Green and Wall

[2020] FamCA 15

FAMILY COURT OF AUSTRALIA

GREEN & WALL [2020] FamCA 15

FAMILY LAW – PROPERTY – variation of final property orders in accordance with section 79A – where final property orders were made by consent – where the husband has failed to comply with the final orders – where the matter has been complicated due to the location of the husband in the United States of America – where the husband commenced proceedings in the United States of America to avoid his obligations pursuant to the final orders – where it is just and equitable to vary the orders as sought by the wife – where the husband has failed to engage in the current proceedings – where the husband is ordered to pay the wife’s costs of the enforcement proceedings on an indemnity basis.

Family Law Act 1975 (Cth) s 79A
Family Law Rules 2004 (Cth) rr 11, 17.03

Colgate Palmolive Co v Cussens Pty Ltd (1993) 46 FCR 225; [1993] FCA 801
Fountain Selected Meats Pty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397
Kohan and Kohan (1993) FLC 92-340; 16 Fam LR 245
Munday v Bowman (1997) FLC 92-784; 22 Fam LR 321
Ragatta Developments Pty Ltd v Westpac BankingCorporation (Unreported, Federal Court of Australia, Davies J, 5 March 1993)
Tetijo Holdings Pty Ltd v Keeprite Australia Pty Ltd (Unreported, Federal Court of Australia, French J, 3 May 1991)

APPLICANT: Ms Green

RESPONDENT: Mr Wall

FILE NUMBER: MLC 9764 of 2014

DATE DELIVERED: 17 January 2020

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Macmillan J

HEARING DATE:

28 October 2019

10 December 2019

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Puckey

SOLICITOR FOR THE APPLICANT: Taussig Cherrie Fildes

THE RESPONDENT: No appearance

Orders

Upon the Court being satisfied that the husband Mr Wall has failed to comply with the final orders made in the Family Court of Australia on 27 April 2016 ("Final Orders"), the orders made on 17 May 2018 and costs orders made on 8 February 2019 pursuant to s 79A(1)(c) of the Family Law Act 1975 (Cth)

IT IS ORDERED THAT

1. Pursuant to the Final orders the wife is entitled to a portion of the interest of the husband, Mr Wall in his Company H Savings Plan (with a balance of US$765,426 as at 22 April 2016) ("Portion"),

2. The Portion for the purposes of order 1 hereof is, as at 10 December 2019 the total of the following:

   3.1.1$300,000 pursuant to order 3 of the Final Orders;

   3.1.2$28,972.60 being the default interest calculated in accordance with the Family Law Rules on the $300,000 as at 17 May 2018 pursuant to order 1 of the orders made on 17 May 2018;

   3.1.3$43,142.47 being the default interest calculated in accordance with the Family Law Rules on the $300,000 from 18 May 2018 to 10 December 2019 inclusive;

   3.1.4$2,194.55 being the default interest calculated in accordance with the Family Law Rules on the $300,000 from 11 December 2019 to 17 January inclusive;

   3.1.5$30,000 pursuant to paragraph 1 of the orders made on 8 February 2019 by way of costs orders;

   3.1.6$2,680.68 being the being the default interest calculated in accordance with the Family Law Rules on the $30,000 payable on 8 February 2019 from 9 February 2019 to 10 December 2019;

   3.1.7Default interest of $65.54 per day calculated in accordance with the Family Law Rules per day for each day 11 December 2019 inclusive until the Portion is received by the wife;

   3.1.8The costs of this application pursuant to paragraph 3 hereof.

1. That the following orders made on 27 April 2016 be varied as follows:

4.1Order 1(b)

The sum of $300,000 ("the Second Payment") from his Company H Savings Plan (with a balance of USD$765,426 as at 22 April 2016) on or before 1 February 2017

4.2Order 3 of the orders made in the Family Court of Australia on 27 April 2016 be varied as follows:

The Husband forthwith do all acts and things and sign all such documents specifically including but not limited to a Qualified Domestic Relations Order, as may be required to withdraw from his Company H Savings Plan (with a balance of US$765,426 as at 22 April 2016) $300,000 together with interest thereon at the rate prescribed in the Family Law Rules 2004 and irrevocably direct Company H to pay such amount to the wife with the husband to be solely liable for any and all liabilities inclusive of but not limited to all taxation arising from the withdrawal required to give effect to these orders.

1. That order 2 of the orders made on 17 May 2018 be varied as follows:

In order to effect the Total Payment to the wife the husband forthwith do all acts necessary and sign all such documents as are required, specifically including but not limited to a Qualified Domestic Relations Order, to withdraw from his Company H Savings Plan (with a balance of US$765,426 as at 22 April 2016) and irrevocably direct Company H to pay such sum as is required to give effect to the Total Payment pursuant to paragraph 1 herein to the wife with the husband to be solely liable for any and all liabilities inclusive of but not limited to all taxation arising from the withdrawal and/or loan to give effect to the Total Payment.

1. The husband pay the wife’s cost of and incidental to the Application in a Case filed 23 October 2019 fixed in the sum of AUD$15,510 from his Company H Savings Plan (with a balance of USD$765,426 as at 22 April 2016).

2. The wife’s Application in a Case filed 23 October 2019 be otherwise dismissed and removed from the list of case awaiting hearing.

Note: The form of the order is subject to the entry of the order in the Court’s records.

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

Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLC 9764 of 2014

Ms Green

Applicant

And

Mr Wall

Respondent

REASONS FOR JUDGMENT

1. This matter was listed for final hearing before me in April 2016 and on 27 April 2016, I made final property orders by consent (“the final orders”). Those final orders included orders in the following terms:

   1.The Husband pay or cause to be paid to the Wife the sum of $400,000     payable as follows:

   a)The sum of $100,000 (“the First Payment”) to be electronically transferred from the Husband’s M Bank account no …91 within 7 days and pending the First Payment the Husband be and is hereby restrained from and howsoever dealing with the said account, save for the purposes of making the First Payment; and

   b)The sum of $300,000 (“the Second Payment”) on or before 1 February 2017 (“the date”), (collectively referred to as “the Payments”)

   2.Contemporaneously with payment to the wife of the whole of the Payments, the wife remove the lis penden lodged by her in respect of the property known as and situated at C Street, D Town, E State in the United States of America and being the property more particularly described as Lot …, in Block 1 of D Town, Village of V, Section …, a subdivision in Q County, E State, according to the map or plat thereof recorded in cabinet “K”, Sheets … of the Map of Plat records of Q County, E State (“the E State property”).

   3.In the event the whole of the Payments has not been made pursuant to these order, the Husband forthwith do all acts and tings and sign all such documents as may be required to pay or cause to be paid to the Wife so much of the Payments as are then outstanding together with any interest thereon at the rate prescribed in the Family Law Rules 2004 from the Husband’s Company H Savings Plan (with a balance of USD$765,426 as at 22 April 2016), including but not limited to by loan from the said Plan.

2. The matter has since then been listed before me on a number of occasions and on 17 May 2018, I found that the husband had contravened paragraph 3 of the final orders and I made orders with a view to ensuring his compliance with the final orders. On that date I made inter alia the following orders:

   1.On or before 31 May 2018 the husband pay or cause to be paid to the wife the sum of $300,00 (“the Payment”) together with interest of $28,972.60 calculated from 1 February 2017 to the date of this order, that rate currently being a rate of 7.5 per cent per annum plus additional interest accrued thereon from the date of this order up to and including the date of receipt of the Payment, as prescribed in the Family Law Rules 2004 (Cth) (“the Total Payment”) with the Total Payment to be paid into the wife’s lawyers (Mills Oakley’s) Trust Account on behalf of the wife.

   2.In order to effect the Total Payment to the wife the husband forthwith do all acts necessary and sign all such documents as are required to personally withdraw in his sole name and/or raise a loan in his sole name and for his sole benefit from his Company H Savings Plan (with the balance of US$765,426 as at 22 April 2016), such sum as is required to give effect to the Total Payment pursuant to paragraph one hearing with the husband to be solely liable for any and all liabilities inclusive of but not limited to all taxation arising from withdrawal and/or loan to give effect to the Total Payment.

3. Notwithstanding that the husband had not made the Payments he was required to make to the wife, he issued proceedings seeking to remove the lis pendens. The wife has opposed the orders sought by the husband and has been involved in litigation with the husband in relation this issue both in the Judicial District Court of Q County (“the Q Court”) and Judicial District Court of T County (“the T Court”) E State since late 2017 culminating in an arbitration which took place on 6 August 2019. 

4. The wife’s US Attorney Mr U in his Affidavit filed 23 October 2019 deposed as follows:

   11.Each of the Final Orders, Contravention Orders and Cost Orders (collectively the “Australian Orders”) have been domesticated in E State and are recognised as binding orders.  Before a foreign order can be enforced in E State, it must be “registered” or “domesticated”, which is a process that provides notice to the other parties to an order and permits them an opportunity to dispute the authenticity of the order before it is domesticated and enforced in E State.

   12.Ms Green also brought a counter-suit in the T County Proceedings against Mr Wall to enforce the terms of the Australian orders in E State and to obtain a Qualified Domestic Relations Order (“QDRO”), which is required to effect a payment from Mr Wall’s Company H Saving Plan to her under local law.

   13.The Employee Retirement Income Security Act (“ERISA”) covers two types of retirement plans: defined benefit plans and defined contribution plans.  A QDRO is the legal instrument used to transfer funds from an employee spouses qualified retirement account to the non-employee’s spouse at the time of divorce.  Mr Wall’s Company H Savings Plan is a defined contribution plan subject to ERISA and, therefore, may only be divided by a QDRO.

   14.In the United States, when a spouse is receiving funds from a qualified retirement account, such as the Company H Savings Plan, it is customary for the order read:

   “Wife is awarded a portion of Husband’s employee and retirement benefits in [exact name of plan] arising out of Husband’s employment with [name of company], that portion being [dollar amount or fractional interest], as of [date], together with any interest, dividends, gains, or losses on that amount arising since that date and more particularly defined in a Qualified Domestic Relations Order signed by the Court on or after the day this Final Decree of Divorce is signed.”

   15.Ms Green’s counter suit relies upon the language of the Australian orders which require Mr Wall to “forthwith to all acts and things and sign all such documents as may be required to pay or cause to be paid to the Wife so much of the Payments as are then outstanding together with interest thereon at the rate prescribed in the family Law rules 2004 from the Husband’s Company H Savings Plan (with a balance of USD$765,426 as at 22 April 2016), including but not limited to by loan from said Plan”.

   …

   17.Mr Wall has repeatedly acknowledged that he has not paid the AUD$300,000 that was due on 1 February 2017; however, he refuses to pay the accrued interest and expenses incurred by Ms Green and/or refuses to pay Ms Green from his Company H Savings Plan via QDRO notwithstanding consenting to order 3 of the Final Orders being made in the first instance.

   18.Following the unsuccessful mediation the parties agree to submit the matter to binding arbitration, which is customary for matters that involve unique or novel matters of law, such as the interpretation and enforcement of a foreign judgement.  During the course of the arbitration on 6 August 2019, Mr Wall acknowledged again that he had not paid the AUD$300,000 that was due on 1 February 2017, and further alleged that he was coerced into consenting to the Final Order, in part, he contended, because the Family Court threatened to withhold his passport to prevent him from leaving the country.

   19.A transcript of proceedings in Family Court of Australia was subsequently obtained on Ms Green’s behalf of the court proceedings from 25 to 26 April 2016, at Ms Green’s expense[ (sic) and submitted in the arbitration to refute Mr Wall’s claim of coercion.

   …

   22.On 20 September 2019 the arbitrator issued his award granting Ms Green a judgement of USD$407,647.17 (AUD$592,742.04 based on a 20 September 2019 exchange rate of 0.68773) however, the arbitrator declined to grant a Qualified Domestic Relations Order requiring the amount to be paid to Ms Green from Mr Wall’s Company H Savings Plan…

   …

   24.Whilst formal reasons were not delivered, the arbitrator intimated during a post arbitration hearing on 11 October 2029 that he did not grant a QDRO because he considered it was not clear that the Final Order specifically awarded Ms Green a direct interest in Mr Wall’s Company H Savings Plan.              

5. In my view the arbitrator is correct and the final orders did not give the wife an interest in the husband’s Company H Savings Plan. Although when I made orders on 8 February 2019, I did order the husband to sign a QDRO at the time the wife was self-represented and the nature of the QDRO was not clear to me. In any event that order was not intended to and did not grant an interest to the wife in the husband’s Company H Savings Plan nor in my view did I have the power to do so other than by way of a variation of the final orders, which was not the application before me at that time.  

6. The wife’s case is in summary that in order to give effect to the terms of the final orders made by consent those orders should be varied so as to provide her with an interest in the husband’s Company H Savings Plan based upon which the arbitrator can make an QDRO.

7. Although in her Application in a Case filed 23 October 2019 the wife sought a variation of the final orders, in my view that application did not make it sufficiently clear that the orders the wife sought were a variation of the final order pursuant to s79A of the Family Law Act 1975 (“the Act”). On that basis the matter was further adjourned for hearing before me on 16 December 2019 to allow the wife to serve a copy of the order made 10 December 2019 upon both the husband and his US attorney making it clear to them that the orders sought by the wife were a variation of the final orders made by this Court pursuant to s 79A of the Act. On 25 October 2019 the wife filed an Affidavit of Service of the orders served upon the husband and his US Attorney. On 11 December 2019 the wife served upon the husband a copy of the minute of orders sought by her making it quite clear that she was proposing to vary the final orders and noting the next return date. I am satisfied that the husband has been served with the wife’s Application in a Case and is aware of the terms of the orders she seeks and the basis of the wife’s application. The husband has filed no material in answer to the wife’s Application in a Case and has not appeared or been represented when that application has been listed, including at the hearing before me on 10 December 2019.

8. Rule 11(2) of the Family Law Rules (“the Rules”) makes provision for the court to determine a case as if it were undefended when a party has failed to comply with the Rules, a regulation or a procedural order. The rules require a respondent who opposes an Application in a Case to file a Response to an Application in a Case seven days prior to the hearing of that application. The husband in this case has not complied with the Rules and has played no active part in these proceedings. I am satisfied that this matter is in fact undefended and should proceed on that basis.

9. Section 79A(1)(c) of the Act provides that on the application of a person affected by a property order that a person has defaulted in carrying out an obligation imposed on that person by that order and that in the circumstances that have arisen as a result of that default, it is just and equitable to vary or set aside the order and make another order in substitution for that order. Significantly the wife in this case is seeking orders which will enable her to enforce the terms of the orders previously made rather than altering her entitlements pursuant to those orders.

10. I have previously found that the husband contravened the final orders requiring him to pay the wife the sum of AUD$300,000. I am also satisfied that the husband has not remedied his default. To the contrary the proceedings the husband instituted in both Q Court when the orders he sought were not granted and in T Court, E State to remove the lis pendens lodged by the wife are ongoing. I am satisfied that the husband’s purpose in instituting and continuing the US proceedings was intended to avoid his obligations pursuant to the final orders.

11. Mr U deposes to the husband having repeatedly acknowledged that he has not paid the AUD$300,000 owing to the wife pursuant to the final orders and his refusal to pay that amount from his Company H Savings Plan via a QDRO, notwithstanding that he had consented to the final order.

12. I am satisfied that the husband is in default and that in the circumstances of that default it is just and equitable to vary the orders as sought by the wife.

Default Interest

1. The wife relies upon the calculation of penalty interest and costs prepared by ABIP Advisors on her instructions annexed to Mr U’s Affidavit and included in the table in the wife’s aid memoir. The wife based her calculations on the period ending 10 December 2019. On the basis of those calculations a further $1,251.39 will accrue until 31 December 2019.

2. As judgment is being delivered on 17 January 2020 a further $943.16 needs to be added to the amount claimed by the wife. That includes a further 17 days multiplied by 6.75. The prescribed rate of interest payable pursuant to the Rules for the period 1 January to 30 June in any year is calculated by adding 6 per cent to the cash rate last published by the Reserve Bank of Australia. That cash rate is currently 0.75 per cent making the interest payable pursuant to Rule 17.03, 6.75 per cent. Allowing for 17 days that makes $943.16.

3. When Company H QDRO Administration produced documents pursuant to subpoena on 21 September 2018, the respondent had $USD 10,597.53 in his Company H Pension Plan as at 1 October 2018 and USD 1,057,923.83 in his Company H Savings Plan at 18 September 2018. I accept as submitted on behalf of the wife that there are sufficient funds to meet the husband’s obligations pursuant to the final orders, penalty interest and costs.

Costs

1. The wife also seeks an order that the husband pay her costs of an incidental to the Application in a Case filed 23 October 2019 on an indemnity basis and that those costs together with the costs the husband has previously been ordered to pay should also be paid out of the husband’s Company H Savings Plan.

2. Although in this Court the general principle is for parties to bear their own costs the court if it is satisfied that there are circumstances which justify it doing so can depart from that principle and make an order for costs against a party [s117(1) of the Act]. In determining what if any order to make the court must consider the matters in s117(2A) of the Act. They include the following:

   a)    the financial circumstances of each of the parties to the proceedings;

   b)   whether any party to the proceedings is in receipt of assistance by way of legal aid and, if so, the terms of the Green of that assistance to that party;

   c)    the conduct of the parties to the proceedings in relation to the proceedings including, without limiting the generality of the foregoing, the conduct of the parties in relation to pleadings, particulars, discovery, inspection, directions to answer questions, admissions of facts, production of documents and similar matters;

   d)   whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the court;

   e)    whether any party to the proceedings has been wholly unsuccessful in the proceedings;

   f)    whether either party to the proceedings has made an offer in writing to the other party to the proceedings to settle the proceedings and the terms of any such offer; and

   g)   such other matters as the court considers relevant.

Discussion

1. The wife is not in receipt of Legal Aid. The husband has not participated in the proceedings and has in those circumstances has not incurred any costs.

2. I have limited evidence in relation to the parties financial circumstances, save that I am satisfied that as at 18 September 2019 the husband had USD$1,057,923.83 in his Company H Savings Plan. I am also satisfied that although the wife retained real property as part of her settlement she has had to sell that property to support herself and fund the proceedings in Australia and the proceedings instituted by the husband in E State.

3. I have already found that the husband instituted and continued the proceedings in both Q and T Counties for the purposes of avoiding his obligations pursuant to the final orders made consent by this Court. The application before me is a direct result of the husband’s failure to comply with those orders. The husband has chosen not to participate in the proceedings and the wife’s application has been wholly successful.

Indemnity Costs

1. The usual practice is that when the court makes an order for one party to pay another party’s costs that order should be made on a party and party basis. In Kohan and Kohan (1993) FLC 92-340 the Full Court observed that the court should not depart lightly from that rules and that circumstance justifying such a departure should be of an “exceptional kind”. In Colgate-Palmolive v Cussons Pty Ltd (1993) 46 FCR 225 Sheppard J stated that there should be some “special or unusual feature in the case to justify the court in departing from the ordinary practice.”

2. In Munday v Bowman (1997) FLC 92-784 Holden CJ drew from the decision of Sheppard J in Colgate-Palmolive the following examples:

   a)Where it appears that an action has been commenced or continued in circumstances where a party properly advised should have known that he had no chance of success.  In such cases the action must be presumed to have been commenced or continued for some ulterior motive or because of some wilful disregard of the known facts (see Fountain Selected MeatsPty Ltd v International Produce Merchants Pty Ltd (1988) 81 ALR 397)

   b)making allegations of fraud, knowing them to be false, and the making of the relevant allegations of fraud (see Fountain Selected Meats Pty Ltd (supra)).

   c)Evidence of particular misconduct causing loss of time to the court and to other parties (see Tetijo Holdings Pty Ltd v Keeprite Australia Pty Ltd, (unreported, Federal Court of Australia, 3 May 1991)).

   d)the making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions (see Ragatta Developments Pty Ltd v Westpac banking Corporation (unreported, Federal Court of Australia, 5 march 1993)).

   e)An imprudent refusal of an offer to compromise.

3. In this case the husband has not only failed to comply, he has actively pursued proceedings in another jurisdiction to avoid his obligations and opposed the proceedings instituted by the wife to enforce the domesticated final property orders made with his consent in this Court. The husband has also made baseless allegations that he was threatened by this Court that his passport would be withheld if he did not consent to the orders. I am satisfied that there are exceptional circumstances in this case that justify the Court ordering costs on an indemnity basis.

4. The Court has the power to order costs of a specific amount. The wife’s costs are $15,510. This case has had some complexity and I am satisfied that those costs are reasonable. I propose to accede to the wife’s application. Given the history of this matter, I could have no confidence that the husband would pay the costs and in these circumstance I propose to make orders in the terms the wife seeks so that she can similarly obtain a QDRO with respect to those costs.

I certify that the preceding twenty-four (24) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Macmillan delivered on 17 January 2020.

Associate: 

Date: 17 January 2020