Deerborne and Firkom and Anor

[2012] FamCA 19

FAMILY COURT OF AUSTRALIA

DEERBORNE & FIRKOM AND ANOR [2012] FamCA 19

FAMILY LAW – PROPERTY - Application: s 79 and/or s 79A based on fraud in making final orders for property made in 1991 at which time the husband was entitled to a periodic pension. The husband was restrained in 1991 from accessing a lump sum. The husband accessed lump sum in 2001. Wife seeks orders under s 79A on the basis of failing to provide information in 1991. Husband cross-applies for orders that the wife lied to the Court in 1991. Both applications under s 79A dismissed. No jurisdiction on the basis that the power of the Court under s 79 was exhausted in 1991. Application by solicitors for the husband in Supreme Court proceedings for their costs. No power to make order under s 79 as a result of their right of participation by virtue of s 79(10) but using the accrued jurisdiction, orders based on the contract between solicitor and client. Each party seeks ancillary orders including damages. No basis to make orders.

Family Law Act 1975 (Cth)

Commissioner of Taxation and Worsnop and Anor (2009) FLC 93-392
Gabel v Yardley (2008) 40 Fam LR 66
Mullane v Mullane (1983) HCA 4; (1983) 158 CLR 436

APPLICANT: Ms Deerborne

RESPONDENT: Mr Firkom

THIRD PARTY: S Pty Ltd (T/As S Law Firm)

FILE NUMBER: MLC 10945 of 2010

DATE DELIVERED: 17 January 2012

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Cronin J

HEARING DATE: 30 November 2011; 1 December 2011

REPRESENTATION

THE APPLICANT: In person

THE RESPONDENT: In person

COUNSEL FOR THE THIRD PARTY: Ms Rozner

SOLICITOR FOR THE THIRD PARTY: S Law Firm

Orders

1. That the application of the wife filed 5 May 2011 is dismissed.

2. That the application of the husband by way of a response filed 31 May 2011 is dismissed.

3. That the husband forthwith do all acts and things necessary to direct Mr F Solicitor of the firm F and Co of … to pay to S Law Firm $43,403.27 and the sum of $2000 to Ms B as set out in paragraph 6 hereof.

4. That upon the husband providing such written instructions to the said solicitors, paragraph 1 of the orders made on 24 March 2011 is discharged.

5. That the application in a case filed on 16 June 2011 by S Pty Ltd trading as S Law Firm is otherwise dismissed save as to issues of costs.

6. That the husband pay the costs of the solicitor Ms B fixed in the sum of $2000 and such sum be paid from the monies referred to in paragraph 3 hereof.  To give effect to this order, the husband forthwith direct Mr F to make the payment to Ms B.

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

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLC 10945 of 2010

Ms Deerborne

Applicant

And

Mr Firkom

Respondent

S Pty Ltd (T/As S Law Firm)
Third Party

REASONS FOR JUDGMENT

1. Property proceedings between Mr Firkom (“the husband”) and Ms Deerborne (“the wife”) began in 1990 after a marriage of 25 years.  Just what happened in and after those proceedings is contentious and the subject of findings below.

2. The issue before me was whether or not the wife should now be entitled to all of some of the interest that the husband has now received in his late mother’s estate to compensate her for the fact that the husband took a lump sum from his superannuation fund in an undeniable breach of a court order.  The question is whether the Court has jurisdiction to make any (and if so what) order and upon what legal basis.  If it does have that power, should it be exercised?

3. The wife pointed to the 1990 proceedings in which injunctive orders were made against the husband disposing of any future lump sum superannuation entitlement he had.  That order distinguished a lump sum from a pension interest which was not injuncted.

4. The husband said that the wife had lied to a variety of courts including this Court and notwithstanding his breach of the injunctive order, the wife should not be given anything out of the estate of his mother.

Background

1. The husband is 70 years of age and described himself as an aged pensioner who lives in Thailand.  The wife is 63 years of age and described herself as a disability pensioner.  The parties have had nothing to do with each other for almost 18 years.

2. Both husband and wife represented themselves.  Age, delay and lack of focus, complicated the legal process and dimmed the memories of each party.  It was very difficult to have them focus on the issues at hand and as neither was represented by a lawyer, the complicated legal issues compounded the difficulties of resolving the matter.  That was particularly so where the very power of a court to make any orders was at issue but not argued.

3. The wife’s amended application was filed on 5 May 2011. She sought orders under s 79 of the Family Law Act 1975 (Cth) (“the Act”) for a property settlement but that was prefaced by a request for an order under s 79A(1)(a) to vary or set aside the orders of Smithers J made on 17 December 1991 that had relevantly provided that “all outstanding applications…be otherwise dismissed”.

4. The question must be asked whether or not all of the applications in 1991 were dismissed on their merits. Did the 1991 order exhaust the jurisdiction under Part VIII of the Act? If so, does the wife have to rely on s 79A(1)(a) as she pleaded and is there evidence to support her allegation such as would enable a court to find that there was a miscarriage of justice?

Outcome

1. I find the jurisdiction to make orders under s 79 was exhausted. I find there is no basis to make orders under s 79A. My reasons are as follows.

The applications of the husband and wife

1. Ironically, both parties sought orders under s 79A.

2. In her amended application, the wife also sought that the husband pay “arrears” of spousal maintenance but she sensibly abandoned that because the “arrears” (if any) had remained uncollected for about 18 years.

3. Further, the wife sought interest upon the money that might now be ordered to be paid by the husband if she was successful. That application could not succeed because there was no order for payment of money in 1991 or thereafter (see s 117B(1) of the Act).

4. The wife also sought a variation of personal protection injunctive orders initially made by Smithers J in 1991 but there was no evidence that would justify me so doing.  I made a similar finding on 10 June 2011 when the wife’s then legal representative urged me to make interim orders.  No new evidence was provided by the wife.

5. In his amended response filed 31 May 2011, the husband sought that all orders after May 1991 (a position in his affidavit and in opening that he subsequently altered to 1990 generally) be set aside. Although no specific provision was relied upon for that order, the accompanying assertion was that the orders were “erroneous” because of the information provided by the wife in or around 1990. That “information” must relate to the period at and prior to the making of any orders. The husband must therefore be referring to s 79A(1)(a) in the same way that the wife was.

6. The husband also sought orders which, when teased out, amounted to a request for the Court to dismiss the wife’s application.  There followed, a request that the Court order the wife pay damages for “excessive litigation”, for obstruction of the sale of the home and for her demands for maintenance.  There is no statutory basis for me to make such an order for damages and when asked, the husband did not point to one.  Unfortunately, he acknowledged he was leaving it all to me to sort out.

7. The wife had also initially filed a contravention application relating to the husband having accessed his superannuation but withdrew that. 

8. One might then ask why these proceedings were back before this Court at all.  All of these litigation issues between the parties had remained dormant until the wife learned in 2009 that her son who had been left a significant inheritance by his paternal grandmother, was facing a Supreme Court of Victoria dispute brought by the husband.  The husband instructed solicitors to act for him to challenge his apparent lack of entitlement to his own mother’s estate.  It came to the wife’s notice (apart from being told by her son) because the executor of the mother’s estate was a solicitor who had been friendly with both parties in 1991 and presumably brought to her attention the question of the evidence that the husband was giving to the Supreme Court.  It was in that evidence to the Supreme Court that the wife learned that the husband had obtained a lump sum from the superannuation authorities.

The application of the intervener

1. The dispute about the husband’s mother’s estate in the Supreme Court of Victoria brought in a third party.  S Law Firm intervened to seek that their costs of acting for the husband in the Supreme Court proceedings about the deceased estate be paid as a priority ahead of any money that might be paid to the wife.  The husband did not oppose the claim of the solicitors.  The wife did oppose the orders sought by the interveners in so far as it may have affected her entitlement to all of the money from the Supreme Court proceedings.  That is, she sought all of that money.

2. The Court’s file is in numerous folders.  It was archived for many years.  In an endeavour to get to the bottom of the dispute, I conducted a first day hearing on 23 March 2011 and a further management hearing on 10 June 2011.  Specific orders were made for the parties to file their evidentiary material. 

The formal applications for orders and the evidentiary documents

1. The husband relied upon a response document filed 31 May 2011 and affidavits filed 16 March 2011 and 31 May 2011.  He also filed and relied upon a financial statement filed 16 March 2011. 

2. The wife, as the applicant, filed an amended application on 5 May 2011 together with a financial statement filed 28 January 2011 and her trial affidavit of 5 May 2011.  It transpired that the wife also wanted to rely upon an affidavit sworn in March 2011 which she thought had been filed by her solicitors.  It was neither filed nor served upon the husband.  As the other parties were caught by surprise, that document, along with some time, was given to all parties to consider their positions.  The husband did not seek an adjournment.

3. The third party intervener relied upon an application filed 16 June 2011 and an affidavit filed on 10 October 2011.

4. Annexed to these reasons is the list of the documents relied upon by all parties.

The subpoena issued by the husband

1. When the hearing began, there was a preliminary issue. The husband had filed a number of subpoenae predominantly to the wife’s former solicitors. There were a number of them. One of those solicitors, Ms B, objected to the production of her file. She had sought advice from the Ethics Committee of the Law Institute of Victoria. She filed an affidavit and appeared by counsel. The affidavit related to the fact that she did not have a waiver of privilege from the wife and no longer acted for her. I ruled in favour of the objection for two reasons. First, the husband could show no relevance other than that the wife’s financial position over the years could not be said to be as impecunious as she was portraying because she had had the ability to engage a variety of lawyers. In my view, that was not relevant other than as to credit. Credit can only be taken so far in a case such as this. The husband showed no connection with the substantive issue under s 79 or s 79A. Secondly, to the extent that they were relevant at all these were discovery issues and accordingly, the subpoena process should not have been so used. The husband was unashamedly on a fishing expedition.

2. I discharged the subpoena and will by order, direct the husband to pay the costs of the lawyer because the exercise was futile, intrusive and fishing. The husband did not address the issue of costs again in anything that he might otherwise have said before the conclusion of the hearing. In making these findings, I am satisfied that this was a case where there is a justification for a departure from the principle of s 117 of the Act that each party bear their own costs. In particular I have taken into account that there may be matters in s 117(2A) of the Act. The fact that the husband shrugged his shoulders and said that he was not a lawyer and that the Court should allow him to issue the subpoena is not an excuse. There was no relevance in this exercise to the issue in dispute between the parties. I see no reason why the lawyer should be inconvenienced particularly having regard to the fact that she was not a party and she could not recover the costs from the wife. The husband took no steps to resolve her objection.

3. I have, without hearing specific argument, examined the documents and affidavit of Ms B. She appeared by counsel. Using the scale attached to the Family Law Rules 2004, I fix $2000 as a reasonable sum in the circumstances. As the husband has no serious connection with Australia other than his pension, those costs should be paid from the money held in trust from the Supreme Court proceedings earlier mentioned.

The chronology of the financial proceedings from 1991

1. I then turn to the relevant parts of the chronology of this dispute. 

2. In December 1990, a decree nisi of dissolution of marriage was granted between the parties. 

3. In March 1991, the parties’ proceedings relating to property and maintenance began in earnest.  Initially the dispute was over the sale of the former matrimonial home and in April 1991, consent orders were made about money from the sale of that property being divided between them.  A dispute about chattels followed.  

4. On 23 May 1991, Smithers J made an order that the husband pay the wife weekly maintenance.  The husband at that stage was working in the education industry.

5. On 3 June 1991, Smithers J had before him the property application which had obviously been issued within time.  His Honour adjourned that to a date to be fixed for a full trial. 

6. In July 1991 pending that trial, Smithers J had a further interim hearing apparently about an appeal by the wife against interlocutory orders that he had made.  That hearing has no relevance here.

7. On 17 December 1991 after what appears to have been 24 days of hearing, Smithers J made orders and published reasons for judgment in what his Honour described as a case that related to the “financial affairs of the parties”. Later in his Honour’s judgment, he said the proceedings concerned the question of what orders, if any, should be made under s 79 of the Act. I return to this below as it is relevant to the critical jurisdictional issue. The substantive financial proceedings had also included a dispute about spousal maintenance and another matter involving the husband’s mother as an intervener claiming that she was owed money by the parties.

8. Smithers J inter alia, ordered the husband pay the wife $100 per week by way of spousal maintenance giving the husband leave to discharge the order if his income was reduced because of retirement from ill health.   

9. In his reasons, Smithers J said the proceedings concerned the assets and liabilities of the parties and made mention of the intervener’s claim.  His Honour noted:

   The wife contended…that were the husband to retire from his occupation [in the education industry] he would receive a superannuation payment of $18,000 before taxation. 

10. His Honour then detailed the history of the parties.  At page 24 of the judgment, his Honour set out the assets and liabilities.  Noticeably, because superannuation was not then capable of being treated as property prior to the entitlement to the superannuation fund vesting, it was excluded from the declared pool of assets.  However, it became relevant when his Honour said that there was a very strong likelihood of the husband retiring from the education industry on the ground of ill health.  His Honour expected the husband to receive a fortnightly indexed pension for life.  His Honour said:

    He will have no option to take a lump sum except in limited circumstances approved by the State Superannuation Board; such circumstances are unlikely to arise in this case as far as I can tell.  (emphasis added)

11. His Honour then set out the unlikely prospect of the husband resigning from his employment.  Because of the husband possibly thwarting the spousal maintenance entitlement of the wife by his retirement, his Honour said that one solution was to make an order restraining the husband from taking a lump sum superannuation without notice.  However, because his Honour saw that as putting the wife in a position where she could not get the maintenance support she would need if the husband did so retire, he thought on balance, a restraining order should not be made.  Accordingly, no such order was made. 

12. The jurisdictional question that arises in the proceedings before me is whether the orders to which I have just referred exhausted the power in s 79. If they did, is the only avenue open to the wife to seek the orders that she now does, under s 79A?

13. In his reasons for judgment, Smithers J referred to the jointly-owned home as being a substantial asset of the parties.  His Honour also referred to furniture, chattels and paintings.

14. His Honour found that after all expenses of the sale of the matrimonial home were taken into account, there was approximately $30,000 left but the parties respectively had to pay their own legal costs.  Both parties had legal costs in excess of what his Honour considered were their respective property entitlements to the $30,000 equity.  His Honour observed that because of their indebtedness to their lawyers, there would be nothing left. 

15. His Honour formally found that the wife had more liabilities than assets but in the pool of assets that he so described, his Honour included arrears of spousal maintenance owed to the wife by the husband.  His Honour noted that the husband did not have the same indebtedness as the wife and as such, for him, there was a small amount of equity. 

16. His Honour pointed to the position of each party about how the equity should be adjusted and he found that it was not appropriate to make adjustments based upon those respective submissions.  His Honour went on to say that it was “academic” in any event if there were no assets “in respect of which a property order” could be made. 

17. Having carefully examined his Honour’s judgment, it was clear that absent their respective legal fees, each was retaining assets including a share of the net proceeds of the sale of the former home.  His Honour concluded:

    The parties have sought orders for the transfer of property. There is no property upon which those orders could be made. I have given consideration to the factors in this case, under s 79 and 75(2). Unfortunately, however, there is simply no basis upon which there can be an order for the transfer of property. There are no claims in this case for indemnities in respect of debts, and it seems clear to me in the circumstances, that there can be no order made in favour of either party under s 79. Accordingly, I will dismiss the application of each party.

    Smithers J pronounced the orders on 17 December 1991 and indeed dismissed the respective applications relating to property settlement.  That dismissal was after a hearing on the merits of each party’s case.

Jurisdiction in financial matters

1. The jurisdiction to make orders is made found in s 39(1) of the Act. It provides that a matrimonial cause may be instituted in this Court. A matrimonial cause includes proceedings between the parties to a marriage with respect to the property of the parties to the marriage or either of them, being proceedings:

   i.arising out of the marital relationship;

   ii.in relation to concurrent, pending or completed divorce or validity of marriage proceedings between the parties;

   iii.…

1. The power to make orders in property settlement proceedings is found in s 79. It provides that a court may make such order as it considers appropriate altering the interests of the parties to the marriage in the property.

2. In Mullane v Mullane (1983) HCA 4; (1983) 158 CLR 436, the High Court considered the question of whether an order for exclusive occupation of a home was an order that altered the interests of property and thereby exhausted the jurisdiction for the purposes of s 79 of the Act. Their Honours said it was not. In the course of their judgment, the Court said that the Act revealed the intention of the parliament that if the Court, in proceedings with respect to the property of the parties, makes an order “altering the interests of the parties in the property”, the order is not open to any review or variation absent some circumstance amounting to a miscarriage of justice that might be foundered in s 79A. Their Honours examined s 79 and said:

   In our opinion, therefore, s 79 on its proper construction refers only to orders which work an alteration of the legal or equitable interests in the property of the parties or either of them. An interest in property is a right of a proprietary nature, not a mere personal right.

3. As their Honours pointed out, once the power of the Court to make an order under s 79 had been treated as having been exercised, the power was exhausted.

4. In Gabel v Yardley (2008) 40 Fam LR 66 Bryant CJ and Coleman J observed that the Court’s power to make orders with respect to the settlement of property was not necessarily exercisable at only one time but could be exercised by a succession of orders until the power was exhausted. Their Honours observed:

   Logic suggests that the power to make orders for settlement of property will be exhausted or “spent” when their remains no property of the parties to the marriage or either of them with respect to which orders by way of alteration of interests of property could be or have been made.  In those circumstances there can be no matrimonial cause to enliven the jurisdiction to make orders for settlement of property.

5. Their Honours referred to the totality of the property of the parties being the subject of orders and until such time as the totality had been dealt with, the power to alter the interests was not spent or exhausted.

6. In a separate judgment in the same case, Finn J noted the various provisions of s 79 recognised the potential for the application of the principle that there could only be one exercise of the power under s 79 but it was only the final order which dealt on a final basis “with all known property of the parties” which completed the one single exercise of the s 79 power.

7. What can be seen from the judgment of Smithers J is that as at that time, all of the property known to the parties was divided. His Honour may not have made orders altering the interests of the parties in property but I conclude that he did not make orders because he did not consider it was proper to do so having regard to the absence of equity because of the costs position. In my view, it is quite clear that his Honour left a variety of items of property in the hands of each of the parties and concluded that he did not need to make an order for the alteration of interests. Because his Honour left chattels with the parties, albeit he did not say so, I conclude he was effectively determining that the husband was not to have any entitlement to those items in the possession of the wife and vice versa. Importantly, there was no known other property at that time. His Honour dismissed all outstanding applications accordingly on a final basis and that completed the single exercise of power under s 79. The power was therefore exhausted at that time.

8. Absent therefore circumstances that might arise by virtue of s 79A of the Act, there is no basis for me to make orders altering the interests of the parties or either of them in property that they now have.

9. The property proceedings were therefore concluded and Part VIII of the jurisdiction relating to property was exhausted. That however did not see an end to the parties’ litigation. It is important to continue to follow the chronology because both parties now seek orders under s 79A of the Act.

The chronology continued and s 79A

1. In January 1992, the husband applied to discharge the maintenance order saying that he had been assessed as unfit to work and his application for benefits had been lodged with the superannuation board.  His entitlement was to be effective from 4 February 1992 whereupon he would be living on a pension.  As the evidence before me confirmed, that is exactly what happened.

2. On 3 March 1992, the wife answered the husband’s application seeking that maintenance as ordered by Smithers J continue. 

3. On 22 April 1992, Smithers J adjourned the proceedings for a final hearing.

4. On 14 October 1992, the matter came before Hase J and his Honour made directions for hearing and ordered that affidavit material was to be filed pending the final hearing.

5. On 14 December 1992, the wife personally filed an application seeking leave out of time to pursue orders for a division of the husband’s superannuation and to reinstate her property application from 1990. When one looks at the orders pursued then by the wife, the inference is that they were carefully drawn. The application for leave could be seen as an acknowledgement of the exhaustion of the s 79 power in 1991. The order seeking to “reinstate” her property application could only have been ordered if there was some property that had not been divided by the orders. Whatever might have been the suspicion of the wife, there was no evidence presented to me to show that in 1992 the husband had received a lump sum nor, more importantly, that he was pursuing one from the State Superannuation Board.

6. However, there was sufficient concern about that raised by the wife because on 14 December 1992, Hase J restrained the husband by injunction from accepting any money from the Superannuation Board except periodical payments and also restrained the Superannuation Board from so paying the husband.  There was no evidence before me that the Superannuation Board was ever served with that order.

7. It was not argued before me that there was a power to so restrain the Superannuation Board and in any event, the wife has not taken action against the Board.  Hase J’s order was against the Board not some individual trustee or statutory office holder.  His Honour’s reasons do not elaborate why the order was made save that he said it was necessary to “protect the wife from dissipation by the husband of the entitlement he may have with [his employer]…”  No reference was made to the Superannuation Board.  Accordingly, it is hard to envisage what was being contemplated other than some lump sum from the husband’s employer.

8. In December 1992, the applications of both parties were adjourned to the Listings Registrar.  Thus, the live applications were for leave to bring a claim by the wife for a share of the superannuation and the husband’s application to discharge the spousal maintenance order.

9. The next events after the hearing before Hase J in 1992 were disputed between the parties but the Court’s file would appear likely to be correct.  The matter was to have been listed in May 1993 by the Listings Registrar but the husband was ill so letters were sent to the parties indicating that the case would not be listed before November 1993.  The letter to the wife was addressed to the address shown on her document filed in December 1992, only months before.  The file however contains an unopened envelope marked “Left address”.  That was consistent with the wife’s evidence that she did not know of the proceedings that were ultimately listed before Hase J on 17 December 1993. 

10. On 17 December 1993, there was no appearance of the wife and a variety of orders was made.  What had clearly been an injunction against the husband a year before precluding him from obtaining some payment for his long service leave entitlement, was then removed.  None of the orders on 17 December 1993 dealt with the superannuation issue.  No reference was made to the wife’s application filed on 14 December 1992 seeking leave to proceed with an application out of time.  That application appears never to have been determined.  Importantly, no order appears ever to have been made granting the wife leave to proceed out of time.

The wife’s credibility and the application by the husband under s 79A

1. Twenty years after Smithers J made orders in 1991, the parties remained at odds about numerous facts.  The husband asserted that the wife had assets in 1991 that she had not disclosed and that she was in a de facto relationship at that time.  It is clear from the 1991 judgment that Smithers J found in favour of the wife after evidence had been called about her movements.  The husband’s focus in the proceedings before Smithers J was that she had commenced another relationship.  In the proceedings before me, the husband produced a variety of recent documents from an action by the wife in the Supreme Court of Victoria against a man with whom she had a de facto relationship subsequent to 1991.  It was common ground that the wife and this man lived together for a number of years.  In her document headed “Further and Better Particulars”, as well as her affidavit for the purposes of the Supreme Court proceedings, the wife said a variety of things which included that the de facto relationship began in early 1991.  When cross-examined about that, she said that her own affidavit was wrong because she only met this man in late 1991.  She was confident enough to say that she met him at this Court.  She said that at that time, she was caring for her father and that even when the relationship commenced, they did not live together for some time.  She pointed to both of them being on pensions.  She gratuitously added that in any event, the further and better particulars document was not sworn.  That was a troubling remark because the further and better particulars were designed to tell the Court and the litigants what material facts would be proved and by what evidence.  The wife saw only the accuracy of a sworn document as important.

2. Another issue arose out of those same Supreme Court proceedings.  In her affidavit to the Supreme Court, the wife asserted that she had made a significant financial contribution at the start of the relationship.  Her pleading showed she alleged it bearing in mind her pleaded position that the relationship began in early 1991.  The husband pointed to the inconsistency of what she was saying before Smithers J in 1991.  The wife told the Supreme Court of Victoria that her initial contribution was $48,000.  When cross-examined before me, she explained that that money came from money paid back to her by relatives, the sale of chattels and an inheritance that she received.  In her financial statement filed in 1992, the wife showed herself to be impecunious.  Notwithstanding the wife said that she got the money from a variety of sources, the picture portrayed was starkly different from her position in 1991 in the judgment of Smithers J and her 1991 and 1992 financial statements.

3. The husband said that he was calling this evidence to show that the wife had consistently and persistently lied to courts.  I find the comparisons of 1992 and that portrayed in the Supreme Court proceedings irreconcilable and the wife’s explanation to me, implausible. 

4. It was this evidence that the husband pointed to to justify an order in his favour under s 79A of the Act. Albeit that I accept the wife did not make proper disclosure in 1992, the question remains as to whether there was a miscarriage of justice. Based on that evidence, I find there was not because the husband was not any worse off as a result of the orders made in 1991.

5. The wife received nothing or at least nothing of substance, in 1991. The suggestion now that the wife had significant assets as might be construed from her Supreme Court claim, would still have not made any difference having regard to the findings of Smithers J about her liabilities. It might be said that the husband paid spousal maintenance unnecessarily but as he did not make the payments anyway, or at least of any substance, no injustice was done to him. There is no basis for the husband to succeed based on s 79A of the Act.

The husband’s credibility and the wife’s application under s 79A

1. The second issue based on the wife’s s 79A application is whether I could find that the husband lied or failed to make adequate disclosure in 1992. Before me, the wife’s whole case turned on the superannuation issue. The evidence is, and I so find, the husband did not pursue a lump sum in 1991 nor at any time immediately thereafter. I find he did not seek a lump sum from the superannuation board. How he received the lump sum ultimately is a matter to which I shall turn below.

2. The wife cross-examined the husband about his disclosure concerning superannuation both as to entitlements overall as well as the pension he received.  To the extent that there was any inconsistency in the fortnightly pension figures, it was minimal.  I accept that the husband only had the one source of income at that time. 

3. As for the “value” or the nature of the entitlement to superannuation, all of these matters were carefully contemplated after the 1991 judgment when a representative of the State Superannuation Board was cross-examined before Hase J.  All of that information could have been pursued by the wife before the 1991 trial.  She did not do so.  Having looked at the financial statement filed by the husband in 1991 and 1992, it is clear that he disclosed the details of which he was then aware, concerning the superannuation entitlement.

4. I find there is no fraudulent conduct on the part of the husband nor anything that could be described as suppression as alleged by the wife. I certainly would not find that there was any miscarriage of justice. Accordingly, both applications for relief under s 79A must fail.

5. In his evidence, the husband bluntly said that he did not wish to waste time on irrelevancies and he acknowledged the injunction granted by Hase J in 1992.  He said that he could have raised a number of defences including that the injunction was an interim one, that the orders of Smithers J did not address the superannuation issue and were final orders, that he did not ask for a lump sum but was offered and accepted it.  There was a change of circumstances because he was remarried and so forth.  He said however that all of those arguments would only have led to prolonged litigation.

6. A critical piece of evidence emerged when the wife cross-examined the husband.  Her question was directed to why the husband had breached the order of Hase J.  Although the husband’s affidavit to which I have referred is somewhat cryptic, the answer came from questions that I put to him. 

7. In about 2001, he having been living on the superannuation pension for ten years, the husband was offered a lump sum to capitalise the pension entitlement.  This was part of a State program to reduce the periodic payment burden on the State of Victoria.  The husband accepted the offer and received $320,000.  He swapped his pension for that lump sum.  He readily acknowledged that he did not contact the wife.  Curiously, the husband was able to obtain a Commonwealth pension benefit thereafter so he used the cash from the Superannuation Board to buy a unit on the Gold Coast.  To do so, he had to provide his own extra funds and then renovated the property with borrowed money.  He lived there for about a year or so whereupon his then marriage broke down.  That precipitated the sale of the Gold Coast unit and the payment out to his then separated wife.  He took the remaining proceeds and travelled around the world ultimately settling in Thailand where he bought the property that he now owns.  He continued (as he still does) to live on a Commonwealth Government pension. 

8. I am satisfied that the only asset that the husband has is the property in Thailand apart from the disputed interest in the mother’s estate.

9. In 2011, the proceedings in the Supreme Court of Victoria went to a mediation and the matter settled.

10. It is common ground between the parties that the only amount in trust arising out of the Supreme Court proceedings and which is the subject of the dispute here, is $165,349.  That gives rise to the intervener’s claim.

The intervener’s claim

1. S Law Firm acted for the husband in the Supreme Court. With the dismissal of the main applications for ss 79 and 79A relief of the husband and wife, is there power to hear the dispute between the husband and his former solicitors and to make orders?

2. S Law Firm seek $43,403.27 being their costs associated with those Supreme Court proceedings.  The husband agrees to pay that sum. 

3. The solicitors sought leave to intervene in the proceedings between the husband and the wife. They did so on the basis of Rule 6.05 of the Family Law Rules 2004. They complied with that rule. Neither the husband nor the wife objected to their intervention.

4. Section 79(10) of the Act entitles a creditor of a party to the proceedings if the creditor may not be able to recover his or her debt if the order sought by the debtor was made.  Here, the husband did not dispute the debt but had no choice but to allow the participation of his solicitors because the wife was pursuing an order for the whole of the Supreme Court money.

5. Notwithstanding I have found there is no jurisdiction under s 79 to make an order, I do not consider that the creditor is precluded from pursuing orders. Section 79 as I have earlier pointed out relates to the power of the Court to alter the interests of parties to the marriage in property. The power is extended to the Court to make orders within a s 79 order for a party to the marriage to pay a creditor. The creditor does not gain any extra right for a just and equitable remedy because of s 79(2). The creditor only has whatever rights it may have, at law. (See Commissioner of Taxation and Worsnop and Anor (2009) FLC 93-392).

6. At the time that the solicitors intervened, there was a live application under s 79 entitling them to be a party but the finding as to the absence of jurisdiction means that there was never power for the Court to make such an order. Accordingly, there could not be any power in s 79 to make an order for the husband to pay the solicitors.

7. However, it was clear from the solicitors’ position that they were pursing their entitlements against the husband by virtue of the contractual arrangement arising from their cost agreement.

8. Although it was not argued before me, I consider I am in a position to determine the matter on an accrued jurisdiction basis if for no other reason than that there was no dispute between the husband and the solicitors (save for the one to which I shall refer in a moment) and at all times, the claim arose out of the contract.

9. It is clear that most if not all of the indicia for a case that would justify the Court exercising its accrued jurisdiction are present here.  It is not in doubt that when the Court is of the view that its jurisdiction is attracted, the Court should exercise it and having regard to the position that the husband adopted, I should do so here. 

10. The application of the solicitors filed 16 June 2011 sought the payment to the solicitors of $43,403.27 from the husband’s share of the proceedings in the Supreme Court. 

11. The solicitors however pointed to their cost agreement under which the husband charged all of the proceedings of the litigation in their favour pending the ultimate payment of their costs.  The solicitors apparently undertook some extra work and it seemed common between counsel for the solicitors and the husband that there is a further dispute of about $5000.  Counsel for the solicitors urged me to make an order that whatever entitlement the husband had, the whole of it should be paid to those solicitors as the contract between them and the husband dictated.  The husband’s response was that such a course was inappropriate because it would simply fuel further litigation.

1. Whilst the oral application of the solicitors was for the whole of the money to be paid to them, having regard to the specific way in which their pleading was put as set out in their application filed 16 June 2011, it would be inappropriate to allow them to step outside of that notwithstanding what their contract said.  That was particularly so where the husband conducted his case on the basis that there was no dispute about the quantum.  In my view, anything beyond the claimed sum will have to be a matter for other litigation.

2. On 24 March 2011, in the absence of the solicitors, I restrained the executor and trustee of the estate of the husband’s mother from distributing the proceeds of the Supreme Court proceedings.  There is now no justifiable basis for that injunction to continue save for its discharge upon the orders being carried out by the husband.  Accordingly, I propose to order that upon the husband signing all necessary documents directed to the executor to pay to the solicitors $43,403.27, the injunction should be discharged.

Costs

1. At the conclusion of the hearing, I invited parties to address the issue of costs.  I am not in a position to determine that issue based on the material that I have because of the potential complication of an argument that the wife may be responsible for the costs of the solicitors in having participated. 

2. Accordingly, the rules can apply in respect of the issue of costs as normal.

LIST OF DOCUMENTS RELIED UPON

The applicant wife

1.The amended application filed 5 May 2011.

2.The affidavit filed by the wife 5 May 2011.

3.      The affidavit of the wife sworn 27 January 2011 and filed 30 November 2011.

4.      The financial statement of the wife filed 28 January 2011.

The respondent husband

1.The response to an application filed 31 May 2011.

2.     The affidavit of the husband filed 31 May 2011.

3.     The affidavit of the husband filed 16 March 2011.

4.     The financial statement of the husband filed 16 March 2011.

The third parties

1.The application in a case filed 16 June 2011.

2.The affidavit of Mr S filed 10 October 2011.

I certify that the preceding Ninety Three (93) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin delivered on 17 January 2012.

Associate: 

Date:  17 January 2012