DUDONOVA & DURANSKY

[2015] FamCA 935

FAMILY COURT OF AUSTRALIA

DUDONOVA & DURANSKY [2015] FamCA 935

FAMILY LAW – PROPERTY – Application to set aside or vary property consent orders pursuant to s 79A – threshold s 79A issue – principles of impracticability considered – where in the circumstances since the order was made it is impracticable for the order to be carried out – where it is appropriate that the Court exercise its discretion to appropriately vary to the orders.

Family Law Act 1975 (Cth) s 79A

Brown v Heffer [1967] HCA 40
Cawthorn v Cawthorn [1998] FamCA 37; (1998) FLC 92-805
Fairweather v Fairweather [1944] HCA 11; (1944) 69 CLR 121 at 154; [1944] ALR 190
Gilbert v. The Estate of Gilbert (1990) FLC 92-125

APPLICANT: Ms Dudonova

RESPONDENT: Mr Duransky

FILE NUMBER: SYC 3238 of 2011

DATE DELIVERED: 30 October 2015

PLACE DELIVERED: Parramatta

PLACE HEARD: Parramatta

JUDGMENT OF: Foster J

HEARING DATE: 14 September 2015

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Schroder

SOLICITOR FOR THE APPLICANT: Mark Brown & Associates

COUNSEL FOR THE RESPONDENT: Mr Gray

SOLICITOR FOR THE RESPONDENT: Corporate and Civil Legal

Orders

1. That the proceedings be listed for submissions as to appropriate variation of orders on a date to be fixed.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Dudonova & Duransky has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT PARRAMATTA

FILE NUMBER: SYC 3238  of 2011

Ms Dudonova

Applicant

And

Mr Duransky

Respondent

REASONS FOR JUDGMENT

1. The present matter for determination arises from an Initiating Application filed by the wife on 3 July 2015 and subsequently amended by way of her Amended Initiating Application filed on 5 August 2015.

2. On 27 February 2014 orders were made by consent as to property settlement as between the wife and the husband. Those orders relevantly provided in summary:

   a)That within 60 days from the date of orders the husband was to do all things necessary to transfer to the wife his interest in the former matrimonial home at Suburb A and simultaneously with that transfer the wife was to pay to him the sum of $385,000,

   b)That in the event of the wife failing to make the payment to the husband within 60 days the wife was to do all things necessary to transfer to the husband her interest in the former matrimonial home and simultaneously with that transfer the husband to pay to the wife the sum of $385,000,

   c)In default of the husband making the payment to the wife the property was to be sold by public auction and the net proceeds of sale were to be divided equally between the husband and the wife.

3. In her Amended Initiating Application the wife in summary seeks the following orders:

   a)That orders made on 27 February 2014 be set aside or varied pursuant to section 79A(1)(b) or (c) of the Family Law Act 1975 (Cth) (“the Act”),

   b)That by way of property settlement orders the wife pay to the respondent husband’s estate $385,000 within 42 days from the date of orders together with interest calculated from 28 April 2014 to the date of payment and that simultaneously with such payment the respondent husband’s estate transfer to her the estates interest in the property at B Street, Suburb A New South Wales,

   c)That in default of payment by the wife by the due date the said property be sold and the net proceeds of sale be divided firstly as to $385,000 plus interest accrued to the respondent husband’s estate and secondly the balance thereof to the wife,

   d)That in default of either party refusing or neglecting to sign documents to give effect to orders the Registrar of the Family Court of Australia be appointed pursuant to s 106A of the Act to do so,

   e)That in the alternative in the event that orders made on 27 February 2014 are not set aside or varied the wife be granted leave to enforce orders of 27 February 2014 against the respondent husband’s estate.

4. In effect the applicant seeks an extension of time to comply with the orders made on the 17 February 2014.

5. The respondent seeks a dismissal of the wife’s application.

Section 79A

1. Section 79A of the Act relevantly provides:

   Setting aside of orders altering property interests

   (1)  Where, on application by a person affected by an order made by a court under section 79 in property settlement proceedings, the court is satisfied that:

   (a)  there has been a miscarriage of justice by reason of fraud, duress, suppression of evidence (including failure to disclose relevant information), the giving of false evidence or any other circumstance; or

   (b)  in the circumstances that have arisen since the order was made it is impracticable for the order to be carried out or impracticable for a part of the order to be carried out; or

   (c)  a person has defaulted in carrying out an obligation imposed on the person by the order and, in the circumstances that have arisen as a result of that default, it is just and equitable to vary the order or to set the order aside and make another order in substitution for the order; or

   (d)  in the circumstances that have arisen since the making of the order, being circumstances of an exceptional nature relating to the care, welfare and development of a child of the marriage, the child or, where the applicant has caring responsibility for the child (as defined in subsection (1AA)), the applicant, will suffer hardship if the court does not vary the order or set the order aside and make another order in substitution for the order; or

   (e)  a proceeds of crime order has been made covering property of the parties to the marriage or either of them, or a proceeds of crime order has been made against a party to the marriage;

   the court may, in its discretion, vary the order or set the order aside and, if it considers appropriate, make another order under section 79 in substitution for the order so set aside.

   (1A)  A court may, on application by a person affected by an order made by a court under section 79 in property settlement proceedings, and with the consent of all the parties to the proceedings in which the order was made, vary the order or set the order aside and, if it considers appropriate, make another order under section 79 in substitution for the order so set aside.

   (1AA)  For the purposes of paragraph (1)(d), a person has caring responsibility for a child if:

   (a)  the person is a parent of the child with whom the child lives; or
   (b)  a parenting order provides that:

   (i)  the child is to live with the person; or

   (ii)  the person has parental responsibility for the child.

   (1B)  An order varied or made under subsection (1) or (1A) may, after the death of a party to the marriage in which the order was so varied or made, be enforced on behalf of, or against, as the case may be, the estate of the deceased party.

   (1C)  Where, before proceedings under this section in relation to an order made under section 79 are completed, a party to the marriage dies:

   (a)  the proceedings may be continued by or against, as the case may be, the legal personal representative of the deceased party and the applicable Rules of Court may make provision in relation to the substitution of the legal personal representative as a party to the proceedings;

   (b)  if the court is of the opinion:

   (i)  that it would have exercised its powers under subsection (1) or (1A) in relation to the order if the deceased party had not died; and

   (ii)  that it is still appropriate to exercise its powers under subsection (1) or (1A) in relation to the order;

   the court may vary the order, set the order aside, or set the order aside and make another order under section 79 in substitution for the order so set aside; and

   (c)  an order varied or made by the court pursuant to paragraph (b) may be enforced on behalf of, or against, as the case may be, the estate of the deceased party…

Context

1. There is little dispute as between the parties in relation to the background facts.

2. It is clear that the wife is a person “affected by the order” and to extent necessary she can enforce the order against the estate of her late husband (see s 79(1A)).

3. By agreement between the parties the matter proceeded by agreement without oral evidence by way of submissions as to the threshold question as to whether there were circumstances that would enliven the Court’s discretion to set aside or vary the subject orders.

4. The wife relied upon her affidavit filed on 3 July 2015.

5. The respondent, the legal personal representative of the late husband as attorney for the named executor, relied upon his affidavit filed on 4 September 2015.

6. The wife and her late husband were married in 1978 in Country C. There are two children of the relationship now aged well over 18 years.

7. The parties separated in March 2010.

8. Subsequently, on 27 February 2014 orders were made by consent as to property settlement as set out above.

Events subsequent to the orders

1. Subsequent to the property orders the wife made application for the requisite finance so as to be in a position to acquire the husband’s interest in the subject property. By letter dated 18 March 2014 she was informed by her lender of an unconditional approval for a loan of $400,000.

2. On or about 24 March 2014 the wife’s solicitor forwarded to the husband’s solicitor, the present respondent, a memorandum of transfer in relation to the subject property at Suburb A. That transfer had been signed by the wife’s solicitor as solicitor for the purchaser and had been marked exempt from stamp duty by reason of the property settlement orders. The husband’s solicitor was informed that the wife had obtained finance approval and would be in a position to complete the transaction within about 14 days.

3. Shortly after the receipt by the respondent of the transfer the respondent facilitated the transfer being signed by the husband with the husband’s signature being witnessed by the respondent’s brother. The respondent also signed a withdrawal of caveat on behalf of the husband presumably in anticipation of settlement.

4. Unfortunately the husband died in 2014.

5. Subsequent to the husband’s death the wife became aware that he had executed a will on 13 March 2014, about 2 weeks after the consent property orders. A witness to the will was the present respondent, the husband’s legal personal representative. The late husband’s will made no financial provision for the children of the marriage.

6. Subsequent to the husband’s death in 2014 the wife’s solicitors by letter dated 4 April 2014 enquired as to the existence of the will and whether the respondent could provide a copy. Subsequent to the provision of a copy of the late husband’s will the wife’s solicitor advised that they would obtain instructions from their client and advise.

7. The respondent replied on 11 April 2014 confirming the death of the husband and advising that he was obtaining instructions from the husband’s executor.

8. The last day for compliance with orders as to the husband’s transfer of his interest in the property to the wife was 16 April 2014. The husband’s solicitor made no effort to complete the transfer.

9. The inference is that there was some uncertainty as to efficacy of the signed and stamped transfer that the husband’s solicitor held in anticipation of settlement and that the death of the husband presented a circumstance where it was impracticable for the settlement of the transfer to the wife to be completed by the 16 April 2014, particularly where the husband’s solicitor had to await instructions from an overseas executor.

10. It subsequently appears that there was some agreement reached as to the entering into of a deed that would have avoided the necessity of obtaining a grant of probate of the late husband’s will. The terms of any such agreement are not in evidence nor is there any evidence as to its relevance to the present issues, save for the inference that the husband’s interest in the property was regarded by his solicitor only as to the payment due to the estate as personalty (see [32] below). That inference is inconsistent with the present contention on behalf of the husband’s estate that it retains a half interest in the property.

11. Later by letter dated 11 June 2014 the respondent provided to the wife’s solicitors a copy of the husband’s will dated 13 March 2014.

12. It appears that no action was taken by the respondent to complete the transfer of the Suburb A property to the wife notwithstanding that he at all relevant times was in possession of the transfer signed by the deceased husband and the withdrawal of caveat signed by him on the husband’s behalf.

13. The wife’s solicitors made further enquiry of the respondent on 10 October 2014 and 3 November 2014. On 18 November 2014 the respondent informed the wife’s solicitors:

    It has been difficult to obtain instructions from the executor and beneficiary. I am hopeful of receiving them shortly.… It is still unclear to me why the transfer cannot occur and the funds (after my costs are deducted) are left in trust pending agreement or court order.

14. Yet the respondent made no arrangements to organise a settlement of the transfer to the wife.

15. The wife complains that she was not informed as to progress in relation to the husband’s estate until 2 June 2015 when her solicitors were informed by the husband’s legal personal representative that letters of administration in relation to the late husband’s estate were granted on 1 May 2015 and a transmission of the husband’s interest in the Suburb A property to his legal personal representative was effected on 21 May 2015.

16. The wife’s application was filed in circumstances where she became aware that the respondent proposed to make application for the appointment for trustees for sale of the subject property under the provisions of s 66G of the Conveyancing Act 1919 (NSW). Such application being proposed notwithstanding the default provisions contained in the subject orders.

17. The wife is in a position to acquire the husband’s interest in the subject property by payment of the ordered capital sum plus interest accrued.

18. It is apparent from later correspondence dated 12 December 2014 and thereafter that there were ongoing negotiations in relation to a prospective application by the deceased husband’s children for provision out of his estate.

19. Once the transfer had been signed by the husband during his lifetime it may be arguable that notwithstanding his death his solicitor then being in possession of a “registrable instrument” could have facilitated the transfer to the wife and received funds from the wife to be held in trust for the husband’s estate. The estate would have received those funds as “personalty”:  ( Brown v Heffer [1967] HCA 40; see also Fairweather v Fairweather [1944] HCA 11; (1944) 69 CLR 121 at 154; [1944] ALR 190 at 204-5).

20. However subsequent events, whereby the respondent has become registered as to the late husband’s interest by transmission as administrator of the husband’s estate, have rendered the transfer nugatory. Accordingly, the wife seeks orders as against the respondent as administrator of the husbands estate.

The grounds for relief

1. The wife seeks relief under s 79A of the Act asserting either:

   a)in the circumstances that have arisen since the order was made it is impracticable for the order to be carried out or impracticable for a part of the order to be carried out or,

   b)a person has defaulted in carrying out an obligation imposed on the person by the order and, in the circumstances that have arisen as a result of that default, it is just and equitable to vary the order or to set the order aside and make another order in substitution for the order.

2. Section79A is a remedial section intended to overcome miscarriages of justice. As such it should be construed liberally to reflect its intended purpose (see Gilbert v. The Estate of Gilbert (1990) FLC 92-125). Even though a ground for variation or setting aside may be made out, the court has a discretion as to whether to do so in all the circumstances.

3. Essentially the wife’s case is one seeking variation as to the time provided for in the orders to facilitate her now acquiring her late husband’s interest as a consequence of the intervening circumstances of the husband’s death that followed the making of the orders.

4. In Cawthorn v Cawthorn [1998] FamCA 37; (1998) FLC 92-805 the Full Court, relevantly considered the question of “impracticability” at 85058-85059:

   In this context it becomes important therefore to give consideration to the approach taken by Kay J. in La Rocca's case ((1991) FLC 92-222). His Honour, after setting out the relevant facts, said (at 78,536):

   "In those circumstances where the husband is apparently insolvent can it be said that circumstances have arisen since the making of the order making it impracticable for the order to be carried out? Can it further be said that if such circumstances do exist should the Court exercise its discretion to set aside any part of this order?

   There have been surprisingly few decisions on the meaning of s.79A(1)(b) since its enactment in 1983. A section with identical import appears in s.87(8) of the Act in dealing with the circumstances in which the Court ought to revoke the approval of a maintenance agreement. There are, as I understand it, only two reported decisions on either section.

   In Rohde and Rohde (1984) FLC 91-592 Justice Gee examined the meaning of the word `impracticable' and concluded that it was something different from impossible and said at p.79,768:

   (a) It is not enough that circumstances have arisen since the order was made which make it unjust for the order or part of the order to be carried out; the onus is upon the applicant to establish to the reasonable satisfaction of the Court, that in the circumstances that have arisen it is impracticable for the order or part of the order to be carried out.

   (b) The word `impracticable' means gleaning a definition from the Shorter Oxford Dictionary, `not practicable', `that cannot be carried out or done'; `practicably impossible'; `unmanageable'; `intractable'.

   The section, in my view, is capable of a very narrow application or a very broad application depending upon as best as I can glean it, the intent of Parliament. The section has to be read in an enactment which includes s.83 that spells out the circumstances in which Parliament thinks it is appropriate to vary orders made under the Family Law Act where a change of circumstances makes it appropriate to no longer require the earlier order to be complied with…

   After referring, at some length, to the Joint Select Committee's report, and to the opinions of text writers and commentators, Kay J at (p.78, 538) continued:

   "My own view is that each of the subsections of s.79A have to be seen in context. They have to be seen against the comments of Mr Justice Murphy, of the dichotomy between property and maintenance, and of the narrow bases upon which it is said it is appropriate to step away from the permanency of a property order.

   There are four bases set out in s.79A, three of which are clearly extremely narrow. The first one of miscarriage of justice relates to events at or before the trial. The second one as to default by one of the parties in carrying out their obligations enables an innocent party to come along and say, well, he was ordered to transfer to me the motor vehicle; he has burnt the motor vehicle, I now want something else, because it is unjust and unfair to require me to be left with nothing.

   The third one, the very narrow circumstances of hardship to a child as a result of changed circumstances, and the fourth one is this one which on the face of it is capable of a wide interpretation.

   My own view is that s.79A(1)(b) should be narrowly interpreted, not to the narrow extremes spoken of by Professors Hardingham and Neave for, indeed, the Family Law Rules themselves now enable the machinery provisions and the times involved in dealing with matters to be altered and in particular, I make reference to Order 3 Rule 3.

   My own view is that the concept of impracticability, as referred to in this section, is akin to the application of the doctrine of frustration in contractual matters. What the Parliament is concerned with and what ought to be concerning the Court is the happening of events which cannot be reasonably foreseen, which will have the effect of causing an injustice to one of the parties if the happening of such events is not given effect to. (emphasis added)

   In standard contractual doctrine, I think that is as comfortably as anywhere described by Russell J. in Re Badische Co. Ltd. (1921) 2 Ch. 331 at 379, where his Honour said:

   `The doctrine of dissolution of a contract by the frustration of its commercial object rests on an implication arising from the presumed common intention of the parties. If the supervening events or circumstances are such that it is impossible to hold that reasonable men could have contemplated that event or those circumstances and yet have entered into the bargain expressed in the document, a term should be implied dissolving the contract upon the happening of the event or circumstances'.

   Now, in my view, what the appropriate application of s.79A(1)(b) ought to be is that circumstances that have arisen in which it becomes impracticable to carry out the orders are circumstances that could not reasonably have been contemplated and that in such circumstances, whilst impossibility is not the test and impracticability is, it may then become just and equitable to change the orders…” (emphasis added)…

1. The Full Court later then said at 85061:

   However in our view a party cannot successfully seek an order pursuant to s.79A(1) as a result of that party's own default unless such default was due to circumstances quite beyond that party's control. (emphasis added) This rests firstly upon the well-established principle of law that no-one should profit by their own wrong doing. This principle clearly embraces the obligation to carry out the provisions of a court order. Secondly, it would normally not be just and equitable to grant relief under s.79A(1) in those circumstances. (See Rohde and Rohde (supra) at 79,769 - 79,770; Monticone and Monticone (supra) at 77,755 -77,756). It is in this context that we briefly revisit the doctrine of frustration and observe that a party cannot rely upon what has been termed "self-induced frustration". See Maritime National Fish Ltd v Ocean Trawlers Ltd[1935] UKPC 1; (1935) AC 524 and Bank Line Ltd v Arthur Capell and Co. (1919) AC 535-542.

2. Relevantly in this matter:

   a)The wife had done things necessary to perform her part of the orders, save for the final payment that awaited arrangements for settlement from the husband’s solicitor for the husband to transfer the property to the wife and the wife to simultaneously pay him the sum of $385,000.

   b)The husband’s obligation was to “do all things necessary” to transfer his interest to the wife. The husband did not do so before his death and the respondent has not done so thereafter.

   c)The husband had signed the transfer before his death but there is no evidence as to whether it would have been appropriate to use that transfer to complete the transaction after the husband’s death. If it had been, the husband’s solicitor did not seek to do so as was the obligation of the husband under the orders. If it had not been, then the completion would of necessity have to await the proper appointment of a personal legal representative for the deceased husband. That did not occur until May 2015.

   d)Whilst the husband had signed the necessary transfer, his subsequent death led to issues between his solicitor and by inference his executor and the wife where the prospect of completion of the transfer was not revisited until the respondent’s letter of 18 November 2014 to the wife’s solicitor.

   e)Nothing then appears to have happened until such time as the respondent obtained the necessary grant of administration in May 2015 and then facilitated the transmission of the husband’s interest in the property to himself in that capacity.

3. The husband’s untimely death before the simultaneous transfer of the property and payment is a circumstance which cannot reasonably have been foreseen or contemplated.

4. The husband’s death was a circumstance outside the control of the wife. She was at that time ready and able to complete the acquisition of the husband’s interest in the subject property. It cannot reasonably be argued that the failure to complete the transaction was due to her default. The intervening death of the husband was a circumstance beyond her control that lead to her failure to comply with the time frame provided for in the subject orders.

5. There are clearly circumstances outlined above that rendered it impracticable for the obligations under the order to be carried out, particularly given the time frame for compliance.

6. In the circumstances this ground for variation has been satisfactorily made out.

7. As to second ground relied on by the wife under s 79A(1)(c) there is no evidence adduced to support the proposition that, notwithstanding the death of the husband, the transfer signed by him prior to his death could be used to complete the parties’ obligations under the orders in a timely manner after his death. Had there been such evidence then this ground would have been made out.

8. The wife asserts she is ready and able to complete. The respondent now has the legal capacity to sign the necessary transfer on behalf of the deceased husband’s estate. The Rules provide for interest in circumstances of delay.

9. In such circumstances it is appropriate that the Court exercise its discretion to appropriately vary to the orders.

10. The wife contends that the subject order should be varied to provide for further time for completion as contemplated by the orders and for the present respondent to affect the necessary transfer. The wife properly concedes that in the circumstances she will be required to pay interest on the capital sum from the original due date to completion. Such payment would compensate the husband’s estate for monies due to it.

11. The Court has no evidence as to the readiness of the parties to complete this long delayed transaction. Accordingly the matter will be relisted for short submissions as to appropriate variation orders.  

12. An order will be made as set out at the forefront of this judgment.

I certify that the preceding fifty (50) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Foster delivered on 30 October 2015.

Associate:

Date:  30 October 2015