Properly constituted applications for property adjustment orders
It has been a practice of family law practitioners to draft applications and responses purportedly seeking final orders to simply seek one “final” order in terms to the effect of:
The applicant/respondent have leave to amend the application/response after disclosure has been attended to.
Most family law practitioners based in Brisbane will be familiar with some judicial officer’s approaches to application such as these:
The applicant [or respondent] file and serve an amended initiating application [or response] that sets out the orders the applicant [or respondent] seeks on a final basis.
The above order is quite frankly the only judicially appropriate approach to rectify the situation.
There is a necessary element of sympathy for some practitioners and clients. Sometimes the non-financial spouse has next to no understanding of the composition, structure, or value of the property of the parties. How then can a lawyer draft a properly constituted application for final property adjustment orders?
First, I will explain the reasoning behind the above judicial approach to these deficient applications. Then I will provide a possible alternative for practitioners who find themselves unable to draft a proper application because of their client’s lack of knowledge.
The rules and the authorities
Filing an application or response described above is actually a breach of the Courts’ Rules.
Rule 4.01 of the Federal Circuit Court Rules 2001 (Cth) provides:
- Unless otherwise provided in these Rules, a proceeding must be started by filing an application in accordance with the approved form.
- An application for final orders may include an application for interim or procedural orders.
- A person may not file an application for an interim or procedural order unless:
- an application for a final order has been made in the proceeding; or
- the application includes an application for a final order.
Rule 4.02 of those Rules provides:
An application must precisely and briefly state the orders sought and (if the application is for a general federal law proceeding) the basis on which the orders are sought.
The Family Law Rules 2004 (Cth) provide similar requirement, in even more detail: see Rule 4.01.
It is unequivocally a failure to comply with the Courts’ Rules.
Moving forward, I will focus only on the Federal Circuit Court Rules, as they are the ones most commonly applied.
Rule 4.01 provides that:
- Unless otherwise provided in these Rules, a proceeding must be started by filing an application in accordance with the approved form.
- An application for final orders may include an application for interim or procedural orders.
- A person may not file an application for an interim or procedural order unless:
- an application for a final order has been made in the proceeding; or
- the application includes an application for a final order.
- If a person makes an application in a case before final orders have been made in a proceeding, the application must be made in accordance with rule 4.08.
Emphasis added.
Rule 4.03 is similarly worded regarding a response.
The approved form for an initiating application or response requires parties to, inter alia, set out the orders that they seek on a final basis.
Rule 2.04 of the Federal Circuit Court Rules 2001 (Cth) ostensibly provides that a party need not strictly comply with approved form provided that the party has substantially complied. That is, substance over form. The purpose and thus the substance of an application is the orders sought.
Rules 13.03A and 13.03B provide for when an application or a respondent is in default. Amongst those subrules is the failure to “file and serve a document required under these Rules”.
Does an application or response that does not substantially comply with the approved form still constitute a document for the purpose of Rules 13.03A and 13.03B? The answer is probably yes.
However, Rule 4.01(3)(b) is in most cases a necessary requirement to substantially comply with the Rules. Interim orders cannot be sought unless final orders are sought. Leave to amend an application is not a final order. It is very much an interlocutory order. If no final orders are sought, then no interim orders may be sought.
Rule 2.06 provides Registrars the administrative power to refuse to accept a document for filing under certain circumstances. The reference to administrative power is important: see Valack & Valack (No. 1) [2020] FCCA 1354 and Valack & Valack (No.2) [2020] FCCA 1799.
Is an initiating application or response that does not seek final orders “frivolous, scandalous or vexatious”? Arguably.
There is also the “jurisdictional” debate.
In Shaw & Shaw and Anor [2016] FamCAFC 159, the Full Court of the Family Court of Australia said:
[80] His Honour’s orders were:
(1) These orders are made by way of alteration of property interests pursuant to s.79 of the Family Law Act 1975 (Cth).
(2) In full and final settlement of property issues between the Husband and Wife, the assets of the [the husband and the wife] be divided between the [husband and the wife] as to 65% in favour of the First Respondent Wife and 35% in favour of the Applicant Husband.
(3) There be liberty to the [husband and the wife] to apply in relation to consequential orders.
(4) The [cross appellant’s] (intervenor’s) application is dismissed.
(5) The Applicant Husband shall indemnify and keep indemnified the First Respondent Wife in relation to any claim brought in relation to the monies referred to in these reasons as “the alleged debts”.
[81] It is undeniable that these orders do not, despite Order 1, effect an alteration of the property interests of the husband and the wife pursuant to s 79. No order requires an adjustment to the interests in the marital home nor requires the payment to the wife, or from the wife to the husband, of funds equivalent to the percentage division referred to in the orders.
The discussion about the need to provide for mechanical orders was discussed in Mullane v Mullane (1983) 158 CLR 436 by Mason ACJ, Wilson, Brennan, Deane and Dawson JJ, who held at [445]:
In our opinion, therefore, s. 79 on its proper construction refers only to orders which work an alteration of the legal or equitable interests in the property of the parties or either of them. An interest in property is a right of a proprietary nature, not a mere personal right: Stow v. Mineral Holdings (Aust.) Pty. Ltd. [(1977) 51 ALJR 672 at 679]; Reg. v. Toohey; Ex parte Meneling Station Pty. Ltd. [(1982) 158 CLR 327 at 343, 350 – 351]. It does not exclude every interest which is not assignable or transferable (cf. per Mason J. in Meneling Station [at 343]). Thus an order under s. 79 may give rise to an interest in property which is defeasible on assignment or transfer to a third party, or on the occurrence of some other event, or which the holder is enjoined from assigning or transferring.
Frost (Deceased) & Whooten [2018] FamCAFC 177 is an example of a case in which the Court held that such an objectionable order sought in an initiating application was sufficient to engage the jurisdiction of the Court.
[4] The appellants, who are the executors of the deceased’s estate, objected to the jurisdiction of the Court, asserting that the deceased had died the day before the time the Initiating Application was taken to have been filed. They also contended that jurisdiction was lacking because the orders sought in the application did not, on their face, invoke any matrimonial cause.
…
[14] The Initiating Application sought only one final order, which was:
That the Applicant Wife be excused from particularising her final orders sought until after the Respondent Husband has made full and frank disclosure in this matter.
[15] The appellants submit that this order does not identify a relevant matrimonial cause as it plainly does not seek orders altering the property of the respondent and the deceased. Thus, they argue, it follows that the Court’s jurisdiction was not invoked by the Initiating Application regardless of the time it was filed.
…
[16] We must therefore look to the material the respondent sought to file to determine the nature of the matter before the Court. In most courts that would involve an examination of the pleadings. This is because it is the substance of the dispute joined between the parties, rather than its form, which is determinative of the engagement of federal jurisdiction. …
…
[19] However, proceedings in this Court do not ordinarily proceed by pleadings but by way of application and affidavit. In the peculiar circumstances of this case, we cannot look to the affidavits because an applicant is precluded from filing them at the same time as the Initiating Application (r 4.02 of the Rules). None was filed.
[20] We must therefore look at the Initiating Application itself to determine the nature of the controversy raised by it, as that is the only material available from which to identify the parameters of the matter.
…
[29] However, at the time the application was electronically received the deceased was still alive. Accepting for the sake of the present argument that this is the relevant moment the Initiating Application was filed, we consider that as a matter of substance it sought orders in a financial case for both property settlement and maintenance – that is, orders that fell within both paragraph (c) and (ca) of the definition of matrimonial cause. Jurisdiction was thus invoked. Even if the maintenance aspect fell away on the death of the deceased, the property aspect remained.
So, whilst filing an application or response in those terms does not comply with the Court’s Rules, it will be sufficient to engage the jurisdiction of the Court. That jurisdiction was engaged upon the Registrar accepting the application for filing (and the backdating that applies pursuant to Rule 2.05(3)).
So, what if a Registrar refused to accept the document for filing because it was an abuse of process, frivolous, scandalous, or vexatious? That would certainly be an interesting exercise following the decisions in Valack and the Full Court’s decision in Frost.
Alternatives for lawyers with uninformed clients
Usually, an application or response can be drafted to include all the property to be retained by one party and then a cash and/or super amount to be determined and described as a fixed percentage of the pool, for example.
If a client and lawyer truly know virtually nothing about the property of the parties or either of them, and so cannot consider the division of assets, leave must be sought to dispense with the relevant rules (rr.4.01(3) and 4.02 discussed above).
For example:
[1] Pursuant to rule 1.06(1) of the Federal Circuit Court Rules 2001 (Cth), in the interests of justice the requirement for the applicant to comply strictly with rules 4.02 and 4.01(3) is dispensed with.
The client’s affidavit must be very clear about the lack of knowledge of the property of the parties to justify that dispensation.
Perhaps some certain final orders can be particularised for any or all property that is known and sought to be retained by the party and/or provided to the other party. may be useful to include a percentage division for the remainder, however it may be inappropriate in certain cases. For example, if one knows not the composition, structure or value of the property of the parties, how then can one know the percentage outcome which is just and equitable?
The dispensation of rules 4.02 and 4.01(3) may be justified when an urgent interim application is made for spousal maintenance or an injunction, for example. In that situation valuations, disclosure and other relevant investigations into the composition of the pool may be unable to be conducted in time, and the conduct of the other party may have disabled the opportunity for the client or lawyer to understand what a just and equitable property division may be.