Property – consent orders obtained based on false information for the purpose of defeating creditors, in most circumstances, justifies an order varying or setting aside the order under s79A of the Act

In Cantrell & North and Anor[2020] FamCAFC 175 (23 July 2020) the Full Court (Ryan, Aldridge & Austin JJ) dismissed an appeal where a couple had entered into consent orders and transferred the former matrimonial home to the wife; and where the Supreme Court of New South Wales declared that the transfer was void against a creditor of the husband pursuant to s37A of the Conveyancing Act 1919 (NSW), setting the order aside pursuant to s79A.

[T]he creditor was owed $381,000 plus interest, primarily made up of costs orders made against the husband… In their application, the couple “wrongly and misleadingly answered ‘No’” as to whether there were any creditors entitled to become a party to the case.

The wife said that the Supreme Court erred in setting the orders aside as it had not considered whether substantially different orders would have been made, had there been proper disclosure.

The Full Court said (from [58]):

“…[W]e do not accept that where there has been a failure to disclose to the Court the existence of a significant creditor who was entitled to join the proceedings, the Court must proceed to consider what final property settlement orders would have been made under s79…of the Act assuming proper disclosure. (…)

[59]…[W]here consent orders have been obtained from the Court on the basis of false information for the purpose of defeating creditors, in most circumstances, this will be sufficient to justify an order varying or setting aside the order under s79A of the Act. (…)

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[83] The final [s79A(1)(a)] step may involve a comparison between the orders that were made and those that were likely to be made, absent any relevant default, but that is not the only means by which a Court could be satisfied that it was just to vary or set aside the orders. A denial of procedural fairness…is…sufficient to be able to justify such a course without such comparison (…).”

Robert Glade-Wright is the founder and senior editor of The Family Law Book, a one-volume loose-leaf and online family law service (thefamilylawbook.com.au). He is assisted by Queensland lawyer Craig Nicol, who is a QLS Accredited Specialist (family law).