Daily & Daily (No 2)

[2023] FedCFamC1A 122

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

(DIVISION 1) APPELLATE JURISDICTION

Daily & Daily (No 2) [2023] FedCFamC1A 122  

Appeal from:

Daily & Daily [2023] FedCFamC1F 222

Appeal number:

NAA 103 of 2023

File number:

ADC 4606 of 2018

Judgment of:

AUSTIN, TREE & christie JJ

Date of judgment:

3 August 2023

Catchwords:

FAMILY LAW – APPEAL – FINANCIAL AGREEMENT – Where the primary judge set aside the spouses’ financial agreement pursuant to s 90K(1) of the Family Law Act 1975 (Cth) (‘the Act’) – Where the primary judge found the second respondent legal corporation was negligent and liable in damages to the husband – Where the proceedings at first instance are currently adjourned for assessment of the damages and determination of the spouses’ property settlement – Where the husband asserts the primary judge erred by relying upon s 90K(1)(d) of the Act to set aside the financial agreement – Where the husband seeks a remedial order to confirm the financial agreement is set aside, but by deleting the reference to s 90K(1)(d) of the Act within the order – Whether the second respondent has standing to contest the appeal – Where the Court accrued jurisdiction at first instance to determine the damages claim conjunctively with the challenge to the financial agreement – Where the common law causes of action relate to the concurrent and pending matrimonial cause between the spouses – Where the text of the appealed order does not match the reasons for making it – Where the reasons of the primary judge make clear the financial agreement was set aside because it is void for uncertainty – Where the husband appeals on a false premise – Where the husband fails to demonstrate an appealable error – Where the grammatical errors within the appealed order may be corrected by resort to the slip rule – Appeal dismissed – Appealed order varied to correct error within its text – Notice of Contention dismissed – Costs – Where the appeal was pointlessly pursued – Husband to pay costs of the wife and the second respondent in relation to the appeal in a fixed sum.

Legislation:

Family Law Act 1975 (Cth) Pts VIII, VIIIA, ss 4, 71A, 90G, 90K, 90KA, 117

Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) rr 10.13, 12.17, 13.10

Cases cited:

Ainsworth v Criminal Justice Commission (1992) 175 CLR 564; [1992] HCA 10

Bateman’s Bay Local Aboriginal Land Council v Aboriginal Community Benefit Fund Pty Ltd (1998) 194 CLR 247; [1998] HCA 49

Daily & Daily (2020) FLC 93-999; [2020] FamCAFC 304

Daily & Daily [2023] FedCFamC1A 76

Driclad Pty Ltd v Federal Commissioner of Taxation (1968) 121 CLR 45; [1968] HCA 91

R v Ireland (1970) 126 CLR 321; [1970] HCA 21

R v Ross-Jones; Ex parte Green (1984) 156 CLR 185; [1984] HCA 82

Number of paragraphs:

45

Date of hearing:

3 August 2023

Place:

Melbourne

Counsel for the Appellant:

Mr Robertson SC & Ms Boyle

Solicitor for the Appellant:

Jordan & Fowler

Counsel for the First Respondent:

Ms Pyke SC

Solicitor for the First Respondent:

Norman Waterhouse Lawyers

Counsel for the Second Respondent:

Mr Doyle SC & Ms Barnett

Solicitor for the Second Respondent:

Barry Nilsson Lawyers

ORDERS

NAA 103 of 2023
ADC 4606 of 2018

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
DIVISION 1 APPELLATE JURISDICTION

BETWEEN:

MR DAILY

Appellant

AND:

MS DAILY

First Respondent

R LAWYERS
Second Respondent

order made by:	AUSTIN, TREE & CHRISTIE JJ
DATE OF ORDER:	3 august 2023

THE COURT ORDERS THAT:

1.The appeal is dismissed.

2.The Notice of Contention filed on 9 June 2023 is dismissed.

3.Order 1 made on 31 March 2023 is amended to provide as follows:

The financial agreement between the spouses, dated 21 July 2005, is set aside.

4.The appellant shall pay the first respondent’s costs of and incidental to the appeal, fixed in the sum of $15,000.00.

5.The appellant shall pay the second respondent’s costs of and incidental to the appeal, fixed in the sum of $15,000.00.

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).

IT IS NOTED that publication of this judgment by this Court under a pseudonym Daily & Daily has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

EX TEMPORE
REASONS FOR JUDGMENT

AUSTIN, TREE & CHRISTIE JJ

1. This appeal is brought by the husband from an order made on 31 March 2023 by a judge of the Federal Circuit and Family Court of Australia (Division 1) under Pt VIIIA of the Family Law Act 1975 (Cth) (“the Act”) setting aside the spouses’ financial agreement dated 21 July 2005.

2. The appeal is curious because, while the husband sought to resist the financial agreement being set aside at first instance, he now wants the financial agreement to remain set aside. If the appeal succeeds, he wants a remedial order made to confirm the financial agreement is set aside, but deleting the reference to s 90K(1)(d) of the Act as appears in the appealed order. He abandoned his former proposal for the reference to s 90K(1)(d) to be supplanted by a reference to s 90K(1)(b) instead.

3. At an earlier interlocutory hearing, the husband refuted the proposition that the appeal is futile. Nonetheless, all but Grounds 1 and 2 of the appeal were then struck out (Daily & Daily [2023] FedCFamC1A 76). Contrary to the husband’s representations at the time, the remaining two grounds were not amended with further particulars. We granted the husband leave to rely upon an Amended Notice of Appeal dated 18 July 2023 (which was not filed within the time allowed by r 13.10(1) of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) (“the Rules”)), but it did not amend the residual grounds of appeal in any way. It only amended the form of relief sought by the husband.

4. The appeal was opposed by both respondents.

5. For the reasons which follow, the appeal is dismissed, though the appealed order is varied to correct errors within its text.

   BACKGROUND

6. The appealed order was made in these terms:

   1.Pursuant to s 90K(1)(d) and/or s 90KA of the Family Law Act 1975 (Cth), the financial agreement entered into between the parties dated 21 July 2005 be set aside.

7. The order resolved only one aspect of the wider controversy between the spouses, by setting aside their financial agreement and thereby circumventing the ouster of jurisdiction, for which s 71A of the Act would otherwise provide. Consequently, jurisdiction now exists under Pt VIII of the Act for the primary judge to move ahead and determine the financial cause between the spouses by way of discretionary property settlement orders.

8. The second respondent is the legal corporation by which the husband’s former lawyers carry on practice. The husband originally engaged the second respondent to draft a binding financial agreement between the spouses. In the event of the financial agreement between the spouses being set aside, the husband seeks damages against the second respondent, either for negligence or breach of contract, to compensate for his loss caused by the wife accruing any better financial remedy under Pt VIII of the Act than she would have received if the financial agreement were binding upon the spouses.

9. The primary judge set out to first determine the status of the financial agreement between the spouses (at [22]–[25]). The remainder of the proceedings, concerning the wider financial cause between the spouses (at [1] and [3]) and the husband’s conditional tortious and contractual claims for damages against the second respondent (at [1], [2] and [4]), would then be addressed as necessary (at [26]–[27]).

10. After concluding the financial agreement should be set aside, the primary judge then proceeded to make findings which will affect the determination of the financial cause between the spouses under Pt VIII of the Act (at [112]–[286]) and the common law causes of action between the husband and the second respondent (at [287]–[375] and [382]–[415]). As was observed in the interlocutory judgment (Daily & Daily [2023] FedCFamC1A 76 at [16], [20] and [23]), those findings do not support an appeal now, but will be open to challenge once orders are finally made to determine the parties’ rights in respect of those particular causes of action.

11. This appeal concerns only the preliminary judgment under Pt VIIIA of the Act, setting aside the spouses’ financial agreement.

    STANDING

12. The subject matter of the appeal raises a question about standing because the second respondent filed a Notice of Contention asserting the order setting aside the spouses’ financial agreement should nonetheless be preserved by reliance upon s 90K(1)(d) of the Act, even if the husband is able to demonstrate appealable error by the primary judge in making the appealed order. The second respondent did not press the Notice of Contention in the appeal, but still sought to make submissions.

13. The appealed order only operates to remove the impediment to the spouses’ resort to the jurisdiction under Pt VIII of the Act for discretionary financial relief, which situation posits this question: what standing does the second respondent have to contest an appeal in respect of an order which only affects the rights of other parties?

14. To have standing, the second respondent must have “a real interest” in the litigious controversy (Bateman’s Bay Local Aboriginal Land Council v Aboriginal Community Benefit Fund Pty Ltd (1998) 194 CLR 247 at [37]; Ainsworth v Criminal Justice Commission (1992) 175 CLR 564 at 581–582 and 595–596). In ordinary circumstances, the second respondent would not have any interest at all in the discrete “matrimonial cause” (as defined in paragraph (eaa) of the definition in s 4(1) of the Act) between the spouses seeking an exercise of power under Pt VIIIA of the Act to determine the status of their financial agreement, exemplified by the fact it could neither have initiated nor intervened in such narrow statutory proceedings.

15. However, the circumstances at hand are not ordinary. Following the husband’s joinder of the second respondent to the proceedings, by an Amended Initiating Application filed in August 2021, his common law causes of action against the second respondent were heard in conjunction with the federal proceedings between the spouses by the accrual of jurisdiction to do so (at [100]). The second respondent was heard on all issues before the primary judge within the original proceedings, including the original matrimonial cause. The second respondent sought a declaration that the spouses’ financial agreement was binding, cross-examined the husband, and made final submissions about the status of the financial agreement.

16. The common law causes of action transformed into “matrimonial causes” (as defined in paragraph (f) of the definition in s 4(1) of the Act), as they relate to the concurrent and pending matrimonial cause between the spouses (falling within paragraph (eaa) of the definition). The conferral of jurisdiction in relation to such ancillary causes follows upon the jurisdictional validity of the related pre-existing matrimonial cause (R v Ross-Jones; Ex parte Green (1984) 156 CLR 185 at 196–197 and 209–210).

17. His Honour has not yet made orders to finally determine the next financial cause between the spouses (falling within paragraph (ca) of the definition) under Pt VIII of the Act, or the common law causes of action between the husband and the second respondent, but inevitably, the findings made to this point in time will later be deployed to determine such causes.

18. The second respondent contends for its standing to be heard in the appeal because the text of the appealed order expressly refers to s 90K(1)(d) of the Act and indirectly affects the causes of action pursued against it by the husband. It postulates the case in this way: if the financial agreement is set aside for uncertainty (s 90K(1)(b)), for which outcome the husband contends, the finding will assist him prosecute his tort and contract claims against the second respondent because it was engaged to draft a coherent and binding financial agreement, whereas if the financial agreement is instead set aside due to material change in child-related circumstances which will cause hardship if the agreement is not set aside (s 90K(1)(d)), for which alternate outcome it contends, then the manner in which it drafted the financial agreement cannot be causally related to any financial loss sustained by the husband having his property interests instead determined by the Court under Pt VIII of the Act.

19. In the appeal, the husband seeks to challenge the existing finding of the wife’s “hardship” – the objective being the removal of any justification for the financial agreement being set aside under s 90K(1)(d) of the Act. For reasons yet to be explained, that is an attack upon a finding which was ultimately immaterial to the judgment. Conversely, the second respondent wants to argue for the validity and retention of the “hardship” finding and ought be permitted to do so. The husband voluntarily joined the second respondent to the appeal, suggesting he believes the second respondent has standing in it, so he cannot now be heard to the contrary.

20. Nevertheless, in contesting the appeal, the spouses tended to conflate different things: the operative effect of the appealed order, the text of the appealed order, and the factual findings made by the primary judge.

    THE APPEAL

21. The two remaining grounds of appeal are pleaded in this way:

    1.That the learned trial judge erred in setting aside the financial agreement entered into between the parties dated 21 July 2005 pursuant to s90K(1)(d) of the Family Law Act 1975.

    2.That the learned trial judge erred in finding that hardship pursuant to s90K(1)(d) had been established.

    (As per the original)

22. Both grounds assert the primary judge erred by relying upon s 90K(1)(d) of the Act to set aside the financial agreement.

23. The first ground does not identify the nature of the asserted error, but the second ground, which really only particularises the first ground, alleges the primary judge erred by finding the wife established “hardship” as an element of the invocation of s 90K(1)(d) of the Act.

24. As already indicated, the husband initially sought to enforce the financial agreement, but now contrarily contends for retention of the order setting it aside, though by reliance instead upon s 90K(1)(b) of the Act.

25. The relevant statutory provisions provide as follows:

    90K Circumstances in which court may set aside a financial agreement or termination agreement

    (1)A court may make an order setting aside a financial agreement or a termination agreement if, and only if, the court is satisfied that:

    …

    (b)       the agreement is void, voidable or unenforceable; or

    …

    (d)since the making of the agreement, a material change in circumstances has occurred (being circumstances relating to the care, welfare and development of a child of the marriage) and, as a result of the change, the child or, if the applicant has caring responsibility for the child (as defined in subsection (2)), a party to the agreement will suffer hardship if the court does not set the agreement aside; or …

26. It is best to begin with an explanation of the context of the judgment and an overview of the primary judge’s findings and conclusions.

27. In an earlier judgment delivered in 2020, the primary judge found the financial agreement should be set aside pursuant to s 90K(1)(d) of the Act, but that judgment was set aside by the Full Court in an appeal successfully brought by the husband and the proceedings were remitted for re-hearing by the same judge (Daily & Daily (2020) FLC 93-999).

28. In the re-hearing, his Honour noted there had been no challenge within the antecedent appeal to the former findings made of the financial agreement being non-compliant with s 90G(1)(b) of the Act, but that the financial agreement could still be found to bind the spouses pursuant to application of s 90G(1A) of the Act (at [17], [327] and [376]–[380]). As his Honour noted though, such former findings became irrelevant if the financial agreement was found to be void for uncertainty (at [327] and [381]).

29. His Honour observed the Full Court’s corroborative expression of disquiet in the former appeal about whether or not the terms of the financial agreement were actually capable of clear understanding (at [21]). Perhaps for that reason, the construction of the financial agreement was the first issue to which his Honour turned. After examination of the text, the primary judge found the financial agreement was void for uncertainty (at [97] and [329]).

30. As his Honour acknowledged (at [25]), that finding ought have been sufficient to set aside the financial agreement under s 90K(1)(b) of the Act without any further enquiry, but his Honour then went on to address the issue of “hardship” asserted by the wife in support of her alternate claim for the financial agreement to be set aside pursuant to s 90K(1)(d) of the Act, finding she would suffer hardship if the financial agreement were not set aside (at [416]–[424]).

31. Without any further explication within the reasons for judgment, the primary judge then set aside the financial agreement, but by specifying within the text of the declaration that it was made in reliance upon either or both of ss 90K(1)(d) or 90KA of the Act, omitting any reference to s 90K(1)(b) of the Act.

32. Three observations are pertinent.

33. First, the reference to s 90KA of the Act in the order was an error as that provision is not a source of statutory power for the appealed order. Rather, that provision affirms the Court’s entitlement to resort to legal and equitable principles when determining whether a financial or termination agreement is valid, enforceable or effective and, if determined it is not, empowers deployment of legal or equitable remedies to save it from that consequence. Conversely, the statutory power to set aside such an agreement emanates exclusively from s 90K(1) of the Act. The mistaken reference within the declaration to s 90KA should be erased.

34. Secondly, the reference to s 90K(1)(d) of the Act within the text of the appealed order was unnecessary. Neither its inclusion within, nor its omission from, the text of the order makes any difference to the validity of the order. The power to make the order setting aside the financial agreement derives from s 90K(1) of the Act, the various sub-sections of which specify the discrete grounds upon which the power afforded by s 90K(1) may be wielded. The particular sub-section which motivates the use of power to make the order setting aside the financial agreement is exposed by the reasons for judgment. Had there been no reference at all to s 90K(1)(d) within the text of the declaration there would have been no appeal.

35. Thirdly, not only was the reference to s 90K(1)(d) of the Act within the text of the appealed order unnecessary, it was mistaken. The reasons for judgment make clear beyond doubt the financial agreement was set aside because it is void for uncertainty (s 90K(1)(b)) but, even if otherwise capable of certain construction, it would have been set aside due to hardship which would be endured by the wife if it were not set aside (s 90K(1)(d)). The order expressly represents it is made pursuant to s 90K(1)(d) of the Act when the reasons reveal it plainly was not. It was instead made in reliance upon s 90K(1)(b) of the Act. The text of the order does not match the reasons given for making it and so should be corrected by the erasure of the mistaken reference to s 90K(1)(d) of the Act. That result could have been achieved by inviting the primary judge to employ the slip rule. An appeal was unnecessary.

1. Thus, Ground 1 is prosecuted on a false premise. The financial agreement was not set aside on the grounds provided by s 90K(1)(d) of the Act, but rather pursuant to s 90K(1)(b) of the Act.

2. Ground 2 is redundant because it attacks the finding made in respect of s 90K(1)(d) of the Act, which finding was immaterial to judgment. Published reasons are apt to reveal errors in appealed judgments but, importantly, appeals only lie from the judgment embodied in the Court’s orders – not separately from the reasons (Driclad Pty Ltd v Federal Commissioner of Taxation (1968) 121 CLR 45 at 64; R v Ireland (1970) 126 CLR 321 at 330). Ground 2 is an impermissible attempt to appeal from a finding which was inconsequential to the validity of the appealed order.

3. That does not mean the husband is without prospective remedy in respect of the finding with which he disagrees. The finding made in respect of s 90K(1)(d) of the Act might eventually influence the orders made by the primary judge to resolve the tortious and contractual causes of action brought by him against the second respondent, but the orders later pronounced to finally determine those causes will be susceptible to a separate appeal, in which the findings underpinning that judgment would then be amenable to challenge. An entirely academic attack upon immaterial findings in this appeal cannot be countenanced.

   DISPOSITION

4. The appeal is dismissed.

5. The Notice of Contention is also dismissed. The operative order need not specify the particular sub-section of s 90K(1) of the Act upon which the primary judge relied to make it, though the second respondent’s former contrary belief apparently underpinned the Notice of Contention. Presumably that is why the second respondent did not press it. The reasons expose how his Honour relied upon findings that the financial agreement should be set aside for uncertainty, but otherwise would have been set aside on grounds of hardship, so the reference to s 90K(1)(d) within the order is mistaken for the reasons already given.

6. Absent the demonstration of appealable error, the grammatical errors within the appealed order may be corrected by resort to the slip rule (r 10.13(1)(e) of the Rules) so it properly reflects the intention of the primary judge, as is revealed by the reasons for judgment. The appealed order is varied by deleting the mistaken references within it to both ss 90K(1)(d) and 90KA of the Act.

7. As was foreshadowed in the earlier interlocutory judgment, the costs of the appeal now become an issue (Daily & Daily [2023] FedCFamC1A 76 at [17]). The appeal was pointlessly pursued and was dismissed. We accept the submissions of the wife and the second respondent that the appeal was premature. It would have been more appropriate to appeal from the orders ultimately made by the primary judge to determine the spouses’ financial entitlements under Pt VIII of the Act and, if relevant, the husband’s causes of action against the second respondent.

8. There are no grounds upon which the husband should recoup his costs of the appeal from the other parties.

9. We accede to the costs applications made by the wife and the second respondent against the husband for their costs of the appeal, on the grounds that it was wholly unsuccessful and should not have been pressed after the interlocutory judgment was delivered. The husband could not point to any factor prescribed by s 117(2A) of the Act which would militate against such costs orders.

10. However, we reject the surprisingly generous assessments of their respective costs, which appear to have been assessed on solicitor/client rather than party/party bases. In reliance upon r 12.17(1)(a) of the Rules, we fix the wife’s costs at $15,000.00 and the second respondent’s costs at $15,000.00.

I certify that the preceding forty-five (45) numbered paragraphs are a true copy of the Reasons for Ex Tempore Judgment of the Honourable Justices Austin, Tree & Christie.

Associate:

Dated:       7 August 2023