant Commissioner Condon v Pompano Pty Ltd (2013) 252 CLR 38
Australian Coal and Shale Employees Federation v Commonwealth (1953) 94 CLR 621
Avon Downs Pty Ltd v Federal Commissioner of Taxation (1949) 78 CLR 353
Bakalov & Bakalov [2021] FedCFamC1F 161
Beirne & Beirne (No 2) [2022] FedCFamC1F 54
Bellenden (formerly Satterthwaite) v Satterthwaite [1948] 1 All ER 343
Black v Black (2008) 38 Fam LR 503
Blanco v Blanco (No 2) (2019) 60 Fam LR 80
Braddon v Braddon (2018) 59 Fam LR 234
Bremer Handelsgesellschaft mbH v Westzucker GmbH (No 2) [1981] 2 Lloyd's Rep 130
Brisbane South Regional Health Authority v Taylor (1996) 186 CLR 541
Bunbury v Fuller (1853) 156 ER 47
Campbelltown City Council v Vegan (2006) 67 NSWLR 372
Cantoni & Cantoni [2022] FedCFamC1A 11
Cantwell v Beitzel (2014) 87 NSWLR 103
Carr v State of Western Australia (2007) 232 CLR 138
Chan & Lee [2022] FedCFamC1A 85
Chevron Australia Pty Ltd v CBI Constructors Pty Ltd [2021] WASC 323
Chu Kheng Lim v Minister for Immigration Local Government & Ethnic Affairs (1992) 176 CLR 1
Commonwealth v Baume (1905) 2 CLR 405
Commonwealth of Australia v Yarmirr (2001) 208 CLR 1
Concrete Pty Ltd v Parramatta Design & Developments Pty Ltd (2006) 229 CLR 577
Cooper Brookes (Wollongong) Pty Ltd v Commissioner of Taxation (1981) 147 CLR 297
Director of Public Prosecutions (Vic) v Le (2007) 232 CLR 562
Drinkwater v Caddyrack Pty Ltd (No 3) [1997] NSWSC 589
Elgin v Elgin (2015) 54 Fam LR 31
Emerald Grain Australia Pty Ltd v Agrocorp International Pty Ltd [2014] FCA 414
Entezam & Devi (No 3) [2021] FamCA 549
Federated Engine-Drivers and Firemen’s Association of Australasia v Broken Hill Pty Co Ltd (1911) 12 CLR 398
Fleming v R (1998) 197 CLR 250
Francis v Todd [2011] WASC 185
Ganzer & Jelbart [2018] FamCAFC 248
Goh v Ren (2020) 61 Fam LR 508
Goodrich Aerospace Pty Ltd v Arsic (2006) 66 NSWLR 186
Gray v O'Donnell [2009] NSWSC 259
Griffiths & Griffiths [2022] FedCFamC1F 219
Gronow v Gronow (1979) 144 CLR 513
Haller v Ayre QCA 224
Hazeldell Ltd v Commonwealth (1924) 34 CLR 442
House v R (1936) 55 CLR 499
Housing Commission of New South Wales v Tatmar Pastoral Co Pty Ltd [1983] 3 NSWLR 378
Hui v Esposito Holdings Pty Ltd [2017] FCA 648
Hunter v Transport Accident Commission [2005] VSCA 1
In the Marriage of Bennett (1990) 14 Fam LR 397
In the Marriage of Ferraro (1992) 16 Fam LR 1
In the Marriage of Petersens (1981) 7 Fam LR 402
In the Marriage of Pierce (1998) 24 Fam LR 377
In the Marriage of Rosati (1998) 23 Fam LR 288
In the Marriage of Yunghanns (1999) 24 Fam LR 400
International Finance Trust Company Ltd v New South Wales Crimes Commission (2009) 240 CLR 319
Jabour v Jabour (2019) 59 Fam LR 475
K & S Lake City Freighters Pty Ltd v Gordon & Gotch Ltd (1985) 157 CLR 309
Karjala & Gallard [2020] FamCA 110
Kennon v Spry (2008) 238 CLR 366
Mackenzie v Albany Finance Ltd [2003] WASC 100
Mallet v Mallet (1984) 156 CLR 605
Metwally v University of Wollongong (1985) 59 ALJR 481
Minister for Immigration and Ethnic Affairs v Wu Shan Liang (1996) 185 CLR 259
Minister for Lands (NSW) v Jeremias (1917) 23 CLR 322
Norbis v Norbis (1986) 161 CLR 513
Northern Territory v Collins (2008) 235 CLR 619
Norton v Locke (2013) 50 Fam LR 517
Obannon v Scarffe (2021) 62 Fam LR 397
Official Trustee in Bankruptcy v Nedlands Pty Ltd (in liq) (2000) 99 FCR 554
Ogilvie v Adams [1981] VR 1041
Old UGC Inc v Industrial Relations Commission of New South Wales (2006) 225 CLR 274
Park Trent Properties Group Pty Ltd v Australian Securities and Investments Commission (ASIC) (2016) 316 FLR 252
Paviello & Paviello [2022] FedCFamC1F 592
Peacock v Newtown Marrickville and General Co-operative Building Society No 4 Ltd (1943) 67 CLR 25
Penhalligon & Penhalligon [2022] FedCFamC1F 744
Pettitt v Dunkley [1971] 1 NSWLR 376
Police Federation of Australia v Nixon (2011) 198 FCR 267
Pollard v RRR Corp Pty Ltd [2009] NSWCA 110
Project Blue Sky Inc v Australian Broadcasting Authority (1998) 194 CLR 355
Public Service Board of New South Wales v Osmond (1986) 159 CLR 656
R v Berchet (1794) 89 ER 480
R v Gray; ex parte Marsh (1985) 157 CLR 351
Re Macks; ex parte Saint (2000) 204 CLR 158
Resi Corporation v Munzer [2016] SASCFC 15
Richter v Richter (2021) 63 Fam LR 102
Ridley v Whipp (1916) 22 CLR 381
Robins v Incentive Dynamics Pty Ltd (1999) 91 FCR 423
Rodgers v Rodgers (1964) 114 CLR 608
Roy Morgan Research Centre Pty Ltd v Commissioner of State Revenue (Vic) (2001) 207 CLR 72
Royal Guardian Mortgage Management Pty Ltd v Nguyen [2016] NSWCA 88
Sainsbury's Supermarkets Ltd v Mastercard Inc (European Commission intervening) [2020] 4 All ER 807
Selvanayagam v University of the West Indies [1983] 1 WLR 585
SDCV v Director-General of Security (2022) 96 ALJR 1002
Shah & Akbarali v Barnet London Borough Council [1983] 2 AC 309
Shepard v Watt [2022] FCAFC 78
South West Water Authority v Rumble’s [1985] AC 609
Stanford v Stanford (2012) 247 CLR 108
Stevens v Kabushiki Kaisha Sony Computer Entertainment (2005) 224 CLR 193
Sun Alliance Insurance Ltd v Massoud [1989] VR 8
Sydney West Corporation Ltd v Aqua Clear Technology Pty Ltd [1996] NSWSC 640
Taylor v Public Service Board (1976) 137 CLR 208
Toronto Suburban Railway Co v Toronto Corporation [1915] AC 590
Transport Accident Commission v Kamel [2011] VSCA 110
Trevi & Trevi [2018] FamCAFC 173
Victorian Stevedoring and General Contracting Company Pty Ltd v Dignan (1931) 46 CLR 73
VL Finance Pty Ltd v Legudi [2003] VSC 57
Wainohu v State of New South Wales (2011) 243 CLR 181
Walton Stores (Interstate) Ltd v Maher (1988) 164 CLR 387
Water Board v Moustakas (1994) 180 CLR 491
Whalan v Kogarah Municipal Council [2007] NSWCA 5
Whisprun Pty Ltd v Dixon (2003) 77 ALJR 1598
Yanner v Eaton (1999) 201 CLR 351
Yarrow & Yarrow (No 2) [2022] FedCFamC1A 171
Division: Division 1 First Instance Number of paragraphs: 206 Date of last submissions: 6 December 2022 Date of hearing: 28 July 2022 and 6 December 2022 Place: Melbourne Counsel for the Applicant: Ms Metherell on 6 December 2022 Solicitor for the Applicant: Marsdens Law Group Counsel for the First Respondent: Mr G. Dickson KC on 28 July 2022 and Mr D. Blackah on 6 December 2022 Solicitor for the First Respondent: Coleman Greig Lawyers Counsel for the Second Respondent: Mr M. Bartfeld KC Solicitor for the Second Respondent: Newnhams Solicitors ORDERS
SYC 1533 of 2019 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS VIDA
Applicant
AND: MR VIDA
First Respondent
MS B VIDA
Second Respondent
order made by:
WILSON J
DATE OF ORDER:
9 December 2022
THE COURT ORDERS THAT:
1.The husband’s review application dated 17 February 2022 is dismissed.
2.Paragraph 2 of the arbitrator’s orders dated 20 November 2022 is set aside.
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 a pseudonym has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
WILSON J
INTRODUCTION
On 14 January 2022 the award of the arbitrator appointed under s 10L of the Family Law Act was registered, pursuant to which award the husband was required to pay the wife an amount of approximately $2 million and simultaneously with that payment, the wife was required to transfer all her right title and interest in two companies and one trust to the husband. The award was registered pursuant to s 13H of the Family Law Act on 14 January 2022.
On 17 February 2022 the husband applied under s 13J of the Family Law Act for the review of that award. The wife sought orders for the dismissal of that review application. On 13 July 2022 the husband, by consent, amended his review application to incorporate relief under s 13K of the Family Law Act.
The wife sought orders in respect of costs by application filed on 28 January 2022.
The husband sought the determination of the review application ahead of the determination of the wife’s cost application.
For present purposes it is sufficient at this stage to record that the arbitration commenced under s 13E but was ultimately determined as an arbitration under s 10L(2)(b) of the Family Law Act.[1] However, the power of the arbitrator to make an order under s 106B was squarely challenged by Mr Bartfeld KC and Mr Dickson KC did not offer any resistance to that challenge.
[1] Deputy Chief Justice McClelland had earlier made an order referring the proceeding to arbitration under s 13E. The parties elected to proceed instead under s 10L(2)(b).
As these reasons reveal, in my view the review application must succeed in relation to the s 106B point and in all other respects the review must be dismissed.
STATUTORY FRAMEWORK
Section 13J and s 13K were invoked on this review application. As has been observed many times by me,[2] those provisions are very different, even though each is concerned with an application seeking orders affirming, varying or reversing the arbitral award.
[2] Entezam & Devi (No 3) [2021] FamCA 549, Bakalov & Bakalov [2021] FedFamC1F 161, Beirne & Beirne (No 2) [2022] FedCFamC1F 54, Paviello & Paviello [2022] FedCFamC1F 592 and Penhalligon & Penhalligon [2022] FedCFamC1F 744.
SECTION 13J
Section 13J is in the following terms –
(1)A party to a registered award made in section 13E arbitration or relevant property or financial arbitration may apply for review of the award, on questions of law, by:
(a) the Federal Circuit and Family Court of Australia (Division 2); or
(b) a single judge of the Family Court of a State.
Note:There may be Rules of Court providing for when, and how, an application for review of the award can be made (see paragraph 123(1)(sf)).
(2)On a review of an award under this section, the judge or Federal Circuit and Family Court of Australia (Division 2) may:
(a) determine all questions of law arising in relation to the arbitration; and
(b)make such decrees as the judge or Federal Circuit and Family Court of Australia (Division 2) thinks appropriate, including a decree affirming, reversing or varying the award.
Importantly, the section speaks of a review of the award. The section does not speak of appeal for error of law. Further, the section requires the court to “determine all questions of law arising in relation to the arbitration”.
The review applicant in this case did not postulate “questions of law”, whether or not expressed in the inquisitive tense. Instead he narrated eight grounds that were said to engage s 13J. While accepting that it is not always easy to differentiate between a question of law as opposed to a question of fact (or, for that matter, a question of mixed fact and law)[3] only some of the eight grounds on which the review applicant relied could be characterised as a question of law, properly so called. Ground 4 which spoke of an advance being statute barred was one. None of the grounds (as they were called by the review applicant) was particularised making it near impossible to comprehend the question of law posed or even the review purportedly invoked. The most glaring illustration of that was found in ground 8, which was in the following terms –
When assessing 75(2) considerations the Arbitrator mistook facts and allowed irrelevant matters to guide him.
[3] Justice Duncan Kerr, ‘What Is A Question of Law Following Haritos v Federal Commissioner of Taxation’ [2016] Federal Journal of Scholarship 18.
No endeavour was remotely attempted by the review applicant to identify the mistaken facts or the irrelevant matters that allegedly guided the arbitrator.
Section 13J involves a “review”. Despite my invitation for them so to do no counsel took me to any learning on the metes and bounds of the word “review” in s 13J. It seemed to me that the decisions of the High Court in Victorian Stevedoring & General Contracting Co Pty Ltd v Dignan[4] and in Avon Downs Pty Ltd v Commissioner of Taxation[5] are the most applicable in the context of judicial review for the purposes of s 13J. In Dignan’s Case the scope of activities contemplated by the word “review” was set out to include the following in the reasons of Dixon J – [6]
13.But it is for the commissioner, not for me, to be satisfied of the state of the voting power at the end of the year of income. His decision, it is true, is not unexaminable. If he does not address himself to the question which the sub-section formulates, if his conclusion is affected by some mistake of law, if he takes some extraneous reason into consideration or excludes from consideration some factor which should affect his determination, on any of these grounds his conclusion is liable to review. Moreover, the fact that he has not made known the reasons why he was not satisfied will not prevent the review of his decision. The conclusion he has reached may, on a full consideration of the material that was before him, be found to be capable of explanation only on the ground of some such misconception. If the result appears to be unreasonable on the supposition that he addressed himself to the right question, correctly applied the rules of law and took into account all the relevant considerations and no irrelevant considerations, then it may be a proper inference that it is a false supposition. It is not necessary that you should be sure of the precise particular in which he has gone wrong. It is enough that you can see that in some way he must have failed in the discharge of his exact function according to law.
The approach was subsequently approved in Avon Downs. I propose to apply it in this application for the review of the arbitral award in this case.
SECTION 13K
In this case the husband also relied on subsection 13K(2)(d) as an alternative to the relief he sought under s 13J. Section 13K is in the following terms –
(1)If an award made in section 13E arbitration or relevant property or financial arbitration, or an agreement made as a result of such arbitration, is registered in:
(a) the Federal Circuit and Family Court of Australia (Division 1); or
(b) the Federal Circuit and Family Court of Australia (Division 2); or
(c) a Family Court of a State;
the court in which the award is registered may make a decree affirming, reversing or varying the award or agreement.
(2)The court may only make a decree under subsection (1) if the court is satisfied that:
(a)the award or agreement was obtained by fraud (including non-disclosure of a material matter); or
(b)the award or agreement is void, voidable or unenforceable; or
(c)in the circumstances that have arisen since the award or agreement was made it is impracticable for some or all of it to be carried out; or
(d)the arbitration was affected by bias, or there was a lack of procedural fairness in the way in which the arbitration process, as agreed between the parties and the arbitrator, was conducted.
Somewhat glibly, the husband asserted in paragraph 5 of his submissions dated 9 June 2022 that “s 13K provides for a review of the award if there is a lack of procedural fairness”. That statement is only partially correct. Section 13K(2) provides that the court (me) may only make a decree under subsection 13K(1), relevantly “affirming, reversing or varying the award” if the court is satisfied of the existence of one of the elements in subsection 2(a) to (d). So far as s 13K(2)(d) was concerned (the provision relating to procedural fairness) any lack of procedural fairness must be in relation to the way in which the arbitration process, as agreed, was conducted.
Self-evidently, in order to comprehend any complaint about a want of procedural fairness for the purposes of s 13K(2)(d), evidence must be before the court about the agreed arbitration process.
In the course of examining each ground, I have addressed the relevant factual setting as is applicable to each ground.
THE PROPER APPROACH ON A REVIEW APPLICATION
Before addressing the eight grounds of challenge to the arbitral award, it is as well to record how a review application should be approached by the judge undertaking the review.
First, as with any appeal or review in this court, the judgment appealed against or award under review should not be read with an eye keenly attuned to the existence of error.[7]
[7] Minister for Immigration and Ethnic Affairs v Wu Shan Liang (1996) 185 CLR 259, 271-272 and Chan & Lee [2022] FedCFamC1A 85 (at [110]).
Second, in an appeal against, or review of, a decision that involves the exercise of a discretionary judgment, a strong presumption exists in favour of the correctness of the discretionary decision (that is to say the decision under appeal or review) and the appeal court (or reviewing judge) should affirm that decision unless satisfied that the decision appealed against or the decision under review is clearly wrong.[8]
Third, where a statute or rule of law prescribes certain factors as being relevant, those factors must be considered.
Fourth, in the absence of a statutory mandate that a particular factor is to be accorded particular weight, and instead the legislation prescribes that a collection of factors must all be considered and weighed, the necessary balancing exercise[9] is to be employed with care. In Macedonian Orthodox Community Church St Petka Inc v His Eminence Petar The Diocesan Bishop of The Macedonian Orthodox Diocese of Australia and New Zealand, the plurality held as follows –
137. “Balancing exercise”? The orthodox approach to appellate intervention in relation to discretionary decisions requires the expression “balancing exercise” to be employed only with care.
138.The question is what the particular statute or rule of law conferring the discretion contemplates as relevant or irrelevant factors. If it mandates that particular weight be given to one factor, that mandate must be obeyed. But, in the absence of any such mandate, the question of what weight the relevant factors should be given or what balance should be struck among them is for the person on whom the discretion is conferred, provided no error of law is made, no error of fact is made, all material considerations are taken into account and no irrelevant considerations are taken into account, subject to the possibility of appellate intervention if there is a plain injustice suggesting the existence of one of the four errors just described even though its nature may not be discoverable, or if there is present what has come to be known as “Wednesbury unreasonableness”.
[9] This was the phrase used by Gummow ACJ, Kirby, Hayne & Heydon JJ in Macedonian Orthodox Community Church St Petka Inc v His Eminence Petar The Diocesan Bishop of The Macedonian Orthodox Diocese of Australia and New Zealand (2008) 237 CLR 66 (at [137] and [138]).
Fifth, elaborate reasons in the discretionary decision under review or appeal will not render that decision immune from review. As was held recently by the Court of Appeal in the Supreme Court of New South Wales,[10] in the absence of specific error the outcome reached will be one which was reasonably open.
[10] Park Trent Properties Group Pty Ltd v Australian Securities and Investments Commission (ASIC) (2016) 316 FLR 252 (Leeming JA with whom McColl and Gleeson JJA agreed). See also Shepard v Watt [2022] FCAFC 78.
With those necessarily general observations, the specific bases of this review application fell into sharp focus.
THE ARBITRATOR’S ORDERS
In order to properly comprehend the grounds of review advanced by the husband, it is necessary to record the precise orders made by the arbitrator. The several sub paragraphs of paragraph 1 of the arbitrator’s orders were as follows –
Pursuant to section 79 of the Family Law Act [the Act] and by way of final property alteration:
1.1within 4 months of the date of this Award the husband shall pay to the wife the sum of $1,920,043;
1.2forthwith and simultaneously upon compliance with paragraph 1.1 herein, and at the sole expense of the husband, the wife shall do all things including signing any documents as may be necessary to transfer and assign to the husband or as he may direct, all right, title and interest the wife may have in and to each of [N Pty Limited], [M Pty Limited] and the [Vida Family Trust], including in respect of any beneficiary entitlements standing to the credit of the wife;
1.3within 4 months of the date of this Award the wife, at her sole expense, shall do all things including signing all documents necessary to discharge all liability of the husband in respect of any encumbrance on the title of the property known as and situate at [D Street, Suburb E], in the State of New South Wales being the whole of the land contained in folio identifier […][the D Street property];
1.4forthwith and simultaneously upon compliance with paragraph 1.3 herein, and at the sole expense of the wife, the husband shall do all things including signing any documents as may be necessary to transfer to the wife all of his right, title and interest in and to the [D Street] property; and
1.5that other than as provided for above:
1.5.1the husband shall indemnify the wife from and in respect of all actions, claims, suits and demands as may be made against; the wife in relation to all liabilities in the name of the husband; [N Pty Limited], [M Pty Limited]; and/or the [Vida Family Trust];
1.5.2the wife hereby indemnifies the husband from and in respect of all actions, claims, suits and demands as may be made against the husband in relation to all liabilities in the name of the wife; and
1.5.3the husband and wife shall be solely entitled to the exclusion of the other to all property and chattels of whatsoever nature and kind in the possession, ownership or control of each party as at the date of this Award or to which they are or may become entitled including but not limited to superannuation entitlements.
GROUND 1 AND GROUND 2 AND THE HUSBAND’S CONTENTIONS
The review applicant elected to bunch grounds one and two together.
Ground 1 (as the review applicant described what s 13J calls the “questions of law”) was as follows –
The Arbitrator erred in failing to provide the Husband with procedural fairness to be heard once the Arbitrator had reached a view as to the orders which the Arbitrator proposed to make.
Ground 2 was as follows
The Arbitrator erred in not taking into account:
(a)the liability imposed upon the husband by the implementation of the proposed order (s79(2));
(b)the terms of the order proposed to be made under section 79 in relation to the property of the parties (s79(4)(e), s75(2)(n)(i)).
(c)the effect of the proposed order upon the earning capacity of the husband (s79(4)(d)).
While ground 1 squarely invoked a contention in respect of procedural fairness, enlivening (one might think) s 13K(2)(d) of the Family Law Act, that ground did not assert that the so-called want of procedural fairness related to the want of procedural fairness that was prescribed by the legislation. In other words, ground 1 was a complaint more broadly expressed than was the gravamen with which s 13K(2)(d) was concerned, namely, “there was a lack of procedural fairness in the way in which the arbitration process, as agreed between the parties and the arbitrator, was conducted”. It seemed that the review applicant propounded by ground 1 a more fundamental principle of law grounded in procedural fairness and most recently pronounced by the High Court on 12 October 2022 in SDCV v Director-General of Security[11] applying Assistant Commissioner Condon v Pompano Pty Ltd.[12] In the latter case, the court held as follows – [13]
My view, in short, is that Ch III of the Constitution mandates the observance of procedural fairness as an immutable characteristic of a Supreme Court and of every other court in Australia. Procedural fairness has a variable content but admits of no exceptions. A court cannot be required by statute to adopt a procedure that is unfair. A procedure is unfair if it has the capacity to result in the court making an order that finally alters or determines a right or legally protected interest of a person without affording that person a fair opportunity to respond to evidence on which that order might be made.
It seemed plain enough that the contention advanced by the review applicant about there being a lack of procedural fairness went very substantially beyond the parameters prescribed by s 13K(2)(d) of the Family Law Act.
Mr Dickson KC conceded in debate before me on 28 July 2022 that ground 1 was not expressed as a question of law.[14] Even recognising that the postulation of a “question of law” may take different forms,[15] and even acknowledging the review applicant’s concession that ground 1 was not expressed as a question of law, it seemed demonstrably apparent to me that the review applicant was seeking to invoke my consideration of whether, as a matter of law, the arbitrator was required to provide the review applicant with an opportunity to make submissions about whatever he wanted to make submissions about concerning the precise form of orders before the arbitrator finally pronounced them.
[14] Transcript 28 July 2022 T6 L35.
[15] Justice Duncan Kerr, ‘What Is A Question of Law Following Haritos v Federal Commissioner of Taxation’ [2016] Federal Journal of Scholarship 18.
In order to better understand the factual setting against which ground 1 arose it is necessary to record certain preliminary issues. They may be synthesised in the following manner –
(a)the husband (56 years of age) and the wife (53 years of age) commenced living together in late 2001, they married in late 2002, they separated on a disputed date and subsequently divorced in January 2020;
(b)the husband and wife have two children now in their late teens;
(c)the second respondent to the proceeding is the husband’s mother;
(d)in June 1995, that is to say, before the husband and wife commenced cohabitating, the husband established N Pty Ltd (“N Company”) in which the husband held one third of the issued shares, the husband’s mother owned one third of the issued shares and the husband’s father owned one third of the issued shares;
(e)upon the death of the husband’s father the husband’s mother acquired her late husband’s one third share thereby conferring upon her a two third shareholding in N Company rendering her the majority shareholder;
(f)Vida Family Trust (“VFT”), a discretionary trust settled by deed dated 20 June 2007, has as its trustee M Pty Ltd (“M Company”) in which the husband is the sole shareholder;
(g)the husband’s mother’s two third shareholding in N Company was transferred to M Company in 2007 for valuable consideration;
(h)the husband and his mother were the directors of M Company as at October 2019;
(i)in November 2018 the corpus of the VFT was transferred to the husband’s mother;
(j)throughout the marriage between the husband and the wife and after their separation the husband and his mother ran N Company thereby deriving income; and
(k)throughout the marriage the wife worked for N Company and cared for the parties’ two children.
The wife commenced a proceeding in (what was then) the Family Court of Australia on 13 March 2019 seeking orders for the alteration of property interests. On 1 March 2021 McCelland DCJ made an order pursuant to s 13E of the Family Law Act referring the totality of this proceeding to arbitration. According to paragraph 2 of the arbitrator’s reasons, the reference to arbitration ordered on 1 March 2021 was “discharged” (whatever that meant) on 15 June 2021. Thereafter, the parties entered into an arbitration agreement pursuant to s 10L(2)(b) of the Family Law Act. The arbitrator was duly appointed and directions hearings were convened on 19 May 2021, 11 and 25 August 2021 as well as on 5 September 2021. The arbitration hearing was conducted between 30 August 2021 and 2 September 2021.
At the arbitration the wife sought orders for her to receive 80% of the asset pool, which percentage included the entirety of the corpus transferred by the trustee of the VFT to the husband’s mother. The husband sought orders that he receive 70% of the asset pool, preserving intact the transfer by VFT to the husband’s mother and the husband further sought orders that his mother retain the transfer effected to her by or on behalf of VFT.
On 20 November 2021 the arbitrator handed down his award. In brief précis –
(a)the arbitrator brought to account the corpus in VFT earlier transferred to the husband’s mother;
(b)the arbitrator divided net assets as to 55% to the husband and 45% to the wife;
(c)to facilitate that percentage division the arbitrator ordered the husband to make a payment to the wife in cash, net of tax, in the sum of $1,920,043;
(d)the arbitrator ordered the wife to retain the former matrimonial home at D Street; and
(e)the arbitrator did not make orders setting aside the transfer of the corpus of VFT to the husband’s mother and instead ordered as a default order that such a result would follow if the husband failed to make the payment of $1,920,043 to the wife.
To better understand each review ground, it is necessary to record a little about the argument advanced.
In support of ground 1, the review applicant argued that the arbitrator’s requirement for the VFT corpus to be transferred to the husband only if the husband failed to pay the wife $1,920,043 had the practical effect of requiring the husband to pay the wife that sum from his existing assets and resources in his own name. The arbitrator’s award did not state as much, however.
The review applicant contended that the arbitrator, in making the order in paragraph 1.1 of the award, is to be taken to have recognised that in order to generate funds to pay the wife $1,920,043 the husband would be required to sell three parcels of real estate used for investments and a parcel of real estate held by a trading entity.
The review applicant focused on the fact that no evidence had been adduced about the tax implications that may have arisen upon the sale of any of his interests. The review applicant contended that the arbitrator ordered payment of the sum of $1,920,043 by the husband to the wife upon the arbitrator –
(a)deciding not to make an in specie transfer of real estate to the wife;
(b)deciding not to make any splitting order as proposed by the wife; and
(c)not to make an order for the sale of real estate in such manner as there would be accounting for tax and selling costs.
The review applicant argued that it must have been apparent to the arbitrator that in addition to selling costs and legal costs associated with the sale of those parcels of land, a very significant tax liability was likely to crystallise in the hands of the husband, mostly in the form of capital gains tax. The review applicant submitted that he specifically addressed the arbitrator on point at paragraph 7.17.3 of his written submissions and the arbitrator specifically addressed the point at paragraph 293 of his reasons. It is utile to record the arbitrator’s reasoning in that paragraph –
At separation, on 2 July 2018, it is agreed that the husband held $185,621 in his accounts and the wife $229,599 [Exhibit 72]. From that time, the wife earned an income from her employment and the husband continued to derive funds from [N Company] in which he continued to work. As identified above, presently the husband has $14,290 cash at bank and the wife $59,910.
By way of retort, the review applicant submitted that the arbitrator knew of and had valuation evidence relating to real property at –
(a)K Street having an agreed value of $625,000;
(b)Suburb G having an agreed value of $580,000; and
(c)Suburb J having an agreed value of $1,000,000.
The review applicant relied on a variety of authorities that have made observations about the need for the person entertaining a s 79 application (whether judge or arbitrator) to make provision in final orders for taxation consequences.[16] So far as the effect of capital gains tax specifically was concerned, the husband relied on the observations of the court in In the Marriage of Rosati[17] when he contended that “the law in relation to the treatment of capital gains tax is well settled”. That is a considerable overstatement as appears from the opening lines of paragraph 6.36 of the report of the Rosati decision. There the court recognised the existence of a degree of confusion and conflict in statements of principle emerging from the reported cases. Precisely how it could be said that the law was well settled in the face of that confusion and conflict in the authorities was not explained. But in Rosati the court proceeded to pose what it called “general principles” that emerged from what I read as being those confused and conflicting authorities. Chief among the points on which the court in Rosati pronounced was the statement that whether capital gains tax should be taken into account varies according to the circumstances of the case. To my way of thinking, that is a self-evident and unremarkable observation. It would be stunning were the law otherwise. No immutable rule could support a proposition that in each and every case all statutory and accounting concepts associated with the imposition of capital gains tax must be applied.
[16] Elgin v Elgin (2015) 54 Fam LR 31, for example.
[17] (1998) 23 Fam LR 288.
The second proposition recorded above, namely that if an order is made for the sale of an asset, then generally allowance should be made for capital gains tax payable upon sale, the relevant words of import are “generally, allowance should be made”, recognising again the existence of no hard and fast immutable rule to that effect. The third and fourth propositions in Rosati are of equally non-specific application.
THE WIFE’S CONTENTIONS ON GROUND 1 AND 2
In like manner as the review applicant addressed on grounds 1 and 2 together, so did the wife in her solicitor’s submissions filed on 23 June 2022. In those submissions the wife contended as follows –
(a)it was no surprise that the arbitrator made an order for the husband to pay the wife $1,920,043 in cash as she had sought such an order;
(b)that was important having regard to the review applicant’s contentions about some alleged denial of procedural fairness;
(c)nowhere does the arbitrator specify a requirement for the husband to liquidate his real property interests in order to make good the payment of $1,920,043 to the wife;
(d)contrary to the contentions of the husband, it is not obvious or necessary that the sale of real estate is a precursor to the making of the payment to the wife;
(e)the husband adduced no evidence about tax imposts;
(f)at the hearing the husband did not make plain whether he intended to sell properties, borrow or whether he would seek financial assistance from his mother;
(g)had the husband given evidence about the way he intended to meet any sum ordered that he was required to pay, then the wife would have had an opportunity to challenge the husband on whatever he said;
(h)the arbitrator had before him evidence that the husband was proposing to raise cash in the sum of $304,259 to pay out the wife which, so the wife submitted, was likely to have been raised otherwise than by a sale of real estate;
(i)the husband erroneously now submits that the only way he can raise the funds required to pay the wife the sum ordered is by the sale of real estate in circumstances where he led no evidence to that effect during the arbitration;
(j)as part of the husband’s case in the arbitration he contended that his mother advanced him funds of $1,375,500, such amount being readily available by the husband from his mother, which the arbitrator found was a circumstance likely to continue;
(k)the arbitrator was cognisant of the fact that real property represented a sizeable portion of the pool in this case; and
(l)those parcels of real estate were likely to attract taxation implications especially a capital gains tax liability.
As her separate submissions concerning ground 2(c), the wife put forward further contentions about the effect of the proposed order on the husband’s earning capacity. She submitted –
(a)the arbitrator considered all relevant issues at paragraphs 34.4, 91 and 275 of the arbitrator’s reasons, recognising that the pool to be divided was $7,478,806 and providing that the husband was ordered to receive 10% more than the wife;
(b)the arbitrator recognised the husband’s rental income at paragraph 286 of the arbitrator’s reasons; and
(c)the arbitrator’s orders do not make provision for the sale of real property owned by N Company.
CONSIDERATION OF GROUNDS 1 AND 2
In this case, the review applicant erroneously elevated the four propositions expressed in Rosati to a point resembling that of a statute. In particular, he contended that by failing to apply the four propositions in Rosati, the review applicant demonstrated the existence of an error of law in respect of the arbitrator’s failure to apply the first limb. I reject the argument that the first (or any) limb of Rosati represented a statement of doctrine such that an error of law is enlivened by a failure to apply it. By its express words, the first limb is written in highly conditional (not mandatory) terms, such as “whether the incidence of capital gains tax should be taken into account ...varies according to the circumstances of the case”. To my mind, that does not impose an obligation, nor does any failure to do as the first limb invites but does not require, constitute an error of law.
The review applicant contended in paragraph 39 of his written submissions that “had the arbitrator sought evidence” about tax and other effects, then certain consequences would have followed. It must not be overlooked, as was recorded in paragraph 293 of the arbitrator reasons, the arbitrator stated that –
(a)the husband did not nominate any property which might be realised;
(b)despite deposing to his seeking tax advice, the husband advanced no evidence about tax issues that may arise upon the realisation of his interests; and
(c)no evidentiary basis existed on which any potential liability to tax ought to have been taken into account.
In my view, the review applicant erroneously purported to cast the onus upon the arbitrator to source evidence about the husband’s taxation liability. Arbitrations are adversarial. The arbitrator adjudicates on competing contentions.[18] The arbitrator does not source evidence for the parties.
[18] Air Canada v Secretary of State for Trade [1983] 2 AC 394, Sainsbury's Supermarkets Ltd and others v Mastercard Inc and others (European Commission intervening) [2020] 4 All ER 807 and Al-Medinni v Mars UK Ltd [2005] EWCA Civ 1041.
The arbitrator found as a factual matter that the husband adduced no evidence about the taxation implication of any property sales. It fell to the husband to have done so. It is common in cases in this court where tax issues (or even potential tax issues) are involved for parties to obtain advice on the point and to lead sophisticated evidence on those taxation issues.[19]
[19] Aitken & Aitken (No 3) [2022] FedCFamC1F 496.
Under ground 1 the review applicant set out in substantial detail what he said were the likely tax consequences to him. He made submissions about that between paragraphs 39 to 43 of his written submissions on this review application. Nowhere in those submissions was there any hint that any of those contentions (especially those numerically precise in nature) were put as evidence or submissions before the arbitrator.
Instead the review applicant criticised the arbitrator for “not creating an opportunity for the husband to be able to provide evidence and make submissions as to the taxation effects”. It was not for the arbitrator to “create an opportunity” by bringing to the review applicant’s attention a yawning chasm in the review applicant’s evidence. The arbitration was adversarial, as has already been stated. I am unable to accept the review applicant’s contention in paragraph 44 of his submissions, that “given what the arbitrator knew about the financial position of the husband” the arbitrator denied the husband procedural fairness in “not creating an opportunity” to enable the husband to adduce evidence on taxation issues. Without citing any authority to support that inventive, if not peculiar submission, the review applicant somehow advanced the proposition that the arbitrator knew aspects of the husband’s financial affairs (although the husband did not say what the arbitrator knew of them to enliven this obligation) and ispo facto, the arbitrator thereby became bound by obligations of procedural fairness to “create an opportunity” for the husband to adopt a particular approach in the running of the case that the husband himself had not chosen to adopt.
I reject the review applicant’s submission.
However, a much larger issue presented itself under the rubric of ground 1, namely, whether general principles of procedural fairness applicable in curial disputes or in administrative determinations apply to arbitrations under the Family Law Act. The review applicant submitted that those principles did in fact apply to a family law arbitration yet the only three authorities on which he relied[20] did not relate to family law arbitration.
[20] Concrete Pty Ltd v Parramatta Design & Developments Pty Ltd (2006) 229 CLR 577, Royal Guardian Mortgage Management Pty Ltd v Nguyen [2016] NSWCA 88 and Obannon v Scarffe (2021) 62 Fam LR 397.
It must be remembered that an arbitrator is not exercising a judicial power.[21] The High Court has held[22] in the case of private arbitration (of which a s 10L arbitration is illustrative) that the arbitrator’s power depends on the agreement of the parties, usually embodied in a contract.
The authorities on which the review applicant relied for the invocation of general principles concerning procedural fairness, all related to judges, not arbitrators. Cases beyond the family law jurisdiction that speak of an arbitrator being bound by procedural fairness obligations such as Emerald Grain Australia Pty Ltd v Agrocorp International Pty Ltd[23] and Hui v Esposito Holdings Pty Ltd[24] involved issues arising under international commercial arbitrations and in particular the UNCITRAL Model Law on Commercial Arbitration. That is not the situation in this case.
[23] [2014] FCA 414.
[24] [2017] FCA 648.
Section 13K(2)(d) pointedly provides for there being a lack of procedural fairness in the agreed procedure and in the conduct of the arbitration, a deviation thereof being potentially reviewable under s 13K(2)(d). But the arbitration regime under the Family Law Act makes no general stipulation to the effect that substantive law principles concerning procedural fairness apply to family law arbitrations. The authorities on which the review applicant relied did not address procedural fairness in a family law arbitration.
Turning to the stipulations of s 13K(2)(d), in this case the agreed procedure between the parties and the arbitrator concerning the conduct of the arbitration said nothing about requiring the arbitrator to give the review applicant an opportunity of addressing the arbitrator in case tax liabilities arose from any particular order to be made by the arbitrator for the sale of one or more parcels of land.
In those circumstances I am unable to see how it could be argued as the review applicant attempted to argue, that somehow the arbitrator failed to accord the review applicant procedural fairness. The review applicant did not point to or rely on any non-compliance with s 13K(2)(d) of the Family Law Act. In a family law arbitration, the arbitrator is not exercising judicial powers and instead is exercising powers conferred upon the arbitrator by agreement. The general principles of substantive law concerning procedural fairness recorded by the High Court in Concrete Pty Ltd v Parramatta Design & Developments Pty Ltd[25] apply to courts. An enormous body of jurisprudence in administrative law in relation to procedural fairness has arisen largely by reason of the terms of the specific statute under consideration mostly in respect of seminal cases under the Migration Act which enshrines specific wording about procedural fairness. That is to be contrasted with the provisions of s 13K(2)(d) of the Family Law Act, the stipulations of which are very precise, making provision for procedural fairness in a highly circumscribed context.
[25] (2006) 229 CLR 577.
Lastly, in respect of ground 1, it must not be overlooked that the review applicant elected to call no evidence of the taxation consequences of any sale of real estate. He did so at his own peril. Having chosen not to adduce any such evidence on a point he now says presents such adversity to him, he ought to have but failed to address that matter at the arbitration.
Under ground of review 2, the review applicant addressed the taxation consequences to him of being required to sell certain real estate to generate over $1,920,043 as a payment to the wife. He did so in reliance upon grounds 2(a) and 2(b). In essence, the review applicant contended that the arbitrator failed to take into account the husband’s potential taxation liability if the order were made for the payment to the wife of $1,920,043 as was prescribed by s 79(2), s 79(4)(e) and s 75(2)(n)(ii) of the Family Law Act. As with all other grounds of review in this review application, ground 2 was not expressed as a “question of law” and instead it was expressed as a proposition in the nature of the arbitrator having erred in “not taking into account” certain prescriptions of the provisions of the Family Law Act.
Ground 2(a) was generic in that it asserted, without detail, error in the arbitrator not taking into account “the liability imposed on the husband by the implementation of the proposed order (s 79(2))”. That ground was so broad as to be near meaningless. Section 79(2) provides that “the court shall not make an order under this section unless it is satisfied that in all the circumstances, it is just and equitable to make the order”. Of course, I recognise the general contention advanced by the review applicant that in his view the arbitrator’s orders were not just and equitable. However, ground 2(a) said nothing of the basis on which the review applicant made that assertion.
Ground 2(b) was more informative. In it the review applicant argued that the arbitrator failed to do as s 79(4)(e) and s 75(2)(n) required, that is to say, by taking into account the terms of the proposed order to be made under s 79. Section 79(4)(e) requires the person determining a s 79 application to take into account, among other things, the matters referred to in s 75(2), sub-section 75(2)(n)(i) of which provides that the court shall take into account “the terms of any order made or proposed to be made under s 79 in relation to the property of the parties”.
The review applicant submitted in paragraph 39 of his submissions before me (although the review applicant did not contend that an identical submission was made to the arbitrator) that upon a sale of the three properties held by the husband plus the sale of the property owned by N Company, taxation consequences aggregating $829,265 would follow. He asserted that the figure of $829,265 was “decomposed” (his words) into the following –
39.1 The Husband would be liable to income tax of $328,621 in relation the disposal of the residential real properties.
39.2 [N Company] would be liable to income tax of $260,465 in relation the disposal of the [U Street] Property.
39.3 The Husband would be liable to income tax of $80,060 in relation to the dividend from [N Company].
39.4 The individual who receives the appointment of income from VFT would be liable to income tax of $160,119.
It was then put on behalf of the review applicant that it was open to the arbitrator to invite submissions on a complex array of arithmetical calculations. The submission was as follows –
43.It would have been open to the Arbitrator, once he had made findings as to the property pool and formulated the proposed order, to invite further submissions as to the effect upon the Husband, as to whether a new liability should be placed on the balance sheet, whet-her s79(4)(d) or section s79(4)(e) and s75(2)(n)(i) needed to be revisited and what might be appropriate form of orders. At this point, it would have been possible to determine which assets were to be sold, and the tax liability. In circumstances where capital gains tax will consume about 11% of the asset pool, orders ignoring this consequence cannot be just and equitable. The intended percentage split was 55% to the Husband and 45% to the Wife. The practical application of the orders would lead to a marked departure from this assessment. That is:
43.1. Asset pool after tax and selling costs: $6,568,528
($7,478,806-$829,265 $81,013)43.2. Wife retains: $3,365,463 43.3. Husband retains (after tax): $3,203,065
($7,478,806 - $3,365,463 - $829,265
-$81,013)43.4. Percentage to the Husband: 48.76%
($3,203,065 / $6,568,528)43.5. Percentage to the Wife: 51.24%
($3,365,463 /$6,568,528)
I confess to having encountered very considerable difficulty in accepting that submission having regard to the observations of the arbitrator at paragraph 293 of the award. In particular, the arbitrator expressly stated –
(a)the husband had not nominated any property which might be realised;
(b)the husband adduce no evidence about taxation liability, despite deposing to the fact that he was seeking such advice; and
(c)no evidentiary or other basis existed on which any such potential liability ought to be taken into account.
To my way of thinking, paragraph 293 of the arbitrator’s reasons revealed that the arbitrator was fully aware of the requirements of s 79(4)(e) and s 75(2)(n)(i) of the Family Law Act. Despite the contentions advanced before me as are recorded in paragraph 43 of the review applicant’s submissions, those contentions were not advanced before the arbitrator. That seems readily apparent having regard to the percentage distributions that the review applicant urged in paragraph 43.4 and 43.5 of his submissions before me when compared with the percentage distributions contended for at various other phases of the litigation as follows –
(a)upon commencing this proceeding the wife sought 80% of the net property pool whereas the husband sought 70%;
(b)the arbitrator found that the net value of the pool of divisible assets to go to the wife was 40% and 60% to the husband; and
(c)in paragraph 43, the review applicant contended that once taxation issues were addressed as he wished them to be addressed the net pool was to be divided as to 51.24% to him and 48.76% to the wife.
The husband’s contention that the pool was to be divided in the manner last mentioned (51.24% to the husband and 48.76% to the wife) was not the subject of submissions before the arbitrator.
It was not correct for the review applicant to assert in connection with ground 2(b) that the arbitrator failed to have regard to s 79, s 79(4)(e) and s 75(2)(n)(i). He did. The review applicant did not adduce evidence about the taxation consequences of selling properties in which he had an interest. That was his own error.
Grounds 1, 2(a) and 2(b) have no merit. Each is dismissed.
Under ground 2(c) the review applicant asserted that the arbitrator erred in not taking into account a matter required to be taken into account under s 79(4)(d), namely, the effect of any proposed order upon the earning capacity of either party to the marriage.
The review applicant contended in paragraph 50 of his submissions before me that the arbitrator failed “to consider the real effect of the property settlement order upon the receipt by the husband of rental income from investment properties”.
Under a section of the arbitrator’s reasons headed “Section 79(4)(d) and (e) – including s 75(2)”, the arbitrator addressed the parties’ respective health issues and earning capacities. Having regard to the fact that ground 2(c) focused specifically on the husband’s earning capacity not all of the passages between paragraphs 277 to 294 of the arbitrator’s reasons were relevant. Those bearing upon the husband may be recorded in the following manner –
(a)the husband’s health issues in paragraph 278 of the arbitrator’s reasons;
(b)the husband’s unchallenged evidence of working up to four hours five times a week then experiencing fatigue in paragraph 279 of the arbitrator’s reasons;
(c)there being no evidence by either the husband or the wife as to any particular financial impost or expense arising consequent upon their respective health conditions as the arbitrator stated in paragraph 283 of the arbitrator’s reasons;
(d)the husband continues to work for N Company with a disclosed annual income of $39,000 and dividends of $25 per week as the arbitrator stated in paragraph 285 of the arbitrator’s reasons;
(e)the arbitrator did not accept that the income disclosed by the husband represented the true extent of the income and benefits derived from N Company, as was recorded in paragraph 285 of the arbitrator’s reasons;
(f)the arbitrator found that until separation the husband’s taxable income was generally in excess of $200,000 per annum as the arbitrator stated in paragraph 285 of the arbitrator’s reasons;
(g)the arbitrator found that the husband derived rental income from properties at K Street, Suburb G and Suburb J of about $688 per week as the arbitrator stated in paragraph 286 of the arbitrator’s reasons;
(h)the husband will receive or retain interests having a value of $4.487 million and the wife will receive or retain earnings having a value of $2.99 million as the arbitrator stated in paragraph 287 of the arbitrator’s reasons;
(i)the husband’s superannuation entitlements had a value of $1,266,641 as the arbitrator stated in paragraph 288 of the arbitrator’s reasons; and
(j)the arbitrator recorded in paragraph 289 of his reasons, “there is no evident impact upon either party’s earning capacity as a result of the position arising from the assessment of contributions nor from the orders sought by them”.
Notwithstanding the findings recorded in the several sub-paragraphs set out in the immediately preceding paragraph, the review applicant asserted in paragraph 50 of his submissions that “the arbitrator fails to consider the real effect of the property settlement order upon the receipt by the husband of rental income from investment properties”. While expressed infelicitously, it seemed that the review applicant was in truth contending that his rental income would be lost if he was required to sell the rental properties.
It seemed to me that two matters arose from the review applicant’s submissions in that regard. First, he did not volunteer a proposal to the arbitrator about whether and if so which properties needed to be sold in order to generate the amount mentioned in paragraph 1.1 of the arbitrator’s orders. Second, the review applicant not only did not nominate the property or properties to be sold but he wholly omitted to put before the arbitrator any evidence about the tax consequences thereof. In the face of that state of affairs it is not in the least surprising that the arbitrator proceeded on the basis that rental income from one or more properties would continue to inure for the review applicant. In circumstances where the review applicant did not nominate any property to be sold, it could scarcely be said that the arbitrator erred in any way by failing to bring to account a loss of rental income from any particular rental property. In my view ground 2(c) is devoid of merit. I dismiss it. Grounds 1 and 2 failed.
GROUND 3 AND THE HUSBANDS CONTENTIONS
Ground 3 was as follows –
The Arbitrator’s decision as to each of the parties’ contributions exceeds the generous ambit within which reasonable disagreement is possible and is plainly wrong.
At the risk of repetition, ground 3 was not expressed as a question of law but instead as an unparticularised statement that the arbitrator’s findings of the parties’ contributions was plainly wrong. That contention squarely raised the jurisprudential basis by which a discretionary determination may properly be the subject of judicial review.
In any review of a decision involving the exercise of discretion, a strong presumption exists in favour of the correctness of the decision under review and a court conducting the review of the exercise of that discretion should affirm that decision unless satisfied that the decision under review is clearly wrong.[26] A court conducting a review of the decision maker’s exercise of discretion should be slow to overturn the decision under review where the basis of the review relates to conflicting assessments of matters of weight.[27]
In Norbis v Norbis[28] Brennan J addressed the generous ambit within which reasonable disagreement is possible and statements in the authorities where a decision is plainly wrong such that an appellate body is entitled to interfere. Relying on observations of the Court of Appeal of England and Wales in Bellenden (formerly Satterthwaite) v Satterthwaite,[29] Brennan J in Norbis held as follows –
“The "generous ambit within which reasonable disagreement is possible" is wide indeed when there are a number of factors to be taken into account and the comparative weight to be attributed to those factors is not clearly indicated by uniform standards and values of the community. The generous ambit of reasonable disagreement marks the area of immunity from appellate interference.”
[28] (1986) 161 CLR 513.
[29] [1948] 1 All ER 343.
Under this ground the review applicant contended that the arbitrator failed to assess the parties’ contributions “within the range in which reasonable minds may differ” (his words), calling in aid the observations of the court in In the Marriage of Pierce.[30] The review applicant submitted, somewhat theatrically, that the arbitrator’s assessment of a contribution-based entitlement “palpably failed to account for the substantial contribution of the husband and his parents”.
[30] (1998) 24 Fam LR 377, 386 (at [30]).
The review applicant focused on paragraphs 82 to 115 of the arbitrator’s reasons. It must be remembered that the review applicant was seeking to demonstrate that the arbitrator’s conclusions about contributions were “plainly wrong” in that those conclusions went beyond the “generous ambit within which reasonable disagreement is possible”. The review applicant needed to show that the arbitrator’s findings that he was attempting to upset under ground 3 were “plainly wrong”. In my view he failed in that regard. My reasons for that now follow.
At paragraph 91 of his reasons the arbitrator identified the sources of money received and applied for the benefit of the husband and the wife during the relationship. The arbitrator identified three sources –
(a)funds derived by the husband from N Company, VFT, his father Mr AA and his mother;
(b)income derived by the wife from work done for N Company from 2011 as well as from other sources; and
(c)money received by the parties at the time of their wedding and applied in reduction of the mortgage debt over the parties’ property at D Street.
The arbitrator took the view that VFT was the property of the husband. The precise finding in that regard was as follows –
I find that the interest of the husband in [N Company], and his control of and interests in each of the VFT and [M Company], are properly to be regarded as property of the husband for the purpose of this determination.
The husband submitted that the arbitrator, at item 38 of the table described in paragraph 269 of the arbitrator’s reasons as “the present interests of the parties in the identified property to be considered”, attributing a zero value to the item styled “loan from husband’s mother (loans up to 2 July 2018 and monies paid on 19 September 2019 (less part repayments)).” The “loan” which the arbitrator accorded no value was in the sum of $1,335,373 and was purportedly advanced by the husband’s mother to the husband. Of that amount, the arbitrator found that $855,000 was statute barred and the balance was unlikely to be pursued against the husband.
The arbitrator addressed loans between the husband and his mother in some little detail between paragraphs 202 and 222 of the arbitrator’s reasons. In essence, having found that various amounts in the nature of loan funds had been advanced by the husband’s mother to the husband from 2005,[31] the arbitrator addressed the wife’s contention that those advances were either statute-barred or would not in fact be called upon for repayment by the husband’s mother and had not been called upon by her to date.[32] The arbitrator recorded a portion of the questioning of the husband’s mother during which the husband’s mother agreed that she would likely agree to a deferral of the husband’s obligation to repay the loan. The husband’s mother agreed that no loan agreement existed, as was recorded in paragraph 205 of the reasons in the exchange between Mr BB and the husband’s mother.
[31] Paragraph 207 of the arbitrator’s reasons.
[32] Paragraph 208 of the arbitrator’s reasons.
The arbitrator characterised each advance made by the husband’s mother to the husband as a loan repayable on demand in respect of which no demand for repayment had been made by the husband’s mother until March 2020.[33] The arbitrator found that it was only after the parties’ separation in 2018 during discussions about estate planning referrable to the husband’s mother did the whole issue of the repayment of loans from the husband’s mother to the husband emerge. Only then did the quantification of those loans emerge, according to the evidence of Mr CC to which the arbitrator referred in paragraph 210 of his reasons.
[33] The arbitrator presumably relied upon authorities such as Ogilvie v Adams [1981] VR 1041, Young v Queensland Trustees Ltd (1956) 99 CLR 560, Drinkwater v Caddyrack Pty Ltd (No 3) [1997] NSWSC 589, VL Finance Pty Ltd v Legudi [2003] VSC 57, Mackenzie v Albany Finance Ltd [2003] WASC 100 and Haller v Ayre QCA 224.
In the context of the sum of $40,000 relating to a motor vehicle in March 2020, the arbitrator was robust in his findings that the transaction revealed the steps that the husband and his mother were prepared to take in an endeavour to promote their contentions in the case adverse to the interest of the wife.
GROUND 3 AND THE WIFE’S CONTENTIONS
In her submissions prepared by the wife’s solicitor the wife relied on a decision of the Federal Circuit of Australia in Braddon v Braddon.[34] In that case the judge followed the test for adequacy of reasons as espoused by Donaldson LJ in Bremer Handelsgesellschaft mbH v Westzucker GmbH (No 2).[35] In Griffiths & Griffiths,[36] I overruled Braddon v Braddon observing that principles of commercial arbitration were not to be transposed to family law arbitrations. Similar views had been earlier expressed by me in Goh v Ren.[37] I have also expressed my very real doubts about the correctness of the decision in Blanco v Blanco (No 2)[38] including the portion on which the wife’s solicitor relied in paragraph 40 of the wife’s submissions.
[34] Braddon v Braddon (2018) 59 Fam LR 234.
[35] [1981] 2 Lloyd's Rep 130.
[36] [2022] FedCFamC1F 219.
[37] (2020) 61 Fam LR 508.
[38] (2019) 60 Fam LR 80.
The wife submitted that it was proper for the arbitrator to have assessed contributions in the manner undertaken by the arbitrator at paragraph 272, that is to say, in a holistic way as was held in Jabour v Jabour.[39]
[39] (2019) 59 Fam LR 475.
The wife submitted that a factual finding made by the arbitrator adversely to the husband based on the arbitrator resolving conflicting evidence does not give rise to a “question of law” as required by s 13J. The wife submitted that the determination of this case on the basis of 60% in favour of the husband and 40% in favour of the wife was entirely within the range of outcomes properly open on the evidence.
CONSIDERATION OF GROUND 3
In the face of certain findings made by the arbitrator as set out below, the question for me was whether those findings about there being no loan indebtedness by the husband to his mother were “plainly wrong”. In my view, those findings were not plainly wrong. The arbitrator found –
(a)each advance by the husband’s mother to the husband was a separate and discrete loan transaction;
(b)no deed of loan had been entered into in respect of each such loan;
(c)each advance was repayable on demand; and
(d)the mother had made no demand for repayment of any advance prior to March 2020 at a time when issues of the husband’s mother’s estate planning were under consideration.[40]
[40] Young v Queensland Trustees Ltd (1956) 99 CLR 560, 566, Ogilvie v Adams [1981] VR 1041 and Gray v O'Donnell [2009] NSWSC 259.
The conclusion expressed by the arbitrator in paragraph 222.3 that the husband’s mother was “most unlikely to call for or seek to compel a repayment of any amounts that may be recoverable from the husband” was open. The arbitrator relied on two authorities in stating that conclusion.[41] The arbitrator’s expression of the likelihood of loans being enforced by the mother was set against a backdrop of events that had unfolded to that date, that is to say, no loan had been enforced in the period prior to mid-2020. Significant amounts were involved. In those circumstances I am unable to conclude that the arbitrator’s finding in paragraph 222.3 of his reasons was plainly wrong.
[41] In the Marriage of Petersens (1981) 7 Fam LR 402 and In the Marriage of Ferraro (1992) 16 Fam LR 1.
Then it was said that the arbitrator declined to make an adjustment in favour of the husband’s mother in the sum of $293,613 to reflect the segregation of their respective interests in the self-managed superannuation fund. This invited examination of the arbitrator’s reasoning expressed in paragraph 267 of his reasons. In paragraph 267, the arbitrator concluded that it was not appropriate to include the adjustment proposed by the husband. The arbitrator’s reasoning was disclosed over paragraphs 253 to 267. The issue may be synthetised in the following manner –
(a)the husband and his mother were the sole members of the relevant superannuation fund, the trustee of which held cash and was the registered proprietor of real property at Suburb W and Suburb E;
(b)according to the expert, Mr DD, as at 30 June 2022 the husband’s entitlement in the fund was valued at $1,266,641 and the husband’s mother’s entitlement in the fund was valued at $1,817,291;
(c)Mr DD gave evidence that he had been provided with documentation purporting to segregate the fund in such manner that as at 1 July 2022 the properties at Suburb E were set aside for the benefit of the husband’s mother to be valued in the sum of $293,613;
(d)Mr DD was not asked, nor did he express an opinion about the validity of the purported segregation;
(e)in his evidence, Mr CC gave evidence that upon its purchase in 2004, the Suburb W property could have been segregate in the superannuation fund yet that did not occur;
(f)Mr CC concluded the husband’s mother had indirectly contributed to, and that the review applicant had benefited from, the superannuation fund not being segregated in the amount of $293,613;
(g)between 2007 and 2020 the superannuation fund financial statements were prepared and member entitlements were conducted on the basis that each was not segregated;
(h)Mr CC gave viva voce evidence to the effect that it was not common to adopt a segregated approach to member entitlements;
(i)the arbitrator found at paragraph 263 that the adoption of a segregated approach to the superannuation fund was not undertaken until a date after the husband and wife separated and that, on the husband’s own evidence, the suggestion of segregating the superannuation fund arose from the husband’s accountants or from his mother;
(j)the arbitrator found that the husband was aware of the contents of the superannuation fund’s accounts in each year prior to 2020; and
(k)the husband gave evidence which the arbitrator accepted that each year the husband and the husband’s mother discussed the superannuation fund’s financial figures with the husband’s accountant and then the husband and his mother read through those financial figures.
The arbitrator found that in the circumstances, it was not appropriate to include the adjustment proposed by the husband. That was mainly because –
(a)until separation and up to 30 June 2020 the superannuation fund has been conducted on an unsegregated basis;
(b)at all times in that period the superannuation fund was conducted on that basis with the benefit of accountancy advice and without protest by the husband or his mother;
(c)no evidence existed to suggest that the husband’s mother wanted the superannuation fund to be conducted on a basis other than the basis on which it was conducted;
(d)the arbitrator found that no accountancy or other identified imperative required the adjustment to be made;
(e)the adjustment proposed arose from a set of illustrative calculations based in part on assumptions about the manner in which the husband and the husband’s mother would, historically, have conducted their affairs had they hypothetically chosen to segregate their interest in the superannuation fund from 2004; and
(f)the arbitrator found that such an approach was not a sound basis on which to accept the conclusion postulated.
The review applicant argued that in the absence of segregation the husband’s mother’s contributions benefited the husband’s superannuation balance because, so it was submitted, it enabled the purchase of (certain) properties and allowed the husband’s superannuation to benefit from those purchases with the consequence that the subsequent appreciation in value of the husband’s superannuation represented a contribution on the husband’s side.
The husband’s challenges under ground 3 were captured in paragraph 59 of his submissions. There, he argued that in the context of a pool valued at about $7.5 million, the disparity in the initial contributions supported an assessment of contributions of 60% on the husband’s part. The husband contended in paragraph 60 of his submissions that the husband’s contributions ought to have been assessed at 72.5%, at least.
Having carefully considered the husband’s submissions in respect of ground 3, I am of the view that there is no merit in them. I say that for several reasons. First, the criticisms of the arbitrator’s treatment of the superannuation fund were erroneous. No error was disclosed, still less was the arbitrator’s decision in relation to superannuation “plainly wrong”. In my view, the arbitrator’s reasoning was unimpeachable. It was squarely within the “generous ambit” mentioned in the authorities recorded earlier.
Second, I do not agree that the arbitrator’s assessment of contribution-based entitlements was outside the range of reasonable discretion. I do not accept that “it palpably failed to take account for [sic, should be “account of”] the substantial contributions of the husband and his parents”. On my reading of the arbitrator’s reasons, the arbitrator conscientiously, diligently and correctly examined the contributions of the husband and his mother. I see nothing wrong with the arbitrator’s finding about the unlikelihood of the husband’s mother seeking repayment of the loans she advanced. I see nothing wrong with the arbitrator’s findings concerning the segregation of amounts in the superannuation fund, a matter about which the husband and his mother knew and approved in the period 2004 until separation and to 30 June 2020. So far as the review applicant’s submission that the sum of $1,335,000 advanced by the husband’s mother had not been accounted for in a practical sense, I do not agree.
The arbitrator’s explanation about the unlikelihood of the husband’s mother’s loan funds being enforced has already been addressed. As to the sum of $855,000 said to have been statute barred, it was the subject of ground 4 of his review application. For the reasons that I later address under ground 4, I do not accept that inadequate reasons were given.
Ground 3 focused on the review applicant’s contention that the arbitrator’s decision as to each party’s contributions exceeded the generous ambit within which reasonable disagreement is possible and is plainly wrong. To my way of thinking that ground failed. It dismiss it.
GROUND 4 AND THE HUSBAND’S CONTENTIONS
The review applicant contended at page 2 of his written submissions that ground 4 was as follows –
“The arbitrator mistakenly found that part of the monies advanced from the second respondent was statute barred.”
In the body of the review applicant’s submissions, no substantive submissions were addressed to ground 4. Instead, at page 15 of the review applicant’s submissions the review applicant inserted a heading for ground 4 yet erroneously recited the details of ground 5 leaving ground 4 (as narrated in the paragraph immediately above) bereft of submissions. That was peculiar because in paragraph 56.1 of his submissions in relation to ground 3 the review applicant asserted that his explanation about the sum of $855,000 being statute barred was given between paragraphs 59 to 68 of his submissions yet paragraphs 59 to 68 of his submission addressed part of ground 3 and most but not all of ground 5.
That left no substantive submissions about ground 4, being the ground in which the review applicant asserted that the arbitrator mistakenly found that part of the monies advanced by the second respondent was statute barred.
There being no submissions from the review applicant about ground 4 it is not possible for me to assess the merits of his contentions that part of the monies advanced by the second respondent was statute barred. In those circumstances ground four must be taken to have been asserted but was unsupported. In that state of affairs I have no choice but to conclude that ground 4 was not pressed so I dismiss it.
GROUND 5 AND THE HUSBAND’S CONTENTIONS
At paragraph 3 and 61 of his submissions the review applicant expressed ground five in the following terms –
3.Ground 5: The Arbitrator erred in law by giving no or inadequate reasons for finding at 222.3 that the Second Respondent is “most unlikely to call for or seek to compel a repayment of any amounts that may be recoverable from the Husband”.
…
60.In well-known decision of Bennett and Bennett (1991) FLC 92-191 at 78,266-78,267 the Full Court adopted the principles expounded in Sun Alliance Insurance Ltd v Massoud [1989] VR 8. The adequacy of the reasons will depend upon the circumstances of the case. But the reasons will be inadequate if:
61.1.the appeal court is unable to ascertain the reasoning upon which the decision is based; or
61.2. justice is not seen to have been done.
At its core the review applicant argued five main propositions under this ground of review (when he needed to rely on questions of law). The following were his contentions –
(a)at paragraph 64 of his submissions it was not open to the arbitrator to find that the second respondent was “most unlikely to call for or seek to compel a repayment of any amounts that may be recoverable from the husband”;
(b)such a finding is not explained and the absence of any adequate reasons is in error;[42]
(c)“difficulty” must be understood by reference to paragraph 220 of the arbitral reasons yet otherwise the “difficulty” is either unfounded or it was inconsistent with other evidence;
(d)the arbitrator’s statement in paragraph 201 of the arbitrator’s reasons about the matters demonstrated was inconsistent with two other items of evidence; and
(e)the arbitrator did not explain why, as the arbitrator was obliged to do, the husband’s mother obtained a deed of loan.
[42] In this regard the review applicant was contending that the absence of reasons or adequate reasons was an error of law as was held in Public Service Board of New South Wales v Osmond (1986) 159 CLR 656, 666, Pettitt v Dunkley [1971] 1 NSWLR 376 and Suburb L City Council v Vegan (2006) 67 NSWLR 372, 399 (at [130]).
The second issue to which I must refer related to paragraph 105 of the review applicant’s submissions. In it the review applicant submitted that if one or more of “the errors identified” were upheld, he sought an order remitting the matter “to a trial judge for trial directions and determination.” Self-evidently, the review applicant wanted orders under s 13K but not in the form specified in s 13K. That section does not contemplate remitting the proceeding. It must not be overlooked that this review application was not an appeal, as I held earlier in these reasons. Remitter is one option open to an appeal court if an appeal is allowed. Remitter is not stated in a s 13K review. Yet under s 13K, the options available upon determination of the review “a decree affirming, reversing or varying the award” is contemplated by the section.
Under s 13J the suite of available orders is broader. In addition to the possibility of the review court making a decree “affirming, reversing or varying a decree”, the judge is empowered to make such decree as the judge thinks appropriate, including a decree affirming, reversing or varying the award.
The husband wished an order, not for the award to be varied, but for the entire proceeding to be remitted for trial.
Let me say at once that I refuse that application.
No ground of review succeeded.
This arbitration was heard over several days from 30 August 2021 to 3 September 2021. Final submissions were provided on 15 October 2021. The parties were represented by counsel including senior counsel. The documentation was voluminous. The parties had a transcript, adding to the costs of the arbitration.
It has been said more than once that arbitration is not a dry run to litigation. In Chevron Australia Pty Ltd v CBI Constructors Pty Ltd[73] Martin J of the Supreme Court of Western Australia held as follows – [74]
…a 'multiple bites at the cherry' approach cannot be accepted. That would violate a cardinal policy of finality, recognised as essential to a coherent process of arbitral and, indeed, to curial decision making.
[73] [2021] WASC 323.
[74] Ibid (at [97]).
In a paper recently delivered by me I wrote the following –
Once parties recognise that by the arbitration process their case will be determined to finality, then they should approach the arbitration, not as a dummy run to some later court hearing, but as the true trial of their property dispute.[75]
[75] ‘National Arbitration List – A Practical Look Two Years On’ presented to the Resolution Institute by the Honourable Justice Wilson (Sydney, 2022), <National Arbitration List – A Practical Look At The Last Two Years | Federal Circuit and Family Court of Australia (fcfcoa.gov.au)>.
Further, various provisions of the Federal Circuit and Family Court of Australia Act 2021 prescribes the overarching purpose of family law practice and procedure to incorporate steps to effectively resolve disputes “at a cost that is proportionate to the importance and complexity of the matters in dispute.”[76] Those provisions include s 36(1)(c), s 67(2)(e) and s 190(2)(e). Those provisions were considered by a Full Court of which I was a member in Yarrow & Yarrow (No 2).[77] Having regard to the expenses already incurred by the parties, the time taken for the hearing of the arbitration and this review application, the uncertainty in any such remitted trial and the time involved in getting the case heard again, in my view it would be wholly antithetical to the overarching purpose in litigation in this court to adopt the course suggested by the review applicant.
[76] Section 67(2)(e).
[77] [2022] FedCFamC1A 171.
In any event, his proposal is entirely academic because he failed on all eight grounds of review.
THE S 106B POINT
On behalf of the second respondent it was argued that paragraph 2 of the arbitrator’s award was made in error by reason of the fact that the arbitrator lacked jurisdiction to make that order. It was argued on behalf of the husband’s mother that if the husband fails to pay the wife the sum of $1,920,043 as ordered, the allocation to the husband’s mother of $1,309,248 will be set aside. Counsel for the husband’s mother contended that “the most telling” error (his words) by the arbitrator was the arbitrator’s failure to expressly consider the husband’s mother’s property interest in the allocation of the corpus of the trust to her when setting aside the transaction. Mr Bartfeld KC said that such an approach was “clearly and directly contrary to the very words of s 106B” (his words). Mr Bartfeld KC contended that after the trust was established, it was used as an investment vehicle by the husband’s mother, thereby demonstrating why the allocation of corpus to the husband’s mother was a proper exercise of discretion by the husband as trustee rendering all the more important that the rights of the husband’s mother needed to be considered.
The husband’s mother submitted that the s 106B order should be set aside and that the wife’s application for that order should be dismissed.
In essence the husband’s mother argued that the arbitrator lacked jurisdiction to make the s 106B order. In elaborate written submissions dated 28 July 2022, exchanged on the morning of the hearing on 28 July 2022, Mr Bartfeld KC advanced a collection of arguments about the inapplicability of s 106B to an arbitration constituted in pursuance of s 10L of the Family Law Act. In précises form, those arguments may be distilled to the following –
(a)on 1 March 2021, McClelland DCJ referred this proceeding to arbitration, by consent, pursuant to s 13E of the Family Law Act;
(b)the parties appointed Mr EE as arbitrator;
(c)on 19 May 2021 the arbitrator made orders for the conduct of the arbitration;
(d)on 19 May 2021 the arbitrator expressly acknowledged that doubt existed whether a s 106B order could be made in an arbitration conducted pursuant to s 10L of the Family Law Act and no party nor even the arbitrator was aware of an authority in which the issue was considered;
(e)the arbitrator invited the parties to consider three options one of which was as follows –
1.4.3The parties consider and agree, notwithstanding the doubt that attends such position at this time, that all relief in the proceedings including the section 106B application(s) may be determined by way of a ‘relevant property or financial arbitration’ pursuant to the Act – in which case the parties will join in submission to the Court of a proposed order seeking to vary the Order such that the arbitration will then proceed as one within the meaning of section 10L(2)(b)
(f)on 15 June the parties approached the court for orders converting the arbitration to a “relevant property or financial arbitration”;
(g)implicit in that consent by the parties was an acceptance that the arbitrator had jurisdiction to make a s 106B order;
(h)the issue raised in respect of s 106B being determined in a s 10L arbitration is a question of law;[78] and
(i)yet irrespective of the parties’ agreement to jurisdiction, unless jurisdiction exists an arbitrator, just like a court, has no authority to deal with a matter.[79]
[78] Water Board v Moustakas (1994) 180 CLR 491 (at [13]).
[79] The husband’s mother relied on the decision of the High Court in Ridley v Whipp (1916) 22 CLR 381, 386 on that issue.
Mr Bartfeld KC conceded, quite properly in my view, that no party debated before the arbitrator the question of his jurisdiction to make orders under s 106B in an arbitration conducted under s 10L of the Family Law Act. Mr Bartfeld pointed out that except in the most exceptional of circumstances, it would be contrary to all principles to allow a party, after a case had been decided against him, to raise a new argument which, whether deliberately or by inadvertence, he failed to put during the hearing when he had an opportunity to do so.[80] Mr Bartfeld sought to distance himself from the self-evident rigour of the High Court’s observations in that regard by submitting that the question of the arbitrator’s jurisdiction “goes to the very heart of the exercise of power” (his words).[81]
[81] Paragraph 8 of the submissions of the husband’s mother dated 28 July 2022, erroneously dated 28 August 2022.
Before addressing the submissions concerning the historical genesis of s 106B as well as the context of s 10L of the Family Law Act, it is as well to make certain observations about jurisdiction on which the High Court has pronounced. I examined the point in Karjala & Gallard.[82] The following may be distilled as the principles that guide a court on the question of jurisdiction –
(a)the very first duty of any court in approaching a cause before it is to consider its own jurisdiction;[83]
(b)even if parties do not raise the issue of the court’s jurisdiction, it is competent and proper for the court to do so of its own motion;[84]
(c)parties cannot consent to jurisdiction if jurisdiction does not exist;[85]
(d)where highly contestable questions of fact arise upon which the court’s authority depends, the grant of jurisdiction carries with it power to determine the existence of facts upon which jurisdiction depends;[86] and
(e)if a court finds that it has no jurisdiction to determine the controversy presented in the application, then in the exercise of its implied jurisdiction, that court has authority to stay or dismiss the proceeding for want of jurisdiction, making a costs order.[87]
[82] [2020] FamCA 110.
[83] Hazeldell Ltd v Commonwealth (1924) 34 CLR 442, Federated Engine-Drivers and Firemen’s Association of Australasia v Broken Hill Pty Co Ltd (1911) 12 CLR 398, Old UGC Inc v Industrial Relations Commission of New South Wales (2006) 225 CLR 274, Robins v Incentive Dynamics Pty Ltd (1999) 91 FCR 423 and Zhang v Zemin (2010) 79 NSWLR 513.
[84] Official Trustee in Bankruptcy v Nedlands Pty Ltd (in liq) (2000) 99 FCR 554.
[85] Bunbury v Fuller (1853) 156 ER 47.
[86] DMW v CGW (1982) 151 CLR 491, R v Gray; ex parte Marsh (1985) 157 CLR 351, Re Macks; ex parte Saint (2000) 204 CLR 158, Kennon v Spry (2008) 238 CLR 366 and Public Service Association of South Australia Inc v Industrial Relations Commission of South Australia (2012) 249 CLR 398.
[87] Peacock v Newtown Marrickville and General Co-operative Building Society No 4 Ltd (1943) 67 CLR 25, In the Marriage of Yunghanns (1999) 24 Fam LR 400, Black v Black (2008) 38 Fam LR 503 and Norton v Locke (2013) 50 Fam LR 517.
Those authorities speak of the jurisdiction of the court. They say nothing about whether an arbitrator has coterminous powers on identical issues. It seems to me that the question is to be determined according to established orthodoxy when searching for the source of power enabling an arbitrator to determine anything. It is customarily two-fold – statutory and contractual. An arbitrator appointed to determine a lis pendens under the Family Law Act derives her or his power (hence, jurisdiction) from –
(a)the provisions of the Family Law Act referrable to family law arbitrations; and
(b)the express and implied contractual provisions arising from the arbitration agreement into which the parties have entered in relation to their arbitration.
Having regard to the statements of principle in the High Court that parties cannot agree to jurisdiction if none exists, in my view the most highly definitive source of jurisdiction is therefore not the terms of the parties’ arbitration agreement but rather the terms of the provisions of the Family Law Act that address jurisdiction in a s 13E arbitration on the one hand and in a s 10L arbitration on the other.
To that I am now turn.
Section 106B is headed “transactions to defeat claims”. It provides as follows –
106B Transactions to defeat claims
(1)In proceedings under this Act, the court may set aside or restrain the making of an instrument or disposition by or on behalf of, or by direction or in the interest of, a party, which is made or proposed to be made to defeat an existing or anticipated order in those proceedings or which, irrespective of intention, is likely to defeat any such order.
(1A) If:
(a)a party to a marriage, or a party to a de facto relationship, is a bankrupt; and
(b)the bankruptcy trustee is a party to proceedings under this Act;
the court may set aside or restrain the making of an instrument or disposition:
(c)which is made or proposed to be made by or on behalf of, or by direction or in the interest of, the bankrupt; and
(d)which is made or proposed to be made to defeat an existing or anticipated order in those proceedings or which, irrespective of intention, is likely to defeat any such order.
(1B) If:
(a)a party to a marriage, or a party to a de facto relationship, is a debtor subject to a personal insolvency agreement; and
(b)the trustee of the agreement is a party to proceedings under this Act;
the court may set aside or restrain the making of an instrument or disposition:
(c)which is made or proposed to be made by or on behalf of, or by direction or in the interest of, the debtor; and
(d)which is made or proposed to be made to defeat an existing or anticipated order in those proceedings or which, irrespective of intention, is likely to defeat any such order.
(2)The court may order that any money or real or personal property dealt with by any instrument or disposition referred to in subsection (1), (1A) or (1B) may be taken in execution or charged with the payment of such sums for costs or maintenance as the court directs, or that the proceeds of a sale must be paid into court to abide its order.
(3)The court must have regard to the interests of, and shall make any order proper for the protection of, a bona fide purchaser or other person interested.
(4)A party or a person acting in collusion with a party may be ordered to pay the costs of any other party or of a bona fide purchaser or other person interested of and incidental to any such instrument or disposition and the setting aside or restraining of the instrument or disposition.
(4AA)An application may be made to the court for an order under this section by:
(a)a party to the proceedings; or
(b)a creditor of a party to the proceedings if the creditor may not be able to recover his or her debt if the instrument or disposition were made; or
(c)any other person whose interests would be affected by the making of the instrument or disposition.
(4A)In addition to the powers the court has under this section, the court may also do any or all of the things listed in subsection 80(1) or 90SS(1).
(5) In this section:
disposition includes:
(a) a sale or gift; and
(b)the issue, grant, creation, transfer or cancellation of, or a variation of the rights attaching to, an interest in a company or a trust.
interest:
(a) in a company includes:
(i) a share in or debenture of the company; and
(ii)an option over a share in or debenture of the company (whether the share or debenture is issued or not); and
(b) in a trust includes:
(i)a beneficial interest in the trust; and
(ii)the interest of a settlor in property subject to the trust; and
(iii)a power of appointment under the trust; and
(iv)a power to rescind or vary a provision of, or to rescind or vary the effect of the exercise of a power under, the trust; and
(v)an interest that is conditional, contingent or deferred.
Section 106B is located in Part XIII of the Family Law Act.
Arbitration was introduced into the Family Law Act by the Courts (Mediation and Arbitration) Act 1991, Act no 113 of 1991. The form of wording was quite different yet by s 19D and s 19E the concepts of a court-ordered arbitration on the one hand and a private arbitration on the other first emerged. Section 19D, the court-ordered arbitration provision, was in the following terms –
Court may refer proceedings to arbitration
(1)In any Part VIII proceedings the court may, subject to the Rules of Court, make an order referring the proceedings, or any part of them, or any matter arising in them, to an approved arbitrator for arbitration in accordance with the Rules of Court.
(2)A court may make an order under subsection (1) with or without the consent of the parties.
(3)Where a court makes an order under subsection (1), it may, if necessary, adjourn the proceedings and may make such additional orders as it thinks appropriate to facilitate the effective conduct of the arbitration.
(4)Where a court makes an order under subsection (1), the arbitration must be carried out by the approved arbitrator in accordance with the Rules of Court.
(5)A party to an award in an arbitration carried out as a result of an order under this section may register the award, in accordance with the Rules of Court, in the court that made that order and the award, when so registered, has effect as if it were a decree made by that court.
Several matters will be immediately apparent from s 19D. They include the following –
(a)the section applied to any Part VIII proceeding (including, most particularly, a s 79 proceeding);
(b)the section spoke of “an approved arbitrator”;
(c)an order could be made referring the proceeding or any part of a Part VIII proceeding to arbitration “with or without the consent of the parties”;
(d)additional directions could be made by the court to facilitate the effective conduct of the arbitration; and
(e)registration of the award.
Many of those provisions are replicated in the current iteration of Part IIIB Division 4 of the Family Law Act.
Section 19E, the private arbitration provision, was configured differently to its current iteration yet the essential components of its provisions were replicated in s 10L. In s 19D(3) the subject matter of a private arbitration was defined by reference to the defined term “dispute”. That word, and hence the phrase “the private arbitration of a dispute” meant a Part VIII proceeding, any part of such proceeding, a matter arising in such a proceeding or (s 19D(3)(d)), “a dispute about a matter with respect to which such proceedings could be instituted”.
Section 19E was as follows –
Private arbitration
(1)A court having jurisdiction under this Act may, on application by a party to the private arbitration of a dispute, make such orders as the court thinks appropriate to facilitate the effective conduct of the arbitration.
(2)A party to an award made in a private arbitration of a dispute may register the award, in accordance with the Rules of Court, in a court having jurisdiction under this Act and the award, when so registered, has effect as if it were a decree made by that court.
(3) In this section:
‘dispute’ means:
(a) Part VIII proceedings; or
(b) any part of such proceedings; or
(c) any matter arising in such proceedings; or
(d)a dispute about a matter with respect to which such proceedings could be instituted.
When the arbitration provisions recorded in ss 19D and 19E were enacted, s 106B did not exist. Provisions largely similar to s 106B were found in the then operative s 85. Yet s 85 was repealed by Act No 143 of 2000. However, when s 19D and s 19E were enacted s 85 was operative. Section 85 was located in Part VIII and so was appropriately the subject of a s 19D or s 19E arbitration because of the reference in each of s 19D and s 19E to Part VIII disputes or part thereof.
Chronologically, s 85 was repealed and s 106B enacted by Act No 143 of 2000, which commenced on 27 December 2000. Section 106B, while making similar provisions to s 85, was removed from Part VIII and placed instead in Part XIII, enforcement of decrees. In other words, on and from 27 December 2000 a s 106B claim ceased to be captured –
(a)by s 10L(2)(a) within the meaning of a s13E arbitration; and
(b)by s 10L(2)(b) within the meaning of a relevant property or financial arbitration because Part XIII is not mentioned in either as being an “arbitration” for the purposes of s 10L(1).
Section 19D and s 19E of Act No 113 of 1991 were repealed and replaced in 2006 by Act 46 of 2006 styled the Family Law Amendment (Shared Parental Responsibility) Act. Schedule 4 Part 3 of that Act introduced the provisions of s 10L as well as, relevantly, s 13E of the Family Law Act.
In s 10L(2)(b)(i) of the current iteration of the Family Law Act, s 106A is among the provisions of the Act applicable to an arbitration other than a s 13E arbitration. It will be immediately apparent that no corresponding inclusion of s 106B appears in s 10L(2)(b)(i).
In those circumstances Mr Bartfeld KC put forward a strident submission about the consequences of that legislative regime on the arbitrator’s consideration of s 106B in this case. It was as follows –
19.It is therefore submitted that on any construction of the legislation, the arbitrator does not have jurisdiction to make an order under s. 106B. The legislature changed the Act to remove the jurisdiction from Part VIII and then it reinstated jurisdiction in respect of s. 106A only. The legislative intention cannot be clearer.
Before examining the events of this case and the consequences of the arbitrator’s orders and reasons in respect of s 106B, it is utile to make certain observations about the appropriate manner in which a s 10L is to be construed. As I held in Richter v Richter,[88] with any legislative provision –
(a)the primacy of words used in the legislation itself determines the proper construction of the legislation;[89]
(b)the primary objective of statutory construction is to construe legislation in such manner that is consistent with the language and purpose of the provisions of the statute;[90]
(c)the meaning of a particular legislative provision is to be determined by reference to the language of the instrument viewed as a whole;[91]
(d)the context, general purpose and policy of the provision of a piece of legislation as well as its consistency and fairness are surer guides to meaning than is the topic with which the legislation is concerned;[92]
(e)the process of construction must always begin with an examination of the context of the provision to be construed;[93]
(f)when construing a statute, a court must strive to give meaning to every word of the relevant provision;[94] and
(g)no sentence, clause or word is superfluous, void or insignificant if by any other construction they may all be made useful and pertinent.[95]
[88] Richter v Richter (2021) 63 Fam LR 102 (at [144]-[148])
[91] South West Water Authority v Rumble’s [1985] AC 609 and Cooper Brookes (Wollongong) Pty Ltd v Commissioner of Taxation (1981) 147 CLR 297.
[92] Project Blue Sky op cit (at [69]).
[93] Toronto Suburban Railway Co v Toronto Corporation [1915] AC 590, Minister for Lands (NSW) v Jeremias (1917) 23 CLR 322, K & S Lake City Freighters Pty Ltd v Gordon & Gotch Ltd (1985) 157 CLR 309.
[94] Commonwealth v Baume (1905) 2 CLR 405 and Chu Kheng Lim v Minister for Immigration Local Government & Ethnic Affairs (1992) 176 CLR 1.
[95] R v Berchet (1794) 89 ER 480.
It has been held that the task of statutory construction must begin with a consideration of the text itself.[96]
[96] Yanner v Eaton (1999) 201 CLR 351, Commonwealth of Australia v Yarmirr (2001) 208 CLR 1, Roy Morgan Research Centre Pty Ltd v Commissioner of State Revenue (Vic) (2001) 207 CLR 72, Stevens v Kabushiki Kaisha Sony Computer Entertainment (2005) 224 CLR 193, Carr v State of Western Australia (2007) 232 CLR 138, Director of Public Prosecutions (Vic) v Le (2007) 232 CLR 562 and Northern Territory v Collins (2008) 235 CLR 619.
Context is of critical importance in the construction of legislation. To my mind, even though s 85 of the repealed legislation was in terms largely consistent with the current s 106B, s 85 was a provision of Part VIII whereas s 106B is a provision of Part XIII. Part XIII of the Family Law Act is concerned with the enforcement of decrees of the court. A s 13E arbitration, as with a private arbitration under s 10L, does not confer authority on the arbitrator to engage in a consideration of the enforcement of decrees. For that matter, the arbitrator’s award does not even become a decree until its registration under s 13H which is necessarily possible only after the award has been made in accordance with regulation 67P. Once the award is registered and thereby becomes a decree of the court, that decree becomes enforceable in the same manner in which any other decree of the court is enforceable.
I take the view that an arbitrator appointed in pursuance of either s 13E or s 10L does not have power to determine issues under s 106B. I so hold because –
(a)s 13E arbitrations concern a Part VIII proceeding, a Part VIIIAB proceeding (other than a Part VIIIAB financial agreement proceeding) but a s 13E arbitration does not concern a Part XIII proceeding;
(b)s 10L(2)(b) arbitrations concern a part VIII proceeding, a Part VIIIA proceeding, a Part VIIIAB proceeding a Part VIIIB proceeding or a s 106A proceeding but not a s 106B proceeding;
(c)the application of principles of statutory construction set out above that guide courts on the proper construction of legislation do not allow for a s 13E arbitration or a private arbitration to incorporate a s 106B component as neither s 13E nor a s 10L(2) makes reference to either Part XIII or to s 106B; and
(d)the statutory jurisdiction of a family law arbitration having been defined by s 13E and s 10L, parties are not permitted to purportedly invoke jurisdiction by agreement where no such jurisdiction exists.
The arbitrator’s reasons at paragraph 1.3 of his decision on 19 May 2021 give some insight into the process of reasoning in which the arbitrator engaged. It was as follows –
1.3it is the view of the Arbitrator that doubt attends the question of whether an application pursuant to section 106B is one properly capable of being determined by way of arbitration pursuant to the Act:
1.3.1.such an application not being within the Parts of the Act enumerated in section 10L(2)(a) for the purpose of a ‘section 13E arbitration’; and,
1.3.2such an application not being within the Parts of the Act enumerated in section 10L(2)(b) for the purpose of a ‘relevant property or financial arbitration’ but an application which could be taken to comprise a ‘matter’arising in the proceedings;
and neither the Arbitrator nor any of the parties are aware of any decision by a Court on point at this time;
The arbitrator’s reference there recorded to his view that doubt exists about a s 106B claim being amenable to determination by him, was something of an erroneous expression of law. There was no doubt that the arbitrator lacked jurisdiction to hear and determine the s 106B component of the claim. The proposal at paragraph 1.4.3 of the arbitrator’s reasons was wrong. No scope whatsoever existed for the parties to consent or to agree to the arbitrator having jurisdiction where no jurisdiction existed. Even if parties had applied to me as the National Arbitration List judge for orders under s 13F, it would have been incompetent of me to order the s 106B component of the proceeding to be heard by the arbitrator as the arbitrator simply had no power to determine that issue.
On behalf of the husband’s mother, Mr Bartfeld KC submitted that the arbitrator made the s 106B order in error there being no jurisdiction for his purportedly making the order. He submitted that the order should be set aside. In my view, an order made without jurisdiction must be set aside for the simple reason that no power to make it existed.
The much more difficult question is the consequence of setting aside the s 106B order and whether, upon the s 106B order being set aside, the orders otherwise made by the arbitrator can stand on the basis that they are just and equitable. In many respects that depends on whether, once the s 106B order is set aside, it can be said, in accordance with principles espoused in Stanford v Stanford,[97] that the orders otherwise made by the arbitrator are just and equitable.
[97] (2012) 247 CLR 108.
On 6 December 2022 I called upon the parties in turn to make submissions on the consequences to the award should I hereafter be of the opinion that there was merit in the s 106B point. On behalf of the second respondent, Mr Barfeld KC submitted as follows –
(a)the arbitrator had no power to make any order in reliance upon or in pursuance of s 106B of the Family Law Act;
(b)under s 13J or s 13K the court (me on this review application) has power to vary the award;
(c)paragraph 2 of the arbitrator’s award should be deleted by reason of that paragraph having been purportedly made in the absence of power to make it; and
(d)otherwise the second respondent relied on earlier contentions in relation to the overall review application.
On behalf of the husband Ms Metherell of counsel submitted that the principle submissions on the review application had already been made and the husband awaited an adjudication of his review application.
On behalf of the wife Mr Blackah of counsel made a collection of submissions which call for addressing. Mr Blackah contended –
(a)the parties conducted themselves in the arbitration on the basis that the arbitrator in fact possessed the requisite power to make orders in reliance upon s 106B of the Family Law Act;
(b)in those circumstances, the parties are now estopped from contending that the arbitrator lacked power;
(c)further, the success or otherwise of the s 106B point advanced on behalf of the husband’s mother needs to be balanced against the delay that has beset this litigation since its commencement in 2019, and that delay causes prejudice to the wife;
(d)the husband and the husband’s mother have unclean hands in that the s 106B component of the case arose from a transfer by the husband to his mother of the corpus of a trust for no consideration in order to defeat the wife’s claim in the proceeding;
(e)one option available is for me to do nothing; and
(f)the arbitration provisions of the Family Law Act are a code, as was held in Griffiths & Griffiths,[98] and even if the arbitrator lacked power under s 106B, s 13J nevertheless prescribes an array of orders that might be made on this review application.
[98] [2022] FedCFamC1F 219.
In reply Mr Barfeld KC submitted that equitable principles of the sort on which Mr Blackah relied have no place in any consideration of jurisdiction, which I took him to mean the juridical power to determine.[99]
[99] Mark Leeming, Authority to Decide: The Law of Jurisdiction in Australia (Federation Press, 2022)
It seemed to me that the arbitrator had no power to make any determination or orders made under s 106B, as has already been addressed. The parties themselves had no power to agree to the arbitrator purportedly invoking power he did not possess. That left for consideration the equitable propositions advanced by Mr Blackah. Before taking each in turn it is important to understand that none was the subject of a considered or developed argument. No written submissions were filed nor a request for time made so as to prepare them. No authority was cited to support any contention put, especially in relation to the estoppel contention. Had reliance been placed on Walton Stores (Interstate) Ltd v Maher,[100] then I would have required submissions on the acts said to constitute the representation, the reliance and the detriment. No submissions were put to me on point. The unclean hands point was faintly pressed, it having been uttered once only by Mr Blackah indicating to me that he placed no real store in the point.
[100] (1988) 164 CLR 387.
At no stage was an argument put about whether those equitable propositions can impinge upon the threshold question of jurisdiction.
Having considered the submissions advanced on 6 December 2022, I adhere to the view that the arbitrator had no power to make orders as were purportedly made in paragraph 2 of the award and I set that paragraph aside.
Therefore, as all grounds of review failed I make orders dismissing the husband’s review application and I set aside paragraph 2 of the arbitrator’s orders.
I certify that the preceding two hundred and six (206) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Wilson. Associate:
Dated: 9 December 2022
- AGLC
- Vida & Vida [2022] FedCFamC1F 968
- Case
- [2022] FedCFamC1F 968
- Decision Date
CaseChat Overview and Summary
The court held that the principles in Rosati were not mandatory and that the failure to apply them did not constitute an error of law. The court further held that the onus was on the parties to adduce evidence in relation to tax implications, and that it was not the role of the arbitrator to source such evidence. The court found that the husband had not provided any evidence in relation to the tax implications of the proposed division of assets, and that the arbitrator was therefore not required to consider such implications.
In light of the above, the court dismissed the application for judicial review. The court held that the arbitrator had not erred in law and that the application was without merit. The court did not make any orders in relation to the application, as it was dismissed.
Orders
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Background
Background to the litigation
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Evidence
Evidence Before The Court
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Ratio Decidendi
Legal Principle Established
As her separate submissions concerning ground 2(c), the wife put forward further contentions about the effect of the proposed order on the husband’s earning capacity. She submitted – (a)the arbitrator considered all relevant issues at paragraphs 34.4, 91 and 275 of the arbitrator’s reasons, recognising that the pool to be divided was $7,478,806 and providing that the husband was ordered to receive 10% more than the wife;(b)the arbitrator recognised the husband’s rental income at paragraph 286 of the arbitrator’s reasons; and (c)the arbitrator’s orders do not make provision for the sale of real property owned by N Company.CONSIDERATION OF GROUNDS 1 AND 2 In this case, the review applicant erroneously elevated the four propositions expressed in Rosati to a point resembling that of a statute. In particular, he contended that by failing to apply the four propositions in Rosati, the review applicant demonstrated the existence of an error of law in respect of the arbitrator’s failure to apply the first limb. I reject the argument that the first (or any) limb of Rosati represented a statement of doctrine such that an error of law is enlivened by a failure to apply it. By its express words, the first limb is written in highly conditional (not mandatory) terms, such as “whether the incidence of capital gains tax should be taken into account ...varies according to the circumstances of the case”. To my mind, that does not impose an obligation, nor does any failure to do as the first limb invites but does not require, constitute an error of law. The review applicant contended in paragraph 39 of his written submissions that “had the arbitrator sought evidence” about tax and other effects, then certain consequences would have followed. It must not be overlooked, as was recorded in paragraph 293 of the arbitrator reasons, the arbitrator stated that – (a)the husband did not nominate any property which might be realised;(b)despite deposing to his seeking tax advice, the husband advanced no evidence about tax issues that may arise upon the realisation of his interests; and (c)no evidentiary basis existed on which any potential liability to tax ought to have been taken into account. In my view, the review applicant erroneously purported to cast the onus upon the arbitrator to source evidence about the husband’s taxation liability. Arbitrations are adversarial. The arbitrator adjudicates on competing contentions.[18] The arbitrator does not source evidence for the parties.[18] Air Canada v Secretary of State for Trade [1983] 2 AC 394, Sainsbury's Supermarkets Ltd and others v Mastercard Inc and others (European Commission intervening) [2020] 4 All ER 807 and Al-Medinni v Mars UK Ltd [2005] EWCA Civ 1041. The arbitrator found as a factual matter that the husband adduced no evidence about the taxation implication of any property sales. It fell to the husband to have done so. It is common in cases in this court where tax issues (or even potential tax issues) are involved for parties to obtain advice on the point and to lead sophisticated evidence on those taxation issues.[19] [19] Aitken & Aitken (No 3) [2022] FedCFamC1F 496.