Force, Alexander v Force, Gilda

[1998] FCA 1451

IN THE FEDERAL COURT OF AUSTRALIA
SOUTH AUSTRALIA DISTRICT REGISTRY	SG 7140 of 1998

BETWEEN:	ALEXANDER FORCE Applicant
AND:	GILDA FORCE Respondent

JUDGE:	MANSFIELD J
DATE:	20 OCTOBER 1998
PLACE:	ADELAIDE

REASONS FOR DECISION

HIS HONOUR:   There is before the Court an application made on 3 August 1998 to set aside a bankruptcy notice issued on 14 July 1998, and apparently served on the applicant on 23 July 1998.  That application in addition seeks orders that the time for compliance with the requirements of the bankruptcy notice be extended until the hearing of this application and, additionally, that the proceedings be transferred to the Family Court of Australia (“the Family Court”) pursuant to s 5(5) of the Jurisdiction of Courts Cross-Vesting Act 1987 (Cth) (“the Cross-Vesting Act”).  At the commencement of the hearing, counsel for the applicant also sought to invoke s 35A of the Bankruptcy Act 1996 (Cth) (“the Bankruptcy Act”) in support of the application to transfer the proceedings to the Family Court of Australia. Reliance on that section was not opposed, and it was not contended on either side that the principles applicable to the exercise of the power under that section are different from the principles applicable to the exercise of power under s 5(5) of the Cross-Vesting Act. In those circumstances the Court will entertain the application on that additional basis without requiring formal amendment of the application.

The application arises in somewhat complex circumstances.  It concerns orders of the Family Court for the full and final settlement of claims for settlement of property and spousal maintenance between the applicant and the respondent, made first on 11 February 1998 and subsequently by supplementary order made on 19 May 1998.  The order of 11 February 1998 contemplated a settlement of the matters agreed between the parties to take place on 3 March 1998. The form of the order of 11 February 1998 firstly defined the settlement date as a certain date, namely 3 March 1998, and then specified the respective obligations of the parties to do certain things on the settlement date.  Subject to the due performance of the things agreed to be done, the issues would be finally resolved except for ongoing payment obligations.

In the case of the applicant, he was to make a substantial payment to the respondent on that date, and thereafter he was to make regular weekly payments of $1,000 per week.  There are acceleration provisions in the order of 11 February 1998 in the event that the payments were not made on the settlement date or thereafter as agreed.  It is accepted that the payments were not made on the settlement date.

In the case of the respondent, she also was to do certain things on the settlement date, including the transfer of a property at 9 Wedge Court, Seaton (“the house”).  It is accepted that on the settlement date she did not attend to the transfer of that property, and she did not in some other significant respects attend to the matters which she was required to attend to on that date.

Settlement of the various matters in the conventional sense took place on 6 July 1998.  Subject to consideration of the acceleration clauses under the order of 11 February 1998, the real issue between the parties at present is whether the applicant was obliged on and from 3 March 1998 to make and maintain the payments then provided for, notwithstanding that there was, in the conventional sense, no settlement of all the terms of the agreement on that date as contemplated in the order.  The applicant has deposed to the fact that he did not make those payments because there was no such settlement.  He maintains that he was unable to refinance his personal arrangements in such a way as to make the initial substantial capital payment on 3 March 1998, and the recurrent weekly payments thereafter, because the house was not transferred to him so he could not use it to support the refinancing of his personal arrangements which he contemplated.  Counsel for the respondent contends that the order of 11 February 1998 expresses the settlement date not as the occasion for settlement in the conventional sense, but as the date upon which the respective obligations of the parties were to be performed.  It is said that those obligations were independent of the performance by the other party of that party’s obligations on the settlement date.

It is apparent, therefore, that one of the issues raised by this application under ss 41(6) and (6A) of the Bankruptcy Act gives rise to the proper construction of the order of 11 February 1998.  It is necessary to note those two sections, because it is said on behalf of the applicant that the amount specified in the bankruptcy notice exceeds the amount due, because the amount so specified did not become due on 3 March 1998 because there was no settlement then, in the conventional sense, and the amount did not in fact become due until 6 July 1998.  Secondly, it is said, invoking s 41(6A), that before the expiration of the time fixed for compliance with the bankruptcy notice, this application was brought to set aside the bankruptcy notice, so that the time for compliance with it should be extended until this application raising that issue has been heard and determined.

The evidence also indicates that on 4 September 1998 the applicant brought further proceedings in the Family Court seeking orders pursuant to s 79A of the Family Law Act 1975 (Cth) to set aside the order of 11 February 1998, or to vary it by replacing the defined settlement date with the date of the actual settlement in a conventional sense, that is 6 July 1998, and for consequential adjustments to the amounts payable at the real settlement date.

I am satisfied that the Family Court has jurisdiction to hear and entertain that application:  In the Marriage of Kerr (1983) 8 Fam LR 1023. Counsel for the respondent did not dispute that proposition. It was said, however, that the fact of that application is not a reason for the cross-vesting of this matter to the Family Court either generally, or in the particular circumstances is it not a reason to do so because there is no real prospect of that application succeeding. It was also put that this Court is in as good a position as the Family Court to interpret the order of 11 February 1998, and that the applicant has not proven that there is no prejudice to the respondent in terms of delay or costs or proper implementation of the order of 11 February 1998. In fact, there is no evidence from either side as to the time when the Family Court might be able to hear this application if it is cross-vested to that Court, or as to any relatively different costs of the parties if the matter is transferred to the Family Court.

I am not prepared, in the absence of such material, to infer that the matter would not be dealt with expeditiously by the Family Court, or that the costs of doing so in the Family Court are of a significantly different order to the costs of the matter being heard in this Court.

There is also said to be some financial prejudice to the respondent in being put out of funds to which she claims to be entitled, pending the hearing and determination of the application in the Family Court.  That is clearly the case upon the hypothesis that she otherwise succeeds in this proceeding.  She would be put out of funds for a period of time only first to the extent to which she has not received the monthly payment of $1,000 between 3 March 1998 and 6 July 1998, but subject to the drawings she has already made and for which she acknowledges she must give credit.  There is a balance she claims is owing to her in the order of about $8,000.  But that begs the question of whether she is entitled to that sum in the circumstances.  That is to be determined.  More significantly, if she is entitled to invoke the acceleration clause in the order of 11 February 1998, she would also be put out of the use of the very substantial amount which is the subject of the bankruptcy notice, and which she will only otherwise become entitled to at a later date.

However, I am not prepared to conclude by reason of that prejudice that the matter should not be cross-vested to the Family Court.  In respect of the latter sum, there will only be a prejudice if the application to set aside the bankruptcy notice is unsuccessful, if the application to set aside the order of 11 February 1998 or to vary it is unsuccessful, and if otherwise this Court or the Family Court makes no orders in some way to protect the applicant from the consequences of the acceleration clauses in the agreement.  There is no evidence deposing to particular or consequential hardship, other than being put out of the claimed entitlement to those sums of money for a period of time.

I accede to the application under s 35A of the Bankruptcy Act to transfer this matter to the Family Court of Australia.  There are three main reasons for doing so.  First, bearing in mind the terms of the order of 11 February 1998 and the subsequent order of 19 May 1998 noting the arrangements then acknowledged by the parties, and noting the common understanding of the parties that there was to be a settlement in some conventional sense shortly after 19 May 1998, this Court is being called upon to interpret the order of another court which has to some extent been addressed by the hearing on 19 May 1998, and might further be addressed by that court.  It is appropriate that the Family Court should, if practicable, address that question.

Secondly, there is an application to set aside or vary that order of 11 February 1998 in the way referred to.  If it is set aside or varied in some way, and in particular if the settlement date as defined in par 1.1 of the order of 11 February 1998 is altered by that court, then that alteration will itself impact upon the entitlement of the respondent to have applied for the bankruptcy notice in the terms in which she did so.  This Court has no power to deal with the application to vary the 11 February 1998 order, but it seems to me that it is desirable that that application be heard and determined at the same time as the application to set aside the bankruptcy notice, so that a determination is made as to whether the foundation upon which the bankruptcy notice was issued remains in force.

Thirdly, one of the issues between the parties is whether the respondent should comply with clause 1.12.6 of the order of 11 February 1998.  It was acknowledged by the applicant, and noted by the Family Court in its order of 19 May 1998, that he no longer required further compliance with that clause of the original order.  His affidavit now says that he gave that acknowledgment because it was asserted by the respondent that she did not give instructions to her solicitors to agree to that term of the order.  The applicant has in the Family Court separately brought proceedings against the solicitors then acting for the respondent, arising out of the assertion by her that she did not give them instructions to agree to that term of the order of 11 February 1998.  He deposes to the fact that, if she did give those instructions contrary to her assertion apparently at or shortly prior to 19 May 1998 he will insist upon compliance with that term of the order.  The Family Court will determine, in that separate matter before it, whether or not she did give those instructions and, if so, whether in the circumstances it is appropriate for the applicant to be entitled to insist upon compliance with the order notwithstanding the acknowledgment which he gave as noted on 19 May 1998.  Whether or not the respondent remains obliged to give that undertaking may or may not be relevant to whether the applicant was obliged to make the payments in accordance with the allegations upon the basis of which the bankruptcy notice was sought, that is, the acceleration of payments provided for in the order of 11 February 1998, as well as in the light of the various steps which the respondent was obliged to take and did not take on 3 March 1998 for her part.  Again it is my view that that issue is in a peripheral way tied into whether the bankruptcy notice should be set aside.

Accordingly, it is more appropriate for this application to be heard and determined by the Family Court of Australia, and I so order in terms of s 35A of the Bankruptcy Act.  I reserve the costs of today to the Family Court when it hears and determines the matter.  I also order that time for compliance with the bankruptcy notice be further extended until the Family Court of Australia hears and determines this application, unless a judge of the Family Court of Australia should make some other order in the meantime.

I certify that this and the preceding five (5) pages are a true copy of the Reasons for Decision herein of the Honourable Justice Mansfield.

Associate:

Dated:             17 November 1998

Counsel for the Applicant:  Mr J Wilkinson
  with Mr A Dal Cin

Solicitors for the Applicant:  Cowell Clarke

Counsel for the Respondent:  Mr M Esau

Solicitors for the Respondent:  Mark Esau

Hearing Date:  20 October 1998

Date of Decision:  20 October 1998