B and Ors & B [Limitation of Action]
[2005] FamCA 906
•26 September 2005
[2005] FamCA 906
FAMILY LAW ACT 1975
IN THE FULL COURT OF
THE FAMILY COURT OF AUSTRALIA
AT SYDNEY
Appeal No. EA 18 of 2005
File No. SYF 2622 of 1984
IN THE MATTER OF:
B
- and -
C
- and -
C
Appellants/Executors
- and -
B
Respondent/Wife
[Limitation of action]
REASONS FOR JUDGMENT
BEFORE:Faulks DCJ, Kay and Boland JJ
HEARD:24 August 2005
JUDGMENT: 26 September 2005
APPEARANCES:
Dr Birch SC (instructed by HAL Lawyers, Suite 28, 193 Macquarie Street, Sydney NSW 2000) appeared on behalf of the Appellant Executors.
Mr Lloyd of counsel (instructed by Stuart & Mills Solicitors, Level 5, 67 Castlereagh Street, Sydney NSW 2000) appeared on behalf of the Respondent Wife.
APPEAL SUMMARY
MATTER:B and Ors and B [Re limitation of action]
APPEAL NUMBER: EA 18 of 2005 (SYF 2622 of 1984)
CORAM:Faulks DCJ, Kay and Boland JJ
DATE OF HEARING: 24 August 2005
DATE OF JUDGMENT: 26 September 2005
CATCHWORDS:
APPEAL – property – orders made under s 79 of the Family Law Act 1975 (Cth) in 1986 – whether enforcement of orders by the wife against the deceased husband’s executors in 2003 is time barred by Limitation Act 1969 (NSW) s 17 – application of s 79 of the Judiciary Act 1903 (Cth) – meaning of “action on a cause of action on a judgment” in light of Dennehy (a bankrupt) v Reasonable Endeavours Pty Ltd (formerly Asiaciti (Australia) Pty Ltd) [2003] FCAFC 158; (2003) 130 FCR 494 – whether orders for sale of property create an equitable interest in the wife’s favour – whether enforcement of equitable interest also time barred by Limitation Act – meaning of equitable charge – whether subsequent consent orders made in 2003 are null and void – effect of non-compliance with s 105 of the Family Law Act – whether equitable interest must be enforced in the Supreme Court of New South Wales – whether executors entitled to equitable accounting
Mullane v Mullane (1983) 158 CLR 436; (1983) FLC 91-303
Official Trustee in Bankruptcy v Mateo (2003) FLC 93-128
Daniel v Daniel and Jones (Trustee in Bankruptcy) (2004) FLC 93-187
Jones v Daniel; In the matter of Daniel (2004) FLC 93-196
In the Marriage of Michiels (1991) 14 Fam LR 587
Northern Territory of Australia v GPAO and Others (1998-1999) 196 CLR 553; (1999) FLC 92-838
Dennehy (a bankrupt) v Reasonable Endeavours Pty Ltd (formerly Asiaciti (Australia) Pty Ltd) [2003] FCAFC 158; (2003) 130 FCR 494
W T Lamb & Sons v Rider [1948] 2 KB 331
Lowsley v Forbes [1999] 1 AC 329
Gleeson v Gleeson [2002] NSWSC 418
Associated Alloys Pty Ltd v ACN 001 452 106 Pty Ltd (in liq) (2000) 202 CLR 588
Jones v Daniel (2005) 212 ALR 588
Metwally (No 2) v University of Wollongong (1985) 60 ALR 68
Appeal dismissed.
Introduction
This is an appeal by the executors of the estate of a deceased husband against orders made by Le Poer Trench J on 27 January 2005. The husband died on 11 August 2001.
The appeal raises two issues of law. The first issue concerns the operation of the Limitation Act 1969 (NSW) (“the Limitation Act”). The executors submit that the wife is precluded from enforcing orders made in this Court in 1986 under s 79 of the Family Law Act 1975 (Cth) (“the Act”) by reason of s 17 of the Limitation Act which prevents “[a]n action on a cause of action on a judgment” if such action is not brought within 12 years “from the date on which the judgment first becomes enforceable…”. The executors also submit that subsequent orders made by consent in 2003 between Mr B, as legal personal representative of the husband, and the wife are inoperative because they were erroneously based on the 1986 orders. The wife does not concede that the Limitation Act applies to the 1986 orders or the 2003 orders.
The second issue is interwoven with the limitation issue and relates to the nature of the wife’s entitlement as a result of the 1986 orders. The executors dispute that the 1986 orders, which provided for the sale of a property in the inner west of Sydney (“the matrimonial home”) registered in the husband’s sole name, and for the net proceeds of sale to “be divided so that the husband receive 50% and the wife receive 50%”, created an equitable interest in the wife’s favour. In the alternative, the executors submit if any equitable interest was created, that interest was an equitable charge, and by 2003 was unenforceable because of the provisions of the Limitation Act.
The wife asserts that the 1986 orders created an equitable interest in her favour such that the husband held one half of the property on trust for her. She asserts firstly the Limitation Act has no operation or effect on her application brought in 2003 as that action was by way of enforcement. She also asserts the interest she obtained under the orders was not an equitable charge, which could be affected by the provisions of the Limitation Act.
Background facts
There was no dispute before us that the background facts as set out in the trial Judge’s judgment are accurate. The trial Judge recorded the relevant factual background as follows:
“4.Final property orders were made on an undefended basis between the parties in the Family Court of Australia on the 26th of August 1986.
5.The relevant order is in the following terms:
‘(a) The husband and the wife do all things necessary and sign all documents to effect the sale of the former matrimonial home…and the proceeds of sale after payment of the Real Estate Agent’s commission, Solicitors legal costs on sale, and repayment of the mortgage be divided so that the husband receive 50% and the wife receive 50%.’
6.The wife in her affidavit sworn on the 29th of August 2003 says that following the making of the order above referred to, arrangements were made for the house to be sold by way of auction in December 1989. Until that time the wife had remained in occupation of the property with the children. She says that the sale of the home was postponed indefinitely by agreement with the husband to enable the wife and children to remain there. The agreement provided that the wife would pay water and electricity expenses and the husband paid all other costs associated with the retention of the property. She said it was the intention of the parties to subsequently sell the property at some future time and fulfil the terms of the consent orders.
7.In January 1997 the wife vacated from matrimonial home leaving one of the children in occupation.
8.On the 11th of August 2001 the husband died. Probate of his estate was granted to the executors on the 2nd of October 2003.
9.On the 18th of September 2003 the wife filed an application seeking to enforce the orders made on the 29th of August 1986.
10.On the 27th of October 2003 the matter was before the Court and Terms of Settlement were entered into. Orders were made pursuant to those Terms. The application which brought the matter before the Court was the wife’s application filed on the 18th of September 2003. That application could best be described as an application to enforce the orders made on the 29th of August 1986.
11.The orders made on the 27th of October 2003 appear to be interim orders which provide for the sale of the [matrimonial home] and included in this order:
‘(d) do all other things and acts to otherwise comply with the husband’s obligations set out in the orders made on the 29th of August 1986.’
12.The [matrimonial home] was sold and the wife’s one half share amounted to $476,536.96.
13.On the 30th of March 2004 the wife filed an application seeking to enforce the orders of the 27th of October 2003 by settlement of the distribution of proceeds of sale in accordance with the 29th of August 1986 orders. That application came before the Judicial Registrar Loughnan on the 31st of March 2004. On that day the application of the Executor filed the 26th of March 2004 was dismissed. The wife’s application filed the 30th of March 2004 was dismissed. An order was made for the wife’s costs to be paid.
14.On the 23rd of June 2004 the wife filed a further application seeking the distribution to her of one half of the net proceeds of the sale of the former matrimonial home.
15.On the 21st of July 2004 Registrar Messner ordered that a Third Party Debt Notice issue.
16.On the 28th of July 2004 the Executors applied for a Stay of proceedings.
17.On the 2nd of August 2004 Judicial Registrar Johnston made orders dismissing the Stay application and ordering the monies due to the wife in the sum of $476,536.96 pursuant to the Third Party Debt Notice issued on the 21st of July 2004 be paid to the solicitors of the wife forthwith. An order was further made for the payment of the wife’s costs in the sum of $2,100.
18.The Executors seek to review the orders made by the Judicial Registrar on the 2nd of August 2004 and the order made by Registrar Messner on the 21st of July 2004 requiring the issue of a Third Party Debt Notice.”
At the date of the 1986 orders the amount outstanding on the mortgage secured on the matrimonial home was approximately $34,811.16. It is not in dispute before us that the monies due under the mortgage were repaid by the husband before his death.
The wife’s Application and the 2003 orders
On 18 September 2003 the wife filed an Application in which she sought the following orders:
“1. That pursuant to the provisions of Section 106A(i)(b) that [the] Solicitor…be authorised and is hereby so authorised to execute all such documents, Deeds, writings and instruments on behalf of the husband in the within proceeds so as to comply with provisions of Order 2(a) of the Orders made the 29th August, 1986 including but not limited to:-
(a) Authorities to agents to list the [matrimonial home] for sale;
(b) To sign an Agency Agreement listing the said property for sale;
(c) To execute a Contract For Sale;
(d) To execute a Memorandum of Transfer and any other associated documentation conveying the said property to any bona fide purchaser for value;
(e) Any authority required for the transfer of deposit funds and/or sale proceeds.”
The executors contend before us that this application was flawed, not only because it was based on the 1986 orders which were statute barred, but because it did not comply with s 105 of the Act. We will return to this latter contention.
It is not disputed that the wife’s application became the subject of an agreement made between the executors and the wife on the first return date and recorded by the making of consent orders (“the 2003 orders”). As the interpretation of those orders and a notation has been raised in this appeal we set out the 2003 orders and notation in full:
“1.That the wife’s Application filed 18th September 2003 be stood over to 4th December 2003.
2.That [Mr B] be appointed as the legal representative of the husband and be substituted for the husband in these proceedings.
3.That [Mr B] and the wife forthwith
(a) List…(‘the home’) for sale by way of auction with an agent to be agreed upon between the Executors and the wife and failing agreement within 7 days, the wife and the Executors to instruct the President of the Real Estate Institute of NSW to nominate such agent.
(b) to agree on a reserve price and failing agreement to join in instructing the President of the Real Estate Institute of NSW to nominate an agent for the purpose of determining such price.
(c) do all things and acts to effect a Transmission Application to enable them to become registered on the title to the home.
(d) do all other things and acts to otherwise comply with the husband’s obligations set out in Orders made 29.8.86.
4.That the wife do all things and acts as are necessary to enable the Transmission Application to proceed resulting in the wife’s caveat remaining on the title to the home pending completion of the sale.
5.That the parties costs be reserved.
6.Liberty to apply on 7 days notice.
Noted that the parties agree that upon completion of the sale of the home, the proceeds of sale shall be defined as the balance remaining after payment of agent’s commission, legal fees, adjustments for rates and taxes, advertising costs and any other ancillary sale costs.”
Grounds of appeal
The grounds of appeal relied on by the executors set out in the Notice of Appeal filed 23 February 2005 are as follows:
“(sic)The claim of the wife in the proceedings in the Court below is availed of a good and valid defence under the terms of the Limitation Act 1969 (NSW).
2. The orders of the Family Court of Australia at Sydney of 29 August 1986 did not effect an equitable vesting of the property subject of the orders.
3. If the orders did effect an equitable vesting and created a trust over the subject property, then the nature of the trust so created was for not more than half the net equity in the property as at the date of the orders being for some 10% of the purchase price.
4. If and in the event the orders did create an equitable vesting as to 50% of the net value of the property, then the husband was entitled to an equitable accounting for the value of his contributions towards the mortgage repayments concerning the property in the years following their marriage.”
The executor seeks, in the event the appeal is allowed, orders, inter alia, setting aside the third party debt notice. The wife has received the sum of $476,536.96 being one half of the net proceeds of sale of the matrimonial home. In the alternative the executors seek in their proposed order 6 the following order:
“that the interests of the Appellant and the Respondent in the net proceeds of sale in the [matrimonial home] vests in the Appellants as to 64% and in the Respondent as to 36%.”
The basis on which this order is sought is unclear.
The trial Judge’s judgment
Having set out the background history, the trial Judge then set out the argument of the executors that had been summarised in the written submissions of counsel for the estate, as follows:
“(i) The orders by their terms took full force and effect 56 days after personal service of a copy of the orders upon the wife, such service was to take place no later than 14 days from the date of the orders being the 29th of August 1986.
(i)Any order or enforcement action based upon the 1986 orders would be an action or cause of action on a judgement (sic) for the purposes of section 17 of the Limitation Act 1969 (NSW).
(ii)Section 17 of the Limitations Act will be applicable to any enforcement of the 1986 orders in this Court by virtue of section 79 of the Judiciary Act (1983) (Commonwealth).
(iii)It follows from the above that the 1986 orders were no longer enforceable when the wife commenced enforcement proceedings since 12 years has expired from the time that those orders first became enforceable.
(iv)The consent orders made in 2003 did not and could not operate as a confirmation so as to prevent expiry of the limitation period because they were commenced after the limitation period had expired. (See section 54 of the Limitations Act).
(v)The consent orders made in 2003 could not operate independently of the 1986 orders as the court does not have jurisdiction in any fresh matter that has arisen after the date of the husband’s death, independent of the 1986 orders.
(vi)In any event of the consent orders as far as relevant, can only give effect to an obligation that exists under the 1986 orders and if there is no longer any enforceable obligation under the 1986 orders to pay 50% of the net proceeds of sale to the wife then the orders on their proper construction do not give rise to one.”
The trial Judge thereafter referred to additional submissions received from counsel for the estate and proceeded to deal with the Limitation Act issue and whether s 17 of the Limitation Act applied to the 1986 and 2003 orders. His Honour said:
“Both the terms of s 79 of the Family Law Act and the case law suggest that an order made under s 79 must immediately alter the legal or equitable interest in the property. Applied to the facts of [this] matter this means that when the order was made in 1986 the husband ceased to have a beneficial interest in the whole property and from that point on has only held a beneficial interest in half. That is, once the orders were made, the husband held a 50% interest in the property (being the proceeds of the sale after other payments were made) in trust for the wife.”
The trial Judge referred to and quoted from Mullane v Mullane (1983) 158 CLR 436; (1983) FLC 91-303. His Honour also referred to the findings of the Full Court of the Federal Court in Official Trustee in Bankruptcy v Mateo (2003) FLC 93-128 and concluded “all three members of the Full Court of the Federal Court held that the effect of an order under s 79 of the Act was to immediately vest in the beneficiary an equitable interest in the property. The transferor was left with a bare legal interest”. His Honour thereafter set out passages from the judgments from each of Wilcox J, Branson J and Merkel J in Mateo.
The trial Judge then referred to the decision of Emmett J in Daniel v Daniel and Jones (Trustee in Bankruptcy) (2004) FLC 93-187. His Honour also referred to Jones v Daniel; In the matter of Daniel (2004) FLC 93-196 and noted that Emmett J’s decision was affirmed by the Full Court of the Federal Court in the latter case.
The trial Judge thereafter quoted from Dickey A, Family Law (Sydney: Lawbook Co, 4th ed, 2002) at 653 as follows:
“[a]n unconditional order under s. 79(1) that one party transfer a specific item of property to the other party confers an immediate equitable interest in the property in this other party.67 (sic)”.
His Honour then set out an extract from the judgment of Elliot J in In the Marriage of Michiels (1991) 14 Fam LR 587 at 591-592 as follows:
“Like a vendor under a contract of sale, a party subject to an order to transfer property to another party on payment of a sum of money becomes in equity a trustee for the transferee of the property and things appurtenant thereto. From the time the order is made the transferee has an equity in the property that the law will protect; it is a right vested in interest which on payment of the sum referred to in the order becomes a right vested in possession.”
The trial Judge then concluded “[h]aving regard to the above it appears from the case law that limitation periods, such as the Limitation Act 1969 (NSW) s 17 will not apply to property orders as the effect of s 79 of the Family Law Act is to immediately alter the interest in the property the subject of the Court order”.
The trial Judge examined the interaction of s 79 of the Judiciary Act 1903 (Cth) and s 17 of the Limitation Act noting the consideration of the Judiciary Act to state legislation discussed in the Northern Territory of Australia v GPAO and Others (1998-1999) 196 CLR 553; (1999) FLC 92-838. His Honour concluded:
“I do therefore accept the submission made by the Estate that the Limitations (sic) Act of NSW can have application to orders of this Court, however, I find that it does not apply to the property orders made in this case in 1986”.
The trial Judge thereafter referred to further submissions received from counsel for the estate in which counsel for the estate drew the trial Judge’s attention to “the distinction between the facts in the current case and those referred to in the decisions of Mateo and Daniel”. The trial Judge recorded counsel for the estate’s submission that, because the reported decisions required a transfer of an interest in a property rather than, as in the case before him, a sale of the property and disposition of the proceeds that “one of the possible interpretations which could be applied to the subject orders, having regard to the decided cases, would be to treat the wife’s interest under the orders as analogous to a charge imposed by a Court of Equity as a remedy”. He further recorded counsel for the estate’s submission “that the proper construction of the effect of order 2(a) of the subject orders, at its highest, is that it gave to the wife an interest reflecting an entitlement to receive 50% of the proceeds of the sale after the property’s disposal. He says such an interest amounts to a charge”.
The trial Judge rejected the interpretation of the wife’s interest as a charge and said:
“I do not see it as helpful to draw an analogy between an order made under section 79 of the Family Law Act and ‘an agreement to grant an equitable charge’. The interest created by a section 79 order is, in my opinion, an absolute interest in its own right. It is not an agreement to create an interest at a later time. In my opinion when the order was made, the husband’s interest in that property changed. The moment the property was sold and the sale proceeds were created the husband’s entitlement to those proceeds was 50% only. It was not contingent on any other factor or circumstance.”
The trial Judge thereafter referred to orders sought in paragraphs 4 and 6 of the Application made by the estate on 29 October. Paragraph 4 sought a stay of the wife’s Application pending proceedings in the Supreme Court of New South Wales. (It is not in dispute that there are no present proceedings before the Supreme Court of New South Wales).
His Honour concluded “[i]t seems to me that paragraph 6 is potentially an application under section 79A of the Family Law Act. Some discussion did take place during the course of the hearing before me as to the availability of section 79A to the Estate if the Estate wished to pursue the application in that direction”. The trial Judge then noted as he had not been asked to determine either a stay or an application under s 79A, that he would make orders requiring the estate to file an amended Application dealing with such proposed orders “should the estate choose to pursue the matter further in this Court”.
The Limitation Act grounds
It appears to us that grounds 1 and 2 are directed to the Limitation Act issue.
The Appellant’s submissions
Counsel for the estate submits that the wife’s enforcement of the orders is statute barred on two bases. First, he submits the action which the wife commenced in this Court in 2003 is barred because of the provisions of s 17 of the Limitation Act as it is an action on a cause of action brought more than 12 years after the 1986 orders.
Counsel for the estate’s alternative submission is that what the wife received, pursuant to the 1986 orders, was an equitable charge. He asserts that if she had sought to enforce her rights, the appropriate action to be undertaken by her was to institute proceedings in the Supreme Court of New South Wales for enforcement of her equitable charge, and not to bring enforcement proceedings in this Court. He notes the definition of mortgage in the Limitation Act includes “a charge or a lien on any property for securing money or money’s worth and includes in relation to land under the provisions of the Real Property Act a charge within the meaning of that Act”. He submits that “[a]n action to enforce a charge would therefore be an action on a cause of action to recover principal monies secured by a mortgage, or to recover possession of mortgaged property, or to foreclose the equity of redemption within s.42(1) of the Limitation Act”. Counsel for the estate submits that any claim which the wife may have been able to institute in the Supreme Court of New South Wales is also time barred as such action should have been commenced by 1998 at the latest.
Counsel for the estate further submits that if the wife’s equitable interest was that of a full equitable co-owner with the husband, “then it would still follow that the orders of the Judicial Registrar that were under review ought not to have been made and that the wife was not entitled to any of the relief she sought in this Court…That would not be within the jurisdiction of this Court but an action that ought be brought in the Supreme Court of New South Wales”. He concludes that the action which should have been brought was one under s 66G of the Conveyancing Act 1919 (NSW), and in such circumstances the executors could claim a set off against the wife by way of occupation fee and other sums which may “be otherwise payable by the co-owner”.
Whilst not conceding the wife now has any entitlement to enforce any order or other equitable entitlement, counsel for the estate submits “if, contrary to that submission, the Court was to find there was such an entitlement, the equitable nature of that entitlement obliges the wife to grant to the deceased’s estate an account in accordance with the principles just mentioned”.
We will discuss counsel for the estate’s submissions in relation to the appropriate jurisdiction for enforcement later in our reasons.
We also had the benefit of oral submissions from counsel for the estate after he had an opportunity to consider the judgment of the Full Court of the Federal Court of Australia (“the Federal Court”) in Dennehy (a bankrupt) v Reasonable Endeavours Pty Ltd (formerly Asiaciti (Australia) Pty Ltd) [2003] FCAFC 158; (2003) 130 FCR 494. We discuss this decision below. Counsel for the estate sought to distinguish Dennehy but conceded that if we were disposed to follow the reasoning in Dennehy then the grounds based on the s 17 of the Limitation Act would fail. However, he submitted the wife’s claim in 2003 based on the 1986 orders for enforcement was flawed by reason of her failure to first seek leave of the Court to proceed under s 105 of the Act.
Relevant law
Application of s 79 of the Judiciary Act
There is no dispute that s 79 of the Judiciary Act 1903 (Cth) applies to make the provisions of the Limitation Act potentially relevant to these proceedings. See Northern Territory of Australia v GPAO (1999) 196 CLR 553 at 575 where Gleeson CJ and Gummow J said:
“It is clear that, were it not for a provision such as s 79, a law of a State with respect to such matters as the limitation of actions could not directly and of its own force operate in relation to a claim arising under a law of the Commonwealth.”
The Limitation Act
It is asserted a number of provisions of the Limitation Act are relevant to this appeal. Of central relevance is the definition of “action” contained in s 11 of the Limitation Act. Other definitions are also relevant.
(i)Action
“includes any proceeding in a court.”
(ii)Judgment
“includes not only a judgment of a court of New South Wales but also a judgment of a court of the United Kingdom of Great Britain and Northern Ireland, a court of another State of the Commonwealth, a court of the Commonwealth, a court of a Territory of the Commonwealth, or a court of any other place.”
(iii)Mortgage
“does not include a possessory lien on goods nor any binding effect on property arising under a writ of execution against the property but otherwise includes a charge or lien on any property for securing money or money’s worth and also includes, in relation to land under the provisions of the Real Property Act 1900, a charge within the meaning of that Act.”
The primary submission of the executors is that s 17 of the Limitation Act applies to the 1986 and 2003 orders. Section 17 of the Limitation Act provides:
“(1)An action on a cause of action on a judgment is not maintainable if brought after the expiration of a limitation period of twelve years running from the date on which the judgment first becomes enforceable by the plaintiff or by a person through whom the plaintiff claims.
(2) A judgment of a court of a place outside New South Wales becomes enforceable for the purposes of this section on the date on which the judgment becomes enforceable in the place where the judgment is given.
(3) Subsection (2) does not apply to a judgment of a court of the Commonwealth, not being a court of a Territory of the Commonwealth.”
Dennehy judgment
The effect of a provision of the Limitation of Actions Act 1958 (Vic), which is in similar terms to s 17 of the Limitation Act, was considered by the Full Court of the Federal Court during the course of bankruptcy proceedings in Dennehy. Given the concession of counsel for the estate, that if we accept the reasoning in this judgment, the Limitation Act grounds fail, we consider we should examine the judgment in some detail.
The Full Court considered a number of provisions of the Limitation of Actions Act, including s 5(4) which provides:
“An action shall not be brought upon any judgment after the expiration of fifteen years from the date on which the judgment became enforceable.”
Also relevant was the definition of “action” in s 3 of the Limitation of Actions Act, namely:
“‘action’ includes any proceeding in a court of law”
Also relevant to the decision in Dennehy was s 5(7) which provides:
“Save as otherwise expressly provided an action shall not be brought to recover any arrears of interest in respect of any sum of money whether payable in respect of a specialty, judgment, legacy, mortgage or otherwise, or any damages in respect of such arrears, after the expiration of six years after they became due.”
The facts in Dennehy were straightforward. On 28 November 1991 a judgment was obtained in the Supreme Court of Victoria in the sum of $339,719.26. Interest ran on the judgment debt pursuant to the provisions of the Supreme Court Act 1986 (Vic). The judgment creditor did not take any step to enforce the judgment for over six years. On 1 October 2001 the judgment creditor obtained leave from a Master under the relevant rules to issue a writ of execution on the judgment. An appeal from the Master’s decision was dismissed. However, no execution was levied. On 15 January 2002 a Bankruptcy Notice was served on the debtor. At that time interest on the judgment, after credit was given for a payment of $100,000, totalled $387,355.37. The debtor disputed the interest claimed on the basis it was, in part, barred by the limitation statute. The debtor claimed a bankruptcy notice could not issue for any debt, or part of the debt in respect of which execution was not available.
The debtor relied on s 40(1) and s 41 of the Bankruptcy Act 1966 (Cth):
“40(1) A debtor commits an act of bankruptcy in each of the following cases:
…
(g) if a creditor who was obtained against the debtor a final judgment or final order, being a judgment or order the execution of which has not been stayed, has served on the debtor in Australia…a bankruptcy notice under this Act and the debtor does not…comply with the requirements of the notice…
41(3)A bankruptcy notice shall not be issued in relation to a debtor:
…
(b) if, at the time of the application its issue, execution of the judgment or order to which it relates has been stayed…
…
(5) A bankruptcy notice is not invalidated by reason only that the sum specified in the notice as the amount due to the creditor exceeds the amount in fact due, unless the debtor, within the time allowed for payment, gives notice to the creditor that he or she disputes the validity of the notice on the ground of the misstatement.”
The debtor argued that ss 40 and 41(3)(b) of the Bankruptcy Act had the effect “that only a creditor who is able to obtain the benefit of the judgment can pursue the bankruptcy of his debtor”.
Finkelstein J, with whom Merkel and Dowsett JJ agreed, rejected the debtor’s argument that a judgment, the enforcement of which was statute barred, was a judgment which had been stayed within the meaning in the Bankruptcy Act and preferred the reference to a stay as being one imposed by a court of its own motion. However, his Honour found that a creditor who has a statute barred debt was not a creditor entitled to lodge a proof of debt in a bankruptcy. His Honour went on to examine the question of whether a creditor who had a statute barred debt could petition for a sequestration order.
Having set out the relevant provisions of the Victorian limitation legislation Finkelstein J identified the question to be determined was whether, on its proper construction, the provisions of the Limitation of ActionsAct prevented execution on a judgment for the principal debt or interest.
His Honour firstly noted that the Limitation of Actions Act would not apply to all judgments, “but only those which require enforcement”. He held “a declaratory judgment as to rights will be effective when it is pronounced (or perhaps when it is perfected)”. His Honour found such a judgment was not affected by the operation by the Limitation of Actions Act. He said “[h]owever, many judgments require something to be done, such as the payment of money, the transfer of property or the doing of some other act. It is only those kinds of judgments upon which s5(4) and s5(7) can operate”.
Finkelstein J identified three categories of an action on a judgment:
·an action on a foreign judgment commenced by writ;
·a new action based on a judgment debt; and
·proceedings which may or may not amount to actions being proceedings by way of enforcement such as by way of writs of execution.
His Honour thereafter considered the third category of judgment debt. His Honour said “the question here is whether s5(4) and s5(7) only apply to the commencement of a new proceedings on the judgment or whether they are concerned with enforcement as well”.
Finkelstein J referred to the leading case on the English limitation statute, W T Lamb & Sons v Rider [1948] 2 KB 331 (“Lamb’s case”). He noted in Lamb’s case Scott LJ held “… the right to sue on a judgment has always been regarded as a matter quite distinct from the right to issue execution under it and … the two conceptions have been the subject of different treatment. Execution … is essentially a matter of procedure – machinery which the court can, subject to the rules from time to time in force, operate for the purpose of enforcing its judgments or orders”.
Finkelstein J also referred to the subsequent consideration by the House of Lords of Lamb’s case in Lowsley v Forbes [1999] 1 AC 329. His Honour noted that Lord Lloyd in his speech disagreed with the narrow interpretation of an action on a judgment adopted by Scott LJ. Notwithstanding this finding, Lord Lloyd held that Lamb’s case had been followed for many years, and when the legislation under consideration by the House of Lords was enacted, Lamb’s case represented the existing law. Finkelstein J noted “[i]n the result, Lord Lloyd held that because Parliament had given its blessing to Lamb’s case it was too late for the House of Lords to hold its reasoning to be erroneous”.
Finkelstein J then turned to the position in Australia. He considered it was appropriate to act on the basis that when the Victorian Parliament enacted legislation in 1955, which was based on the English legislation, “it did so in the belief that Lamb’s case was correctly decided”. Finkelstein J considered his assumption was fortified by reference to the New South Wales legislation now under consideration by us. His Honour noted that the Limitation Act was passed following a report by the New South Wales Law Reform Commission into Limitation of Actions published in 1967. Relevantly that report said at paragraph 116:
“The present limitation provisions here and in England concerning judgments apply, and section 17 of the Bill would apply, to an action on the judgment, but not to the processes of execution of a judgment: W. & T. Lamb & Sons v. Rider ([1948] 2 K.B. 331). When exercising discretions concerning the execution of a judgment after a long period, however, a court has regard to the effect which the statutes of limitation would have if an action were brought on the judgment: Jay v. Johnstone ([1893] 1 Q.B. 189).”
Finkelstein J concluded:
“In the result, I see no basis upon which we should adopt an approach which is different from that taken by the House of Lords. It is clear that if parliament legislates upon an erroneous view of the law, that view will effect the construction of the legislation.
…
It follows, in my view, that s5(4) only affects new actions upon a judgment and does not deal with steps taken in the enforcement of a judgment. The only ‘limitation’ which applies to the enforcement of a judgment obtained in the Supreme Court of Victoria is that contained in the rules of the Supreme Court.”
Discussion - s 17 of the Limitation Act
The trial Judge found that by reason of the operation of s 79 of the Judiciary Act that the Limitation Act was potentially relevant. We also accept that to be the case. We accept that the 1986 orders constitute a “judgment” as defined under “order” in the dictionary of the Family Law Rules 2004 (“the Rules”).
We are satisfied that the proceedings commenced in 2003 by the wife were proceedings for enforcement under s 79(1A), which we discuss below, and not a new action. The wife’s Application sought orders under s 106A of the Act. That section, which is found in Part X111 of the Act, “Enforcement of Decrees”, provides machinery provisions to facilitate, inter alia, execution of documents if a person obliged to do so has refused or neglected to comply with an order, or “for any other reason, the court considers it is necessary to exercise the powers of the court”.
We therefore consider whether the reasoning of the Full Court of the Federal Court in Dennehy is applicable to the Limitation Act and should be adopted by us. Relevant to our interpretation of s 17 is s 34 of the Interpretation Act 1987 (NSW) s 34 which provides:
“(1)In the interpretation of a provision of an Act or statutory rule, if any material not forming part of the Act or statutory rule is capable of assisting in the ascertainment of the meaning of the provision, consideration may be given to that material:
…
(2) Without limiting the effect of subsection (1), the material that may be considered in the interpretation of a provision of an Act, or a statutory rule made under the Act, includes:
…
(b) any relevant report of a Royal Commission, Law Reform Commission, committee of inquiry or other similar body that was laid before either House of Parliament before the provision was enacted or made…”
We are satisfied as the report was before the New South Wales Parliament it is appropriate for us to have regard to the Law Reform Commission’s Report in our interpretation of s 17 of the Limitation Act.
Conclusion - s 17 of the Limitation Act
We are satisfied that the action brought by the wife in 2003 was not a new cause of action, but was an application for orders providing additional machinery provisions for the implementation of the 1986 orders. We agree with the trial Judge’s characterisation of the application as an enforcement application.
In so determining, we accept the reasoning of the Full Court of the Federal Court in Dennehy is compelling. Whilst acceptance of the ratio in Dennehy perpetuates a narrow interpretation of the statute, it is an interpretation followed by superior courts for many years, and not subject of legislative change in 1969 or since. The interpretation of the law which clearly differentiated between an action on a judgment and execution was recognised by the Law Reform Commission when the New South Wales legislation was enacted but did not result in legislative change. We are satisfied the wife’s action was one for execution and not an action on a cause of action.
We are satisfied that on a correct interpretation of s 17 ground 1 is not made out. We also take into account that from the time of the making of the orders in 1986 until the death of the husband in 2001 he took no action to enforce the orders or to seek to set aside the orders under s 79A. The wife lived in the home with the children with the husband’s knowledge, and at least implied consent, for many years after the making of the orders. In those circumstances any delay by the wife seeking enforcement is explicable.
The nature of the wife’s “interest” or entitlement under the 1986 orders
We turn then to the nature of the wife’s interest in the matrimonial home as a result of the 1986 orders. Ground 2 of the grounds of appeal challenges the trial Judge’s finding that the 1986 orders changed the nature of the husband’s interest in the matrimonial home.
The parties’ submissions
We have set out above in paragraphs 26 to 28 the general thrust of the appellant’s submissions on this issue. The appellant further argues that the interest obtained by the wife under the 1986 orders should be distinguished from the interest obtained by the spouses in both Mateo and Daniel where the relevant orders provided for a transfer of a half interest in the matrimonial home to the spouse. Counsel for the estate further submits the order should not be treated as analogous to a concluded contract for sale. He submits the only interest the wife obtained was a share in the proceeds of sale of the home.
On behalf of the wife, counsel for the respondent submits:
“5. The clear meaning of Order 2A was that upon the making of such orders the wife was entitled precisely to one half of that property given that both parties were compelled pursuant to the terms of the orders to effect a sale equally sharing in the amounts required to pay the agent’s commission, Solicitor’s legal costs and the mortgage. The orders did not provide for such obligations and/or debts to be paid in any fashion other than equally and the orders did not provide for an entitlement to one or either of the parties to exclusive use of the property pending a sale.
6.There is no substance to the proposition that a charge was granted to the wife in a sum equal to an amount representing that sum which would remain following a sale. If that argument were available it could similarly be applied to the husband. Clearly that is not the submission of the Appellant as he ultimately contends for the accounting by the wife to the entitlement she ultimately received upon sale to the estate of the late husband.
7.It is submitted on behalf of the Respondent that there is nothing in the terms of the orders 29th August, 1986 which particularly distinguish this case from those referred to in the Appellant’s submissions notably of Official Trustee v Mateo (2003) 30 FamLR 122; Daniel v Daniel (2004) 32 FamLR 160.”
At trial similar submissions to those set out above were made by counsel for the estate about the nature of the equitable interest, if any, received by the wife as a result of the orders. We have already set out the trial Judge’s examination of the relevant authorities.
Equitable charge
We turn now to the assertion by the executors that the wife’s interest under the 1986 order was, if anything, merely an equitable charge. The term “equitable charge” is not defined in the Limitation Act. However the definition of mortgage refers to “a charge or lien on any property for securing money or money’s worth”. It includes a charge registered under the provisions of the Real Property Act 1900 (NSW). Counsel for the estate submits the equitable charge is a mortgage as defined in the Limitation Act and is statute barred under the provisions of s 42 of the Limitation Act. Before us counsel for the respondent relied on the decision of Bryson J in Gleeson v Gleeson [2002] NSWSC 418. That decision involved, inter alia, the enforcement of a registered mortgage over land. Bryson J held that:
“A registered mortgage may itself create a contractual entitlement of the mortgagee to possession against the mortgagor, to which the general provisions of the Limitation Act 1969 would apply, but such a mortgagee is also entitled to remedies conferred by the Real Property Act 1900 itself, and those remedies are not affected by the Limitation Act.”
His Honour went on to find:
“The result is that after the expiration of the limitation periods fixed by s42 and s43 an action for debt is not available to the mortgagee, and the mortgagee cannot obtain a judgment or other judicial remedies for the principal and interest, but on the other hand the mortgagee can continue to exercise rights specifically conferred by the Real Property Act on a mortgagee, without limitation as to time.”
There is no suggestion in this case that the wife had a mortgage capable of registration under the provisions of the Real Property Act. Consequently it appears to us the decision is Gleeson does not rebut the executors’ claim that if the wife’s interest was an equitable charge, it was subject to s 42 of the Limitation Act.
Relevant law
Other relevant sections of the Limitation Act
A number of provisions of the Limitation Act deal with equitable interests.
Section 11(2) of the Limitation Act provides:
“For the purposes of this Act:
(a) a person claims through another person in respect of any property or right if the person is entitled to the property or right by through under or by the act of that other person, but a person entitled to property or a right by virtue of an appointment under a special power of appointment does not, by reason of the appointment, claim the property or right through the appointor,
(b) a reference to a cause of action to recover land includes a reference to a right to enter into possession of the land,
(c) a thing done to or by or suffered by an agent is done to or by or suffered by his or her principal, and
(d) a cause of action to which any of the provisions of Division 4 of Part 2 applies is not a cause of action to recover land or a cause of action to enforce an equitable estate or interest in land.”
Section 23 of the Limitation Act deals with equitable relief. It is as follows:
“Equitable relief
Sections 14, 16, 17, 18, 20 and 21 do not apply, except so far as they may be applied by analogy, to a cause of action for specific performance of a contract or for an injunction or for other equitable relief.”
It is clear that ss 14, 16, 18, 20 and 21 are not relevant to this matter.
Section 36 provides as follows:
“Equitable Interest
(1) Subject to section 23, this Act applies to an action on a cause of action to enforce an equitable estate or interest in land in like manner as it applies to an action on a cause of action to recover land by virtue of a legal estate or interest in land.
(2) For the purposes of this Act, but without limiting the generality of subsection (1), a cause of action to enforce an equitable estate or interest in land accrues in the like manner and circumstances and on the same date as a cause of action to recover the land would accrue if the estate or interest were a legal estate or interest”.
Meaning of equitable charge
The essential characteristics of an equitable charge, and the distinction between such a charge and a trust are discussed in various texts including Sykes E I and Walker S, Law of securities: an account of the law pertaining to securities over real and personal property under the laws of Australian jurisdictions (Sydney: The Law Book Company Limited, 1993, 5th ed), and Ford H A J and Lee W A, Principles of the Law of Trusts (Sydney: Lawbook Co., 1996, 3rd ed).
Ford and Lee describe at 1-4051 an equitable charge as arising “where an owner of particular property intends to give another person a present right to have that property made available to secure a payment or other benefit to that other person”. The learned authors note that such a charge created inter vivos may be without consideration. They further say “[a]n equitable charge may also be created inter vivos as a means of giving security for the performance of an obligation, as where a debtor charges particular property with payment of the debt to the creditor”. The authors further note at 1-4053 “[w]hile an equitable charge confers an equitable proprietary interest on the chargee by way of security, it does so without making the chargee the owner of the property out of which the charge is to be satisfied” (see also Sykes and Walker at 196).
Ford and Lee note at 1-4055 that the High Court has considered the difference between a charge and a trust in Associated Alloys Pty Ltd v ACN 001 452 106 Pty Ltd (in liq) (2000) 202 CLR 588 and state “the High Court, when classifying a transaction as between a charge and a trust, has placed much importance on the classification intended by the parties”. The authors distinguish between a charge and trust at 1-4057 as follows:
“A person holding property subject to a charge is under no duty to administer the property in the interests of the chargee beyond a duty not to waste the property under threat of appointment of a receiver. Hence a trust under which the trustee has active duties of administration in the interests of a beneficiary cannot be confused with an equitable charge. But even a trust which imposes no active duties is different from a charge.
The holder of property subject to a charge is a holder of property subject to a security interest and he has something in the nature of an equity of redemption. When the charge is satisfied and the chargee’s security interest in his property has ended the owner has the complete unencumbered ownership of the property if it is not subject to other security interests: Re Oliver (1890) 62 LT 533) (sic); [1886-90] All ER Rep 810. By contrast in many instances where property is held on trust and the purposes of the trust have been carried out any surplus property will be held on a resulting trust for the settlor or his estate or, in the case of a testamentary trust, for the residuary beneficiary or the testator’s next of kin: King v Denison (1813) 1 Ves & B 260 at 272; 35 ER 102, 106, 108.”
Relevant provisions of the Act
Section 78 of the Act provides that the Court may declare the rights or title a party to a marriage has in property. The 1986 orders contained such a declaration in respect of property held in the husband’s sole name in Queensland. Section 79(1) enables the Court, if it is just and equitable to do so, to make an order altering the interests of the parties in the property of the parties or either of them. Section 79(1) provides as follows:
“In proceedings with respect to the property of the parties to a marriage or either of them, the court may make such order as it considers appropriate altering the interests of the parties in the property, including an order for a settlement of property in substitution for any interest in the property and including an order requiring either or both of the parties to make, for the benefit of either or both of the parties or a child of the marriage, such settlement or transfer of property as the court determines.”
Also relevant in this case is s 79(1A) which provides:
“An order made under subsection (1) in proceedings with respect to the property of the parties to a marriage or either of them may, after the death of a party to the proceedings, be enforced on behalf of, or against, as the case may be, the estate of the deceased party.”
In Mullane the High Court examined the nature of an order made under s 79 and said 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 A.L.J.R. 672 at p. 679]; Ex parte Meneling Station Pty. Ltd. [(unreported, delivered 8/12/82, pp. 14 and 28)]. It does not exclude every interest which is not assignable or transferable (cf. per Mason J. in Meneling Station [at p. 15]). 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.
…
Where the section refers to a settlement of property, it should be understood as using that expression in a sense which is closely related to the meaning which the expression bears in the law of real and personal property.”
Recent decisions of the Federal Court dealing with bankruptcy proceedings have brought into sharp focus the nature of the interest of a non bankrupt spouse in property as a result of orders made under s 79. Those decisions are conveniently summarised in Jones v Daniel (2005) 212 ALR 588. At first instance in Daniel v Daniel Emmett J declared the bankrupt’s trustee held two properties in trust for the bankrupt’s spouse. The bankrupt and the spouse brought proceedings under s 79 and following a defended hearing Coleman J, in this Court, ordered the bankrupt to transfer all of his right, title and interest in two properties to his spouse by February 2004. Prior to the property proceedings a creditor’s petition was presented seeking the sequestration of the bankrupt’s estate and after the proceedings, but before the transfer of the properties, the bankrupt presented a debtor’s petition under s 55 of the Bankruptcy Act. Emmett J followed the earlier Full Court decision in Mateo notwithstanding in issue in that case was whether a transfer which had been carried into effect was voidable under s 120 or s 121 of the Bankruptcy Act. At paragraph 14 the Full Court summarised the findings of the earlier Full Court in Mateo about the effect of a s 79 order. That summary included the qualified opinion of Branson J that it was “probably implicit in the terms of the order that the interest of the parties to the marriage in their matrimonial home were altered by the operation of the order”. The other members of the Full Court in Mateo expressed their views of the operation of s 79 more robustly Wilcox J describing the order as “vesting an equitable interest” and Merkel J as “transferring an equitable interest”. In Jones v Daniel Moore J with whom Allsop J agreed, found “[i]n any event the views of the majority were clear and an equitable interest was, by the order, transferred. A trust was created for the benefit of the other person”. He further went on to hold:
“It is true that the members of the Full Court approached the matter by considering whether an equitable interest vested when an order was made under s 79 altering the interests, of the parties to a marriage, in property. It is not necessary to determine whether the transfer of an equitable interest creates a trust enforceable in equity or an interest of some other character deriving from statute: see, for example, The Registrar of the Accident Compensation Tribunal v Commissioner of Taxation of the Commonwealth of Australia (1993) 178 CLR 145 at 181 and The Wik Peoples v Queensland (1996) 187 CLR 1 at 187 per Gummow J.”
In the Accident Compensation case the High Court held:
“if the statute vests property or provides for the vesting of property in one person and requires that person to apply the property for the benefit of another or for the benefit of a class, does the statute intend the property to be held in trust for the other or for the class? A statutorily created trust may not necessarily exhibit all the features of a trust for beneficiaries created by a settlor of property, but the statutory intention to create a trust must nevertheless appear in the terms of the statute.”
Discussion
It is important to consider the terms of the 1986 orders. As counsel for the respondent points out in his submissions, the orders although made on an undefended basis, the wife not appearing at the hearing, were considered by the Court to be just and equitable. The husband’s interest in the property altered on the making of the s 79 order by reason of the change in his interest in the matrimonial home, subject only to defeasance if the wife applied within 56 days to set aside the order, and presumably seek a greater adjustment in her favour under s 79. The orders, on their face, do not provide for a payment to the wife, the performance of which is secured against the matrimonial home. The effect of the orders was to give the spouses equal entitlements to the equity in the matrimonial home. Consequently the 1986 orders affected the husband’s interest in the matrimonial home either on the making of the orders or at the latest 56 days after the orders were made.
Conclusions – equitable charge
We do not need, for the purposes of this appeal, to determine whether the interest created by the s 79 orders created a statutory trust, or an equitable interest with the husband’s role being akin to that of a trustee for sale. We are however satisfied by reason of the provisions of Order 2(b) that the nature of the interest created by the 1986 orders does not have the indicia of an equitable charge.
Further, we are fortified by our conclusions that the wife’s application in 2003, being one for enforcement, was not caught by either the provisions of s 17 of the Limitations Act, or the other provisions of that legislation relative to limitation on certain “actions on a cause of action” in respect of an equitable interest. Accordingly, we find no merit in ground 2.
Status of the 2003 orders
The appellant’s submission
The thrust of the executor’s challenge to these orders is that, being founded on the 1986 orders, they are null and void, or in the alternate, void because of failure to comply with s 105 of the Act.
Discussion
We have already set out the terms of the 2003 orders. Those orders were made by consent. Paragraph 2 of the orders provide for Mr B to be substituted for the husband in the proceedings. Save and except for Order 1 which stood the proceedings over for a further mention date, the orders appear to dispose of all matters sought in the wife’s Application. Order 3 provides for Mr B and the wife (our emphasis) to forthwith sell the matrimonial home, and to effect such sale. Order 3(c) provides that they “do all things and acts to effect a Transmission Application to enable them (our emphasis) to become registered on the title to the home”. The notation to the orders clearly defined the net proceeds of sale. Significantly, Order 3(d) obliges the legal personal representative and the wife to “do all other things and acts to otherwise comply with the husband’s obligations set out in Orders made 29.8.86”. We are satisfied that the 2003 orders are unambiguous. They provide machinery provisions to effect enforcement of the 1986 orders. The executors did not seek to resile from the husband’s obligations under the 1986 orders. The orders make no provision for any adjustment in the estate’s favour for repayment of monies which the husband paid in respect of the mortgage.
The effect of s 105 of the Act
Section 105 of the Act provides:
“(1) Subject to this Part, to the regulations and to the applicable Rules of Court, all decrees made under this Act may be enforced by any court having jurisdiction under this Act.
…
(3) Where a person bound by a decree made under this Act has died, the decree may, by leave of:
(a) the court by which it was made; or
(b) any court in which the decree has been registered in accordance with the regulations (whether the decree was registered before or after the death of the person);
and on such terms and conditions as the court considers appropriate, be enforced, in respect of liabilities that arose under the decree before the death of that person, against the estate of that person.”
Also relevant is rule 6.15 of the Rules, which provides as follows:
“(1) This rule applies to a property case or an application for the enforcement of a financial obligation.
(2) If a party dies, the other party or the legal personal representative must ask the court for procedural orders in relation to the future conduct of the case.
(3) The court may order that a person be substituted for the deceased person as a party.
Note 1 The court may make other procedural orders, including that a person has permission to intervene in the case (see rules 1.12 and 6.05).
Note 2 For the effect of the death of a party in certain cases, see subsections 79 (1A), 79 (8), 79A (1C) and 105 (3) of the Act.”
We accept that the wife’s Application filed 18 September 2003 named her deceased husband as the Respondent to the Application, and did not formally seek leave of the Court to commence enforcement proceedings. It did seek orders which could be considered procedural in nature for the future conduct of the case.
No Response was filed on behalf of the executors until 26 March 2004 and that Response, unsurprisingly, having regard to the 2003 orders, did not raise the issue of leave. The Response was filed after the 2003 orders in which the husband’s legal personal representative was substituted for the husband, and consented to orders by way of enforcement. We are satisfied that by entering into the 2003 orders the executors impliedly consented to leave being granted in respect of the enforcement proceedings. Further the issue of s 105(3) not having been raised in the Review Application, before the trial Judge or in the Grounds of Appeal we are satisfied it cannot now properly be raised before us (see Metwally (No 2) v University of Wollongong (1985) 60 ALR 68).
Is enforcement available under the Act or was the wife compelled to enforce in the Supreme Court of New South Wales?
The appellant’s submissions
Grounds 3 and 4 go to the executors’ assertion that if the wife’s interest is an equitable one, then they are entitled to an accounting in the estate’s favour for sums which the husband paid in respect of the mortgage secured over the matrimonial home. This submission is based, in part, on the executors’ assertion that the 1986 orders are unenforceable by reason of the Limitation Act. We have rejected that argument.
The executors argue that if the wife’s interest was an equitable interest as found by the trial Judge, enforcement of such equitable interest is also time barred. We have also rejected that argument. Counsel for the estate in his written submission also says:
“45 …On such an assumption the wife’s action would not be founded upon the 1986 orders but would be an action to enforce an interest as an equitable co-owner. That would not be within the jurisdiction of this Court but an action that ought be brought in the Supreme Court of New South Wales.
46.The provisions of s.66G of the Conveyancing Act (NSW) providing for the appointment of trustees for sale and division of the proceeds of sale, apply to property generally, not only real property. Further, on an action to divide property held in co-ownership, including equitable co-ownership, a party is entitled to insist on an accounting where that party has paid more than his or her share of the costs associated with that co-ownership. A person who has enjoyed exclusive occupation may be charged with an occupation fee, and a party who has paid more than their share of rates and the like may also be entitled to a set off against such sum as might otherwise be payable to the co-owner. (See Forgeard v Shanahan (1994) 35 NSWLR 206). The application of those principles to the present case is far from clear, but the wife is not entitled to the proceeds of sale without any accounting.”
Notwithstanding these submissions the executors in their Response sought an order in the alternate for the wife to pay a sum “calculated as the financial contribution” made by the husband to the matrimonial home after the 1986 orders “to be calculated as a percentage of the value of the said property”. In this Appeal they seek orders that the net proceeds of sale “vest in the appellants as to 64% and in the Respondent as to 36%”. The executors submit that if we are satisfied the wife has an equitable interest, other than an equitable charge, that this Court is not the appropriate court to enforce the wife’s equitable interest. They submit the wife’s right to enforce her interest is in the Supreme Court of New South Wales, and that the executors can bring an action for set off by way of expenses paid by the husband and occupation fee for the wife’s occupation of the matrimonial home.
Relevant law
We have already referred to ss 79(1A), 105 and 106B of the Act.
A “matrimonial cause” is defined in s 4(1) of the Act. Included in that definition is (f) which provides:
“any other proceedings (including proceedings with respect to the enforcement of a decree or the service of process) in relation to concurrent, pending or completed proceedings of a kind referred to in any of paragraphs (a) to (eb), including proceedings of such a kind pending at, or completed before, the commencement of this Act.”
Section 4(1)(ca) provides:
“proceedings between the parties to a marriage with respect to the property of the parties to the marriage or either of them, being proceedings:
(i) arising out of the marital relationship;
(ii) in relation to concurrent, pending or completed divorce or validity of marriage proceedings between those parties; or
(iii) in relation to the divorce of the parties to that marriage, the annulment of that marriage or the legal separation of the parties to that marriage, being a divorce, annulment or legal separation effected in accordance with the law of an overseas jurisdiction, where that divorce, annulment or legal separation is recognised as valid in Australia under section 104”
Section 8(1)(a) provides as follows:
“After the commencement of this Act:
(a) proceedings by way of a matrimonial cause shall not be instituted except under this Act”
Section 80 of the Act provides a wide range of orders which the Court may make under Part V111. These include orders requiring necessary production of documents such as a Certificate of Title to enable orders to be carried out, appointment and removal of trustees for sale, or any other order which is necessary to do justice. Further the rules provide for various means of enforcement including the provisions of Part 20.7.
Discussion
The Act and Rules provide a comprehensive regime for this Court to determine, inter alia, a just and equitable division of property of separated spouses and enforcement of such orders. In summary, the provisions of the Act and the Rules provide that:
·orders made under s 79 are final and binding unless set aside under s 79A;
·an enforcement application is a matrimonial cause as defined in s 4(1)(f);
·this Court has exclusive jurisdiction to deal with matrimonial causes; and
·s 106B and Part 20.7 of the Rules provide an appropriate means for the wife to enforce her equitable interest.
Conclusions – enforcement of equitable interest
The practical effect of the submission made by counsel for the estate would be that any party who obtain orders in this Court under s 79 requiring the other party to transfer an interest in real property or personalty may be required to commence proceedings in a Court with an equitable jurisdiction for enforcement of such an order. It is clear in our view that although the Act does not specifically invest this Court with a general jurisdiction in law and equity, the Act itself does provide appropriate statutory remedies for enforcement of its orders. Accordingly, we reject the executor’s argument that the wife’s enforcement application was one which should have been brought in the Supreme Court of New South Wales.
Ground 4 – was the executor entitled to an equitable accounting?
In our discussion above, we have considered the submission that, by reason of payments asserted to have been made by the husband in respect of the mortgage after 1986, his estate is entitled to an accounting leading to reimbursement of those sums to the estate.
Discussion
There was evidence before the trial Judge that in 1989 there was correspondence between the parties’ solicitors about the sale of the matrimonial home. The correspondence discloses that as at 4 March 1987 whilst the husband was not prepared to agree to the wife receiving “a benefit over and above that awarded to her by the Court” that he was prepared to transfer to the children of the marriage his interest in the home, subject to their taking over the mortgage.
The husband during his lifetime took no steps to enforce the 1986 orders or to set them aside under s 79A. The executors, in the 2003 orders, agreed to machinery provisions to enable the wife’s entitlement under the 1986 orders to be effected. By their action at that time they confirmed the husband’s obligations.
The trial Judge was not asked to, nor did he determine, the application for a division of the proceeds of sale in proportions different to those in 1986 orders. The executors were afforded the opportunity by the trial Judge to file an amended application if they chose to do so.
Conclusions
Having regard to the matters raised by us in paragraph 99 and in particular paragraph 100, we are satisfied that grounds 3 and 4 of the Appeal are not made out.
Costs
At the conclusion of the appeal we received submissions from each of the parties concerning costs. In the event the appeal was dismissed the wife sought an order for costs in the sum of $2,500. Counsel for the respondent also submitted that the wife’s costs in respect of the estate’s unsuccessful application for security for costs which was reserved to the hearing before us should be made in the sum of $1,500 and she should receive a fixed sum for costs of the adjourned procedural hearing on 21 July 2005 which were also reserved.
We have regard to the provisions of s 117(1) and s 117(2A). There is evidence before us of the value of the estate as estimated for Probate purposes of $1,078,769. There is no evidence of the wife’s present financial circumstances. Neither party was in receipt of legal aid. The executors have been wholly unsuccessful in the appeal, and were wholly unsuccessful in their application for security. In these circumstances we are satisfied it is appropriate to make an order for the wife’s costs in the quantum claimed by counsel for the respondent together with an additional sum of $500 for the costs of the adjourned procedural hearing.
ORDERS
That the appeal is dismissed.
The appellant executors pay the wife’s costs in the sum of $4,500 within 28 days of this order.
I certify that the preceding 103 paragraphs
are a true copy of the reasons
for judgment delivered by
this Honourable Full Court.
Associate
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