Caska and Caska

[1998] FamCA 118

[1998] FamCA 118

FAMILY LAW ACT 1975

IN THE FULL COURT OF

THE FAMILY COURT OF AUSTRALIA

AT SYDNEY  Appeal No. EA 19 of 1998 Suit No. SY 6343 of 1991

BETWEEN:

JUDITH IDA CASKA

(Appellant Wife)

-and -

JOHN PIUS CASKA

(Respondent Husband)

JUDGMENT OF THE FULL COURT
Published the 18th day of September 1998

Coram:  Fogarty, Finn and May JJ.
Date of hearing:  2 June 1998
Further written submissions:     12 and 15 June 1998

Appearances:
Mr Mark Adrian Twigg, solicitor (of Adrian Twigg & Co., DX 267, Sydney), appeared for the appellant wife.
Mr Maiden of Counsel (instructed by Steele & Walker, solicitors, DX 8807, Woy Woy) appeared for the respondent husband.

Caska
Appeal No. EA 19 of 1998
File No. SY 6343 of 1991
Appeal Coram: Fogarty, Finn and May JJ.
Date of Hearing: 2 June 1998
Date of Judgment: 18 September 1998

Catchwords:  Spousal maintenance – threshold test required for variation of a spousal maintenance order made by consent – s.83 Family Law Act 1975.

This is an appeal by the wife against orders of Chisholm J dismissing the wife’s application for an order that the husband pay her periodic spousal maintenance of $2,000 per week, in circumstances where a consent order had previously been made for payment by the husband to the wife of lump sum spousal maintenance in the sum of $60,000.

The husband and wife commenced a de facto relationship in 1981; they had three children born respectively in 1983, 1984 and 1986; they married in 1989, separated in 1990 and were divorced in February 1992.

Consent orders were made on 12 August 1996 that the husband pay to the wife lump sum spousal maintenance in the sum of $60,000.

On 16 June 1997 the wife filed an application for periodic spousal maintenance, which was heard by a Registrar. The Registrar made orders that the earlier consent orders be varied to provide that the husband pay to the wife the sum of $1,000 per week by way of spousal maintenance for four years.

The husband applied for a review of the Registrar’s decision and the wife applied for an enforcement summons; both applications were heard by Chisholm J. who made orders setting aside the periodic spousal maintenance order made by the Registrar and dismissing both the wife’s application for periodic spousal maintenance and the wife’s enforcement summons.

His Honour held that s.83(2)(ba) of the Family Law Act 1975 (being that the amount ordered to be paid under the order is not proper or adequate) contains the only threshold test for the variation of a spousal maintenance order made by consent, and that the other matters or conditions in s.83(2) have no application. His Honour concluded that the wife had not established that the consent order was not proper or adequate and thus dismissed her application.

The wife appealed the trial Judge’s orders, seeking orders that the husband pay her periodic maintenance in the sum of $2,000 per week. She submitted that his Honour had misdirected himself in relation to the correct threshold test for the variation of a spousal maintenance order made by consent.

During the hearing of the appeal the issue also arose as to the possible operation of s.77A of the Family Law Act 1975 in the circumstances of this case, in that the original consent order did not state that it was an order to which s.77A applied. Both parties were given leave to make further written submissions in relation to this question.

Held by the Full Court in allowing the wife’s appeal and remitting the matter for rehearing:

• That the conditions or matters listed in s.83(2) of the Family Law Act 1975 are in the alternative, and s.83(2)(ba) simply provides an additional ground which may be relied upon when seeking a variation of a spousal maintenance order made by consent; it is not a prerequisite for the variation of such an order. His Honour had erred in this regard and thus the appeal would be allowed.

• That it was not possible on the material before the Full Court, to reach a decision as to whether there had been the necessary change of circumstances on the part of either the husband and/or the wife such as would warrant an order in the wife’s favour for spousal maintenance, and as to the amount of such an order. There were no real findings by the trial Judge about the wife’s present financial situation. Hence, the Full Court would not re-exercise the trial Judge’s discretion but would remit the matter for rehearing.

• In the circumstances, it would not be desirable to make any pronouncement as to the meaning and operation of s.77A of the Family Law Act 1975. The absence of any reference to s.77A in the original consent order was not raised as an issue in the grounds of appeal, and neither party sought to rely on the provision in the further written submissions which they made to the Court.

APPEAL ALLOWED
Certificates awarded under Federal Proceedings (Costs) Act 1981 to both parties.
REPORTABLE

1. This is an appeal by the wife against all the orders made by Chisholm J on 5 February 1998.  The effect of his Honour’s orders was essentially to dismiss an application filed on 16 June 1997 by the wife for an order that the husband pay her periodic spousal maintenance in circumstances where an order had been made by consent on 12 August 1996 for the payment by the husband to the wife of lump sum spousal maintenance of $60,000.

BACKGROUND

1. By way of background to this matter, it need only be said that the husband and the wife had commenced a de facto relationship in 1981; they had three children born respectively in 1983, 1984, and 1986; they married in 1989, separated in 1990 and were divorced in February 1992.

1. On 12 August 1996 orders were made by consent which provided amongst other things that:

“1.The Husband . . . pay to the wife the sum of sixty thousand dollars ($60,000.00) by way of spouse maintenance such payment to be made within twenty eight (28) days from the date of these orders.

2.The Husband is to pay to the Wife the further sum of one hundred and forty thousand dollars ($140,000.00) by way of property settlement in the following terms . . .

(a)As to an amount of forty thousand dollars ($40,000.00) on or before 12 August 1997;

(b)As to an amount of fifty thousand dollars ($50,000.00) on or before 12 August 1998;

(c)As to the remaining amount of fifty thousand dollars ($50,000.00) on or before 12 August 1999.

. . . ”

1. On 16 June 1997 the wife filed an application (in Form 12) in which she sought an order that the husband pay her by way of maintenance the sum of $2,000 per week.  In a response filed on 22 July 1997 the husband sought that the wife’s application be dismissed.

1. The matter came before Registrar Symons on 4 September 1997 for hearing.  On 15 September 1997 the Registrar made an order to the effect that the order for spousal maintenance made on 12 August 1996 be varied to provide that the husband should pay to the wife the sum of $1,000 per week by way of spousal maintenance for four years.

1. The husband filed an application for a review of this decision of the Registrar on 18 September 1997 and the wife filed an enforcement summons on 8 October 1997 (presumably for the purpose of enforcing the Registrar’s order).  Both the husband’s application for a review and the wife’s enforcement summons were heard by Chisholm J. on 4 December 1997.

1. On 5 February 1998 his Honour delivered judgment and made orders whereby he set aside the periodic maintenance order made by Registrar Symons and dismissed both the wife’s application for spousal maintenance and the wife’s enforcement summons.

1. It is from these orders of Chisholm J. that the wife now appeals.  In her notice of appeal she sought that, in the event her appeal was successful, we should order that the husband pay her periodic maintenance in the sum of $2,000 per week – although it was conceded on behalf of both parties during the hearing of the appeal that a new trial may be necessary in the event that the appeal succeeded.

THE TRIAL JUDGE’S APPROACH TO THE VARIATION OF A MAINTENANCE ORDER MADE BY CONSENT.

1. In his reasons for judgment Chisholm J. acknowledged that “the wife’s entitlement to spousal maintenance was first determined by the consent orders of August 1996 to be payable by a lump sum payment of $60,000” and that the wife now sought “to vary this” (at Appeal Book 11). His Honour then referred to s. 83 of the Family Law Act 1975 (“the Act”) as the statutory provision relevant to such a variation and in particular to s. 83(1). He then set out in full the provisions of s. 83(2) which contains what can be described as the threshold conditions for the variation of a spousal maintenance order. In view of the importance of the terms of s.83(2) in this appeal, we will also set out at this point the provisions of that sub-section:

“(2)the court shall not make an order increasing or decreasing an amount ordered to be paid by an order unless it is satisfied:

(a)that, since the order was made or last varied:

(i)the circumstances of a person for whose benefit the order was made have so changed;

(ii)the circumstances of the person liable to make payments under the order have so changed; or

(iii)in the case of an order that operates in favour of, or is binding on, a legal personal representative--the circumstances of the estate are such;

as to justify its so doing;

(b)that, since the order was made, or last varied, the cost of living has changed to such an extent as to justify its so doing;

(ba)in a case where the order was made by consent--that the amount ordered to be paid is not proper or adequate;

(c)that material facts were withheld from the court that made the order or from a court that varied the order or material evidence previously given before such a court was false.”

1. Shortly thereafter his Honour expressed the following view with regard to the operation of s.83(2):

“In my view where the application is to vary a previous order made by consent, the correct interpretation of the section is that the applicant must show that that (sic) the amount ordered to be paid (in the consent orders) “is not proper or adequate”: paragraph (ba).  Paragraph (a), referring to change of circumstances, does not apply.” (Appeal Book 12)

1. His Honour then proceeded to consider the present financial situations of both parties.  He concluded that he was not satisfied that the wife had shown “that the sum of $60,000 spouse maintenance determined by the 1996 consent orders is now ‘not adequate or proper’”, and that it followed that it was “not open to (him) because of the terms of s.83, to make an order varying the spousal maintenance”.  (Appeal Book 17).

THE WIFE’S COMPLAINT IN RELATION TO THE TRIAL JUDGE’S APPROACH

1. By the third ground of appeal contained in her notice of appeal, the wife asserted that his Honour “erred in law in finding that in the case of variation of a consent order that Section 83(2)(ba) was a pre-condition to varying the orders particularly in circumstances where that was not an issue at the trial.”

1. This was the first ground pursued on behalf of the wife both in the written and oral submissions on her behalf, and it is a ground which we consider has real substance.

1. It seems clear that the application of s.83(2)(ba) was not an issue in the hearing before either Chisholm J. or Registrar Symons, and that those hearings were both conducted on the basis of the operation of s.83(2)(a), that is, of a change of circumstances.

1. But irrespective of that consideration, we are of the view that the appeal must be allowed on the basis of this ground because his Honour was, in our opinion, clearly wrong in law in holding that, in order to vary a previous spousal maintenance order made by consent, the applicant for variation must show that the condition contained in s.83(2)(ba) (being that the amount ordered to be paid in the previous order “is not proper or adequate”) is satisfied, and that the other matters or conditions in s.83(2) (including a change of circumstances in the payer or payee) have no application. In this regard we agree with the submission made on behalf of the appellant wife, that the conditions or matters listed in s.83(2) are clearly in the alternative, and that s.83(2)(ba) provides an additional ground which may be relied on when seeking a variation of a maintenance order made by consent; it is not a prerequisite for the variation of such an order.

1. As mentioned above, his Honour, having stated his view that the provisions of s.83(2)(ba) contained the only threshold test for the variation of a spousal maintenance order made by consent, then proceeded to apply that test to the facts of this case, and concluded that that test was not met. His Honour did not apply any of the other threshold tests contained in s.83(2), although he did conclude that the wife had not shown that she was unable to support herself adequately within the meaning of s.72 of the Act. (Section 72 contains the essential tests for an order for spousal maintenance, being that the applicant cannot support himself or herself adequately and that the respondent to the application has the capacity to pay such maintenance).

1. Although grounds one, four, six and seven contained in the wife’s notice of appeal challenged his Honour’s findings, or lack of findings, regarding either the wife’s present financial situation and her capacity to support herself, or certain related matters (such as a loan application by the wife to a bank and the level of her disclosure of her financial affairs to the court), we did not understand the wife to challenge his Honour’s conclusion that the threshold test contained in s.83(2)(ba) (being that the lump sum payment of $60,000 which was the subject of the consent orders was “not proper or adequate”) had not been met.

1. Rather, having established that his Honour had misdirected himself in relation to the correct threshold test for the variation of a spousal maintenance order made by consent, the solicitor for the wife sought to persuade us that we would be able to satisfy ourselves on the basis of the findings of his Honour (or presumably on such evidence which was before him as was unchallenged), that there had been a sufficient change of circumstances in the wife’s position since the consent order was made, as would justify under s.83(2)(a) a variation in the consent order to provide for a periodic payment to her of at least $1,226.00 per week. We also understood it to be at least the primary position of counsel for the husband, that in the event that we concluded that his Honour was in error in relation to the threshold test, that we should re-exercise the discretion – although on the husband’s case this would require a conclusion that there was no liability for periodic maintenance.

THE QUESTION OF A RE-EXERCISE OF THE DISCRETION BY THIS COURT

1. However we consider that it would be impossible for us on the material before us to reach our own decision as to whether there has been the necessary change of circumstances on the part of either the husband and/or the wife such as would warrant an order in the wife’s favour for spousal maintenance, and as to the amount of such an order.  We consider it would be impossible for us to do this because there were no real findings by the trial Judge about the wife’s present financial position, and also because his Honour expressly stated (at Appeal Book 15) that he considered the wife’s evidence to be “not satisfactory”.

1. In considering the wife’s evidence regarding her present financial situation, his Honour began by summarising the wife’s evidence in chief regarding her income, expenses, assets and liabilities (at Appeal Book 13).  He then referred to certain evidence which the wife gave under cross examination about the pre-school business which she was operating, and about an application to a bank for a mortgage in January 1997.  His Honour also referred to certain shortcomings in the information contained in the wife’s Form 12 application and in her affidavit; these shortcomings had apparently emerged largely during cross-examination of the wife. 

1. His Honour then concluded his examination of the wife’s evidence with the following comments (at Appeal Book 15):

“In my view the wife’s evidence was not satisfactory, mainly for the reasons already referred to.  As submitted by [Counsel for the husband], the picture that emerged from her oral evidence was very different from that which appeared from her affidavit material which, in particular, does not disclose the way the financial matters are handled as between the wife and the business.  For reasons I have mentioned, she seems to have been willing to convey a false impression to the bank when she applied for finance.  She says that her net profit has decreased, but, again as [Counsel for the husband] pointed out, the material put forward by the wife does not really enable that assertion to be tested.  Because of my concern about her evidence, I do not accept her assertion to that effect in the absence of supportive documentary evidence.  However it does seem that she is able to meet her recurring expenses from the business.  Further, I accept the submission by [Counsel for the husband] that the wife’s present debt seems to have resulted to some extent at least from her large borrowings to acquire her present property.”

1. Thus as we have already indicated, no conclusive findings were made by his Honour as to the wife’s financial position.  He outlined her evidence in chief and he referred to matters of concern to him which emerged from her cross-examination.  But he never reached a final conclusion as to what in light of the wife’s cross-examination, he ultimately found the wife’s income, expenses, asset and liability position to be.  It appears that what his Honour was in fact saying in the passage quoted in the last paragraph, was that he could not make any findings because of the unsatisfactory nature of the wife’s evidence, and thus the only course open to him was to conclude that the wife had not fulfilled the onus which rested on her as the applicant to establish her case.

1. Despite considerable effort on the part of the solicitor for the wife (and we refer here in particular to section II of his written submissions) to convince us that his Honour was wrong in his conclusion that the wife’s evidence was unsatisfactory and that his Honour should have accepted the wife’s evidence, we are not satisfied that justice would be done to either party if we were to attempt to reach a conclusion regarding the wife’s financial position on the basis of the material before us.  Indeed, we consider that it would be a particularly inappropriate course for us to adopt in the circumstances of this case where the trial judge has found the evidence of the party, who is now seeking from this appeal court a more favourable order from her point of view than that made by the trial Judge, to be unsatisfactory.

1. Accordingly we do not propose to re-exercise the discretion, but rather we will remit the matters which were before Chisholm J. for rehearing.  Given the view that we have taken of this matter, it is unnecessary that we consider those grounds of appeal (being grounds two and five) which relate to his Honour’s conclusions regarding the husband’s evidence.

THE OPERATION OF S.77A OF THE ACT

1. Towards the conclusion of the hearing of this appeal an issue arose concerning the possible operation in this case of s.77A of the Act. That section provides as follows:

“(1)Where:

(a)     a court makes an order under this Act (whether or not the order is made in proceedings in relation to the maintenance of a party to a marriage, is made by consent or varies an earlier order), and the order has the effect of requiring:

(i)payment of a lump sum, whether in one amount or by instalments; or

(ii)the transfer or settlement of property; and

(b)     the purpose, or one of the purposes, of the payment, transfer or settlement is to make provision for the maintenance of a party to a marriage;

the court shall:

(c)     express the order to be an order to which this section applies; and

(d)     specify the portion of the payment, or the value of the portion of the property, attributable to the provision of maintenance for the party.

(2)Where:

(a)     a court makes an order of a kind referred to in paragraph (1) (a); and

(b)     the order:

(i)is not expressed to be an order to which this section applies; or

(ii)is expressed to be an order to which this section applies, but does not comply with paragraph (1)(d);

any payment, transfer or settlement of a kind referred to in paragraph (1)(a), that the order has the effect of requiring, shall be taken not to make provision for the maintenance of a party to the relevant marriage.”

1. In this case the original consent order of 12 August 1996 provided expressly that the payment of $60,000 by the husband to the wife was to be “by way of spouse maintenance”. However that order did not contain the statement (which s.77A would seem perhaps to require) that this was an order to which s.77A applies. Given this omission and given then the provisions of s.77A(2), it might be argued that there was no existing provision for spousal maintenance for the wife, with the result that it was unnecessary for the statutory provisions relating to variation of existing orders contained in s.83 of the Act to be applied in this case. If there had been no previous provision for spousal maintenance, the position might also arise that the wife would not have been able to bring an application for such maintenance without leave under s.44(3) of the Act (although whether this consequence would arise may depend on whether the wife had originally filed an application for spousal maintenance within the required period).

1. When the question of the operation of s.77A arose during the hearing of this appeal, we gave both parties leave to make further submissions in writing in relation to that question. Pursuant to that leave, both parties provided us with relatively brief written submissions.

1. It would be fair to say that in those further submissions, neither party sought to obtain any advantage in this case from the provisions of s.77A (or perhaps more correctly, from any failure to comply in the drafting of the original consent orders with s.77A). Both parties appeared content to rely on the fact that the consent order was clearly expressed to be an order for spousal maintenance, thus making any express reference to s.77A unnecessary in that order. In addition it was submitted on behalf of the wife, that the relevant explanatory memorandum and second reading speech make it clear that s.77A was introduced for social security purposes, and that the section should if necessary be read down to confine its operation to social security purposes.

1. It is true, as was pointed out in the further written submissions on behalf of the wife, that the reported cases on s.77A offer little assistance. This is particularly so in relation to the issues which might be seen as arising on account of the operation of that section in a case such as the present; those issues being essentially whether the section has any operation where an order for a lump sum payment expressly states that such payment is to be by way of spousal maintenance, and what are the consequences (other than in the social security context) of a failure to include a specific reference to s.77A in an order for lump sum spousal maintenance.

1. The reported cases to which we were referred (being: Habib(1988) FLC 91-931; Dein (1989) FLC 92-014; Penza (1988) FLC 91-949; Evans &Spicer (1992) FLC 92-320; and Borriello (1989) FLC 92-049) do little more than either make it clear that s.77A does not apply to the component of a property settlement that may be attributable to an adjustment in that settlement on account of the matters in s.75(2) of the Act, or simply draw attention to the ambiguity or obscurity of the operation of s.77A.

1. Obviously at some time in the future a Full Court may have to address issues relating to the true meaning and operation of s.77A, including the issues which we outlined in paragraph 29. However we are not persuaded that it would be appropriate to do so in this case. This is because not only was no ground of appeal directed to the issue of s.77A, but also when the opportunity was given to both parties to make further submissions on the issue, neither side sought to place any reliance on the operation of s.77A. Furthermore, we are each aware from our own experience, that the practice in relation to including reference to s.77A when an order is clearly expressed to be in relation to spousal maintenance apparently varies in different registries of the court. Accordingly we consider it would be undesirable for us to make any pronouncement about that matter when it has not been squarely raised as an issue in the appeal before us and also in the absence of full argument on the issue.

THE COSTS OF THE APPEAL

1. At our invitation the parties also included in their further written submissions in relation to s.77A, submissions in relation to the costs of the appeal.

1. In light of those submissions, and of the fact that the appeal has succeeded on the basis of an error of law on the part of the trial Judge, we consider that there should be certificates under the Federal Proceedings (Costs) Act 1981 to both parties, both in respect of the appeal and of the new trial.

1. The wife also appears to seek in her further written submissions that we should make an order that the husband pay her costs of the hearing before Chisholm J. on the basis that this was a review of an order made by a Registrar in her favour.

1. We do not see why the fact that this matter came before his Honour by way of review rather than for an initial hearing, should cause us to depart from the usual practice that it is the trial judge (or if necessary, another judge sitting at first instance) who should determine any costs application in relation to a trial.  For the Full Court to undertake that determination would deprive both parties of their rights of appeal.  Accordingly we decline to make any determination in relation to the costs of the trial before Chisholm J.

ORDERS

1. That the appeal be allowed.

1. That all orders of the court made on 5 February 1998 be set aside.

1. (a)     That the husband’s application (filed on 18 September 1997) for a review of the exercise of delegated power be remitted to a judge at the Sydney Registry of the court for re-hearing.

(b)That the wife’s enforcement summons (filed on 8 October 1997) be remitted to a judge at the Sydney Registry of the court for re-hearing.

1. (a) That the Court grants to the appellant wife a costs certificate pursuant to s.9 of the Federal Proceedings (Costs) Act 1981, being a certificate which, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under this Act to the appellant wife in respect of the costs incurred by the appellant wife in relation to the appeal.

(b) That the Court grants to the respondent husband a costs certificate pursuant to s.6 of the Federal Proceedings (Costs) Act 1981, being a certificate which, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under this Act to the respondent husband in respect of the costs incurred by the respondent husband in relation to the appeal.

(c) That the Court grants to the appellant wife and to the respondent husband costs certificates pursuant to s.8 of the Federal Proceedings (Costs) Act 1981, being certificates which, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under this Act to the appellant wife and to the respondent husband in respect of the costs incurred by each party in relation to the new trial.