BULLEEN & BULLEEN - [2011] FamCA 253

FAMILY COURT OF AUSTRALIA

BULLEEN & BULLEEN

[2011] FamCA 253

FAMILY LAW – PRACTICE AND PROCEDURE - Variation of property orders - Power to make machinery orders and to vary them - Slip rule usage where orders not consistent with Court’s intention.

Family Law Act 1975 (Cth)
Income Tax Assessment Act 1936 (Cth)

Elyard Corporation Pty Ltd v DDB Needham Sydney Pty Ltd [1995] 61 FCR 385
FAI General Insurance Co Ltd v Southern Cross Exploration NL (1988) 165 CLR 268
Guinness & Guinness (No. 2) [2008] FamCAFC 100
Ravasini & Ravasini (1983) FLC 91-312
Slapp & Slapp (1989) FLC 92-022; 13 Fam LR 158
Vance & Vance [2011] FamCAFC 17

APPLICANT:

Ms Bulleen

RESPONDENT:

Mr Bulleen

FILE NUMBER:

MLC

12431

2007

DATE DELIVERED:

12 April 2011

PLACE DELIVERED:

Melbourne

PLACE HEARD:

Melbourne

JUDGMENT OF:

Cronin J

HEARING DATE:

23 February 2011

REPRESENTATION

COUNSEL FOR THE APPLICANT:

MR Geddes QC

SOLICITOR FOR THE APPLICANT:

Gillian Coote Family Law

COUNSEL FOR THE RESPONDENT:

Mr Walker

SOLICITOR FOR THE RESPONDENT:

Gadens Lawyers

Orders

That within 14 days, the husband provide to the solicitors for the wife, the documents referred to in the letter dated 30 November 2010 from Mr F to the wife’s solicitors.
That paragraphs 2 and 3 of the orders made on 28 September 2010 are varied such that the process for the division and distribution of the artwork referred to in the said orders is to resume within 48 hours of these orders as if the process had not been suspended by the husband.
That save as to any issue of costs, the application in a case of the wife filed 16 February 2011 and the response of the husband thereto filed 23 February 2011 are otherwise dismissed.

AND THE COURT NOTES that paragraph 9 of the orders made on 28 September 2010 was incorrect and has been amended pursuant to Rule 17.02(5) of the Family Law Rules 2004.

IT IS NOTED that publication of this judgment under the pseudonym Bulleen & Bulleen is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLC 12431 of 2007

Ms Bulleen

Applicant

And

Mr Bulleen

Respondent

REASONS FOR JUDGMENT

The parties in this dispute require determinations which would enable the implementation of property orders made in March 2010. At that time, I ordered that their property be divided on a percentage basis making orders for each party to retain specific property.
The two issues litigated in this interim hearing were:
(a)whether the husband should provide source documents and information about how his accountant determined the amount deposited into the wife’s bank account in partial satisfaction of a payment by their corporate entity B Holdings; and
(b)could and should a default order for the distribution and/or sale of artwork be activated as a result of or because of, the actions of the husband who had unilaterally “suspended” the distribution process and was there power to vary that default order?
In the course of argument, a third issue arose. It raised the question of whether the “Slip Rule” could be used in circumstances where a party’s drafting had given rise to the question of whether the order was as intended and effective.
After hearing the submissions of the parties on 23 February 2011, I reserved judgment. I now intend to order that:
·    the husband direct his advisers to make available the relevant financial material to the wife;
·    notwithstanding the default provision, the orders relating to the distribution of the artwork be amended to enable the resumption of the methodology until its conclusion; and
·    the order made on 28 September 2010 be re-issued under the Slip Rule to reflect the intention of the Court.
My reasons are now set out.
The proceeding was before the Court because of an application in a case filed by the wife on 6 December 2010. The wife’s application sought orders for information to enable her accountant to determine her entitlement and further that the division of the artwork be deemed to have concluded. The wife sought consequential orders for collection, delivery and sale of the artwork. The wife’s application was amended on 16 February 2011. An additional order was sought that notwithstanding the wife had received a deposit into her bank account of about $43 million, B Holdings pay to her that sum again in partial satisfaction of her entitlements. There are significant taxation consequences depending upon how the payment(s) by B Holdings are made. I previously addressed some of those issues last year and there is no reason for them to be reconsidered.
In support of her application, the wife relied upon her two affidavits and one by her taxation lawyer.
The husband did not file any material but his counsel provided written submissions in respect of the orders sought by the wife.
It was the husband who raised the third issue about the “Slip Rule” and whilst the wife was not opposed to that course, it would be fair to describe her position as being one of apprehension. The alternate position put by the wife however is not one that I could accept. In my view, for the reasons that follow, the approach using the slip rule is appropriate.
Chapter 17 of the Family Law Rule 2004 allows for the correction of errors in orders. In particular:
17.01(2) An order takes effect on the date when it is made, unless otherwise stated.
…
17.02(5) A judicial officer may, after giving each party a reasonable opportunity to be heard, rectify the error referred to the judicial officer.
Note An amendment of an order may be made under this rule only if it is an error obvious when reading the order. Any other amendment must be remedied by appeal or consent.
Does the Court have the power under the slip rule to correct an error in an order that results from an omission of counsel or a party’s lawyer? If it has that power, is it simply discretionary?
The rule encompasses the intention that the court would have had but for the failure that resulted in the omission or slip.[1] It includes the correction of an order that has occurred because of the inadvertence of a party’s counsel or lawyer.[2] However, the court retains the discretion to refuse to make an order under the slip rule where intervening events make it inexpedient or inequitable,[3] or where the amendment is a matter of controversy, or due to mistakes that are the consequence of a deliberate decision.[4] The discretion should be used cautiously to encourage diligence by a party’s legal representatives and to give effect to the overarching public interest in the finality of litigation.[5]
[1]Symes v Commonweatlh (1987) 89 FLR 356 at 357. See also Arnett v Holloway [1960] VR 22; R v Cripps; Ex parte Muldoon [1984] QB 686 at 695.
[2]Gould v Vaggelas (1984) 157 CLR 215 at 274 to 275; L Shaddock & Associates Pty Ltd v Parramatta City Council [No 2] (1983) 151 CLR 590 at 594 to 595, 597.
[3]L Shaddock & Associates Pty Ltd v Parramatta City Council [No 2] (1983) 151 CLR 590 at 597 citing Tak Ming Co Ltd v Yee Sang Metal Supplies Co [1973] 1 WLR 300 at 304.
[4]Arnett v Holloway [1960] VR 22; Re Army and Navy Hotel (1886) 31 Ch D 644 and Ivanhoe Gold Corporation Ltd v Symonds (1906) 4 CLR 642.
[5]Gould v Vaggelas (1984) 157 CLR 215 at 274 to 275.
Senior counsel for the husband referred me to Elyard Corporation Pty Ltd v DDB Needham Sydney Pty Ltd[6] as authority for the proposition that the Court has the discretion to rectify paragraph 9 of the order which was made on 28 September 2010. That read:
That to give effect to paragraph 3 of the orders made 12 March 2010, each of the husband and the wife forthwith do all things necessary and sign any required document to distribute such funds of [B Holdings] as may be necessary to satisfy the order or as much of it as can be so satisfied.
[6][1995] 61 FCR 385.
Senior counsel for the husband submitted that the wording of the wife’s September 2010 application was not consistent with the advice that had been given to her as to the nature of the order to be pursued. The wife had annexed her advice to the affidavit supporting the orders sought. The advice arose out of an Australian Taxation Office (ATO) ruling for the distribution of the wife’s share of the property held in B Holdings. It must also be said that the advice was consistent with the Court’s intention as set out in paragraphs 22 to 32 of the 28 September 2010 reasons for judgment.[7]
[7]See Bulleen & Bulleen (No. 3) [2010] FamCA 859
The alternative position now advocated by the wife in the current application was to effectively order a payment from B Holdings but as Senior Counsel for the husband pointed out, that amount of money was not in the account to do so. Senior Counsel for the wife pointed to the wife’s taxation lawyer’s advice that such a course could be used relying on s 109D(4A) of the Income Tax Assessment Act 1936 (Cth). That provides:

109D Loans treated as dividends
…Payment converted to loan before lodgment day
(4A) If:
(a)a private company makes a payment to an entity at a time in a year of income; and

(b)the payment is converted to a loan before the end of the private company’s lodgment day for the year of income;

for the purposes of this Division, treat the events mentioned in paragraphs (a) and (b) as the private company making a loan to the entity at the time mentioned in paragraph (a).

In effect, by a “round-robin” type of arrangement and/or a series of book entries, the provisions of the ruling of the ATO could be satisfied.
The position of the husband and B Holdings was that using s 109D was artificial and unnecessary where the intended order could be drawn and issued under the slip rule particularly where its effect was operational ab initio[8].
[8] See Elyard
In Elyard Lockhart J comprehensively discussed the slip rule at 390 to 391 and noted that:
The circumstances in which the slip rule has been applied are numerous and varied. Examples of the application of the rule include amendments, to allow a proper order for costs: Armitage v Parsons [1908] 2 KB 410; to increase the amount of an award of damages: Storey & Keers Pty Ltd v Johnstone (1987) 9 NSWLR 446; to permit a proper calculation of interest: Ninnis v Miller [1905] VLR 669; to permit a claim for interest to be added to the amount of the judgment: Shaddock; to order repayment of moneys previously paid by the defendant where the subsequent appeal was upheld: Commonwealth v McCormack (1984) 155 CLR 273; to alter a wrong date or figure in the orders, where the parties and the court both used the same wrong date or figure, but the correct figure had been available at the relevant time: Re J W Challand Pty Ltd (1945) 62 WN (NSW) 166; and, to limit the time of an injunction’s application: Shipwright v Clements [1890] WN 134.

Recently in Vance & Vance[9] Boland J discussed the law relating to the slip rule and noted at paragraphs 16 to 17 that:
The authorities dealing with the limited circumstances in which a superior court can amend its orders under the slip rule are extensively discussed by Spigelman CJ in Newmont Yandale Operations Pty Ltd v The J Aron Corporation and the Goldman Sachs Group Inc (2007) 70 NSWLR 411. In that case Spigelman CJ also discussed authorities which deal with the inherent power of a superior court to amend its orders. The Family Court, while a superior court of record, as a court created by statute does not have an inherent jurisdiction derived from the common law, but has such powers as are expressly contained in the Act or other statute conferring jurisdiction and such powers as may be implied by those statutes (see DJL v Central Authority (2000) 201 CLR 226). Two essential criteria have been identified where the slip rule may be invoked: where there is a clerical mistake; and where there is an accidental slip or an accidental omission.
[9] [2011] FamCAFC 17
Senior counsel for the husband described the actions of the wife’s lawyers as an ‘accidental omission’ in that they had not comprehensively followed the advice of their taxation lawyer when drafting the wording of the orders about the distribution from B Holdings. Looking again at the application and the affidavit in support of it, I agree. Rectification of the order is necessary to give effect to the Court’s intention. To do so would not be inexpedient or inequitable to either party. I am also satisfied that the omission was not a deliberate decision on the part of the wife or her legal representatives.
Thus, the Court has the power pursuant to r 17.02(5) to rectify paragraph 9 of the orders of 28 September 2010 and the discretion should be exercised.
The second question concerns access by the wife to B Holding’s documents to determine if the capital sum deposited into the wife’s account was a correct distribution to the wife? The husband argued res judicata applied and that the Court had exhausted its power under s 79.
On 17 November 2010, $43,496,041 was paid into the wife’s bank account. The calculation was made by the husband’s accountant, Mr P. He asserted that this sum reflected the wife’s interest in B Holdings.
Senior counsel for the wife argued that the calculation by Mr P arose from a joint report with the wife’s adviser Mr F in November 2009. The calculation by Mr P was said to exclude any 2010 income or taxation accrued by B Holdings in the interim period between the 2009 report and the initial and further orders of March and September 2010.
After receiving the deposit in her account, the wife sought documents to enable Mr F to verify the distribution reflected her 46.7% interest in B Holdings. It is to be remembered that in March 2010, I ordered that the wife was entitled to 46.7% of the assets of the parties.
Senior counsel for the husband submitted that after the final orders of September 2010, the wife had stalled attempts for a meeting between Mr P and Mr F designed to sort out the entitlement. He argued that she was seeking a revaluation of B Holdings and that was precluded as the order relating to property division pronounced on 12 March 2010 (paragraph 3) was a substantive property order (as opposed to a machinery order) and therefore could not be varied except on appeal, or pursuant to s 79A or s 90SN. Senior counsel cited Ravasini & Ravasini[10] and referred to my reasons for judgment of 28 September 2010 at paragraph 40. In paragraphs 38 to 41 of my reasons, I said:
[10](1983) FLC 91-312.
38.In McDonald and McDonald (1976) FLC 90-047, the Full Court held that “there is ample power to modify the machinery provisions of a property order provided this does not affect the substantive property rights or cause undue hardship to either party”. This view was followed Molier and Van Wyk (1980) FLC 90-911.
39.In Slapp & Slapp (1989) FLC 92-022 the Full Court discussed the limitations on the power of the Court to vary an order made under s 79 and said at 77,360:
It is not open to a court to make a substantive variation to orders previously made under sec. 79. That proposition can today no longer be doubted. It is based upon the principle, endorsed by the High Court in the case of Taylor v. Taylor(1979) FLC 90-674; 5 Fam. L.R. 289, that an order under sec. 79 is a once and for all proposition.
Such an order can only be varied on appeal or, where the circumstances warrant the same, pursuant to sec. 79A.
40.The distinction between a machinery and a substantive order was discussed in Ravasini & Ravasini (1983) FLC 93-312 where the Full Court at 78,126 said:
Counsel for the appellant referred to McDonald and McDonald (1976) FLC 90-047, Kaljo and Kaljo (1978) FLC 90-445 and Molier and Van Wyk (1980) FLC 90-911 as authority for the power of the Court to make what is termed a machinery order. There is no question of the power of the Court to make what we would with respect suggest is more properly called a consequential order. The real questions are what is the proper definition of a consequential or machinery order and where is the dividing line between a consequential order which may be varied or modified and a substantive order which the Act gives no power to the Court to modify or vary. Counsel for the appellant was unable to refer the Court to any authority on this point but argued the submission rather by comparison with the facts of the cases referred to.
...
It is appropriate then to look at what a consequential order is. The Shorter Oxford Dictionary defines “consequential” as meaning “Following esp. as an effect, immediate or eventual, or as a logical inference”.
The Universal English Dictionary defines the word as “Following as a consequence, on what has gone before, resultant: consequential alteration in wording of a document, those made necessary by others already made.” The same dictionary defines “consequence” as “Event which follows upon something else which is, or appears to be, the cause; a result, outcome of what has gone before.”
A consequential order then, in a property matter, would include an order following logically or of necessity from a prior substantive order.
What a consequential order is not is an order the effect of which is to vary the prior order for property settlement. It is not possible to suggest that even the slightest variation of the original order is a consequence of it. What is being submitted in this appeal is that the original order should be amended not as a consequence of that order itself, not as a necessary follow up of that original order but rather as a consequence of events which have happened in the market place since that order was made rendering the facts on which it was based no longer accurate.
As explained in Ravasini, the court has power to vary machinery or consequential provisions of a property order. However, the power to vary machinery provisions is limited and can only be implemented to allow the intention of the order to be effected. In varying such a provision a court must have regard to issues of justice and equity between the parties.[11] To determine whether a provision is a consequential provision or a substantive provision of an order the construction of the order is to be observed and the test is “whether the part or parts of the order sought to be changed are part or parts of the substantive order of whether they are orders made to give efficacy to that substantive order”.[12] Further, a substantive provision is an order that vests a right in a party.[13]
[11]Ravasini & Ravasini (1983) FLC 91-312; Holland & Holland (1982) FLC 91-243 at [77,343].
[12]Ravasini & Ravasini (1983) FLC 91-312 at [78,128].
[13]Bray & Bray (1988) FLC 91-968 at [77,343].
The property orders of 12 March 2010[14] and in particular paragraphs 3 and 4 provided that:
[14]Bulleen & Bulleen [2010] FamCA 187.
3.That notwithstanding paragraphs (1) and (2) hereof, all property of the parties be divided as to 53.3 per cent to the husband and 46.7 per cent to the wife.
4.That the ultimate determination of the distribution of assets in specie, sale of assets, the payment of taxes and the payment of cash by one party to the other (if any) be the subject of agreement between the parties adjusting for and taking into account:
(a)the partial distributions in paragraphs (1) and (2) above;
(b)the determination in paragraph (3) above,
and failing agreement, that determination be made by the Court.

The construction of paragraph 3 of the orders clearly indicates that it is a substantive provision as it vests a right in each party as to the division of property. Paragraph 4 is a consequential provision as it gives effect to paragraph 3. In the event that the parties fail to agree to “the ultimate determination of the distribution of assets in specie, sale of assets, the payment of taxes and the payment of cash by one part to the other” in accordance with paragraph 3, then paragraph 4 provides that the determination can be made by the Court.

Paragraphs 9 and 15 of the orders of 28 September 2010 provide:
9.That to give effect to paragraph 3 of the orders made 12 March 2010, each of the husband and wife forthwith do all things necessary and sign any required document to distribute such funds of B holdings as may be necessary to satisfy the order or as much of it as can be so satisfied.
…
15.That save as otherwise provided in these orders, the husband retain and the wife relinquish any interest in:
(a)      K Nominees Pty Ltd;
(b)      B Holdings Pty Ltd;
(c)      The Bulleen Investment Trust.

Paragraph 15 is a substantive provision as it vests a right in the husband to retain B Holdings. Paragraph 9 is a consequential provision as it gives effect to paragraph 3 of 12 March 2010 and gives effect to paragraph 15 of 28 September 2010.
On the limited evidence available to me, I accept that the wife was endeavouring to verify whether the amount distributed to her by Mr P’s calculations reflected the distribution under the orders. That did not require fresh evidence to be adduced nor did it give rise to a matter that was res judicata. The wife is seeking to vary machinery or consequential orders in order to give effect to paragraph 3 of the original orders and to achieve a just and equitable outcome. It is appropriate therefore for me to make those orders.
I turn then to the final issue which relates to the artwork.
Paragraph 2 of the orders of 12 March 2010 made provision for the division of the artwork of the parties in the following terms:
2. That the artwork contained at M Street and L Street and those listed as “unlisted location” in the document annexed to the wife’s “minute of orders sought” dated 12 November 2009 be divided on the following basis:
(a)that all such paintings be grouped according to their artist;
(b)unless the parties otherwise agree, the division be on the basis of the respective artists;
(c)the parties pick their desired artists’ artwork on an alternating basis;
(d)the wife be entitled to the first pick of one artist followed by the husband having the second pick; and
(e)in the event that there is unwanted artwork upon the conclusion of such method of division, the remnants be sold and the proceeds be otherwise divided according to these orders.

Paragraphs 1 to 5 of 28 September 2010 made further provision for the division of the artwork in the following terms:
1.That if by 4 pm on 8 October 2010, the husband has not advised the wife by email of his first selection of artist for the purposes of completing the requirements of paragraph 2 of the orders made 12 March 2010, the wife shall be entitled to have the first pick of the works of which artist she desires to retain.
2.That unless otherwise agreed to the contrary, after each party has made their first selection, their subsequent selections shall be made on an alternating basis by email on successive days until the completion of the process.
3.That if a party fails to make a daily selection as set out, the other party shall be entitled to presume that no further selection is to be made and make a decision as to what artworks are to be retained by them and what is to be sold.
4.That upon completion of the division of the artwork, the relevant pieces shall be collected by agreement and failing agreement, collected by the party entitled to the artwork at their own expense upon 7 days written notice.
5.That to the extent that any artwork remains unselected by the processes set out in these orders, it shall be sold as soon as practicable and the net proceeds shall be divided according to the orders made on 12 March 2010.

In October 2010, there was a delay in the implementation of the art distribution because the husband appealed against the orders and I granted his application to stay my orders. The husband filed a notice of discontinuance of the appeal on 3 November 2010. The art distribution then began in earnest. The parties made selections until a dispute arose as to the artworks to be included. On Monday 8 November 2010, the wife requested the husband to make his first selection. Contrary to the orders, the husband proposed a conference to divide the artwork in one sitting. Rejecting that, the wife again requested the husband make a choice of artist and he did so.
The husband then sought to delay the selection process because he was going to be hospitalized for “oral surgery” but the wife proceeded to make her selection.
On Friday 12 November 2010, the Wife informed the husband that as he had failed to make his selection, he was in breach of the orders. The husband again endeavoured to organize a conference and again the wife insisted that he make his next selection. The forbearance of the wife from enforcing the default provisions of the September order was apparent if not obvious.
Thereafter over successive days, the parties strictly followed the order and made successive selections. On 22 November, there was communication between the parties about clarifying one of the husband’s selections. I have concluded that to that point, the wife was content to overlook any of the husband’s reticence about complying with the orders.
The selection process went on until Tuesday 23 November 2010 when the wife selected a “[artist’s name] sculpture ([title])”. The husband responded that the sculptures together with all post-separation artworks were not part of the property to be divided. Negotiations took place and the husband made another selection but correspondence followed about the unresolved issue of the sculptures and post-separation artwork.
Next, when the wife selected an artist which the husband said fell into the disputed category, the husband said he was “suspending” the process until the Court could determine the dispute. The battle lines were drawn. The husband maintained that the process excluded post-separation artwork and sculptures and the wife said she would invoke the orders if the husband did not make his next selection. The negotiations stopped.
On 6 December 2010, the wife filed the application in these proceedings and on the following day, the husband made his next selection. That action did nothing to resolve the impasse.
Senior counsel for the wife submitted that the wife was entitled to rely upon the default provisions of the orders of 28 September 2010. It was argued that the way the wife’s application was drawn in seeking to formally retain the artworks selected and allowing the wife to make her wholesale selection from the balance of the artwork was not a variation of the orders but simply giving effect to the default provision. The wife’s position was that a variation of the orders was precluded because the s 79 power, particularly in respect of the artwork, was exhausted by the September orders.
Senior counsel for the husband submitted that the orders did not encompass the sculptures or artworks acquired post separation and that the wife was deliberately being vindictive because of her knowledge of the husband’s “deep emotional attachment to the artworks”.
Despite the husband’s position of withdrawing from the selection process because of his view about what was divisible artwork, his counsel said that there was no longer any dispute about that. The husband simply sought the opportunity to continue to make selections consistent with the September orders. It was submitted that whilst the March 2010 orders were substantive, those in September 2010 were machinery and could be amended pursuant to r 1.14 of the Family Law Rules 2004 (Cth) (“the Rules”). Rule 1.14 allows the Court to shorten or extend time fixed by a procedural order in the following terms:
(1) A party may apply to the court to shorten or extend a time that is fixed under these Rules or by a procedural order.
(2) A party may make an application under subrule (1) for an order extending a time to be made even though the time fixed by the rule or order has passed.
(3) A party who makes an application under subrule (1) for an extension of time may be ordered to pay any other party’s costs in relation to the application.

Senior counsel for the wife contended that r 1.14 did not apply as the order was not a procedural order but an order made for the enforcement of a previous order. It was submitted that the order was a substantive provision not a mechanical provision and that the husband’s real position was a variation of a substantive order.
The question is whether the default provision in the orders is a substantive or a machinery provision. The test to determine that is whether it vests a substantive right in a party. That requires an examination of the nature of the order and not the amendment sought.[15] The Court has the power to modify machinery provisions to effect enforcement and to clarify the effect of an order where it is not clear.[16] In amending such a provision the Court must have regard to issues of justice and equity between the parties.[17]
[15]Bray & Bray (1988) 12 Fam LR 563 at 567. See also Ravisini & Ravisini (1983) FLC 91-312.
[16]Ravasini & Ravasini (1983) FLC 91-312.
[17]Ravasini & Ravasini (1983) FLC 91-312; Holland & Holland (1982) FLC 91-243 at [77,343].
The self-executing nature of the September order might suggest that its provisions have merged with the March substantive orders and that there is now one substantive order. In FAI General Insurance Co Ltd v Southern Cross Exploration NL[18] a judge of the Supreme Court of New South Wales made an order after trial that the proceedings stand dismissed unless on or prior to a certain date the plaintiffs provided certain particulars and security for costs. On the stipulated date, the plaintiffs applied for an extension of time within which to comply with the order. That application was dismissed. Later the same day the plaintiffs provided the required security and provided a document which the plaintiffs contended complied with the order. The plaintiffs thereafter sought a declaration that the proceedings had not been dismissed. They sought an extension of time for the delivery of particulars. Both applications were dismissed on the basis that the self-executing order had terminated proceedings and the court therefore had no power to extend time. On appeal to the High Court Gaudron J, with Brennan J agreeing, at 289 reasoned that:
Although the rule that a court may not vary a duly entered order which brings proceedings to a conclusion rests, at least in part, on the obvious desirability that litigation should be brought to an end, the converse of that rule viz. that a court of record may vary an order before the order is entered must rest on the notion that a court is not functus officio whilst there remains any judicial function which may be performed in relation to a proceeding, even if it be only that of ensuring that the final order correctly records the meaning of the court.
…
Although it has been common to speak of a conditional order for dismissal as self-executing or of a proceeding upon which such an order has operated as “dead”, that seems to me to obscure the fact that a conditional order, of its nature, necessitates the exercise of the further judicial function of determining that the condition was not satisfied at the specified time. Where such an issue remains to be determined in relation to a proceeding it cannot be said that the court is functus officio.
…
There may be occasions when it is appropriate to approach the question of the proper meaning of the grant of power on the basis that only the clearest express intention can displace fundamental legal principle or basic policy consideration. However, as a conditional order for dismissal such as that presently under consideration neither renders the Court functus officio nor of itself precludes the bringing of fresh proceedings there is no question of fundamental legal principle or policy brought into issue by the grant of power in Pt 2, r. 3. That being so, and the language of the rule being such as to comprehend the power, Pt 2, r. 3 must be construed as authorizing the Court to enlarge the time fixed by a duly entered conditional order for dismissal notwithstanding that the time so fixed has expired, unless such authority is expressly excluded by statute or other rule of court.
[18](1988) 165 CLR 268.

The reasoning of Gaudron J indicates that a Court has the power to extend the time fixed in relation to a conditional order unless it is excluded by statute or the rules of the court. Rule 1.14 (1) and (2) allows for an extension of time set by a procedural or mechanical order. In my September 2010 reasons for judgment at paragraphs 41 to 44 and 52, I said :
41.A determination was made which I found to be just and equitable. It was not a machinery order but rather a substantive division of the parties’ property because I divided the artwork on the basis of each party having the work of particular artists but left them to work out which artists they desired. My orders gave rights of ownership and the alteration of the entitlements to the paintings. The orders were therefore an exercise of the s 79 power in respect of those assets and should not be re-opened except by agreement.
42.Even if I was wrong about that, neither party had been able to agree upon a methodology which in my view would have led to a just and equitable outcome. At trial, the husband sought that virtually all of the artwork be delivered to him. What he now proposes is an option suggested by the wife during the trial but he rejected it. The wife sought an order for delivery of specific items or that there be a “pick about” basis. It is clear that the wife does not wish to return to that issue and relies upon the orders I made. The disagreement between the parties would require a complete re-arguing of the matter and as there is still no agreement, I see no basis to reconsider it. Section 79(2) of the Act requires that the Court shall not make an order unless it is satisfied that, in all the circumstances, it is just and equitable to do so. That is something that I have already found.
43.The second matter is that there is a dispute about the implementation of the order particularly as the wife says that the husband will not make his selection. The orders were silent on the subject of what was to occur in default of a party making an election save that in the event that there was a residue of paintings, they were to be sold.
44.To permit the “stand-off” to continue would mean that the wife could not have access to her property. The solution is to give the husband a limited time in which to make his selection failing which, the wife can presume he does not want any of the paintings. She can then determine which she desires and the balance can be sold as envisaged. An order to that effect is a consequential order to ensure the wife obtains the assets to which she is entitled.
…
52. There is therefore no basis for me to revisit the artwork issue.

In Guinness & Guinness (No. 2)[19] the Full Court, per Coleman, Boland and Thackray JJ, stated that “the Court is functus officio when it has determined a case and orders are regularly entered”. However, the Court noted that an exception to that rule arose if a machinery order was required to give effect to the substantive orders. The Court stated that “[a] court is not at liberty to amend orders if the new order would affect substantive rights (a substantive order).”
[19][2008] FamCAFC 100 at [17].
In Slapp & Slapp[20] the Court held that an order granting a further extension deprived the wife of a right of substance and stated that:[21]
In my view that situation falls fairly and squarely within the scope of the earlier decision in In the Marriage of Bray supra. It cannot be described as merely a change of machinery but it had the effect of depriving the wife of a right of substance which the earlier orders of the court, as amended, had vested in her. Consequently, in my view, it was beyond his Honour’s power to make the orders that he made and they cannot be allowed to stand.
[20](1989) 13 Fam LR 158.
[21](1989) 13 Fam LR 158 at 160 to 161.
In both Slapp & Slapp and Bray & Bray the grant of an extension of time would or did have the effect of depriving a party of their substantive rights under substantive orders. In Bray & Bray the default provision required that in the event of a failure to pay, the property was to be sold to give effect to the orders. In Slapp & Slapp the extension of time granted had the effect of frustrating the consent orders that constituted a variation of the orders by the parties, depriving the wife of additional money she would have received under the varied consent orders but not under the initial orders.
Varying the time for compliance here does not affect the substantive rights of the wife as she will still receive artwork albeit not necessarily the particular artwork she wanted. The substantive right was to have the opportunity to make the selection. The wife waived the right to enforce the orders on two occasions thereby varying the selection process arrangements. When what appeared to be a genuine dispute arose, the husband sought that she vary the arrangement again by “suspending” the selection process but this final time she declined. If the ultimate objective was to achieve a just and equitable outcome for both parties, one of the considerations is whether the action of the parties was designed to thwart the orders. In November 2010, it appeared that both parties were working towards a conclusion of the issue. As such, the “suspending” action of the husband could not be seen as thwarting the order notwithstanding his earlier attempts to renegotiate or even get around the selection process in the orders. The power to vary the machinery orders or to reinstate the selection process is still a discretionary matter and in this case, it is relevant that until the late November dispute arose, both were concerned to bring the matter to an end.
In my view, this is a case where the discretion ought be exercised in favour of the husband and the orders be varied to allow an immediate resumption of the selection process.

I certify that the preceding Fifty Three (53) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin delivered on 12 April 2011.

Associate:

Date: 12 April 2011