Benito & Emmanouel
[2023] FedCFamC1F 1023
•30 November 2023
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Benito & Emmanouel [2023] FedCFamC1F 1023
File number: SYC 103 of 2023 Judgment of: REES J Date of judgment: 30 November 2023 Catchwords: FAMILY LAW – PROPERTY – PROCEDURAL – Application pursuant to s 79A(1)(c) of the Family Law Act 1975 (Cth) to set aside final consent orders – Where the application is dismissed – Where the husband owed a debt to his parents who are parties to the proceedings – Where the wife contends that the husband’s delay in repaying his parents constitutes a default – Where the wife is found not to be a “person affected” for the purposes of s 79A(1) – Where it is not just and equitable to set aside the final consent orders Legislation: Family Law Act 1975 (Cth) ss79A, 79A(1), 79A(1)(c)
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) Rule 10.13(1)(h)
Division: Division 1 First Instance Number of paragraphs: 45 Date of hearing: 28 November 2023 Counsel for the Applicant: Mr Lloyd SC Solicitor for the Applicant: JC Legal Practice Counsel for the First Respondent: Mr Wong Solicitor for the First Respondent: Barkus Doolan Winning Counsel for the Second & Third Respondents: Mr Havenstein Solicitor for the Second & Third Respondents: Gordon & Barry Lawyers Pty Ltd ORDERS
SYC 103 of 2023 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS BENITO
Applicant
AND: MR EMMANOUEL
First Respondent
MR B EMMANOUEL
Second Respondent
MS ULRICH
Third Respondent
ORDER MADE BY:
REES J
DATE OF ORDER:
30 NOVEMBER 2023
THE COURT ORDERS:
1.That the wife’s amended application pursuant to s 79A(1)(c) of the Family Law Act 1975 (Cth) filed 3 August 2023 is dismissed.
2.That each party file any documents intended to be relied upon in relation to the issue of costs within seven days.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under a Benito & Emmanouel has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
REES J:
On 17 September 2020, consent orders (“the orders”) were made for property settlement in proceedings between Ms Benito (“the wife”), Mr Emmanouel (“the husband”) and Mr B Emmanouel and Ms Ulrich (“the husband’s parents”).
Those orders included a declaration that the husband was indebted to his parents for an amount of $1,365,000 and, relevantly, provided for the wife to transfer to the husband her interest in a property at Suburb D in return for a payment of $65,000 and charged the Suburb D property and two other properties at Suburb C and at Suburb E, with the repayment of that debt. The orders further provided that the full amount of the debt to the husband’s parents was to be paid by 31 March 2021 and, in default, the husband was to sell all three properties and pay the outstanding principal and interest to his parents. The wife also received an unencumbered property.
The wife now seeks to set the orders aside, relying upon s 79A(1)(c) of the Family Law Act 1975 (Cth), (“the Act”) and, if the orders are set aside, she seeks orders which would have the effect of her receiving 57.5 per cent of the net assets of the husband and the wife.
The husband opposes the application but, in his response filed 14 August 2023, seeks to vary the orders in relation to the superannuation split between the husband and the wife pursuant to Rule 10.13(1)(h) of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) (“the Rules”). That issue was resolved by consent.
The husband’s parents oppose the application and seek indemnity costs against the wife.
The wife relies on an affidavit sworn by her on 3 August 2023.
The husband relies on an affidavit sworn by him on 14 August 2023.
The husband’s parents each swore an affidavit on 10 February 2023 and the husband’s father swore a further affidavit on 20 November 2023.
The husband was briefly cross-examined.
THE LAW
Section 79A of the Act provides, relevantly,
79A Setting aside of orders altering property interests
(1)Where, on application by a person affected by an order made by a court under section 79 in property settlement proceedings, the court is satisfied that:
(a)there has been a miscarriage of justice by reason of fraud, duress, suppression of evidence (including failure to disclose relevant information), the giving of false evidence or any other circumstance; or
(b)in the circumstances that have arisen since the order was made it is impracticable for the order to be carried out or impracticable for a part of the order to be carried out; or
(c)a person has defaulted in carrying out an obligation imposed on the person by the order and, in the circumstances that have arisen as a result of that default, it is just and equitable to vary the order or to set the order aside and make another order in substitution for the order; or
(d)in the circumstances that have arisen since the making of the order, being circumstances of an exceptional nature relating to the care, welfare and development of a child of the marriage, the child or, where the applicant has caring responsibility for the child (as defined in subsection (1AA)), the applicant, will suffer hardship if the court does not vary the order or set the order aside and make another order in substitution for the order; or
(e)a proceeds of crime order has been made covering property of the parties to the marriage or either of them, or a proceeds of crime order has been made against a party to the marriage;
the court may, in its discretion, vary the order or set the order aside and, if it considers appropriate, make another order under section 79 in substitution for the order so set aside.
On behalf of the husband, it is submitted that the wife is not a “person affected” for the purpose of s 79A(1) and therefore she cannot invoke the provisions of s 79A(1)(c).
The wife, in these proceedings, bears the onus of proving, by admissible evidence, that,
·there has been a default, and
·as a result of that default it is just and equitable to set the orders aside.
Is the wife a “person affected by an order”?
It is not in dispute that the wife has received all that to which she was entitled pursuant to the orders. The orders which determine the wife’s rights are Orders 1 to 4 inclusive.
The asserted default is in relation to Orders 8 to 14 inclusive.
The only persons affected by those orders are the husband and the second and third respondents.
I do not accept that, in these proceedings, the wife is a person affected by the relevant orders.
Has there been a default?
The husband’s father deposed that, by 1 November 2023, the husband had repaid the whole of the amount owed, including interest. The bulk of the funds was repaid between July and October 2023.
Orders 7 to 10 provided:
7.The Court notes that the 1st respondent husband and the applicant wife acknowledge the equitable charges of the 2nd and 3rd respondent over each of the [Suburb D], [Suburb C] and [Suburb E] properties and the right to lodge a caveat in respect of each property in respect of such charge.
8.An order that on or before 31 March 2021 the husband pay to the 2nd and 3rd respondents the sum of $1,365,000 in full payment and discharge of the Debt.
9.In the event that the full amount of the Debt or any part thereof remains unpaid as at 31 March 2021 the amount of the debt remaining unpaid shall carry interest at the rate prescribed under the Family Law Rules as at that date and calculated from that date.
10.In the event that the full amount of the Debt or any part thereof remains unpaid as at 31 March 2021 the following orders [11] to [13] shall apply.
Order 11 dealt with the sale of Suburb C. Order 12 dealt with the sale of Suburb E and Order 13 dealt with the sale of Suburb D.
The husband deposed that he sold the Suburb C property in late 2020 and received a net amount of $453,925. From that sum, he repaid his parents “approx. $275,649.29”.
The wife asserts that the husband’s dealings with the proceeds of that sale constitute a default of Order 11 because he did not pay the net proceeds to his parents in reduction of the debt. However, Order 11 must be read subject to Order 10.
The provisions of Order 11, which determine how the sale proceeds of Suburb C are to be distributed, come into effect only after 31 March 2021.
Therefore I do not accept that the distribution of the proceeds of the sale of Suburb C in 2020 constitutes a default on the part of the husband.
Order 12 required the husband, if the debt remained outstanding on 31 March 2021, to sell Suburb E and repay the debt. The husband deposed that his attempts to sell the property were interrupted by the COVID 19 pandemic and a decline in his father’s health. The husband’s father deposed in his affidavit to the decline in his health during 2021 and 2022. The property was sold in mid-2023. In his affidavit sworn 14 August 2023, the husband deposed that he expected to receive a net amount of $911,699.27 and “I intend to apply those funds in further repayment of the Debt owing to my parents which should reduce it down to approx. $183,168.41”.
While I accept that the husband was required to sell the Suburb E property after March 2021 if the debt remained unpaid, the orders do not specify a date by which the sale was to be completed and Order 9 makes provision for the payment of interest on the amount outstanding after 31 March 2021.
I am not satisfied on the available evidence that the husband’s conduct of the sale of Suburb E constitutes default.
Order 13 provides that, in the event that any part of the debt to the husband’s parents remains outstanding by 31 August 2021, the Suburb D property is to be sold and the proceeds used to repay the debt.
The husband deposed that the property was to be auctioned in late 2023.
The husband’s parents and the husband were living in the Suburb D property. The husband’s father deposed that, by 31 March 2021, the market was depressed and,
… as my wife and I had no other place to live, if we forced [the husband] to sell his properties, including [Suburb D], we would have no place to live. It suited me and my wife to stay in [Suburb D] and not force [the husband] to sell until we had a place ready to buy and move to. My wife also did not want to move more than once, something that I agreed with.
As such, my wife and I decided not to press the repayment when it came due, knowing the debt is secured and remained owing to us under a declaration by way of Court Order, as well as provisions in the Orders which we were at liberty to enforce in order to secure that repayment.
The husband’s father deposed,
A final Order and a declaration was made by the Court that the amounts were due to me and my wife by [the husband], and the issue of whether or not that repayment and enforcement of same has been implemented remains a matter between me, my wife and [the husband]. It is my intention, and my wife’s intention, to be repaid as and when we call for that money to be paid and, if not, I will enforce the orders against [the husband] for that to occur.
The husband’s mother deposed that, in March 2021, because of the COVID 19 pandemic, and because of her husband’s deteriorating health, they were reluctant to go out looking at property to buy. She deposed,
I also did not want to move out of the [Suburb D] property (if we forced [the husband] to sell) until we had our own property to move into, as otherwise my husband and I would not (sic) nowhere else to live. I did not want to move multiple times …
…
I have every intention to secure and have returned the $1,365,000 which rightfully is due to me and my husband.
Again, I am not convinced that the husband’s delay in selling the Suburb D property, in circumstances where the persons entitled to enforce the sale consented, constitutes a default.
However, if I am mistaken in either or both of those findings, I will consider the next step.
Is it just and equitable to set the orders aside?
The husband’s father deposed,
The matter was before the Court in 2020 and evidence was provided at that time to substantiate the amounts my wife and I were owed…
The wife deposed,
On 17 August 2018, the husband’s parents … filed an Application in a Case seeking to be joined as Second and Third Respondent in these proceedings. The husband’s parents alleged that the funds they transferred from [Country F] to Australia between 2009 and 2016 was (sic) a loan and the sum of $1,534,000 should be returned to them.
The wife was legally represented when the consent orders were made. She does not dispute that the funds were, in fact, transferred by the husband’s parents to the husband. She must have accepted that there was, at least, a prima facie case that the transfer of funds was by way of loan. In any event, if the funds were provided by the husband’s parents, then the provision of those funds would have been taken into account as a contribution on behalf of the husband.
She proffers no evidence upon which the Court could now find that the transfers were a gift. The wife deposed,
The failure of the Husband to comply with Orders 11, 12 and 13 of the 2020 Property Orders has caused me to form the view that the Debt purported to exist between the Husband and his parents … did not actually exist or that there was never any intention between them that the Husband would repay the debt.
The wife bears the onus of proving, to the standard required by s 142(2) of the Evidence Act (1995) Cth, the facts which base a submission that it would be just and equitable to set aside the 2020 orders.
I am not satisfied that the fact that the properties which were to be sold pursuant to the orders were sold for a greater sum than that which was jointly agreed to be their value at the time that the orders were made is sufficient. Using the same logic, the husband would not be able to set the order aside if the properties had sold for a lesser value than the agreed values. The vicissitudes of the market must have been in the contemplation of each of them.
I am not satisfied on the evidence before me that the division of property effected by the 2020 orders should be set aside or that the result would be different if the matter were re-litigated.
The application will be dismissed.
COSTS
The husband seeks an order for costs against the wife.
The husband’s parents seek an order for indemnity costs against the wife.
The wife’s position is that there should be no order as to costs.
The respective counsel have made their submissions in relation to costs but I was informed that the husband’s parents wish to rely on offers of settlement made. It was not appropriate for me to receive evidence of offers before the substantive issue was determined and the orders will provide that any further documents are to be filed within seven days and the issue of costs will be determined in chambers.
I certify that the preceding forty-five (45) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Rees. Associate:
Dated: 30 November 2023
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