FEDERAL COURT OF AUSTRALIA

LFDB v SM [2017] FCAFC 178

ORDERS

THE COURT ORDERS THAT:

1.    The appeal be dismissed.

2.    The interlocutory application dated 17 August 2017 be dismissed.

3.    Within seven days from the date of this order the parties file and serve any submissions, limited to two pages, as to the terms of the costs order for which they contend.

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

REASONS FOR JUDGMENT

THE COURT:

A    INTRODUCTION

1    This appeal represents a further instalment of a dispute over relationship property, which commenced in 2009 and has resulted in a plethora of contested applications, hearings and appeals, primarily in the Courts of New Zealand.

2    On 16 December 2015, pursuant to s 68 of the Trans-Tasman Proceedings Act 2010 (Cth) (Act), a Registrar of this Court registered two judgments of the High Court of New Zealand being:

(a)    parts of judgment relating to two proceedings (CIV-2011-404-6851 and CIV-2011-404-4245) between the first appellant (LFDB) and the other appellants (being companies associated with LFDB) as plaintiffs, and the current respondent (SM) as defendant, whereby the High Court of New Zealand made orders concerning the division of the parties’ relationship property (Relevant Judgment); and 

(b)    a judgment as to costs in an amount equivalent to AUD $22,826.20 in proceeding CIV-2011-404-6851 in the High Court of New Zealand (Costs Judgment) in favour of SM against LFDB.

3    This is an appeal against orders made by the primary judge dismissing an application, made by the appellants, under s 72(1) of the Act, seeking to set aside the registration of both the Relevant Judgment and the Costs Judgments. The contentions of the appellants before the primary judge were that the registration of both judgments should be set aside on three grounds: (a) first, enforcement of both judgments would be contrary to public policy in Australia (s 72(1)(a)); (b) secondly, the judgments were given in a proceeding in rem, the subject of which is moveable property which is not situated in New Zealand (s 72(1)(c)); and (c) thirdly, the Relevant Judgment was registered in contravention of s 72(1)(b) because it is not a “registrable judgment” since it is partly an order that, if contravened, would make LFDB liable to conviction for contempt in New Zealand (s 66(2)(i) of the Act).

4    Subject to a jurisdictional argument which arose after the oral hearing of the appeal, argument on the appeal was significantly narrowed from the issues agitated below. The precise metes and bounds of the case on appeal will be set out below, but it suffices to note for the purposes of this introduction that subject to an argument belatedly raised as to jurisdiction, it is only the challenge to the registration of one of the judgments, being the Relevant Judgment, that is maintained, and this challenge is further restricted to the first of the three grounds advanced before the primary judge. Accordingly, the ultimate proposition advanced by the appellants at the hearing of the appeal was that the primary judge erred in failing to set aside the registration of the Relevant Judgment pursuant to s 72(1)(a) of the Act, on the basis that enforcement of the Relevant Judgment would be contrary to public policy in Australia.

B    THE SCOPE OF THE APPEAL

5    The appeal was filed on 3 March 2017. The original notice of appeal was a discursive and repetitive document with a large number of overlapping grounds (including submissions said to be grounds of appeal). On 17 July 2017, an interlocutory application was filed seeking leave to amend the notice of appeal (Amendment Application) and an order seeking leave to “adduce evidence” on the appeal (Additional Evidence Application). It is convenient to return to and consider the Additional Evidence Application separately below.

6    As to the Amendment Application, at the commencement of the appeal, leave was granted to the appellants to amend on the express basis that the amended grounds of appeal “completely replaced” the grounds set out in the original notice of appeal. The amended grounds of appeal were as follows:

1.    That in finding that that a gross denial of procedural fairness had not been demonstrated in respect of either of the judgments sought to be registered the trial judge erred in that he:

(a)     failed to have any or any proper regard to nature of the proceedings that were before Justice Ellis in the High Court of New Zealand and the findings necessary to enable orders to be made in relation to the property of the parties;

(b)    failed to have any regard to the agreement reached by the parties and reduced to writing that in the event that the appeal by the appellant to the New Zealand Court of appeal was unsuccessful as it was, and despite the failure of the appellant to comply with the “unless order” evidence already filed by the appellant in the High Court of New Zealand might be relied upon by him in the trial of the applications before Justice Ellis and that the appellant might call such other evidence as required by him.

(c)    Failed to have any proper regard to the terms of section 72(1)(a) of the Trans -Tasman Proceedings Act 2010 in that he failed to address either the fact that the consideration by the Court was to the “enforcement” of the judgement and required the Court to be satisfied that enforcement was contrary to Public Policy “in Australia.”

(d)    Put at an unreasonable level the degree to which public policy in Australia must be imposed upon by the orders sought to be enforced in Australia.

7    This was not the end of the attenuation of the case on appeal. Despite the granting of the amendment, in the course of oral submissions, senior counsel for the appellants said that the appeal came down to only two contentions, expressed in the alternative. As will be seen, both arguments had, as their point of departure, the existence of an ‘unless’ order (the details of which will be examined below), which relevantly barred LFDB from taking part in the hearing which gave rise to the Relevant Judgment.

8    The two contentions pressed at the oral hearing of the appeal were as follows:

(a)    a judge hearing the substantive application was required to make orders pursuant to the Property (Relationships) Act 1976 (NZ) (NZ Act), which legislation required a “just division” of relationship property and orders that “are just” effecting the division. Against this background, an order made by the Court of Appeal of New Zealand, which had the effect of debarring participation of LFDB at the property dispute hearing, rendered it impossible for the Court to fulfil its statutory function under the NZ Act in a way which resulted in a just division or the making of just orders; as a consequence, enforcement of the Relevant Judgment, being a judgment which was infected by (or reflected) this flawed process, would be contrary to public policy in Australia (First Argument); and

(b)    even if, contrary to the First Argument, it was possible for the Court hearing the substantive application to fulfil its statutory function and proceed to make just orders under the NZ Act notwithstanding the barring order, in order to achieve this end, it was necessary for the Court to “pay heed to whatever material” the debarred party had previously filed. The Relevant Judgment does not evince a consideration of the material that had been put before the Court by LFDB and, in these circumstances, the Relevant Judgment is incapable of enforcement consistent with public policy in Australia (Second Argument).

9    Neither of these arguments was dealt with, in terms, by the primary judge. This is hardly surprising as neither argument was advanced, in terms, before his Honour. The question of how it could be said that his Honour fell into error in rejecting an argument when it was not advanced before him was never referred to (let alone grappled with) by the appellants but, in any event, it does not matter as both arguments, for reasons detailed below, are misconceived both legally and factually. In order to understand the context in which the arguments arise, it is useful initially to canvass some limited aspects of the litigious saga between the parties and also some relevant aspects of the reasoning of the primary judge.

C    relevant background

10    LFDB and SM lived together in a domestic relationship in Australia and New Zealand for some time until they separated in early 2009. As noted at [2(a)] above, the second to fifth appellants are companies associated with LFDB.

11    In March 2009, SM commenced an action against LFDB in the Family Court of New Zealand seeking division of property under the NZ Act. In October 2011, the proceeding was transferred to the High Court of New Zealand. By this time, remarkably, the parties “had indulged in 23 interlocutory applications, 53 affidavits, 7 court judgments (all directions), 5 judicial conferences and a hearing, one appeal to the High Court, a High Court application and hearing, and further High Court proceedings involving a mortgagee sale”: see SM v LFDB [2012] NZHC 1152 at [7] per Priestley J.

12    This litigious saga had costs consequences for LFDB and after a failure to pay adverse costs orders dating back to January 2010, described by Priestley J as “longstanding and conspicuous”, an order was made in September 2012 providing that unless the costs ordered were paid by LFDB, then he was “to be barred from taking any further part in the proceedings currently before this Court”. Apparently, at the heel of the hunt, on the last day before this self-executing order took effect, the relevant costs were paid: see SM v LFDB [2014] NZCA 326; [2014] 3 NZLR 494 at 497 [10] (Court of Appeal of New Zealand).

13    In July 2013, after another unsuccessful stage of the litigation, LFDB was ordered to pay a further fixed sum for adverse costs plus interest within seven working days. The judge making the order (Ellis J) gave SM leave “to seek unless orders in the event that [LFDB] fails to pay any part of those amounts as directed”.

14    Payment was not made and in August 2013, Ellis J ordered:

If LFDB does not pay to SM’s solicitors by 5:00pm on Monday, 9 September 2013 (New Zealand time) the sum of $24,435.08 plus interest accrued due at 5% per annum from 10 May 2013 to date of payment:

LFDB shall be debarred from taking any further part in the proceedings presently before this Court...

15    Ellis J, in her reasons for making this second self-executing order (Unless Order), explained that the order:

…in question was made principally because of my view that SM’s preparation for the trial in February was being unduly and unfairly prejudiced by her comparative lack of access to funds (a considerable proportion of which is said by her to constitute relationship property)… The effect of LFDB’s failure to meet the costs awards, in circumstances where I had formed the view that he had the means to do so, was therefore particularly acute.

16    An appeal was lodged in relation to the Unless Order and a number of interlocutory skirmishes followed, however, in October 2013, LFDB paid the amount specified in the Unless Order and the following month, Ellis J was persuaded to discharge the Unless Order: SM v LFDB [2013] NZHC 3105. This discharge was also the subject of an appeal and in July 2014, the Court of Appeal of New Zealand allowed the appeal and made an order reinstating the Unless Order, with the consequence of debarring LFDB from taking any further part in the proceeding: SM v LFDB [2014] NZCA 326; [2014] 3 NZLR 494. 

17    In doing so, the Court of Appeal held that LFDB had “deliberately flouted” the Unless Order, and characterised the breach as contumacious and agreed that Ellis J was right to observe “that [LFDB] continued to play “some protracted game of ‘chicken’ with the Court”” (at 502 [33]).

18    It is worth pausing the narrative to note that in concluding that Ellis J had misunderstood the ramifications of LFDB remaining unbarred, the Court of Appeal observed (at 502-503 [36]):

Without the benefit of any information from the parties about the likely nature and scope of a trial proceeding without the [LFDB’s] participation, Ellis J considered the task faced by the Court would be “extremely difficult”. At our request, counsel provided this Court with an outline of the shape of a formal proof hearing. This satisfies us that the Judge’s assessment was incorrect. Further, [SM], through her counsel, had applied (albeit unnecessarily) for [LFDB] to be debarred. In doing that, she had plainly assessed that a successful application would not prejudice her in advancing the litigation. While Ellis J accepted that the prejudice to [LFDB] from the debarment was “self-inflicted”, she was obviously concerned about it. The answer to this concern is ...the prejudice to [LFDB] carries much less weight than the prejudice to the administration of justice generally, and to [SM] specifically, resulting from [LFDB’s] flouting of the second unless order. He very well knew the ramifications of what he deliberately did. He brought any prejudice down upon himself. 

19    The outline referred to in the above extract from the Court of Appeal’s reasons was a Joint Memorandum of Counsel dated 15 May 2014 (Joint Memorandum), which document is the subject of the Additional Evidence Application (which is dealt with below at [51]).

20    Not daunted, LFDB sought leave to appeal the decision of the Court of Appeal. At first the application for leave was successful but in December 2014, leave was revoked (LFDB v SM [2014] NZSC 197; (2014) 22 PRNZ 262) when the Supreme Court of New Zealand became aware of yet another costs order. In revoking leave, the Court noted:

[25] When the Court granted leave to appeal it was appreciated that [LFDB] had demonstrated a defiant attitude to past orders and that the trial Judge was concerned at the prospect of this conduct causing continuing prejudice to the respondent. But the Court also understood that he had paid what was due on outstanding costs orders, and saw the case as suitable for addressing the issues we have mentioned.  [26] The further information we received at the hearing made clear that [LFDB’s] ongoing conduct of the litigation was such that it would inevitably create more continuing problems for the respondent and the courts than we had appreciated at the time leave was granted. In light of that information, the Court has formed the view that the manner in which [LFDB] has continued to conduct the proceeding is oppressive. It is clear the court system is being abused. [27] [LFDB’s] offer to make payment of the ordered costs in response to the indication at the hearing that the Court would consider withdrawing leave does not persuade us otherwise. It came too late. Plainly he has always had the means to comply with the unless orders in issue. [LFDB] is gaming the court system. It is intolerable for [SM] to be faced with this and inappropriate for the Court to countenance such abuse of its process.

21    Accordingly, the Unless Order remained extant and LFDB was debarred from taking any further part in the substantive proceeding.

22    During 2015, there were a number of contested applications concerning freezing orders, security for costs and an application for companies associated with LFDB, which had not been debarred, to be heard (including in the substantive proceeding). Brief details as to these skirmishes, which are not material to the determination of the appeal, are recounted in the primary judge’s reasons (at [27]-[36]).

23    For completeness, it is worth noting that registration in this Court under the Act of three freezing orders made by the High Court of New Zealand between February and June 2015 took place, and these registrations were the subject of a successful application to have registration set aside, which was determined by Gleeson J: LFDB v SM [2015] FCA 725; (2015) 239 FCR 262. Her Honour’s view was that the freezing orders were not final and conclusive “registrable judgments”. At 284 [119], her Honour noted that because of the conclusion reached as to inability to register the freezing order judgments under the Act, it was unnecessary to express a concluded view on the issue raised by LFDB that enforcement of the freezing orders may be contrary to public policy in Australia because the orders had been made ex parte and LFDB had not been given an opportunity to contest them.

24    Returning to the substantive proceeding, it came back before the trial judge (Ellis J) for what was described as a “formal proof hearing” on 4 and 5 May 2015. After reserving, on 26 November 2015, her Honour published reasons for judgment (SM v LFDB [2015] NZHC 2630) and made orders, which constitute the Relevant Judgment (and which were part of what was registered by a Registrar of this Court in December 2015, pursuant to s 68 of the Act: see [2] above).

25    An appeal from the orders of Ellis J was not filed timeously (for reasons that are not presently relevant) but on 29 June 2016, the Court of Appeal granted an extension of time to appeal on the condition that LFDB pay into court amounts owing to SM by 12 August 2016. Upon this condition not being met by LFDB, the appeal was dismissed.

26    The application to set aside the registration of the two judgments including the Relevant Judgment filed in this Court had been adjourned by the primary judge (and execution of the judgments stayed) until determination of the application for an extension of time to appeal was dealt with by the Court of Appeal of New Zealand. Upon the dismissal of the appeal, the primary judge heard and dismissed the application to set aside registration: LFDB v SM (No 3) [2017] FCA 80.

d    the relevant reasons of the primary judge

27    Leaving aside those aspects of the matters advanced before the primary judge which are not the subject of the appeal, and notwithstanding the arguments advanced on appeal are formulated differently from those below, parts of his Honour’s reasoning in rejecting the contention that enforcement of the Relevant Judgment as being contrary to public policy in Australia (s 72(1)(a) of the Act) remain of significance.

28    The primary judge recorded the submission of LFDB (and the other appellants) that to enforce a foreign judgment involving a gross denial of procedural fairness (such as took place following the making of the Unless Order) is contrary to public policy. His Honour then recorded ten reasons advanced as to why the process by which the Relevant Judgment was obtained was said to have that character (at [52]-[65]). Only one of these arguments remains relevant given the more confined issues on appeal (see [7]-[8] above). This argument, as articulated below, was recorded at [52], as being: “by reason of his “debarring”, LFDB was not permitted to contest or otherwise make submissions in relation to SM’s applications… in relation to the NZ final judgment” and this “was fundamentally inconsistent with Australian law regarding procedural fairness”.

29    In rejecting this submission, the primary judge identified that the real issue is whether the Court is satisfied that there has been a gross denial of procedural fairness so as to attract the public policy exception and that, in considering this issue, “it is important to bear in mind the need for judicial self-restraint”: LFDB v SM (No 3) at [106] referring to the judgment of Lindley MR in Pemberton v Hughes [1899] 1 Ch 781 at 790-791.

30    The primary judge then observed that merely because ‘unless’ orders are unknown in Australia does not mean that they are contrary to public policy; the notion that merely because a different approach is taken to a problem in an overseas jurisdiction that renders such an approach contrary to public policy, is wrong. In this regard, his Honour made reference to the well-known observations of Cardozo J in Loucks v Standard Oil Co of New York (1918) 224 NY 99 at 110-111; (1918) 120 NE 198 at 201-202:

A right of action is property. If a foreign statute gives the right, the mere fact that we do not give a like right is no reason for refusing to help the plaintiff in getting what belongs to him. We are not so provincial as to say that every solution of a problem is wrong because we deal with it otherwise at home ... The courts are not free to refuse to enforce a foreign right at the pleasure of the judges, to suit the individual notion of expediency or fairness. They do not close their doors unless help would violate some fundamental principle of justice, some prevalent conception of good morals, some deep-rooted tradition of the common weal.

31    The primary judge noted that “there are several overseas jurisdictions, including New Zealand” where powers are conferred on a court to make an ‘unless’ order in appropriate circumstances and that having regard to the high threshold, his Honour identified, “this Court should be hesitant to conclude that the making of unless orders in the New Zealand litigation was contrary to public policy”. The making of the ‘unless’ order that debarred LFDB from participating in the proceedings was “made in circumstances which were fully explained by Ellis J”.

32    Further, the primary judge rejected the submission that the making of the Unless Order was “fundamentally inconsistent with Australian law concerning procedural fairness”. After noting that the principles of procedural fairness require that a person whose interests are likely to be adversely affected to be generally given a reasonable opportunity to be heard, the primary judge noted “LFDB lost that opportunity because of his failure to comply with the [Unless Order]” (at [111]).

E    The First Argument

33    The First Argument proceeded as follows:

(a)    the Unless Order prevented LFDB from being heard;

(b)    it was impossible for the Court to make an order under the NZ Act which effected a “just division” of the relationship property without the participation of LFDB at the property dispute hearing;

(c)    the enforcement of the Relevant Judgment, which was the result of this flawed process, was necessarily contrary to public policy in Australia.

34    This reasoning breaks down at a number of points.

35    First, it is not for this Court to determine whether a New Zealand judge can make orders which are consistent with the statutory requirement under the NZ Act to make orders effecting a just division of the relationship property. If a suggestion was to be made that the Unless Order impossibly fettered the ability to make such orders under the NZ Act, then this was a matter of domestic law to be addressed by an appeal from the orders made by Ellis J. It would not be appropriate for this Court to express a view about this topic other than to note that the Court of Appeal was plainly cognisant that the inevitable consequence of the restoration of the Unless Order was that the substantive proceeding would be conducted in the way in which it was eventually conducted by Ellis J. As noted at [18] above, their Honours did not agree that conducting a hearing in such circumstances would be “extremely difficult” and considered that any prejudice to LFDB was “self-inflicted” and did not create insuperable difficulties in determining the substantive application. The highest Court in New Zealand did not interfere with these orders, which were premised on this reasoning.

36    Secondly, senior counsel for the appellants, in the course of his submissions, made the point that the Family Court of Australia does not (and would not) make a cognate order under the Family Law Act 1975 (Cth) in similar circumstances. Assuming the correctness of this contention, as the primary judge explained, such an argument misses the point. As Kirby P explained in Bouton v Labiche (1994) 33 NSWLR 225 at 234:

The interests of comity are not served if the courts of the common law are too eager to criticise the standards of the courts and tribunals of another jurisdiction or too reluctant to recognise their orders, which are, and remain, valid by the law of the domicile …

37    Put another way, it is natural, and to be expected, that different jurisdictions (including those countries with whom we have a close connexion and a shared legal heritage) adopt different solutions to the same problems without those different solutions “suffering the ignominy of being described as contrary to public policy”: see De Santis v Russo [2000] QSC 65; (2001) 27 Fam LR 414 at 419 [18] per Atkinson J.

38    Thirdly, as the primary judge observed at [111], although LFDB, which was likely to be adversely affected by the orders dividing relationship property, was entitled to a reasonable opportunity to be heard (see Kioa v West [1985] HCA 81; (1985) 159 CLR 550), he lost that “opportunity because of his failure to comply with the [Unless Order]”. This conclusion was consistent with the reasoning of the Court of Appeal in reinstating the Unless Order: SM v LFDB [2014] NZCA 326; [2014] 3 NZLR 494 at 502-503 [36], where reference was made to the prejudice being “self-inflicted” and that any prejudice carried much less weight than the prejudice to the administration of justice (and to SM) resulting from LFDB’s “flouting” of the Unless Order.

39    This is sufficient to deal with the First Argument, but further points can usefully be made.

40    Fourthly, the argument was premised on the notion that ‘unless’ orders were a different solution in the sense that they were species of orders wholly unknown in Australia. This may be correct, but only in a limited sense. ‘Unless’ orders so-called, which debar litigants from being heard in continuing proceedings, are not made in precisely the same terms in Australia – at least the parties raised no Australian example of an order being made in the exact terms made by Ellis J. Having noted this, they are a form of peremptory order, being a ‘self-executing’ or ‘springing’ order, which is very well known in Australia and which constitutes a remedial response to the same vice to which the order of Ellis J was directed. The High Court recognised the existence of peremptory orders of an analogous type in FAI General Insurance Co Ltd v Southern Cross Exploration NL [1988] HCA 13; (1988) 165 CLR 268 in determining that a court at first instance has the power to extend time under a self-executing order which has 'sprung'. The Court of Appeal of Western Australia has noted that ‘springing’ orders are a well-established method of applying appropriate sanctions for non-compliance with orders: see Skahill v Kestral Holdings Pty Ltd (in liq) [2000] WASCA 185. That intermediate Court also equated ‘unless’ orders and ‘springing’ orders as reflecting the need to have regard to those rules of court (reflected in this Court in Part VB of the Federal Court of Australia Act 1976 (Cth) (FCAA)) which provide that the processes of the court are to be applied so as best to attain the just determination of litigation, the efficient use of the resources of the court, and the timely disposal of the business of the court at affordable cost. Such peremptory orders “are made to be obeyed and they are generally made only where the party in default has already failed to comply with an order of the court, or has failed to pursue the action in accordance with the rules of court and has been responsible for serious delay”: see Brocx v Hughes [2010] WASCA 57; (2010) 41 WAR 84 at 101 [95] per Newnes JA. Similar, although not identical, orders are not only not foreign to this Court, but self-executing orders which have the effect of bringing a proceeding to an end are not novel: see, for example, Sammy Russo Meat Supplies Pty Ltd v Australian Safeway Stores Pty Ltd [1999] FCA 1381; Deangrove Pty Ltd (Receivers and Managers Appointed) v Commonwealth Bank of Australia [2001] FCA 173; (2001) 108 FCR 77; Lowe v Mack Trucks Australia Pty Ltd [2001] FCA 388; Australian Competition and Consumer Commission v Dataline.net.au Pty Ltd [2005] FCA 153; Wiri People #2 v State of Queensland [2006] FCA 1069; Nucoorilma Clan of the Gamilaaroy Aboriginal People v NSW Minister for Land & Water Conservation [2009] FCA 1043; Skinner v Commonwealth of Australia [2012] FCA 1194; Hutchinson v Comcare [2017] FCA 136.

41    It was submitted below that a meaningful distinction should be drawn between striking out a defence of, and giving default judgment against, a party in continuing default of orders, as opposed to debarring the party from contesting any application made thereafter by another party. The significance of this distinction for present purposes is somewhat difficult to understand. Both types of orders constitute a remedial response to conduct which, in this Court, would be regarded as inimical to the overarching purpose of civil practice and procedure provisions: see s 37M(1) of the FCAA. Indeed, the conduct of LFDB was characterised by the Supreme Court of New Zealand as “gaming the court system” and an abuse of process: LFDB v SM [2014] NZSC 197; (2014) 22 PRNZ 262 at [27]. These are emphatic and serious findings by an ultimate court of appeal. Orders striking out a defence or allowing entry of judgment (very well known in this country) can hardly be said to be less robust responses to egregious default than an ‘unless’ order. Against this background, the notion, expressed at a high degree of generality, that simply because such orders are unknown in Australia public policy considerations are engaged, not only misapprehends that this is not enough (see [36]-[37] above) but is also superficial in that analogous orders are well known.

42    Fifthly, there are reasons, in any event, to be sceptical of the underlying argument that there was some intractable problem with ever making a just order in the absence of one party. The example of a litigant recalcitrantly declining to appear was raised with senior counsel for the appellants. The problem that senior counsel had to confront was that the logical extension of his argument was that if one of the parties made a deliberate decision not to attend, a court may be placed in the impossible position of being prevented from making just and proper property division orders. It is sufficient to merely state this proposition to identify that the contention as advanced by the appellants, at the level of generality at which it was expressed, cannot be correct.

43    In any event, at the very least, the primary judge was correct to reject the notion that merely because a different approach is taken to a common problem in an overseas jurisdiction, that difference renders such an approach contrary to public policy in Australia. The primary judge recognised at [102] that the authorities demonstrate the need to go further. As Tamberlin J noted in Stern v National Australia Bank [1999] FCA 1421 at [143]:

The thread running through the authorities is that the extent to which the enforcement of the foreign judgment is contrary to public policy must be of a high order to establish a defence. A number of the cases involve questions of moral and ethical policy; fairness of procedure, and illegality, of a fundamental nature.

44    The primary judge was correct in determining that the Unless Order did not mean the Relevant Judgment was flawed in such a fundamental way. There is nothing about the bespoke nature of the judicial task to be performed under the NZ Act which brings this conclusion into question and the First Argument therefore fails.

F    The Second Argument

45    As noted at [8(b)] above, the Second Argument proceeds on the basis that it was possible for the Court hearing the substantive application to fulfil its statutory function and proceed to make just orders under the NZ Act notwithstanding the barring order. It posits, however, in order to achieve this end, that it was necessary for the Court to “pay heed to whatever material” the debarred party had previously filed.

46    SM submitted that this contention is incorrect. It is matter for the New Zealand courts to determine what, if any, level of consideration of the debarred party’s material is required in order to fashion an outcome which is just. A court in Australia, in considering an application such as the present, should defer to such a determination by the New Zealand courts, for reasons already explained.

47    It is unnecessary to engage with this argument of legal principle because the Second Argument is flawed at the most basic level. The fact is that the careful and comprehensive reasons of Ellis J plainly demonstrate that her Honour, in making final orders, did pay particular heed and took account of the material filed by LFDB prior to the making of the Unless Order.

48    The reasons of Ellis J (SM v LFDB [2015] NZHC 2630) commence with what her Honour describes at [8] as “a relatively anodyne account” of the litigation omitting “many of the steps taken by [LFDB] to prevaricate, obfuscate, frustrate and obstruct the proceedings and their efficient progress”. After dealing with the procedural history in that fashion, at [51], her Honour turned to her “approach” to the hearing, and after noting issues arose including as to “what account the Court should take of the pleadings and very significantly quantity of sworn evidence filed by the defendant prior to his debarring”, resolved, at [55], that:

…the Court’s role in a formal proof [is] to ensure as best it can that [SM’s] claims have a proper foundation both in law and in fact. And in that context it seems to me to be relevant to take account, in a limited way, the position taken by [LFDB] in not only his pleadings but his evidence, if only as a means of identifying those areas in which the Court needs to take particular care to satisfy itself that the plaintiff has established her case.

49    It is evident throughout the balance of the judgment, that Ellis J found facts and drew legal conclusions in accordance with the approach that she identified. Without seeking to be exhaustive, examples include:

(a)    at [61]-[64], LFDB’s “latest” stance prior to his debarring was summarised and set out in detail; in doing so, her Honour noted that LFDB had “changed his position and his evidence over time to suit whatever happened to be his immediate objective, but also that as the litigation became more intense and combative over time, he has become increasing less rational (and certainly less fair)”;

(b)    at [65], her Honour identified the issues for determination based on the respective positions of both parties, including those identified by LFDB prior to his debarring;

(c)    at [71], her Honour considered the contention of LFDB but rejected it as “perverse and implausible” and preferred the position advanced by SM as to when the parties began living together as a couple;

(d)    at [72]-[77], her Honour canvassed the evidence concerning the incorporation and activities of an Australian and a New Zealand company and, in particular, the evidence of LFDB as to his intentions as to incorporation and as to business activity;

(e)    at [80], reference was made to company records and trust deeds which, it appears, were put into evidence by LFDB. Notably in this regard, at [82], her Honour rejected a contention made by SM that part of the trust arrangements in respect of which LFDB had apparently given evidence was a “sham” and expressed a reluctance to accept an alternative submission of SM that the evidence supported the finding that certain property was held by LFDB personally (rather than being property the subject of a trust);

(f)    at [119], her Honour turned to a detailed valuation of the relationship property. In doing so, her Honour made extensive reference to expert evidence filed on behalf of LFDB (primarily by Mr Dobson, but also by Mr Rickard and Ms Cahill (see [125]); indeed her Honour noted that prior to the debarring, two of the experts, being Mr Dobson (who was engaged by LFDB) and Mr Weber (who was engaged by SM), were directed to confer and produce a joint statement but that Mr Dobson failed to participate in that process (a failure the consequence of which led to her Honour drawing adverse inferences). At [127], her Honour accepted that Mr Weber’s calculation of the property pool was current and should be preferred and that Mr Dobson’s evidence was unreliable. This involved her Honour making a finding that Mr Dobson took LFDB’s instructions at face value despite “striking inconsistencies” and was not provided with certain documents provided to Mr Weber. Relevantly, her Honour’s, with respect, careful consideration of the expert evidence can be seen from [127]-[135].

50    The notion that the reasons which led to the Relevant Judgment do not evince a consideration of the material that had been put before the Court by LFDB is simply wrong and must be rejected. This is without the necessity to go any further and consider the questionable legal merits of the argument, which asserted that a failure to have considered the material, in the circumstances of this case, would have led to a judgment incapable of enforcement consistent with public policy in Australia.

G    THREE additional matters

51    First, as noted above, the Additional Evidence Application was in respect of the Joint Memorandum that New Zealand counsel provided to the Court of Appeal (see [19] above). It turns out, however, that the document actually was before the Court below. As counsel for SM submitted, it was sent to the Associate to the primary judge as part of a “Supplementary Bundle of Memoranda from the New Zealand Proceedings” on 7 October 2016, five days before the hearing on 12 October 2016. Not only was it provided to the Court as Tab 3 in this bundle, but the bundle was before the primary judge at the hearing and reference was made to the bundle during the hearing. In the circumstances, the application to adduce material that was already before the primary judge is misconceived.

52    Secondly, although the rejection of the alternative arguments formulated during the course of oral submissions by counsel for LFDB is sufficient to determine the appeal, for the sake of completeness, reference should be made to the amended grounds of appeal document. It was difficult to understand the precise relationship between the two arguments orally (described as the only bases of the appeal) and the amended document. To the extent some of the grounds (see [6] above) might be thought to travel beyond the contentions advanced orally, they have no merit. In particular:

(a)    the notion that the primary judge failed to have any “proper regard to the nature of the proceeding” that was before Ellis J; this seems to be an argument that goes no further than the First Argument rejected above;

(b)    as to the contention of a failure of the primary judge to have any regard to an agreement reached by the parties as reflected in the Joint Memorandum, this appears to be a contention that goes nowhere. As noted above, New Zealand counsel jointly set out their understanding of how the hearing of the merits of the dispute would be conducted if the Unless Order was in place. To the extent that the Joint Memorandum summarised legal principles, these were not in dispute, and to the extent that this ground embraces an allegation of a departure from those principles, this would be an impermissible collateral attack on the Relevant Judgment. Needless to say, if such an attack was to be mounted, it should have been the subject of an appeal in New Zealand;

(c)    the suggestion that the primary judge failed to have any proper regard to s 72(1)(a) of the Act seems to be a suggestion that the primary judge misconceived his function. The reasons of the primary judge demonstrate that his Honour was under no misapprehension whatsoever as to the nature of the proceedings and the Court expressly dealt with, and rejected, the proposition that enforcement of both registered judgments was contrary to public policy in Australia (albeit on the different grounds advanced before the primary judge);

(d)    finally, the contention that the primary judge “put to an unreasonable level the degree to which public policy in Australia must be affected by orders sought to be enforced in Australia” seems to be directed to a suggestion that the primary judge erred in his approach to the gravity of conduct which would render a judgment unable to be enforced consistently with public policy in Australia. At [102] of the primary judge’s reasons, his Honour identified, in accordance with well-known authorities, that a high threshold is required but also noted that a gross denial of procedural fairness could amount to a failure to meet relevant standards; the reasoning of his Honour is comprehensively set out at [102]-[124] and no error is shown in this regard.

53    The third additional matter arises in somewhat unusual circumstances. On 17 August 2017, after judgment on the appeal had been reserved following the oral hearing, LFDB filed an interlocutory application by which he sought what was described as a “declaration” to the effect that this Court did not have jurisdiction to register (or make orders in relation to the enforcement of) the Relevant Judgment and the Costs Judgment; an ancillary order was also sought, setting aside the registration of those judgments. Such a challenge had never been made or even foreshadowed before the primary judge; nor had it been raised in written or oral submissions on the appeal. Notwithstanding the irregular form of the relief sought, the Court is prepared to deal with the interlocutory application as, in substance, an amended ground of appeal asserting error in the primary judge implicitly satisfying himself that the Court had jurisdiction to register the Relevant Judgment and the Costs Judgment in the first place.

54    On 22 and 24 August 2017, additional directions were made to facilitate the exchange of submissions directed to LFDB’s jurisdictional contention. The point is a short one.

55    LFDB contends that the registration and enforcement of the Relevant Judgment and the Costs Judgment falls within the definition of “de facto financial cause” in s 4 of the Family Law Act 1975 (Cth) (FLA). That definition relevantly provides:

de facto financial cause means:

...

(c) proceedings between the parties to a de facto relationship with respect to the distribution, after the breakdown of the de facto relationship, of the property of the parties or either of them; or

…

(g) any other proceedings (including proceedings with respect to the enforcement of a decree or the service of process) in relation to concurrent, pending or completed proceedings of a kind referred to in any of the preceding paragraphs.

56    LFDB further submits that there were proceedings in New Zealand between the parties to a de facto relationship with respect to the distribution, after the breakdown of the de facto relationship, of the property of the parties and that the subsequent Australian proceedings for registration were proceedings with respect to the enforcement of a decree (defined in s 4 of the FLA as being a judgment or order) in relation to the completed New Zealand proceedings.

57    It is then said (by operation of s 39B of the FLA) that such an application is a de facto financial cause as defined and, unlike other courts upon which jurisdiction is conferred by s 39(1), the Federal Court has no jurisdiction conferred on it to deal with such causes. In this regard LFDB also relies on s 39A(5) of the FLA which provides that “[a] de facto financial cause that may be instituted under this Act must not, after the commencement of this section, be instituted otherwise than under this Act.”

58    This further argument is also misconceived.

59    Part V of the FLA deals with jurisdiction of courts in relation to matrimonial causes (Division 1) and, since 2009, also deals with jurisdiction in relation to de facto financial causes (Division 2). Section 39B is part of an integrated statutory scheme (enacted in 2008 by the Family Law Amendment (De Facto Financial Matters and Other Measures) Act 2008 (Cth), following referrals by the States to the Commonwealth in accordance with s 51(xxxvii) of the Constitution) providing access for de facto couples to the federal family law courts in property and maintenance matters. Notably, this statutory scheme had nothing whatsoever to do with registration of foreign judgments arising from foreign proceedings in foreign courts exercising jurisdiction granted by a foreign law.

60    LFDB submitted that the characterisation of the registration proceeding as a de facto financial cause was available because “proceedings” (defined in the FLA as “a proceeding in a court, whether between parties or not, and includes cross-proceedings or an incidental proceeding in the course of or in connexion with a proceeding”), as that term is used in the definition of de facto financial cause (see [55] above), means any such proceeding whether in Australia or overseas. The problem with this submission is that it fails to have regard to s 21(1)(b) of the Acts Interpretation Act 1901 (Cth), which provides that:

(1) In any Act:

…

(b) references to localities jurisdictions and other matters and things shall be construed as references to such localities jurisdictions and other matters and things in and of the Commonwealth.

(emphasis added)

61    An application to register a New Zealand judgment under the Act (which provides a mechanism for registration of New Zealand judgments) is not a de facto matrimonial cause because it is not a de facto financial cause that is “in and of the Commonwealth”. It was a proceeding which related to the enforcement of a judgment quelling a foreign controversy governed by foreign law, being the NZ Act.

62    This interpretation is not only harmonious with the statutory context referred to in [59] above, but also congruent with s 31 of the FLA, contained in Part IV, which confers original jurisdiction on the Family Court with respect to matters arising under specified Acts including, in s 31(1)(aa), matters “arising under this Act in respect of which de facto financial causes are instituted under this Act”. There is simply no matter (to use that word in its constitutional sense) arising under the FLA, nor can it be said there is any de facto financial cause instituted under the FLA. The associated jurisdiction of the Family Court (s 33) is not relevant because the enforcement of the foreign judgment is not associated with any ‘matter’ (being a justiciable controversy) within the original jurisdiction of the Family Court.

63    The registration of the Relevant Judgment and the Costs Judgment under the Act was not a de facto financial cause as that expression is used in Division 2 of Part V of the FLA. The jurisdictional argument has no merit.

H    Conclusion AND orders

64    It follows that the interlocutory application dated 17 August 2017, and the appeal, must be dismissed. SM has sought a special costs order. Both parties should file within seven days a submission, limited to two pages, as to the terms of the costs order for which they contend. The Court will then determine the issue of costs on the papers.

Associate:

Dated:    15 November 2017

SCHEDULE OF PARTIES