Reported Decision : (2007) DFC 95-410 New South Wales Supreme Court CITATION : Jacqueline Sands -v- David Leslie Henderson [2007] NSWSC 1200 HEARING DATE(S) : 12 September 2007 JUDGMENT DATE : 26 October 2007 JUDGMENT OF : Associate Justice McLaughlin DECISION : 1. I order that the notice of motion filed by the Plaintiff on 8 March 2007 be dismissed. 2. I order that the Plaintiff pay the costs of the Defendant of the aforesaid notice of motion and of the notice of motion filed by the Defendant on 29 June 2007. CATCHWORDS : Family Law. De facto relationship. Adjustment of interest of parties in property. Orders made by consent. Application by the Plaintiff to set aside consent orders. Whether there was a miscarriage of justice. Any such asserted miscarriage of justice must arise through some fault in the integrity of the judicial process. Asserted suppression of fact by the Defendant. Asserted mistake of fact in respect to valuation of property. LEGISLATION CITED : Family Law Act 1975 (Cth) Property (Relationships) Act 1984 Huddersfield Banking Co Limited v Lister [1895] 2 Ch 273 Spencer v The Commonwealth (1907) 5 CLR 418 Harvey v Phillips (1956) 95 CLR 235 Molier v Van Wyk (1980) FLC 90-911 CASES CITED : Gerbert v Gerbert (1990) FLC 92-137 Clifton v Stuart (1991) FLC 92-194 Public Trustee v Gilbert (1991) FLC 92-211 Bradshaw v Walder (1998) DFC 95-195 Barker v Barker [2007] Fam CA 13 PARTIES : Jacqueline Sands (Plaintiff) David Leslie Henderson (Defendant) FILE NUMBER(S) : SC 2392 of 2005 COUNSEL : Mr P. Smart (Plaintiff) Mr N. Jackson (Defendant) SOLICITORS : Jensens Solicitors & Attorneys (Plaintiff) Trenches (Defendant) IN THE SUPREME COURT OF NEW SOUTH WALES EQUITY DIVISION ASSOCIATE JUSTICE McLAUGHLIN Friday, 26 October 2007 2392 of 2005 JACQUELINE SANDS –v- DAVID LESLIE HENDERSON JUDGMENT 1 HIS HONOUR: These are proceedings under the Property (Relationships) Act 1984. 2 The proceedings were specially fixed to be heard by Associate Justice Macready on 3 October 2006. Each of the parties was legally represented throughout the course of the proceedings. On 3 October 2006 each of the parties was represented by Counsel. 3 During the course of that day, apparently after negotiations, Associate Justice Macready was requested by the parties to make orders in accordance with terms of settlement which had been signed by each of the parties on that date. His Honour did so, and made orders in accordance with the Terms of Settlement which His Honour initialled and dated. Those terms were stated to be made "by way of consent and pursuant to the Property (Relationships) Act 1984 (NSW)". 4 By notice of motion filed on 8 March 2007 the Plaintiff, Jacqueline Ruth Sands, seeks a variation of the orders made by Associate Justice Macready on 3 October 2006 (the most significant variation being an increase in the amount which the Terms of Settlement provide should be paid by the Defendant to the Plaintiff from the sum of $800,000 to the sum of $1,040,00), and, in the alternative, seeks an order setting aside the orders made on 3 October 2006 and an order that the matter be re-listed for hearing. 5 On 29 June 2007 the Defendant, David Leslie Henderson, filed a notice of motion seeking, first, that the Plaintiff's notice of motion filed on 8 March 2007 be summarily dismissed, "on the basis of there being no reasonable cause of action disclosed on the evidence presented"; and, in the alternative, that the Plaintiff's notice of motion be dismissed for want of prosecution. 6 It is those two notices of motion, that filed by the Plaintiff on 8 March 2007 and that filed by the Defendant on 29 June 2007, which have now come before me for hearing. They have been dealt with together, and I have treated the evidence presented in the one as being evidence in the other. 7 I have had the benefit of receiving written outlines of submissions from Counsel for the respective parties. Those documents will be retained in the Court file. 8 The Plaintiff brings the present application pursuant to the provisions of section 41 of the Property (Relationships) Act, which provides, relevantly, Where, on the application of a person in respect of whom an order referred to in section 20 or 27 has been made, a court is satisfied that: (a) there has been a miscarriage of justice by reason of fraud, duress, suppression of evidence, the giving of false evidence or any other circumstance, (b) in the circumstances that have arisen since the order was made, it is impracticable for the order to be carried out or impracticable for a part of the order to be carried out, or (c) a person has defaulted in carrying out an obligation imposed on the person by the order and, in the circumstances that have arisen as a result of that default, it is just and equitable to vary the order or to set the order aside and make another order in substitution for the order, the court may, in its discretion, vary the order or set the order aside and, if it thinks fit, make another order in accordance with this Part in substitution for the order so set aside 9 After the filing of the Plaintiff's notice of motion the solicitors for the Defendant sought further and better particulars in respect to the specific part of section 41 relied upon by the Plaintiff, and further and better particulars of the specific grounds relied upon. By letter dated 20 June 2007 the solicitors for the Plaintiff stated that the claim was being made pursuant only to section 41(1)(a), on the basis of being: · a suppression of fact, and · "any other circumstance" – specifically a mistake of fact induced by a single expert. 10 It was the case for the Plaintiff that there had been a miscarriage of justice by reason of suppression of evidence or any other circumstance, thus enlivening the discretion vested in the Court by section 41 of the Act. That asserted miscarriage of justice arises out of valuations of two properties which together constitute the substantial part of what has been described as the asset pool of the parties. 11 On 28 October 2005 Hoolihan Valuations of Ballina provided valuation reports in respect to the Hastings Point property at $2,450,000 and in respect to the Coorabell property at $1,200,000. It would appear that those valuations were agreed upon between the parties in December 2005 or January 2006. At or shortly before the hearing on 3 October 2006 the Defendant prepared and served upon the Plaintiff a Case Summary document, in which the Defendant identified the agreed values of those two properties at the foregoing figures. 12 It was the case for the Plaintiff that the foregoing valuations were relied upon by her in order to estimate the net asset pool, and that the figure of $800,000 referred to in paragraph 1 of the Terms of Settlement, being the amount to be paid by the Defendant to the Plaintiff, was calculated to represent about 30 per cent of the net asset pool. 13 It was asserted on behalf of the Plaintiff that she subsequently became aware that on 16 October 2006 (that is, 13 days after the making of the consent orders) in regard to the proposed auction of the Hastings Point property a sales inspection report and agency agreement, prepared by Roger McLeod of Pottsville Properties Pty Limited and stating the selling price to be in the range of between $3,000,000 and $3,500,000, had been signed by the Defendant. In his professional market analysis, also dated 16 October 2006, Mr McLeod stated the price range of the Hastings Point property to be $3,000,000 to $3,500,000. 14 The Plaintiff also sought to rely upon a passage in paragraph 5 in the affidavit of Andrew Hoolihan of 9 May 2007. However, at the hearing before me that passage was objected to by the Defendant and was rejected. At paragraph 6 of the same affidavit Mr Hoolihan said, I am of the opinion that an update valuation should have been obtained by the parties prior to settlement of the matter. 15 On 2 December 2006 (that is, two months after the making of the consent orders on 3 October 2006) the Hastings Point property was sold by the Defendant at auction for $3,250,000, that price being $800,000 more than the valuation that had been provided by Hoolihan Valuations on 28 October 2005. Apparently the reserve at the auction was $3,400,000, although the Defendant during the course of that day, 2 December 2006, authorised two reductions to that reserve price (being to $3,200,000 and later to $3,100,000). 16 It was submitted on behalf of the Plaintiff that there was a strong inference from the foregoing circumstances that at or before the time when the consent orders were agreed upon on 3 October 2006, the Defendant was aware that the Hastings Point property was worth considerably more than the Hoolihan valuation, and yet suppressed that evidence. It was further submitted on behalf of the Plaintiff that at the time when the consent orders were made, and before that time, the Defendant was under a duty of full and frank disclosure to the Plaintiff of any such financial information. 17 It was submitted on behalf of the Plaintiff that the Defendant bore a responsibility to place before the Court full and complete information concerning his financial and material circumstances, including his assets and liabilities, at the commencement of the relationship, at the termination of the relationship and at the time of the trial. 18 Whilst acknowledging that there was little, if any, case law relating to the circumstances in which the provisions of section 41 of the Act could properly be invoked, nevertheless, the Plaintiff pointed to the provisions of section 79A of the Family Law Act 1975 which is in similar, but not identical, terms. Section 79A provides, relevantly, in subsection (1), Where, on application by a person affected by an order made by a court under section 79 in property settlement proceedings, the court is satisfied that: (a) 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; or … the court may, in its discretion, vary the order or set the order aside and, if it considers appropriate, make another order under section 79 in substitution for the order so set aside. 19 It was submitted on behalf of the Plaintiff that in the instant case there had been a miscarriage of justice within the meaning of that phrase used in section 41 of the Property (Relationships) Act, on the ground, first, that the Plaintiff's share of the asset pool agreed to by her (when she understood that pool to have a certain value) constituted a miscarriage of justice, in the light of the actual sale price of the Hastings Point property, especially when the Court had regard to the duration of the relationship between the parties and the relevant contributions made to the relationship by the Plaintiff. Further, that the alleged miscarriage of justice so identified by the Plaintiff was so substantial that the Court should use its remedial discretion under section 41 of the Act to rectify that miscarriage. 20 It was additionally submitted on behalf of the Plaintiff, further and independently from the foregoing assertions regarding the miscarriage of justice, that the Defendant had suppressed evidence of the true value of the Hastings Point property at 3 October 2006, thereby creating a miscarriage of justice so substantial that the Court should use its remedial discretion under section 41 to rectify that miscarriage. 21 It was the submission of the Plaintiff that by 3 October 2006, no updating valuation having been obtained in the interim, the increased value of the Hastings Point property had the effect of invalidating the basis upon which the Plaintiff negotiated her settlement. The Plaintiff further submitted that, in the absence of any evidence that would lead the Court to believe that an $800,000 increase in value of the Hastings Point property was due to a fact or circumstance that arose after 3 October 2006 and before the auction day of 2 December 2006, the Hastings Point property on 3 October 2006 was worth $800,000 more than the agreed valuation prepared by Mr Hoolihan. 22 I was taken on behalf of the Plaintiff to a number of judicial authorities, especially decisions of the Family Court of Australia regarding section 79A of the Family Law Act. However, the Plaintiff did not dispute that there was a wealth of persuasive judicial authority supporting the principle that the miscarriage of justice identified in section 41 of the Property (Relationships) Act can only occur by reason of a fact or event which occurs before or at the time of the making of the order which is sought to be set aside (Molier v Van Wyk (1980) FLC 90-911 at 75,767 – 75,768; see also, Public Trustee v Gilbert (1991) FLC 92-211 at 78,426 – 78,428). 23 In Gebert v Gebert (1990) FLC 92-137 (approved in Clifton v Stuart (1991) FLC 92-194 at 78,336 - 78,337) the Full Court of the Family Court, (constituted by Nicholson CJ, Baker and Burton JJ) said, at 77,935, We consider that the words "any other circumstance" appearing in section 79A(1)(a) whilst not to be read ejusdem generis with fraud, duress, suppression of evidence or the giving of false evidence, are intended to cover other situations where, for one reason or another, a miscarriage of justice has occurred… The important matter that must be established for an application under this part of the section to succeed is that there has been a miscarriage of justice. 24 One of the very few reported decisions on the application of section 41 of the Property (Relationship) Act, is the judgment of Master Macready (as His Honour then was) in Bradshaw v Walder (1998) DFC 95-195. In that case the de facto husband agreed to give the de facto wife in excess of 60 per cent of the value of the subject property, in circumstances where her likely entitlement was somewhere between 20 per cent and 40 per cent. A residential property was the only substantial asset at the time of the separation after a de facto relationship which had obtained for about eight years. A firm of solicitors which the parties had previously used was involved in giving advice. A proposal was written out by the de facto husband, and the solicitors were asked to draw up an agreement between the parties to that effect. An amount of $88,000 for the de facto wife was agreed upon, in spite of advice by the solicitors to the de facto husband that that amount was excessive. Orders to give effect to that agreement were made by the Local Court in the absence of both parties. The de facto husband thereafter approached the Supreme Court, seeking an order, pursuant to section 41, that the orders made in the Local Court be set aside. It was submitted on behalf of the de facto husband that there had been a miscarriage of justice, in that, under the Property (Relationships) Act, the Local Court had a duty to consider whether the terms of the consent orders were just and equitable, and it had not done so; and, further, that the order consented to was so outside the ambit of what was just and equitable that the Court might infer that a party had acted in ignorance or as a result of incompetent advice. 25 In the Supreme Court Master Macready found that there had not been any miscarriage of justice. The de facto husband had received advice that the amount he was paying was excessive, but he still went ahead with the proposal. There was no duty on the Court to consider whether a consent order under section 20 of the Act was just and equitable. The Master held that the circumstances under which an order may be set aside are essentially those under which a simple contract would be void or voidable. He said, at 77,715, In my view a comparison of the differences between s 20 and s 27 of the De Facto Relationships Act [the statutory predecessor to the Property (Relationships) Act 1984] and the difference between s 20 of the De Facto Relationships Act and s 79 of the Family Law Act , to which I have already referred, indicates that there is no duty on the court to consider whether a consent order under s 20 is just and equitable. Power to make a consent order is expressly given in s 38(1)(j). In the case of a consent order made under circumstances where there is no legislative prescriptions for conditions precedent to the making of the order, there are well established principles under which such an order may be set aside. These are conveniently referred to in Harvey v Phillips (1956) 95 CLR 235 at 243 – 244, where the High Court said:- "… The question whether the compromise is to be set aside depends upon the existence of a ground which would suffice to render a simple contract void or voidable or to entitle the party to equitable relief against it, grounds for example such as illegality, misrepresentation, non-disclosure of a material fact where disclosure is required, duress, mistake, undue influence, abuse of confidence or the like. The rule appears rather from positive statements of grounds that suffice… but there is a dictum of Lindley LJ which is distinct enough "… nor have I the slightest doubt that a consent order may be impeached, not only on the ground of fraud but upon any grounds which invalidate the agreement it expresses… To my mind the only question is whether the agreement on which the consent order was based can be invalidated or not. Of course if that agreement cannot be invalidated the consent order is good." Huddersfield Banking Co Limited v Lister [1895] 2 Ch 273 at 280." 26 Master Macready was also at pains to point out that any asserted miscarriage of justice must arise out of the judicial process. 27 In the instant case it was acknowledged by the Plaintiff that any miscarriage of justice must be grounded upon events existing at the time at which, not after, the order sought to be set aside was made. This principle emerges clearly and without dispute from a number of decisions of the Family Court of Australia regarding the application of section 79A of the Family Law Act. The principle was most clearly emphasised in Public Trustee v Gilbert (1991) FLC 92-211, where the Full Court of the Family Court of Australia said, at 78-427, Furthermore, as their Honours pointed out in Molier v Van Wyk , the circumstance complained of must have resulted in a miscarriage of justice. That term relates to the judicial process which resulted in the order sought to be set aside. Its integrity cannot be put into question by something that happened after that process was completed. 28 In the instant case the event or circumstance asserted by the Plaintiff as the basis for impugning the consent order is that the valuation of the Hastings Point property at $2,450,000 on 3 October 2006 was not correct. 29 However, it must be emphasised that there is no evidence that that valuation was not a correct valuation of the property at 3 October 2006. The Plaintiff submits that the Court is entitled to draw an inference from the fact that the Hastings Point property was at auction on 2 December 2006, some two months after the date of the consent orders, sold for $3,250,000, that the valuation of $2,450,000 which was relied upon by both parties on 3 October 2006 was not correct. 30 However, that sale price does not establish the value of the property on 3 October 2006. Neither does the sales inspection report of Mr McLeod or his professional market analysis of 16 October 2006 (in each of which the price range of the property is stated to be between $3,000,000 and $3,500,000) or the original reserve price of $3,400,000 placed on the property for the auction (or the subsequent reductions to that reserve price) establish the value of the property on 3 October 2006. 31 The locus classicus in respect to the determination of the value of land appears in the judgment of the High Court of Australia in Spencer v The Commonwealth (1907) 5 CLR 418, where Griffith CJ said, at 432, In my judgment the test of value of land is to be determined, not by enquiring what price a man desiring to sell could actually have obtained for it on a given day, ie , whether there was in fact on that day a willing buyer, but by enquiring "What would a man desiring to buy the land have had to pay for it on that day to a vendor willing to sell it for a fair price but not desirous to sell?" 32 In the same case, Isaacs J said, at 441, To arrive at the value of the land at that date, we have, as I conceive, to suppose it sold then, not by means of a forced sale, but by voluntary bargaining between the plaintiff and a purchaser, willing to trade, but neither of them so anxious to do so that he would overlook any ordinary business consideration. 33 The foregoing passages were summarised in the headnote to the report, at 418, as follows, [T]he basis of valuation should be the price that a willing purchaser would at the date in question have had to pay to a vendor not unwilling, but not anxious, to sell. 34 In applying the foregoing principle to the instant case, I am not prepared to draw the inference (which the Plaintiff seeks that I should draw) from the sales inspection report and the professional market analysis and the reserve placed upon the property at the auction, and from the result of the auction itself, that the valuation of the property on 3 October 2006 was $3,250,000 (or, indeed, any figure other than the value agreed upon by the parties). 35 Further, it seems to me that even if there were evidence of the value of the property on 3 October 2006 in an amount greater than that relied upon by the parties on that date, that fact would not of itself, in any way impugn the integrity of the judicial process which had brought about the making of the consent orders. For the integrity of the judicial process to be put in question (in order to have the result now sought by the Plaintiff, that the consent orders be impeached), it must be established not only that the value of the property at the date of the consent orders was far in excess of that relied upon by both parties in arriving at those consent orders, but that the Defendant at that time knew that the value was considerably in excess of the agreed value. 36 Not only is there no evidence that on 3 October 2006 the value was in excess of $2,450,000, but there is certainly no evidence that the Defendant at that date knew that the value was in excess of the agreed value. 37 The Court must not overlook the fact that at all times the Plaintiff was legally represented. It was always open to the Plaintiff, if she considered that the value might be greater than that disclosed in the valuation (which had been carried out almost a year previously and had been communicated to her legal representatives some time thereafter), to obtain her own valuation. 38 The possibility of the value of a property increasing after a valuation had been effected was recognised in Barker v Barker [2007] Fam CA 13 (24 January 2007), where the Full Court of the Family Court said, at 121: Where a single expert is employed, the valuation may be concluded months before a settlement is reached. There are many factors that may intervene during this period… During the intervening period the normal commerce of life will continue. Sales of properties, whether they be metropolitan or rural and regional, will continue and may affect the value of relevant properties. It would be incomprehensible to expect that in this arena, valuations will always be updated on a regular basis. 39 It must always be recognised that the setting aside of an order of a Court, whether in consequence of a statutory provision such as section 41 of the Property (Relationships) Act, in consequence of the principles recognised in such decisions of high authority as Harvey v Phillips, supra, is a very serious matter, which must not be approached lightly. The statutory provision of section 41 requires, in order to activate the discretion to vary or set aside the order, first that there has been a miscarriage of justice, and, second, in the circumstances of the instant case, that that miscarriage of justice has been by reason of suppression of a fact or a mistake of fact induced by a single expert. 40 As I have already observed, the miscarriage of justice must arise through some fault in the integrity of the judicial process. There is no evidence to support the assertion of the Plaintiff that at the date when the consent orders were made the agreed value of the Hastings Point property at $2,450,000 was incorrect. Neither is there any evidence that at that date the Defendant knew that that value was incorrect. The fact that some two months later the property was sold at auction for a substantially greater price is not evidence of the valuation of the property at 3 October 2006, and certainly is not evidence that the Defendant on 3 October 2006 was aware that the value of $2,450,000 was incorrect. Neither the sale price obtained at auction on 2 December 2006, nor the sales inspection report, and agency agreement prepared by Mr McLeod and signed by the Defendant on 16 October 2006 or Mr McLeod's professional market analysis of 16 October 2006 constitutes evidence of the value of the property on 3 October 2006, let alone constitutes evidence of the awareness of the Defendant of the value of the property on that date. 41 I am not satisfied that there has been a miscarriage of justice in this matter. Neither am I satisfied that there has been a suppression of fact by the Defendant or that there has been a mistake of fact resulting from the adoption by the parties of an agreed valuation which was performed almost a year before the date of the consent orders. 42 It follows, therefore, that the present application of the Plaintiff will be dismissed. 43 For completeness, however, I would observe that even if (contrary to the conclusion which I have just expressed) I were to have been satisfied that there had been a miscarriage of justice grounded upon one or other, or both, of the grounds relied upon by the Plaintiff, I certainly would not have been disposed to grant the primary relief sought by the Plaintiff in her notice of motion, being that order 1 of the consent orders, made on 3 October 2006 be varied by substituting $1,040,000 for $800,000. Since the orders were made by consent, and since it was no part of the function of the Court to determine, at the time of the making of the consent orders, whether those orders were just and equitable, I consider that if a party in the position of the present Plaintiff were to succeed in having the consent orders set aside, the only proper course would then be for the matter to proceed to a contested hearing of the substantive proceedings. 44 There are many factors which have the ultimate result of parties agreeing to a settlement of litigation. The outcome of negotiations and of considerations which may not be purely financial are then embodied in consent orders. It is not for the Court to go behind those consent orders. But if, for some reason, those consent orders are ultimately set aside, then the Court is not entitled to assume that, if some factual element had been different, there would automatically have been consent orders reflecting that difference. The only consequence of the setting aside of consent orders in circumstances where, in a case such as the present, one of the monetary factors was found to be incorrect, would be, not the substitution of another monetary figure, but the complete hearing of the proceedings. 45 However, in the light of the conclusion which I have already expressed upon the Plaintiff's application to set aside the consent orders, it will not be necessary for that course to be followed. 46 The present application of the Plaintiff will be dismissed. As will be appreciated, the essential ground for that dismissal is the absence of any evidence in support of the application of the Plaintiff. It follows, therefore, that the Defendant has established the basis for the order sought in paragraph 1 of his notice of motion filed on 29 June 2007 (that the notice of motion of the Plaintiff filed on 8 March 2007 "be summarily dismissed on the basis of there being no reasonable cause of action being disclosed on the evidence presented"). However, it would seem to be superfluous for me to make a further order, in the terms of the Defendant's notice of motion, where the application of the Plaintiff is dismissed. Accordingly, I propose merely to make an order that the Plaintiff's notice of motion be dismissed and an order that the Plaintiff pay the costs of that notice of motion and also of the Defendant's notice of motion. 47 I make the following orders: 1. I order that the notice of motion filed by the Plaintiff on 8 March 2007 be dismissed. 2. I order that the Plaintiff pay the costs of the Defendant of the aforesaid notice of motion and of the notice of motion filed by the Defendant on 29 June 2007. ********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.