This is a sample (posted 21 June 2023) of “Latest Notable Cases”, which is posted monthly with live links for members at the Members’ Home Page under Members’ Practice News. Also available at our Members’ Home Page (along with our E-Book, our up-to-the-minute family law and child support practice news, our online forms and precedents and our free legal help line) is our online members’ Archive of all our back issue indexed case notes (assembled by topic and with live links to AustLII), useful papers and client brochures.
Property – Order requiring husband to pay lump sum to acquire wife’s interest in parties’ company set aside – Failure to consider husband’s capacity to pay – Inadequate reasons given for rejecting husband’s proposal for sale of the company – Full Court disagreed with judge’s statement that “it’s not [the court’s] job to draft the orders; it’s the representatives’ jobs”
In Aitken [2023] FedCFamC1A 69 (12 May 2023), the Full Court (McClelland DCJ, Austin and Altobelli JJ) heard a husband’s appeal from three decisions of Wilson J that ultimately required the husband to pay the wife a fixed sum in exchange for her holding in D Pty Ltd.
After their 28 year marriage, the parties divorced in 2020. The husband and wife were directors and shareholders of D Pty Ltd which conducted the manufacture and repair of equipment. The asset pool was about $80 million ([4]).
On 15 July 2022, Wilson J delivered reasons for judgment after the final hearing of the substantive proceedings. His Honour required that the parties “bring in a minute that gives effect to these reasons” by 27 July 2022 ([6]). The parties could not agree on a minute and the proceedings were relisted.
After handing down his second reasons for judgment on 7 September 2022, his Honour ordered that the parties “bring in a minute giving effect to these reasons” by 28 September 2022 ([14]). The parties remained unable to reach agreement as to a joint minute.
On 8 November 2022, after giving his third reasons, his Honour ordered that the parties “bring in a final minute to reflect the orders made herein” ([20]).
The husband appealed the substantive orders. He argued that the Court failed to give adequate reasons and that his incapacity to pay the wife had not been considered, when his proposal for the sale of D Pty Ltd was rejected ([38], [39]).
Regarding the minutes, the Full Court said (from [28]):
“The approach of the primary judge in delivering multiple sets of reasons before making final orders was problematic. The three sets of reasons … all run to many pages in length and … cloud rather than clarify his reasoning process.
[29] From the start of the trial in March 2022, the parties were in agreement that their net assets should be divided between them in equal shares. …
[30] The essential issues for the primary judge were the identification and valuation of the parties’ assets and liabilities and, in the adjustment process, whether D Pty Ltd (or its assets) should be sold or, instead, acquired by the husband from the wife. … [H]is Honour determined that the husband should buy-out the wife’s shareholding in D Pty Ltd.
[31] The transcript of proceedings on 16 November 2022 reflects an unfortunate tension between counsel and the primary judge. Senior counsel for the wife contended that the primary judge had discharged his judicial function and was functus officio, despite not having made final orders. Senior counsel for the husband … voiced concern that the primary judge had failed to discharge his judicial function by delegating the responsibility of drafting orders that reflected his initial decision to the parties. This was in circumstances where the husband contended that compliance with the orders was beyond his capacity and … potentially exposed the husband to bankruptcy proceedings or even a possible finding of contempt.
[32] There was … merit to the concerns expressed to the primary judge … about his Honour’s insistence upon having the parties agree upon the property settlement orders that should be made.
[33] The ‘judgment’ required of his Honour was that embodied in the orders made to determine the cause of action under Pt VIII of the Family Law Act 1975 (Cth) (“the Act”), not the multiple sets of reasons published to explain findings made about contentious issues (Driclad Pty Ltd v Federal Commissioner of Taxation [1968] HCA 91 … ; Commonwealth v Bank of NSW [1949] HCA 47 … ).
[34] … [H]is Honour was bound to make orders that were appropriate, just and equitable to adjust the parties’ property interests and, as far as was practicable, finally end their financial relationships: ss 79 and 81 of the Act. To achieve that end, the primary judge was already equipped with the amended suites of orders proposed by the parties within the context of an agreement that they should share their wealth equally.
[35] Repeatedly delegating responsibility to the parties to conceive the nature and form of the orders required to quell the controversy between them arguably amounted to an abdication of judicial duty. … [W]e respectfully disagree with the statement made by the primary judge during the course of the proceedings that ‘it’s not [his Honour’s] job to draft the orders; it’s the representatives’ jobs’.
[36] Other than in limited and exceptional circumstances, we caution against the practice of delegating to parties the responsibility to agree upon the nature and form of orders required to give effect to views expressed by a trial judge in reasons for judgment. … ”
The Full Court continued (from [57]):
“We are … satisfied that the husband did draw the attention of the primary judge to his contention that he lacked the ability to pay the lump sum amount to the wife in order to acquire her interest in D Pty Ltd. It was clearly an issue of significance in the proceedings that required consideration by the primary judge. …
( … )
[62] Nowhere did the primary judge find that the husband had assets, in his sole name, available to satisfy the requirement … that he pay the wife the sum of $26,751,023 within 60 days of the date of the final orders.
( … )
[64] … [T]he evidence was that, as at the date of the orders, the husband had insufficient property in his own name that would enable him to comply with the orders without access to property in which he did not enjoy exclusive title …
( … )
[68] … [W]e are satisfied that the capacity of the husband to pay the lump sum amount to the wife within the specified 60 day time period was a ‘fundamental and obvious’ issue that required, but did not receive, adequate consideration in the proceedings …
( … )
[84] … [T]he primary judge had an obligation to clearly explain why, despite the submission by the husband that he lacked the capacity to pay the required sum to the wife, the primary judge made Order 23 which required the husband to do just that. … [T]he primary judge also had a corresponding obligation to explain why he rejected the husband’s submission that, as an alternative to the wife’s proposal, an order be made for D Pty Ltd to be sold in order to raise sufficient funds to pay the wife the amount of $26,751,023. The primary judge did not provide reasons addressing the capacity to pay issue in that context.”
The appeal was allowed and the proceedings remitted for re-hearing. No cost orders were made given that the parties were “well resourced” ([90]).
Our latest notable cases this month also include summaries of cases that involve the following:
Property – Leave to proceed sought seven years out of time – Court erred by finding a mortgage debt of $430,000 and failed to consider appellant’s disability and limited employment opportunities
Property – Kennon – Court erred by failing to explain how the husband’s acts of violence led to wife’s non-financial contributions being made difficult, distressing and more arduous
Property – Final hearing proceeds as undefended – Court’s failure to allow self-represented wife (who had been refused an adjournment) to make submissions was a denial of procedural fairness
Children – Consent orders were ultra vires as they permitted mother to reopen proceedings subject to her obtaining a psychiatric assessment and purported to exclude the operation of Rice & Asplund
Child Support – Applicant’s 14 year delay between obtaining informal DNA test and s 107 application (not to be assessed in respect of costs of child) – Insufficient explanation for delay not dispositive – Rigid application of legal principles in error
Procedure – Whether proceedings were properly commenced by litigation guardian as manager of the applicant’s affairs when the validity of power of attorney was the subject of litigation before the Supreme Court – Death of applicant prior to appointment of litigation guardian