Guinness & Guinness (No. 2)
[2008] FamCAFC 100
•8 July 2008
FAMILY COURT OF AUSTRALIA
| GUINNESS & GUINNESS (NO. 2) | [2008] FamCAFC 100 |
| FAMILY LAW - APPLICATION TO RE-OPEN – Where application made to re-open – Where orders made by consent allowing property appeal and substituting new s 79 order – Where order was valid and regularly entered – Where re-opening contested – Whether Court has power to re-open and vary order – Whether proposed variation machinery / consequential or substantive – Discussion of distinction between machinery and substantive orders – Whether extension of time is substantive or machinery – Application of Slapp & Slapp (1989) FLC 92-022 and Ravasini & Ravasini (1983) FLC 91-312 – Where variation is substantive – Whether interest pursuant to s 79 order is payable – Where in the circumstances s 117B(1) applies – Claim for interest available – Application to re-open dismissed. FAMILY LAW - COSTS – Where appellant wholly unsuccessful – Costs ordered in favour of the respondent as agreed or assessed. | |
| Family Law Act 1975 (Cth) – s 79, s 117B Family Law Rules 2004 (Cth) – r 17.02, r 17.03 |
| Martin & Harris [2007] FamCA 560 Ravasini & Ravasini (1983) FLC 91-312 |
| APPELLANT: | Mr Guinness |
| RESPONDENT: | Ms Guinness |
| FILE NUMBER: | SYF | 3422 | of | 2002 |
| APPEAL NUMBER: | EA | 15 | of | 2007 |
| DATE DELIVERED: | 8 July 2008 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Coleman, Boland & Thackray JJ |
| HEARING DATE: | By way of written submissions |
| LOWER COURT JURISDICTION: | Family Court of Australia |
| LOWER COURT JUDGMENT DATE: | 5 January 2007 |
| LOWER COURT MNC: | [2007] FamCA 1 |
REPRESENTATION
| COUNSEL FOR THE APPELLANT: | Mr G Johnston |
| SOLICITOR FOR THE APPELLANT: | Bizannes & Associates |
| COUNSEL FOR THE RESPONDENT: | Ms A Rees |
| SOLICITOR FOR THE RESPONDENT: | Anne Marie Proctor & Associates |
Orders
That the husband’s application filed 8 February 2008 is dismissed.
That the husband pay the wife’s costs of and incidental to the application as agreed, and failing agreement, as assessed, under Chapter 19 of the Family Law Rules 2004.
IT IS NOTED that publication of this judgment under the pseudonym Guinness and Guinness (No. 2) is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)
| THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT SYDNEY |
Appeal Number: EA 15 of 2007
File Number: SYF 3422 of 2002
| Mr Guinness |
Appellant
And
| Ms Guinness |
Respondent
REASONS FOR JUDGMENT
Introduction
On 7 December 2007 the husband’s appeal against parenting orders made by Cohen J on 30 June 2006, and his appeal against property orders also made by his Honour on 5 January 2007 under the Family Law Act 1975 (Cth) (“the Act”) were before us. Also before us was a cross appeal filed by the wife in respect of both the parenting and property orders. We made orders by consent allowing the appeal against the property orders, and also by consent allowed the cross appeal in part relating to some of the parenting orders. Subsequently, on 7 February 2008 we published reasons, and dismissed the balance of the husband’s appeal against the parenting orders.
On 7 December 2007 orders were made by consent under s 79 of the Act as follows:
1.That the husband pay to the wife the sum of $240,000 (“the Capital Sum”) within 60 days of the date of these orders.
2.a. That upon payment of the capital sum by the husband that the wife shall do all acts and things and execute all documents necessary to transfer to the husband the whole of her right title and interest in the property situate [in Sydney] (“the home”).
2.b. that simultaneously with the transfer the husband shall discharge any mortgage over the wife’s unit [in Canberra] relating to the mortgage registered over the title to the home and release it as security for the mortgage over the home.
3.That in default of payment of the capital sum by the husband to the wife that the parties forthwith upon default do all acts and things and execute all documents necessary to sell the home on such terms and with an agent agreed upon by the parties within 14 days of the date of this order and failing agreement then with such agent as the President of the Real Estate Institute of New South Wales shall nominate and such agent shall determine the method and terms of sale including sale price.
4.That the proceeds of sale of the home pursuant to order 3 shall be distributed in the following order and priority:
i.In payment of all legal costs and agents fees and commissions;
ii.In payment of the capital sum or such part thereof as shall remain outstanding to the wife together with interest calculated in accordance with the rates prescribed by the Rules from default to payment;
iii.In payment of the remainder to the husband.
5.Declare that otherwise each party is the sole and beneficial owner of all other items of property in their respective possession, custody or control including but not limited to superannuation entitlements.
6.That in the event that either party shall fail, neglect or refuse to execute any deed, instrument or document to give validity and effect to these orders then upon the other party filing an affidavit setting out such failure, neglect or refusal then a Registrar of the Registry of the Court is hereby appointed pursuant to section 106A of the Family Law Act to execute any such deed, instrument or document in the name of the party who defaults and to do all things necessary to give validity to the operation of the deed, instrument or document.
7.That the parties have liberty to apply on 7 days notice in respect of the implementation of these orders.
8.That each party pay his or her own costs of the proceedings below, the Appeal and Cross-Appeal in relation to the property proceedings.
On 8 February 2008 Mr Guinness (“the husband”) filed an application in a case in which he sought the following orders:
1.That order 1 of the consent orders requiring payment by the husband to the wife to be effected within 60 days of Order dated 7 December 2007 be extended by 14 days from the due date 5 February 2008 to 19 February 2008.
2.That no interest be deemed due and payable by the husband to the wife because of the extended time frame above.
3.No order as to costs.
The husband’s application was supported by an affidavit of his solicitor, Victor Bizannes sworn or affirmed on 7 February 2008.
We determined in order to deal with this application in a timely and cost effective manner that we would determine the application “on the papers”. Accordingly we directed the Appeal Registrar to request that Ms Guinness (“the wife”) file any material in opposition to the application by 4.00 pm on 21 February 2007, and serve a copy of such material on the husband’s solicitors. The Appeal Registrar subsequently provided to us material received on 19 February 2008 being a response, affidavit and short submissions from the wife’s solicitors, and subsequently correspondence indicating the wife’s material had been served on the husband’s solicitors.
The evidence
The husband’s solicitor deposes to steps taken to obtain finance to pay the sum due to the wife pursuant to the orders, and forwarding to the wife’s solicitors on 23 January 2008 a stamped memorandum of transfer in respect of the former matrimonial home.
The husband’s solicitor further deposes to receiving on 9 January 2008 a letter from the Department of Lands, a copy of which is annexed to his affidavit, advising of the lodging of a caveat affecting the title of the former matrimonial home. The caveat (a copy of which is also annexed to the solicitor’s affidavit) claims an interest by the caveator pursuant to a judgment debt.
The solicitor deposes to steps taken by him to have a lapsing notice lodged, and that the caveat would, by reason of the relevant legislative provisions, lapse on 8 February 2008 unless extended.
Having received notice of the caveat, the husband’s solicitor said that he wrote to the wife’s solicitor on 14 January 2008 advising of the caveat and sought consent to a short extension of the time provided in Order 1 of the consent orders to pay the monies due to the wife. The husband’s solicitor in his letter put the wife’s solicitors on notice that if consent was not forthcoming, an application would be made to the Court “for a short extension of time”.
The husband’s solicitor annexes to his affidavit further correspondence between his firm and the wife’s solicitors. By letter dated 17 January 2008 the wife’s solicitor wrote to the husband’s solicitor advising, inter alia, “In the event that your client does not make payment in accordance with the orders of the Court then of course interest will be payable on those funds in accordance with the rules of the Court”. The wife’s solicitors requested the husband’s solicitors to confirm to the Commonwealth Bank that on settlement the title for the wife’s unit in Canberra (which unit provided collateral security for the borrowings secured over the former matrimonial home) should be delivered to the wife’s solicitors.
The husband’s solicitor’s affidavit also annexes a copy of his letter dated 30 January 2008 to the wife’s solicitor which contains the following:
…
We have re-visited the Orders, a copy of which we are sending with this letter and we draw your attention to the fact that there is no provision for payment of interest outside of the sixty days as you assumed. The provision for interest only comes into place under the terms of paragraph 4(ii) in the event of a total breakdown and failure on the part of the husband to pay the capital sum and a sale of the property takes place, a situation which cannot and will not happen.
… (annexure “K”)
In her opposition to the husband’s application, the wife relies on her affidavit affirmed 19 February 2008. In her affidavit the wife deposes:
4.The matter did not settle on 8 February as envisaged as I understand the caveat had not been withdrawn. It did not settle on 14 February as envisaged on the basis that the applicant’s solicitor was unable to produce the certificate of title with respect to my unit in Canberra. That property was security for the [Sydney] property. I refused to settle on the basis that that title document was not available at settlement…
5.I have not sought to receive an increased amount owing by way of interest for that one day.
6.The applicant’s solicitor has retained in his trust account the sum of $636.16 being interest. I seek payment of that interest and payment of my costs with respect to this response.
The wife also annexed a letter from her solicitors to the husband’s solicitors dated 1 February 2008 in which the solicitors advised as follows:
…
We note that you expect to be able to settle on either 8 or 11 February 2008. As we understand it, the orders provide that you should settle on 5 February 2008. In those circumstances, and we do not rely on any orders but rather the Family Law Act Section 117B, your client is obliged to pay interest in accordance with the rules of the Family Court and that interest is currently at the rate of 10.75%. That amounts to $212.05 if settlement takes place on 8 February or $353.40 if settlement takes place on 11 February 2008. Our client will not settle unless she receives payment of the interest in accordance with this letter. (annexure “B”)
Two other letters from the wife’s solicitors to the husband’s solicitors were annexed to her affidavit. The relevant parts of those letters are as follows:
(a) Letter dated 7 February 2008:
…
We cannot imagine circumstances where your inability to settle would be such that the Court would not require payment of some interest. Our client requires payment of interest in the sum of $636.16 if settlement takes place on 14 February 2008.
Our client will not agree to settlement which does not include the interest component.
Whether you wish to apply to the Court is a matter for you. We will oppose any such application.
… (annexure “C”)
(b) Letter dated 13 February 2008:
…
In order to try and avoid delay of the settlement or either party incurring further costs, we refer you to the case Slapp & Slapp 1989 FLC 92-022. That case is still good law and makes it clear that there is no power for an extension of time to be granted in the circumstances of your application.
Please confirm that settlement, together with the payment of interest, can now proceed on 14 February 2008. We will of course rely on this letter should you continue, and we will of course be seeking costs. (annexure “D”)
The issues raised by the parties on this application
We infer from the husband’s application that he asserts the variation he seeks to the orders made by consent is a machinery and not a substantive order.
From the brief submissions filed on behalf of the wife it is asserted that the Court has no power to extend the time for compliance by the husband for payment of the capital sum of $240,000.00, and procuring the discharge of the mortgage over the Canberra property. By subsequent written submissions it was submitted on behalf of the wife that we were functus officio and could not vary the order (see DJL v The Central Authority (2000) 201 CLR 226).
Relevant law
The principles relevant to this application are subject of well settled law. The Court is functus officio when it has determined a case and orders are regularly entered. However the doctrine has well recognised exceptions. It has long been recognised that an accidental slip or omission or an ambiguity or infelicity of expression in an order can be amended under the so called “slip rule” (see now r 17.02 of the Family Law Rules 2004 (“the rules”)). The other exception to the doctrine is if a consequential order (referred to as a machinery order) is required to give effect to the orders made. A court is not at liberty to amend orders if the new order would affect substantive rights (a substantive order).
The distinction between machinery and substantive orders was discussed by Boland J in a recent appeal against an order of a Federal Magistrate (Martin & Harris [2007] FamCA 560) where her Honour set out the relevant authorities at paragraphs 48 to 50 of her reasons as follows:
In Slapp and Slapp (1989) FLC 92-022 the Full Court discussed the limitations on the power of the Court to vary an order made under s 79 and said at 77,360:
It is not open to a court to make a substantive variation to orders previously made under sec. 79. That proposition can today no longer be doubted. It is based upon the principle, endorsed by the High Court in the case of Taylor v. Taylor (1979) FLC 90-674; 5 Fam. L.R. 289, that an order under sec. 79 is a once and for all proposition.
Such an order can only be varied on appeal or, where the circumstances warrant the same, pursuant to sec. 79A. As counsel for the husband pointed out, the first extension of time can be seen as either an extension by agreement between the parties made by the very authority of the order itself, or alternatively as an exercise of the court's power to vary an order by the consent of the parties pursuant to sec. 79A(1A).
However, the orders made by his Honour on 7 October 1988 were not made by consent and the question therefore arises as to whether those orders affected the substance of the orders or were merely dealing with the machinery aspect of implementing those orders.
The applicable principles were similarly referred to by Frederico J in Cranage and Cranage (1981) FLC 91-039 as follows at 76,344:
The Family Law Act confers no power on the Court to vary an order for settlement of property (Taylor and Taylor (1977) FLC 90-226; King and King (1977) FLC 90-299; Kaljo and Kaljo (1978) FLC 90-445; Branchflower and Branchflower (1980) FLC 90-857). The Court has power to set aside a property order only on the narrow grounds set out under sec. 79A, and the parties make no application under that section. Nor has any appeal been brought against his Honour's order.
However, in McDonald and McDonald (1976) FLC 90-047, the Full Court held that “there is ample power to modify the machinery provisions of a property order provided this does not affect the substantive property rights or cause undue hardship to either party”. This view was followed in Kaljo and Kaljo (supra) and more recently in Molier and Van Wyk (1980) FLC 90-911. The Court derives such power from sec. 80 of the Family Law Act. An application might be made for the Court to exercise the power even though liberty to apply had not been reserved expressly.
The distinction between a machinery and a substantive order is extensively discussed by the Full Court in Ravasini and Ravasini (1983) FLC 91-312 at 78,126 to 78,127:
Counsel for the appellant referred to McDonald and McDonald (1976) FLC 90-047, Kaljo and Kaljo (1978) FLC 90-445 and Molier and Van Wyk (1980) FLC 90-911 as authority for the power of the Court to make what is termed a machinery order. There is no question of the power of the Court to make what we would with respect suggest is more properly called a consequential order. The real questions are what is the proper definition of a consequential or machinery order and where is the dividing line between a consequential order which may be varied or modified and a substantive order which the Act gives no power to the Court to modify or vary. Counsel for the appellant was unable to refer the Court to any authority on this point but argued the submission rather by comparison with the facts of the cases referred to.
...
It is appropriate then to look at what a consequential order is. The Shorter Oxford Dictionary defines “consequential” as meaning “Following esp. as an effect, immediate or eventual, or as a logical inference”.
The Universal English Dictionary defines the word as “Following as a consequence, on what has gone before, resultant: consequential alteration in wording of a document, those made necessary by others already made.” The same dictionary defines “consequence” as “Event which follows upon something else which is, or appears to be, the cause; a result, outcome of what has gone before.”
A consequential order then, in a property matter, would include an order following logically or of necessity from a prior substantive order.
What a consequential order is not is an order the effect of which is to vary the prior order for property settlement. It is not possible to suggest that even the slightest variation of the original order is a consequence of it. What is being submitted in this appeal is that the original order should be amended not as a consequence of that order itself, not as a necessary follow up of that original order but rather as a consequence of events which have happened in the market place since that order was made rendering the facts on which it was based no longer accurate.
Discussion
The wife’s solicitor drew the attention of the husband’s solicitor to the decision of the Full Court in Slapp prior to the filing of this application.
The order sought to be varied in Slapp was a property order which, as in the instant case, required payment on a particular date. The Full Court determined such an order conferred substantial rights, and a variation to extend time was not a consequential order to give effect to the substantive order.
We think that the reasoning in Ravasini highlights the nature of the order now sought. What is sought is not as a consequence of the order itself, but is a consequence of events which have happened since the order was made (that is, the discovery of the caveat, and it appears the inability of the husband to procure release of the certificate of title in respect of the Canberra unit). Accordingly we accept the order sought is not machinery but substantive, and the husband’s application must be dismissed.
We note that the interest claimed by the wife’s solicitors is claimed under s 117B(1) of the Family Law Act 1975 (Cth) which is in the following terms:
(1) Subject to any order made by the court under subsection (2), where, in proceedings under this Act, a court makes an order for the payment of money (other than an order for the payment by way of maintenance of a periodic sum), interest is payable, at the rate prescribed by the applicable Rules of Court, from:
(a) the date on which the order is made; or
(b) the date on which the order takes effect;
whichever is later, on so much of the money as is from time to time unpaid.
Rule 17.03 sets out the rate of interest payable under s 117B. We accept that the claim for interest made by the wife is available under the Act and rules.
Costs of this application
While we acknowledge that the husband’s solicitor attempted, after the orders were made, to diligently prepare the matter for settlement, and to seek the wife’s consent to a very short extension of time in which to pay the sum due to the wife, the costs of this application could have been avoided by reference to the applicable authorities, particularly after the Full Court’s decision in Slapp was brought to his attention. In these circumstances, and having regard to the fact the husband has been wholly unsuccessful in this application, we are satisfied that it is appropriate that the husband pay the wife’s costs of and incidental to this application. The wife sought costs of this application in the sum of $1000.00, but provided no breakdown of how that sum was calculated. We therefore, somewhat reluctantly as we do not wish to involve the parties in further proceedings, propose to make an order that the husband pay the wife’s costs as agreed, or failing agreement, as assessed under the rules.
I certify that the preceding twenty four (24) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court
Associate:
Date:
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