DAVIS & DAVIS
[2012] FMCAfam 1244
•4 December 2012
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| DAVIS & DAVIS | [2012] FMCAfam 1244 |
| FAMILY LAW – Contravention application – alleged breach of property orders – consequential orders – whether court has power to extend time for refinancing. |
| Family Law Act 1975, ss.112AB(1), 112AC(2) |
| FAI General Insurance Co Ltd v Southern Cross Exploration NL (1988) 165 CLR 268; (1988) 62 ALJR 216 (1988) 77 ALR 411; [1988] HCA 13 In the Marriage of Bray (1988) 93 FLR 183; (1988) 12 Fam LR 563; (1988) FLC 91-968 In the Marriage of Bugg (1989) 96 FLR 310; (1989) 13 Fam LR 471; (1990) FLC 92-110 In the Marriage of McDonald (1976) 10 ALR 436 (1976) 1 Fam LR 11, 391; (1976) FLC 90-047 In the Marriage of Ravasini (1982) 8 Fam LR 903; (1983) FLC 91-312 In the Marriage of Slapp (1989) 96 FLR 236; (1989) 13 Fam LR 158; (1989) FLC 92-022 |
| Applicant: | MS DAVIS |
| Respondent: | MR DAVIS |
| File Number: | MLC 5380 of 2011 |
| Judgment of: | Riley FM |
| Hearing dates: | 5, 8 & 27 November 2012 |
| Date of Last Submission: | 27 November 2012 |
| Delivered at: | Melbourne |
| Delivered on: | 4 December 2012 |
REPRESENTATION
| Counsel for the Applicant: | Dr Ingleby |
| Solicitors for the Applicant: | Logie Smith Lanyon |
| Counsel for the Respondent: | Ms Williams |
| Solicitors for the Respondent: | Stephen Farmer & Associates |
ORDERS
The contravention application filed on 31 August 2012 is dismissed.
By 4pm on 5 December 2012, the husband arrange with the Westpac Bank a date, time and place for settlement.
By 5pm on 5 December 2012, the husband notify the wife by email of the date, time and place of settlement.
The wife provide at settlement a signed, registrable withdrawal of the caveat number [omitted] lodged by her over the former matrimonial home.
The husband at settlement:
(a)refinance into his sole name all liability secured by mortgage registered no. [omitted] to the Bank of Melbourne; and
(b)provide to the wife the outstanding balance of the $6,400 by bank cheque (without deduction for any bank fees or expenses relating to the children).
The trust account cheque contained in exhibit 1 be returned to the solicitors for the husband.
The parties have liberty to apply on 24 hours written notice if there is any difficulty with the implementation of these orders.
IT IS NOTED that publication of this judgment under the pseudonym Davis & Davis is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE |
MLC 5380 of 2011
| MS DAVIS |
Applicant
And
| MR DAVIS |
Respondent
REASONS FOR JUDGMENT
Introduction
This is a contravention application. The wife alleges that the husband contravened certain property orders that were made by consent on
16 May 2012.
Count 1: refinancing
The first count in the contravention application is that the husband breached order 1.b in that he, on 16 July 2012:
… without reasonable excuse failed to sign all such documents and do all such acts and things necessary to refinance into his sole name all liability secured by mortgage registered no [omitted] to the Bank of Melbourne (also known as the Westpac Banking Corporation) (approximately $238,000) (Mortgage), so as to procure the release of the wife from all liability therefor (Refinance).
Order 1 of the orders made on 16 May 2012 is as follows:
That:
a.the husband retain for his sole benefit and to the exclusion of the wife all his right, title and interest in the real property registered in his sole name and situate at and known as Property M, in the State of Victoria (Property M) and more particularly described in Certificate of Title Volume [omitted];
b.on or before 16 July 2012 (Date), the husband sign all such documents and do all such acts and things necessary to refinance into his sole name all liability secured by mortgage registered no. [omitted] to the Bank of Melbourne (approximately $238,000) (Mortgage), so as to procure the release of the wife from all liability therefor (Refinance);
c.contemporaneously with the Refinance, the wife sign all such documents and do all such acts and things, at her expense, necessary to withdraw the caveat registration no. [omitted] lodged by her over Property M.
The husband denied the allegation.
The mortgage was over the Property M property, which was the former matrimonial home. The former matrimonial home was in the husband’s sole name. The mortgage was in the wife’s name, with the husband as guarantor. The mortgage secured borrowings that had been used to buy an investment property. The investment property was in the wife’s sole name. The wife had a caveat over the former matrimonial home.
The tenants of the investment property paid their rent into a bank account. The mortgage repayments were deducted directly from that account. In about May 2012, the wife sold the investment property without discussion with the husband. The sale proceeds were not sufficient to fully discharge the mortgage. There was then no rental income from which to repay the balance of the mortgage.
Under the orders, the husband was to retain the former matrimonial home. Since separation, he has lived in the former matrimonial home with the two teenage children of the relationship. (The younger daughter, under consent orders, is to spend alternate weeks with her mother. The older daughter, who has psychiatric issues, does not spend any time with her mother.)
At the settlement of the refinancing transaction, the wife was to provide a withdrawal of the caveat that she had placed over the former matrimonial home. The orders provided that, in the event of a default in the refinancing that lasted more than seven days, the house was to be sold.
The wife said that the husband without reasonable excuse failed to do all things necessary to refinance the mortgage by 16 July 2012. The husband denied the allegation. He said that he did all that he could to facilitate the refinancing. In particular, he obtained approval for the necessary loan on 3 July 2012 and signed and returned to the bank the loan documents on 13 July 2012. However, the husband said, the wife frustrated the refinancing by failing to provide a withdrawal of her caveat because she wanted the former matrimonial home to be sold.
The wife did, indeed, argue that the default provisions in the orders had been triggered and sought orders for the former matrimonial home to be sold. The default provision was in order 14. That order provided as follows:
That:
a.In default of the Refinance and/or the Payment by the Date and such default continues for a period of 7 days, Property M be sold (Default Sale) and upon completion of the Default Sale, the proceeds of sale be applied:
i.first, to pay all costs, commission and expenses of the Default Sale;
ii.secondly, to discharge the Mortgage and any other encumbrance affecting Property M;
iii.thirdly, so much of the Payment as is then outstanding together with interest thereon at the rate prescribed by the Family Law Rules 2004 from time to time, adjusted monthly from the Date until payment to the wife, subject to sub-paragraphs (b) and (c) hereof.
b.In the event of the Default Sale, the parties be liable for and pay any capital gains taxation referable thereto in the following proportions:
i. 55% by the husband; and
ii. 45% by the wife.
c.In the event the sale price of Property M upon the Default Sale is greater than $1,150,000, the parties shall be entitled to the difference between the sale price and $1,150,000 in the following proportions:
i. 55% to the husband; and
ii. 45% to the wife.
d.Liberty to apply be reserved in relation to the Default Sale and the terms and conditions thereof.
Both parties were legally represented when the consent orders were made on 16 May 2012. However, the husband decided to carry out the requirements of the orders without the assistance of solicitors.
The wife’s loan was with the Westpac Bank. The husband initially asked the Westpac Bank to simply transfer the wife’s loan to his name. The Westpac Bank told him that they could not do that.
The husband then applied to the Commonwealth Bank for a loan on
2 June 2012. The Commonwealth Bank asked the husband to obtain from the wife a signed “request to release” form and the last six months home loan statements. The wife declined to provide those documents. She said that the only relevant information was the husband’s current ability to repay the loan as he would be solely responsible for it.
On 4 June 2012, the husband made a preliminary application for a loan from the Westpac Bank. He lodged the formal loan application documents with the Westpac Bank on 26 June 2012. The loan was approved on Tuesday 3 July 2012.
The husband was on holiday with the parties’ older daughter in the week beginning Monday 9 July 2012. He signed and returned the required documents to the Westpac Bank on 13 July 2012.
The husband said that he understood from the bank that he had done all that he needed to do to effect the refinancing. He seemed to think that, having signed the required documents, the refinancing would go through more or less automatically. The husband said that he was not aware of the wife’s caveat until 23 July 2012, when the Westpac Bank’s draw down team contacted him. He said that, through ignorance, he had thought the property could be refinanced independently of the withdrawal of the caveat.
The wife said in her affidavit that the Westpac Bank had advised her that the husband would have to book the settlement. The husband said in his oral evidence that his understanding was that the Westpac Bank draw down team would organise the settlement. Unfortunately, no one organised the settlement.
The refinancing was due under the orders on Monday 16 July 2012. The orders also required the husband to pay the wife $6,400 contemporaneously with the refinancing. The husband asked the wife for her bank account details so that he could pay the money electronically. The wife refused to provide them, and asked for the money by bank cheque. The husband emailed the wife at about 2pm on 16 July 2012 saying that her requirement for a bank cheque would delay settlement. The wife replied the following day saying the husband was in breach of the orders and he had seven days to remedy the breach.
Records of the Westpac Bank were exhibited to the wife’s affidavit. They show that the husband’s loan for the purposes of the refinancing was drawn down at about 8pm on Wednesday 18 July 2012. The bank records show that the draw down was reversed less than an hour later:
as marital split caveat must be removed from title prior to draw down.
The bank records show that Ms H, from the Westpac Bank, noted at about 3pm on 19 July 2012 that she had contacted the wife’s former solicitors who said that they had an outstanding account that the wife needed to pay before they would lift the caveat. Ms H also noted that the wife had a new solicitor, Mr Broadbent, of Oakley Thompson and Co. Ms H telephoned Mr Broadbent.
Mr Broadbent sent the wife an email on Friday 20 July 2012 at about midday saying that the wife’s former solicitors had lodged the caveat for the wife’s benefit, and, accordingly, she could remove the caveat herself and without any recourse to her former solicitors. The wife replied to Mr Broadbent saying that she had prepared the withdrawal of caveat. Mr Broadbent emailed the wife again at 6.40pm on Friday 20 July 2012, saying:
I asked the Westpac person (Ms H) to contact you directly and I thought she was [going] to do that. Her contact number is [omitted]. I suggest you call her on Monday and see if you can sort it out. As I understand everything is close to resolving I’d suggest it might be worthwhile trying to get it ‘over the line’. The alternative is to again become embroiled in a dispute that might involve lawyers and further costs.
The wife said she rang Ms H on Monday 23 July 2012 at about midday but she was unavailable. The wife said she left a message for Ms H. The wife said Ms H called back when the wife was on her way to the husband’s workplace for “settlement”. (No one but the wife was under the impression that settlement was going to occur at the husband’s workplace.) The wife said that she told Ms H that she was aware that Westpac was not in a position to discharge the mortgage at the “settlement” but the wife would provide the husband with the required documents at “settlement”.
The records of the Westpac Bank, which appear to be intended to be complete, make no mention of a telephone conversation between Ms H and the wife on 23 July 2012, much less a settlement on that date.
However, Ms H did record in the notes of the Westpac Bank that the husband told her, at about midday on Monday 23 July 2012, that he was meeting with the wife that day.
The wife said that settlement was to be at the husband’s work. She said that she told the husband by telephone that she was aware that he was not able to comply with the orders on 23 July 2012, but that she would provide her documents to the husband. She said that the husband said that he would not meet her. The wife said that she delivered a signed withdrawal of caveat and other documents to a person at the husband’s work.
The husband said that he arranged to meet the wife at his work. He said that when she called him at 1pm to say she was there, he told her that he would be 10 minutes. The husband said that the wife then said that she could not wait that long. The meeting did not take place. The husband said that he had agreed to a meeting, rather than a settlement. Neither party suggested that the Westpac Bank had agreed to a settlement at the husband’s workplace.
The actual documents delivered by the wife were tendered to the court. Relevantly, there was a purported withdrawal of caveat. It was dated 23 July 2012 and was signed by the wife in black pen. However, the signature has been crossed out in purple pen, with eight lines in a cross hatch pattern. The document had two red, diagonal, parallel lines across it, about eight centimetres apart. Between the lines, also in red, was the word “COPY”, in letters about three centimetres high. The red lines were thick, and looked like they were made with crayon, or possibly lipstick.
The husband said that the documents were delivered to him exactly as they now appear. The husband was not challenged on that evidence and I accept it. (Obviously, a withdrawal of caveat in that state would not be accepted by the titles office.)
The wife, on the other hand, said in her affidavit that she exhibited a true copy of the withdrawal of caveat. The document that she exhibited was a copy of the withdrawal of caveat before her signature had been crossed out in purple pen and “COPY” had been written across it inside two parallel lines in red crayon or possibly lipstick.
The wife spoke to Ms H at the Westpac Bank on the following day, Tuesday, 24 July 2012 at about 12.30pm. Ms H’s notes read:
I have now called Ms Davis in relation to organising a settlement. She has advised me that she attended settlement with Mr Davis yesterday and her requirements were not met. I am unsure about settlement as settlement to obtain withdrawal of caveat needs to be made with Westpac. She advised me that she is organising for the house to be sold and details are now with the lawyers.
Ms H spoke to the husband at about 3.20pm on 24 July 2012. Her notes of that conversation say:
I have now called Mr Davis to discuss arranging a settlement. … I have advised Mr Davis that we are ready for settlement.
The wife said that, in these circumstances, the husband had not done all things necessary to refinance the loan. The wife relied on the case of In the Marriage of Bugg (1989) 96 FLR 310; (1989) 13 Fam LR 471; (1990) FLC 92-110. In that case, an order required the husband to:
do all acts and things and sign all deeds, documents and writings necessary to transfer to the Wife the whole of his right, title and interest [in the former matrimonial home] … .
The Full Court held that the order required the husband to:
deliver to the wife a duly stamped form of transfer in registrable form which without further assistance from the husband would enable the wife to procure the registration of the transfer of title to her.
The present case does not involve a transfer. It involves the refinancing of a loan which, on the evidence, could not occur without the wife withdrawing her caveat. Consequently, In the Marriage of Bugg does not apply directly to the present situation.
More importantly, the Full Court decided In the Marriage of Bugg without reference to s.112AB(1) of the Family Law Act 1975. That was entirely proper, as that subsection was introduced by Act No 182 of 1989 and did not come into force until 25 January 1990. In In the Marriage of Bugg, the relevant orders were made on 6 July 1988 and the contravention occurred in late September 1988. The Full Court’s judgment was delivered on 16 November 1989. On any view, s.112AB(1) of the Act had no application to In the Marriage of Bugg.
Subsection 112AB(1) of the Act clearly applies to the present case. It relevantly provides that:
A person shall be taken for the purposes of this Part to have contravened an order under this Act if, and only if:
(a)where the person is bound by the order - he or she has:
(i)intentionally failed to comply with the order; or
(ii)made no reasonable attempt to comply with the order;
I am not satisfied on the evidence that the husband intentionally failed to take all necessary steps to refinance the property or made no reasonable attempt to refinance the property.
I note that the husband was not specifically cross examined about his intention. He gave evidence, which was not specifically challenged, that he thought he had done everything he needed to do for the refinancing to go through. I accept that evidence.
The evidence shows that the husband did everything necessary to obtain his own loan in good time to refinance the wife’s loan by the due date. It seems to me, on the evidence, that the husband had every intention of refinancing by the due date but that did not happen because of the wife’s caveat. The husband did not appreciate the significance of the caveat until after the due date. Indeed, the Westpac Bank apparently did not appreciate that there was a caveat at all until after the loan was drawn down on 18 July 2012.
At that point, if the wife had been moderately cooperative, the matter could have been resolved on 23 July 2012. The husband had arranged for the money to be ready for the refinancing to occur. The wife’s own solicitor advised her to ring Ms H on 23 July 2012 to sort the matter out. The wife claims that she did. However, the records of the Westpac Bank, which were exhibited to the wife’s own affidavit, contain no mention of such a telephone call.
In view of:
a)the wife’s claim that she was exhibiting to her affidavit a true copy of the withdrawal of caveat that she delivered to the husband when in fact she delivered a withdrawal of caveat that was defaced; and
b)the fact that the records of the Westpac Bank appear to be complete but make no mention of a telephone call with the wife on 23 July 2012,
I do not accept that the wife did telephone Ms H on 23 July 2012. If she had, the matter would presumably have been finalised on 23 July 2012 and there would have been no occasion to bring this application.
In addition, I am satisfied that the husband made a reasonable attempt to comply with the order. He signed the various documents necessary to obtain a loan in good time. He understood from the bank that there was nothing further he needed to do. The wife did not point to any particular aspect of the husband’s approach to the refinancing that was unreasonable, except, perhaps, obliquely, that the husband did not meet the wife at his work on 23 July 2012.
I do not consider that to have been unreasonable. The notes from Ms H at the Westpac Bank make it clear that “settlement to obtain withdrawal of caveat needs to be made with Westpac.” That is, the settlement could not occur at the husband’s work. Therefore, it was not unreasonable for the husband not to meet the wife at his work for the purpose of settlement. Moreover, I accept the husband’s evidence that he did not meet the wife because she was unable to wait 10 minutes. It was the wife who was unreasonable in that situation, not the husband.
In addition, s.112AC(2) of the Act provides that:
A person (in this subsection called the respondent) shall be taken to have had a reasonable excuse for contravening an order under this Act if:
(a)the respondent contravened the order because, or substantially because, he or she did not, at the time of the contravention, understand the obligations imposed by the order on the person who was bound by it; and
(b)the court is satisfied that the respondent ought to be excused in respect of the contravention.
If it is the case that the husband, rather than the Westpac Bank, had the responsibility of appointing the settlement date and time, it is abundantly clear on the evidence that the husband was not aware of that requirement. In the terms of s.112AC(2) of the Act, the husband did not “understand the obligations imposed by the order”. I am satisfied that the husband ought to be excused in respect of the contravention. Therefore, he had a reasonable excuse for the contravention.
Consequently, count 1 will be dismissed.
Count 2: payment of $6,400
The second count in the contravention application is that the husband breached order 3.a in that he, on 16 July 2012:
… without reasonable excuse failed to sign all such documents and do all such acts and things necessary to contemporaneously with the Refinance, pay or cause to be paid the sum of $6,400 to the wife.
Order 3 of the orders made on 16 May 2012 is as follows:
That contemporaneously with the Refinance, the husband pay or cause to be paid the sum of $86,400 (Payment) as follows:
a. the sum of $6,400 to the wife; and
b.the sum of $80,000 to his solicitors, Pearsons (Pearsons), to be held upon trust for the husband and the wife and applied as provided for in paragraph 4 hereof.
The husband denied the allegation. Because the refinancing has not yet occurred, the obligation to pay the $6,400 has not yet arisen. That is a complete answer to this allegation. In any event, the husband has since paid the wife the $6,400, or almost all of it. (The wife did not allege that the husband failed to pay the $80,000 as required by the orders.)
For completeness, however, I note and accept the husband’s unchallenged evidence that he asked the wife for her bank details prior to 16 July 2012 so that he could transfer the funds to her electronically. The wife refused, and required cash or a bank cheque. The husband confirmed the wife’s refusal in an email sent at about 2pm on 16 July 2012.
I consider that the wife’s refusal was unreasonable. People routinely give bank account numbers to virtual strangers to enable electronic funds transfers to occur. It is an accepted and reasonably safe method of conducting business. Although a bank cheque is traditional, electronic funds transfer prior to the due date is also acceptable.
Within the terms of s.112AB(1) of the Act, I consider that the husband’s actions to this point demonstrate an intention to comply with the orders and a reasonable attempt to comply with them.
However, under cover of a letter dated 18 July 2012, the husband sent the wife a cheque for a little over $3,000. He said that he had deducted from the $6,400 the wife’s 50% share of specified expenses relating to the children’s [omitted] activities and their medical and dental treatment and the fee for a bank cheque.
By 30 October 2012, following advice from his lawyers, the husband recognised that he had been wrong to deduct the children’s expenses from the amount he owed the wife under the orders. On 30 October 2012, through his lawyers, the husband sent the wife a cheque drawn on his solicitor’s trust account for $3,187.35, being the balance of the $6,400. The wife has not accepted that cheque. The cover letter and the cheque have been tendered in evidence.
In any event, in terms of s.112AC(2) of the Act, the evidence indicates that the husband did not understand, until his lawyers advised him, that the orders required him to pay the full amount of the $6,400 without deduction for any expenses relating to the children. I am satisfied in all of the circumstances of this case that the husband ought to be excused in respect of this contravention. Those circumstances include:
a)the wife’s unreasonable refusal to accept an electronic transfer of funds;
b)the wife’s failure to telephone Ms H on 23 July 2012 to arrange a settlement, notwithstanding the wife’s own solicitor’s advice that she do so;
c)the wife’s generally uncooperative attitude towards the settlement; and
d)the fact that the husband corrected the situation, once he became aware of his error, by providing the balance by solicitor’s trust account cheque, although the wife has refused to accept it.
Count 2 will be dismissed.
Count 3: payment of the mortgage
The third count in the contravention application is that the husband breached order 13 in that he, in June, July and August 2012:
… without reasonable excuse failed to, pending the Refinance, stop the liability secured by the mortgage registered no [omitted] to the Bank of Melbourne (also known as the Westpac Banking Corporation) from increasing, by failing to pay the mortgage instalment payments due in June 2012, July 2012 and August 2012.
Order 13 of the orders made on 16 May 2012 is as follows:
That pending the refinance, each party be and is hereby restrained from increasing the liability secured by the mortgage, save and except in the case of the husband for the purposes of making the Payment.
In relation to this count, the wife also relied upon order 16.e, which provided as follows:
That unless otherwise specified in these Order[s] and save for the purposes of enforcing any monies due under these or any subsequent orders:
…
e.each party be solely liable for and indemnify the other party against any liability of his/hers or encumbering any item of property to which he/she is entitled pursuant to these Orders;
The husband denied the allegation. It was common ground that the mortgage was not paid in the months of June, July and August 2012. There was a dispute as to who was responsible for paying the mortgage. The orders did not specifically say who had that responsibility. The husband, as the guarantor of the mortgage, was notified of the default in the mortgage repayments. He then, as guarantor, discharged the arrears on about 2 November 2012.
The wife said that the husband was entitled to the former matrimonial home pursuant to the orders and the mortgage encumbered the former matrimonial home. Therefore, the wife said that the husband was solely liable for the mortgage and was required to indemnify the wife.
The husband said that the mortgage was in the wife’s sole name and she was liable for it until the refinancing occurred.
I consider that the husband’s interpretation of the orders is correct. It is also what the parties’ presumably intended. The usual situation in cases of this nature, in the absence of any other express arrangement, would be that the person with a particular liability would continue to discharge that liability until the refinancing occurred. There is nothing in the consent orders to displace that intention.
I also note that the husband, as guarantor, demonstrated good faith by bringing the mortgage up to date once the bank alerted him to the fact that it was in arrears.
Count 3 will be dismissed.
Count 4: ASIC documents
The fourth count in the contravention application was withdrawn. The count that is numbered 5 in the contravention application became count 4. That count is that the husband breached order 5.a in that he, on 16 July 2012:
… without reasonable excuse has contravened the steps required to Refinance and has prepared and lodged or authorised the preparation and lodgement of documents with the Australian Securities and Investment Commission (“ASIC”) without the Applicant’s knowledge or consent and before the Refinance has been completed the Date (sic) (16 July 2012) with documents being lodged with ASIC on 6 June 2012.
Order 5 of the orders made on 16 May 2012 is as follows:
That:
a.contemporaneously with the Refinance, the wife sign all such documents and do all such acts and things necessary, at the expense of the husband, to:
i. resign all officeholdings in [C] Pty Ltd;
ii.transfer to the husband or his nominee all shareholdings in the said company; and
iii.otherwise renounce any and all entitlement in or to the said company whatsoever; and
b.upon compliance by the wife with sub-paragraph (a) hereof, the husband indemnify and keep indemnified the wife in relation to any liability howsoever arising out of her involvement in [C] Pty Ltd including her officeholdings and shareholdings and any taxation liabilities past, present or future including liabilities for any taxation for any sums actually or notionally distributed or paid to her by the said company.
The husband denied the allegation.
The wife said in her affidavit sworn on 30 August 2012 that the husband, without her knowledge or consent, had signed a form and lodged it with the Australian Securities and Investment Commission with the result that she ceased to be a director and shareholder of [C] Pty Ltd.
The wife exhibited a copy of the completed form that her solicitors had obtained from ASIC. The form indicates that it must be signed by a current office holder of the company. It indicates that it was signed by the husband on 6 June 2012. However, the form obtained from ASIC does not actually bear anyone’s signature.
The husband in oral evidence denied that he had signed the form or instructed anyone to lodge it on his behalf. He said that the company’s accountant was Mr F.
The husband called Mr F to give evidence. Mr F said that he lodged the form electronically. He said that the original documents are still in his office, ready to be signed by the husband. Mr F said that he had been consulted by the parties’ barristers during the settlement negotiations on 16 May 2012 in relation to capital gains tax. He said he was aware that the orders required the wife to cease to be a director and shareholder of the company. He said he took it upon himself to lodge the form with ASIC. He said that no one instructed him to do so. He took umbrage at the suggestion of the wife’s counsel that he had acted improperly.
I accept the evidence of the husband and Mr F on this matter. Their evidence was not effectively undermined. Consequently, I do not accept that the husband prepared and lodged or authorised the preparation and lodgement of the relevant form with ASIC on 6 June 2012 or at all.
Count 4 will be dismissed.
Oral applications
At the conclusion of the hearing of the contravention application, the wife and the husband both made oral applications to the court. The wife argued that there had been a default and sought orders facilitating the sale of the former matrimonial home. The husband sought orders extending the date for the refinancing.
Default provisions in cases such as this are usually invoked where a party has been unable to obtain the necessary finance to buy out the other party’s share of a property. That was not what occurred in this case. In this case, the husband obtained the necessary finance in good time. However, through a misunderstanding on his part, an uncooperative attitude on the wife’s part, and a failure on the part of the Westpac Bank to appreciate that there was a caveat on the former matrimonial home, the settlement did not go through in a timely manner.
Ms H from the Westpac Bank rang both the husband and the wife on 24 July 2012 to organise a settlement. That was one day after the seven day grace period had expired. Most people in the wife’s position would have overlooked the slight delay and proceeded with settlement. However, the wife refused to do so and commenced contravention proceedings.
The husband, on the other hand, said that the court had power to vary the orders made on 16 May 2012 to extend the time for the refinancing. The husband relied on a series of cases culminating in In the Marriage of Ravasini (1982) 8 Fam LR 903; (1983) FLC91-312. In that case, a unanimous Full Family Court said at 905 to 907:
… Counsel for the appellant referred to McDonald and McDonald (1976) 1 Fam LR 11,391; [1976] FLC 90-407; Kaljo and Kaljo (1978) 4 Fam LR 190; [1978] FLC 90-445 and Molier and Van Wyk (1980) 7 Fam LR 18; [1980] FLC 90-911 as authority for the power of the court to make what is termed a machinery order. There is no question of the power of the court to make what we would with respect suggest is more properly called a consequential order. The real questions are what is the proper definition of consequential or machinery order and where is the dividing line between a consequential order which may be varied or modified and a substantive order which the Act gives no power to the court to modify or vary. Counsel for the appellant was unable to refer the court to any authority on this point… .
…
It is appropriate then to look at what a consequential order is. The Shorter Oxford Dictionary defines “consequential” as meaning “following esp as an effect, immediate or eventual, or as a logical inference”.
The Universal English Dictionary defines the word as “following as a consequence, on what has gone before, resultant: consequential alteration in wording of a document, those made necessary by others already made”. The same dictionary defines “consequence” as “event which follows upon something else which is, or appears to be, the cause; a result, outcome of what has gone before”.
A consequential order then, in a property matter, would include an order following logically or of necessity from a prior substantive order.
What a consequential order is not, is an order, the effect of which is to vary the prior order for property settlement. It is not possible to suggest that even the slightest variation of the original order is a consequence of it. What is being submitted in this appeal is that the original order should be amended not as a consequence of that order itself, not as a necessary follow-up of that original order but rather as a consequence of events which have happened in the market place since that order was made rendering the facts on which it was based no longer accurate.
Whether what is to be done is termed a consequential order or a machinery order the result is the same. The court has no power to vary the original order. It has power to enforce the order and to modify the machinery provisions of the order to effect enforcement provided that by so doing it does not affect the substantive rights of the parties. That power can also be used to spell out the effect of the order where that is not clear. (emphasis added)
An examination of the cases referred to bears out what we have already stated. In Kaljo’s case, supra, the court did not vary the substantive order namely that the husband provide up to $70,000 for the purchase of a home; what the court did do was to examine that order, discover its true meaning and then make further orders of a machinery, consequential or operative nature to enable the substantive order to be put into effect. The substantive order itself was not varied. That order could only be varied pursuant to the provisions of s 79A or on appeal or under the slip rule.
The same situation applies in the cases of Molier and Van Wyk, supra, and McDonald, supra. In Molier and Van Wyk the court again interpreted the substantive order and then made the necessary further orders to give it operation and effect. In McDonald and McDonald the order could be divided into two parts, the substantive order that the husband pay the purchase price to the wife and then the machinery or consequential orders which set out how that payment was to be made. Again the substantive order was not varied.
…
The true position then was summed up with precision by the Full Court in Molier and Van Wyk at 21 (Fam LR); 75,768 (FLC) where it was said: “It has been decided that while this court has no power to vary an order for property settlement, it has power to enforce the order and to modify the machinery provisions of the order to effect enforcement…” Thus, as we have set out above, the substantive order cannot be varied but the enforcement provisions, the secondary orders made as a consequence of the substantive order, to give it operation and effect, can be varied. It is therefore the construction of the order itself that is to be examined and not the basis of fact on which it was made. The test is not whether the unchangeable or substantive order is a just or proper order – that is a matter for appeal or for an application under s79A but whether the part or parts of the order sought to be changed are part or parts of the substantive or whether they are orders made to give efficacy to that substantive order.
The parties at the conclusion of the hearing on 8 November 2012 were in dispute about whether the order for the refinancing was a machinery order, which the court could vary, or a substantive order, which the court could not vary.
However, a number of cases that were not mentioned by the parties at the hearing on 5 and 8 November 2012 shed light on the matter.
In the early case of In the Marriage of McDonald (1976) 1 Fam LR 11, 391; (1976) FLC 90-047; (1976) 10 ALR 436, Evatt CJ, Demack and Watson JJ considered the effect of a delay in paying an instalment under certain property orders. Their Honours said at 11,393 to 11,394:
In this case the substantive part of the order set out in pars 8 and 9 of the decree was that the property be sold and that the wife receive a share of the proceeds. It provided for an expert valuation of the property, for the husband to have the option to purchase the property at that price, and for the auction of the property if he did not take up that option. …
In our view, the provisions in par 9 for the payment of instalments and for the effects of failure to comply in time, were machinery provisions. Failure to comply with them did not vest rights in the wife. Her right was to share in the proceeds of the sale, whether to the husband at an agreed valuation or by auction. Her substantive rights were not affected by the delay in making the first payment. In our view, there is ample power to modify the machinery provisions of a property order provided this does not affect the substantive property rights or cause undue hardship to either party. (emphasis added)
Turning to the merits of this issue, the trial judge gave very little consideration to the issues which we consider were relevant to the exercise of his discretion. His concern was merely that the terms of the parties’ agreement should be carried out to the letter. He did not consider whether either party would suffer any hardship. The relevant considerations, in our view, were that there was no evidence of any prejudice to the wife because of the delay; that there was a reason for the delay; that the delay related only to an instalment and not to completion; and that the order for auction may have had human consequences for the husband and for the child of the marriage in respect of whom he has alternate weekend access. His failure to look at these matters, in our view, led him to err and to reach a decision which was unjust to the husband in that it failed to relieve him of the hardship of a penalty provision which was entirely out of proportion to the benefit, if any, accruing to the wife from its enforcement.
McDonald was cited in the more recent case of Ravasini without any criticism. However, in In the Marriage of Bray (1988) 93 FLR 183; (1988) 12 Fam LR 563; (1988) FLC 91-968, the Full Court again considered McDonald. Lindenmayer J said at 565:
In my opinion, what is of most significance in relation to the orders of 13 August [in the case of Bray] is that, by para 3 of those orders, it was specifically provided that in the event that the wife should fail, refuse or neglect to pay the husband the sum of $51,680 referred to in order (1) within the time specified in order (1), then the property should be sold forthwith and the net proceeds of sale should be divided between the parties in certain proportions. Order (3) made specific provision for what should occur in the event that the wife failed to pay the money within the time specified in order (1). In my opinion, order (3) did create a substantive right in the husband, and, for that matter, in the wife, to receive, in that event, in the husband’s case not a fixed sum of money but a fixed percentage of the proceeds of sale of the matrimonial home. In my view, that is an entirely different right from that provided by order (1), and it cannot be said, in my opinion, that the requirement for the payment within a period of three months was merely a machinery provision.
In my opinion, in order to succeed with his submission in relation to para 1, it is necessary to conclude that order (3) is entirely a machinery provision only, and in my opinion, it is not.
Mr Rybak referred to a number of authorities in support of his submissions. He referred firstly to the case of McDonald (1976) 1 Fam LR 11,391; [1976] FLC 90-047, and he submitted that that case is authority for the proposition that an order for the payment of money within a fixed period of time is merely a machinery order.
I do not regard that case as authority for that proposition in every case. In any event, the case of McDonald was a case decided in 1976, prior to the enactment of s 79A of the Act, and in my opinion if it were authority for a proposition as broad as Mr Rybak suggested, then, in my opinion, it would no longer have any force or validity.
Nygh J said at 567:
The test, as I have said earlier, is the one laid down In the Marriage of Ravasini, and In the Marriage of McDonald, an inquiry as to whether the order vests a right in a party, and for the reasons I have explained earlier this must be done within the context of those orders. Obviously each set of orders in each case must be analysed on its own in its own right. In the context of the orders of this case, I am satisfied that the time provision was an integral part of the substantive provisions of the orders which his Honour made.
Graham J said at 567:
The wife’s application sought to vary a prior order for property settlement. She sought to have the original order amended, not as a consequence of the order itself, but because something had occurred which required the order to be modified in this case. That something was the fact that the wife could not raise the money that she had been ordered to pay the husband.
The order of the learned trial judge was couched clearly and precisely. I have concluded that order was not a consequential order, and I am of the view that the payment of the money within three months was a substantive part of the order. I, too, would dismiss the appeal.
Bray was followed by the Full Court in In the Marriage of Slapp (1989) 96 FLR 236; (1989) 13 Fam LR 158; (1989) FLC 92-022. Nygh J, with whom Fogarty and Bulbeck JJ agreed, said at 160 to 161:
As Mr Moss has pointed out, this court In the Marriage of Bray (1988) 12 Fam LR 563, held in an almost identical situation that an order which substitutes an alternative order if certain preconditions are not fulfilled by a certain time, confers upon the beneficiary of that order a substantive right. In other words, the orders as originally framed by his Honour on 11 March 1988 provided that if the money was not paid by 11 July 1988, or such further time as the parties might by agreement extend, there would be vested in the wife a substantive right of quite a different kind to that provided for in the first alternative.
…
In my view that situation falls fairly and squarely within the scope of the earlier decision in In the Marriage of Bray, supra. It cannot be described as merely a change of machinery but it had the effect of depriving the wife of a right of substance which the earlier orders of the court, as amended, had vested in her.
However, Nygh J in Slapp discussed the possibility of time being extended under the rules of court in cases such as the present. His Honour considered that as a possibility arising from the decision of the High Court in FAI General Insurance Co Ltd v Southern Cross Exploration N.L. (1988) 165 CLR 268; (1988) 62 ALJR 216; (1988) 77 ALR 411; [1988] HCA 13. Nygh J said at 161 of Slapp:
In [FAI] their Honours were dealing with an appeal from the Supreme Court of New South Wales and held that the provisions of Pt II, r 3 of the Rules of that court which allow the Supreme Court by order to extend or abridge any time fixed by the Rules or by any judgment of (sic) order, allowed the Supreme Court of New South Wales to extend the time fixed under certain procedural directions for the doing of certain things, even though it was part of a self-executing order which had the effect of terminating the proceedings if those steps were not being taken within the time prescribed.
The equivalent rule of the Family Court is not as extensive as the rule of the Supreme Court of New South Wales. However, rule 3.05(1) of the Federal Magistrates Court Rules 2001 is relevantly identical to the rule considered by the High Court in FAI. Rule 3.05(1) of this court provides that:
The Court may extend or shorten a time fixed by these Rules or by a judgment, decree or order.
At the further hearing on 27 November 2012, the court invited the parties to make submissions on the effect on this case of McDonald, Bray, Slapp, FAI and rule 3.05(1) of the Federal Magistrates Court Rules 2001.
The wife argued that rule 3.05(1) of the Federal Magistrates Court Rules 2001 was limited by the rule making power in s.81(1) of the Federal Magistrates Act 1999. That subsection provides as follows:
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.
The wife argued that the rules could only provide for matters of practice and procedure, and, to the extent that they purported to go beyond that, they should be read down. The wife argued that a rule that purported to permit the court to vary a substantive order, such as order 1 in the present case, was not a rule concerned with practice and procedure and was beyond power. The wife argued that, notwithstanding the express terms of rule 3.05(1) of the Federal Magistrates Court Rules 2001, the court had no power to extend the time during which the refinancing was to occur.
Based on the clear authority of Bray and Slapp, I conclude that the time limit in order 1 in the present case cannot be described as a machinery or consequential provision.
I do not accept the wife’s argument concerning rule 3.05(1) of the Federal Magistrates Court Rules 2001. The rule making power in s.124 of the Supreme Court Act 1970(NSW), which governed the rule considered by the High Court in FAI, was also relevantly limited to matters of practice and procedure. Notwithstanding that, the High Court held in FAI that the Supreme Court had power under its rules to vary a final order to extend the time for doing an act even after that time had passed and the proceeding had been finalised.
It is commonplace for courts to have rules that permit a proceeding that has been determined on a final basis to be resurrected. For example, rule 16.05(2) of the Federal Magistrates Court Rules 2001, permits a final order to be set aside if it was made in the absence of a party, if it was obtained by fraud, if it does not reflect the intention of the court or if the parties consent. These matters can all be properly regarded as matters of practice and procedure, even though the original final orders would invariably have given one or more parties substantive rights. Rule 16.05(2) is no doubt within the rule making power under the Federal Magistrates Act 1999. Equivalent rules are no doubt within the rule making powers of the various courts around the country.
Consequently, I consider that this court has power to extend the time under order 1 for the refinancing to occur. The next question is whether, as a matter of discretion, the time should be extended.
The court expressly asked the wife whether she wished to make submissions on the discretion. The wife maintained that the court had no discretion to exercise and declined to make any submissions on the point. The husband argued that the discretion should be exercised in his favour.
In my view, there are strong discretionary reasons to extend the time under order 1. The husband arranged finance in reasonable time. The delay was caused by a combination of the wife not providing a registrable withdrawal of caveat, the bank not appreciating that there was a caveat and the husband not understanding what was required. The delay would have been very short if the wife had allowed settlement to proceed. Notwithstanding the various misunderstandings, settlement could have been effected the day after the expiry of the seven day period of grace.
The consequences of not extending the time for the refinancing would be severe. The husband and the children of the marriage would be forced out of the family home. One of the children has serious psychiatric problems. There is a risk that those problems will be exacerbated by the upheaval of finding a new home. There is also a risk that the relationship between the wife and her daughters would worsen.
On the other hand, it is not known whether there would be any financial benefit to the wife in forcing a sale. There was no evidence before the court of the current value of the former matrimonial home. After the costs of sale, the payment of capital gains tax, and the discharge of her existing mortgage, it is possible that the wife would be worse off financially if the property were sold.
I consider that the appropriate orders, in the circumstances of this case, where there is a lack of cooperation between the parties and where everything needs to be spelt out, are as follows:
a)by 4pm on 5 December 2012, the husband arrange with the Westpac Bank a date, time and place for settlement;
b)by 5pm on 5 December 2012, the husband notify the wife by email of the date, time and place of settlement;
c)the wife provide at settlement a signed, registrable withdrawal of the caveat number [omitted] lodged by her over the former matrimonial home;
d)the husband at settlement:
i)refinance into his sole name all liability secured by mortgage registered no. [omitted] to the Bank of Melbourne; and
ii)provide to the wife the outstanding balance of the $6,400 by bank cheque (without deduction for any bank fees or expenses relating to the children);
e)the trust account cheque contained in exhibit 1 be returned to the solicitors for the husband; and
f)the parties have liberty to apply on 24 hours written notice if there is any difficulty with the implementation of these orders.
I certify that the preceding ninety-nine (99) paragraphs are a true copy of the reasons for judgment of Riley FM
Associate:
Date: 4 December 2012
2
3
4