ZAGAR & BACALL
[2020] FamCAFC 268
•6 November 2020
FAMILY COURT OF AUSTRALIA
| ZAGAR & BACALL | [2020] FamCAFC 268 |
| FAMILY LAW – APPEAL – PROPERTY – COSTS CERTIFICATES – Appeal against final property settlement orders – Procedural fairness – Error of law – Appeals allowed by consent – No order as to costs – Costs certificates granted to the parties – Reasons given as to the grant of costs certificates. |
| Federal Proceedings (Costs) Act 1981 (Cth) ss 3(1)(j), 6, 9 |
| Concrete Pty Ltd v Parramatta Design & Developments Pty Ltd (2006) 229 CLR 577; [2006] HCA 55 Cramer v Davies (1997) 72 ALJR 146 Kioa v West (1985) 159 CLR 550; [1985] HCA 81 Royal Guardian Mortgage Management Pty Ltd v Nguyen (2016) 332 ALR 128; [2016] NSWCA 88 |
| APPELLANT: | Mr Zagar |
| RESPONDENT: | Ms Bacall |
| FILE NUMBER: | SYC | 8282 | of | 2017 |
| FIRST APPEAL NUMBER: | EAA | 92 | of | 2020 |
| SECOND APPEAL NUMBER: | EAA | 102 | of | 2020 |
| THIRD APPEAL NUMBER: | EAA | 116 | of | 2020 |
| DATE DELIVERED: | 6 November 2020 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney (via video link) |
| JUDGMENT OF: | Ainslie-Wallace, Ryan & Aldridge JJ |
| HEARING DATE: | 14 October 2020 |
| LOWER COURT JURISDICTION: | Family Court of Australia |
| LOWER COURT JUDGMENT DATES: | 14 May 2020, 17 July 2020 and 23 July 2020 |
| LOWER COURT MNC: | [2020] FamCA 350; [2020] FamCA 595; [2020] FamCA 598 |
REPRESENTATION
| COUNSEL FOR THE APPELLANT: | Mr Othen with Ms Tabbernor |
| SOLICITOR FOR THE APPELLANT: | Neil Jamieson & Associates |
| COUNSEL FOR THE RESPONDENT: | Ms Coulton |
| SOLICITOR FOR THE RESPONDENT: | O’Sullivan Legal |
Orders made on 14 October 2020
IT IS ORDERED THAT:
Appeal Nos. EAA 92 of 2020; EAA 102 of 2020 & EAA 116 of 2020 (“the appeals”) be allowed.
The Orders of a judge of the Family Court of Australia of 18 June 2020, 17 July 2020 and 23 July 2020 be set aside.
The Court grants to the appellant a costs certificate pursuant to the provisions of s 9 of the Federal Proceedings (Costs) Act 1981 (Cth), being a certificate that in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the appellant in respect of the costs incurred by her in relation to the appeal.
The Court grants to the respondent a costs certificate pursuant to the provisions of s 6 of the Federal Proceedings (Costs) Act 1981 (Cth), being a certificate that in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the respondent in respect of the costs incurred by him in relation to the appeal.
IT IS ORDERED BY CONSENT THAT:
There be no order as to costs for the appeal or the substantive proceedings.
The appellant shall pay the respondent the sum of $1,100,000 (“the settlement sum”) as follows:
a.An initial sum of $100,000 as the respondent may direct in writing as soon as practicable but in any event within twenty-eight (28) days of the date of these Orders; and
b.The balance of the settlement sum, being $1,000,000 to be directed as follows:
i.$350,000 to O’Sullivan Legal; and
ii.$650,000 to the respondent or as she directs in writing
as soon as practicable but in any event within ninety (90) days of the date of these Orders, subject to the respondent’s compliance with Orders 7 and 9.
By no later than the date the appellant complies with Order 6 the respondent shall vacate the property situated at [B Street, Suburb C] in the State of New South Wales (“the Suburb C property”) and remove all of her personal effects.
Within ninety (90) days the appellant shall take all steps and sign all documents required to refinance the [KK Bank] mortgage secured against the title to [the Suburb C property] into his sole name, and to the extent required by [KK Bank] the respondent shall do all acts and things and sign all documents required to cause the discharge of the said [KK Bank] mortgage.
Simultaneously with the appellant complying with Orders 6 and 8 the respondent shall transfer to the appellant all of her right, title and interest in [the Suburb C property] and take all steps to ensure all caveats she has registered against the titles to the [the Suburb C property], [X Street, Suburb Y] in the State of New South Wales or [G Street, Suburb C] in the State of New South Wales (collectively, “the three properties”), are removed at or before the time of transfer.
Except as provided for by these Orders, the parties are each declared the sole owners in equity and at law to all items of property and financial resources including superannuation, shares, motor vehicles, chattels and money in back accounts held in their respective names.
Default
Within sixty (60) days of the date of these Orders the appellant shall nominate which of the three properties will be sold in the event that the appellant is in default of Orders 6 and 8 (“the nominated property”).
In the event that the appellant does not nominate a property to be sold pursuant to Order 11 then [the Suburb C property] shall be the nominated property.
Within fourteen (14) days of the appellant’s default of Orders 6 and 8 or within such further time as the parties may agree in writing (“default”), the parties must do all acts and things and sign all documents necessary to effect the sale of the nominated property by public auction as follows:
a.Within seven (7) days of the date of the default the parties do all acts and sign all documents necessary to appoint a real estate agent as agreed between them, or failing agreement, the appellant to nominate three (3) real estate agents and the respondent to choose one (1) from the list (“the agent”);
b.The parties shall cooperate with all reasonable requests by the real estate agent including facilitating inspections and maintaining the home in good order;
c.The price or reserve price for auction be agreed by the parties, or failing agreement, as nominated by the agent;
d.The auction shall take place on a date no later than four (4) weeks after the default, unless the parties otherwise agree in writing;
e.If the nominated property fails to sell at the auction it shall be auctioned again on a date recommended by the agent but in any event within six (6) weeks of the date of the prior auction at a reserve price 5 per cent below that at the immediately preceding auction unless the parties otherwise agree in writing and this paragraph shall apply repeatedly until the nominated property is sold;
f.The auction shall be conducted by an auctioneer as agreed, or failing agreement, as nominated by the agent; and
g.The conveyance of the property shall be conducted by a solicitor or any other such qualified person as agreed, or failing agreement, as nominated by the agent.
On completion of the sale of the nominated property the proceeds of sale shall be applied in the following order of priority:
a.Payment of any real estate agent’s commission, marketing expenses, auctioneer’s fees and solicitor’s expenses;
b.Discharge of any mortgages secured against the nominated property;
c.Payment of any outstanding Council rates or charges or levies due in relation to the nominated property;
d.Payment of any outstanding monies owed pursuant to Order 6, to be directed in accordance with that Order; and
e.In payment of the balance to the appellant.
Restraints, Injunctions and Indemnities
From the date of these Orders the appellant shall:
a.Make all mortgage repayments for the properties as and when they fall due;
b.Indemnify and keep indemnified the respondent in relation to the [KK Bank] mortgage;
c.Make all payments in relation to council and water rates and charges levies on each property, including any arrears as at the date of these Orders.
The parties are hereby restrained from further mortgaging, encumbering, disposing or dealing with the properties except for the purposes of complying with these Orders.
Except as provided for by these Orders, each of the parties are to remain solely liable for any debt or liability held in their name and, if required, release and indemnify the other party in respect of any debts, liabilities, demands or claims arising from any debt or liability their name.
Further Orders
Both parties shall do all acts and things and sign all documents necessary to comply with and to implement these Orders.
If either party fails or neglects to sign a document required to give effect to these Orders then the Registrar of the Court is appointed pursuant to s 106A of the Family Law Act 1975 (Cth) to sign any such document which a party has failed or neglected to sign.
All outstanding applications in the appeals and the substantive proceedings SYC 8282 of 2017 are hereby dismissed.
Note: The form of the order is subject to the entry of the order in the Court’s records.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Zagar & Bacall has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).
| THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT SYDNEY |
Appeal Numbers: EAA 92 of 2020; EAA 102 of 2020 & EAA 116 of 2020
File Number: SYC 8282 of 2017
| Mr Zagar |
Appellant
And
| Ms Bacall |
Respondent
REASONS FOR JUDGMENT
Mr Zagar (“the husband”) appealed final property settlement orders made by a judge of the Family Court on 18 June 2020. He further appealed against his Honour’s refusal to stay his orders pending appeal and against costs orders made on 23 July 2020.
At the appeal hearing, Ms Bacall (“the wife”) agreed that the appeals must be allowed and the orders of the primary judge were thus set aside. The parties were able to resolve the property settlement issues between them and consent orders were made by the Full Court on 14 October 2020 resolving those issues.
The Full Court also made orders for costs certificates in favour of the husband and wife and we indicated that reasons supporting those orders would be given at a later date. These are those reasons.
That the primary appeal be allowed was inevitable as his Honour had failed to afford the parties procedural fairness. Want of procedural fairness cuts to the heart of the integrity of the judicial process and orders made in those circumstances must be set aside (Concrete Pty Ltd v Parramatta Design & Developments Pty Ltd (2006) 229 CLR 577 at 612; Royal Guardian Mortgage Management Pty Ltd v Nguyen (2016) 332 ALR 128 at [9]–[10]).
Where an appeal is allowed by reason of an error of law on the part of the primary judge and in circumstances where the Court would not otherwise make an order for costs inter partes, it may make orders for costs certificates.
Before making orders for costs certificates, the Court must be satisfied as to three matters pursuant to s 6 and s 9 of the Federal Proceedings (Costs) Act 1981 (Cth):
·the existence of a Federal appeal;
·that the appeal has succeeded on a question of law; and
·that the court concerned should have “heard” the appeal.
Two of those three conditions are plainly met here. The appeals are clearly a “Federal appeal[s]” (see paragraph (j) of the definition of “Federal appeal” in s 3(1) of the Federal Proceedings (Costs) Act 1981 (Cth)). Despite the truncated nature of the proceedings before us, the appeals have been “heard” in the relevant sense in that they were “listed before the Court so that it may dispose of the appeal in a public and formal way” (Cramer v Davies (1997) 72 ALJR 146 per Kirby J at [18]). The hearing here went further than the description offered by his Honour with argument advanced by counsel for each of the parties.
The third requisite condition, that the appeal which was allowed by consent nevertheless “succeed[ed] on a question of law”, requires consideration.
There was little in dispute between the parties in the proceedings before the primary judge. His Honour was provided with a balance sheet on which the values of the various assets were agreed and the net asset position was agreed to be $4,225,571. We note that in ascribing values to the various assets, the parties agreed that the former marital home be valued but as to the other assets, the parties agreed on their values without the necessity of formal valuations. The agreed values were included in the balance sheet.
Nonetheless, over many, many paragraphs, his Honour considered the various properties of the parties and their ascribed values, criticising the parties, and in particular the husband along the way for apparently failing to provide adequate documentary support for historical transactions such as the purchase of property, the substance of which was not in dispute nor was the fact of the transaction relevant to the determination of a fact in issue.
In particular, the primary judge was highly critical of what he concluded was the husband’s failure to provide adequate disclosure.
As the husband noted in his Summary of Argument filed 24 September 2020:
19.… His Honour’s reasons are littered with assertions as to the inadequacy of husband’s disclosure – see paragraphs [166], [209], [248], [277] – [353] (being somewhat of an academic essay on the topic) and [359]. Apart from these bare assertions, His Honour does not in his reasons state what documents or evidence has not been properly disclosed by the husband, refer to any evidence of non‑disclosure or discovery or seek this evidence from the parties.
…
22.His Honour does not link the husband’s purported lack of disclosure to any principled basis for inflating the property pool in the way that he did…
It was not part of the wife’s case that the husband had failed to make proper disclosure, albeit there was a minor disagreement about the correct amount of his superannuation, although an agreed figure was ascribed to it on the balance sheet. Certainly the husband was not cross-examined to suggest that he had failed to provide adequate disclosure. Nor were his Honour’s concerns raised with the parties at any time during the hearing. That his Honour had been troubled by the husband’s asserted failure to make proper disclosure was first disclosed in his Honour’s reasons.
His Honour said:
359.In my view, a division of property should be ordered. Once done, in my view the [wife] is entitled to a sum equating to 40% of the value of property and the [husband] is entitled to a sum equating to 60% of the value of property. On current figures, in my view, such an order for the division of property is warranted as it is just and equitable to make such an order. So far as the precise amount to be divided is concerned, it is almost impossible to say having regard to the appalling disclosure that the [husband] has provided. Using the figures mentioned above in the passage immediately above “contributions”, on one view the net asset position of the parties was a little over $4.3 million. Applying 40% to that figure, the sum thereby derived is $1,720,000. I have real reservations that the figure of $4.3 million is accurate in view of the disclosure discrepancies and the lack of accurate valuation evidence. In view of the fact that this s 79 settlement is a “once and for all” figure, it would be wholly erroneous to make an order based on suspect figures. It must not be forgotten that in Merritt & Richards (No. 2), by reason of the disclosure deficiencies the court awarded the entirety of the property to the person to whom defective disclosure was given. In the circumstances of this case such a result would be extreme. Yet the position remains, that I feel no confidence whatsoever that the figures given by the [husband] bear any relationship to reality. But as other authority canvassed above instructs, the trial judge must do the best he or she can do in the circumstances of the case. The figures given by the [husband] were estimates, on his own admission. True, those estimates were agreed by the [wife]. But they remained estimates in respect of which proper valuation evidence should have been given but was not given. This led me to question the validity of the [husband’s] assertion that the net property pool was $4.3 million. I hold grave suspicions that the [husband] was playing down the actual value of assets so that the [wife’s] entitlements to them would be correspondingly diminished. In my view the net pool of assets was nearer $5.3 million than it was to $4.3 million. Forty percent of that figure was $2,120,000. In my judgment, that is more likely the real net figure on which this property division should proceed.
(Emphasis added)
Thus, consistent with his findings about the husband’s failure to disclose and in order to address his suspicions that the values of the various properties were understated, the primary judge “created” an additional $1 million which he “added back” to the parties’ balance sheet and based his orders on that figure.
It is therefore immediately apparent that his Honour’s determination on this point was beset by error both as to law and as to procedural fairness.
The husband submitted:
22.… At [347] – [353] His Honour refers, by reference to the authorities, the consequences of a breach of the duty with the “uppermost limit” being to transfer to one party the whole of the asset pool. There is no authority cited for the proposition that a consequence of non‑disclosure is to exercise the Court’s discretion to “add-back” an arbitrary amount to the pool as His Honour did (see Annexure A of the Orders). This is not a case, for example, where it has been suggested that the husband has property in existence which has not be [sic] disclosed in which an estimated value could be applied.
(Husband’s Summary of Argument filed 24 September 2020)
As we have said, his Honour’s views about the husband’s failure to disclose and his suspicion that the husband was downplaying the value of the assets in the balance sheet was not raised at all with the parties during the taking of evidence nor during submissions.
It is a fundamental principle that where the rules of procedural fairness apply to a decision-making process, the party liable to be directly affected by the decision is to be given the opportunity of being heard. Furthermore, and relevant to the particular denial of procedural fairness relied on in the primary appeal, it is a fundamental principle of justice that a person is entitled to know the case against him or her and is to be given the opportunity of replying to it (Kioa v West (1985) 159 CLR 550 at 582). Here, his Honour did not do that and so deprived the husband of procedural fairness.
Thus the appeals were allowed on an error of law and costs certificates for the appeals were ordered.
I certify that the preceding twenty (20) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court (Ainslie-Wallace, Ryan & Aldridge JJ) delivered on 6 November 2020.
Associate:
Date: 6 November 2020
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