Husband’s Duty of Discovery Did Not Oblige Him to Explain Documents to the Wife

Background

In the recent case of Pendleton [2017] FamCAFC 108 (20 June 2017) the Full Court of the Family Court heard the husband’s appeal against orders made by Judge Coates under s79A of the Family Law Act 1975 which varied a final property order (in favour of the wife) amounting to $300,000. Section 79A essentially allows the court to set aside or vary a court order where a miscarriage of justice is established. The wife had established a miscarriage of justice by reason of suppression of evidence under s79A(1)(a). The parties had agreed their assets to be worth $622,000 but made no reference to payments made to the husband before and after the consent order was made.

Wife’s Submission

The wife argued at trial that if a miscarriage of justice was established, the Court should vary the order and direct the husband to pay her a further amount of $300,000. Judge Coates ultimately made that order.

Full Court of the Family Court Analysis

Justices Thackray & Cronin (with whom May J agreed) said that the husband had a contract of employment which defined his entitlements. The primary judge found that the wife had discovered its existence, and thought there was a ‘strong possibility’ that she was aware of it before she consented to the orders.

His Honour nevertheless concluded that it would very probably be the case that she could not understand or decipher the amounts to be paid pursuant to the contract, and disclosed material had to be in a form so that it can be understood.

Just before the consent orders were made, the husband received $44,586.84 which he claimed was a reimbursement of expenses. In April 2013, the husband received payments of $11,775.83 and $35,000, which were not brought to the wife’s attention prior to the making of the orders.

The husband had been entitled to a redundancy payment but, notwithstanding that his employment had been terminated in September 2012, the payment was not received until February 2013. The husband had submitted to his Honour that there was no obligation to disclose the redundancy because there was no contractual right to it. His Honour found that the husband had been aware that he was to receive a payment and accordingly was obliged to disclose it.

Thackray & Cronin JJ said that the husband is justified in saying that the primary judge had led him to believe he would be afforded the opportunity to make submissions in relation to any new order if a s79A(1) ground was established. All indications in the transcript were to this effect, and the husband was entitled to assume he would not only be given an opportunity to be heard, but that he would be accorded an opportunity to present further evidence relevant to the exercise of the discretion (Haoucher v Minister for Immigration and Ethnic Affairs [1990] HCA 22; {1990) 169 CLR 648).

The husband was therefore denied procedural fairness and on that basis alone the appeal succeeded.

In submissions before the Court, counsel for the wife accepted that if the consent orders had been set aside, rather than varied, his Honour would have been required to ‘start afresh’ and to consider the matters in s75(2) and 79(4) of the Act (dealing with considerations to adjust the property distribution between the parties) because the Act specifically required him to do so. It was argued, however, that there was no such requirement when a court is merely ‘varying’ orders pursuant to the power conferred by s79A.

When s79A was first introduced into the Act in 1976, it contained no power to vary an earlier order – the only power conferred being the power to set aside in its entirety. In appreciating why this might be so, the Court considered it important to recognise that originally there was only one basis upon which to set aside an earlier order, namely a miscarriage of justice of the type now found in subparagraph (1) of s79A(1). The power to vary an earlier order was only introduced when the Act was amended in 1983 to include the grounds now set out in subparagraphs (b), (c) and (d) of s79A(1), two of which contain internal references to an order being varied as well as being set aside.

The husband also complained that in making the variation, his Honour did not consider the present financial circumstances of the parties. Indeed, had his Honour set the consent order aside and proceeded to make a fresh order under sec. 79(4) and, so far as they are relevant, under sec. 75(2). As Nygh J. explained in Parker and Parker [1983] FamCA 54 the choice between setting aside and variation depends on the degree of intervention to be made. Where as here, that intervention consisted of a perceived realignment of the distribution of property of the parties from one-third to two-thirds respectively to an approximately equal division, it is in our view a matter which goes beyond mere variation and would require the formal setting aside of the order and the making of a new order with all the consequences of that under sec. 79. Only thus can the Court ensure that the new order will be just and equitable between the parties.
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Full Court’s Conclusion

The Full Court accepted in this case, having regard to the time which had elapsed since the making of the consent orders and changes in circumstances pertaining to the real estate, the orders proposed by the trustee presented practical difficulties. Nevertheless, according to the Full Court, in light of the magnitude of the adjustments to the outcome contained in the consent orders, in this case the orders should have been set aside rather than merely being varied or, as his Honour stated, “amended”.

In the present case, the Court considered that the magnitude of the change made to the consent orders was such as to go beyond mere variation and required the setting aside of the order and the making of a new order ‘with all the consequences of that under sec.79. His Honour’s failure to appreciate this fact and hence to give full consideration to the matters arising under s 79(4), including the matters incorporated by reference in s 75(2), constituted appealable error.

The husband also argued that the primary judge erred by stating as to discovery of his employment contract that disclosure is not just ‘dumping’ documents into the mix, it is explaining the meaning of documents as well. To this, Thackray & Cronin JJ said:

The husband maintained on appeal that he had no obligation to explain the document to the wife, and that the primary judge erred in holding that he did. The Court accepted that premise in the argument, but the statement must be read in context it is tolerably clear that his Honour meant no more by his remark than that the husband had to be frank so as to place the wife in possession of the information he had, which would, in turn, allow the wife to form her own view of the likelihood of him receiving benefits under the contract.

Orders

The husband’s appeal was allowed and the case remitted for re-hearing by another judge.

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