FEDERAL CIRCUIT COURT OF AUSTRALIA
PAVIC & PAVIC  FCCA 3386
CATCHWORDS: FAMILY LAW – Arbitration – where the wife objects to the registration of the arbitral award – where the bases for objection to the registration of the arbitral award are not specified within the Family Law Act 1975 – reference to the Commercial Arbitration Act 2010 as a grounds for objection to registration of the arbitral award – consideration of the circumstances in which the Court should set aside or review an arbitral award – determination of costs with respect to the arbitration.
(1) The Arbitration Award of Mr Jeffrey David dated 22 August 2018, is registered as it if were a Decree of the Federal Circuit Court of Australia.
(2) All outstanding Applications and Responses are withdrawn and dismissed and all issues are removed from the list of matters awaiting hearing.
(3) The wife shall pay the husband’s costs of and incidental to the determination of objection to registration of the arbitral award and/or review/setting aside of the arbitral award pursuant to sections 13J and 13K of the Family Law Act 1975, such costs fixed in the sum of $5,000 and to be paid by the wife to the husband within 42 days of today’s date.
(4) Declare that the issue of costs with respect to the conduct of the arbitration leading to and including the delivery of the arbitral award dated 22 August 2018 are costs which must properly be determined by the arbitrator representing a portion of the dispute or a necessary ancillary issue arising from the referral of the totality of the Part VIII proceedings between the parties.
REASONS FOR JUDGMENT
- The substantive proceedings between these parties relate to the determination of issues of property adjustment between them. The parties are, Mr Pavic, the Applicant in the substantive proceedings, and Ms Pavic, the Respondent in the substantive proceedings. For the purpose of this determination, the role of the parties is reversed. The Application before the Court today is an Application in the arbitration.
- The matter comes before the Court today for determination of Applications “objecting” to an arbitral award. I have used that broad and generic term purposefully at this point and for reasons that will become apparent, although I propose, for reasons that will also be explained, to adopt greater definitional purity in relation to the separate heads of jurisdiction that are available as regards impeachment of the arbitral award.
- The proceedings between the parties were commenced by an Application Initiating Proceedings filed on 30 June 2017. A Response thereto was filed on 8 September 2017.
- The proceedings came before a Judge of this Court on 12 September 2017. The parties were referred to a Registrar’s Conference. That Conference proceeded on 20 October 2017.
- The matter returned before the then docketed Judge on 1 February 2018 at which time a number of directions were made to prepare the matter for hearing.
- The proceedings were then, for reasons which are not relevant to this determination, transferred to my docket.
- The matter came before me on 30 April 2018. On that date, an Order was made by consent, pursuant to section 13E of the Family Law Act 1975, referring the totality of the proceedings to arbitration. The matter was adjourned for a period of time to enable the arbitration to occur.
- During that period, an objection to subpoena came before the Court. That objection was dealt with by separate Judgment on 11 July 2018. The objection was dismissed and leave was granted to the legal representatives for the parties to inspect the material produced.
- The matter next came before the Court on 20 September 2018, being the original date to which the proceedings were adjourned following referral to arbitration. On that date, it was noted that a Form 8 Application, seeking registration of the arbitral award, had been filed and that the Application had been served the preceding day, 19 September 2018. It was apprehended that an objection might be made to registration of the award or that it might be sought to impeach the award. As a consequence, the matter was adjourned to 2 November to enable the 28-day period for objection, required by regulation 67Q(3) of the Family Law Regulations 1984, to pass.
- When the matter next came before the Court on 2 November 2018, objection to registration of the award had been raised. Accordingly, the proceedings were adjourned to today to allow the husband to respond. At the time that the proceedings were adjourned, it was noted that the arbitral award might be sought to be impeached by:
a) Objection to registration (regulation 67Q of the Family Law Regulations 1984); or,
b) An Application to set aside the arbitral award (section 13K of the Family Law Act 1975); or,
c) An Application to review the arbitral award (section 13J of the Family Law Act 1975).
- The Court is advised this morning that the objection to registration is not pressed. However, some brief comment must be made regarding that issue for completeness, and lest it be implied, that it has otherwise been disregarded.
Objection to Registration of the Arbitral Award
- The bases for objection are not specified within the Family Law Act 1975. The right to object is created by regulation 67Q of the Family Law Regulations 1984.
- Regulation 67Q(3) provides:
A party on whom an application [for registration of an arbitral award] is served may, within 28 days after service, bring to the attention of the Court any reason why the award should not be registered.
- There is no form by which objection is to be raised. The Regulation indicates, by note, that “an example of a way of bringing a matter to the attention of the court is by filing an affidavit”. As I had previously commented in Braddon & Braddon  FCCA 1845, that method, the filing of an Affidavit, would appear the most appropriate means by which to raise objection as there would need to be evidence before the Court as to the complaints suggested to obviate against registration. An Application in an arbitration may also be appropriate.
- Regulation 67Q(5) provides:
If a party brings a matter to the Court’s attention … the court must, after giving all parties a reasonable opportunity to be heard in relation to the matter, determine whether to register the award.
- In this case, each of the parties has had the opportunity to file and has, in fact, filed written submissions in relation to their respective positions. The written submissions provided by Counsel for the wife address objection to registration, review and setting aside the arbitral award. In the case of the Respondent, having had notice that the matter would proceed on one or all of these grounds, Counsel has filed written submission addressing all grounds upon which the arbitral award is sought to be impeached.
- In my earlier decision of Braddon, reference was made by me to the bases upon which objection to registration might arise. At paragraph 49 of Braddon, I had said:
In the absence of any clear specification or definition, within either the Family Law Act or the Regulations, of reasons which support non-registration of an Arbitral Award, I am satisfied, that those reasons should be approached from the perspective of and upon the same basis as, the grounds for reviewing or seeking to set aside a registered Award pursuant to sections 13J and 13K of the Family Law Act together with any complaint as to non-compliance with the regulations.
- Sections 13J and 13K of the Family Law Act 1975 relate, respectively, to review of an award or setting aside an award. Whilst in Braddon I made reference to the grounds of registration being no broader than the bases set out in these sections, it must be remembered that Braddon did not proceed as an objection to registration. As would be apparent from paragraph 69 of that Judgment, the award had been registered prior to any Application to impeach the award and, accordingly, an objection to the award’s registration could not have been maintained. The term “objection” was used as a broad term seeking to capture both the section 13J and 13K grounds for review and setting aside. Hereafter, I will confine any discussion specifically to the grounds that arise from both the Act and Regulations. I am conscious to ensure that definitional integrity is adopted.
- As the grounds for objection to registration of an arbitral award are not defined, it is necessary to give some consideration to what might be appropriate or permissible bases for objection. That consideration is separate to any consideration of the grounds for review or to set aside the award once registered. The grounds for review and setting aside of an award are specifically defined by the Family Law Act 1975 and the sections already referred to.
- In relation to matters that might be a basis for objection to registration of an arbitral award, I am satisfied that assistance and guidance is given by a consideration of the provisions of the Commercial Arbitration Act 2010 (NSW), which I shall hereinafter refer to as “the Model Law”, as the Act is largely replicated in the various State arbitration Acts which are each the subject of settled jurisprudence.
- I am satisfied that reference within the Model Law to “recognition and enforcement” of awards is directly referable to registration of an award under the Family Law Act 1975. They are one and the same. In that regard, I am also conscious of that opined by Professor Parkinson in a paper delivered to the Family Law Pathways group, Katoomba, June 2016. Therein Professor Parkinson observes at page 9:
“…it is important to note that an arbitral award only takes effect once registered”
And hence the arbitral award is enforceable only upon registration.
- In the absence of authority as to the proper basis for objection to registration of an arbitral award, I am satisfied that I should consider the address of that issue by reference to the Model Law. That will provide the guidance of Superior Courts and lead to consistency between jurisdictions.
- Section 36 of the Model Law provides for “recognition and enforcement” or arbitral awards rather than registration. The Model Law provides for enforcement of an arbitral award by recognition (and enforcement). I am satisfied that “recognition and enforcement” of an arbitral award, as described in the Model Law, is referrable to and one and the same as registration of an arbitral award under the Family Law Act 1975.
- In relation to objection, Professor Parkinson opines, commencing at page 12 of the above article, as follows:
Because the legislation only provides for an arbitration award to be challenged after it has been registered in Court and the regulations do not indicate the basis for objection, it is necessary to go back to some basic principles to understand what this right to “bring to the attention of the Court any reason why the award should not be registered” might mean. The first point to observe is that the regulations are subject to the head legislation. If any regulation is inconsistent with the terms of the legislation, it will be invalid to the extent of that inconsistency. Section 13H Family Law Act does not give any party to an arbitration a right to object to registration. It only gives the Court the power to review the arbitration award (on the various grounds given) after it has been registered, so whatever the right to “bring to the attention of the Court any reason why the award should not be registered” its meaning ought to be consistent with the legislation’s provision that powers of review be exercised in relation to registered awards.
- I am satisfied that what Professor Parkinson is indicating at this point is entirely consistent with settled case law relating to the interpretation of section 36 of the Model Law. Professor Parkinson continues:
Secondly, as a matter of general principle, Australian Courts will only deal with orders of another Court if the orders are registered. It is the registration that gives the Court jurisdiction to deal with it by enforcement or otherwise. Thirdly, before any legal document can create rights and obligations, the conditions precedent for legal validity must be satisfied. Unless and until the conditions precedent for a valid contract are satisfied, there is no contract to interpret or enforce. Unless a Court, other than a superior Court of record, has jurisdiction to make an order, any orders it purports to make are a nullity (see Enid Campbell ‘Inferior and Superior Courts of Record” (1997) 6 Journal of Judicial Administration 249).
- I pause to observe that Professor Parkinson’s opinions on this point accord with my own. The direct comparison between the Model Law, to the extent that it discusses recognition and enforcement, must compel that registration under the Family Law Act 1975 and Family Law Regulations 1984 be read, considered, and interpreted on the same footing. Professor Parkinson concludes:
It follows that the most sensible interpretation of the right to “bring to the attention of the Court any reason why the award should not be registered” is that a person may argue that an award should not be registered because one of the conditions precedent for legal validity have not been met. Examples might be:
(a) The objecting party did not consent to the arbitration. [In the context of the Family Law Act 1975, it must be observed that section 13E, referrals to arbitration, can only occur by consent];
(b) The arbitrator is not qualified in accordance with the regulations. [In this regard, it is to be noted that the arbitrator – whose qualifications and whose arbitral award I will return to shortly – is included in the list of accredited arbitrators maintained by the Australian Institute of Family Law Arbitrators and Mediators (AIFLAM) as an arbitrator and, accordingly, that could not be a challenge];
(c) The arbitration purports to deal with matters that are outside of the scope of the matters that may legally be arbitrated.
- Again, the Order referring the matter to arbitration, as recited above, referred the totality of the proceedings to arbitration. Accordingly, and there being no challenge to the exercise of power by the arbitrator as going beyond that which was referred, such objection could not be maintained.
- Professor Parkinson concludes:
If such matters were made out then there would be no legally valid arbitration award to register, review or set aside. If the arbitration award is valid on its face – that is, the conditions precedent for it to be described as an arbitration award under the Family Law Act are met – then it should be registered and objections to its enforcement dealt with in accordance with sections 13 J and K, the power to review awards or set them aside.
- If one turns to section 36 of the Model Law relating to recognition and enforcement of arbitral awards, the grounds that are provided accord with that expressed by Professor Parkinson and, indeed, more broadly describing the conditions precedent of a valid arbitration.
- Section 36 of the Model Law provides that a Court may refuse to recognise or enforce an arbitral award on a number of grounds including:
a) Incapacity of a party;
b) That the arbitration agreement is not valid under the law to which the parties are subjected – in this case, the Family Law Act 1975;
c) That a party against whom the award is invoked was not given proper notice of the appointment of the arbitrator;
d) The award deals with a dispute not contemplated or falling within the terms of submission to arbitration;
e) The composition of the arbitral tribunal was not in accordance with the agreement of the parties;
f) The award has not yet become binding on the parties under the law under which the arbitration was conducted.
- The grounds to oppose recognition and enforcement of an arbitral award under the Model Law, whilst not specifically enumerated in regulation 67Q of the Family Law Regulations 1984, are a good starting point for understanding what might be appropriate bases to object to registration of an arbitral award. They largely reflect the points above. I propose to deal with each of them briefly:
a) Neither party suggests that they were under an incapacity;
b) Neither party suggests that the proceedings were determined other than in accordance with the law of the jurisdiction in which the arbitration occurred. That is not to suggest that there is no complaint that the law was misapplied. However, the correct law was identified and applied;
c) Proper notice was given of the arbitration. Both parties participated in the arbitration and were represented by Counsel. That must, of itself, obviate against any complaint as to a lack of notice;
d) The award deals with issues and disputes which are contemplated by the parties. The totality of the dispute was referred to arbitration and an arbitration agreement entered into which clearly defined the issues for determination and it is those issues which were determined;
e) The arbitrator, Mr David, is an accredited arbitrator for the purpose of the Family Law Regulations 1984;
f) The parties had entered into a mediation agreement, as is recited within the arbitral award.
- Whilst the grounds for objection to registration of an arbitral award under the Family Law Act 1975 are not necessarily strictly confined to those enumerated by section 36 of the Model Law, the grounds for objection to registration, (in the case of the Family Law Act 1975), and for recognition and enforcement (in the case of the Model Law) should be interpreted consistently across jurisdictions.
- None of the above grounds that could be a basis for objection to registration arise.
- Objection to registration deals with the constitution of the arbitral tribunal and the necessary preconditions thereto, matters such as the giving of notice, submission to arbitration and the like. All of those conditions are satisfied in this case. Objection could not thus be established.
- Section 34 of the Model Law, which deals with setting aside arbitral awards, might also be relevant, by way of comparison, in informing the possible bases for objecting to registration of an arbitral award. However, the section need not be considered further as the grounds for setting aside an arbitral award under section 34 are identical to those for opposing recognition and enforcement under section 36.
- The standard of proof required to demonstrate and establish the bases for objection to registration of an arbitral award also requires some comment. I am satisfied that the appropriate standard is that described in TCL Air Conditioner (Zhongshan) Co Ltd v The Judges of The Federal Court of Australia & Anor  HCA 5. In that case, the High Court of Australia made clear that an arbitral award would not be set aside or recognition refused under sections 34 and 36 respectively of the Model Law:
unless there is demonstrated real unfairness or real practical injustice in how the [international case] litigation or dispute resolution was conducted or resolved by reference to established principles of natural justice or procedural fairness. The demonstration of real unfairness or real practical injustice will generally be able to be expressed and demonstrated with tolerable clarity and expedition.
- The above passage might suggest a further ground of objection, namely, a denial of due process within the arbitration. No such complaint is raised in this case. Further, the arbitral award clearly discloses that both parties were represented and heard, that both parties had input into the definition of the issues to be arbitrated (as set out in the arbitration agreement). Both parties would appear to have been afforded abundant due process.
- I have also had regard to the discussion of Mason CJ in Autodesk Inc & Dyason (No 2). Whilst, in that case, the Chief Justice was dealing with an Application to set aside a default Judgment, I am satisfied that the principles applicable are comparable to an Application to refuse to recognise and enforce an arbitral award (or, in the Family Law Act 1975 context, register the award) and should be applied.
- The Chief Justice articulated four principles to be borne in mind in relation to an Application to set aside default Judgment, which principles would be equally applicable to an Application to refuse enforcement or recognition of an arbitral award under the Model Law (or registration of an arbitral award under the Family Law Act 1975), namely:
(1) The power is to be exercised “with great caution” in view of the public interest in the finality of legal proceedings;
(2) The power may be exercised where, through no fault on the Applicant’s part, the Applicant has not been heard on a matter decided by the Court;
(3) The jurisdiction extends to cases where a Court has good reason to consider that the arbitral tribunal has proceeded on a misapprehension of the facts or the law, such as a failure to recognise a line of authority. One of the complaints raised by the wife in these proceedings is that the arbitrator has not applied, for example, the principles enunciated by Baker J in Kowaliw & Kowaliw (1981) FLC 91-092. I am not satisfied that that is so, but will, in any event, deal with that issue by reference to review of the arbitral award itself under section 13J of the Family Law Act 1975;
(4) The jurisdiction (in this case, objection to registration of the arbitral award) is not a backdoor for rearguing the case. The objection process is not to be used for the purpose of reagitating arguments already considered by the arbitral tribunal when a party has failed to present that argument in all of its aspects or it was not put at all.
- Jurisprudence from State superior Courts, operating under the Model Law, make clear that the Court should proceed on the basis of prima facie recognition and enforcement of awards. In Larkden Pty Limited v Lloyd Energy Systems Pty Ltd  NSWSC 1331, Hammerschlag J, at paragraph 25, made clear that complaints with respect to arbitral awards should pertain to “the State’s basic notions of morality and justice with which public policy is more appropriately concerned”, quoting a number of authorities contained within that passage.
- Similarly, Croft J of the Victorian Supreme Court in Andent Pty Ltd v Thornhill Machine Tools Australia Pty Ltd  VSC 647 said:
The prima facie right to recognition and enforcement of an arbitral award is consonant with the common law view that the issuing of an arbitral award gives rise to an implied promise that the award will be honoured. In Agromet Motoimport Ltd v Maulden Engineering Co (Beds) Ltd Evans LJ said:
“…Conceptually the claim arises under a contractual undertaking to honour the award. This may mean that the party against whom the award is made becomes under an immediate obligation to pay the amount of the award…”
- I pause to observe that under the Family Law Act 1975, such obligations do not and cannot arise as a legally enforceable obligation until the arbitral award is registered.
- Croft J concluded:
“It follows that the arbitral award should be recognised and enforced [or, under the Family Law Act 1975, registered] unless any of the grounds enumerated in section 36 apply, or unless a successful application is made to set aside the arbitral award under section 34”
- Similarly, in Amasya Enterprises Pty Ltd v Asta Developments (Aust) Pty Ltd  VSC 326, Croft J returned to that very issue, quoting at length from the High Court of Australia’s decision in TCL Air Conditioner already referred to. His Honour then, commencing at paragraph 23, embarked upon an erudite discourse with respect to overseas jurisdictions and the principles that have been consistently espoused by those jurisdictions consistent with Australian authority. Each of those cases makes clear that the Court can, and should, recognise and enforce arbitral awards unless it is clearly established that one of the grounds within the enabling legislation make it egregious to do so.
- By reference to the above, I am not satisfied that an objection could have been made out, although, as is clear from the outset, the objection is not ultimately pressed. However, the initial Application which led to these proceedings being listed for determination was an objection to registration of the arbitral award and it is on that basis that the possible grounds of objection have been addressed.
- Before concluding a discussion of the possible bases for objection to registration of an arbitral award, it should also be noted that regulation 67P of the Family Law Regulations 1984 might provide additional bases for objection. Regulation 67P provides the technical requirements, if they might be so described, for making an award. It indicates that an award must include a concise statement setting out the reasons for the award and the findings of fact made and referring to evidence considered in making those findings.
- A complete absence of reasons might be a valid basis for objection to registration of an award, as if so absent, the regulated requirements of an award are not met, (although it is difficult to envisage when this might arise). If a complaint were raised that reasons were inadequate then I am not satisfied that this would be a basis for objection to registration. It would be more appropriate, in the event that there was a challenge as to the adequacy of reasons, that this be dealt with by way of review of the arbitral award. This is so, particularly as a yawning chasm arises between a right to object to registration and what might arise if the objection is upheld. The Act and Regulations are entirely unclear in those circumstances. One might argue that the matter would be remitted to the arbitrator for rehearing in accordance with law. However, once an award is delivered, the referral to arbitration is spent and, accordingly, it is more likely that the Court would then determine the matter as to do otherwise would leave the rights of the parties unaddressed and the controversy between them unquelled. Clearly, if an arbitral award were successfully reviewed, the Court would then proceed to make a determination even if of limited scope such that this latter approach would lend consistency. However, that controversy does not arise in this case and need not be further addressed.
Review of the Arbitral Award
- From the outset, it must be observed that arbitration is not a judicial process. Section 10L of the Family Law Act 1975 makes so much clear in the definition of “arbitration” as:
…a process (other than the judicial process)[emphasis added] in which parties to a dispute present arguments and evidence to an arbitrator who makes a determination to resolve the dispute.
- The definition also apprehends that arbitration might occur by referral from the Court pursuant to section 13E of the Family Law Act 1975 or simply by the parties agreeing and contracting to do so. An arbitral award can be registered without prior proceedings and Court referral. This voluntary contracting into arbitration reinforces the validity of comparison of provisions under the Family Law Act 1975 and the Model Law. Arbitration involves the parties consenting and submitting to a determination by a non-judicial third-party neutral by agreement or on a contractual basis, even if the arbitration is Court ordered, whereas a judicial determination involves the parties’ submissions or consent to determination by a judicial officer as part of the operation of the rule of law in a functioning democracy as discussed by Field and Boulle:
“…the orderly management of disputes is…a critical feature of democratic governance, a feature enabled by the rule of law. The rule of law in democracies such as Australia ensures a consistently peaceful and ordered society because it puts in place a network of accessible, fair and usually open and accountable institutions and procedures that allow for citizens to address sources of dispute and conflict”
- Arbitration is one such means of managing and resolving disputes.
- Whilst it is fundamental to a democracy that parties have access to a means of dispute resolution, as Rares J has opined, the Court is far more than a means of dispute resolution. It is a means by which controversies are quelled on a final and binding basis. Arbitration, fundamentally, is not binding until such time as the arbitral award is recognised and enforced, as described in the Model Law, or registered by the Court, as described in the Family Law Act 1975. As registration of an arbitral award results in the arbitral award having effect as if it were a decree made by that Court, the Court must retain, as it does, discretion to review or set aside awards or, for that matter, address objection to their registration. This is entirely consistent with the High Court of Australia’s discussion in Harris v Caladine (1991) 172 CLR 84.
- The grounds for reviewing and setting aside an arbitral award are found in sections 13J and 13K of the Family Law Act 1975, and I incorporate those sections herein.
Family Court or Federal Circuit Court can review registered awards
(1) A party to a registered award made in section 13E arbitration or relevant property or financial arbitration may apply for review of the award, on questions of law, by:
(a) a single judge of the Family Court; or
(b) a single judge of the Family Court of a State; or
(c) the Federal Circuit Court of Australia.
Note: There may be Rules of Court providing for when, and how, an application for review of the award can be made (see paragraph 123(1)(sf)).
(2) On a review of an award under this section, the judge or Federal Circuit Court of Australia may:
(a) determine all questions of law arising in relation to the arbitration; and
(b) make such decrees as the judge or Federal Circuit Court of Australia thinks appropriate, including a decree affirming, reversing or varying the award.
Family Court and Federal Circuit Court may set aside registered awards
(1) If an award made in section 13E arbitration or relevant property or financial arbitration, or an agreement made as a result of such arbitration, is registered in:
(a) the Family Court; or
(b) the Federal Circuit Court of Australia; or
(c) a Family Court of a State;
the Court in which the award is registered may make a decree affirming, reversing or varying the award or agreement.
(2) The Court may only make a decree under subsection (1) if the Court is satisfied that:
(a) the award or agreement was obtained by fraud (including non-disclosure of a material matter); or
(b) the award or agreement is void, voidable or unenforceable; or
(c) in the circumstances that have arisen since the award or agreement was made it is impracticable for some or all of it to be carried out; or
(d) the arbitration was affected by bias, or there was a lack of procedural fairness in the way in which the arbitration process, as agreed between the parties and the arbitrator, was conducted.
- It is clear from each of the sections that jurisdiction to either review an arbitral award or to seek to set an arbitral award aside can be exercised by a single Judge of the Federal Circuit Court of Australia.
- Regulation 67I of the Family Law Regulations 1986 provides that “…an arbitrator must determine the issues in dispute between the parties to the arbitration in accordance with the Act”. Section 13J(1) of the Family Law Act 1975 provides that a party “…may apply for review of the award on questions of law”. Section 13J(2) provides that on review of an award the Court may “…determine all questions of law arising in relation to the arbitration and make such decrees as the judge or Federal Circuit Court of Australia thinks appropriate, including a decree affirming, reversing or varying the award.”
- I am satisfied that an Application for review would thus proceed as an Application for judicial review. The principles for such a review are set out at paragraphs 88-90 of Braddon.
- Upon review and, if satisfied that there has been an error of law, the Court may pronounce a decree affirming, reversing or varying the award.
- If a decree were pronounced reversing the award, again, the Court is left without guidance as to what would then transpire. I am satisfied that the Court would proceed to determine the controversy as the arbitral process has concluded.
- Whilst section 13K of the Family Law Act 1975 is headed “Family Court and Federal Circuit Court may set aside registered awards”, the power is actually broader than a mere power to set aside an arbitral award. The Court may affirm, reverse (set aside) or vary the arbitral award.
- Section 13K(2) is specific as to the bases upon which the Court may set aside an award, being:
a) The award was obtained by fraud (including non-disclosure of a material matter); or,
b) The award is void, voidable or unenforceable; or,
c) In the circumstances that have arisen since the award was made it is impracticable for some or all of it to be carried out; or,
d) The arbitration was affected by bias or there was a lack of procedural fairness in the way in which the arbitration process, as agreed between the parties and the arbitrator, was conducted.
- I do not propose to canvas the bases set out in section 13K as those grounds are not advanced as impeaching the arbitral award.
- As the matter proceeds on the basis of alleged errors of law, section 13J is the applicable law. In approaching the wife’s Application for review, I must turn to and consider the arbitral award.
The arbitral award
- In reviewing the arbitral award and deciding whether the arbitral award should be affirmed, reversed or varied, it is necessary to commence with a consideration of the award itself. There are a number of matters of moment in relation to the award that must be observed from the outset.
- Firstly, the award, on its first page under the heading “Background”, records that:
a) The parties entered into a specific arbitration agreement prior to the arbitration proceeding;
b) Both parties participated in the arbitration and that both were represented; and,
c) The specific issues for determination were identified by the arbitration agreement between the parties and the arbitrator.
- That preamble makes clear that the parties had agreed on certain facts. They are annexed to the arbitral award as schedule 1, being a joint statement provided to the arbitrator by the parties headed “Statement of Agreed Facts”.
- The Statement of Agreed Facts is of particular relevance as it records the submission to arbitration by the parties of their dispute on the basis that the statement of agreed facts reflects the evidence to be taken into account by the arbitrator. At paragraph 32 of the Statement of Agreed Facts it is recorded:
The following credit card liabilities of the parties are debts of the marriage.
- That paragraph then goes on to enumerate 36 specific credit card liabilities of either the husband or the wife and which the parties have put under the descriptor “debts of the marriage”. Similarly, schedule 2, a joint balance sheet of the parties, sets out each of those 36 credit card liabilities as liabilities to be taken into account in this dispute. The amount then outstanding with respect to each of those credit card liabilities is set out. As a consequence, it is made clear that the total assets of the parties, less their liabilities, are a fairly meagre sum.
- There is some possibility for argument that the value of the net property pool of the parties, as referred to through the arbitral award, is at some slight variance with schedule 2, although the point is not taken and thus is not further considered. In any event, it is not a serious issue in relation to the arbitral award itself.
- The arbitral award is, without intending to provide praise for its own sake, clear, easy to read, and demonstrates a clear chain of logic in arriving at a determination. Each fact relied upon, whether as agreed between the parties or as determined by the arbitrator following each of the parties having been afforded an opportunity to be heard, is clearly stated. Each of the parties gave evidence and opportunity was provided to each party to challenge that evidence. On its face, the arbitral award is prima facie an award determined in accordance with relevant legal principle.
- The submissions that are put on behalf of the wife raise a number of complaints. Those complaints are addressed specifically in the submissions put on behalf of the husband, and I propose to refer to and consider each complaint briefly.
- Fundamental to the attack upon the arbitral award, and thus the desire to enliven the Court’s jurisdiction to review it, is the suggestion that the arbitrator did not take into account or appropriately dealt with the credit card debts that are referred to above.
- At the commencement of the wife’s submissions six grounds are identified and I will deal with each in order.
The arbitrator failed to take into account the parties’ respective financial positions at the date of settlement, considering only the joint net financial situation of the parties
- In relation to this ground, the husband, through his Counsel, protests the validity of the arbitral award. At paragraph 14 of the husband’s submissions is the following:
The arbitrator correctly identified the parties’ respective financial position as at the date of arbitration.
- Indeed, that is so.
- At various points throughout the arbitral award, (which I do not propose to specifically identify other than by page number as the arbitral award, whilst set out in individual paragraphs, is not paragraph numbered), the arbitrator refers to the present financial position of the parties in some detail including by reference to:
a) The parties’ present living arrangements or allegations of their present living arrangements;
b) The parties’ present incomes;
c) The parties’ present assets;
d) The value of the parties’ present assets;
e) The present balance outstanding with respect to the parties’ respective credit card debts including the reductions in those debts which have occurred since separation. See, in particular, the discussion commencing at page 9.
- In that regard, one could not find that the arbitrator failed to take into account the parties’ respective financial positions as at the date of arbitration. It is clearly set out throughout the arbitral award.
The arbitrator failed to take into account the effect the proposed settlement would have on the parties
- The wife complains that the arbitral award results in an unjust settlement and that the wife will have net assets of $101,000 but debt of $523,390 whilst the husband will have assets worth $33,727, no debt and a steady career earning him about $130,000 per annum. The wife will retain the home valued at $640,000.
- That complaint is connected with the broader complaint that the arbitrator has included all of the credit card debt of the individual parties as debts of the marriage. Indeed, that position is what was submitted to the arbitrator as an agreed fact at paragraph 32 of schedule 1. What is clear is that the wife was afforded a real opportunity, which she undertook, to conduct her case as she desired. The parties jointly submitted a statement of agreed facts which conceded that the numerous credit card debts were to be treated as matrimonial debts.
- The dispute was presented to the arbitrator in a particular fashion, being that the credit cards should all be taken into account as debts of the marriage and thus “taken off the top”, as it were, in compiling a balance sheet for these parties. It is now suggested that the credit card debts should have been dealt with separately and differently to the manner that the dispute was defined and presented and the case of each party respectively conducted. That is a point taken up by Counsel for the husband.
- In turning to the arbitral agreement, what is apparent is that the arbitrator calculated that which each of the parties would retain. The net effect of the arbitral award is that the wife is to receive 75 per cent of the net assets of the parties as identified and agreed upon by them. The discussion leading to that conclusion commences at page 14 of the arbitral award.
- The arbitrator, in the penultimate paragraph on page 14, sets out the basis for his award in favour of the husband. The husband is to receive 25 per cent of the non-superannuation assets of the parties. The arbitrator has proceeded on the basis of what might be described as a two-pool approach, excluding superannuation and dealing with it separately and differently as was the agreement that was submitted to the arbitrator.
- Neither party sought an Order adjusting interests in superannuation as identified in schedule 2. Those interests are not dramatically disparate (subject to that observed within the balance sheet that the wife’s superannuation had not been disclosed or at least that alleged).
- As a consequence of the arbitrator’s calculation that the husband is to receive 25 per cent of the net available assets ($134,851) equating to the wife making payment to the husband of $33,712.75. The arbitrator observes that the husband will retain a motor vehicle and modest savings, together with credit card liabilities. Accordingly, once those retained assets and liabilities are taken into account, there was the need for payment by the wife to the husband of a sum certain of $113,134. The net effect of the arbitral award is that the husband will retain his credit card liabilities – although, presumably, using the funds paid to him to discharge them – and would, overall, receive a total of $33,712.75 or 25 per cent of the net pool of property.
- The arbitrator clearly took into account all of the debts of the parties as they were presented. I have some difficulty comprehending how the wife validly complains that she is left in a worse position than the husband. True it is that the effect of the credit card debts of both parties being taken into account as liabilities to be deducted from the gross assets of the parties means that both parties will contribute in some fashion to discharge of those liabilities, the husband by either retaining or paying them out from the settlement funds that he receives, the wife by being required to pay a settlement fund calculated by reference to and with deduction of those amounts.
- The reality, however, if the credit card debts of the parties were not included – and if the husband’s credit cards were not included then nor could the wife’s credit card debts be included – then there would be very little difference in the ultimate outcome. The sum certain that the wife would be required to pay would not decrease dramatically, and, whilst each would then be left with their credit card liabilities, the net position for the parties or either of them would not dramatically change, if it changed at all. That discussion, however, is somewhat unnecessary as regards the claim for relief or ground for review.
- The wife’s complaint is that the arbitrator failed to take into account the effect of the settlement. The arbitrator did not fail to do so. He most clearly and specifically, and as articulated in erudite reasoning, took all of those debts into account as the parties jointly suggested that he should. Not only were the credit card debts taken into account, they were taken into account in the manner in which the dispute was presented to the arbitrator. It was an agreed fact that all of the credit card debt was referrable to the dispute between the parties and should be treated as debts of the marriage.
- It is submitted in the wife’s case that authorities such as Kowaliw & Kowaliw (1981) FLC 91-092 would obviate against such an approach being adopted. Specific attention is drawn to page 3 of the arbitral award indicating that whilst both parties accepted that during their relationship they lived well beyond their means and had significantly subsidised their living expenses by incurring debt, neither gave any particulars as to the specific purposes for which the bulk of these debts were incurred. Whatever may have been the purpose of this expenditure, it was, as indicated, the common position of the parties that the liabilities were a joint responsibility.
- It is submitted by the wife that “this is the kind of conduct Baker J had in mind when speaking of parties who ‘acted recklessly, negligently or wantonly’” and thus warranting an adjustment pursuant to section 75(2)(o) of the Family Law Act 1975. With the greatest of respect to the wife, the discourse by Baker J in Kowaliw does not support that proposition. Baker J dealt with premature distribution of property. What was referred to by Baker J was the differentiation between expenditure of capital to meet reasonable living expenses or premature distribution of capital. What his Honour said was as follows:
If a party has acted in the manner to which I have referred earlier either by:
(a) embarking upon a course of conduct designed to reduce or minimise the effective value or worth of matrimonial assets, or
(b) acting recklessly, negligently or wantonly with matrimonial assets the overall effect of which has reduced or minimised their value,
then such conduct in my view and the economic consequences which flow therefrom are clearly matters to which the Court may have regard pursuant to the provisions of s 75(2)(o) [emphasis added].
If, on the other hand, losses of a financial kind have been suffered by the parties to a marriage in the course of the pursuit of matrimonial objectives, such as the gaining of income or the acquisition of assets whether the liability for such losses be joint or several then, in my view, such losses should be shared by the parties (although not necessarily equally) and taken into account when altering property interests.
- Here, the parties presented to the arbitrator an agreed fact that the expenditure would be treated as marital debt. Hence, the principles espoused in Kowaliw could not have been misapplied. The case the wife presented at arbitration was predicated upon the agreed fact that all credit card expenditure was debt of the marriage.
- I am satisfied that the treatment of the credit card debt is guided by that discussed by Bryant CJ in Shimizu & Tanner  FamCA 271:
“…although add-backs to the pool are the exception and not the rule, an exception can exist when one party has embarked upon a course of conduct designed to reduce or minimise the effective value or worth of matrimonial assets, or where one of the parties has acted recklessly, negligently or wantonly with matrimonial assets; the effect of which has reduced or minimised their value or the pool of assets”
- This is the approach that would appear to have been adopted, indeed adopted on the basis of that submitted as an agreed fact to the arbitrator. As the Full Court of the Family Court of Australia observed in Mayne & Mayne  FamCAFC 192:
78. It is not the Court’s function to conduct an audit of the marriage or of the relationship finances. The parties’ remedies for resolving disputes about expenditure while they are together are centred on them and them alone. Choosing one transaction from many prior to separation for different treatments, specifically “to be added-back” or notionally included in the pool of property may make doing justice and equity between the parties difficult.
- It is not the responsibility of the Court to audit the affairs of the marriage. The remedy for the parties is during the relationship.
- The reality for these parties is that:
a) They incurred expenditure, significant expenditure, prior to their separation;
b) They each submitted to the arbitrator, as an agreed fact, that the expenditure should be treated as joint or as a debt of the marriage;
c) Neither complains that they did not receive the benefit of that expenditure;
d) The arbitrator took into account what had transpired with that expenditure post-separation. It is abundantly clear, both as to the agreed Balance Sheet, (schedule 2), and that discussed by the arbitrator within the arbitral award, that each of the parties has continued to service the debts in their respective name and with each having reduced that debt, the husband somewhat more substantially than the wife. Each of the parties has been somewhat crippled by credit card debt, both during their relationship and post-separation.
- Having regard to those realities, the ground for review alleged by the wife could not be made out as an attack upon the arbitral award, nor could it impugn or impeach it in any way.
The arbitrator erred by ordering that the wife effectively assume liability for all of the losses accrued during the relationship
- This ground is resisted by Counsel for the husband who submits that the adjustment made by the arbitrator reflects the substantial initial contributions of the wife (paragraph 30 of the written submission) and that the effect of the Orders made by the arbitrator is not as complained of by the wife. Indeed, it is not.
- The liabilities of the husband are taken into account in calculating the net property available for adjustment between the parties. Those liabilities remain the liabilities of the husband. The net effect of the arbitral award is that the husband will be left with liability for the debt. The wife will not be directly responsible for the payment of debt in the husband’s name. On that basis alone, the wife must fail in her allegation. The wife is not assuming responsibility for the debt. It remains the husband’s legal obligation, it being a debt in his sole name.
- Leaving aside that reality, it is abundantly clear that, on the basis of that submitted to the arbitrator as agreed fact, that all of the credit card debts were sought by the parties to be taken into account as debts of the marriage. The arbitrator dealt with the credit card debts as directed and submitted to by the parties and with the consent of both parties. That ground could not be a basis for review.
The effect of the award does not reflect the findings that the wife entered the relationship with vastly superior assets and made by far the greater contribution during the relationship
- I am not satisfied that the wife argued before the arbitrator (and certainly the arbitral award does not record a finding) that the wife’s contribution during the relationship was greater than the husband’s. The evidence as recited within the arbitral award, indeed the agreed facts submitted by the parties to the arbitrator, would not bear out such a finding. Hence, it is thankfully absent the arbitral award and the reasoning leading thereto.
- The arbitrator clearly took into account the wife’s substantial initial contributions (page 11). The arbitrator clearly took into account that the wife’s initial contributions of certain assets and funds were compounded by a further contribution, by the introduction of those assets, in enabling, permitting and facilitating the establishment of a business by the parties (again, page 11). The arbitrator clearly took into account that the wife made contributions by reference to Robb & Robb (1995) FLC 92-555 in providing for the welfare of the husband’s son of a prior relationship (again, page 11).
- In relation to all of the findings made by the arbitrator, predominantly in accordance with the agreed facts as submitted by the parties, the wife’s superior contribution was acknowledged. As is clear in the third-last and penultimate paragraphs of page 12, the wife’s contribution was assessed as being three times that of the husband. A finding was made that the wife’s contribution was 75 per cent to the husband’s 25 per cent, thus triple his contribution. I am not satisfied that that ground could be made out.
The award severely affects the rights of creditors, as is submitted by Counsel for the husband
- This submission is somewhat curious. There is no basis upon which it could be suggested that the wife’s creditors have been affected in any way, certainly not their rights, by the arbitral award. The wife’s creditors, by reference to schedule 2, comprise (Business), who hold a secured loan by way of registered mortgage against a parcel of real estate at Town A and numerous unsecured creditors. Each of those creditors’ rights remain intact.
- The arbitral award does not seek to impact upon or influence or affect the rights of those third parties. Their rights remain as they are contractually between the creditor and the wife. Certainly the wife has many unsecured debts. These creditors of the wife can pursue the wife whenever they may so desire should they have grounds to do so. They do not stand in any priority as against the husband or the mortgagor. Their rights remain unaffected. Accordingly, that ground could not be made out.
- To the extent that the wife may suggest that this ground is connected with the previous grounds, in that the arbitral award renders her in a reduced position to service the debt that she retains, that argument cannot succeed. That is the nature and effect of any arbitral award or Order for adjustment of property. It does not affect the rights of creditors.
That the arbitrator failed to properly apply section 79(2) of the Act
- The basis upon which this is suggested is somewhat unclear. Section 79(2) of the Act provides that:
The Court shall not make an order under this section unless it is satisfied that in all the circumstances it is just and equitable to make the order.
- The arbitrator went to some lengths to set out the reasons for the arbitral award that was made including why the arbitrator considered it just and equitable for such an arbitral award to be made. The majority of reasons given are connected with and arise from the joint facts of the parties as submitted to the arbitrator. The wife could not be heard to complain that the husband’s credit card debts should be treated differently to the wife’s when, at paragraph 32 of schedule 1, the parties present to the arbitrator, as an agreed fact, that the credit card liabilities are to be treated as debts of the marriage and thus debts to which both parties have contributed and for which both parties should, to some extent, (although in this case disproportionately as the husband’s debt is greater) be liable.
- For all of the above reasons, I am not satisfied that the Court’s jurisdiction to review the arbitral award or to set it aside are made out. More specifically, by reference to any plea to set aside the award, it is not suggested that fraud was involved through non-disclosure or otherwise. It is not suggested that the award or the arbitral agreement was void, voidable or unenforceable. The Orders can most assuredly be enforced, and provision is made for enforcement in default of payment of a sum certain.
- Circumstances are not suggested to have arisen since the making of the arbitral award that renders the award impracticable. There is no allegation of bias in relation to the arbitrator or the arbitral award, nor a denial of due process. If one were to consider the broader grounds as identified in my earlier Judgment in Braddon, similarly none of those grounds exist. For those reasons, I am not satisfied that any attack upon the arbitral award by way of objection to its registration, review of the arbitral award consequent upon its registration, or its setting aside for the grounds suggested, could arise in this case. Accordingly, I propose to proceed to register the award.
- At the conclusion of the substantive determination in these proceedings, an Application for costs is made. The Application for costs is made somewhat more complex by the need to determine a jurisdictional issue.
- Costs are sought to be pressed by the husband with respect to both of the proceedings before the Court today. As it is an Application in the arbitration and before the Court, I propose to deal with that Application. The husband also seeks to press for costs with respect to the arbitration. I will deal with each of the issues separately.
Costs of the arbitration
- There is no dispute that, by his Initiating Application, the husband sought, at paragraph 7 of the relief sought by him, an Order for costs. That Application was clearly before the Court at time of referral of the proceedings to arbitration. Issue arises as to the appropriate person or jurisdiction to determine costs.
- It would appear common ground between the parties – indeed it is submitted by Counsel for each – that the arbitrator should deal with and determine any issue with respect to costs. However, it would appear that the parties have been advised by the arbitrator, of whom inquiry has been made, that costs should be determined by the Court.
- The arbitrator had before him the controversy between these parties. Counsel for the husband points to the very terms of section 13E of the Family Law Act 1975 under which the referral to arbitration occurred. Thereby, the Court may make an Order “referring the proceedings, or any part of them, or any matter arising in them, to an arbitrator for arbitration”. Some semantic exercise might be engaged with as to whether an issue for costs arises “in the proceedings” referred to arbitration, being Part VIII proceedings, or whether the issue of costs arises “from” those proceedings. I am satisfied on the basis that a plea for relief for costs was included in the Part VIII proceedings referred to arbitration. The referral of the totality of the dispute would have included, as a matter of necessity, the determination of any costs arising therefrom.
- The definition of “arbitration” in section 10L of the Act must also be considered. It makes clear at section 10L(2)(a) that arbitration may occur pursuant to a section 13E referral, as has occurred in this case, and it goes on to indicate:
…which is arbitration of Part VIII proceedings … carried out as a result of an order made under section 13E
- Again, the issue of costs does not expressly arise under part VIII of the Act but under part XV. However, part XV, headed Miscellaneous, applies to all cost determinations under the Act including cost determinations arising from Part VIII proceedings. To that end, I am satisfied that the determination of costs arising from the determination of Part VIII proceedings referred to arbitration would appropriately fall to the arbitrator, as the tribunal of fact, as it were, who has heard and determined the issue.
- Again, I propose to make analogous reference to the Model Act. Section 33B of the Model Act specifically invests the arbitrator determining any dispute under the Model Act with authority to determine issues of costs at their discretion. In the context of Family Law Act 1975 arbitration, the provisions of section 117 of the Act must apply, being the relevant law in relation to the dispute. However, as the Model Act contains a specific provision, I am satisfied that this provides some at least inferential support to the proposition that arbitrators must, and should of necessity, have jurisdiction to determine issues of costs which arise.
- On that basis, I propose to declare that the appropriate determiner of the issue of costs is the arbitrator who delivered the arbitral award in the Part VIII proceedings.
Costs of the application before the Court
- Costs in relation to the Application objecting to registration of the arbitral award and review or setting aside of the arbitral award must, however, be costs which are determined by the Court. It is an Application to the Court and falls outside of the referral to arbitration and thus that which the arbitrator should determine.
- Costs are addressed by section 117 of the Act. Subsection (1) creates what is often referred to as the general rule that each party will bear his or her own costs. Subsection (2) permits departure from the general rule provided that the dual tests of both justifying circumstance and justice are established (see Re JJT & Ors; Ex Parte Victoria Legal Aid  FLC 92-812 for a discussion thereof). Subsection (2)(a) sets out a prescriptive but non-exhaustive list of considerations in determining whether that discretion is enlivened and, if so, how it might be discharged. Subsections (3), (4), (4a) and (5) are not relevant to this determination, dealing, as they do, with Applications by or involving Independent Children’s Lawyers or state child welfare agencies.
- I propose to deal with each of the factors in subsection (2a) by reference to a determination of whether there is a justifying circumstance or circumstances and justice generally.
Financial circumstances of the parties
- Neither party is in a strong financial position. As the arbitral award made clear, each of the parties is in employment, whether self-employed or otherwise, but neither has any substantial or significant savings and no substantial income, although the husband’s income is somewhat greater than the wife’s. There is some controversy as to whether either party is cohabitating and, if so, the financial circumstances thereof.
- Following enforcement of the arbitral award, neither of the parties will be in a strong financial position. As is submitted on the wife’s part, and correctly so, she will have debt well in excess of $500,000 comprising the existing mortgage over the home that the wife will retain together with her credit card liabilities, unsecured as they may be. The wife will need to borrow further funds, presumably by way of mortgage or, if unable to do so, it will be necessary for the wife to sell the home so as to pay to the husband the sum certain required to be paid.
- The husband’s financial position is not substantially better. The husband will, as a consequence of the arbitral award, receive payment of a sum a little in excess of $113,000. He has nearly $95,000 of credit card debt to discharge therefrom, leaving him with what will, in effect, be something in the nature of $18,000. He has his legal costs in relation to the arbitral proceedings and the conduct of the proceedings before this Court prior to referral. Those costs would not be insubstantial, although that is no criticism of those retained by the husband. They are entitled to be paid for the work that they do.
- The financial circumstances of the parties could not speak to a justifying circumstance in this case. It is not suggested that one party has used their disproportionately strong financial position to oppress or in any way bring pressure to bear upon the other or that either has used their financial position as a means of seeking to gain advantage in the proceedings.
- The financial circumstances of the parties do speak to justice. I accept that the wife’s financial position is dire but so is the husband’s. It is a balance which does not compel an award of costs or a positive exercise of discretion but, on the basis that the financial disadvantage of each of the parties is relatively equal, nor does it obviate against an Order.
Whether a party is in receipt of Legal Aid
- Neither is.
The conduct of the parties with respect to the proceedings
- There is no suggestion that either of the parties has, with respect to this Application before the Court, engaged in any behaviour which has protracted the proceedings or caused cost to be inflated. The parties have each, through their respective legal representatives, dealt with the matter appropriately, promptly and eruditely. The matter has reached a conclusion quickly. This factor does not assist.
Where the proceedings were necessitated by the failure of a party to comply with a previous order
- This is not strictly relevant. The arbitral award does not have force or effect until registered with the Court and, thus, the wife could not be suggested to have failed to comply with her obligations under the arbitral award. It is upon registration that the award takes effect. This factor does not assist.
Whether a party has been wholly unsuccessful
- This factor has some relevance in that the wife has clearly been wholly unsuccessful. The wife had initially objected to registration of the agreement, although the objection was ultimately not pressed. The wife has sought to review or set aside the agreement. Clearly, she has not succeeded in that regard.
- I am conscious of that which fell from the Full Court of the Family Court of Australia in Davida & Davida (Costs)  FamCAFC 61:
The other justifying circumstance is the husband’s relative success. True it is that the relevant paragraph … refers to a party being “wholly unsuccessful”, but I think it is fair to say that the practice has been to look at what one might term the relative merits of success … between the parties, even if necessarily doing that under the last matter mentioned … being any “other” matter.
- In this case, it is trite to observe that the wife has been wholly unsuccessful in her attempts to impeach the arbitral award. The husband has been wholly successful in his opposition thereto. The issue is somewhat tempered by the relative novelty of determinations with respect to the Family Law Act’s provisions with respect to arbitration. The determination today would seem to be one of very few determinations with respect to the arbitration provisions of the Family Law Act 1975, although there is a wealth of jurisprudence in relation to comparable State jurisdictions. In that regard, I am conscious of that which fell, for example, from the Victoria Supreme Court in Gunns Forest Products Ltd v North Insurances Ltd & Ors  VSCA 105:
Those who choose to resolve their disputes by invoking the provisions of the Commercial Arbitration Act [in this case, Family Law Act arbitration provisions] must take the good with the bad. They trade litigation with its strict adherence to justice in accordance with law and its relatively generous rights of appeal for a species of alternative dispute resolution with its advantages of speed and, possibly, cost – but with more limited rights of recourse to the courts thereafter. In short, they thereby take a step which limits the power of the Court subsequently to intervene.
- That position is repeated throughout comparable case law, not only Australian cases but overseas. Arbitration is intended to quickly and cheaply bring finality. As observed by Lurie:
“The courts have an important role to play through their intervention at various stages of the arbitral process. In the absence of such intervention the fair resolution of disputes before an impartial tribunal, without unnecessary delay or expense, may not be achieved. Whether court intervention is viewed as supporting or interfering with the arbitral process will depend upon a range of factors including the timing, manner and degree of such intervention. Much will also depend upon the relative importance of the competing concepts of party autonomy and due process.”
- However, this must be balanced against that opined, for example, by Blackaby, Partasides, Redfern and Hunter that arbitration:
“is not intended to be the first step on a ladder of appeals through national courts”
- This is, perhaps, one issue to take into account, namely that Court’s should interfere with an arbitral award on a minimalist basis and should be loath to do so lightly or extensively. It could not, as a matter of policy or principle, substantially impact upon the determination.
- There is a difficulty for the wife which arises from the substantive determination with respect to the merits of the case. The grounds which were raised by the wife, six in total, related principally to review of the award rather than objection to its registration. Each of those grounds was dealt with and each was unsuccessful. What is particularly germane is the reality that each of the grounds relied upon was not only unsuccessful and perhaps unsupported by evidence.
- The complaints that the arbitrator had not taken certain matters into account were unfounded. They were not only unfounded, they were contrary to the statement of agreed facts that was provided by the parties to the arbitrator prior to the arbitration commencing and in accordance with the arbitration agreement. For the arbitrator to be criticised for treating, as debts of the marriage, the in excess of 30 credit cards debts of the parties is contraindicated by the statement at paragraph 32 of the statement of agreed facts that those debts were to be treated as debts of the marriage.
- In those circumstances, I am satisfied that the wife’s lack of success is rendered, perhaps, more egregious, certainly elevated to the point of a justifying circumstances by and of itself.
Offers in writing
- There is nothing tendered as to an express offer, whether in writing or otherwise. Whether offers have been made in the substantive property adjustment proceedings is not known but nor need it be, particularly in light of the determination that has been made, that the arbitrator is the appropriate person to determine any issue of costs in those proceedings.
- For the purpose of these proceedings, it must be observed that the husband has, at all times, made clear, through his legal representatives, that he seeks registration and enforcement of the arbitral award. It is he who has applied for registration. The husband made clear at the earlier Court event, 2 November 2018, that he sought registration of the arbitral award and that he opposed both the wife’s then objection to registration and the wife’s Application to review or set aside the award.
- These are not offers as such. The husband’s signalled resistance does not propose a compromise on the basis of an action by one party or the other. These actions are, however, relevant matters. The husband’s opposition to the wife’s Application has always been abundantly clear. In all of those circumstances, I am satisfied there is justification for a departure from the general rule supporting an Order for costs.
- I must also be satisfied than an Order for costs is just. That requires that I have regard both to the financial circumstances of the parties and the quantum of costs.
- As both parties are in a poor financial position, it would be equally egregious for the husband to be required to meet his own costs, possibly well in excess of that which would be applied on a party-party basis, when he has incurred those costs for the purpose of obtaining the very outcome that he sought to achieve in the first place, registration of the arbitral award.
- I am satisfied in that, whilst it is clearly a financial impost on either party, that having regard to the lack of success in objection to registration of the award or its review, that it would be unjust for the husband to be required to meet all of his costs and that it would be just for some contribution thereto to be made by the wife.
- As regards quantum of costs, a schedule is tendered on the husband’s behalf calculating costs in accordance with schedule 1 of the Federal Circuit Court Rules 2001. I am conscious that in determining the quantum of costs that division 21 of the Federal Circuit Court Rules 2001 requires consideration of the schedule of costs and that departure from the schedule, whilst permitted, should be explained.
- The primary issue that arises is the nature of the determination which has been undertaken by the Court today.
- In the Application that the Court has determined, initially framed as both an objection to registration, (although that issue was not pressed today), and a plea for review or setting aside of the arbitral award, the wife has failed. However, the Applications the wife has pressed do not, by and of themselves, determine the final rights of the parties and are inherently interlocutory in nature. What is determined is whether an award is to be registered. It is the award itself that is the substantive determination of the parties’ dispute, and, notwithstanding that upon registration of the award, the parties’ rights and entitlements are finally and effectively adjusted. The Order or decree of this Court is interlocutory.
- For that reason, I am not satisfied that item 1, initiating or opposing an Application, is the appropriate item. It is not a criticism that it is identified or sought. I am satisfied, instead, that item 3, an interim or summary hearing, is the appropriate amount. This is not a substantive determination of interests between parties in which evidence has been taken and cross-examination undertaken. It is an issue dealt with, thankfully and due to the extensive preparation of each of the parties, on the papers and with brief submissions. It is an Application which is interlocutory, and I am satisfied that might fall within the ambit of interim or summary hearing as item 3 provides. That equates to $1,867.
- In relation to preparation, some allowance must be made. However, I am satisfied that item 6 is perhaps, in the circumstances, too generous. That is not to suggest that preparation has not been undertaken and well undertaken. Indeed, the document that is filed by Counsel for the husband is erudite, directed to relevant issues in dispute, and identifies relevant legal principles and sources therefore. Accordingly, whilst item 6 provides an amount for preparation for a final hearing as a one-day matter, this case is an interlocutory matter which was never likely to exceed one half-day in total. But for other business before the Court, the matter would have been completed in even less than that. Some tempering of the amount should occur. I proposed to permit one-third of the amount that item 6 would otherwise provide. The total amount provided $4,775, one-third thereof being $1,591.67, which I propose to round to $1,600 for the ease of maths, if nothing else.
- There was the earlier appearance, 2 November 2018, which, thankfully, was facilitated by telephone. With respect to each party, I propose to allow the costs of that appearance as a short mention, (item 13), $305. There is today’s hearing itself. I am satisfied and, to the extent that it is necessary, certify that Counsel’s retention is appropriate. Accordingly, both items 13 and 12 would be invoked, being the hearing itself and advocacy loading. As a half-day matter, item 13, that would be an amount of $1120. The advocacy loading, item 12, would be $560. Those amounts total $5,452. In light of the meagre pool and the expeditious determination of the matter I propose to round that amount down to $5,000.
- Accordingly, the further following Orders are made as follows.