The Facts
Husband and wife marry and have daughter
A husband and wife married in 1988.
They had one child together, a daughter who is now an adult.
Husband and wife buy property together after husband goes to prison
In early 2007, the husband was sentenced to a term of imprisonment. He was also ordered to pay the NSW Crime Commission $100,000, which he paid in full in June 2007.
In 2008 the husband and wife purchased Property C for $450,000.
Husband and wife separate and husband returns to prison
The husband and wife separated in 2009 and divorced in 2012.
In March 2012, the husband was sentenced to another term of imprisonment for a period of two years.
Daughter convinces father to sell property to her for $1 to avoid confiscation of asset
While the man was in prison, his daughter visited him and convinced him to sign a document agreeing to sell his interest in Property C to her for $1.
The daughter told him that she had been contacted by the NSW Crime Commission, which was seeking further funds, having discovered her father’s part ownership of Property C.
She also told him that she would sell the property and buy another in his name.
Neither of these statements was true.
Wife gets consent order giving effect to property sale from father to daughter
The wife commenced property settlement proceedings, which were resolved by consent orders, providing that the wife would retain her interest in Property C and the husband would transfer his interest in Property C to the daughter.
These consent orders gave effect to the conclusion sought by the daughter in having her father sign the document when she visited him in jail.
Wife and daughter sell property, buy new one and father moves in
In 2013, the daughter and wife sold Property C for $540,000 and purchased Property B for $265,000 and Property A for $330,250.
After being released from prison, the husband moved into Property B, erroneously believing that it was his.
Daughter evicts father from property and father applies to set aside consent orders
The daughter evicted her father from Property B.
He then brought proceedings pursuant to section79A of Commonwealth Family Law Act 1975 to have the consent orders set aside on the basis his daughter had misled him, and he had only signed the documents transferring Property C to her because of this deceit.
Court summarily dismisses father’s application and father appeals
The wife and daughter applied for summary dismissal of the husband’s application to set aside the consent orders (ie they asked the court to throw out his application on the basis that it had no reasonable prospect of success).
The Federal Circuit Court of Australia ruled in favour of the wife and daughter, granting the summary dismissal.
The husband appealed to the Family Court of Australia.
Expert commentary on the court's decision
Family Court rules in favour of husband
In Ritter & Ritter and Anor [2020] FamCAFC 86, the Family Court of Australia found in favour of the husband, overturning the grant of summary dismissal to the wife and daughter.
The court also ordered the wife and daughter to pay the husband’s costs of the appeal in the sum of $19,030.67.
Section 45A of Family Law Act allows for summary dismissal if no reasonable prosect of success
Section 45A of the Family Law Act 1975 provides that the court can make an order against a party to dismiss their application if the court is satisfied that the party has no reasonable prospect of success.
Unclean hands doctrine misapplied by trial judge
In determining whether the husband had a reasonable prospect of success, the primary judge explored whether he came to court with “clean hands”, so as to entitle him to the exercise of the discretion of the court.
The appeals court noted that the maxim, “he who comes into equity must come with clean hands” is not of universal application and only applies where the improper conduct of the plaintiff has “an immediate and necessary relation to the equity sued for”.
On this basis, the court concluded that the principle had no place in the primary judge’s consideration of the issues to be determined by her.
Reliance on husband’s motive was denial of procedural fairness
As summarised by the appeals court, procedural fairness “requires that anything relied upon by a court in reaching its decision be made known to the parties… prior to the making of the decision, so that parties may oppose reliance upon it, produce evidence in relation to it and/or make submissions about it”.
In the court’s view, the husband had been denied procedural fairness by the primary judge.
This was because a significant factor in the primary judge’s decision to grant summary judgement was her conclusion that the husband was attempting to profit by his own fraud.
Her conclusion was never raised as an issue in the proceedings, only being mentioned for the first time in her reasons for judgement. This meant that the husband had been given no opportunity to present material information or submissions.
The court explained that while not every denial of procedural fairness will be sufficient to establish appealable error, critical consideration needs to be given to the consequence of the denial and whether it is material.
In this instance, the court found the denial to be material, as it struck at the validity and acceptability of the trial process and its outcome.
Reliance on insufficiency of evidence was also denial of procedural fairness
The adequacy of the husband’s evidence pertaining to his application to set aside the consent orders was not raised before the primary judge as an argument for granting summary judgement.
Yet, the primary judge pointed to the insufficiency of the husband’s evidence in her reasons for judgement.
The appeals court found that this too was a denial of procedural fairness which had a material effect on the primary judge’s orders.
Primary judge incorrectly applied legal principles pertaining to summary dismissal
In deciding whether the husband had a reasonable prospect of success, the primary judge was required to take the husband’s case “at its highest” unless his version was inherently incredible or unreliable.
The appeals court found that while the primary judge correctly stated this principle, she erred in how she applied it.
Since she did not find the husband’s account of the circumstances in which he signed over his interest in Property C to be inherently incredible or unreliable, there was no basis for not accepting his account.
Further, in the court’s view, very little evidence was required to prevent summary dismissal because “a miscarriage of justice occasioned by [the daughter’s] fraud cuts to the integrity of the judicial process”.