Zao & Lee - [2019] FamCAFC 169

FAMILY COURT OF AUSTRALIA

ZAO & LEE

[2019] FamCAFC 169

FAMILY LAW – APPEAL – PRACTICE AND PROCEDURE – Summary dismissal – Where the primary judge dismissed the appellant wife’s application for summary dismissal – Where the appellant wife sought summary dismissal on the basis that the respondent husband failed to provide adequate disclosure – Where the appellant wife submits that the primary judge erred by failing to admit exhibits to affidavits into evidence – Where the contents of the exhibits to the affidavits were before the Court and were taken into account by the primary judge – Application of r 11.02 and r 13.14 of the Family Law Rules 2004 (Cth) – Where no substantial injustice flows from any error of the primary judge – Where leave to appeal was required but was not sought in the Notice of Appeal – Where leave was granted to amend the Notice of Appeal to include an application for leave to appeal – Where the application for leave to appeal is dismissed.

FAMILY LAW – APPEAL – COSTS – Where the respondent husband did not comply with the Registrar’s direction for a costs schedule to be filed and served no later than seven days prior to the first day of the sittings in which the appeal is listed – Where the respondent husband did not comply with the Registrar’s direction for a schedule of costs to be sought at the scale prescribed by the Family Law Rules 2004 (Cth) – Where there was no explanation for the failure to comply – Where the Court will not extend time for the costs schedule to be filed in accordance with the Registrar’s directions – No order as to costs.

Family Law Act 1975 (Cth) ss 79, 94AA
Family Law Rules 2004 (Cth) rr 10.12, 11.02, 13.14, 15.08, 22.53
Family Law Regulations 1984 (Cth) reg 15A

Adam P Brown Male Fashions Pty Ltd v Phillip Morris Inc (1981) 148 CLR 170; [1981] HCA 39
Black and Kellner (1992) FLC 92-287; [1992] FamCA 2
Ebner & Pappas (2015) FLC 93-643
Lindon v The Commonwealth (No 2) (1996) 136 ALR 251; [1996] HCA 14
Re Luck (2003) 203 ALR 1; [2003] HCA 70
Re the Will of F B Gilbert (1946) 46 SR (NSW) 318; 63 WN (NSW) 176
Weir & Weir (1993) FLC 92-338; [1992] FamCA 69

APPELLANT:

Ms Zao

RESPONDENT:

Mr Lee

FILE NUMBER:

SYC

8556

2015

APPEAL NUMBER:

2019

DATE DELIVERED:

4 October 2019

PLACE DELIVERED:

Sydney

PLACE HEARD:

Sydney

JUDGMENT OF:

Strickland, Aldridge & Watts JJ

HEARING DATE:

24 September 2019

LOWER COURT JURISDICTION:

Family Court of Australia

LOWER COURT JUDGMENT DATE:

27 February 2019

LOWER COURT MNC:

[2019] FamCA 99

REPRESENTATION

SOLICITOR FOR THE APPELLANT:

Legal & Company Solicitors

COUNSEL FOR THE RESPONDENT:

Ms Cohen

SOLICITOR FOR THE RESPONDENT:

Ren Zhou Lawyers

Orders

Application for leave to appeal the orders made by Rees J on 27 February 2019 be dismissed.
There be no order as to costs.

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 Zao & Lee 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 Number: EA 30 of 2019
File Number: SYC 8556 of 2015

Ms Zao

Appellant

And

Mr Lee

Respondent

REASONS FOR JUDGMENT

Introduction

On 28 March 2017, Mr Lee (“the husband”) filed an Initiating Application commencing property proceedings against Ms Zao (“the wife”). The husband sought orders that the wife transfer two properties in Australia to him and that he be declared to be the sole owner of two properties in City B, China. In the wife’s Response filed on 24 April 2017, the wife sought an order that she be declared to be the sole owner of a property in Australia and that the husband pay her the sum of $250,000.
On 5 September 2018, the wife filed an Application in a Case seeking the summary dismissal of the husband’s Initiating Application pursuant to r 11.02 of the Family Court Rules 2004 (Cth) (“the Rules”) on the basis that he had persistently failed to provide proper disclosure.
On 27 February 2019, a judge of the Family Court of Australia dismissed the wife’s Application in a Case.
A Notice of Appeal was filed by the wife on 25 March 2019. The notice did not seek leave to appeal but clearly such leave was required as it is an appeal from an interlocutory order that does not relate to the welfare of a child (s 94AA of the Family Law Act 1975 (Cth) (“the Act”); reg 15A of the Family Law Regulations 1984 (Cth) (“the Regulations”)). An order for summary dismissal or refusing it is an interlocutory order (Re Luck (2003) 203 ALR 1 at [9]; Ebner & Pappas (2015) FLC 93-643 at [29]–[33]).
Without objection from the husband, we permitted the solicitor for the wife to make an oral application to amend the Notice of Appeal filed on 25 March 2019 to include an application for leave to appeal. He indicated that the basis for such leave was raised by the grounds of appeal themselves.
The discretion to grant leave to appeal is unfettered, however, the court will generally approach the matter by looking to see whether the decision the subject of the appeal is attended by sufficient doubt so as to justify reconsideration and whether a substantial injustice would arise if that reconsideration was not undertaken, assuming the decision to be wrong.
There is no doubt that courts exercise a “particular caution in reviewing decisions pertaining to practice and procedure” (Adam P Brown Male Fashions Pty Ltd v Phillip Morris Inc (1981) 148 CLR 170 (“Adam P Brown”) at [9] per Gibbs CJ, Aickin, Wilson & Brennan JJ). In Adam P Brown, their Honours expressly approved the following statement of Sir Frederick Jordan in Re the Will of F B Gilbert (1946) 46 SR (NSW) 318 at 323:
… I am of opinion that, … there is a material difference between an exercise of discretion on a point of practice or procedure and an exercise of discretion which determines substantive rights. In the former class of case, if a tight rein were not kept upon interference with the orders of Judges of first instance, the result would be disastrous to the proper administration of justice. The disposal of cases could be delayed interminably, and costs heaped up indefinitely, if a litigant with a long purse or a litigious disposition could, at will, in effect transfer all exercises of discretion in interlocutory applications from a Judge in Chambers to a Court of Appeal.
The judges in Adam P Brown then added that “[i]t is safe to say that the question of injustice flowing from the order appealed from will generally be a relevant and necessary consideration.”
In the present matter no substantive rights were affected as the application for summary dismissal did not succeed.
Turning now to the relevant history of the matter, the husband filed a Financial Statement on 28 March 2017 and a Financial Questionnaire dated 20 June 2018.
Orders for the production of documents by both parties, or by the husband, were made on 3 May 2017, 6 July 2017, 13 December 2017 and 24 April 2018.
On 28 February 2018, the husband’s solicitor informed the Court that the husband had been unable to obtain copies of documents despite having travelled to China to do so.
After recording these matters her Honour concluded as follows:
25.The wife’s solicitor deposed to extensive correspondence forwarded to the husband’s solicitors seeking disclosure by documents and attempts to arrange a valuation of the husband’s assets in China.
26.It is the wife’s case that the husband has still not complied with the various orders requiring disclosure in relation to his assets in China and I accept that he has not.
There is no doubt that the evidence disclosed that the husband had assets in China, including property and a share portfolio, and that he was reporting income for tax purposes.

The Appeal

Did the primary judge err by failing to admit into evidence or look at and consider the exhibits to the affidavits of the wife and the wife’s solicitor filed on 5 September 2018? (Grounds 1 and 2)

It is convenient to deal with these two grounds together.
The gravamen of the complaint is that the primary judge refused to receive the exhibits to the affidavits of the wife and the wife’s solicitor filed in support of the application for summary dismissal and did not have regard to them. The first proposition is clearly correct but the second is wrong.
In accordance with r 15.08 of the Rules, the exhibits were not filed with the affidavits. During the hearing, on three occasions, the solicitor for the wife asked the primary judge to receive the exhibits and her Honour refused to take them.
The affidavit of the wife’s solicitor filed on 5 September 2018 describes in significant and accurate detail what is in each of the exhibits. It is clear that her Honour had read the affidavit (Transcript 25 February 2019, p.6 line 44 to p.7 line 26).
The solicitor for the wife had also apprised her Honour of the contents of the exhibits, which consisted largely of letters passing between the lawyers for the parties, in the course of his submissions, albeit in general terms. Consequently, on each occasion that the exhibits were proffered, the primary judge enquired as to the need to receive them given that the contents of them had been described in the affidavit of the wife’s solicitor and during the course of submissions. No adequate response was received.
For example, the primary judge said:
HER HONOUR: I assume that I can be confident that when you’ve told me what was in the correspondence, that’s what was, in fact, in the correspondence. Why do I actually need to read the letters?
[SOLICITOR FOR THE WIFE]: Yes, your Honour…
(Transcript 25 February 2019, p.3 lines 12–14)
…
HER HONOUR: I accept absolutely that you’ve been accurate when you describe the letters.
(Transcript 25 February 2019, p.7 lines 9–10)
The solicitor for the wife, thus forewarned that the primary judge was relying on his description, referred very briefly to nine requests for disclosure during his oral submissions. At no time in those submissions did he refer to the content of any letter in detail or read any passages from the exhibits.
The wife submitted in her Summary of Argument that the exhibits contain “vital context for the manner in which the [h]usband has been requested by the Court to produce documents… and vital context for the continuous evasion and dodging on the question of production … which are vital to understand the scope of the failure to produce by the [h]usband” (Wife’s Summary of Argument filed on 22 July 2019, paragraph 7).
However, the primary judge expressly referred to each of the orders requiring disclosure at [16]–[18], [20] and [22]. Obviously, her Honour was aware of their terms.
As we have already recorded above, her Honour also expressly referred to the “extensive correspondence” at [25] and found that the husband had not complied with the orders. It is not at all obvious in what way the primary judge failed to understand the scope of the husband’s failure to produce documents.
It is difficult to see what the admission of the exhibits themselves into evidence would add to these findings. The content of the exhibits was described in the affidavit of the wife’s solicitor and during the course of submissions in circumstances where it had been made plain that the primary judge was relying on those descriptions. At no stage did the solicitor for the wife suggest that his descriptions were inadequate or explain why the exhibits themselves needed to be read even after the primary judge expressly enquired as to the need to receive them.
Thus, the contents of the exhibits were before the Court and were taken into account by the primary judge. In the circumstances, the physical receipt of the documents was not required.
In our opinion no error has been identified.

Did the primary judge err by finding that the husband’s persistent failure to give disclosure is not a ground for summary dismissal? (Ground 3)

It is to be recalled that the wife’s Application in a Case filed on 5 September 2018 only sought orders pursuant to r 11.02 of the Rules but was expressed in the terms of summary dismissal. Rule 11.02 of the Rules permits the Court to take a number of steps, including an order dismissing all or part of a party’s case, where a party does not comply with the Rules, the Family Law Regulations 1984 (Cth) or a procedural order. That is, of course, a form of summary dismissal albeit not expressed in those terms.
At the hearing before the primary judge, there was some discussion as to the law to be applied. Not surprisingly, since the phrase was used in the wife’s Application in a Case, the primary judge sought submissions on the law relating to summary dismissal. The following exchange occurred:
[SOLICITOR FOR THE WIFE]: Yes, your Honour. Family Law Rules 2004, 11.02.
HER HONOUR: Well, that’s a different issue. That’s not summary dismissal.
[SOLICITOR FOR THE WIFE]: Yes. Rule 13.14, though, your Honour, consequence of non-disclosure:
If a party does not disclose a document as required under these rules, the court may stay or dismiss all the party’s case.
The – as I’ve mentioned, there is a history of non-disclosure of documents by the husband. Consequently, my client has not been able to answer his case. He has put a case on. The onus is on him to comply with his duty of disclosure, and ‑ ‑ ‑
(Transcript 21 February 2019, p.8 lines 22–34)
Rule 13.14 is similar to r 11.02 in that if a party does not disclose a document as required under the Rules, the Court may stay or dismiss all or part of the party’s case.
The discussion between counsel and the Court then moved to a discussion of the assertion made by the husband (made a few days earlier when the husband’s lawyer appeared and the wife’s did not) that he had disclosed all that he could. The solicitor for the wife informed the court that the wife had been able to obtain copies of the documents that she had sought from the husband. We would infer that the submission intended to be made was that if the wife could obtain them, so too could the husband.
Her Honour then said:
[HER HONOUR]: And in relation to your application pursuant to rule 11.02, I can’t see, for my own part, how, in a jurisdiction which has no pleadings and where no affidavits have been filed, the court could make the findings that you assert.
(Transcript 21 February 2019, p.8 lines 25–27)
Ultimately, the response by the wife’s solicitor was that the onus was on the husband to prove his case and that he had failed to give proper disclosure.
It can be said at the outset that there was some confusion as to the relief sought by the wife. It was repeatedly described by the wife’s solicitor as an application for summary dismissal but he referred only to r 11.02 and r 13.14 of the Rules.
Her Honour was of the view that this was an application for summary dismissal and in her reasons referred to r 10.12 of the Rules which provides:
A party may apply for summary orders after a response has been filed if the party claims, in relation to the application or response, that:
(a) the court has no jurisdiction;
(b) the other party has no legal capacity to apply for the orders sought;
(c) it is frivolous, vexatious or an abuse of process; or
(d) there is no reasonable likelihood of success.
We pause to say that both this statement and her Honour’s comment to like effect in the course of the hearing were somewhat misplaced because both r 11.02 and r 13.14 of the Rules provide for a form of summary dismissal.
Her Honour continued:
33.It is not submitted in the wife’s case that any of the provision of Rule 10.12 could be argued to apply in the instant case.
34.Rather, as the solicitor for the wife deposed, her case is that:
Over a period of over one and a half years, the case has not proceeded in any substantial manner owing to the [husband’s] continuous disregard of the Court’s rules as to disclosure and complete disregard for its orders.
35.That is not a ground for summary dismissal.
36.It could not be argued, based on the husband’s Financial Questionnaire, that he does not have a case to advance. He claims to have contributed $680,000 to the acquisition and conservation of the assets in Australia.
37.His alleged persistent failure to give proper disclosure is not a ground for summary dismissal.
38.The application for summary dismissal will be dismissed.
Her Honour was correct in saying that non-disclosure was not a basis for summary dismissal under r 10.12 of the Rules.
However, the primary judge also considered r 11.02 of the Rules and after stating its terms, said:
40. No directions have been made for the filing of affidavits for the purpose of a final hearing. The matter has not been allocated to a docket and sits in the pool of matters waiting for allocation to a judge’s docket.
41.Procedural fairness would dictate that before the Court took the step of determining the proceedings in the absence of the husband, it would be necessary to give him the opportunity to file any affidavit evidence and to participate in a hearing.
42If the husband chooses not to file any evidence or to participate in the preparation of the matter for trial, a judge might determine that the matter should be heard on an undefended basis. Such a determination, at this stage, would be premature.
In doing so the primary judge clearly had in mind r 11.02(2)(c) of the Rules which empowers the court to determine the case as if it were undefended. There was no direct reference to the power to dismiss all or part of the proceedings (r 11.02(2)(a) of the Rules). Her Honour was, somewhat confusingly, led to this consideration by the following submission:
[SOLICITOR FOR THE WIFE]: On that basis, your Honour, we ask that the case be dismissed. We ask for costs and if you could determine the case as if it were undefended, in accordance with rule 11.02.
HER HONOUR: Well, which is it that you’re asking? Are you asking for it to be dismissed, or are you asking it to be set down as an undefended hearing?
[SOLICITOR FOR THE WIFE]: We’re asking for it to be dismissed, your Honour.
(Transcript 25 February 2019, p.7 lines 30–37)
In any event, although her Honour did not refer directly to r 13.14 of the Rules, it is in similar terms to r 11.02 and it is difficult to see how reference to that particular rule would have altered the outcome in any way.
Rule 11.02 and r 13.14 permit an order dismissing all or part of a party’s case and in the latter case, on the ground of non-disclosure. However, r 13.14 also provides that where a party does not disclose a document, that party must not offer the document or present evidence of its contents at a hearing without the other party’s consent or the Court’s permission. Also if they do not disclose a document as required under the rule, they may be liable to proceedings for contempt and costs (r 13.14 (a) of the Rules).
Dismissal of proceedings is therefore a last resort.
Further, in coming to a determination of what property orders are just and equitable, the court may take into account a party’s failure to disclose relevant documents (Black and Kellner (1992) FLC 92-287; Weir & Weir (1993) FLC 92-338).
It follows that if the proceedings proceed the husband’s failure to disclose documents will not be ignored and may have severe consequences for him.
As her Honour pointed out and as is well established, courts are justifiably reluctant to summarily dismiss proceedings (see, for example, the discussion by Kirby J in Lindon v The Commonwealth (No 2) (1996) 136 ALR 251 at 256). This reluctance is taken into account at [41] of the reasons where the primary judge expresses reluctance in denying the husband the opportunity to be involved in the proceedings without first giving him the opportunity to adduce evidence and presumably, if necessary, for the strength of that evidence to be assessed.

It is difficult, for the above reasons and the confused approach to the basis of the wife’s application, to identify any error in the approach of the primary judge. The most that could be said is that her Honour failed to address r 11.02(2)(a) and r 13.14(b) of the Rules insofar as they provide for dismissal.
It is necessary though to consider whether any substantial injustice would arise if leave was not granted, supposing the decision was based on a wrong principle.
To our minds, a very significant matter in this regard is the wife’s Response to the husband’s Initiating Application. If the husband’s Initiating Application is dismissed at this stage, the Response would remain on foot as a source of jurisdiction to make property settlement orders which would not be limited to the orders sought by the wife. The Court is required to make an order which is appropriate, just and equitable.
It is true that the husband’s degree of participation in these proceedings may be limited by further order of the court which will, no doubt, be influenced by the husband’s attitude towards the conduct of the proceedings in the future. That, however, is not a matter for today.
We repeat that the wife has now obtained, through her own efforts, the documents that she sought from the husband.
It follows that no substantial injustice flows from any error of the primary judge.
It is to be recalled that the only order sought by the wife was for summary dismissal. The same result would ensue for the above reasons when r 13.14 of the Rules is directly applied, which would be our approach in any re-exercise of the discretion if leave was to be granted and the appeal allowed. The continuation of the proceedings pursuant to the Response, thereby depriving any dismissal of the Initiating Application of any practical effect is a compelling consideration in favour of dismissing the wife’s application.
It follows that even if leave to appeal was granted and the appeal allowed, a re-exercise of the discretion would, in our opinion, inevitably result in the same outcome. No substantial injustice has been demonstrated.

Did the primary judge err by failing to consider the full extent of the husband’s non-disclosure and non-compliance with orders? (Ground 4)

The submissions made under this ground merely invite this Court to substitute the primary judge’s decision with its own. The fact that other judges, would have come to a different view on the exercise of a discretion does not demonstrate error.

Conclusion

For the reasons we have given above, we do not consider that her Honour’s decision was arrived at by the erroneous application of principle or fact as asserted by the wife. The decision cannot be described as unreasonable or wholly unjust.
Even if it assumed that the primary judge erred by not receiving the exhibits themselves or by applying r 10.12 instead of r 11.02(2)(a) and r 13.14(b) of the Rules, and leave to appeal was granted and the appeal allowed, on any re-exercise of the discretion, we would dismiss the wife’s application because it lacks any utility.
We are therefore of the view that any such errors have not led to any substantial injustice.
We are fortified in that view when regard is had to the restraint to be shown when dealing with appeals from orders as to practice and procedure and the confused manner in which the application was run before her Honour.
The application for leave to appeal will be dismissed.

Costs

The husband sought an order for costs and relied upon a costs schedule that had, apparently, been forwarded to the Registry at 9:50 am on the morning of the hearing of the appeal.
Unfortunately, there are a number of difficulties with the costs schedule.
On 15 May 2019, a Registrar directed that any party seeking a costs order was to file and serve, no later than seven days prior to the first day of the sittings in which the appeal is listed, a schedule of the costs to be sought at the scale prescribed by the Rules.
The husband did not comply with this direction, and sought to tender a costs schedule at the hearing of the appeal.
That costs schedule was not served on the wife.
The costs schedule includes a claim for costs incurred “from 5 September 2018 before the Family Court” and thus not in relation to the appeal.
The claim for costs is not calculated at scale as required by the direction of the Registrar. It is, therefore, in effect, a claim for indemnity costs. An order for costs on that basis cannot be made because r 22.53(3) of the Rules was not complied with and because there are no exceptional circumstances which would justify such an order.
The purpose of the direction as to the provision of costs schedules is to permit the court hearing the appeal to determine, where possible, the quantum of any costs ordered to be paid, thereby avoiding the parties having to undertake the expensive and time consuming task of having the costs assessed.
It is essential for the rule to be complied with so that the Court and, most importantly, the person against whom the costs are sought, are given time to consider the schedule and to be in a position to make informed submissions in response to the application for costs.
The failure to comply with the direction has entirely forestalled that process.
There was no explanation proffered for the failure to comply. The upshot was that we declined to extend time for the costs schedule to be filed in accordance with the Registrar’s directions. The consequence is that there will be no order as to costs.

I certify that the preceding seventy (70) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court (Strickland, Aldridge & Watts JJ) delivered on 4 October 2019.

Associate:

Date: 4 October 2019