Caruana and Caruana - [2012] FMCAfam 791

FEDERAL MAGISTRATES COURT OF AUSTRALIA

CARUANA & CARUANA

[2012] FMCAfam 791

FAMILY LAW – Property settlement – application for enforcement – whether any taxation liability existed at the time of orders being made – consideration of definition of a debt and the term “exist” – debt to ATO against wife for PAYG assessment not being pursued by ATO at time orders made – subsequent decision by ATO to pursue after all other liabilities paid by husband pursuant to orders – not an enforceable claim against the husband – wife’s enforcement application dismissed.

Family Law Act 1975 (Cth), s.81

Applicant:

MS CARUANA

Respondent:

MR CARUANA

File Number:

BRC 11700 of 2008

Judgment of:

Coker FM

Hearing date:

31 July 2012

Date of Last Submission:

31 July 2012

Delivered at:

Townsville

Delivered on:

3 August 2012

REPRESENTATION

Solicitors for the Applicant:

Self-represented

Solicitors for the Respondent:

Self-represented

ORDERS

That the Application in a Case filed on 26 June 2012 be dismissed.
That each party pay their own costs of and incidental to the proceedings herein.

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

FEDERAL MAGISTRATES
COURT OF AUSTRALIA
AT TOWNSVILLE

BRC 11700 of 2008

MS CARUANA

Applicant

And

MR CARUANA

Respondent

REASONS FOR JUDGMENT

On 30 October 2009 orders were made by me following a hearing on 29 October 2009. Those orders related to the applicant in the proceedings now before me, Ms Caruana, whom I shall refer to as the wife and Mr Caruana, whom I shall refer to as the husband. The orders related to property settlement between the parties and included, particularly at order 3, the following order:
That the Husband be responsible for the payment of the various liabilities of the parties, including any existing taxation liability of the Wife, and that the Husband indemnify the Wife in relation to such matters.
At the time of the hearing, the liabilities of the parties were not specifically known. Rather, it was necessary for various taxation returns to be lodged and for there to be assessments obtained, in relation to the liabilities of the parties. As a result of the lodgement of such tax returns, a taxation liability was assessed in respect of the wife of $12,213.95. The husband paid that sum on behalf of the wife and annexed to his affidavit of 12 July 2012 is a copy of his cheque payable to the Australian Taxation Office in the sum of $12,213.95.
The husband says that at the time that that liability was paid, and in fact there was a subsequent payment involving accrued interest, the husband had met all of the existing obligations in relation to property settlement. The wife, however, says that that was not the case and, on 26 June 2012, filed an Application in a Case in which she sought orders with regard to enforcement.
Quite simply, the orders sought by the wife were as follows:
1. That the Respondent to comply with paragraph 3 of the court order dated 30 October 2009 to pay a sum of $3,331.83 to the applicant and the accrued interest up to this date.
2. That the Respondent pay all my costs in this application.
The basis for the orders sought in relation to this matter arises from an assessment of PAYG tax instalments owing by the wife, for the financial years ended 30 June 2003, 2004, 2005, 2006 and 2007. The total of the PAYG tax instalments unpaid, as well as a general interest charge, were notified to the wife by way of correspondence from the Australian Taxation Office on 2 November 2011. The wife says that the amount of $3,331.83 is tax that arises from the operation of a business, (name omitted). It does not exactly appear that that is the case but perhaps can best be understood as income which was attributed to the wife from the operation of that business and that the PAYG tax arising from it related to payments to be received by the wife.
It is not clear, in fact, nor is it perhaps relevant in relation to this determination, as to whether the income which gave rise to the PAYG tax liability was actually paid, or was only recorded notionally, for the purposes of the business accounts. In any event, the wife says that the indications by the tax office were that the tax instalments which were unpaid related to the financial years 2003 to 2007 and that therefore, it was an existing tax at the time when the court orders were made.
The husband says that that is simply not the case. He says that considerable efforts were made by all parties to obtain information as to taxation liabilities of the parties and, in fact, the liabilities were detailed on approximate bases in affidavits that were filed leading up to trial, as well as in communications between the parties. To that end, the wife specifically refers to her trial affidavit sworn 5 October 2009, which makes reference to a tax liability for her of between $14,000 and $18,000, a tax liability for the husband of $42099.85, was well as a BAS liability for the company, (omitted), and the final notation in relation to the debts that the wife says were noted, were the PAYG debt to the Australian Taxation Office relating to her unpaid tax, in the sum of $3,427, as at 11 September 2009.
The wife says that that is a clear indication that the debt both existed at the time of the orders being made on 30 October 2009 and, more particularly, says that in correspondence that was forwarded under the hand of the husband’s own solicitors, Rod Madsen Solicitor, on 19 October 2009, reference was made in that correspondence which was open correspondence, to the payment of the wife’s PAYG tax liability in the sum of $3,427.00.
Accordingly, the wife says that there is clear evidence of the knowledge held by both she and the husband of the debt owing to the Australian Taxation Office and that therefore, it was an “existing taxation liability of the wife”, at 30 October 2009.
The husband’s position, as I have indicated however, is to say that that was simply not the case. The husband says that there were certainly liabilities which were required to be paid and in fact, pursuant to the orders of 30 October 2009, he specifically approached the taxation office, produced the orders of 30 October 2009, and requested indications of the existing liabilities of the parties, so as to enable him to facilitate payment of the various liabilities, including any and all existing liabilities relating to the wife. It appears clear that the husband was given a figure in relation to that particular obligation and then attended to that payment.
Some considerable time later, however, the determination was made by the tax office that they would seek to collect the taxation liability for the years 2003 to 2007, which they had previously decided not to pursue, because of a determination that it would be uneconomical. In fact, the correspondence from the Australian Taxation Office to the wife of 2 November 2011 specifically includes the following statement:
We recently received your income tax returns for the years ended 30 June 2010 and 2011. As a result of this lodgement, a debt of $3,331.83 that we previously decided not to pursue has been re-raised. This is because the debt was originally considered uneconomical to pursue but after reviewing your circumstances we consider the recovery of this debt is now viable.
The husband’s position therefore is to say that as at 30 October 2009 and if not then then certainly at the time that he was attending, pursuant to the orders to the payment of the existing taxation liabilities, the debt of $3,331.83 did not exist. It raises an interesting issue in respect of this matter and I have taken the opportunity of attempting to ascertain the definition of debt. Firstly, I turned to Butterworths Australian Legal Dictionary which defines “debt” as follows:
1. An obligation to pay.
2. A sum of money owed.
The definition then does on:
A debt is a sum of money which is now payable or will become payable in the future by reason of a present obligation
Clearly, there appears to be an expectation that there is a sum of money owed and that there is an existing or present obligation, in relation to the payment of such monies. It is noteworthy that the same authority refers to the definition of an accruing debt as, “a debt not yet actually payable but that is represented by an existing obligation”.
Quite clearly both the definition of “debt” and the definition of “accruing debt” have two elements to them. The first relates to an actual and definable sum of money and secondly, an obligation either to immediately effect payment or a present and continuing obligation, to effect a payment.
The terms of the orders of 30 October 2009 specifically relate or refer to, an existing taxation liability of the wife.
“Existing” is not defined in the Australian Legal Dictionary but in the Macquarie Dictionary 1982, the word “exist” has a number of definitions, the most appropriate being, “to have actual being; be”.
In other words, there appears clearly from that definition to be an expectation that there is the actual existence of the debt and as referring to the definitions of debt as contained in Butterworths Australian Legal Dictionary, “an appreciable and definable obligation either to pay forthwith or at some stipulated time in the future.”
The husband’s argument therefore carries some weight in relation to this matter, because it is clear that at the time that he quite properly set out to establish what the liability was in relation to this matter, he was advised of a fixed sum, which was paid. He was not advised of any amount which had been determined by the Australian Tax Office to be owing but not pursued, because of some determination that it may be uneconomical to do so.
It is a long bow then to draw a determination that an amount which may or may not, and it is indeterminate until such time as the Australian Taxation Office made a decision in relation to the matter, become due and owing. To do so would fail to bring an end to the matrimonial financial relationship between the parties to a marriage. Section 81 of the Family Law Act specifically requires that such an action be, if at all possible, taken by a court in relation to proceedings. Section 81, headed ,“Duty of court to end financial relations”, is in these terms:
In proceedings under this Part, other than proceedings under section 78 or proceedings with respect to maintenance payable during the subsistence of a marriage, the court shall, as far as practicable, make such orders as will finally determine the financial relationships between the parties to the marriage and avoid further proceedings between them.
The orders that were made on 30 October 2009 were intended to bring to an end the financial relationship between these parties. The husband has acted in good faith in taking steps to have, as best as anyone could expect, an assessment of the liabilities of the wife at a time that arose, following the making of the orders of 30 October 2009, and has then attended to the payment of such sum.
It would be unjust, nearly three years later, to suggest that a further sum, only coming to light some two years or more after the orders were made in relation to the matter, should become an obligation of the husband. It flies in the face of the provisions of section 81 with regard to finalising the financial dealings as between the parties, and also would give rise, at least in my assessment, to an unacceptable uncertainty, in relation to proceedings as between parties.
To suggest that a liability which may or may not at some time in the future become due and owing, and that then that obligation is to fall upon a party not originally owing the monies, is to ensure that litigation between parties is never brought to a close. The obligations of the parties here was to as best as could physically be done, determine the liabilities that existed and which were required to be paid and for the husband to make such payment. He has done so.
In my assessment, it would be contrary to law and contrary to the proper expectations of parties wishing to move on with their lives, to have the possibility of future indeterminate debts falling due and becoming the obligation for payment of one party or another into the future, to be required to be paid.
I am satisfied that it is contrary to the expectation of the court in relation to this matter and accordingly intend to dismiss the wife’s application for enforcement, pursuant to the Application in a Case filed 26 June 2012.
I should note in passing that both the husband and the wife were self-represented but that each contended that they had incurred expenses as a result of the litigation brought in relation to the matter. I am very much of the view that it is not proper that either party should be required to pay the costs of the other associated with these proceedings, certainly upon the basis that there was a clear argument which could properly be brought in relation to the proceedings and that each chose to represent themselves in relation to the matter, rather than incurring independent expenses in relation to legal representation.
The costs associated with the bringing of the application and the costs associated with the defending of the application should, in my view, be borne by each of the parties respectively and I would specifically therefore order in addition that each party pay their own costs of and incidental to the proceedings herein.

I certify that the preceding twenty-seven (27) paragraphs are a true copy of the reasons for judgment of Coker FM.

Date: 3 August 2012