B Pty Ltd & Anker [2025] FedCFamC1A 85 (14 May 2025)

1. The proposed appeal requires leave if it concerns interlocutory orders: see s 28(3)(e)(ii) of the Federal Circuit and Family Court of Australia Act 2021 (Cth) ("the FCFCOA Act") and reg 4.02 of the Federal Court and Federal Circuit and Family Court Regulations 2022 (Cth) ("FCFCOA Regulations").
2. An order is final if it determines the rights of the parties as a matter of law, not as a matter of the practical consequence of the order: Carr v Finance Corporation of Australia Ltd (No 1) [1981] HCA 20; (1981) 147 CLR 246. A judgment or order is not final where "the unsuccessful party could make a further application for the same relief, even though such an application might have very little prospect of success": Bienstein v Bienstein [2003] HCA 7; (2003) FLC 93-124 at [25] (footnote omitted).
3. In Robson and Robson & Ors [2003] FamCA 217; (2003) FLC 93-145, the Full Court found that an order summarily dismissing a claim pursuant to s 79 of the Family Law Act 1975 (Cth) ("the Act") fell within the meaning of the phrase "an order made by a court under section 79 in property settlement proceedings" so as to satisfy one of the requirements to bring an application pursuant to s 79A of the Act. In 2005, s 79(17) of the Act was added defining certain interlocutory orders in s 79 proceedings as final orders for the purpose of s 79(11) and (14). Robson's case did not establish that an order summarily dismissing proceedings pursuant to s 79 is outside the definition of an interlocutory order for the purpose of reg 4.02 of the FCFCOA Regulations (as interpreted in accordance with Carr and Bienstein), which is for the purpose of regulating the right to appeal. Robson's case only addresses the right to bring proceedings under s 79A.
4. The intervenor's claim that it has a right to apply for orders pursuant to s 79 of the Act (should the intervenor ever be able to establish such rights at some point in the future) remains as the proceedings were summarily dismissed, not dismissed after a hearing on the merits. Despite the practical consequences of the order, it is an interlocutory order within the meaning of reg 4.02 of the FCFCOA Regulations and thus the intervenor requires leave to appeal.
5. To obtain leave, the intervenor must show that the decision of the primary judge was "attended by sufficient doubt to warrant it being reconsidered by the Full Court and [that] substantial injustice would result if leave were refused, supposing the decision to be wrong": Medlow & Medlow (2016) FLC 93-692 at [57] (emphasis in the original).
6. For the reasons that follow, we are not persuaded that the intervenor has established either limb of the test set out in Medlow and therefore leave to appeal should be refused.

1. At a general level, the appellant argued that it had a right to pursue a claim under s 79 of the Act. It is appropriate to consider this general claim before addressing the specific grounds concerning the primary judge's finding that there is no jurisdiction to entertain the intervenor's claim (Grounds 2, 6, 7, and 8).

1. The words of s 79(1) are in broad terms, relevantly providing:

(1) In property settlement proceedings, the court may make such order as it considers appropriate:

(a) in the case of proceedings with respect to the property of the parties to the marriage or either of them - altering the interests of the parties to the marriage in the property; or

(b) in the case of proceedings with respect to the vested bankruptcy property in relation to a bankrupt party to the marriage - altering the interests of the bankruptcy trustee in the vested bankruptcy property;

including:

(c) an order for a settlement of property in substitution for any interest in the property; and

(i) either or both of the parties to the marriage; or

(ii) the relevant bankruptcy trustee (if any);

to make, for the benefit of either or both of the parties to the marriage or a child of the marriage, such settlement or transfer of property as the court determines.

1. Section 79 is not to be read as a free ranging general power to alter property rights of anyone who has ever married: the provision must be read to ensure that it remains within the ambit of the jurisdiction conferred by the Act, which is ultimately constrained by the limits of the constitutional power of the Commonwealth.
2. The breadth of s 79 is limited by the requirement that the proceedings are a "matrimonial cause" as defined in subparagraph (ca) in s 4 of the Act. This limit is imposed by s 39 of the Act (Russell v Russell (1976) 134 CLR 495 at 538; Fisher v Fisher [1986] HCA 61; (1986) 161 CLR 438; Ascot Investments Pty Ltd v Harper (1981) 148 CLR 337) although, in this case, it is by a proclamation under s 41 of the Act because this is an appeal from the Family Court of Western Australia. In Russell, Gibbs J said that the only way the relevant part of the definition of "matrimonial cause" can fit within constitutional bounds is if it is limited to "proceedings between the parties to a marriage" (at 528), because "conferring a jurisdiction unlimited as to parties ... travels beyond the marriage power" (at 541; see also R v Ross-Jones; Ex parte Beaumont [1979] HCA 5; (1979) 141 CLR 504 at 510). Importantly, the "section can only have a valid application with respect to a claim based on circumstances arising out of the marriage relationship" (Dougherty v Dougherty [1987] HCA 33; (1987) 163 CLR 278 at 286, citing Russell at 525, 528, 542-543, 552-553). That is, "the rights and duties which the ... Court may validly create or define under the section are confined to those which have their basis in the marital relationship" (Dougherty at 288).
3. This reflects the fundamental structure of family law in Australia as a separate property regime rather than a community property regime: each spouse has their individual property entitlements at law and equity (Wirth v Wirth [1956] HCA 71; (1956) 98 CLR 228 at 231-232 and 247-248; Stanford v Stanford [2012] HCA 52; (2012) 247 CLR 108 at [37]-[39] and [50]). Whilst the Court may alter spouses' property rights by making orders pursuant to s 79 of the Act, there is no presumption of equal sharing of property interests (Mallet v Mallet [1984] HCA 21; (1984) 156 CLR 605).
4. The right of a spouse to make a claim pursuant to s 79 is a personal right: the right is not a property right nor even an inchoate property right. "[O]rders made under s. 79 do not give effect to antecedent rights arising in virtue of the marital relationship": Fisher at 453. Property "[r]ights arising under s 79 only come into existence when an order is made under that section": Re Chemaisse; Federal Commissioner of Taxation (Cth) (Intervener) [1990] FamCA 32; (1990) FLC 92-133. As a consequence, a right to make a claim pursuant to s 79 is not a caveatable interest in land: see Dembitzer v Mills [1980] 2 NSWLR 697; Australian Eagle Insurance Co Ltd v Parry (1992) ANZ ConvR 166. A spouse's s 79 right does not vest in a trustee in bankruptcy if the spouse is made bankrupt (see Page and Page (No. 2) (1982) FLC 91-241 at 77,328-77,329; Bryson & Pember [2013] FamCA 43; Barre & Barre [2021] FamCA 101). Even after bankruptcy, the scheme of the legislation leaves the s 79 right with the insolvent spouse and provides the solvent spouse with a right to make a claim against those assets of the bankrupt spouse that vest in the bankruptcy trustee (the contrary finding in Hankin & Nankervis [2018] FCCA 2075; (2018) 335 FLR 314, where both spouses were bankrupt and the respective trustees sought orders by consent, is erroneous and should not be followed).
5. The right to make claims pursuant to s 79 has three limited statutory extensions. First, the legislature provided for orders in favour of a child of the marriage, provided the claim arose out of the marriage: see s 79(1)(d) of the Act and Dougherty (although a child may not commence a claim pursuant to s 79: Egan and Egan [1984] FamCA 47; (1985) FLC 91-608 at 79,937). Secondly, whilst a spouse's claim abates on the death of a spouse, the statutory extension in s 79(8) of the Act provides for a pending claim to form part of the spouse's estate if they die after the s 79 proceedings are commenced: Fisher. Thirdly, a solvent spouse may continue a claim with respect to a bankrupt spouse's property after that property has vested in their bankruptcy trustee: see s 79(1)(b) and s 79(1)(d)(ii) of the Act. None of these statutory extensions apply to the intervenor in this appeal.

1. A debt is property of a creditor at common law; however, it is not property of the debtor as the debtor has only an obligation to the creditor.
2. The Court may make property settlement orders settling property of a debtor spouse on a non-debtor spouse pursuant to s 79 of the Act even if the debts of a spouse exceed the value of that spouse's property: see Biltoft and Biltoft [1995] FamCAFC 45; (1995) FLC 92-614 and Trustee of the Property of G Lemnos, a bankrupt & Lemnos and Anor [2009] FamCAFC 20; (2009) FLC 93-394. The usual approach in cases where one or both spouses have debts is that the parties share responsibility for the debts - they "take the good with the bad": see Johnson v Johnson (No 1) [1999] FamCA 369; (2000) FLC 93-039 at [20.6]. However, there may be good reasons for departing from the usual approach in particular cases, for example where it was one party's misconduct that resulted in the debt.
3. A claim pursuant to s 79 of the Act is a personal claim between spouses to alter the proprietary interests of "the parties to the marriage" and not a claim by the creditor directly against a spouse. However, a creditor may have an interest in the outcome of a spouse's s 79 claim because property settlement orders may affect the creditor's capacity to recover a debt from the debtor spouse. This is recognised in s 75(2)(ha) of the Act which requires the Court to consider "the effect of any proposed order on the ability of a creditor of a party to recover the creditor's debt, so far as that effect is relevant". Whilst a creditor may intervene in order to be heard in this respect, s 92(3) only provides a creditor with procedural rights, not the right to make a substantive claim pursuant to s 79: Ascot Investments at 357 and Dougherty at 284-285. A creditor otherwise retains all of their remedies at law and equity, just as if the spouses had not been married (for example, claims pursuant to State legislation to set aside transactions that are a fraud on creditors or claims in equity such as remedial trusts or promissory estoppels). For these reasons, the intervenor cannot succeed on the general argument that it may make a claim against one or both spouses pursuant to s 79 of the Act.

ARGUMENTS BASED ON THE COURT'S POWERS TO EFFECT PROPERTY SETTLEMENTS PURSUANT TO S 79

1. Once a spouse succeeds in establishing that it is "just and equitable" to make property settlement orders, the Court has a broad range of powers to give effect to the determination, primarily set out in s 80 of the Act. There is a limited power to make orders binding upon third parties in Pt VIIIAA. There are also provisions that permit a creditor or bankruptcy trustee to have property settlement orders set aside when, for example, the property settlement effects a fraud upon a creditor: see s 79A(1)(a) and s 79(4)-(7).
2. The intervenor relies upon three arguments based upon the operation of s 90AE, a combination of ss 92(3) and 79(10)(a), and s 117 of the Act.

_ In dismissing the applications before the Court (being an order pursuant to section 79 of the Family Law Act 1975) the Court failed to comply with the requirements of section 90AE Family Law Act 1975, in particular sections 90AE(2)(b) and 90AE(3)(b) of the Family Law Act 1975._*

1. Section 90AE(1)-(2) of the Act (which appears in Pt VIIIAA) provides broad powers to affect property interests of a person who is not a party to a marriage. These broad powers are carefully constrained by s 90AE(3) which provides:

90AE Court may make an order under section 79 binding a third party

...

(3) The court may only make an order under subsection (1) or (2) if:

(a) the making of the order is reasonably necessary, or reasonably appropriate and adapted, to effect a division of property between the parties to the marriage; and

(b) if the order concerns a debt of a party to the marriage - it is not foreseeable at the time that the order is made that to make the order would result in the debt not being paid in full; and

(c) the third party has been accorded procedural fairness in relation to the making of the order; and

(d) the court is satisfied that, in all the circumstances, it is just and equitable to make the order; and

(e) the court is satisfied that the order takes into account the matters mentioned in subsection (4).

1. The Revised Explanatory Memorandum on the Family Law Amendment Bill 2003 (Cth) states that the "provision is intended to apply only to the procedural rights of the third party" (at [149]). Despite the extended definition of "property" for the purpose of Pt VIIIAA, s 90AE does not confer on a creditor a right to make a claim for a property settlement order pursuant to s 79. Rather, s 90AE confers power on the Court (in the limited circumstances set out in Pt VIIIAA) to "[alter] the rights, liabilities or property interests of a third party" (s 90AE (2)(b)) when effecting a property settlement between the spouses.
2. The intervenor is not seeking an alteration of its rights liabilities or interests, but those of the non-debtor spouse. The orders are not "reasonably necessary, or reasonably appropriate and adapted, to effect a division of property between the parties to the marriage" (s 90AE(3)(a)) as neither party to the marriage is continuing to pursue property settlement orders.
3. The primary judge made no orders affecting the intervenor's existing rights as the Supreme Court judgment debt remained valid and enforceable against the wife, and no orders were made settling any property of the wife or the husband. Section 90AE is not engaged in the circumstances of this case.

_ In summarily dismissing the applications before it, the Court did not have proper regard for the Intervener's rights as a party pursuant to section 92(3) of the Family Law Act 1975 according to law._*

1. Section 92(3) of the Act provides:

(3) Where a person intervenes in any proceedings by leave of the court the person shall, unless the court otherwise orders, be deemed to be a party to the proceedings with all the rights, duties and liabilities of a party.

1. In Ascot Investments Pty Ltd v Harper (1981) 148 CLR 337, Barwick CJ said (at 357):

Section 92(3) enables the court to make an order either in favour of or against an intervener if such order is one that can properly be made as a matter of substantive law; the sub-section removes a possible procedural obstacle, but does not alter substantive rights and duties. If the court had no power, apart from s. 92(3), ... that sub-section did not confer that power on it.

1. The intervenor argued that the effect of s 79(10)(a) is to convert the procedural rights provided by s 92(3) into substantive rights to make a claim under s 79. The subsection merely provides:

(10) The following are entitled to become a party to proceedings in which an application is made for an order under this section by a party to a marriage (the subject marriage):

(a) a creditor of a party to the proceedings if the creditor may not be able to recover his or her debt if the order were made ...

1. Whilst s 79(10) provides a right to intervene (unlike s 92(3) which provides for the procedural rights of an intervenor), it does not confer a substantive right upon a creditor to make a claim for a property settlement order pursuant to s 79. The effect of these provisions is to enable the creditor to intervene in the proceedings in order to support or oppose a claim by a spouse, to the extent that any orders settling the property of the spouses pursuant to s 79 may affect the ability of the creditor to recover against the debtor spouse. Where neither spouse seeks a property settlement order pursuant to s 79, there will be no orders affecting the rights of the creditor. In the present proceedings, there is no longer any claim pursuant to s 79 for the intervenor to support or oppose.
2. The intervenor's argument that s 79(10) and s 93(2) provide a basis for it to make a claim for property settlement orders must be rejected.

_ The Court erred in finding it had no jurisdiction to consider payment of the Intervener's debt (which are only costs from the conduct of the same proceedings) pursuant to section 117 of the Family Law Act 1975, and did not have regard to the relevant factors under the legislation in doing so._*

1. The intervenor argued that the Court's broad power to make costs orders pursuant to s 117 of the Act is wide enough to encompass orders that the husband pay the wife's debts to her former solicitor. The intervenor is not seeking an order for its costs in the proceedings.
2. The wife had a right to pursue a costs order as recompense for expenses that she had incurred in the proceedings (provided the primary judge was satisfied it was appropriate having regard to the provisions of s 117 of the Act). The wife did not pursue a costs order for the costs to which the debt to the intervenor related nor was it open to the intervenor to pursue any rights of the wife pursuant to s 117. Section 117 does not provide the intervenor with a right to pursue a claim for a property settlement order pursuant to s 79.

MAY THE INTERVENOR REQUIRE THE WIFE'S CLAIM TO BE DETERMINED DESPITE HER ABANDONING THE CLAIM?

_ The Court erred in not exercising its discretion to list the matter for a final hearing ... 1. on an undefended basis in the event the Wife continued to not participate ..._*

1. Ground 7(a) alleges that the primary judge ought to have listed "the matter ... on an undefended basis in the event the wife continued to not participate". This misconceives the nature of the proceedings. The only claim was the s 79 claim by the wife which she had abandoned. The husband was opposing the wife's application for property settlement orders. Effectively, the intervenor argues that the primary judge ought to have listed the matter on an "unprosecuted" basis and heard the husband's defence to a claim that was not being pursued by the wife. A similar argument was put in Spellson and Spellson [1989] FamCA 99; (1989) FLC 92-046, where the Court upheld the dismissal of a husband's claim for the benefit of the parties' adult son who did not wish to intervene in the proceedings and disclaimed any interest.
2. At paragraph 79 of the intervenor's Summary of Argument filed 4 March 2025, the intervenor argued that:

If the Intervener was the ATO, we submit it is very unlikely the Court would have used its discretion to summarily dismiss proceedings which involved payment of a debt owed by the non-participating party.

1. There is no basis for considering that there would be any difference in the treatment of creditors pursuant to s 79 whether the creditor is the Commissioner of Taxation or a non-government creditor: see generally Commissioner of Taxation v Tomaras [2018] HCA 62; (2018) 265 CLR 434 at [7].
2. Whilst it was not the subject of submissions before us, we note that the primary judge in Cao & Trong and Anor [2018] FamCA 460 declined to permit the spouses to discontinue their respective claims pursuant to s 79 in proceedings where the Commissioner of Taxation had intervened (seeking recovery of tax debts). It follows from our conclusions in this case that its correctness is in issue.
3. If the spouses abandon their s 79 claims and there are no claims or causes of action in the jurisdiction, accrued or associated, there remains no claim or cause of action pending before the Court and as such there is no basis for the exercise of jurisdiction under s 79 (except in the unusual case of a child of the spouses: Dougherty).
4. The intervenor sought to rely on two decisions, which may be dealt with briefly. In Puddy & Grossvard and Anor [2010] FamCAFC 54; (2010) FLC 93-432, the argument concerned the jurisdiction of the Court to determine the amount of a debt as an incident of a s 79 claim. However, the primary judge had relied upon the accrued or associated jurisdiction of the Court, rendering the question moot. In Deputy Commissioner of Taxation v Kliman and Kliman [2002] FamCA 629; (2002) FLC 93-113 at [21], the Full Court reiterated that s 92(3) "does not confer on the intervener the right to seek any substantive relief which is not otherwise available to the intervener under some other provision of the Act."
5. The act of intervening in the proceedings did not provide the intervenor with a substantive right to make a claim under s 79(1) either directly or on some basis analogous to a right of subrogation of a spouse's rights pursuant to s 79. As identified above, subparagraph (ca) of "matrimonial cause" in s 4 of the Act expressly limits claims to "proceedings between the parties to a marriage". As no s 79 application (by a party to the marriage) remained on foot, the intervenor could only have proceeded on the basis of another cause of action reliant upon the accrued or associated jurisdiction of the Court, which would have continued even if the federal claim fell away (see Beck v Spalla [2005] FCAFC 82; (2005) 142 FCR 555), but it would be a different cause of action and not a claim pursuant to s 79. In this case, there was no claim by the intervenor in the accrued or associated jurisdiction against the husband, and the intervenor's debt claim against the wife had merged in judgment when the Supreme Court entered judgment on the debt against the wife.

THE EFFECT OF THE ALLEGED LOSS OF OPPORTUNITY TO BANKRUPT THE WIFE

_ The Court erred in not exercising its discretion to list the matter for a final hearing ... 1. on a defended basis should a trustee in bankruptcy be appointed as foreshadowed by the Intervener._*

1. In Ground 7(b), the intervenor argued that the effect of the orders by the primary judge, in circumstances where the creditor had agreed to delay enforcement of the judgment debt due to the pending property settlement proceedings, resulted in the intervenor losing the opportunity of bankrupting the wife. It was argued that if the wife had been sequestrated prior to the proceedings being dismissed, the bankruptcy trustee would have become a party and the proceeding could then have continued. The argument misconceives the role of a bankruptcy trustee in s 79 proceedings.
2. If a spouse is sequestrated when a claim is pending pursuant to s 79 of the Act, the bankruptcy trustee may apply to be joined as a party pursuant to s 79(11). If the bankruptcy trustee is joined as a party:

(a) The insolvent spouse remains a party to the proceedings, but may only make submissions with respect to the vested bankruptcy property in exceptional circumstances (see ss 79(12) and 79(13)); and

(b) Section 79(1) permits the Court to alter the interests of the bankruptcy trustee in the vested bankruptcy property of the bankrupt spouse "for the benefit of either or both of the parties to the marriage or a child of the marriage".

1. Nothing in s 79 permits the bankruptcy trustee to bring a claim pursuant to s 79 for orders to settle any of the property of the solvent spouse upon the trustee. As a result, sequestration of the wife prior to the orders the subject of this appeal could not have improved the intervenor's position.

GROUNDS OF APPEAL RELATING TO INTERLOCUTORY ISSUES

1. The balance of the grounds of appeal argue that the primary judge erred in taking the procedural step of summarily dismissing the wife's claim. They may be dealt with briefly.

_ The Court failed to identify what head of power it relied upon to summarily dismiss the financial proceedings (and Intervener's claim) and / or failed to give adequate reasons for doing so._*

1. Judges are presumed to know the law. It was not necessary for a primary judge to specifically identify a head of power. This ground cannot succeed.

_ The Court failed to have proper regard to the implications of summarily dismissing the proceedings upon the parties._*

1. This ground must fail as the intervenor has not established that it had a substantive claim or cause of action pending and therefore the dismissal order did not affect the intervenor's existing rights.

_ The Court did not have the power to dismiss the proceedings for want of prosecution pursuant to Rule 176 of the Family Court Rules (WA) 2021, as the precondition:_*

"If a party has not taken a step in a case for 1 year..."

1. It was unnecessary for the primary judge to rely upon r 176 of the Family Court Rules 2021 (WA) as it was open to his Honour to dismiss the orders sought by the wife on the basis that she had failed to appear (r 86(1)) and had failed to comply with earlier procedural orders (r 172(2)). The primary judge had power to dismiss the wife's claim pursuant to the Family Court Rules 2021 (WA).

_ In any event, the Court wrongfully exercised its discretion to summarily dismiss the proceedings._*

1. The wife had failed to comply with previous directions and failed to appear. There were no other substantive claims or causes of action pending before the court. The primary judge was correct to dismiss the wife's claim in such circumstances.

1. The intervenor had no substantive claim pursuant to s 79 of the Act. The intervenor's cause of action for the debt claim merged in the judgment of the Supreme Court and thus could not have formed the basis for a cause of action within the court's accrued jurisdiction. An intervenor may not continue to pursue a spouse's property settlement claim if the spouse abandons their claims or rights under s 79 of the Act as the s 79 claim is a personal right of the spouse which is not assignable or transferrable. None of the various consequential powers available to the Court to effect a property settlement order provided a basis for an independent claim by the intervenor against the husband.
2. The primary judge was correct to dismiss the proceedings. We therefore dismiss the application for leave to appeal.
3. As the second respondent has incurred no recoverable costs in the appeal, we make no order for costs.

I certify that the preceding fifty-two (52) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justices Riethmuller, Campton & Christie.