Family Law Property Settlement – when is a miscarriage of Justice sufficient for the Court to set aside a Consent Order?

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The Full Court of the Family Court of Australia recently handed down a decision in Lane v Lane [2016] FamCAFC 53 which rejected a wife’s appeal to have a property Consent Order set aside.  In particular, the wife claimed that there had been a miscarriage of justice because her husband had suppressed evidence of the value of his interest as a beneficiary under the Lane Family Trust.

The Full Court held that the husband’s suppression of evidence could amount to a miscarriage of justice however it regardless refused to set aside the Order in the particular circumstances of this case.

Ordinarily, in terms of Section 79 A (1) of the Family Law Act 1975 the Court may in its discretion, vary or set aside an order and if it considers appropriate, make another order in substitution of an order when  it is satisfied among other reasons that there has been a miscarriage of justice by reason of fraud, duress, suppression of evidence (including failure to disclose relevant information), the giving of false evidence or any other circumstance.

Background

The parties commenced cohabitation in early 1978. They married in 1980 and divorced in January 2011. During their marriage, the husband and wife decided upon a property settlement agreement. On 4 March 2003, the husband filed an Application for Consent Orders in the Family Court which would give effect to their agreement. The consent orders provided that the husband would pay the wife $100,000 (about 74% of the parties’ asserted assets) within 12 months of signing the orders. In a supporting affidavit to the Application, the husband disclosed that he was the beneficiary of a trust but was not aware of the value of the trust. At the time of the Application for Consent Orders was made, the value of the trust was $980,000.

Pursuant to s 79A(1) of the Family Law Act 1975 (Cth), the wife sought to have the Consent Orders set aside on the basis that the husband had failed to disclose to her the value of his interest in the family trust. This was a suppression of evidence which in her submission amounted to a miscarriage of justice.

The trial judge’s decision

In considering the suppression of evidence, the trial judge accepted the husband’s contention that his wife knew of his interest in the trust at the time of the settlement and that she had access to the financial records of the trust because he had offered them to her and because she worked in the husband’s professional practice. His Honour rejected the wife’s denial of these assertions as she was not considered to be a credible witness. Honour concluded that the wife could not establish that in reliance of the husband’s representations she had agreed to the orders. His Honour also rejected the contention that there was a miscarriage of justice.

The appeal decision

There were 3 important issues urged in appeal:

  1. Had the wife established that the husband had suppressed evidence (s 79A Family Law Act);
  2. If so, did this amount to a miscarriage of justice; and
  3. If so, should the Court have exercised its discretion and have the Consent Order set aside

 (at [36]).

  1. Suppression of evidence

The Appellate Court disagreed with the trial judge and held that the husband was aware of the value of the trust and concealing it amounted to a suppression of evidence. The husband had conceded that he prepared and provided the Trust’s financial accounts to the bank. These accounts showed the exact value of the trust. The Court agreed with the wife’s submission that the husband had misled the court in relation to the value of the trust and thus had ‘impugned the integrity of the judicial processes (at [50]).

  1. Miscarriage of justice

The Court also disagreed with the trial judge and held that the suppression of evidence did amount to a miscarriage of justice. The trial judge reasoned that the wife’s entering into the Consent Orders was done so under no duress or as a consequence of the suppression of evidence. Therefore there had been no miscarriage of justice. The Full Court held that this was not the correct approach of determining the issue of a miscarriage of justice. Instead the correct approach is to consider whether the suppression of evidence ‘was such that the court’s process was impugned’ (at [80]). The court process required the husband to make full and frank disclosure as to the accuracy of the information he presented to the court. The suppression of that which he knew in good faith to be the value of the trust therefore amounted to a miscarriage of justice (at [80]).

      3. Should the consent order be set aside?

The Court noted that the finding of a miscarriage of justice does not automatically mean that an Order will be set aside. Instead in order for a claim under s 79A to succeed, the Court must be satisfied not only that a miscarriage of justice exists, but that it has resulted. That is, not every failure of full and frank disclosure will justify a court setting aside an order. Rather such a failure will only justify setting aside an order where the order made would have been substantially different to that which it is currently. Here the wife knew of the establishment of the trust, that her husband controlled the trust and she had been offered access to the financial records of the Trust. The Court agreed with the trial judge’s conclusion that the provision of about 15% of the total property pool was ‘within the proper range of the outcomes that would have resulted from an application of s 79’ (at [75]).

Therefore the Court concluded that the miscarriage of justice in question did not sufficiently justify having the Order set aside.

For more information regarding a Consent Order in property settlements post-separation

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