CUMMINGS & WARNER (No.2)
[2018] FCCA 2838
•1 November 2018
FEDERAL CIRCUIT COURT OF AUSTRALIA
| CUMMINGS & WARNER (No.2) | [2018] FCCA 2838 |
| Catchwords: FAMILY LAW – Property – enforcement action following earlier judgment that found that a binding financial agreement existed and was binding on the parties pursuant to s.90UJ(1B) Family Law Act 1975 – de facto Wife seeking to enforce this judgment in circumstances where the de facto Husband says that his only asset is his superannuation which is in the payment phase – de facto Husband had benefit of funds from the de facto Wife during the relationship but now seeks to thwart recovery of what he acknowledges that he owes her – de facto Husband contends that the Court is without jurisdiction to make any Order regarding the splitting of his superannuation – finding that the Court has relevant jurisdiction – Orders as sought by the de facto Wife made. |
| Legislation: Family Law Act 1975 (Cth) ss.4, 90MC, 90UJ(1B), 90MS, 90MT, 90UN(c)105, 90SS(1)(k) & (l) Federal Circuit Court Rules 2001, rr.25B.11, 25B.13, 25B.15, 25B.61 |
| Cases cited: Colgate Palmolive v Cussons Pty Ltd (1993) 46 FCR 225 Pera v Pera (2008) 218 FLR 222; (2009) 39 Fam LR 469 Stephens v Stephens (Enforcement) (2010) 42 Fam LR 423 Stephens v Stephens (Costs) (2011) 44 Fam LR 117 Yunghanns v Yunghanns (1999) 24 Fam LR 400 |
| Applicant: | MS CUMMINGS |
| Respondent: | MR WARNER |
| File Number: | CAC 1778 of 2015 |
| Judgment of: | Judge Neville |
| Hearing date: | 8 August 2018 |
| Date of Last Submission: | 8 August 2018 |
| Delivered at: | Canberra |
| Delivered on: | 1 November 2018 |
REPRESENTATION
| Counsel for the Applicant: | Ms Curran |
| Solicitors for the Applicant: | Robinson + McGuinness |
| Counsel for the Respondent: | Mr Hill |
| Solicitors for the Respondent: | Elizabeth Fleming & Associates Lawyers |
ORDERS
The Third Party Debt Notice, dated 26 July 2017, addressed to the Super Fund 1 in favour of Ms Cummings, be discharged.
In accordance with section 90MT(1)(b) of the Family Law Act 1975:
(a)Ms Cummings is entitled to be paid the specified percentage out of Mr Warner’s interest in the Super Fund 1 (“Super Fund 1”);
(b)The said Mr Warner’s entitlement is correspondingly reduced by force of this Order; and
(c)The specified percentage for the purpose of this Order is 38.94%.
The Trustee of the Super Fund 1 do all such acts and things and sign all documents as may be necessary to:
(a)Calculate, in accordance with the requirements of the Family Law Act 1975 and the Family Law (Superannuation) Regulations 2001, the entitlement awarded to Ms Cummings in the immediately preceding clause of this Order; and
(b)Pay the entitlement whenever the trustee makes a splittable payment from Mr Warner’s interest in the Super Fund 1.
Orders 2 and 3 have effect from the operative time and the operative time is 4 business days after service of a sealed copy of the sealed Orders.
The Respondent is to pay the Applicant’s costs on an indemnity basis, either as agreed or taxed.
NOTATIONS
(A)That in accordance with section 90MZD of the Family Law Act 1975, the Trustee has been accorded procedural fairness in relation to the making of these Orders and has been provided with a copy of the proposed Order.
(B)The Trustee, after service upon it of a sealed copy of these Orders, has obligations under the Superannuation Act 1976 to create an associate pension in the name of the said Ms Cummings.
IT IS NOTED that publication of this judgment under the pseudonym Cummings & Warner (No.2) is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT CANBERRA |
CAC 1778 of 2015
| MS CUMMINGS |
Applicant
And
| MR WARNER |
Respondent
REASONS FOR JUDGMENT
Introduction
On 10th March 2017, this Court declared that a Binding Financial Agreement (“the BFA” or “the Agreement”) between the parties, dated 15th July 2013, was a Part VIIIAB Financial Agreement pursuant to the Family Law Act1975 (“the Act”), and that, pursuant to s.90UJ(1B) of that Act, it was binding on the parties.
On the same date, this Court made Orders, whereby the de facto Husband was to pay the de facto Wife the sum of $121,848.25 plus interest, plus costs.[1] To date, very little has been paid by the Husband to the Wife, other than a very modest sum that has been procured via a Third Party Debt Notice. As of 8th August 2018, the Wife has received the sum of only $2560.00 by way of these Third Party Debt Notices. The Wife contended, and was not challenged on it, at the enforcement hearing that if “repayment” of the debt continued at the rate set out in the said Notice (i.e. $400 per fortnight) it would take in excess of 12 years to discharge the principal sum alone – excluding interest and costs.
[1] Simply for ease of reference, for the purposes of these reasons, I will refer to the parties as Wife and Husband.
Procedural History/Background
Without going into the detail of the matters set out in the primary judgment of March 2017, it is sufficient to note here that the BFA recorded (at Recital K) that the Wife loaned the Husband the sum of $121,848.25 for the operating expenses of his property, Ederveen. It was also recorded in the judgment that, on the facts there outlined, the Husband has patently had the benefit of funds provided to him by the Wife, but she has had the greatest difficulty in recouping/recovering them from him. Had he been successful in the principal proceeding to have the BFA declared “not binding”, he would patently have “had his cake [the funds from the Wife] and continue eating it too [not having to repay the loan]”. I should also record – again – that the Husband’s evidence at trial was that had he received the sale price he hoped for and expected for his property, and had he received an insurance payout he also hoped for and expected (neither of which bore the fruit of his expectation), he would not have sought to set aside the BFA. Genuinely, this was a case of an ex post facto attempt to dishonour his clear obligations to the Wife. Among other things, in my view, his actions were then, and remain, dishonourable.
Put another way, he has sought through every means possible, including to besmirch one of his earlier, ever-growing list of former lawyers (whose unchallenged evidence was that he had not been paid his fees by the de facto Husband), to evade his responsibilities to his former de facto Wife. He had the use of her money. She was declared by the Court to be entitled to have it back. She continues to expend money to recoup it. The Husband continues to resist every attempt to re-pay it.
The current proceeding is the Wife’s further attempt to have the judgment made in her favour in March 2017 enforced. It is important, for the reasons that follow, to reinforce or to emphasise that the current matter before the Court is an enforcement proceeding; it is not, as essentially argued by the Husband, a proceeding pursuant to s.79 of the Act, in which either party seeks Orders in relation to the division of property of the relationship, which includes the division of superannuation. Accordingly, (a) considerations of “justice and equity”, which otherwise attend the division of property pursuant to s.79 of the Act, have no application here, and (b) the proceeding is governed by the Federal Circuit Court Rules2001 (“the Rules”) that relate to enforcement, notably r.25B.11 which relates to “enforcing an obligation to pay money.” That is all, and precisely, what the Wife is seeking to achieve here. In the course of the hearing, once this jurisdictional basis for the proceeding was pointed out, Counsel for the Husband seemed to concede that his jurisdictional objection to the proceeding necessarily fell away.
In March 2018, the Husband wrote to the Trustee to pose a series of questions. The Trustee responded in terms which, the Husband contends, at least indicate that the use of his superannuation to satisfy the judgment debt against him is not possible because it is in the “payment phase.”[2] Among other things, the Trustee’s response to the Husband confirms that, under s.119 of the Superannuation Act 1976 (Cth), a Court may request the Trustee to “attach” his superannuation for the purpose of satisfying a debt.
[2] A copy of that earlier letter, dated 7th March 2018, is annexed to the Husband’s Affidavit, filed 7th August 2018.
The Wife seeks to have the Third Party Debt Notice discharged (pursuant to Rule 25B.15) and an Order made for the transfer of property, being the relevant interest in the Husband’s Super Fund 1 (“the Super Fund 1”), pursuant to Rule 25B.61. The Trustee of the Super Fund 1 was notified of the Wife’s proposed Orders; the Trustee confirmed in writing that there is no objection to the proposed Orders.[3]
[3] A copy of the letter from the Trustee, dated 9th July 2018, is annexed to an Affidavit of Ms McCabe, filed 1st August 2018.
The Husband (a) acknowledges the debt he owes the Wife, but (b) says that his only asset is his superannuation, which is in the payment phase. As such, he contends that this Court is (in my words) neutered and without relevant power to make any Order in relation to his superannuation. Respectfully, I disagree. The Orders as sought by the Wife, including a further Order for costs, will be made for the following reasons.
Minute of Orders Sought by Applicant
The Applicant Wife’s Minute of Orders Sought, filed 3rd August 2018, were as follows:
APPLICANT’S MINUTE OF ORDERS SOUGHT
1) That the Third Party Debt Notice dated 26 July 2017 addressed to the Super Fund 1 in favour of Ms Cummings be discharged.
2) That in accordance with paragraph 90MT(1)(b) of the Family Law Act 1975:
a) Ms Cummings is entitled to be paid the specified percentage out of Mr Warner’s interest in the Super Fund 1 (“Super Fund 1”);
b)The said Mr Warner’s entitlement is correspondingly reduced by force of this order; and
c)The specified percentage for the purpose of this Order is 38.94%.
3)The Trustee of the Super Fund 1 do all such acts and things and sign all documents as may be necessary to:
a)Calculate, in accordance with the requirements of the Family Law Act 1975 and the Family Law (Superannuation) Regulations 2001, the entitlement awarded to Ms Cummings in the immediately preceding clause of this Order; and
b) Pay the entitlement whenever the trustee makes a splittable payment from Mr Warner’s interest in the Super Fund 1.
4) Orders 2 and 3 have effect from the operative time and the operative time is 4 business days after service of a sealed copy of the sealed orders.
Minute of Orders Sought by Respondent
The Respondent Husband simply sought that the Enforcement Application be dismissed and an Order for costs made in his favour. Respectfully, in the circumstances where the Respondent has persistently denied his responsibilities and forced the Applicant to pursue every avenue to bring him to account, simply to recoup funds that she lent to him during the relationship and of which he had the full benefit, the Respondent seeking, among other things, an Order for “costs” is rather breath-taking. Figuratively at least, it is salt in the Wife’s long-standing wounds.
The Applicant’s Evidence
The Applicant’s evidence was set out in the following documents:
(a)Affidavit of Ms Cummings, filed 13th December 2017. This Affidavit set out the attempts to recoup funds via Third Party Debt Notices, as well as the costs she has incurred in the proceedings thus far ($47,395) and doubtless growing. The Affidavit also noted (at par.24) that, according to advice received from a noted superannuation expert, Mr S (who filed an Affidavit on the Applicant’s behalf – noted below), the amount that is sought by the Applicant would constitute only a percentage split of the Respondent’s superannuation of 25.47%;
(b)Affidavit of Ms Cummings, filed 30th July 2018, which updated, among other things, the amount of costs she has incurred in attempting the recoup the funds owing to her pursuant to the judgment entered in her favour on 10th March 2017;
(c)Affidavit of Mr S, filed 27th July 2018, which presented a Report that valued the Respondent’s superannuation, as assessed a “split” of that superannuation as a result or in consequences of these enforcement proceedings. Further, Mr S confirmed that (a) it is not possible to commute a pension in its payment phase to a lump sum, and (b) the Orders sought by the Applicant will result in “pensions” for both parties. Mr S also noted in his Report that should the Respondent die, there would be no reversionary pension to the Applicant. For all relevant purposes, notably his experience and expertise as set out in his Affidavit, Mr S must be regarded as an expert in all matters “superannuation.” He will be so treated here. Moreover, there is no evidence provided by the Respondent to challenge Mr S’s evidence;
(d)Affidavit of Ms McCabe, filed 1st August 2018. This Affidavit from the Wife’s solicitor, attached correspondence from the Super Fund 1 confirming that the Trustee of Super Fund 1 would have no objection to the Orders sought by the Applicant.
The Respondent’s Evidence
The Respondent’s evidence was limited to an Affidavit, filed 7th August 2018, which attached correspondence from the Super Fund 1 (“Super Fund 1”) and its response to a series of questions put to it by the Respondent Husband.
Leaving to one side that all of the questions posed by the Husband refer to Orders made by (or sought in) the “Family Court” (there have never been proceedings in that Court in this matter), it is sufficient to note the following from that letter from Super Fund 1.
The first question (para-phrased) sought advice as to whether the obligations owed to the Husband can be “overridden by a Court Order. To this the Super Fund 1 said that only a “splitting Order” under Part VIIIB of the Family Law Act 1975 could achieve such a split, and that under s.118 of the Superannuation Act1976, the Husband’s pension cannot be assigned or charged.
The second question posed, theoretically, what impact (if any) a Court order might make if to do so would cause “severe financial distress” to the Super Fund 1 member. Because this is a theoretical issue, and because not all the facts and circumstances was provided to the Super Fund 1, the “advice” from Super Fund 1 need not be considered.
The same comment applies to the third issue raised by the Husband, where he inquired if any representative of Super Fund 1 would attend Court to confirm its view regarding the Husband possible “severe financial hardship.” No further comment is necessary.
The fourth “question” posed by the Husband to Super Fund 1 was whether a “civil debt can be demanded from Super Fund 1?” To this, Super Fund 1 simply said “yes” and referred to its earlier comments as well as to s.119 of the Superannuation Act and the exercise of a general discretion and the criterion used in this regard.
The fifth question posed by the Husband to Super Fund 1 related to whether, upon his death, any relevant benefit passed to his former Wife. In all of the circumstances, I do not need to outline here the detailed response. I simply refer to the comments by Super Fund 1 in the letter annexed to this Affidavit.
The final question posed to Super Fund 1 was whether “this type of Family Court [sic] matter has ever previously been used to extract default payment from a member’s superannuation …” pursuant to a financial agreement or Court Order? Super Fund 1 simply replied that s.119 of the Superannuation Act “can be utilised by any judgment creditor, including in family law proceedings.
Applicant’s Submissions
The Applicant’s Submissions, filed 8th March 2018, were as follows:
APPLICANT’S OUTLINE OF SUBMISSIONS
1) The parties entered into a Part VIIIAB Binding Financial Agreement. On 10 March 2017, Orders and Declarations were made inter alia, upholding the Agreement as a Part VIIIAB Financial Agreement pursuant to the Family Law Act, declared it binding pursuant to s90UJ(1B) and ordering payment of the principal sum plus interest and costs.
2) The Respondent has made no efforts to comply with the order, notwithstanding demands. It is clear that the Respondent has contravened the order (112AB). The orders sought are to remedy such contravention (112AK).
3) Pursuant to section 90UN of the Family Law Act, financial agreements can be enforced as if the provisions of the agreement were orders of the court. Insofar as it may be necessary, the Applicant seeks an order pursuant to section 90UN for the provisions of the financial agreement to be treated as an order of the court, noting His Honour’s decree for payment of the due amount plus interest and costs. All of the enforcement methods contained in the Rules are accordingly available to the Applicant.
4) Following non-compliance with the Order by the Respondent to pay the amount ordered, the Applicant sought enforcement of the order, by way of Third Party Debt Notices.
5) Pursuant to such Notice to the Super Fund 1, the Applicant has received in total payments (from the date of order to the date of this hearing on 8 August 2018) of $2,560. This sum was initially being repaid at $80 per fortnight. The last three payments have been made at $400 per fortnight. The payments will cease upon the Respondent’s death.
6) If the amount were to continue to be paid at the revised sum of $400 per fortnight, it would take in excess of 12 years to discharge the principal sum alone (excluding interest and costs). The amount currently being paid is only slightly more than the interest amount that is accruing in accordance with the order. The effect is the judgement amount is never likely to be paid. The Respondent has disclosed no other asset from which the Applicant can recover the judgement sum.
7) The Application is to discharge the Debt Notice and an order is sought for the transfer of property (being the relevant interest in the Super Fund 1) relying on the evidence filed, including the valuation evidence of Mr S. The Trustee of Super Fund 1 was notified of the proposed Orders and has no objection to the proposed Orders.
8) If the Respondent were to die, the entirety of his superannuation pension benefit, in the absence of a splitting order, would cease to be payable. If this were to occur, the Applicant would not ever receive the fruits of her litigation.
9) Pursuant to section 90MC, superannuation is to be treated as property.
10) The Applicant seeks enforcement of the Orders dated 10 March 2017 by way of enforcement pursuant to section 105 of the Family Law Act and relies upon the General Powers of the Court at s90SS(k).
11) The Applicant relies upon the authority of Pera & Pera [2008] FamCAFC 87.
12) At paragraph 135 of the Judgment dated 10 March 2017, His Honour makes the observation: “Clearly the [Respondent] has the benefit of those funds. He should not now be permitted to renege on his agreement, long-discussed, with the [Applicant] as recorded in the Agreement… He had (or ate) his cake, so to speak, over a number of years in the benefits from the use of the funds provided by the [Applicant]. He cannot [now] still have that cake by denying and otherwise disowning his responsibility to pay what he has agreed to make to the [Applicant]. The day of “accounting” for the loan, reflected in the Agreement, has now come; it must be honoured by the [Respondent].”
13) The orders are necessary to do justice. Without making the Orders sought, the Respondent will successfully defeat compliance with the Orders of this Honourable Court unless the Applicant makes an application to set aside the agreement and the matter is again re-litigated.
14) The Applicant seeks her costs as set out in the schedule.
Respondent’s Submissions
The Respondent’s Submissions, filed 8th March 2018, were as follows:
1. SUMMARY OF PROCEEDINGS
1) The Applicant and Respondent cohabitated for approximately 5 years from July 2007 to June 2012. The couple entered into a Binding Financial Arrangement (BFA) after separation on 15 July 2013.
2) The Respondent applied to have the BFA set aside. This application was unsuccessful with a Judgement delivered on 10 March 2017 that the BFA was upheld.
3) On 4 July two Third Party Debt Notices were granted against two banks. Both ultimately held no funds. On 26 July a Third Party Debt Notice was directed to the respondents Superannuation scheme. As per applicant’s affidavit 27 July 2018 the Super fund determined to pay the applicant $80 per fortnight. (paragraph 11(d)). This was subsequently increased to $400 per fortnight.
4) The applicant seeks a splitting order pursuant to 90MT(1)(b) as enforcement of the debt owed to the applicant.
5) The respondent submits the court lacks the jurisdiction to make such an order and accordingly seeks the application be dismissed.
2. DOCUMENTS
2(i) DOCUMENTS RELIED ON BY THE RESPONDENT - DATED
1. Response 02AUG18
2. Affidavit of Mr Warner 02AUG18
2(ii) DOCUMENTS SERVED BY THE APPLICANT - DATED
1. Initiating Application 13DEC17
2. Affidavit of Ms Cummings 12DEC17
3. Affidavit of Mr K 03JUL17
4. Third Party Debt Notice 04JUL17
5. Affidavit of Ms Cummings 27JUL17
6. Affidavit of Mr S 27JUL17
3. CHRONOLOGY
A - Applicant's affidavit - affirmed 27 July 2018
DATE
EVENT
REF
1949
Respondent – Mr Warner Born – aged 69 years
A2
1952
Applicant – Ms Cummings Born – aged 65
A1
2007
Relationship started
A3
JUN12
Relationship ended
A3
15JUN13
Binding Financial Agreement (BFA)
A7
12NOV15
Respondent commenced proceedings to have BFA set aside
A8
10MAR17
BFA upheld
A10
04JUL17
Third Party Debt Notice granted by FCC – directed at two banks
A11(b)
26JUL17
Third Party Debt Notice granted by FCC – directed at respondent’s superannuation fund
A11(c)
27OCT17
Respondent’s superannuation fund responds to debt notice by agreeing to pay $80 per fortnight
A11
20JUN18
Respondent’s superannuation fund responds to debt notice review by agreeing to pay $400 per fortnight
A12
12DEC17
Applicant commences proceedings for a “Super Splitting” order
4. MINUTE OF PROPOSED ORDERS
1) The Applicant’s proposed orders are set out in the initiating application filed 13DEC17.
2) The Respondent seeks that the application is dismissed and costs are ordered.
5. LEGISLATIVE PATHWAY
Unsplittable Interest
1) The Applicant seeks a “Super Splitting” order pursuant to s 90MT(1)(b) of the Family Law Act 1975.
2) 90MT(1) is set out as follows:
A court, in accordance with section 90MS, may make the following orders in relation to a superannuation interest (other than an unsplittable interest): (emphasis not in original)
It is submitted that it is clear that for the Court to have power under s 90MT that the superannuation interest must not be “unsplittable”.
3) The Family Law (Superannuation) Regulations 2001 at Regulation 11 sets out the meaning of Unsplittable as follows:
(1) Subject to subregulation (2), for the definition of unsplittable interest in section 90MD of the Act, a superannuation interest of a member spouse described in subregulation (1A) or (1B) is prescribed.
(1A) For subregulation (1), the superannuation interest of the member spouse must be:
(a) an interest other than 1in respect of which the whole or remaining part of the benefits are being paid to the member spouse as:
(i) a lifetime pension or fixed‑term pension that the member is no longer entitled to commute; or
(ii) a lifetime annuity or fixed‑term annuity; and
(b) an interest with a withdrawal benefit in relation to the member spouse of less than $5 000.
(1B) For subregulation (1), the superannuation interest of the member spouse must be an interest in respect of which:
(a) the whole or remaining part of the benefits are being paid to the member spouse as:
(i) a lifetime pension or fixed‑term pension that the member is no longer entitled to commute; or
(ii) a lifetime annuity or fixed‑term annuity; and
(b) the amount of the annual benefit payable to the member is less than $2,000.
(2) This regulation does not apply to any of the following superannuation interests:
(a) a superannuation interest in the Judges’ Pensions Act Scheme;
(b) a superannuation interest in the scheme provided under the Judges’ Pensions Act 1971 of South Australia.
It is submitted that since the respondents super is in the pension stage and can’t be “commuted” that therefore his superannuation interest is unsplittable and unable to be dealt with pursuant to s 90MT.
ENLIVENING 90MT and BINDING FINANCIAL AGREEMENTS
4) Orders under s90MT require the Court to be exercising a power pursuant to s90MS.
5) s90MS requires the Court to be making an order pursuant to either s79 or s90SM
6) There are no orders of the Court pursuant to either s79 or s90SM (noting that the BFA that was utilised to finalise property matters, and that BFA was found to be binding on the parties pursuant to order 1 and 2 of the orders dated 10 March 2017, and in circumstances where a BFA is utilised the court does not make orders pursuant to s79 of s90SM).
7) It is submitted that the general principal [sic] with binding financial agreements is that they are a complete resolution of property matters arising between the parties on the breakdown of a relationship. Nothing in this matter suggests that there was any intention of the parties to deviate from that position, with the executed BFA being found to be binding on the parties by the Court.
THIRD PARTY DEBT NOTICE AND ENFORCEMENT
8) It is submitted that the applicant has exercised all her remedies available to her by making the Third Party Debt Notice application to Super Fund 1 and received the benefit of the maximum allocation of superannuation entitlement available to her at law.
SUMMARY
9) It is submitted that there does appear to be scope under s90UN(c) for the Court to enforce a part of an agreement as though it were an order of the Court. This may be the basis which the applicant is seeking to enliven the jurisdiction of the Court. However, it is submitted that given there is no scope for a “splitting order” in the BFA the order sought does not seem to be an order that the Court can then enforce.
10) For the above reasons it is submitted the orders sought by the respondent should be made.
Consideration and disposition
Subject to what is said later in these reasons, it is apposite to deal firstly with the issue of “jurisdiction” given that the Husband primarily argued that because the Wife sought a “splitting Order”, the Court had no relevant jurisdiction to make such an Order in the circumstances. This is also in circumstances, where, as earlier noted, once reference was made to Rule 25B of this Court’s Rules, which relate to “enforcement”, the Husband’s Counsel seemed to concede that the Court did have jurisdiction to entertain the Wife’s Application.
In Yunghanns v Yunghanns, the Full Court considered at some length the distinction between the jurisdiction of the Court to make Orders, and the actual making of those Orders.[4] For example, firstly at [99], the Full Court said (emphasis in original):
Those related but different issues are: does the Court have jurisdiction to entertain the proceedings? and does the Court have jurisdiction to make the orders sought in the proceedings?
[4] Yunghanns v Yunghanns (1999) 24 Fam LR 400.
In more detail, at [109], the Full Court set out a number of principles, the most relevant of which are set out below:
109. Before proceeding further, we think it may be useful to summarise what we see as being the essential principles, relative to the determination of this appeal, arising from the decisions of the High Court in R v Ross-Jones, ex parte Green and D.M.W. v C.G.W. (both supra). Those essential principles, we perceive, to be:-
(1) Before making orders in proceedings (including interlocutory orders) the Family Court of Australia, as a court of limited jurisdiction, must be satisfied:
(a) that it has jurisdiction to make those orders in the proceedings;
and
(b) that it is appropriate to exercise that jurisdiction by making those orders on the facts of the case as then known to it.
(2) The Court always has jurisdiction to entertain proceedings for the purpose of and up to the point of deciding whether it has jurisdiction to make the orders sought in the proceedings.
(3) In carrying out that limited exercise of jurisdiction, the Court is required to determine any essential facts upon which the existence of its jurisdiction to make the orders sought ultimately depends (“the jurisdictional facts”). That determination is a function which is incidental to the exercise of the jurisdiction referred to in (2) above.
(4) Where, from the very nature of the proceedings and the relief claimed, the substantive proceedings prima facie fall within the definition of “matrimonial cause” in s.4(1) of the Act, the jurisdiction to determine the jurisdictional facts, as an incident of determining whether it has jurisdiction to make the orders, is itself a matrimonial cause, and therefore within the exclusive jurisdiction of the Court.
(5) There is a distinction between the jurisdictional facts, as defined under (3), above, and the facts the existence of which it is necessary to establish in order to entitle the applicant (subject to discretionary considerations) to an exercise in his or her favour of the jurisdiction which the Court has (“the adjudicational facts”).
(6) Once a respondent challenges the Court’s jurisdiction to make the orders sought, the Court, before considering the adjudicational facts, must find the existence of the jurisdictional facts, on the balance of probabilities…In the current matter, there can be no dispute regarding the “adjudicational facts” simply because they are set out in the judgment delivered by this Court on 10th March 2017. There was no appeal lodged in relation to it. As for “jurisdictional facts”, I note the following in support of my view that the Court relevantly has jurisdiction to make the Orders sought by the Applicant.
First, it will be recalled (and observed) that the Applicant’s submissions detail many sections of the Act upon which the Court is entitled to grant relief by way of enforcement. For example, s.105(1) of the Act provides:
Subject to this Part, to the regulations and to the applicable Rules of Court, all decrees made under this Act may be enforced by any Court having jurisdiction under this Act.
“Decree” is defined in s.4 of the Act as “decree, judgment or order.” Clearly, in the present case, there is a “judgment” and there are “Orders.”
Secondly, s.90MC of the Act confirms that superannuation is relevantly treated as “property” for the purposes of the Act.
Thirdly, s.90SS(1)(k) and (l) are in the following terms:
The Court, in exercising its powers under this Division [Part VIIIAB, Subdivision E], may do any or all of the following:
(k) make any other Order, or grant any other injunction … which it thinks it is necessary to make to do justice;
(l) subject to this Act and the applicable Rules of Court, make an Order under this Division at any time before or after the making of a decree under another provision of this Act.
In her submissions, the Applicant relied upon each of the provisions noted except s.90SS(1)(l).
Fourthly, in addition to the sections already noted, in the course of the hearing, I noted to the Respondent’s Counsel the wide terms of Rule 25B.11 of the Federal Circuit Court Rules 2001. That Rule provides:
An obligation to pay money may be enforced by one or more of the following enforcement orders:
(a) an order for seizure and sale of real or personal property, including under an Enforcement Warrant (see Subdivision 25B.2.3);
(b) an order for the attachment of earnings and debts, including under a Third Party Debt Notice (see Subdivision 25B.2.4);
(c) an order for sequestration of property (see Subdivision 25B.2.5);
(d) an order appointing a receiver (or a receiver and manager) (see Subdivision 25B.2.6).
Note: The Court may imprison a person for failure to comply with an order (see section 112AD of the Family Law Act). Division 25B.1 sets out the relevant procedure.
Further, I note the wide general powers of the Court set out in Rule 25B.13, which provides as follows:
General enforcement powers of Court
The Court may make any of the following orders:
(a) an order declaring the total amount owing under an obligation;
(b) an order that the total amount owing must be paid in full or by instalments and when the amount must be paid;
(ba) an order for payment under rule 25B.09;
(c) an order for enforcement (see rule 25B.11);
(d) an order in aid of the enforcement of an obligation;
(e) an order to prevent the dissipation or wasting of property;
(f) an order for costs;
(g) an order staying the enforcement of an obligation (including an enforcement order);
(h) an order requiring the payer to attend an enforcement hearing;
(i) an order requiring a party to give further information or evidence;
(j) an order that a payer must file a financial statement;
(k) an order that a payer must produce documents for inspection by the Court;
(l) an order dismissing an application;
(m) an order varying, suspending or discharging an enforcement order.
Rule 25B.13 clearly provides for wide powers (if any more be needed) to make Orders regarding costs, and Orders to “aid the enforcement of an obligation.”
In my view, as the statutory provisions outlined above make clear, there are many bases upon which the Court relevantly has “jurisdiction” to enforce the judgment and the Orders made by this Court on 10th March 2017.
As already noted, fairly and properly, when the terms of Rule 25B.11 were pointed out to the Respondent’s Counsel, he conceded that the Court had relevant jurisdiction to deal with the Application.
In addition to the above, I note the following comments from the Full Court judgment in Pera v Pera, which was relied upon by the Applicant Wife.[5] That matter involved issues of enforcement that also included dealing with a superannuation fund. Firstly, at [52], the Full Court said (emphasis added):
It is not in doubt that the Court, being a court exercising jurisdiction under the Act, had jurisdiction by reason of s 8(1) in respect of a matrimonial cause, and that jurisdiction could not be exercised by a State court. The Court also had, in the exercise of its discretion, power to make consequential orders.
[5] Pera v Pera (2008) 218 FLR 222; (2009) 39 Fam LR 469. For other general consideration and discussion regarding enforcement, including costs, see the extensive discussion in Stephens v Stephens (2010) 42 Fam LR 423.
Then at [54], the Full Court said (emphasis added):
In summary, we conclude that the Court had jurisdiction to deal with the superannuation fund; the parties treated their respective superannuation interests as property in the consent orders, altered the husband’s interest in his superannuation fund by transferring paintings to the wife and by the transfer of shares by the wife to the fund. The trustee was not affected by the s 79 orders (or the consequential orders) and did not need to be joined to the proceedings, and if the proceedings were by way of enforcement (which is unnecessary for us to determine), or were consequential orders, there was power to make such orders.
Obviously, the only points of difference here are that s.79 of the Act is not the section in question, and no consent Orders are in play.
In the light of the sections of the Act, the Rules of this Court, and the decisions of the Full Court, outlined above, in my view the Court plainly has jurisdiction in relation to the current Application filed by the Applicant on 13th December 2017.
Given the lack of evidence filed by the Respondent (other than what is referred to earlier in these reasons) in relation to the proper exercise of this Court’s discretion, in my view,
(a)The Applicant is entitled to the benefit of the judgment entered in her favour on 10th March 2017;
(b)In the light of the unchallenged evidence of the expert, Mr S, the percentage amount to satisfy the judgment from the Respondent’s superannuation is relatively modest (thereby satisfying, if such be needed, any discretionary consideration regarding “hardship”, which the Wife has continued to suffer in any event by having to pursue the Husband to recover the money owed to her in addition to her own limited means);
(c)It is especially noteworthy that, should the Respondent die (I do not suggest that there is any evidence to indicate that this is likely to happen any time soon), on Mr S’s evidence, the Applicant will receive nothing from his superannuation and therefore the utility of the 2017 judgment will have been lost (not to mention the further costs she has incurred in seeking to enforce it);
(d)The later correspondence from the Trustee of Super Fund 1 to the Applicant’s lawyers, and notably that the Trustee had before it a copy of the Orders Sought, confirm that there is no impediment to them being made.
Otherwise, I accept the submissions filed on behalf of the Applicant.
I should also note the following matters in relation to the Respondent’s submissions.
First, the Respondent basically relies upon 3 different sections of the Act – ss.90MS, 90MT, and 90UN(c). The first two sections referred to relate to the making of Orders under either s.79 or s.90SM regarding “payment splitting” or “flagging by Court Order.” These two sections (90MS and 90MT) are in Part VIIIB, which Part deals with “superannuation interests.” Section 90UN(c) relates to “the validity, enforceability and effect of financial agreements and termination agreements.”
Respectfully, each of these sections is not directly “on point” for the simple reason that the current Application relates to the enforcement of a judgment.
Further, as already noted, whatever the questions put to the Trustee of Super Fund 1 by the Respondent, the fact that the Applicant provided the Trustee with a copy of her Orders sought, and the Trustee expressed no difficulty with them, must, in my view, put beyond doubt that the enforcement of the judgment, pursuant to the Orders sought by the Applicant, by way of accessing the Respondent’s superannuation interests, is both permissible and proper in the circumstances.
For these reasons, the Orders sought by the Applicant should be made. Indeed, although I have made similar observations a number of times before, in my view it would be unconscionable for the Respondent Husband to have had the benefit of the funds lent to him by the Applicant Wife during their relationship, and now escape his responsibility to repay them to her. For the same reasons, the Applicant should have an Order for costs for all of the trouble and expense she has necessarily incurred in seeking to have returned to her what is rightfully hers.
The Applicant also sought that the current (or any) Third Party Debt Notice be discharged. That Order should also be made. This would obviously be on the basis that, given the different route sought by her (and now granted by the Court) to access the Respondent’s superannuation, it is now otiose to pursue the completely incremental recovery that has hitherto barely made a dent in the amount due and payable to the Applicant.
Having regard to the prescriptions and proscriptions of s.117 of the Act, I must make a brief comment regarding the award of costs. I do so by reference to the comments of the Full Court in Stephens v Stephens.[6] At [62] – [73], the Full Court said:
[6] Stephens v Stephens (Costs) (2011) 44 Fam LR 117.
[62]Section 117(1) of the Act provides: “[s]ubject to subsection (2), subsection 70NFB(1) and sections 117AA, 117AB, 117AC and 118, each party to proceedings under this Act shall bear his or her own costs.”
[63]Section 117(2) of the Act provides that if, in proceedings under the Act, the court is of opinion that there are circumstances that justify it in doing so, it may, subject to sub-ss (2A), (4) and (5), and the applicable rules, make such order as to costs, whether by way of interlocutory order or otherwise, as it considers just.
[64]Section 117(2A) of the Act provides that in considering what order (if any) should be made under s.117(2), the court shall have regard to the matters set out in paragraphs (a) to (g). In Fitzgerald (as child representative for A (Legal Aid Commission of Tasmania)) v Fish and Another (2005) 33 Fam LR 123 the Full Court (Kay, Warnick and Boland JJ), referring to s.117(2A), said at 130:
[41]A number of factors are then listed in the subparagraphs. The financial circumstances of each of the parties to the proceedings is the first mentioned factor. Nowhere in subs (2A) or elsewhere in s.117, is there any prescription that more than one factor must be present before an order for costs is made nor of comparative weight of the factors set out in subs (2A). As a consequence, there is nothing to prevent any factor being the sole foundation for an order for costs.
[65] As to the relationship between 1.117(1) and s.117(2) of the Act in Penfold v Penfold (1980) 144 CLR 311, in joint reasons, Stephen, Mason, Aickin and Wilson JJ said at 315:
It is an accurate description of s.117(1) to say that it expresses a general rule, provided that it is firmly understood that the sub-section is not paramount to s.117(2). As sub-s. (1) is expressed to be subject to sub-s. (2) the former must yield whenever a judge finds in a particular case that there are circumstances justifying the making of an order for costs.
Sub-section (2) requires a finding of justifying circumstances as an essential preliminary to the making of an order. Beyond this there is nothing in the subject matter or in the interrelationship of the two provisions which imposes any additional or special onus on an applicant for an order for costs. Consequently, with respect to their Honours in the Family Court, we do not agree with the suggestion made in the judgment under appeal that an order can only be made under s.117(2) in “a clear case”. (emphasis added)
[66] As to the nature of the hearing of an application pursuant to s.117 of the Act in Penfold their Honours said at 315-16:
Sub-section (2) does not in our view as a matter of law require the judge to specify the circumstances which justify the making of an order. It does not expressly say so, and in the context of the making of an order for costs there is no sufficient basis for making an implication. Judges very frequently make orders for costs without giving reasons or making findings, even when costs are in issue. The absence of reasons or findings does not in itself indicate that a judge has erroneously exercised his discretion to award costs, though it will place an appellate court in the position of examining the circumstances and of determining for itself whether the circumstances show that the discretion was erroneously exercised (Kent v. Kent [1970] 3 NSWR 229). Accordingly, in the absence of some positive legislative indication we should not attribute to Parliament the requirement that a judge must make particular findings in relation to an order for costs.
[67] We also observe that in Re JJT; Ex parte Victoria Legal Aid (1998) 195 CLR 184 the majority of the High Court (Gaudron, Gummow, Hayne and Callinan JJ, Kirby J dissenting) held that s.117(2) of the Act referred to costs in the conventional sense and thus to the payment by one party to litigation of money by way of a partial indemnity for professional legal fees and expenses actually incurred by another party in the course of the litigation: see Hayne J at 219. An order for costs is made to compensate a party against expense incurred in litigation and is not punitive in nature. Costs are not a penalty or damages: Latoudis v Casey (1990) 170 CLR 534 per Mason CJ at 543 and McHugh J at 567; Ruddock and Ors v Vadarlis and Ors (2001) 115 FCR 229 per Full Court of the Federal Court at [12] and Brott and Joachim (2006) 35 Fam LR 222; (2006) FLC 93-259 per Full Court (Holden, Warnick and Boland JJ) at 80,403-404.
[68] There are various relevant machinery provisions in Part 19 of the Rules. Part 19.08 provides:
(1) A party may apply for an order that another person pay costs.
(2) An application for costs may be made:
(a) at any stage during a case; or
(b) by filing an Application in a Case within 28 days after the final order is made.
(3) A party applying for an order for costs on an indemnity basis must inform the court if the party is bound by a costs agreement in relation to those costs and, if so, the terms of the costs agreement.
Note 1 The court may make an order for costs on its own initiative (see rule 1.10)
Note 2 A party may apply for an order for costs within 28 days after the filing of a notice of discontinuance by the other party (see subrule 10.11 (4)).
Note 3 A party may apply for an extension of time to make an application (see rule 1.14)
(4) In making an order for costs, the court may set a time for payment of the costs that may be before the case is finished.
[69]Rule 19.11 of the Rules provides:
(1) Before making an order for costs against a lawyer or other person who is not a party to a case, the court must give the lawyer or other person a reasonable opportunity to be heard.
(2) If a party who is represented by a lawyer is not present when an order is made that costs are to be paid by the party or the party’s lawyer, the party’s lawyer must give the party written notice of the order and an explanation of the reason for the order.
[70]Part 19.5 of the Rules deals with the calculation of costs. Rule 19.18 provides:
(1) The court may order that a party is entitled to costs:
(a) of a specific amount;
(b) as assessed on a particular basis (eg lawyer and client, party/party or indemnity);
(c) to be calculated in accordance with the method stated in the order; or
(d) for part of the case, or part of an amount, assessed in accordance with Schedule 3.
Example
For paragraph (1) (c), the stated method may be in accordance with Schedule 3 but with an additional percentage for complexity.
(2) If costs are payable under the Act or these Rules, or the court orders that costs be paid and does not specify the method for their calculation, the costs are to be assessed on a party/party basis.
(3) In making an order under subrule (1), the court may consider:
(a) the importance, complexity or difficulty of the issues;
(b) the reasonableness of each party’s behaviour in the case;
(c) the rates ordinarily payable to lawyers in comparable cases;
(d) whether a lawyer’s conduct has been improper or unreasonable;
(e) the time properly spent on the case, or in complying with pre-action procedures; and
(f) expenses properly paid or payable.
[71]Rule 19.19 of the Rules provides:
(1) This rule sets out the maximum amount of party/party costs a person may recover:
(a) if the court orders that costs are to be paid and does not fix the amount; and
(b) if a person is entitled to costs under these Rules.
(2) The maximum amount of costs that a person may recover under this rule is as follows:
(a) for fees — an amount calculated in accordance with Schedules 3 and 4;
(b) for an expense mentioned in Schedule 4 (other than item 101) — the amount specified in Schedule 4 for that expense;
(c) for any other expenses — a reasonable amount.
Note This Division provides that, if an account payable by a person is not in an itemised form, the person has the right to request an itemised account (an "itemised costs account"). The person may then dispute the itemised costs account by following the procedures set out in this Division. A person may apply to extend the time for taking any action required under these Rules (see rule 1.14)
Indemnity Costs
[72] The Family Court has jurisdiction to make orders for indemnity costs: McAlpin and McAlpin (1993) FLC 92-411 per Full Court (Nicholson CJ and Maxwell J, Baker J dissenting); Kohan and Kohan (1993) FLC 92-340 per Full Court (Strauss, Lindenmayer and Bulley JJ); Munday v Bowman (1997) 22 Fam LR 321 per Holden J; Yunghanns & Ors v Yunghanns & Ors and Yunghanns (2000) 26 Fam LR 331 per Full Court (Lindenmayer and Holden JJ, Mullane J dissenting) and Limousin v Limousin (Costs) (2007) 38 Fam LR 478 per Full Court (Kay, Coleman and Boland JJ).
[73] An order for costs may be made on an indemnity basis, subject to a judicial determination capable of being made that there ought to be a departure from the usual basis that costs be payable on the party and party basis. For a discussion of the jurisdiction to order indemnity costs and its exercise see Colgate Palmolive Co and Another v Cussons Pty Ltd (1993) 46 FCR 225 per Sheppard J at 256-257 and NMFM Property Pty Ltd and Others v Citibank Ltd (No 2) (Court’s “NMFM” Judgment No 11) (2001) 109 FCR 77 per Lindgren J at [53] to [90].
Having regard to
(a)the factual history of the matter and the findings of the Court in the principal judgment in March 2017,
(b)the multiple attempts by the Applicant to seek to have the Respondent (or others on his behalf) satisfy the amount owed to her pursuant to the March 2017 judgment, and
(c)the unchallenged evidence of the Applicant referred to earlier in these reasons,
in my view an award of costs, on an indemnity basis, should be made in the Applicant’s favour. Those indemnity costs should be either agreed or formally assessed.
Put another way, in my view, the principles set out by Sheppard J in Colgate Palmolive v Cussons Pty Ltd have been readily satisfied.[7] The Applicant has done absolutely everything in her power to have the judgment in her favour satisfied. Unfortunately, the Respondent has done almost everything in his power to stymie the Applicant, first by opportunistically contesting the validity of the binding financial agreement the parties signed, and secondly, by resisting every subsequent attempt by the Applicant Wife to seek to have the significant loan she provided to the Respondent Husband re-paid.
[7] Colgate Palmolive v Cussons Pty Ltd (1993) 46 FCR 225 at pp.232 – 234.
I certify that the preceding fifty (50) paragraphs are a true copy of the reasons for judgment of Judge Neville
Date: 1 November 2018
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