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Incompetent application by father to review or set aside Arbitral Award results in failure and irresistible costs order against him.

This is an interesting case involving Arbitration, where an application for enforcement of a 2016 Arbitral Award was made by the wife and an Application for review or setting aside of Arbitral Award by the husband. 

The Arbitral Award was previously consented to and/or no objection raised.  The Court had to consider the circumstances in which it should set aside or review an Arbitral Award giving due consideration of grounds for review of Arbitral Awards under the Family Law Act 1975 (Cth).

FACTS:

The application by the husband was considered incompetent because it seeks relief which could not be ordered by the Court. There are only two options available either seek a review of the Arbitral Award[1] or to seek to set the Award aside.[2] A Response filed in December 2019 by Ms Jancos in response to the incompetent application of Mr Abelas seeking relief pursuant to section 79A[3];

ISSUE:

Whether the court should set aside an arbitration award consented to and registered with the Court.

The arbitration 

  • The parties attended arbitration with an appropriately qualified and accredited arbitrator in January or February 2019, that is, some 12 months ago. An Arbitral Award was issued by the arbitrator on 6 February 2019.
  • The Arbitral Award was then the subject of an Application for Registration of an Arbitral Award filed by the legal representatives for Ms Jancos and dated 9 February 2019.
  • The proceedings were listed for mention and directions on 13 March 2019, that date having been allocated on the basis that the substantive proceedings, the totality of which had been referred to arbitration, were effectively stayed pending registration of an Arbitral Award.
  • It was hoped that the date might be vacated. It is clear, however,[1] that a period of 28 days must pass from the date of service of the Application for Registration of the Arbitral Award before the Arbitral Award can be registered.
  • The 28-day period is, in effect, a disallowance period, as it were, affording to any party who seeks to oppose registration of the Arbitral Award the opportunity to do so.
  • As discussed in Blanco & Blanco (No. 2) [2019] FCCA 2458, objection is an opportunity to impugn or impeach the integrity of the arbitral process and to raise matters relating to a denial of due process, bias, or some alleged failure by the arbitrator to act within the terms and parameters of their contractually created jurisdiction.
  • In any event, no objection was raised.
  • On receipt of the Arbitral Award, correspondence was forwarded by my Chambers seeking to vacate the listing date in the event that no objection was raised.
  • Whilst it is not expressed within the Family Law Rules 2004 (Cth) or Family Law Regulations 1984 (Cth), which facilitate the arbitral process, one might assume (and in this case, I accept, validly) that it is a matter for the parties to seek to waive that disallowance period (or the period in which they are entitled to object). Such waiver has most clearly occurred.
  • On the very same day that my Chambers contacted the legal representatives for the parties, the legal representatives for Mr Abelas responded by email indicating that no objection was raised to the immediate registration of the Award. Accordingly, it was registered.
  • Thereafter began the difficulties, as enumerated in the various affidavits referred to above and culminating in the Application for Enforcement filed by Ms Jancos.
  • I propose to shortly turn to each of the grounds upon which Mr Abelas might seek to impeach the Arbitral Award, inferred or expressed (although incompetently, as I have already described) by the Application filed. Before doing so, it is germane to consider the Arbitral Award, albeit briefly.

The Arbitral Award 

  • The Award is registered and speaks for itself.
  • What is clear and apparent from the Award is that the substantive assets of the parties and the subject of the dispute comprised two parcels of real estate.
  • The parties were the joint registered proprietors of the first parcel, not the second.
  • To the extent that the findings made by the arbitrator as to the assets available for division between the parties might be challenged, they simply could not be. They were presented as agreed facts. Thus, there could be no suggestion that an error of law occurred through an incorrect finding not supported by evidence.
  • The Arbitral Award was to distribute the identified assets as to 39.12 per cent to Ms Jancos and 60.88 per cent to Mr Abelas.
  • The award required that Mr Abelas pay to Ms Jancos a sum certain - $630,000 - and refinance certain mortgages.
  • In return for payment of the sum certain, Ms Jancos was to transfer to Mr Abelas her interest in those properties, whether legal or equitable. Each party was otherwise to retain all other property and resources to which they were entitled or which were in their possession.
  • The sum certain was not paid by Mr Abelas.
  • Mr Abelas asserts in his sworn evidence that he had made inquiries with respect to borrowing but had been advised that he could not do so. Accordingly, the mechanisms included within the Arbitral Award triggering the sequential sale of those properties came to bear.
  • The jointly owned property was to be sold first, if funds realised from that sale were not sufficient to discharge both the secured mortgages and make payment in full to Ms Jancos of the sum of $630,000, then the second property was to be sold.
  • What is remarkable is that the property sold for significantly less than the value that was agreed between the parties and, thus, presented as an agreed fact to the arbitrator.
  • The property had an agreed value of $800,000. It was sold to the brother-in-law of Mr Abelas for $455,000.
  • Mr Abelas is at pains in his material to point out that his brother-in-law was not an anticipated bidder. Indeed, his evidence is that his brother-in-law registered during the course of the auction.
  • An Order was made appointing a trustee for sale of the second property, that property has also been sold at something less than the agreed value presented by the parties at arbitration, although not by the same magnitude of variance.
  • The Arbitral Award need not be further considered. It is registered with the Court without objection - indeed, with the consent of both parties. There is no question raised or challenge mounted that it would impact upon the registration, and thus, the enforceability of the Award.

It must be observed that the Award is not a decree of the Court. It has effect as if it were a decree of the Court. Thus, it is not a decree or order of the Court that can be challenged. It is an Arbitral Award. That much must be clear from the fact that sections 13J and 13K provide separate and specific bases upon which Arbitral Awards might be challenged or impeached, (section 13J providing for review, section 13K providing grounds to set aside registered Arbitral Awards).

It is also clear, that registration of the Arbitral Award is a necessary precondition to invocation of sections 13J and 13K of the Family Law Act 1975 in seeking to review or set aside the Award. If the Arbitral Award is not registered, it cannot be reviewed and it cannot be set aside. Indeed, there would be no need for it to be so as the Arbitral Award cannot be enforced if not registered.

Determination

The relief sought by Mr Abelas is incompetent. It is, perhaps, important to be clear what the relief that is sought is.

Mr Abelas seeks orders pursuant to section 79A(1)(a) of the Family Law Act. As would be apparent from the above comments, section 79A has no application to the circumstances of this case. There is no order which might be set aside. There is a registered Arbitral Award which has effect as though it were a decree of the Court, but it is not a decree of the Court. It is an Arbitral Award which arises from a separate, albeit court-ordered, contractual determination of the dispute between these parties.

There are two further problems. Firstly, the parties were not married. Thus, section 79A, founded in matrimonial causes, has no application to the proceedings.

The section upon which Mr Abelas would proceed would be section 90SN of the Family Law Ac 1975.

Secondly, the ground that is relied upon and specified within the relief sought, section 79A(1)(a), provides to the Court a jurisdiction to set aside an order if:

...there has been a miscarriage of justice, by reason of fraud, duress, suppression of evidence, the giving of false evidence or any other circumstance.

Clearly, in considering the evidence, the first four grounds could not be relied upon. There has been no fraud, duress, suppression of evidence or false evidence. There has been a joint consensual statement by the parties through their Counsel to the arbitrator, and thus adopted and relied upon by the arbitrator, as to the agreed value of the properties. That the eventual sale prices realised for each of those properties is at variance with the agreed value could not fall within the above descriptors and as there was no other circumstance put forward, the relief sought was hopeless.

Section 13K provides that an Arbitral Award may be reviewed on questions of law. What might constitute a question of law was dealt with authoritatively (from my perspective) in Blanco & Blanco (No. 2).

Mr Abelas does not suggest any error of law.

Conclusion

For all of those reasons the Application by Mr Abelas must fail.


Costs

The Application by Ms Jancos has succeeded. She has successfully prosecuted her Application not only on this occasion but on an earlier listing of the proceedings, and obtained relief.


The court is satisfied that Mr Abelas’ conduct justifies an order for costs and departure from the general rule. It would be unjust for an order for costs not to be made in those circumstances, an order for costs is not only justified and just, but irresistible.

There is an issue as to time for payment. No application is made by Mr Abelas as to time for payment. On the basis that settlement of the second property has recently occurred, there would be no need for time to pay. There is a ready means by which payment can be secured - deduction from those funds as held by the wife’s solicitors and payment to Ms Jancos before payment is made to Mr Abelas. That is the course I propose to take. It will obviate against the need for interest to accrue or be calculated and, thus, obviate against further controversy.

CITATION :

Jancos & Abelas [2020] FCCA 459 (20 February 2020)

 

[1] Family Law Act 1975 (Cth) ‘FLA’, s.13J

[2] Ibid s.13K.

[3] Ibid 79ASetting aside of orders altering property interests

 

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