Daniels & Bell

[2007] FamCA 152

FAMILY LAW ACT 1975

IN THE FULL COURT OF THE
FAMILY COURT OF AUSTRALIA

AT BRISBANE Appeal No. NA38 of 2005
File No. BRM6281 of 2001

IN THE MATTER OF: DANIELS
Appellant

AND: BELL
Respondent

Appeal No. NA53 of 2005

AND IN THE MATTER OF: DANIELS
First Appellant

AND: ITHACA PTY LTD
Second Appellant

AND:
  CHILD SUPPORT REGISTRAR
  Respondent

CORAM: FINN, WARNICK AND MAY JJ

DATE OF HEARING: 10 MARCH 2006

DATE OF JUDGMENT: 2 MARCH 2007

JUDGMENT OF THE FULL COURT

Appearances: Mr Page of senior counsel, instructed by K L King & Associates, 180 High Street, Southport, QLD, 4215 appeared for the Appellant(s) in each appeal

Mr Hamwood of counsel, instructed by Quinn & Scattini Lawyers, Level 28, Central Plaza One, 345 Queen Street, Brisbane, QLD, 4000 appeared for the Respondent in Appeal NA38 of 2005
Mr Dorney of senior counsel and Mr Fellows of counsel, instructed by The Australian Government Solicitor, Level 12, Adelaide Street, Brisbane, QLD, 4000 appeared for the Respondent in Appeal NA53 of 2005

Name of Appeal	Daniels & Bell; Daniels & Ithaca Pty Ltd & Child Support Registrar
Appeal Number	NA38 of 2005 and NA53 of 2005
Date of Appeal Hearing	10 March 2006
Date of Judgment	2 March 2007
Coram	Finn, Warnick & May JJ

Catchwords: APPEAL – FROM DECISION OF FEDERAL MAGISTRATE – CHILD MAINTENANCE – DISCHARGE OF ARREARS – The parties married in 1980 and separated in early 1989 – There were two children of the marriage – Orders for child maintenance were first made, by consent, in November 1989 and were subsequently registered with the Child Support Agency in either 1989 or 1990 – Significant arrears of child maintenance accumulated over time and various orders for enforcement and variation of arrears had been made since 1993 – While the father made or caused to be made various non-agency payments in relation to the children’s schooling and medical expenses, not all were accepted and credited by the mother – In 2002, the father filed an application seeking, in effect, the discharge of arrears of child maintenance and penalties – The Federal Magistrate dismissed the father’s application on the basis that it would not be just to discharge or vary the maintenance orders, due in large part to the father’s significant delay – In relation to non-agency payments, the Federal Magistrate found the father chose to disregard the risk that some of the non-agency payments would not be accepted by the mother – On appeal, one of the father’s arguments was that the Federal Magistrate erred in addressing what constituted ‘just cause’ for the discharge of child maintenance orders, particularly in relation to his non-agency payments – It is clear that the Federal Magistrate had the father’s non-agency payments clearly in mind when considering the application for discharge of arrears – The concept of whether it is ‘right’ or ‘proper’ to discharge a maintenance order readily encompasses consideration of conduct such as delay – There was nothing to suggest that the Federal Magistrate failed to take into account any relevant matter or took into account any irrelevant matter.
CHILD SUPPORT – ENFORCEMENT – ENFORCEMENT SUMMONS – POWER TO ISSUE – In 2001, the Child Support Registrar issued an enforcement summons against the father for arrears of his liability – The Federal Magistrate found that while Order 33, Rule 2 (as it then was) of the Family Law Rules 1984 did not provide a remedy for the enforcement of debts due to the Commonwealth under a registered administrative assessment, the debt in the current case was that pursuant to a court order – The Federal Magistrate then declared that $225,431.92 in child support arrears had accrued and enforced that amount against the father – On appeal, the father asserted that the Federal Magistrate erred in finding that the enforcement summons had been issued within power – The father argued that it was inconsistent for the Federal Magistrate to treat the liability as a registered maintenance liability in the proceedings for enforcement, but to treat it as a liability pursuant to court order in the father’s application to set aside or vary the maintenance arrears – The two applications were different in nature and relied upon completely different statutory bases – It is clear that in so far as the debt pursued by the Child Support Registrar was comprised of child maintenance arrears, the rules at the time the enforcement summons was issued accommodated that procedure – In any event, the rules did accommodate the procedure by the time the orders were made.
CHILD SUPPORT – ENFORCEMENT – TRANSACTION TO DEFEAT CLAIM – In 1999, the father created the “Ithaca Trust”, the trustee of which was “Ithaca Pty Ltd” – The Federal Magistrate found the trustee company and the Trust to be the ‘alter ego’ of the father and found that purchase of real property by the trustee was a ‘sham’ – The Federal Magistrate ordered that certain real property in the name of the trustee company be sold and the sale proceeds be used to satisfy the father’s debt to the Commonwealth – On appeal, the father argued that the Federal Magistrate failed to have regard to the proper interpretation of the word ‘sham’ and failed to properly take into account the evidence regarding the true purpose of the Trust, which the father asserted was to distribute and invest bequests to the parties’ children made by the husband’s father in his will – The father’s submissions overlooked the very significant findings made by the Federal Magistrate, particularly the father’s concession that the Trust was created as a result of ‘ongoing proceedings’ brought by the mother in relation to the maintenance arrears – No merit in the arguments in support of this ground.

Ascot Investments Pty Ltd v Harper and Harper (19810 FLC 91-000
Bellenden (formerly Satterthwaite) v Satterthwaite (1948) 1 All ER 343
House v The King (1936) 55 CLR 499
Lutzke and Lutzke (1979) FLC 90-714
Vakil and Vakil (1997) FLC 92-743
That the appeals be dismissed. That the father pay the mother’s costs of appeal NA38 of 2005 and the father and Ithaca Holdings Pty Ltd jointly and severally pay the costs of the Child Support Registrar of appeal NA53 of 2005.

These reasons are for the disposition of two appeals against orders made by Federal Magistrate Baumann in proceedings relating to child maintenance.
In the first appeal (NA38 of 2005), that by “Mr Daniels”, the respondent is “Ms Bell”, the mother of “AM” and “AN”, of whom “Mr Daniels” is the father and in respect of whom the issues of child maintenance arose.
The primary order the subject of this appeal was made on 18 February 2005. It dismissed an application by the father, effectively for discharge of arrears of child maintenance and penalties.
Additionally, in his reasons delivered 18 February 2005, Baumann FM indicated an intention to make an order for the mother’s costs. However, there is no costs order in the appeal book. There is a ground challenging “the costs order’, but no submissions were made in respect of that ground.
In the second appeal (NA53 of 2005), the father is joined as the appellant by “Ithaca Holdings Pty Ltd”. This company (incorrectly described in some court documents as “Ithaca Pty Ltd”) was at relevant times the trustee of the “Ithaca Trust”. The Federal Magistrate found both the trustee and the Trust to be the “alter ego” of the father. He also found that a subsequent purchase of real property by the trustee was a “sham”. The respondent to the second appeal is the Child Support Registrar, who had brought the enforcement proceedings leading to the orders appealed.
These orders were made on 17 June 2005. The Court declared that $225,431.92 had accrued under the registered maintenance liability of the father (inclusive of penalties) and was due and owing to the Commonwealth of Australia. The court ordered:
·   that the father pay the Registrar the amount of the registered maintenance liability,
·   that the father pay the costs of the Registrar, including reserved costs,
·   that certain real property in the name of “Ithaca Holdings”, held as trustee for the “Ithaca Trust”, be sold, and
·   that from the sale proceeds, after certain other payments, any debt by the father to the Commonwealth then outstanding be paid.
As the outcome of the appeal against the order dismissing the father’s application for discharge of arrears obviously affects the subject of the orders for enforcement, we will deal with that appeal first, after a short background to the litigation leading to both appeals.

Background

The parties married in 1980. They separated in February 1989; that is, prior to commencement of the Child Support (Assessment) Act 1989 (The Assessment Act).
The first order for child maintenance was made, by consent, in the Family Court of Australia, at Sydney on 3 November 1989. It provided for payment of periodic child maintenance by the father in the sum of $70 per week per child (with CPI adjustments) and that the father pay the children’s private school fees and expenses.
At a time not identified with precision, but possibly in 1989 or 1990, the mother registered the liability under the orders, for collection by the Child Support Registrar under the Child Support (Registration and Collection) Act 1988 (The Collection Act).
In October 1993, orders were made in the State Magistrates Court (there being no appearance by the father) that the father pay arrears of child maintenance in the amount of $12,026.88. (This may indicate, contrary to the possible date of registration just mentioned, that the liability may not by October 1993 have been registered for collection by the Registrar). By the same orders, the father’s liability to pay ongoing maintenance increased to $315 per week for each child (with CPI adjustments). However, his liability to pay the children’s private school fees was discharged.
In February 1996, Judicial Registrar Smith, by consent, ordered the father to pay half the children’s school tuition fees, books and school camp expenses approved by the father. There was no discharge of the 1993 order for periodic maintenance.
The father sought review of the orders and, in March 1996, Bell J slightly altered the February 1996 orders to provide for the father to pay one-half of the children’s school tuition fees, books and school uniforms.
At various times, the father personally or by payments made by other entities, met expenses related to, or in respect of the children. However, he paid virtually nothing to the Child Support Registrar. Over some years, the father sought from the Registrar credit for payments made. Some credit was given. The Registrar first sought to enforce the child maintenance liability (probably) in October 1996.
The father was declared bankrupt in April 1998. At that time, the balance of child maintenance arrears was $80,000. On 9 September 1998, Registrar McGrath, on the father’s application, ordered that the maintenance orders made from time to time and the payment of all arrears and penalties owing be discharged. However, he ordered that, from that date the father pay all tuition fees and school related expenses for the children’s attendance at nominated private schools.
The mother sought review of Registrar McGrath’s orders and on 2 August 1999 Barry J discharged the order of Registrar McGrath, with the result that the 1993 orders for periodic maintenance and the order of Bell J relating to payment of half school expenses, revived.
Barry J later made other orders by way of enforcement and those orders were appealed. However, the orders made by way of review of Registrar McGrath’s orders were not appealed.
The child “AM” turned 18 in July 2000. “AN” turned 18 in December 2001. The orders for maintenance of each child ceased on her/his 18^th birthday (ss 66L(3), 66T of the Family Law Act 1975 as amended) (The Family Law Act).
On 27 September 2001, the Registrar issued an enforcement summons against the father. This was part-heard by Baumann FM on 30 April 2002. On 6 November 2002, the father filed the application for discharge of arrears which was dismissed by the order of 18 February 2005, the subject of the first appeal.
After November 2002, the two applications leading to the orders appealed occupied largely concurrent timelines, though they were never heard concurrently.
After further hearing on 27 November 2002, with submissions finalised on 28 February 2003, the trial of the enforcement summons was completed.
It is not clear when “Ithaca Holdings” became a party although it and other entities are named as parties in the written submissions for the Registrar, of 7 February 2005. Injunctions were made against “Ithaca Holdings”, as trustee of the “Ithaca Trust” as early as 11 October 2002 and it is apparent from other material in the appeal books, in particular affidavits by an officer within the Child Support Agency that from an early stage, attention was focussed on the “Ithaca Trust” and the real property it held.
In any event there is no suggestion from the appellants contrary to the written submission on behalf of the Registrar that:
“31. Both Appellants were on notice as to the Orders sought by the Respondent and fully participated in the hearings before the Federal Magistrate so no issue of natural justice arises – the question is simply one of “power” to make the orders.”
The application for discharge of arrears was heard on 1 and 2 May 2003. The father was not legally represented.
On 24 December 2004, Baumann FM delivered reasons in the enforcement proceedings comprising “various findings as to facts”. He directed the parties to file submissions relating to the orders which could be made, as a result of those findings.
Then, as seen, the order dismissing the father’s application for discharge was made 18 February 2005. The orders for enforcement were made on 17 June 2005.

The appeal against the order of 18 February 2005 (NA38 of 2005)

This appeal substantially divides into two criticisms of the learned Magistrate’s approach. Firstly, senior counsel for the father argues that, in what was an application for discharge or variation of child maintenance orders, Baumann FM introduced consideration of sections of the Collection Act which had no application to the circumstances.
Secondly, senior counsel for the father asserted that the Federal Magistrate had erred in addressing what constituted “just cause” for discharge of the child maintenance orders.
We will consider the arguments in support of the grounds of appeal and the principles applicable to the appeal after mentioning an “oddity” in respect of the order appealed and after a summary of the reasons given for that order.
The actual order made by Baumann FM on 18 February 2005 reads:
“(1) That the Child Support Departure Application filed by the father on 6 November 2002 be dismissed.”
Nobody suggests that the application by the father was a Departure Application (pursuant to s 116 of the Assessment Act) or that it was treated as such at any pertinent time.
We think that nothing turns on this, notwithstanding that senior counsel for the father suggested that, in some way, it supported his argument that Baumann FM had taken an erroneous approach to the “classification” of the father’s application. However, as will be seen, his arguments about that really rested on a quite different basis.

Summary of the reasons of the Federal Magistrate of 18 February 2005

As to the issue before him, Baumann FM said:
“3. In short, as a result of the combination of earlier orders for both spousal maintenance and child maintenance (stage 1) the wife asserts the husband is indebted to her in a sum exceeding $222,000. Part of that sum, according to the Child Support Agency of course, are penalties imposed administratively over which I have no control.
4. The husband by his application filed on 6 November 2002 seeks that:
“(1)That arrears of maintenance (child support) and penalties attributable thereto be discharged.
(2)In the alternative that such arrears of maintenance and penalties attributable thereto be reduced to effect payments made by the applicant for and on behalf of the children.””
The reference to “spousal maintenance” was not explained to us, nor was it referred to in argument and in particular was not suggested to constitute any error.
His Honour described the father’s application as to a large extent “misconceived”.
The father’s case, as described by the learned Magistrate, was that, since separation in 1989 the father had:
“12. …
(a)     paid "substantial private education expenses and related costs for both children including boarding fees". He concedes not all these payments were made by him but some were paid by "my family and maternal grandparents".
(b)     had extensive costs associated with interstate contact of the children.
(c)     paid extensive medical and dental expenses including physiotherapy costs of both children. He conceded the expenses were to a large extent covered by "private health fund MBF".
(d)     made a number of direct payments to the children at their request in circumstances where the children informed me that their mother would not assist with their day to day needs.”
and further:
“13. The father provided a breakdown of these expenses for the period of May 1994 to July 2002 in annexure "JD1" to his first affidavit. My analysis of that document breaks the payments into the following basic categories of, school expenses, contact costs, medical and dental expenses and direct allowances to children. The husband says the ex parte order made in October 1993 that he pay $315 per week for each child was more than he could afford and "it was these orders and my state of earnings in the years 1990, '91 and '92 that started the accrual of arrears to the Child Support Agency".
14.    He has not referred to the consent order made by Registrar McGrath in the Family Court on 26 February 1996 which require the husband to pay:
“Half of school tuition fees, books and school camps which are approved by the husband for the children at [SH] and [TG] School”.
It appears that that order was subsequently discharged through subsequent litigation.
17.    The husband says "some of the orders obtained were outside my ability to pay” and that this has caused his health to suffer greatly (see the report of psychiatrist [Dr L]). For reasons which I give later and to the extent it is purported that his application is an application for a retrospective discharge of the child maintenance order, I do not believe it is just to vary the orders.
18.    The crux of the husband's case seems to be raised in paragraph 25 of his affidavit filed 28 January 2003, namely:
“The amount of money paid for the benefit of the children that has been rejected by the wife as they were non agency payments from my family trust amounts to some $30,000 and included school fees. The current child support enforcement proceedings before the Court against me for arrears for large amounts that the trust has paid and been rejected by the Child Support Agency already confirms my belief that this matter defies logic as the Child Support Agency is now seeking that the family trust and my alter ego but have rejected the same from these sources as my wife ruled they were not for the benefit of the children”.”
Baumann FM then said of “The wife’s case”:
“20. …The wife was not required for cross-examination. The wife's case essentially is that the payments for which credit as non agency payments are sought should not be permitted for a number of reasons including:
a)Many expenses claimed had been previously the subject of a request for credit, but had been rejected by the Child Support Agency in 1998.
b)Allowances the father chose to pay to the children were not agreed to by the mother and were not necessary.
c)Holiday expenses claimed were again a unilateral decision of the father who did not seek agreement from the mother to credit against child support payments.
d)The husband seeks a credit for expenses after the children turned 18.
e)The mother will not accept payments made by entities associated with the father but not paid by him personally. The mother asserts a significant amount of the school expenses fall into this category with a large proportion paid by a company [M Holdings Pty Ltd]. The wife asserts that some of the moneys actually represented funds to which the children have some entitlement as beneficiaries of the trust established by the father's late father, [Dr Daniels]. In respect of those issues I have already made findings in relation to that trust in my earlier decision referred to at paragraph 10.
f)The father seeks crediting for the full amount of some medical expenses when they were proportionally covered by a private health insurer, the father was not required to maintain private health insurance cover for the children.
g)The father has not met the evidentiary burden of establishing with bank records that payments have in fact been made by him. The mother does not accept a cheque butt alone.
h)…”

The learned Magistrate then posed for himself the question:
“Is the application an application to vary?”
to which he said:
“21. Although not specifically pleaded the application by the father and the evidence in part relied upon may be regarded by him as an application to vary or discharge earlier orders pursuant to s.66S of the Family Law Act 1975.…”
Although Baumann FM referred to section 66S, he then immediately acknowledged that both children had turned 18 and the child maintenance order had ceased to be in force before the father’s application was made. The Federal Magistrate then directed himself to section 66W which he then set out, albeit somewhat inaccurately.
The parts relevant to the father’s application actually are:
“66W(2)If arrears are due under such an order when the order ceases to be in force, the court may, by order, retrospectively:
(a)discharge the order if there is just cause for doing so; or
(b)vary the order so as to increase or decrease the arrears to be paid under the order if the court is satisfied that:
(i)     the circumstances of the person liable to pay the arrears are such as to justify the variation; or
(ii)     …
(iii)    …”
His Honour then immediately moved to a paragraph central to the ultimate result and the subject of scrutiny in this appeal. He said:
“22. I would not regard it as just to discharge or vary the orders which found the liability in circumstances where these proceedings are brought:
(a) In [AM’s] case more than two years after she turned 18 and in [AN’s] case nearly 12 months;
(b)More than four years after the father was declared bankrupt;
(c)More than four years after the father made an application to the Child Support Agency for the crediting of a range of non agency payments;
(d)Nearly eight years after [AN] first began boarding school - an event which the father asserts was a significant change in circumstances which made the order of October 1993 inappropriate and no longer fair; and
(e)In circumstances where the father has been engaged in continual litigation in the Family Court of Australia and could have raised such issues with Barry and Bell JJ at least.
23. It may be that some of the orders of the previous judicial officers in the Family Court which reviewed the order (also with Bell J viewing the order of Registrar McGrath to effectively re-instate the 1993 order) operate as some form of issue estoppel to the current proceedings in part or wholly. I did not receive any submission on behalf of the wife to that effect and did not therefore consider that issue.”
The Federal Magistrate then turned to the “Legislative framework” and in particular to sections 71 and 71A of the Collection Act, relating to credit granted by the Registrar (Agency) to payers, for direct payments to payees and payments by a payer to a third person. After setting out those sections, the learned Magistrate said:
“25. If a person is dissatisfied with the agency decision they can appeal the decision to the Court under s 88. The current application is not, in my view, an appeal.” (emphasis added)
His Honour said of the father’s submissions:
“27. He did not, in my view, in his evidence or submissions grasp the fundamental principle that when a Court had ordered him to pay to the mother funds for the support of the children that he does not have a unilateral right or option to choose to pay to or for the benefit of the children expenses which he can demand be credited against his ongoing child support liability created by the Court order.
28. This is not a case where the mother has refused to allow credits. She clearly has. The father conceded in his evidence that the mother had not agreed to the expenses he claimed, being credited. That was, in my view, a critical concession. The father seeks me to effectively determine whether the mother's refusal to accept certain payments was reasonable. But that misunderstands the intention of the legislation. The history of litigation and correspondence which passed between the father and the Child Support Agency over many years makes it abundantly clear to me the father was well aware of the risk that payments would not be credited. He chose to disregard that risk it seems to me. Perhaps he did so to show to his children his support of them. It seems he preserves an intact relationship with them as does the mother. However, that is not the issue for this Court.”
Baumann FM then said of the “Mother’s submissions”:
“29. I was given the benefit of written submissions by the solicitor advocate for the mother and I will refer particularly to paragraph 10 and 11 of those submissions which I shall incorporate in these reasons as follows:…”
We summarise the submissions then set out , as going to the following propositions:
·   That there had been no agreement between the father and mother that any of the payments sought to be credited, be credited.
·   That some payments were made before the registration of the debt and the father could not receive credit for those;
·   That some payments were made after the children turned 18 and the child maintenance obligation had expired;
·   There was no evidence that those payments were made to reduce the debt created before the respective eighteenth birthdays;
·   Some payments had been made by an entity other than the father;
·   The identity of the payer of other payments could not be determined;
·   In any event there had been insufficient evidence that a number of payments had actually been made at all;
·   That not all of the payments were in any event, child maintenance;
·   And, finally, that:
“The husband has previously attempted to set aside the Court Orders for child maintenance, together with a waiver of all arrears. The husband’s application was unsuccessful. The husband was found not to have fulfilled his obligations to the children (see Reasons for Judgment and Orders of Judge Barry date 2 August 1998).(sic)”
His Honour then said:
“31. A recent helpful analysis of the law and proceedings relating to non agency payments was undertaken by the Full Court in its judgment in [F & C & The Child Support Registrar] (2003) FCA 458, and in particular the reasons of Finn J adopted by the Court at paragraphs 66 to 80. To the extent that the application of the father purported to be in appeal under s 88 it is defective as to form and is well outside the time limits imposed by O 31 r.19 of the Family Law Rules. (emphasis added)
32.    On the evidence the payments made by the father have not been shown to the requisite standard of proof as being "intended by both the payer and the payee to be paid in complete or partial satisfaction of an amount payable" under the relevant child support liability. Accordingly, if I had properly been empowered under s.88 (which I do not believe is the case) then I would not find the Registrar's decision in upholding an objection by the payee to the crediting of a non agency payment against the payer's liability was wrong. (emphasis added)
33.    Furthermore, any payments for which credit has not been sought from the Registrar under the Act and therefore has not been the subject of determination by the Registrar (or an objection under s.85) cannot form part of an appeal to this Court as no pre-requisite decision has been made. Some of the alleged payments fall into that category. No discretion is given to the Court to consider whether it is fair to the father that he get a credit as it seems the father seeks. The legislative requirements are clear and specific.
34.    I am not satisfied that the child support liability has been increased by the father's obligation to pay school fees such that he suffers from an increase in liability without the benefit of fees paid. It is apparent the wife with family help did contribute significantly as well to school fees. In general, in addition, I adopt the submissions set out by the mother as to:
a)payments made prior to the registration of the child support liability.
b)payments made after the children individually reached 18.
c)failure of the husband to meet the evidentiary standard of proof.” (emphasis added)
Baumann FM then concluded his reasons with consideration of the question of costs.

Grounds of appeal against the 18^th February 2005 order

There were four grounds of appeal against the primary order.
The submissions on behalf of the father dealt with these grounds substantially together. There is much commonality between grounds 1, 3 and 4 and we will deal with those together later.

Ground 2

This ground reads:
“2. That in applying the provisions of sections 71 and 71A of the Child Support (Registration and Collection) Act 1989 to a consideration of the factors required to be considered in section 66W of the Family Law Act the Federal Magistrate erred.”
We consider that this ground misconceives the structure of the Federal Magistrate’s reasons. Senior counsel for the father argued that the correct construction of the father’s application was as one for discharge or variation pursuant to s 66W of the Family Law Act. Bearing in mind that the father’s application did not refer to any particular sections of any legislation and that the father was not legally represented at the hearing, it fell to the learned Magistrate to endeavour to identify the basis of the application. In our view, it is abundantly clear that Baumann FM did not apply the provisions of section 71 and 71A of the Collection Act when considering the application as an application for discharge or variation pursuant to section 66W. He clearly dealt with the application on two possible bases, firstly construed as an application to discharge or vary arrears, pursuant to section 66W. As seen, he expressed his conclusion about “that application” in paragraph 22. Only then did he turn to the possible construction of the father’s application as an appeal from a decision of the Child Support Agency in relation to credit for non-agency payments and only then did he address the effect of sections 71 and 71A of the Collection Act. This he seems to have done out of an abundance of caution and in response to the way the father presented his case, because he also made it clear that he did not regard the application as a valid appeal. Senior counsel for the father agreed that it was not.
We do not consider that the identification by the Federal Magistrate, at paragraph 26 of his reasons (ie. after he had moved to consider the father’s application construed as an appeal), of both the father’s submissions about his capacity to pay during his bankruptcy, and his complaints about the way the Child Support Agency dealt with his claims for credit for non-agency payments, indicates any confusion of matters pertinent to the application if construed as an appeal, with matters pertinent to the application if construed as an application pursuant to section 66W. It is clear that the father relied upon both submissions in support of his application, however construed, and the Federal Magistrate considered both submissions when addressing the application on each basis (see paragraphs 12, 13 and 17 previously quoted).
We find no merit in this ground.

Grounds 1, 3 and 4

These grounds are:
“1. That in dismissing the application to discharge or vary arrears of child maintenance, the Federal Magistrate erred in that he failed to have any or any proper regard to the provisions of section 66W of the Family Law Act and in particular in that he failed to he:
(a)Failed to consider properly or at all whether there existed just cause for the discharge of the arrears;
(b)failed to consider in any way whether the circumstances of the applicant might justify the variation of the arrears;
(c)failed to consider in any way whether the circumstances of the respondent might justify the variation;
3. That the Federal Magistrate erred in that he failed to have any or any proper regard to the evidence that was before him of payments made or caused to have been made by the appellant for the maintenance of the children whilst the order for maintenance was in force.
4. That in determining the merits of the application based on a consideration as to whether the discharge or variation sought was just the Federal Magistrate erred in that he failed to have proper regard to the provisions of section 66W of the Family Law Act.”
As to these grounds the written submissions on behalf of the father said:
“2.    The facts alleged by the appellant as constituting a just cause for discharging the arrears were that payments had been made by the appellant both to the respondent and to third parties, all of which payments were for the benefit of the children in relation to whom the order for maintenance had been made.
3.     A large number of documents were tendered in evidence before the Federal Magistrate which supported the extent of and nature of the payments made by the appellant.
4.     No part of the respondent’s case before the Federal Magistrate was that such payments had not been made and/or that such payments were not for the benefit of the children in relation to whom the order for maintenance had been made.
5.     No submission was made to the Federal Magistrate that the extent of the payments made by the appellant exceeded the liability for maintenance pursuant to the order.
6.     …
7.     …
8.     Had the Federal Magistrate properly considered the nature and extent of the payments made, it is submitted that he would have found just cause to discharge the arrears.
9.     …
10.    The orders sought on this appeal seek that all arrears of maintenance together with penalties and interest thereon be discharged. Such order is appropriate on the basis that no issue was taken before the Federal Magistrate as to the nature of or the extent of the payments alleged to have been made by the appellant.…”
We think the above submissions do not reflect with complete accuracy the issues before Baumann FM as he outlined them in his reasons. Based on the Federal Magistrate’s reasons quoted we think it inaccurate to say that there was little or no issue before the Federal Magistrate that payments had been made, or that the payments were not in some way or another, of some benefit to the children.
The grounds under discussion assert that the learned Magistrate failed to properly address the father’s case about non-agency payments. As seen in our summary of the Federal Magistrate’s reasons, he set out the father’s case as it related to non-agency payments in paragraphs 12 and 13. He also made some findings in respect of that case. These are expressed, in particular, at paragraph 34 of his reasons (set out earlier). Again, though that paragraph appears in the part of the judgment where the Federal Magistrate was considering the application construed as an appeal under the child support legislation, all findings of fact form the basis of his consideration of the application on either construction. In our view, it is clear that the learned Magistrate had the father’s case, based on payments made, clearly in mind when considering the application for discharge of arrears. Moreover, though he had made findings against some of the father’s claims, he then addressed that case on the basis that, even if he accepted the father’s evidence, he would not, for the reasons he nominated at paragraph 22, grant the application.
While sometimes there are dangers in not determining all factual issues prior to application of the relevant legal principle, it is at times an available course. This would be particularly so if, as on the submissions for the father, there was really no or little issue about the factual assertions of the father. In any event, provided the case of the “losing” party is taken as “proved”, that party will not suffer disadvantage simply because of the party’s case has not been found proved.
The learned Magistrate had, as earlier seen, analysed the payments that the father had allegedly made and allocated them to categories. These he nominated as school expenses, contact costs, medical and dental expenses and direct allowances to the children.
There would seem little likelihood of injustice to the father if, in view of the delay and other factors relied upon by the Federal Magistrate to dismiss the application, the father did not effectively “gain credit” for payments for costs of holidays with the children or for gifts and the like to them, for these payments would not (certainly not obviously) assist the wife in the necessary costs of child-rearing.
On the other hand, the prospect of injustice to the father in having to pay arrears, if, for example, schools fees already paid by him or his “agent” were included, is more readily perceived. We note however that Baumann FM expressly addressed this issue (and other related issues) at paragraph 34 of his reasons, previously quoted. There was no challenge to what the learned Magistrate there said.
Though not necessary to the reasoning employed by Baumann FM up to and including paragraph 22 of his reasons, the findings in paragraph 34 reinforce his conclusion.
In oral submissions, senior counsel for the father focussed on the content of paragraph 22 of Baumann FM’s reasons. He submitted that what were, in effect, matters of delay, (measured against different events, such as the eighteenth birthdays of each child, the father’s bankruptcy, the last application by the father to the Child Support Agency for credits for non-agency payments and “AN’s” commencement at boarding school), could not go to the question of whether or not “just cause” for discharge of the orders, existed.
This submission renders necessary some consideration of the term “just cause” in section 66W(2). We repeat the terms of that subsection so far as relevant:
“2. If arrears are due under such an order when the order ceases to be in force, the court may, by order retrospectively:
(b)discharge the order if there is just cause for doing so; or…”
Arguably, these terms provide for a dual exercise of discretion; firstly, that to be exercised in finding whether or not there is a “just cause” and secondly whether, though “just cause” has been established, the order ought or ought not be discharged. Under this approach, a factor such as the making of non-agency payments may, in a particular case, be regarded as a “just cause” for discharging the order, but nonetheless other factors such as delay, or perhaps representations or promises by the payer to the payee, may mean that notwithstanding existence of a “just cause”, in the ultimate exercise of discretion, an order is not discharged.
Alternatively, there is but one enquiry and that is whether “just cause” exists. If it does, the order must be discharged. Senior counsel for the father’s submission, we thought, implied this approach. This interpretation would seem to attach no significance to the words “the court may”, in the second line of the subsection. Leaving that aside, whether ultimately the two approaches would produce different results would depend upon whether the court could, in determining “just cause” under the alternative approach, take into account any or all of the factors taken into account under the two step approach. Senior counsel for the father’s submission seems to imply a negative answer.
The scope of the term “just cause” was discussed by Lindenmayer J in Lutzke and Lutzke (1979) FLC 90-714 in these terms:
“…the Act is silent as to what may constitute “just case” for the discharge of an order. In my opinion, however, the words “just cause” are not used in any broad general sense, nor are they intended to import any abstract notions of justice, “palm tree” or otherwise, into the determination of applications for discharge. In my opinion those words must be interpreted in the context of the Act as a whole, and in particular with regard to the other specific provisions of the Act which relate to maintenance. Thus a “cause” for the discharge of an existing maintenance order will be a “just cause” only if, having regard to the other provisions of the Act, particularly those relating to maintenance, it can be said that it is “right” or “proper” that the order should be discharged. If there is any room for doubt that this is the correct approach, in my opinion that doubt is removed by section 83(7) which provides:
(7)for the purposes of this section, the Court shall have regard to the provisions of section 72, 73, 75, and 76.” (at p 78,832)”

In Vakil and Vakil (1997) FLC 92-743 the Full Court, of which Lindenmayer J was a member, extensively reviewed authorities relating to discharge of maintenance orders for “just cause” and endorsed but also expanded upon the comments of Lindenmayer J in Lutzke.
The Full Court in Vakil said (at 84,021):
“5.23…(W)e think that the…dicta of Lindenmayer J in Lutzke (supra), which appear to have received no judicial criticism over the last eighteen years, probably define the concept with as much precision as it is possible to give it in this context. Thus we conclude that, having regard to the current wording of s 83(7)…the question whether there is ‘just cause’ for discharging an order…is to be determined by an exercise of judicial discretion by reference to notions of what would be regarded as ‘right’ and ‘proper’ in Australia, having regard (inter alia) to the provisions of ss 72 and 75 of the Act. However, we are of the view that the effects of s 83(7) is not such as to preclude regard also being paid to the provisions of the Act other than ss 72 and 75, to the extent that they may be considered relevant in the circumstances of a particular case, and that may include, for example, s 81 and s 43(a).”
Section 81 of course requires the court to, as far as practicable, make such orders as will finally determine the financial relationship between parties to the marriage and avoid further proceedings.
In our view, the concept of whether it is “right” or “proper” to discharge a maintenance order readily encompasses consideration of conduct such as delay.
Moreover, notwithstanding his initial submission, senior counsel for the father later conceded that the matter referred to by Baumann FM in paragraph 22(e), namely:
“…circumstances where the father has been engaged in continual litigation in the Family Court of Australia and could have raised such issues with Barry and Bell JJ at least.”
could go to the exercise of discretion as to whether or not to discharge an order.
In this regard, as noted at paragraph 23 of the Federal Magistrate’s reasons, he referred to the prospect that, at least in part, the application by the father, then before the Federal Magistrate, had been dealt with in earlier proceedings. However, in that paragraph the Federal Magistrate also recorded that he did not receive any submission on behalf of the wife to the effect that any issue estoppel arose. Therefore, the learned Magistrate did not consider the issue. However, we further note that, in the quotation in his reasons of the written submissions of the wife, which the learned Magistrate said he incorporated in his reasons, it was said:
“The husband has previously attempted to set aside the Court Orders for child maintenance, together with a waiver of all arrears. The husband’s application was unsuccessful. The husband was found not to have fulfilled his obligations to the children (see Reasons for Judgment and Orders of Judge Barry date 2 August 1998).”
We are not certain whether the incorporation of that submission into the Federal Magistrate’s reasons meant an adoption of it or not. In any event, the passage quoted is possibly not precise enough to amount to a plea of issue estoppel or res judicata in relation to the application by the father before Baumann FM for discharge of arrears prior to the hearing before Barry J, based on non-agency payments or any other ground which he might have then raised.
However, we note that in the written submissions for the mother in respect of this appeal, it was said:
“14. It is apparent then that as to arrears and/or variation of the maintenance orders then in existence, the Appellant’s Application to vary or discharge those arrears of those Orders up to July 1999 have been dismissed by the Order of Barry J of the 2^nd August, 1999.
15. In those circumstances, the Federal Magistrate was essentially dealing only with an Application to vary or discharge the orders insofar as it related to operative orders or arrears accrued between July1999 and, in respect of [AM], 19^th July, 2000, and in respect of [AN], 10^th December, 2001, those being the dates on which, at latest, the Orders ceased to be in force as the children turned 18.”
As stated, the learned Magistrate did not determine any claim of issue estoppel. It is not a claim about which we express a view. However, as also stated, senior counsel for the father conceded that the previous litigation over arrears and the opportunity then for the father to present at least part of the case he ran before Baumann FM, were matters that could sound in the discretionary determination of whether “just cause” existed.
We agree with that concession and think them matters which might attract considerable weight.
In our view, all of the matters which the Federal Magistrate took account in paragraph 22 of his reasons were properly taken into account, whether the course to the ultimate result is a one or two step approach.
Senior counsel for the father touched on a further proposition, namely that the Federal Magistrate did not pay any, or any sufficient, attention to the father’s argument that his financial circumstances from time to time were relevant to whether the then operative maintenance orders should be varied. This argument raises the question of the meaning of section 66W(2)(b)(i), namely that the court may:
“(b) vary the order so as to increase or decrease the arrears to be paid under the order if the court is satisfied that:
(i)the circumstances of the person liable to pay the arrears are such as to justify the variation; or…”
Counsel for the mother submitted that, by the terms of this subsection, the matter to which the court is directed is the circumstances of the payer, current at the time of hearing.
The use of the word “are” in sub-paragraph 66W(2)(b)(i) makes it clear that it is the circumstances of the payer at the time of the hearing which are to be considered.
Senior counsel for the father contends that the position is analogous to that which applies to applications to vary orders still in force, for example, pursuant to section 66S(3).
We see no reason why senior counsel for the father’s contention should be accepted. There are many differences between section 66S and section 66W. Section 66S is directed to the modification of child maintenance orders in force. That subsection is much more extensive as to the available bases for variation than is s 66W(2). Section 66W is directed to the recovery of arrears or the discharge or variation of those arrears under an order that has ceased to be in force.

Principles applicable to the appeal

The circumstances in which an appellate Court should interfere with a discretionary judgment were set out in House v The King (1936) 55 CLR 499 at 504‑505 where Dixon, Evatt and McTeirnan JJ said:
“The manner in which an appeal against an exercise of discretion should be determined is governed by established principles. It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if the allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some of the material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so. It may not appear how the primary judge has reached the result embodied in his orders, but if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court of first instance. In such a case, although the nature of the error may not be discoverable, the exercise of discretion is reviewed on the ground that a substantial wrong has in fact occurred.”
With particular regard to a challenge based on the weight given by a trial Judge to factors relevant to an exercise of discretion, in Bellenden (formerly Satterthwaite v Satterthwaite) (1948) 1 All.ER 343 at 345, Asquith LJ said:
“… It is, of course, not enough for the wife to establish that this court might, or would, have made a different order. We are here concerned with a judicial discretion, and it is of the essence of such a discretion that on the same evidence two different minds might reach widely different decisions without either being appealable. It is only where the decision exceeds the generous ambit within which reasonable disagreement is possible, and is, in fact, plainly wrong, that an appellate body is entitled to interfere.”

Conclusion in relation to the order dismissing the father’s application for discharge or variation

Having regard to the above principles, and what we earlier said, we are not satisfied that the learned Magistrate failed to take into account any relevant matter or took into account any irrelevant matter.
We are not satisfied that the learned Magistrate erred in his approach as asserted in ground 2 nor, as argued, that he erred in the approach he took to the determination of “just cause” and/or the overall exercise of discretion.
Accordingly in our view, the appeal against the primary order of 18 February 2005 ought to be dismissed.

The costs appeal

In respect of costs, the learned Magistrate said:
“35. Costs should in this case and after consideration of s.117(2A) of the Family Law Act and particularly the fact that the husband has been wholly unsuccessful, follow the event.
36. I will provide that the mother provide written submissions within 28 days as to the quantification of her costs in this matter considering the Federal Magistrates Court scale and that the husband have 28 days thereafter to respond.
37. I should indicate that I was invited by the mother in her application to make an order which effectively prevented the husband from having an appeal against this order. That is not an order which I am entitled as a matter of law to make.”
It seems a possibility that no order was taken out, perhaps because the mother’s submissions as to quantum were not made or not considered.
The ground of appeal challenging the costs “order” was:
“5. That in determining that the appellant should pay the costs of the respondent the Federal Magistrate erred in that he failed to have any or any proper regard to the provisions of section 117 of the Family Law Act and in that he failed to give any reasons for his decision.”
For the mother it was submitted:
“20. As to costs, the Federal Magistrate adverted in paragraph 35 of his Reasons (AB42) to the fact that he was required to consider the matters set out in s.117(2)(A) of the Family Law Act. He identified appropriately as a significant consideration the fact that the Husband had been wholly unsuccessful.
21. It is not necessary for a Judicial Officer to give extensive reasons in respect of a Costs Order. In this case, however, the basis upon which the Federal Magistrate exercised his discretion is clearly set out.
22. It is not shown that the exercise of his discretion was incorrect or outside of the proper range of discretion and the Costs Orders should stand.”
As earlier indicated, no submissions were made for the father to support an appeal against any costs order. We therefore take the approach that:
(i) if no order has been made, the appeal is nugatory and should be dismissed. We would not see this result as necessarily preventing an appeal if a costs order later issues.
(j) If an order has been made, in the light of the Federal Magistrate’s reasons (albeit brief), the mother’s submissions and the absence of submissions for the father, we discern no appealable error and the appeal should be dismissed.

Appeal NA 53/05

As earlier indicated, this appeal requires attention to two sets of reasons. The first set are those delivered on 24 December 2004 containing “various findings as to facts” and following which Baumann FM directed the parties to file submissions as to the orders which could be made as a result of those findings. Then, when the orders for enforcement, which are the subject of this appeal, were made on 17 June 2005, further reasons were delivered.
The orders appealed were summarised earlier. The grounds of appeal are particularly directed to the orders which appointed a trustee for sale of the real property of which “Ithaca Holdings” Pty Ltd was registered proprietor and which it (ostensibly) held as trustee for the “Ithaca Trust”.
Senior counsel for the appellants conceded during submissions that nothing in the appeal turned on the form or content of the orders, save in the sense that the submission was that the orders were beyond power, directed as they were to a “third party”.
There are three grounds of appeal. The first asserts that the Federal Magistrate erred in finding that the enforcement summons had been properly issued, that is, within power. The second attacks the finding that “…the creation and continuation of the [Ithaca Trust] by the appellants were a sham…” and the third that, as just stated, the Federal Magistrate erred in finding that he had power to make the orders sought against the property of the “Ithaca Trust”.
We will set out the grounds of appeal in full and consider the arguments in respect of them, after a short summary of the relevant reasons of Baumann FM.

Summary of Baumann FM’s reasons

In his judgment delivered 17 June 2005, Baumann FM repeated a summary of findings set out at paragraph 86 of his reasons of 24 December 2004.
(Note: To understand the significance of some of the findings it is necessary to know that, on other findings of the Federal Magistrate, “Mr C” was a director of “Ithaca Holdings”. “Mr R” was at one time a director of that company. The children “AM” and “AN” had each at some time been directors of one or other of relevant corporations).
The summary, so far as is relevant to this appeal, was:
“For (sic) my analysis above, I summarise my findings to date as follows:
a)[Mr C] is a “puppet” of the father
b)[Mr R] is a “puppet” of the father
c)…
d)[AM] and [AN] have no independent knowledge of the business operations
e)…
f)…
g)…
h)…
i)…[M HOLDINGS] PTY LTD is the “alter ego” of the father, and any equity in the company, after genuine creditors are discharged (including the testamentary trust if the loan is established to exist), should be available to the Applicant
j)…
k)[ITHACA HOLDINGS] PTY LTD is the “alter ego” of the father
l)…
m)The [ITHACA TRUST] is the owner of the real property at [MU]
n)The [ITHACA TRUST] is the “alter ego” of the father and that to the extent the assets of the Trust exceed its liabilities (including any loan from the testamentary trust and accrued interest), that equity should be available to the Applicant.
8. A further finding which I earlier made was that [M HOLDINGS] PTY LTD traded as [MW NURSERY] & [G LANDSCAPE SUPPLIES] (see paragraph 58) and that the [ITHACA TRUST], as owner of the [MU] property, “collects income farm (sic) rentals (including from [M HOLDINGS] PTY LTD, trading as [MW Nursery]).”
The learned Magistrate then addressed further evidence that he had received after 24 December 2004, and said:
“16. I find that [M Holdings] Pty Ltd continues to remain the owners of the hothouses and stock on the property. The hothouses are essentially tenant’s fixtures. I would find that the increase in liability of $120,000 in the balance sheet of the [Ithaca Trust] to [Daniels] Testamentary Trust is not a valid transaction and should be ignored.
17. The property value is uncertain as a result of the inability of the Applicant to have an expert valuer inspect the property. A “kerbside” or “drive by” valuation of $500,000 to $550,000 is offered to the Court. On the basis of the current loan to [T] Home Loan and the current loan of $65,541 to the [Daniels] Testamentary Trust, there is a sizeable equity in this property.
18. In respect of the Balance Sheet of the [Ithaca Trust], a debt is now said to be owing (commencing 30 June 2001) to [Daniels] Family Trust. No explanation for this liability, which was not revealed in the earlier balance sheets offered to the Court, is provided by [the father]. That alleged loan has fluctuated such that at 30 June 2004, it is said to stand at $42,177.53. I am not satisfied it is a valid loan. This unsecured loan should be ignored when the equity in the property is determined.”
Baumann FM then dealt with a submission that there had been no power to issue the enforcement proceedings. (We will say more of his reasons about that argument when dealing with ground 1). He then turned to a submission which he expressed as follows:
“26. Finally, the Respondent contends that the orders sought by the Applicant in relation to the [MU] property against [Ithaca Holdings] Pty Ltd as trustee of the [Ithaca Trust] are “not competent” and that there is “no statutory power to order the sale of trust property nor is there any power at common law”.”
In dealing with this submission, his Honour summarised the facts relating to the creation of the “Ithaca Trust”, saying:
“31. At the time the trust was created on 6 October 1999 the father was an undischarged bankrupt (his Bankruptcy ceasing on 18 July 2002). Proceedings relating to payment of Child Maintenance had been the subject of proceedings before Barry J (who delivered reasons on 2 August 1999). It is reasonable to infer that the long litigation between the parties (the decision of Barry J was the subject of a subsequent appeal to the Full Court), was uppermost in [the father’s] mind. His father, who had died in November 1998, had created a testamentary trust for the benefit of the children (of which the father was Trustee).
32.    As [the father] conceded in his evidence, the Trust was formed because of the “ongoing proceedings by my ex-wife against the children’s money”.
33.    The property at [MU] was purchased in August 2000. The only contribution of the “children’s money” was the use of $55,000 as a deposit. These funds came from the testamentary trust. It is relevant, in my view, to record that at no time has it ever been asserted by the father or anyone else that the [Daniels] Testamentary Trust was a co-owner of the property. Its only interest was as the lender of the deposit to, and for the benefit, of the [Ithaca] Trust. I have already dealt with allegations as to the current level of this indebtedness.
34.    On this basis, the Trust, which is the “alter ego” of the father and controlled by him, seems to have acquired the [MU] property not to protect the “children’s money” but rather to provide a vehicle through which the father’s personal financial position was to be improved. No distributions from the income generated by the Trust have been distributed to the children. The father has utilised the income as he desires – including access by ATM for payment of his private expenses. Whether this “shield” was created to protect him from the claims currently made and/or as a device to avoid the limitations arising from his bankruptcy at the time is uncertain. What I am clear about is that the creation of the [Ithaca] Trust; the purchase of the [MU] Property and its subsequent control and management by the father was a well considered scheme devised by the father for his financial benefit. It appears, on the basis of the most recent “kerbside” appraisal of value, that he has been successful in creating an equity in this property – even after increasing the indebtedness on the security to [T] Home Loans (which the Applicant asserts is a breach of the injunction ordered on 11 October 2002).”
His Honour then turned to consider whether “the whole transaction is a “sham”. He set out passages of the judgment of Fogarty J in Gould and Gould; Swire Investments Pty Ltd (1993) FLC 92-434, then said:
“36. The orders sought by the Applicant do not seek to reconstruct the Trust in some way. Even though the father is the principal of the [Ithaca Trust] which, appointment carries the power of changing the Trustee and appointing new or additional beneficiaries), the orders do not seek to compel him to exercise those powers (all discretionary), in a particular manner so as to achieve a predetermined outcome through the trust structure – namely to be in a position to sell the property and cause a return of capital to be paid to presumably the father (as a likely new beneficiary).
37.    The essence of the orders, it seems to me, is to ignore the structure set up by the father entirely and to disregard the obligations it imposes under the Deed and by operation of law. This makes it an entirely different situation to that confronting Warnick J in BP & KS.
38.    It would, in my view, be a quite unjust result if the father were entitled to avoid his creditors (particular this child maintenance liability) which he has cleverly designed for that clear purpose.
39.    I regard the transaction (not the trust creation) in acquiring, operating and otherwise managing the property through the Trust as an attempt to disguise the true position – namely that the property is in all respects the property of [the father].
40.    I therefore propose to adopt the interpretation identified by Gibbs J that a sham is something which has “being brought into being, in appearance rather than reality, as a device to assist one party to evade his or her obligations” (Ascot Investments Pty Ltd v Harper (1981) CLR 337 at 354), and disregard the existence of the [Ithaca Trust] – save for the existence of the loan taken out by the father (through the Trust) from the Testamentary Trust for the purpose of paying the deposit at acquisition.”

Overview of submissions for the father

These submissions raised very limited arguments.
The written submissions for the father consisted of 11 short paragraphs, only 3 of which apply to the learned Magistrate’s findings about the property held within the “Ithaca Trust” and the exercise of power in respect of that property.
Senior Counsel’s oral submissions did not expand upon the written submissions with regard to grounds 2 and 3. He did however refer us to his written submissions made to the Federal Magistrate on 15 March 2005, that is after the “findings” of 24 December 2004 and in respect of the orders that could be made consequent upon those findings. The result of this approach is that senior counsel for the appellants, in support of the grounds of appeal attacking the reasons of the Federal Magistrate given on 17 June 2005, relies upon submissions made before the Federal Magistrate’s conclusions were known, subject only to 3 brief paragraphs in the written outline of argument in respect of the appeal.

Grounds 1(a), (b) and (c)

“1. That in determining that there was power to issue the enforcement summons pursuant to Order 33 Rule 2 of the Family Law Rules the Federal Magistrate erred in that he:
(a)made such decision inconsistently with the determinations made by him in reasons delivered on 18 February 2005;”

(By leave given at the hearing, the date originally in Ground 1(a), 24 December 2004, was deleted, and 18 February 2005 inserted)
(b)failed to have any or any proper regard to the fact that the enforcement summons sought a declaration that the amounts owing under the registered maintenance liability were a debt due and owing by the first appellant, [the father], to the Commonwealth of Australia;
(c)failed to have any or any proper regard to the fact that the debt sought to be enforced was a registered maintenance liability.”

Baumann FM’s reasons in relation to the question “Was there power to issue enforcement?” were as follows:
“21. A more substantiative submission is contained at paragraphs 8 to 20 of the Respondent’s written submissions dated 15 March 2005 – in essence that because no “order” exists, there is no power available to the Child Support Registrar to issue an enforcement summons in terms of O33 R2 of the Family Law Rules. The Respondent relies upon the decision of Monteith J in Deputy Child Support Registrar v [K] (unreported 19 November 2001). Such a decision was followed by Hannon J in Deputy Child Support Registrar v The Public Trustee (unreported 20 December 2001) who considered the earlier decisions (including the Full Court decisions in Harrison (1996) FLC 92-256 and Hendy (2001) FAMLR 641).
22.    The clear indication from these decisions is that Order 33 does not provide a remedy for the enforcement of the debts due to the Commonwealth under a registered administrative assessment.
23. However, that is not the case in these proceedings. The liability in this case is an order of a Court exercising powers under the Family Law Act 1975 – essentially a Stage 1 matter. As was said in Harrison at 82,755:-
“…the reference to “the Act” in Order 33 Rule 2(6) may, by operation of s 105 of the Collections (sic) be taken to include authorisation given to the registrar to recover monies due under the Collection Act arising from non-payment of registrable maintenance liabilities.”
24.    Such a view is consistent with the decision of Kay J in Deputy Child Support Registrar & Froehlich (1991) FLC92-203 at 78,390.
25.    I adapt (sic) the submissions of the Applicant in this regard as to the effect of the Rules to accept that power did exist to issue the enforcement summons.”
The submission made orally in support of ground 1(a) was that, in deciding on 17 June 2005 that the enforcement summons pursuant to order 33 rule 2 had been issued within power, Baumann FM treated the liability, recovery of which was sought, as arising pursuant to court order. However, in his judgment of 18 February 2005, he treated the same liability as a registered maintenance liability, when dealing with the husband’s application for discharge of arrears.
As stated, this submission is confusing, because in his written submissions in support of the appeal, senior counsel for the appellants accepts that the liability of the father was a registered maintenance liability. However, (save for penalties) it was also unarguably one that arose from a court order.
We think the intended thrust of the submission was that it was inconsistent for the Federal Magistrate to apply the provisions of s 66W of the Family Law Act in determining whether the liability that had arisen from court orders should be discharged or varied, and then to apply the provisions of the Collection Act to recovery by the Commonwealth of the same liability, but as a debt due to it, constituting a registered maintenance liability.
We disagree with this submission. Senior counsel for the appellants does not suggest that either the father in respect of his application or the Registrar in the enforcement proceedings, lacked standing. The two applications are different in nature and rely upon completely different statutory bases.
There is no merit to this argument.
As to grounds 1(b) and (c) senior counsel for the appellants conceded that the arguments were somewhat academic, because the relevant rule had been amended between the issue of the enforcement summons and the decision of the Federal Magistrate. Nonetheless, he did not abandon the arguments. In our view:

•firstly, it is clear that in so far as the debt pursued by the Registrar was comprised of child maintenance arrears, the rules at the time the enforcement summons was issued accommodated that procedure.
•Secondly, the rules may also have accommodated the procedure for the recovery of penalties also but in view of the third observation, it is unnecessary to reach a conclusion about that.
•Thirdly, as conceded, the rules did accommodate the procedure by the time the orders were made.

Before we discuss these views further, we set out relevant legislative provisions and the rules.

Family Law Act

Section 109A in relevant parts provides:
“(1)   The power of the Judges … under section 123 to make Rules of Court extends to making Rules of Court for or in relation to, or for or in relation to anything incidental to, the enforcement by the court of:
…
(c)the Child Support (Registration and Collection) Act 1988; or…
and, in particular for or in relation to any of the specific matters mentioned in subsection (2).
(2)     The specific matters are as follows:
(a)requiring a person to do any one or more of the following:
(i)to attend before a court or Registrar and answer questions or produce documents;
(ii)to deliver a document or article to, or to a person specified by, a court or Registrar;
(iii)to transfer the ownership of specified property to another person;
(iv)     to give another person possession (including exclusive possession) of specified property;
(v)to deliver a specified chattel to another person;
(vi)to do, or abstain from doing, any other act;
(b)…”
Section 109B provides in relevant part:
“(1) Section 109A applies to the making of Rules of Court under section 81 of the Federal Magistrates Act 1999 in a corresponding way in which it applies to the making of Rules of Court under section 123 of this Act.”

The Collection Act

Section 104 provides:
“Jurisdiction is conferred on the Family Court and the Federal Magistrates Court and, subject to subsection (7), the Supreme Court of the Northern Territory and each Family Court of a State is invested with Federal jurisdiction in relation to matters arising under this Act.”
Section 105 provides:
“(1) The Family Law Act 1975 (other than Part X of that Act), the standard Rules of Court and the related Federal Magistrates Rules apply, subject to this Act and with such modifications as are prescribed by the applicable Rules of Court, to proceedings under this Act (other than proceedings under subparagraph 113(c)(i) as if:
(a)the proceedings were proceedings under that Act…”
(2) Where any difficulty arises in the application of subsection (1) or in relation to a particular proceeding, the court exercising jurisdiction in the proceeding may, on the application of a party to the proceeding or of its own motion, give directions, and make such orders, as it considers appropriate to resolve the difficulty.”
Section 113 provides:
“(1) Debts due to the Commonwealth under this Act:
(a)are payable to the Registrar in the manner and place prescribed;
and
(b)may be sued for a recovered; by the Registrar suing in his or her official name; and
(c)may be recovered in;
(i)a court having jurisdiction for the recovery of debts up to the amount of the debt; or
(ii)a court having jurisdiction under this Act.”
As at September 2001, when the enforcement summons was issued, the Federal Magistrates Court Rules 2001, by virtue of r 1.05(3)(a) and schedule 3, applied Order 33 of the Family Law Rules. Senior counsel for the appellants’ arguments hinge upon the provisions of Order 33, Rules 2 and 3.
In September 2001, Order 33 r 3 of the Family Law Rules provided:
“3 Summary procedures on refusal or failure to comply with certain orders
(1) If a person is alleged to have refused to comply with an order or agreement to which rule 2 applies, the person who is entitled to the money payable under the order or agreement, or a person who is entitled to take proceedings for the purpose of enforcing the payment of those moneys, or the forfeiture of a bond, may file an affidavit requesting the issue of:
(a)in relation to a debt due to the Commonwealth:
(i)a notice in accordance with Form 45A; or
(ii)a summons in accordance with Form 45B; or
(b)in any other case:
(i)a notice in accordance with Form 45; or
(ii)a summons in accordance with Form 46.…” (emphasis added)
Order 33 r 2 provided in part:
“2. Enforcement of maintenance etc orders and debts due to the Commonwealth
(1) This rule applies to:
(a)the recovery of a debt due to the Commonwealth under section 30 or 67 of the Child Support (Registration and Collection) Act 1988; and
(b)an order that a party pay maintenance or other money for the benefit of the other party, or of a child, made under:
(i)the Act; or
(ii)the Child Support (Registration and Collection Act 1988;
…”

In so far as the debt pursued by the Registrar was comprised of child maintenance arrears, the rules at the time the enforcement summons was issued accommodated that procedure.

The argument for the father was essentially that, while Order 33 r 2 included reference to:
“(1)
(a)the recovery of a debt due to the Commonwealth under section 30 or 67 of the Child Support (Registration and Collection ) Act 1988;…” (emphasis added)
rule 3 only referred to the issue of a notice or summons where there had been a refusal or failure to comply with “an order or agreement to which rule 2 applies…” (emphasis added).
As recounted in Baumann FM’s reasons earlier quoted, senior counsel for the appellants, in his submissions of 17 March 2005, referred to and placed reliance upon, the decision of Monteith J in Deputy Child Support Registrar v [K] in which his Honour said:
“In my opinion it is clear beyond argument that all the enforcement provisions relate to decrees or orders or agreements referred to in rule 2 of order 33. It is impossible in my opinion to read “a debt due to the Commonwealth under section 30 or section 67” or “a liability to pay child support under an assessment made under the Child Support Assessment Act” as “an order or agreement to which rule 2 applies” of order 33. The Full Court in Hendy said as much.”
A reading of the decision of Monteith J discloses that his Honour was concerned with an attempted enforcement of an administrative assessment, which was a registrable maintenance liability in accordance with section 30 of the Collection Act, and with penalties, which were debts to the Commonwealth pursuant to section 67 of that Act. He was concerned that in respect of such debts, if an enforcement summons was issued by the court, it would be in respect of a debt arising, not under a judgment or order of the court, but by virtue of an administrative process. Moneith J was concerned that the issue of a summons in those circumstances offended fundamental principles.
In our view, Baumann FM correctly distinguished Deputy Child Support Registrar v [K] because (save for penalties) “the liability in this case is an order of a court exercising power under the Family Law Act 1975…”.
Therefore we reach the conclusion expressed earlier and repeated in the heading to this discussion, namely the rules accommodated the procedure followed, so far as arrears of child maintenance are concerned.

The rules may also have accommodated the procedure for the recovery of penalties, but in view of our third observation, it is unnecessary to reach a conclusion about that

As far as penalties were concerned, it may well be that, given that within Order 33 r 3(1) there is specific reference (O 33 r 3(1)(a)) to a debt due to the Commonwealth, a proper interpretation of the subrule is that the issue of a notice or summons was available in respect of a debt due to the Commonwealth, notwithstanding that earlier in the same sub-rule the reference in the first paragraph was limited to “If a person is alleged to have refused to comply with an order or agreement”. However, we think it unnecessary to decide this point in this appeal.

As conceded, the rules did accommodate the procedure by the time the orders were made

Order 33 of the Family Law Rules was amended by the Family Law Amendment Rules 2002 (No.1) (SR 23 of 2002). O 33 r 2(1)(4B) was introduced and provided:
“If a person seeks to enforce an obligation that is not an order of the court, or is not deemed by the court to be an order of the court, the person may apply to the court for:
(a) an order declaring the amount of the obligation; and
(b) a second order that the obligation be paid.”
The next paragraph was:
“(5) An obligation may be enforced by one or more of the following means
(a) …
(b)…
(c)…
(d)sale of real property.”
Rule 3, as amended, provided:
“3 Summary procedures on refusal or failure to comply with certain orders
(1) If a person fails to satisfy an obligation, a person seeking to enforce the obligation may file an affidavit requesting the issue of::
(a)in relation to a debt due to the Commonwealth:
(i)a noticed in accordance with Form 45A; or
(ii)a summons in accordance with Form 45B; or
(b)in any other case:
(i)a notice in accordance with Form 45; or
(ii)a summons in accordance with Form 46.…”
The Family Law Rules were re-written with the introduction of the Family Law Rules 2004. Consequently, on 29 March 2004 some amendments were made to the Federal Magistrates Court Rules 2001.
Rule 1.05 then read:
“(1)   It is intended that the practice and procedure of the Federal Magistrates Court be governed principally by these Rules.
(2)     However, if in a particular case the Rules are insufficient or inappropriate, the Court may apply the Federal Court Rules or the Family Law Rules 2004 or the Family Law Rules 1984, in whole or in part and modified or dispensed with, as necessary.
(3)     Without limiting subrule (2):
(a)the provisions of the Family Law Rules set out in Part 1 of Schedule 3 apply, with necessary changes, to family law or child support proceedings; and
…”
Schedule 3 referred to in r 1.05(3)(a) did not pick up the relevant enforcement provisions of the Family Law Rules 2004. However, the amended Federal Magistrates Court Rules provided:
“25B.05
(1) Order 33 (other than rule 10) of the Family Law Rules 1984 applies, with necessary changes, to family law or child support proceedings.
Note The text of Order 33 (other than rule 10) of the Family Law Rules 1984 is set out in Note 1 in Schedule 5 (Notes to these Rules).
(2) A reference in Order 33 of the Family Law Rules 1984, as applied by subrule (1), to Form 45, 45A, 45B or 46 is a reference to the Form identified by that number, or by that number and letter, set out in Part 2 of Schedule 2.”
Schedule 5 contained the terms of Order 33, as amended in 2002.
As earlier seen, Baumann FM said:
“25. I adapt (sic) the submissions of the Applicant in this regard as to the effect of the Rules to accept that power did exist to issue the enforcement summons.”
The submissions of the applicant (ie. the Registrar), referred to by Baumann FM in paragraph 25 were as follows:
“ENFORCEMENT SUMMONS UNDER ORDER 33 RULE 25b.01 AND SCHEDULE 5 OF THE FEDERAL MAGISTRATES COURT RULES 2001 (SCHEDULE 5)
25. By operation of Rule 25B.01 and Schedule 5 of the Federal Magistrates Court Rules 2001 (Schedule 5), Order 33 of the Family Law Rules 1984 (now repealed) provides the procedure for the enforcement of an “obligation”.
26.    An obligation means an obligation to which Rule 2 Schedule 5 applies (see Order 33, Rule 1 Schedule 5).
27.    If a person fails to satisfy an obligation then a request can be made for the issue of an enforcement summons. (see Order 33, Rule 3 Schedule 5)
28.    Rule 2(1)(a) Schedule 5 states that it applies to the recovery of a debt due to the Commonwealth under section 30 or section 67 of the Collection Act.
29.    an order declaring the amount of the obligation and an order that the obligation be paid can be sought pursuant to Rule 2(4B) Schedule 5.
30.    Rule 2(5) Schedule 5 allows an obligation to be enforced by one or more of the following means:
(i)garnishment;
(ii)seizure and sale of personal property;
(iii)     sequestration of estate;
(iv)     sale of real property.
31.    The arrangements proposed are contemplated by the rules and this is an appropriate case for them to be made.”
We think that the reference to Rule 25B.01 in paragraph 25 of the submissions ought more properly have been a reference to Rule 25B.05.
We think there may be some confusion in tense in paragraph 25 of Baumann FM’s reasons, in that he accepts that “power did exist to issue the enforcement summons” (emphasis added): whereas the submissions for the Registrar was that “31. The arrangements proposed are contemplated by the rules and this is an appropriate case for them to be made”. (emphasis added)
Senior counsel for the appellants’ submissions of 17 March 2005, on the point that is the subject of these grounds, were couched under the heading “Jurisdiction of the Federal Magistrates Court”. This heading could promote a misconception. The legislatively conferred jurisdiction and powers of the Federal Magistrates Court are of course, not contained with the rules of court. Rules serve quite a different function, though may within that function deal with “powers”.
Section 81 of the Federal Magistrates Act 1999 provides:
“(1)   The Federal Magistrates, or a majority of them, may make Rules of Court:
(a)   making provision for or in relation to the practice and procedure to be followed in the Federal Magistrates Court (including the practice and procedure to be followed in registries of the Federal Magistrates Court); or
(b)   making provision for or in relation to all matters and things incidental to any such practice or procedure, or necessary or convenient to be prescribed for the conduct of any business of the Federal Magistrates Court; or
(c)prescribing matters required or permitted by:
(i)any other provision of this Act; or
(ii)any other law of the Commonwealth;
to be prescribed by the Rules of Court.
(2)     Rules of Court have effect subject to any provision made by another Act, or by rules or regulations under another Act, with respect to the practice and procedure in particular matters.
(3)     The Legislative Instruments Act 2003 (other than sections 5, 6, 7, 10, 11 and 16 of that Act) applies in relation to rules of court made by the Court under this Act or another Act:
(a)as if a reference to a legislative instrument were a reference to a rule of court; and
(b)   as if a reference to a rule‑maker were a reference to the Chief Federal Magistrate acting on behalf of the Federal Magistrates; and
(c)    subject to such further modifications or adaptations as are provided for in regulations made under section 120 of this Act.
(4) Despite the fact that section 16 of the Legislative Instruments Act 2003 does not apply to rules of court made by the Court under this Act or another Act, the Department may provide assistance in the drafting of any of those Rules if the Chief Federal Magistrate so desires.”

The Legislative Instruments Act 2003, s 12, in relation to the Federal Magistrates Rules, as amended on 29 March 2004, has the effect that the rules did not operate retrospectively.
However, we think it important to recognise that we are not here concerned with an order made in circumstances contrary to or outside rules, but rather that, with reference to part of the subject matter, part of the process leading to the orders, may have been outside the rules as they stood at the time.
It appears from the reasons of Baumann FM on 17 June 2005, that the orders sought by way of enforcement were conveyed to the court in the written submissions of the Registrar on 7 February 2005. Senior counsel for the appellants did not suggest that, at any time before his submissions of 17 March 2005, the point about the issue of the enforcement summons three and a half years beforehand, had been taken.
Before us the argument did not deal with the effect of part of a proceeding falling outside the rules at the time. In any event, in our view, the proceedings were not thereby rendered a nullity.
Firstly, in effect because by the time of determination the rules accommodated the process taken in respect of all of the Registrar’s claim, the decision of Baumann FM on this point amounts to a waiver of any earlier non-compliance to enable adjudication on the merits.
Secondly, again though not argued before us, through a chain of provisions commencing with Rule 1.05 of the Federal Magistrates Court Rules, the Family Law Rules 2004 and 1984 and s 38(2) of the Family Law Act, Rule 2.03.l of the High Court Rules may have applied. That rule provides:
“2.03.1A failure to comply with these Rules is an irregularity and does not render a proceeding or any step taken in a proceeding, or any document, judgment or order in a proceeding or nullity.”
We find no merit in this ground.

Ground 2

“2. That in determining that the creation and continuation of the [Ithaca Trust] by the appellants were a sham, the Federal Magistrate erred in that he:
(a)failed to have any or any proper regard to the proper interpretation of the word “sham”;
(b)failed to have any or any proper regard to the evidence as to the purpose for which the [Ithaca Trust] was established;
(c)failed to have any or any proper regard to the nature of the transactions entered into by the Trust in the course of its operation; and
(d)made the finding inconsistent with the determination made by him on 24 December 2004.”

There is immediately upon a reading of this ground a misconception, which is of some significance to the ground’s prospects. The Federal Magistrate did not determine “…that the creation and continuation of the [Ithaca Trust] by the appellants were a “sham”.”
Although in paragraph 35 Baumann FM said “The facts as I find them to be, cause a consideration of whether the “whole transaction” is a “sham”, he shortly after expressed his finding arising from that consideration:
“39. I regard the transaction (not the trust creation) in acquiring, operating and otherwise managing the property through the trust as an attempt to disguise the true position – namely that the property is in all respects the property of [the father].”
As indicated earlier in respect of these grounds, senior counsel for the appellants relied heavily on submissions made in March 2005, prior to the orders and reasons of 17 June 2005, but after the findings of fact were handed down on 24 December 2004. In so far as those submissions related to the order for sale (then proposed by the Registrar), they relied heavily on a decision of Warnick J in BP v KS (2003) FLC 93-157. As seen earlier, Baumann FM distinguished that case, which he regarded as dealing with “…an entirely different situation…”. No submissions have been made to us to the effect that in so doing, the learned Magistrate erred.
In the submissions of March 2005, senior counsel for the appellants said:
“26. It is not uncommon where a Court finds that a trust is either a sham or the alter ego of a party that it might direct that party to take a step in relation to trust property that would provide that party with the facility to satisfy an order for property settlement. Such an order can only be made where that party has an ability to control the trust to give effect to that order in such a way that there is no breach by that party or by any other person of a fiduciary duty. Thus, if a party is the director of the trustee company or has the power of appointment in a deed of trust, it would be conceivable that that party might be ordered to take a step that would either make that person a beneficiary sufficient to make a distribution of capital or income to that party needed to give effect to an order.
27. Such is not the case with [the father]. It is the case that [the father] is not in any position in relation to the [Ithaca Trust], whether as director, beneficiary or holding power of appointment that would enable him to take any action in relation to the trust that would enable the sale of the [MU] property and the provision of the proceeds to the applicant.”
Senior counsel for the appellants conceded that the submissions in paragraph 27 were in error. The father was a director of the trustee company and was the named principal. He had power to appoint beneficiaries and to appoint and remove trustees.
The effect of these concessions, the content (quoted in paragraph 142) of paragraph 26 of senior counsel for the appellants’ March 2005 submissions and the findings that had then already been made by the Federal Magistrate on 24 December 2004, that “Ithaca Holdings” and the “Ithaca Trust” were the “alter egos” of the father, senior counsel for the appellants’ submissions now made seem to essentially dissolve into a complaint seems to be an acknowledgement that what the orders appealed achieved directly could be achieved in any event, albeit less directly.
While in some instances the law might permit something to be done indirectly, but not directly, the point seems without merit in this instance, where there is no challenge to the findings classifying the trust and trustee as “alter egos” of the father. As senior counsel for the Registrar said in his outline of argument:
“17. No criticism can be found in the Notice of Appeal or Outline of Argument for the Appellants as to the findings of fact in the reasons for judgment delivered 24/12/04; and the Respondent’s outline is drawn on this basis.…”
In our view, the two paragraphs quoted (26 and 27) contain the entirety of the relevant arguments in the March 2005 submissions. The only other arguments were contained in three paragraphs of the outline of argument in support of the appeal. They attack the findings of “sham”, or perhaps the appellant’s erroneous perceptions of the findings, and are as follows:
“9.    There was nothing in the establishment or operation of the [Ithaca Trust] which conveyed an intention that that Trust be mistaken for something else or that it was not really what the Trust purported to be. There was no evidence which supported a finding that the Trust was a spurious imitation, a counterfeit, a disguise or a false front. There was no evidence that led to a finding that it was not genuine or true but something made in imitation of something else, or made to appear to be something which it was not. The Trust could not be seen to be false or deceptive.
10.    The [Ithaca Trust] was not intended to be a façade behind which the appellant might carry on activities which were not really directed to the stated purpose but to other ends. It was a trust that was established to invest and operate upon the bequests made to the children of the marriage by their grandfather within the testamentary trust established by him and it was operated, albeit under the direction of the husband, for that purpose only. The Trust could not be determined to be a sham on that basis.
11.    The only basis upon which the Federal Magistrate found an ability to make orders against the property of the [Ithaca Trust] was his mistaken view of that Trust as a sham. As that finding was not open to the Federal Magistrate, no such orders could be made.”
These are curious submissions, which do not seem to join issue in any direct way with the Federal Magistrate’s actual conclusions about the trust and the real property it held.
In our view, they overlook the very significant findings set out in paragraphs 32, 38, 39 and 40 of the Federal Magistrate’s reasons (earlier quoted, but repeated here):
“32. As [the father] conceded in his evidence, the Trust was formed because of the “ongoing proceedings by my ex-wife against the children’s money.
…
38.    It would, in my view, be a quite unjust result if the father were entitled to avoid his creditors (particular this child maintenance liability) which he has cleverly designed for that clear purpose.
39.    I regard the transaction (not the trust creation) in acquiring, operating and otherwise managing the property through the Trust as an attempt to disguise the true position – namely that the property is in all respects the property of [the father]. (emphasis added)
40.    I therefore propose to adopt the interpretation identified by Gibbs J that a sham is something which has “being brought into being, in appearance rather than reality, as a device to assist one party to evade his or her obligations” (Ascot Investments Pty Ltd v Harper (1981) CLR 337 at 354), and disregard the existence of the [Ithaca Trust] – save for the existence of the loan taken out by the father (through the Trust) from the Testamentary Trust for the purpose of paying the deposit at acquisition.”
Like the ground, these submissions also suffer from the misapprehension as to exactly what it was that the learned Magistrate found to constitute a “sham”.
Finally, the proposition in ground 2(d) that the findings of 17 June 2005 were inconsistent with the findings of 24 December 2004 was not the subject of submissions.
We are not satisfied that there is any merit in the arguments in support of this ground.

Ground 3

“3. That in finding that he had power to make the orders sought against the property of the [Ithaca Trust], the Federal Magistrate erred in that he:
(a)relied upon his mistaken view of the [Ithaca Trust] as a “sham”; and
(b)failed to have regard to the fact that whatever be the determination of the nature of the [Ithaca Trust], such determination did not provide to the Court power to deal with the property of the Trust as the Court saw fit.”

Ground 3(a) could not succeed unless the learned Magistrate’s findings as to a “sham” were shown to be mistaken. We have already dealt with that argument in respect to the previous ground.
As to the power of the court to order directly in respect of “trust property”, Gibbs J said in Ascot Investments Pty Ltd v Harper and Harper (1981) FLC 91-000, at p 76,061:
“The authorities to which I have referred establish that in some circumstances the Family Court has power to make an order or injunction which is directed to a third party or which will indirectly affect the position of a third party. They do not establish that any such order may be made if its effect will be to deprive a third party of an existing right or to impose on a third party a duty which the party would not otherwise be liable to perform.…It can safely be assumed that the Parliament intended that the powers of the Family Court should be wide enough to prevent either of the parties to a marriage from evading his or her obligations to the other party, but it does not follow that the Parliament intended that the legitimate interests of third parties should be subordinated to the interests of a party to a marriage, or that the Family Court should be able to make orders that would operate to the detriment of third parties.…
The position is, I think, different if the alleged rights, powers or privileges of the third party are only a sham and have been brought into being, in appearance rather than reality, as a device to assist one party to evade his or her obligations under the Act. Sham transactions may always be disregarded. Similarly, if a company is completely controlled by one party to a marriage, so that in reality an order against the company is an order against the party, the fact that in form the order appears to affect the rights of the company may not necessarily invalidate it.”
In our view, there is clear support within this statement (with which there was express agreement from Aitkin and Wilson JJ and no disagreement by Mason J) for the orders which the Federal Magistrate made.
Moreover, section 109A of the Family Law Act (quoted in part earlier) provides that the court can make rules requiring a person to transfer specified property to another person and such rules have been made.
We consider that there is no merit in this ground.

Conclusion

It follows from our conclusions that we consider both appeals ought be dismissed.

Costs

We consider in view of the result of each appeal and having regard to the submissions made in relation to costs at the conclusion of the hearing of the appeals, that there should be an order for costs in favour of the respondent.

ORDERS

That appeal NA38 of 2005 be dismissed.
That appeal NA53 of 2005 be dismissed.
That the father pay the costs of the mother of and incidental to appeal NA38 of 2005 and the father and “Ithaca Holdings” Pty Ltd jointly and severally pay the costs of the Child Support Registrar of and incidental to appeal NA53 of 2005, in each case as agreed and in default of agreement, as assessed.

[2007] FamCA 152

2 March 2007