Ebbage & Ebbage - [2000] FamCA 1470

[2000] FamCA 1470

FAMILY LAW ACT 1975

IN THE FAMILY COURT OF AUSTRALIA
AT BRISBANE No. BR 8202 of 1996

BETWEEN:
  EBBAGE
  SUSAN JAYNE
  Applicant Wife

AND:
EBBAGE
RAYMOND JOSEPH

(AS EXECUTOR OF THE ESTATE OF PAUL GERRARD EBBAGE)
Respondent Husband

BEFORE THE HONOURABLE JUSTICE WARNICK

REASONS FOR JUDGMENT

Dates of Hearing: 12 September 2000

Date of Judgment: 15 November 2000

Appearances: Mr A Morris of Senior Counsel with Mr P Hanlon of Counsel, instructed by Adamsons, Solicitors, appeared on behalf of the Applicant Wife
Mr North of Counsel, instructed by Minter Ellison, Solicitors, appeared on behalf of the Respondent Husband

On 3 December 1996, Paul and Susan Ebbage, once married, but then separated, resolved a dispute about division of property and obtained orders of this Court, in accordance with terms of settlement.
Those orders placed a variety of obligations on the husband.
The wife alleges that the husband failed to meet at least some of those obligations.
On 2 December 1998, the husband died.
The wife further alleges that the executor of the husband’s estate has failed to fulfil obligations under the orders. On 25 August 2000, she filed an application that the executor of the estate (Raymond Ebbage) be dealt with for contravention of the orders, both by himself and by the husband.
The executor says that the proceedings against him cannot continue, because leave of the court to enforce against the estate, liabilities that arose under the orders before the husband’s death, has not been obtained.
He says that section 105(3) of the Family Law Act mandates that leave must first be obtained.
On behalf of the wife, it is said that that sub-section does not apply to enforcement of the obligations arising under this order.
This is the point for determination. Resolution of it requires focus on the sub-section.
This includes examination of:

the Legislative and legal History
the scope and operation of the sub-section

The results of this scrutiny must then be applied to the particular circumstances of this case.

Legislative and legal History

The “predecessor” of section 105(3) was section 104(2) of the former Matrimonial Causes Act 1959. That section provided:
“A decree made under this Act may be enforced, by leave of the Court by which it was made and on such terms and conditions as the court thinks fit, against the estate of a party after that party’s death.”
I have not been referred to, nor have I located, any case in which the question of categorization of orders, by source of power or terms of orders, into those which could be enforced without leave, as against those not enforceable except with leave, against the estate of a party, was decided.
The question of enforcement after, as against abatement upon, death of a party, has certainly been much discussed. In that context, parties (including personal representatives) have succeeded in obtaining “enforcement” of property rights granted by order in a matrimonial cause, where the order had not been complied with prior to the death of a party. See Harris v Walker (1969) 14 FLR 167; Re Johnston’s Estate (1973) 22 FLR 291; Public Trustee v Grivas (1974) 2 N.S.W.CR 316; Pollard v Pollard (1975) 25 FLR 125. They were cases which turned upon recognition of equitable rights in property, found to have been created at the time the orders were made, and of consequential orders derivative from those equitable rights. For example, the vesting order in Pollard, was made pursuant to section 71 of the Trustee Act 1925 (NSW). In Re Johnston’s Estate, declarations as to property rights were sought by summons. No question of leave pursuant to section 104(2) appears even to have been raised in those cases, and in any event, the section did not apply to “enforcement” by an estate.
The sub-section was discussed in Johnston v Krakowski (1965) 113 CLR 552. That case involved the determination by the High Court of a question of inconsistency between the provisions of the Matrimonial Causes Act 1959 and Part 4 of the Administration of Probate Act 1958 (VIC). The Victorian legislation permitted the making of orders for the maintenance and support of certain persons out of deceased estates. The argument was that sections of the Matrimonial Causes Act permitting applications to be made by former spouses for maintenance, ousted the Victorian “testator’s family maintenance” legislation, so far as it might have otherwise permitted applications by that spouse.
The former wife of the deceased had obtained an order for her maintenance. Following the husband’s death, she sought provision under the testator’s family maintenance legislation.
In the course of his judgment, Kitto J commented on the provisions of section 104(2) in these terms (page 562):
“It is true that s.104(2) makes a general provision to the effect that a decree (which includes an order) made under the Act may be enforced, by leave of the court by which it was made and on such terms and conditions as the court thinks fit, against the estate of a party after that party’s death. This provision does not purport to convert an order against a party, which in its nature is purely personal to him, into an order which on his death may be made binding upon his legal personal representatives. The only decree to which its terms applies is one which admits of enforcement according to its true meaning against the party’s estate.”
Kitto J was addressing a different point to that raised in this instance, but the use of the term “general provision” and the terms of the last sentence of the passage quoted, together with the absence of any suggestion to the contrary, may support an argument that Kitto J certainly did not see the section being confined to enforcement of a particular type of liability or obligation, such as one deriving from a maintenance order.
Kitto J went on to discuss the scope of the Matrimonial Causes Act, with regard to the making of orders that might bind personal representatives after the death of a party to the orders. He said (page 563):
“Nowhere in the Federal Act are the necessary clear words to be found, and it seems to me that subject to the limited exception implied in s.104(2) the situation is still as it was when Bonny J said in Hobden v Hobden (5): “This court has no power to bring the executor or the administrator of a deceased party before it.” (6)”
In Sims & Sims (1981) FLC 91-072, (at page 76,533) the Full Court of the Family Court of Australia said of the decision in Johnston v Krakowski:
“…The majority view in that case appears to have been that sec. 104(2) did no more than enable the enforcement against the estate of a deceased party of obligations which had accrued before that party’s death. Section 105(3) appears to give effect to the majority view…”
Indeed, it does seem that the only essential difference between sec. 105(3) (as it originally read) and the former sec. 104(2), was the expression in sec. 105(3) of the limitation read into sec. 104(2) in Johnston v Kwakowski, as sec. 105(3) included the words “the decree may, by leave of the court … be enforced, in respect of liabilities that arose under the decree before the death of that person…” (my underlining)
In summary, the legislative and legal history is that s 104(2) existed in the context of “…the general application of the doctrine of abatement in matrimonial causes”. (Sims & Sims, at page 76,531). Subject to debate about its application in some circumstances, and the effect of s 104(2) upon it, this principle extended generally to rights and obligations under orders obtained before death of a party, not just to incomplete proceedings.
It perhaps would not be surprising that in such an environment, if an obligation (of any type) under an order did survive the death of a party, leave be required before it could be enforced, at least when reliance was placed on “matrimonial” law.
The Family Law Act 1975 provided a different context to that comprised of the Matrimonial Causes Act. Section 82(3) provided that sub-section (2), which mandated the cessation of a maintenance order upon the death of the payer, did not apply:
“…if the order is expressed to continue in force throughout the life of the person for whose benefit the order was made or for a period that had not expired at the time of the death of the person liable to make payments under the order and, in that case, the order is binding upon the legal personal representative of the deceased person.”
In Sims & Sims the Full Court of this court saw no difficulty or inconsistency between section 82(3) and section 105(3) saying (at page 76,533):
“…its [section 105(3)] terminology and its effect fit in neatly with the maintenance provisions in section 82, in the sense that it would allow the recovery of arrears of maintenance accrued before the death of the person bound by the decree, irrespective of whether the order ceased to have effect by reason of the death or whether it continued in force by virtue of section 82(3).
However, prior to 1983, the Family Law Act (the Act) did not allow for the continuation of pending property proceedings after the death of a party. Nor did it allow for the enforcement by an estate, of an order of which the deceased was a beneficiary, and nor did it (apart from, arguably, section 105(3)) expressly provide for enforcement against an estate by the beneficiary of an order.
By the Family Law Amendment Act 1983, section 79(1A) was inserted in the Act. That section provides:
“An order made under subsection (1) in proceedings with respect to the property of the parties to a marriage or either of them may, after the death of a party to the proceedings, be enforced on behalf of, or against, as the case may be, the estate of the deceased party.”
At the same time, sub-section 8 was inserted in section 79, providing for the continuation of proceedings notwithstanding the death of the party.
These amendments radically changed the legislative and legal context in which, however, s 105(3) continued to exist.

The scope and operation of section 105(3)

The scope of the sub-section has caused commentators perplexity, both as to its relationship to section 82(3) and as to its application to orders made pursuant to section 79. (see CCH Electronic Family Law Library 25-680). WADE, Property Division upon Marriage Breakdown, 12-040 to 12-044).
Questions of any inconsistency between section 105(3) and section 82(3) are not central to this case. However, an interpretation for other purposes of section 105(3) which caused inconsistencies between section 105(3) and section 82(3) may be questioned.
In Sims & Sims, immediately before the discussion quoted above, dealing with the interplay of section 105(3) and section 82, the court said:
“There may be some difficulty about the scope of sec.105(3).”
After the discussion of section 82, the court continued:
“The application of sec.105(3) to sec.79 of the Act is more difficult. For present purposes, it is unnecessary to express a concluded opinion on whether sec.105(3) applies to orders under sec.79. If it does, practical difficulties might arise, for instance, where obligations have been performed by one party, but the liabilities of the deceased party had not arisen by the time of death or where the liabilities of the deceased party have been deferred by the order made.
Assuming that the terms of section 105(3) may be sufficiently general to apply to all property and financial orders, it would be a plain indication that no orders should be enforceable other than those made during the joint lives of the parties and that after the death of one of them, they should be enforceable only to the limited extent provided for in section 105(3)…”
In this passage, the court seems to be pointing to the particular hardship that would arise for a surviving party if that party had performed obligations, but the deceased party died before becoming obliged to provide some benefit to the surviving party. If that is the argument, it would seem to be one of degree, for even if a surviving party has not had to fulfil an obligation, there is a hardship if some benefit to be provided at some later time, is not recoverable because of the death of the other party. In any event, if such observations were once a reason for doubting the application of section 105(3) to the enforcement of property orders, the argument would not seem to retain merit after the introduction of section 79(1A).
In Rafter & Rafter (1982) FLC 91-261, His Honour Justice Lambert was concerned with an application by an executor of a deceased husband’s estate, for enforcement of consent orders made in settlement of property, several years before the husband died. His Honour said:
“Section 105(3) relates only to enforcement against the estate of a person of liabilities that arose under an order made before that person’s death. It has no application to the enforcement, for the benefit of the estate of a deceased party against the surviving party, of obligations that arose under orders made in favour of the deceased party prior to his death.
Thus, though His Honour discussed s 105(3) at length, it did not apply to the case before him.
His Honour continued:
“Although the class of “decree” in respect of which the section is intended to operate is not expressly limited by the language used, the inclusion of the discretion and the restriction of the section’s operation to the enforcement of liabilities that arose under the decree before the death of a party against that party’s estate, suggests that the legislature in enacting it did not have in contemplation decrees made under section 79 of the Act.”
I confess to some difficulty in understanding the proposition that, because of the inclusion of a discretion about enforcement and the restriction of the section’s operation to the question of liabilities that arose before the death of a party, the legislature did not have in contemplation the application of the section to orders made under section 79.
His Honour Justice Lambert continued:
“Whilst the jurisdiction created by the statute may be personal, an order made under section 79 altering the interests of the parties to a marriage operates in rem. A final order made during the lifetime of the parties to the marriage alters the equities of the parties and the property to which it relates… If the final dissolution of the marriage by decree absolute does not affect the equities so altered, why should its dissolution by death of one party? Lucas J answered that question in Re Johnstones Estate (supra) at page 294:
‘It seems to me to be quite inconsistent with the intention of the order that, if for any reason no transfer had been executed by the wife at the husband’s death, its operation should be defeated by the incident of succession by survivorship arising out of the existence of the joint tenancy. It was a provision of a ‘once and for all’ nature, to be contrasted with, for example, a provision of the payment of maintenance by weekly sum.”
It seems to me that an order altering the interests of the parties in their property operating in rem is distinguishable from a maintenance order, so that the dicta of Kitto J in Johnston v Krakowski (1965) 113 CLR 552 has no application to final orders in relation to the property of the parties such as were made in the present case.”
Although in the final sentence quoted, Lambert J refers to the orders “in the present case”, His Honour’s reasoning seems to proceed on the assumption that all orders made pursuant to section 79 will be for the transfer of existing property. For myself, I pose the question, if section 105(3) applied to a lump sum of arrears payable (as maintenance) prior to the death of a party/payer, why should it not equally apply to a lump sum payable (as property settlement) by a party prior to the death of that party, albeit the jurisdictional foundation of the order for payment was under a different section of the Family Law Act. I cannot see why the sub-section should not apply in both cases.
Even with regard to rights under an order relating to existing property, although a right (equitable or otherwise) to particular real or personal property may carry different characteristics, particularly with regard to the position of the beneficiary of the orders as against “the rest of the world”, when compared with a right pursuant to an order, to a money payment, such differences by no means lead to a conclusion that the holder of a right of the former type should be more favourably treated with regard to enforcement against the estate of a deceased party, than the holder of a right of the latter type.
Perhaps it could have been argued that if a beneficiary could, without leave enforce rights against “third parties”, it was inconsistent to require a grant of leave before allowing enforcement against the estate of the liable party.
But looked at from the point of view of the executor of the estate, in some cases at least, protected by leave hearing against automatic action in respect of liabilities that arose before executorship descended upon him/her, it is difficult to see a distinction.
Again, even if once such different characteristics provided a distinction with regard to enforcement after death of the liable party, s 79(1A) has at least blurred that distinction, in that all orders, whether resulting in equitable property rights or not, are enforceable after death of a party.
As to other aspects of the scope of the sub-section, there was no contention that the use of the term “decree” in sec 105(3), included “order”. It clearly does (see sec 4 of the Act, “Interpretation” “decree”).
I was referred by Counsel for the executor to the Macquarie Dictionary, 3^rd edition, in which the word “liability” is defined as including “an obligation, especially for payment; debt or pecuniary obligations”.
I see no reason to exclude obligations to do acts and things from the ambit of the word “liabilities” in sec 105(3).
In considering the scope and purpose of section 105(3) it is perhaps helpful to recognise that, though Family Court orders may be spoken of as enforceable and reference made to “the right to enforce”, enforcement is in many (or perhaps all) instances discretionary (see Ramsay and Ramsay 1983 FLC 91-301). In that sense, a requirement of leave, before enforcement is permitted, is not inconsistent with a “right to enforce” an order.
To seek to enforce against a personal representative is to draw into litigation a person not previously a party. That person may be in a disadvantageous position with regard to raising those matters that might bear upon the exercise of a discretion whether to allow enforcement or not. That person may also, by virtue of the position as personal representative, be subject to a number of duties, some of which may be conflictual. In these circumstances, that a party with a ”right to enforce” should first have to obtain leave, provides an opportunity for the court to oversight the joinder of a fresh party and the continuation of proceedings against that party.
Any apparent oddness that leave is only necessary in relation to liabilities arising before death, but not in respect of liabilities arising after death, is dispelled by recognizing that the meeting of a liability arising after the death, is something for which the executor has responsibility at the time it falls due.
Further, any apparent dissonance between the position that a party seeking to enforce against the estate must obtain leave, whereas the estate seeking to enforce against the surviving party need not, is explainable, again, because the circumstances surrounding the alleged failure to meet an obligation are within the knowledge of the surviving party, who is not a fresh party to the litigation.
Counsel for the wife submitted that sec 105(3) was a facilitative provision, rather than one which took away or destroyed rights. In the end, I do not think it assists interpretation or application to categorise the sub-section as facilitive or, for that matter, as restrictive.

I conclude therefore that there is no reason to read down section 105(3), so as to exclude from its operation, particular types or categories of liability, whether according to terms of order, or source of power.

This case

The orders of 3 December 1996, in effect, provided:
(i)that on or before 1 June 1998 the husband transfer his interest in the former matrimonial home to the wife, free of any encumbrance;
(ii)that the husband pay on or before the due dates payments pursuant to a mortgage over the home;
(iii)that the husband discharge the mortgage on or before 1 June 1998;
(iv)that the husband pay the wife $1,500,00.00 by instalments as follows:
(a)on or before 1 June 1997 $500,000.00;
(b)on or before 1 September 1997 $250,000.00;
(c)on or before 1 December 1997 $250,000.00
(d)on or before 1 March 1998 $250,000.00;
(e)on or before 1 June 1998 $250,000.00;
(v)that until the first of the abovementioned payments to the wife the husband pay certain costs relevant to the home;
(vi)that within 28 days of the orders the husband do certain things to cause a transfer to the wife of ownership of a Toyota motor vehicle, subject to a lease or, if that could not be done, indemnify the wife in respect of liabilities under the lease and ultimately discharge those liabilities, after which the vehicle was to be transferred to the wife. Or, if neither of the preceding results could be achieved, provide the wife with a substitute vehicle of her choice with a comparable market value;
(vii)that the husband was to do those things necessary to cause a trust to sell shares and upon sale to pay the proceeds to the wife;
(viii)that the husband pay spouse maintenance on a monthly basis gradually reducing as the wife received the payments aforesaid until ceasing when $1,000,000.00 had been paid to the wife.
The contravention application alleged that the husband had failed in the fulfilment of each of the above obligations, either entirely or to some extent, and that in some instances, the executor had failed to meet obligations placed on the husband.
It was not contended that the form of application was not an application for enforcement.
The application involves sec 112AD of the Act. That section is in Division 2 of Part XIIIA of the Act, and the last section of that Division is:
“112AO. Nothing in this Division is intended to limit the operation of section 105.”
I say nothing about the appropriateness of this form of application in the circumstances alleged. However, I observe, that such reasons as exist for Court scrutiny on a leave application for enforcement against an executor, must be at their highest when the application is of this type.
I see no reason to find that section 105(3) does not require leave before these proceedings can progress. Leave has not been obtained. I will hear the parties as to the future of the application that the executor be dealt with for contravention.
I certify that the preceding 59 paragraphs
are a true copy of the Reasons for Judgment
herein of the Honourable Justice Warnick.

………………………………….
Associate

Date: 15 November 2000

FAMILY LAW – Enforcement of Orders – Against estate of deceased party – whether leave required.

Family Law Act 1975 (Cth), s 105(3)

Orders were made in settlement of a property dispute in December 1996. The wife alleges that the husband failed to meet some of the obligations placed upon him by the orders, which obligations included the transfer of property to the wife and payment of a lump sum, by instalments.

On 2 December 1998, the husband died.

The wife alleges that the executor of the husband’s estate failed to fulfil obligations under the orders.

The wife brought an application that the executor be dealt with for contravention of the orders, by the husband and by himself.

The executor argued that the contravention application could not proceed, because leave had not been obtained as required by s 105(3) of the Family Law Act 1975.

The wife argued that, in respect of the particular obligations she sought to enforce, leave was not necessary.

Held:

Though there had been considerable discussion about the predecessor of s 105(3) (namely s 104(2) of the Matrimonial Cases Act 1959), about the question of enforcement after, as against abatement upon, death of a party to matrimonial proceedings, and about the application of s 105(3) to orders in property settlement proceedings, it had never been decided that s 104(2) or s 105(3) did not apply to enforcement of a particular type, or category, of order.
Any basis for doubts that s 105(3) applied to property orders was substantially removed by the 1983 Amendments to the Family Law Act, permitting enforcement of orders and continuation of pending proceedings by and against an estate, after death of a party.
To seek to enforce against a personal representative is to draw into litigation a person not previously a party. That person may be in a disadvantageous position with regard to raising those matters that might bear upon the exercise of a discretion whether to allow enforcement or not. That person may also, by virtue of the position as personal representative, be subject to a number of duties, some of which may be conflictual. In these circumstances, that a party with a ”right to enforce” should first have to obtain leave, provides an opportunity for the court to oversight the joinder of a fresh party and the continuation of proceedings against that party.
There is no reason to read down section 105(3) so as to exclude from its operation, particular types or categories of liability, whether according to terms of order, or source of power.
Leave was required before the contravention application could be proceeded with.