BENSON & BENSON

[2017] FamCA 365

FAMILY COURT OF AUSTRALIA

BENSON & BENSON [2017] FamCA 365

FAMILY LAW – PROPERTY – Whether power under s 79 exhausted

Family Law Act 1975 (Cth) ss 79, 79A

Gabel v Yardley (2008) FLC ¶93-386

Kennon v Spry (2008) 238 CLR 366
Mullane v Mullane (1983) 158 CLR 436

APPLICANT: Ms Benson

RESPONDENT: Mr Benson

FILE NUMBER: CAC 599 of 2013

DATE DELIVERED: 29 May 2017

PLACE DELIVERED: Canberra

PLACE HEARD: Canberra

JUDGMENT OF: Gill J

HEARING DATE: 14 February 2017

REPRESENTATION

SOLICITOR FOR THE APPLICANT: Self-representing

COUNSEL FOR THE RESPONDENT: Mr Harper

SOLICITOR FOR THE RESPONDENT: Farrar Gesini Dunn

Orders

1. It is ordered that:

   (a)The orders sought by the husband for the adjustment of the property of the parties pursuant to s 79 of the Family Law Act 1975 is dismissed;

   (b)The applications of the wife for spousal maintenance and costs are adjourned for further directions on 5 June 2017 at 10am; and

   (c)In the event that either of the parties files any further application prior to 5 June 2017, that application will be listed for directions on 5 June 2017. 

Note: The form of the order is subject to the entry of the order in the Court’s records.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Benson & Benson has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).

FAMILY COURT OF AUSTRALIA AT CANBERRA

FILE NUMBER: CAC 599 of 2013

Ms Benson

Applicant

And

Mr Benson

Respondent

REASONS FOR JUDGMENT

1. The matter comes before this Court for hearing following transfer from the Federal Circuit Court on 12 July 2016.  The dispute before the Federal Circuit Court involved an application for property orders and for spousal maintenance by the wife.  The husband sought the dismissal of the wife’s application.  The transfer followed the Federal Circuit Court making orders on 11 May 2016, the day on which the matter was set for final hearing, which it described as final orders in respect of a number of aspects of the wife’s application for property adjustment.  At the time the orders were made they were not expressed to completely deal with the proceedings between the parties.  There was one outstanding issue that was identified and, in the event that the husband consented to a making of further orders in particular terms within fourteen days the proceedings were to be regarded as finalised.  In the event that no consent was forthcoming, then further directions were required.  The transcript of those proceedings has been tendered in these proceedings and is marked as Exhibit H1.

2. The trial judge formed the view that there had been significant non-compliance with directions on the part of the husband, including the non-filing of a current trial affidavit and failure to attend at directions for the trial.  During the hearing of the matter a number of exchanges occurred between the trial judge and the husband where it was identified to the husband, in strong terms, that it was the view of the trial judge that the husband was in a “precarious position” by virtue of his non-compliance.[1] 

   [1] T p 5.

3. The matter did not proceed to final hearing on that day.  Rather, attempts were made by the trial judge to resolve the matter by consent.  The discussions about whether the matter could be resolved by consent centred around Exhibit H1[2] which was the Minute of Orders Sought by the wife. 

   [2] From proceedings held on 14 February 2017.

4. In dealing with the parties in relation to the matter, the trial judge noted that he had no way of knowing what constituted the asset pool.[3]  This was further reinforced by indications that the husband was unable to say what the asset pool might be.[4] 

   [3] T p 11.

   [4] T p 19.

5. Apparent agreement was given to orders approximating 1-6 of those sought in Exhibit H1.  The apparent consent is seen at transcript pages 24 and 34.

6. Those orders sought were as follows:

   1.The Husband indemnify the Wife against any liability, including outstanding taxation, fines and penalties that may be imposed by the Australian Taxation Office, with respect to [B Pty Ltd] ACN...

   2.The Husband indemnify the Wife against any liability, including outstanding taxation, fines and penalties that may be imposed by the Australian Taxation Office, with respect to [C] Superannuation Pty Ltd ACN ….

   3.In accordance with s90MT(1)(b) of the Family Law Act 1975 (the Act) whenever a splittable payment within the meaning of s90ME of the Act becomes payable to or on behalf of [MR BENSON], from his interest in the Public Sector Superannuation Scheme (the PSS), [MS BENSON] is entitled to be paid (by the Trustee of the PSS) 100% of the splittable payment and there shall be a corresponding reduction in the amount [MR BENSON] would be entitled to receive but for these Orders.

   4.The operative time for Order 3 is 4 business days after the service of the Order on the Trustee.

   5.The Husband is, within 28 days, to take all steps necessary to cause the [C] Superannuation Fund to become compliant with the SIS Regulations and Taxation Act.

   6.Upon the [C] Superannuation Fund becoming compliant, then pursuant to section 90MT of the Family Law Act 1975, a splittable payment of the funds of the [C] Superannuation fund is ordered and the Trustee, or its delegate, is ordered to make a payment split in favour of the Wife, [MS BENSON], using a base amount of $100,000.00, and there is a corresponding reduction in the entitlement [MR BENSON] would have had but for this Order.

7. The consent given at transcript page 24 in relation to order 6 was conditional on there being a change in the base amount such that, on payment of money into the superannuation fund by the husband there would be a 50/50 split between the husband and the wife.  The husband indicated, in giving consent, that he would be unable to pay the sum of money into the C Superannuation Fund that was required within 28 days but that rather the payments that were necessary to be made, in the order of $155,000, would need to be paid across five years.[5]  He was to pay the amount into the superannuation fund on a fortnightly basis.  This order does not appear to relate, in reality, to the property of the parties, being reliant upon property coming into existence in the future.  This future interest in the superannuation would then be split 50/50 between the parties, according to the consent given at transcript page 25.    

   [5] T p 22 and T p 25.

8. This then left proposed orders 7 to 9, or in the alternative proposed order 10 as follows:

   7.That commencing 1 June 2016, the husband pay, by way of spousal maintenance, to the wife’s nominated bank account $2,000.00 per calendar month.

   8.That the amount payable buy the husband to the wife by way of spousal maintenance shall increase each 6 months on 1 December and 1 June each year by the increase in the consumer price index (all groups) for all capital cities and the wife shall notify the husband in writing of the new payment amount.

   9.That the husband shall pay spousal maintenance at the rate provided in these Order from 1 June 2016 to 31 May 2012.

   THAT IN THE ALTERNATIVE TO ORDERS 6 TO 9

   10.That the Husband pay to the Wife the sum of $220,000 by periodic payment of $2,000 per calendar month commencing 1 June 2016, such payment to be to the Wife’s nominated bank account.

9. Items 7, 8 and 9 were characterised as an application for spousal maintenance.  Item 10 was proposed in the alternative to item 7-9.  The interchanges between the trial judge and the parties in relation to this amount indicated that there were two alternative positions put for the resolution of this item by the wife.  The first is that the husband would pay to the wife the sum of $200,000 as a single lump sum or in the alternative by periodic payments in the sum of $220,000.[6]  The husband asserted the order was acceptable to him if it was in the sum of $50,000.

   [6] T p 26.

10. Further discussions took place between the trial judge and the parties in relation to item 10 wherein the trial judge asserted that item 10 was an order that could be made by consent to finalise the proceedings on the basis that the order would not become effective unless the husband further indicated his consent within a 14 day period.  The husband and wife agreed to this approach, with the proposed orders in amended terms reproduced in Notation B below.  His Honour asserted that it would not be a spousal maintenance order but would be a finalisation of property matters.[7]

    [7] T p 51.

11. His Honour then made orders along with notations as follows:

    THE COURT NOTES THAT:

    A.The Husband’s consistent failure to abide by Court Orders including his failure to file documents in accordance with the Trial Directions, and his failure to attend the pre-Trial Directions Hearing.  On the Other hand, the Wife has consistently filed material and has attended all Court events, which necessarily has meant that she has incurred various costs which, in part, are directly attributable to the Husband’s non-compliance with Orders.

    BY CONSENT, ON A FINAL BASIS, THE COURT ORDERS THAT:

    1.The Husband indemnify the Wife against any liability, including outstanding taxation, fines and penalties that may be imposed by the Australian Taxation Office, with respect to [B Pty Ltd ACN ...

    2.The Husband indemnify the Wife against any liability, including outstanding taxation, fines and penalties that may be imposed by the Australian Taxation Office, with respect to [C] Superannuation Pty Ltd ACN ...

    3.In accordance with s90MT(1)(b) of the Family Law Act 1975 (Cth) (“the Act) whenever a splittable payment within the meaning of s90ME of the Act becomes payable to or on behalf of MR BENSON, from his interest in the Public Sector Superannuation Scheme (the PSS), MS BENSON is entitled to be paid (by the Trustee of the PSS) 100% of the splittable payment and there shall be a corresponding reduction in the amount MR BENSON would be entitled to receive but for these Orders.

    4.The operative time for Order 3 is 4 business days after the service of the Order on the Trustee.

    5.The Husband is, within 28 days, to take all steps necessary to cause the [C] Superannuation Fund to become compliant with the SIS Regulations and Taxation Act.

    6.Upon the [C] Superannuation Fund becoming compliant, then pursuant to section 90MT of the Family Law Act 1975 (Cth), a splittable payment of the funds of the [C] Superannuation fund is ordered and the Trustee, or its delegate, is ordered to make a payment split in favour of the Wife, MS BENSON, using a base amount of $155,000.00, and there is a corresponding reduction in the entitlement MR BENSON would have had but for this Order.

    THE COURT FURTHER ORDERS THAT:

    7.The Wife’s costs of the pre-hearing directions and Final Hearing dates be formally reserved.

    THE COURT FURTHER NOTES THAT:

    B.The Wife sought an Order that ‘the Husband pay to the Wife the sum of $200,000.00 by periodic payments of $1,500.00 per calendar month commencing 1 June 2016, such payment to be to the Wife’s nominated bank account’;

    C.The Husband has 14 days to consider whether or not the Order outlined in Notation B may be made by consent, and at the expiration of the 14 day period, that being, by close of business on 25 MAY 2016, the Husband is to notify the Court and [Ms Benson] whether or not that Order can be made;

    D.If the Orders outlined in Notation B can be made by consent, final Orders can issue from Chambers reflecting the final property settlement.  If Orders cannot be made as outlined in Notation B, then the matter will be re-listed for further Directions.

12. Order 6 did not represent the agreed position between the parties.  The parties had agreed that, once the husband made the payments of $155,000 the interest would be split 50-50.  This was understood to take five years to achieve.

13. At no stage was the proposed order at Notation B made referable to any existing item of property held by either of the parties.  The only references to the payment was that the husband would either have to borrow the amount (he asserted he would be unable to do so[8]) or pay an amount by future periodic payments.  The husband said that the future periodic payments would need to be determined by reference to what he “could actually pay on a periodic payment, given the debt that I have.”[9]   That is, what was sought was not the adjustment of the property of the parties, but payments made from what was not, at the time of the making of the orders, in existence.

    [8] T p 25.

    [9] T p 29.

14. It was following the husband declining to give further consent to the orders set out in Notation B that the proceedings were transferred to the Family Court of Australia.

15. An issue arises as to the characterisation of the proceedings that were transferred to this Court. This turns in large part upon the characterisation of the orders made in the Federal Circuit Court. In short, the issue is whether or not the orders made in the Federal Circuit Court disposed of the whole of the s 79 case between the parties, leaving only a spousal maintenance application on the part of the wife. If the matter is characterised in this manner then the jurisdiction for the adjustment of the property interests has been exhausted and there is no further jurisdiction for this Court to exercise in respect of adjustment. The only remaining jurisdiction for the applications as they currently stand would relate to spousal maintenance.

16. If, however, the orders made by the Federal Circuit Court are characterised as a partial disposition of the property proceedings between the parties, leaving either a further part of the property proceedings to be dealt with or a further part of the property proceedings and spousal maintenance proceedings to be dealt with, then this Court retains jurisdiction not only to make further property orders, but also to change the orders already made in the Federal Circuit Court.

17. It has been said for the husband that, should the s 79 power not be exhausted, it will be necessary for this Court to change the orders that have already been made by the Federal Circuit Court as it will be unable to cause a just and equitable result without an amendment of those orders.

18. In aid of the proposition that this Court holds the capacity to change the previous s 79 orders, provided that his Honour did not completely exhaust that power, I was directed to Gabel v Yardley.[10]  There Bryant CJ and Coleman J, in dealing with orders made pending final hearing said, at [72]-[73]:

    It follows in our view that when the court finally determined the proceedings which had been adjourned, whether categorised as "partial", "interim", or otherwise, earlier orders altering property interests could be varied or reversed without resort to s 79A of the Act or an appeal, the power to make such orders not having been "spent" or "exhausted".

    The circumstances in which the court would be likely to vary or reverse earlier orders altering interests in property will depend on the circumstances of the individual case. Matters such as the disposition of property transferred, the length of time since the original orders were made, the extent to which the parties had acted in reliance upon the orders and whether the orders were made by consent or otherwise would all be matters relevant to the question of whether any variation of partial orders affecting the parties' interests in their property should be made. Nevertheless, if there is only one exercise of power under s 79, albeit that occurs in a series of stages and by the making of a number of orders, the orders must ultimately be just and equitable as between the parties. A consideration of justice and equity would take into account the matters to which we have referred.

    [10] (2008) FLC ¶93-386.

1. This would leave the position that, if the power has not been exhausted, it would be necessary to consider the matter as a whole.  This court would not be constrained to retain the orders made by consent in the court below except so far as the just and equitable resolution of the matter required it to do so.

Were the orders in the Federal Circuit Court a complete exercise of the s 79 jurisdiction?

1. The orders made in the Federal Circuit Court were described as final. However, the parties and the trial judge regarded the matter as unfinished. One order was clearly identified as not made and as being outstanding. The husband now seeks orders pursuant to s79 that were not sought in the Federal Circuit Court in relation to the wife’s superannuation interest. The wife does not seek any further order pursuant to s79, but seeks the making of spousal maintenance orders, in terms that generally match orders 7-10 as sought before the federal Circuit Court.

2. It was submitted for the husband that the proceedings were not a complete exercise of the s 79 power and that there are a number of factors to be examined to determine whether or not it was a complete exercise of the power. One matter to examine is the applications made by each of the parties. The husband’s application sought a dismissal of the wife’s application. The wife’s application sought a number of property adjustment orders and spousal maintenance orders with an alternative order to the spousal maintenance orders. It was this alternative (as see in exhibit H1) that comprised the outstanding order identified by the Federal Circuit Court. That is, it is said that the outstanding matter had the character of a property adjustment application.

3. A further matter that I was directed to by the husband was the notations made at the time of the making of the orders.  Notation D expressed the property settlement as incomplete absent consent give to Notation B.

4. A further factor pointed to by counsel for the husband was the question of whether or not all of the property had been dealt with by the s 79 orders made by his Honour. By way of example, he pointed to the fact that there is no order in respect of the wife’s superannuation interests.

5. However, the orders that were made were dealt with by the parties as though they were complete but for the question of whether the husband would make the further payment.  There was no suggestion raising the transfer of any interest in any property from the wife to the husband.  Implicitly the interest was to remain in the hands of the wife. 

6. It was further suggested for the husband that an examination of the orders would reveal that they, as they stood at the end of the proceedings before the trial judge, could not be considered to be just and equitable. This being the case, it was argued, it could not have been the case that his Honour regarded the s 79 exercise as complete. I accept that the trial judge did not regard the proceedings as complete without the final order in place.

7. While carrying some persuasive value, a belief on the part of the trial judge or the parties that the jurisdiction has not been exhausted is not determinative of that matter. The power under s 79 has either been exercised and exhausted or it has not. If the power has been exercised and exhausted in a manner that is not just and equitable that may be a matter for appeal, or if the result of a miscarriage of justice, by the exercise of the power contained at s 79A.

8. At [57] of Gabel v Yardley[11] Bryant CJ and Coleman J set out the circumstances of the exhausting of the power:

   The legislative framework, and the authorities to which we have been referred, suggest that the court's power to make orders with respect to settlement of property is not necessarily exercisable at only one time, and can properly be exercised by a succession of orders until the power to make orders with respect to property is exhausted.  Logic suggests that the power to make orders for settlement of property will be exhausted or "spent" when there remains no property of the parties to the marriage or either of them with respect to which orders by way of alteration of interests of property could be or have been made.  In those circumstances there can be no matrimonial cause to enliven the jurisdiction to make orders for settlement of property.

   [11] (2008) FLC ¶93-386.

1. That is, the power is exhausted once the subject matter of the power has been completely dealt with. It is a conclusion implicitly derived from the terms of s 79 itself which requires both that the proceedings be in relation to the property of the parties to the marriage, and that the power is directed to the alteration of those interests. Once the consideration of the property, and the alteration of the property, is complete, the power is exhausted.

2. This point appears implicit to Bryant CJ and Coleman J’s analysis in Gabel v Yardley of Harris[12] at [71]:

   Nevertheless, we consider the principles to be the same, the issue being whether or not the orders were interim in the sense that they were made pending the final hearing, or whether they were partial in the sense that they altered interests in property after a hearing in circumstances where it was anticipated that there was further property to be dealt with at some future time, the power of the court to alter interests in property and make orders pursuant to s 79 not being finally exhausted until those further determinations were made.

   [12] (2008) FLC ¶93-386.

3. In this case the question of whether there is an ongoing power pursuant to s 79 to continue to deal with the dispute between the parties rests upon whether the orders made dealt with the property fully or whether there was further property to be dealt with.

4. Notation B was expressed to require the payment of a lump sum to the wife of $200,000 by monthly payments of $1,500.  This would entail payments being made for approximately 11 years in order to complete the order.  There is no indication, in the exchanges between the parties and the trial judge, that this is in any way referable to the property of the parties.  It is not connected to any item of the property of the parties, nor predicated upon a particular outcome for any of the items of property of the parties.  It is predicated upon what the husband can afford into the future, in the context of the payment of other debts. 

5. In Mullane[13] the High Court dealt with what is meant by property in s 79:

   In our opinion, therefore, s79 on its proper construction refers only to orders which work an alteration of the legal or equitable interest in the property of the parties or either of them.

   [13] Mullane v Mullane (1983) 158 CLR 436 at 445.

6. The order at Notation B appears to have no connection to the property of the parties.  It has neither the appearance of the varying of “the legal interest in any property of the parties to a marriage or either of them …(nor as)..orders for the settlement of property in substitution for any interest in the property.[14]”

   [14] Kennon v Spry (2008) 238 CLR 366 per French CJ at 387

7. It appears that the orders made prior to the resolution of the issue in relation to Notation B dealt with the property of the parties.  The remaining order was to deal with something that was not the property of the parties, being derived from the future income or property of the husband.

8. This being the case, the s 79 power was exhausted on the making of the orders of 11 May 2016, leaving no remaining s 79 power to be exercised by this Court on transfer.

9. What is left is an outstanding application for spousal maintenance, a distinct head of power for the making of an order.

10. This leaves the parties in the unfortunate position of being the subject of orders that neither of them considered to fully dispose of their matter, without the court having the capacity to correct the position through the use of s 79 to make further orders. At this stage neither party has raised the question of whether the case presents as appropriate to utilise the powers contained at s 79A.

11. The husband’s application for further orders pursuant to s 79 will be dismissed, leaving the wife’s spousal maintenance application on foot. Should the parties wish to make application pursuant to s 79A such application may be entertained at short notice.

I certify that the preceding thirty-eight (38) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Gill delivered on 29 May 2017.

Associate:

Date:  29 May 2017