Grist and Grist

[2008] FamCA 289

FAMILY COURT OF AUSTRALIA

GRIST & GRIST [2008] FamCA 289

FAMILY LAW – PROPERTY SETTLEMENT – IMPLEMENTATION OF ORDERS – Credit card debt in husband’s name alleged by husband to have been incurred for the benefit of corporations the liabilities of which the wife was to indemnify the husband by previous order of this Court. Held that the relief sought by the husband was a determination of existing rights and not an alteration of property interests, and thus within the jurisdiction and power of the Court. Held that funds held by husband’s solicitors to be utilized to satisfy husband’s debt to the creditor providers and any remaining sum to be paid to the wife pursuant to previous orders of this Court.

Family Law Act 1975 (Cth) Part VIII; Section 75(2); Section 79(2)

APPLICANT: MR GRIST

RESPONDENT: MRS GRIST

FILE NUMBER: PAC 337 of 2007

DATE DELIVERED: 11 April 2008

PLACE DELIVERED: Parramatta

JUDGMENT OF: Coleman J

HEARING DATE: 19 February 2008

REPRESENTATION

SOLICITOR FOR THE APPLICANT: Kirstie Wulf
Lamrocks

ADVOCATE FOR THE RESPONDENT: Self Represented

Orders

1. The orders of the Court are:

   a)That the Solicitors for the husband pay direct to the credit providers of the husband in satisfaction of the husband’s indebtedness to them, the sum of $52 938.18 presently held by the solicitors for the husband and pay the balance, if any, remaining after such payment to the wife.

   b)That there be no order for costs of the present application.

   IT IS NOTED IN CONNECTION WITH THESE ORDERS that the judgment of the Honourable Justice Coleman delivered this day will for all publication and reporting purposes be referred to as Grist and Grist.

FAMILY COURT OF AUSTRALIA AT PARRAMATTA

FILE NUMBER: PAC 337 of 2007

MR GRIST

Applicant

And

MRS GRIST

Respondent

SUPPLEMENTARY REASONS FOR JUDGMENT

1. On 19 October 2007 the Court delivered judgment in substantive proceedings between the parties and made orders in accordance with its reasons for such judgment.

2. On 29 November 2007 the wife filed an application seeking orders which are not material for present purposes. The application did however give rise to a re-listing of the matter before the Court.

3. When the matter came before the Court, it was common ground, the parties were in dispute as to the effect, and hence implementation, of one of the substantive orders of 19 October 2007.

4. The issue which requires consideration arises with respect to Order 5 of the orders of 19 October 2007 which order provided:

(5)That, subject to these orders, the wife indemnify the husband with respect to any liability of the husband with respect to P Holdings Pty Limited, AG Pty Ltd and/or GT Pty Limited.

1. In essence, as affidavits filed on behalf of both parties confirm, the parties are in dispute as to where, pursuant to Order 5, a credit card liability approximating $50 000 should fall.

2. The wife contends that the liability should remain with the husband in whose name the relevant account has been held and who, absent any order this Court makes, would be liable for the debt.

3. For his part, the husband contends that, although the debts were incurred on a credit card in his name, the benefits which were received in consideration of the liabilities which were created were received by the corporate entities which the wife is to receive pursuant to the orders of 19 October 2007 and that, accordingly, they are liabilities in respect of which the husband is entitled to look to the wife for indemnity.

4. The first issue which requires consideration is the nature of the relief which the husband seeks. Counsel for the husband submitted that the relief sought by him was in the nature of “implementation” within the terms of Order 7 of the orders of 19 October 2007, the pre-requisite to which was a declaration that the credit card debts fell within the ambit of Order 5 of the orders of that date. It was thus submitted that the relief sought was within jurisdiction and power and did not constitute an alteration of interests in property.

5. The Court does not understand there to be any doubt that, if the orders sought are ancillary to the declaration of existing rights, and do no more than give effect to such rights, the relief sought is within jurisdiction and power, being a matrimonial cause within s 4(f) of the Family Law Act 1975 (Cth). Conversely, if howsoever expressed, the relief sought constitutes an alteration of interests in property, the orders cannot be made, other than by consent (which is absent in this case), pursuant to a s 79A application (which has not been made) or by re-exercise of discretion by the Full Court of this Court consequent upon a successful appeal (which, though pending, has yet to be determined). See Mullane v Mullane (1982) 158 CLR 436.

6. Although the contrary has not been suggested, the reservation of “liberty to apply” in Order 7 of the orders of 19 October 2007 does not, and cannot expand the jurisdiction or power of the Court to deal with the present application.

11. Whether the wife fully appreciates the legal issues to which reference has briefly been made is less than entirely clear. Given however that the Court’s refusal to alter the orders of 19 October 2007 could not constitute an injustice to the wife, and that any orders made altering what the wife perceives to be the proper construction of those orders could be appealed against by her, it is difficult to see how the wife could in any way be disadvantaged if she does not fully understand the legal complexities of the current dispute.

1. The Court perceives that, to determine the extent to which the husband’s credit card indebtedness was incurred “with respect to” any of the three corporations referred to in Order 5 of the orders of 19 October 2007, and to make orders consequent upon such determination would represent no more than a declaration of existing interests in property rather than an alteration of those interests.

2. The Court perceives there to be no scope for any exercise of discretion in determining the current dispute. Quite simply, by reference to what the parties agree to be the relevant documentation the Court will determine what, on the balance of probabilities, represents a liability incurred by the husband “with respect to” any of the three corporate entities referred to in the orders of 19 October 2007. To the extent that it does, the husband is entitled to indemnity with respect to that extent. To the extent that it either does not, or cannot, on the balance of probabilities, be concluded to do so, husband would not be entitled to indemnity with respect to such indemnities pursuant to Order 5.

14. Whether it be a shortcoming on the part of the Court, or of counsel then appearing for the husband at trial, the Court’s extensive reasons for judgment of 19 October 2007 do not deal with the current dispute. It is unproductive to explore why that was so, beyond noting that counsel then appearing for the husband did not, in his outline of case document or series of statements of assets and liabilities, appear to refer to the topic which gives rise to this dispute. The Court recorded (reasons for judgment paragraph 65) “on behalf of the husband no liabilities were asserted to be relevant”. No financial or other accounting records to which the Court was referred at trial appear to shed any light on this topic.

15. The Court is unable to revisit the merits of the dispute between the parties, however desirable that may be in terms of the broader interests of justice given that the issue appears to have assumed the significance it now has after the Court’s judgment. The amount involved is not insignificant but, relative to the costs of further litigation in relation to disputed issues of fact, it would be readily apparent that maintaining some semblance of proportionality, provided it was consistent with the broader interests of justice, would not be inappropriate.

16. With at least the tacit consent of the parties, the Court directed that a schedule be completed to indicate the matters called for by the document. The completed schedule and the parties’ comments were received by the Court on 25 March 2008.

17. As a perusal of them confirms, each party has to some extent sought to rely upon matters which are alleged to have occurred after the date the Court delivered judgment in this matter in October 2007. The Court perceives that it cannot have regard, other than to the extent the parties invite it to, to matters which occurred after the delivery of judgment in the proceedings. Even if the Court could do so, the submissions of the parties do not constitute evidence to which regard could be had.

18. Similarly, to the extent that the submissions of the parties appear to attempt to revisit matters which were determined in the Court’s substantive judgment, the Court perceives that it has no power to reconsider such matters. If appealable errors have been made, that is a matter which, in the absence of agreement between the parties, only the Full Court can resolve.

19. Whilst the Court is endeavouring to provide a ruling which the parties can accept, or if they cannot, provide some foundation for the Full Court’s assistance in considering the parties’ contentions, doing so is not easy and is somewhat artificial given that the Court does not believe that the present issue was agitated at trial in the manner or to the extent to which it has now been agitated. The absence of evidence and the testing of such evidence is a very real obstacle in the path of deciding the present issue.

20. As was indicated when this issue was first agitated before the Court earlier in 2008, realistically the only way that the Court can approach the question of whether a particular credit card debit was or was not referrable to business expenses is by drawing inferences from the relevant statements and the identity of the entity which obtained the benefit of such debit. In many instances so doing is decisive of the issue. Given the nature of the business activities of the corporations which the wife retains pursuant to the Court’s orders of 2007, entities clearly associated with building, renovation or construction, or expenses reasonably ancillary thereto, readily fall within the ambit of business expenses.

21. With respect to the parties, the Court’s difficulties are not greatly eased by the fact that each party seems to have focused somewhat more on advocating the correctness of his or her case than engaging with the contentions of the other party. The Court perceives that, at least to some extent, the contentions of the parties thus pass as “ships in the night”.

1. By reference to the NAB MasterCard Statements, it was submitted on behalf of the husband that business expenses totalled $28 140.80. The Court is unclear as to the derivation of that figure given that the wife appears to contend that $22 554.89 of such payments represented business expenses.

2. So far as the CBA Visa Card is concerned, it was submitted on behalf of the husband that the $30 936.16 was agreed by the parties to constitute business expenses drawn on such account. The wife suggests a figure of $30 373.29 to have been made. Business expenses thus can be seen as accounting for $52 938.18 of the credit card expenditure in the post separation period.

3. The wife asserts that she made payments with respect of the NAB account in the post separation period totalling $37 916.30 and with respect to the CBA Account $45 193.85. It is difficult to see how, if that were so, there could be any currently outstanding debit balance with respect to those accounts, particularly as it does not seem to be suggested that further debits have been incurred on those accounts, or if they have, the Court has not been furnished with the statements which are relevant in that regard.

25. It was submitted on behalf of the husband that the wife claimed at the trial of the proceedings in October 2007 to have expended substantial sums of capital received by her from the sale of matrimonial assets in discharging the various liabilities of the parties and had received credit for those payments. It was thus submitted that the wife “cannot once again claim credit for these payments”.

26. There is a nexus between that submission and a submission which the wife made, albeit probably with a somewhat different intention, that being that “husband abandoned all responsibility for his debts when he went to Germany in July 2004” and that the “wife was left to manage joint affairs and pay all the debts without any assistance from the husband”. To the extent that the wife claims to have more than paid the credit card debts to which reference has been made, she has been credited for so doing.

27. As the wife’s submissions and the evidence at trial make clear, the wife had, albeit perhaps by default, sole and unfettered control of the parties’ businesses after July 2004 and consequently, control of the parties’ finances. How the wife could have made the payments asserted by her and the credit cards have remained in debit, as undoubtedly they did, is difficult to understand and the Court cannot suggest a rational explanation for such state of affairs.

28. The Court has reservations as to whether the current issue can be resolved on the findings of fact made at trial in 2007. The submissions of both parties appear to involve now making findings which the Court did not make at trial. To the extent that the Court erred in that regard, the Full Court may be able to redress the injustice that may have caused. If the Court’s recollection that the present issue was not agitated at trial in a manner which facilitated making findings of fact, the Full Court may labour under similar difficulties to the Court in this application.

29. Without suggesting that the matter is without uncertainty, on balance, the Court concludes that $52 938.18 of the credit card debts should be met out of the funds held by the husband’s solicitors. That is essentially on the basis that these are on their face referrable to the parties’ businesses, that the wife retains the businesses, that the wife received credit in the various ways described in the judgment of the Court of 19 October 2007 for her management of the parties’ affairs in the post separation period, and avoided add-backs by reference to her efforts in that regard with respect to various large capital sums.

30. To the extent that the wife contends that satisfying the credit card debts to the extent indicated out of the funds held by the husband’s solicitors alters the beneficial entitlements of the parties, the Court does not accept that such is the case, essentially on the basis urged by Counsel for the husband, namely that the wife was given credit for having made the payments which she now appears to claim that she made and for which she should be relieved.

I certify that the preceding thirty (30) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Coleman

Associate: 

Date 11 April 2008