Dace and Dace - [2012] FMCAfam 1298

FEDERAL MAGISTRATES COURT OF AUSTRALIA

DACE & DACE

[2012] FMCAfam 1298

FAMILY LAW – Property Adjustment – application to vary orders under s.79A – no grounds made out – application dismissed.

Family Law Act 1975, ss.79, 79A(1)(a), 79A(1)(b), 79A(1)(c)

In the Marriage of Cawthorn (1998) 23 Fam LR 86

Applicant:

THE ESTATE OF THE LATE MS DACE

Respondent:

MR DACE

File Number:

BRC 12064 of 2010

Judgment of:

Jarrett FM

Hearing date:

15 October 2012

Date of Last Submission:

15 October 2012

Delivered at:

Brisbane

Delivered on:

15 October 2012

REPRESENTATION

Counsel for the Applicant:

Mr Blond

Solicitors for the Applicant:

Attwood Marshall

Counsel for the Respondent:

Mr Gordon

Solicitors for the Respondent:

A K Abbott & Co

ORDERS

The executors of the Estate of the late MS DACE, namely MR J and MS K be appointed as the personal representatives of the applicant.
Otherwise all outstanding applications (whether contained in an application or a response) be dismissed.

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

FEDERAL MAGISTRATES
COURT OF AUSTRALIA
AT BRISBANE

BRC 12064 of 2010

THE ESTATE OF THE LATE MS DACE

Applicant

And

MR DACE

Respondent

REASONS FOR JUDGMENT

Ex tempore

On 26 September 2011 I made some orders by consent by way of property adjustment between Ms Dace and Mr Dace. Those orders are relatively lengthy.
Paragraph 1 of the orders is important. It records that:
1. The net assets of the Applicant Wife and Respondent husband agreed in the sum of $2,000,000.00 (plus such further sum if the properties at Property P1 & P2, sell for a sale price above $1,000,000.00) be distributed in the following proportions:
1.1 $960,000.00 to the Applicant Wife being 48% of $2,000,000.00 (plus 48% of the sale price of the properties at Property P1 & P2, above $1,000,000.00); and
1.2 $1,040,000.00 to the Respondent Husband being 52% of $2,000,000.00 (plus 52% of the sale price of the properties at Property P1 & P2, above $1,000,000.00).
Paragraph 2 of the orders provides that the wife was to receive her entitlement in a particular way:
2. The Wife’s entitlement pursuant to order 1.1 hereof be received by her in cash payable as to the sum of $75,000.00 by the Husband within 60 days of the date of this order and otherwise from the net proceeds of sale of the following properties:
2.1    Property A, in the State of Queensland (“the Property A”) and more particularly described as Lot (omitted) on Registered Plan (omitted), Title Reference (omitted).
2.2    Property C, in the State of Queensland (“the Property C”) and more particularly described as Lot (omitted) on Registered Plan (omitted), Title Reference (omitted)
2.3    Property P1 & P2, in the State of Queensland more particularly described as Lots (omitted) on Title references (omitted) (“the Property P1 & P2 properties”),
and any shortfall in the net sale proceeds be paid by the Husband to the Wife within 30 days of the last sale and any surplus net sale proceeds be paid to the Husband.
The orders are clear, the obligations are clear and the intent is, in my view, clear.
Paragraph 3 of the orders provides how the husband was to receive his entitlement and paragraph 3.1 and 3.2 set out in detail what he was to receive. Included in the items of property that he receives was a property at Property K, a time-share interest, the parties’ joint savings account, some shares and some other real property situated at Property C and Property T.
This application has come about because the parties have fallen into dispute about how to carry these orders into execution. Unfortunately, Ms Dace passed away soon after the orders were made and her executors, those nominated in the grant of probate to administer her estate upon her death, now apply to be joined to these proceedings for the purposes of this application.
The application for joinder is not opposed according to the response that has been filed by Mr Dace, and in those circumstances I will order that the executors of the estate of the late MS DACE, namely Mr J and Ms K be appointed as the personal representatives of the applicant for the purposes of these proceedings.
The orders sought by the legal personal representatives, those that are now parties to the action, are that the executors be entitled to sell Property A and Property P1 & P2 so as to realise Ms Dace’s entitlement, or her estate’s entitlement, under the property adjustment orders. It is suggested that a regime for the sale of those properties be ordered – see paragraph 3 of the application in the case – and then an order is sought requiring the husband to set out in affidavit form the steps that he has taken to comply with the orders that were made in September 2011 and any response that he has received from anybody that he may have had contact with, with a view to having those orders carried out. I am not going to pretend that I know what those last two orders are all about but it seems to me I do not need to know what they are all about because, on any view of it, I do not think that I should make that order.
The application by the executors is opposed by Mr Dace and by his response, he says that:
a)the orders 2, 3, 4 and 6 made on 26 September be “dismissed”;
b)the orders of 26 September, 2011 should be varied in that:
i)as agreed between the parties and as particularised in his affidavit the applicant retain the property at Property P1 & P2, free from mortgage at a value of $550,000; and
ii)the mortgage encumbering Property P1 & P2 should be discharged from the proceeds of sale of the property at Property A and the amount used to discharge the mortgage be deducted from the entitlement of the late Ms Dace pursuant to the orders of 26 September, 2011.
Some basal propositions ought to be stated. The first is that the orders between Mr and Ms Dace are property adjustment orders for the purposes of s.79 of the Family Law Act. Neither party suggested to the contrary and, as the authorities make clear, parties are only entitled to one set of s.79 orders. Accordingly, if one wishes to set aside, discharge or vary those orders in substance, there needs to be an application made under s.79A of the Family Law Act. I say in substance because the authorities draw a distinction between variations to an order which affect a change in the substance of them, and a change to the mechanical provisions of an order which are designed to assist its execution. The change to the former is impermissible; a change to the latter has always been permissible and, indeed, provisions in orders that provide for liberty to apply are traditionally directed towards such matters.
The change that Mr Dace seeks to have made to the orders is a change of substance, no mere mechanics are involved, and so he needs to rely on s.79A to succeed in his application. Section 79A is complex but his case focuses on ss.79A(1)(a), 1(b) and (1)(c). Section 79A(1)(a) provides that:
(1) Where, on application by a person affected by an order made by a court under s.79 in property settlement proceedings, the court is satisfied that:
(a) there has been a miscarriage of justice by reason of fraud, duress, suppression of evidence (including failure to disclose relevant information), the giving of false evidence or any other circumstance; or
…
the court may, in its discretion, vary the order or set the order aside and, if it considers appropriate, make another order under section 79 in substitution for the order so set aside.
The authorities make it clear that when a party relies on s.79A(1)(a) that party needs to point to a miscarriage of justice which has occurred by reason of the making of the orders. The old cases used to talk about a failure of process, fraud, suppression of evidence, during the lead-up to the making of the orders. Subsequent cases may have broadened that slightly but all of them are to the same effect, namely that the miscarriage of justice must occur by reason of the making of the orders, at the time the orders are made. Whether there is a miscarriage of justice is judged at the time of the making of the orders, not by reference to subsequent events.
The matters relied upon by Mr Dace in this case are all matters which have occurred after the making of the orders. Ms Dace’s demise, a failure in the property market, a reduction in property values and an agreement or an alleged agreement with Ms Dace’s executors about how the orders might be carried into effect are all matters which have arisen after the orders were made and which cannot be said to give rise to a miscarriage of justice when the orders were made. It is not suggested, for example, that the orders were based upon some failure to properly disclose by Ms Dace her financial circumstances, some failure to discharge her obligation of full and frank financial disclosure.
Section 79A(1)(b) provides that:
(1) Where, on application by a person affected by an order made by a court under s.79 in property settlement proceedings, the court is satisfied that:
…
(b) in the circumstances that have arisen since the order was made it is impracticable for the order to be carried out or impracticable for a part of the order to be carried out; or
…
the court may, in its discretion, vary the order or set the order aside and, if it considers appropriate, make another order under section 79 in substitution for the order so set aside.
Impracticability deals not with the desirability of the orders, nor, indeed, the justice and equity of the orders judged against the circumstances at the time of execution but rather whether the orders can be carried out. In the Marriage of Cawthorn (1998) 23 Fam LR 86, referred to in submissions, is such a case. It is clear form the Full Court’s judgment in Cawthorn that something more than a failure of the property market or disappointment in expectations about what one might receive under the orders when carried into execution is necessary to provide impracticability.
In the present case the orders can be carried out. They can be carried into execution. There is not something which prevents them from being carried into execution. It may be that the result, once they are carried into execution, disappoints one or other of the parties but that is not the test. There needs to be a demonstration in the evidence that the orders simply cannot be carried into effect. The evidence falls short in that respect. It is not demonstrated on the material that in the circumstances that have arisen since the order was made it is impracticable for the order to be carried out or impracticable for a part of the order to be carried out.
Section 79A(1)(c) provides that:
(1) Where, on application by a person affected by an order made by a court under s.79 in property settlement proceedings, the court is satisfied that:
…
(c) a person has defaulted in carrying out an obligation imposed on the person by the order and, in the circumstances that have arisen as a result of that default, it is just and equitable to vary the order or to set the order aside and make another order in substitution for the order; or
…
the court may, in its discretion, vary the order or set the order aside and, if it considers appropriate, make another order under section 79 in substitution for the order so set aside.
In one sense it might be argued that the husband in these proceedings is in default of the orders. There are obligations cast on him to make certain payments and those payments have not been made within the timeframes set out in the order. But the order itself provides for what is to occur in those circumstances. See, for example, those parts of the order that provide for the sale of properties by private treaty or subsequently by auction. The order is, in that sense, self-fulfilling and self-executing. Again, it may well be the case that the result of that process being carried to fruition will be disappointment because the orders do not return what it is the parties thought they might return, but a change in circumstances such as a drop in the property market after the orders are made is not, in my view, something which is of any particular consequence. I was not taken to any authority which demonstrated that it ought to be considered in such a way.
It was said that the agreement that was reached between the executors and Mr Dace about how the orders might be worked out by reference to a transfer of property and with or without a discharge or a forgiveness of a particular mortgage demonstrates an acceptance by all of the parties that the results that these orders would return now, if carried out in accordance with their terms, would not be just or equitable. But, in my view, to put the matter in that way does not recognise that the test of justice and equity is a test that needs to be applied at the time the property adjustment orders are made, that is, on 26 September 2011. No party comes to the Court today suggesting that on that date the orders were not just and equitable.
In all of those circumstances, it seems to me that no case is made out for the variation of the orders under s.79A as Mr Dace seeks.
Moreover, I am not satisfied that I ought to make the orders that the executors seek in paragraph 2 or 3 of their application because the orders have provisions in them as to how they are to be carried out.
Although it was said from the bar table, I have no difficulty with the proposition that if a registrar was asked to sign documents leading to an auction of the relevant properties before the relevant time periods had expired for sale of those properties by private treaty that a registrar may well have refused to sign them. But the six months provided for in the orders for a sale by private treaty has well and truly passed and there is a clear requirement and facility under paragraph 4 of the orders for the relevant properties to be subject to an auction and to be sold. That is what the parties agreed to in September 2011; that is the process that they fixed on for the carrying of these orders into effect and nothing before me suggests that I should allow either side of the record to depart from that agreement. There is a facility to have relevant documents signed if it is the case that one or other of the parties concerned cannot or will not sign the relevant documents – the facility is built into the orders.
In all of those circumstances, it seems to me that the net result of all of this is an order that the personal representatives be substituted as parties for Ms Dace but otherwise both the application and the response be dismissed.

I certify that the preceding twenty-three (23) paragraphs are a true copy of the reasons for judgment of Jarrett FM

Date: 28 November 2012