Hamrock and Hamrock and Anor
[2020] FCWA 49
•31 MARCH 2020
JURISDICTION : FAMILY COURT OF WESTERN AUSTRALIA
ACT: FAMILY LAW ACT 1975
LOCATION: PERTH
CITATION: HAMROCK and HAMROCK & ANOR [2020] FCWA 49
CORAM: TYSON J
HEARD: 28, 29, 30 and 31 JANUARY 2020
DELIVERED : 31 MARCH 2020
FILE NO/S: PTW 674 of 2011
BETWEEN: MR HAMROCK
Applicant
AND
MS HAMROCK
First Respondent
AND
BANK A
Second Respondent
Catchwords:
PROPERTY – Application pursuant to s 79A to set aside consent orders – Applicant asserts circumstances have arisen since the consent order was made, which make performance impracticable pursuant to s 79A (1)(b) – Application dismissed - Case turns on its own facts
Legislation:
Family Law Act 1975 (Cth)
Category: Not Reportable
Representation:
Counsel:
| Applicant | : | Mrs Farmer |
| First Respondent | : | Mr Hooper SC |
| Second Respondent | : | Did not participate at trial |
Solicitors:
| Applicant | : | Leach Legal |
| First Respondent | : | Dwyer Durack |
| Second Respondent | : | Lavan |
Case(s) referred to in decision(s):
Bigg & Suzi (1998) FLC 92-799
Cawthown & Cawthorn [1998] FamCA 37
Fotia & Welsh [2013] FCWA 112
Franklin and McLeod (1994) FLC 92-481
Gebert & Gebert (1990) FLC 92-137
Gilbert & Estate of the late Gilbert (1990) FLC 92-125
Kowalski & Kowalski (1993) FLC 92-342
La Rocca & La Rocca (1991) FLC 92-222
Lane & Lane (2016) FLC 93-699
Parker & Parker (1983) FLC 91-364
Reichstein & Reichstein [2006] FamCA 1422
Rohde & Rohde (1984) FLC 91-592
Sanger & Sanger (2011) FLC 93-489
TYSON J:
WORDS IN SQUARE BRACKETS REPLACE WORDS USED IN THE ORIGINAL JUDGMENT – PARTIES’ NAMES AND IDENTIFYING DETAILS HAVE BEEN CHANGED
IT IS NOTED that publication of this judgment by this Court under the pseudonym Hamrock & Hamrock has been approved by the Family Court of Western Australia pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
1[Mr and Mrs Hamrock] were unable to agree on orders by way of alteration of their property interests following the breakdown of their marriage. On the first day of trial on 6 February 2014, they resolved matters by consent.[1] The Consent Orders were negotiated and made on the basis they provided the net property of the parties be divided as 60% to [the wife] and 40% to [the husband].
[1] Consent Orders.
2The Consent Orders were supported by a schedule which specified the assets and liabilities to be divided in specie, for the sale of the former family home, [Property A] and an overall division. The estimated asset pool at the date of the Consent Orders was $2,880,583, which was predicated on the basis Property A sold for $2,150,000, noting the other variable amounts to be quantified. Property A subsequently sold for $1,750,000. Accordingly, each party’s entitlements were reduced.
3In breach of the Consent Orders, The husband did not:
(a)Transfer [Property B] to the wife.[2]
(b)Discharge the mortgage secured over Property B on or before 30 June 2016.[3]
(c)Pay the amount required to the wife to achieve the overall agreed division, on or before 30 June 2016.[4]
[2] Order 8.
[3] Order 10.
[4] Order 11.
4In circumstances where the husband remained in default of his obligations pursuant to the Consent Orders, on 1 December 2016 the wife commenced enforcement proceedings. On 8 June 2017 the husband filed an initiating application seeking to have the Consent Orders set aside.
5The husband seeks that the Court set aside the Consent Orders pursuant to s 79A(1)(b) of the Family Law Act 1975 (Cth). It is his case that circumstances have arisen since the Consent Orders were made that has made it impracticable for part of the Orders to be carried out, and it is just and equitable to vary or set the Orders aside. The wife opposes the application.
WHAT ARE THE ORDERS SOUGHT?
6The husband seeks the Court exercise discretion to discharge orders 4, 8, 10, 11 and 13 of the Consent Orders and thereafter, orders requiring the parties to transfer Property B to the wife, at her cost and she refinance the mortgage into her sole name. In the alternative, he proposes the wife transfer Property B to him and he indemnify her in relation to the mortgage and within 12 months the wife vacate the property.
7The wife seeks the husband’s application be dismissed and her enforcement application be listed for hearing.
WHAT IS THE EVIDENCE RELIED UPON?
8The husband relies upon his affidavit filed 2 July 2018 and his financial statement filed 21 January 2020. The wife relies upon her affidavit and financial statement filed 18 September 2018.
9Both parties were cross-examined at length. The trial commenced on 28 January 2020 with an estimated hearing time of two days. The trial concluded after four days. 49 documents were tendered as exhibits. I have considered carefully all of the evidence.
WHAT ARE THE BACKGROUND FACTS?
10The husband is 52 years of age and is an [architect]. The wife is 51 years of age and is unemployed.
11The parties married [in] 1990 and separated on a final basis in February 2010. They have since divorced. They have three adult children, [Ms S], [Ms L] and [Mr J].
12Following separation, the husband purchased [Property C] for $969,000. The husband has re-partnered [with] [Ms K] and they have since married, in October 2016. The husband has two children with his wife, [M] born [in] 2013 and [T] born [in] 2016.
13At the time of the Consent Orders, in February 2014, both parties were represented by solicitors and counsel. To achieve the agreed overall division as to 60% in the wife’s favour and 40% in the husband’s favour, the Consent Orders provided, in summary:
(a)The parties sell Property A and after discharge of the mortgages and usual expenses associated with the sale, the wife receive the net proceeds.[5]
[5] Orders 3 – 4, 6.
(b)The wife have sole occupation of Property A pending settlement, with the husband to pay the mortgage, rates, taxes and insurance.[6]
[6] Order 5.
(c)The parties transfer Property B to the wife, at her cost,[7] with the wife to receive the rental income from 6 February 2014.[8]
(d)On or before 30 June 2016 The husband discharge the mortgage secured over Property B and pending compliance, he pay the mortgage.[9]
(e)On or before 30 June 2016 the husband pay to the wife such further sum required to achieve the overall division[10] and he was restrained from increasing any loans secured against Property B, Property A and Property C.[11] The wife was permitted to register a caveat against Property C to secure the husband’s compliance.[12]
(f)Each party was otherwise to retain various property[13] and the husband was to indemnify the wife in relation to certain liabilities.
(g)The husband transfer [Motor Vehicle A] to the wife, with the costs to be taken into account in the overall division.[14]
(h)The husband pay to the wife lump sum spousal maintenance of $15,000, by way of instalments.[15]
(i)The wife receive $130,000 from the [Hamrock Superannuation Fund] and thereafter the husband retain the Fund and indemnify the wife from any obligation to repay $10,000 to the Fund.[16]
COMPLIANCE WITH THE CONSENT ORDERS
[7] Order 8.
[8] Order 9.
[9] Order 10.
[10] Order 11.
[11] Order 12.
[12] Order 13.
[13] Orders 14 – 15.
[14] Order 17.
[15] Order 18.
[16] Orders 19 – 23.
14It is agreed that Orders 3, 5, 9, 13, 14, 17, 18, 19, 20 21 and 23 have been implemented.
15Pursuant to the Consent Orders, based upon the attached schedule, the husband was to retain the following assets, liabilities and superannuation entitlements:
Assets
Property C
$1,150,000
Bank A choice account
$5,759
Funds distributed
$15,475
Partial property payment
$141,339
Interest in [Company X], less discount for minority interest
$668,700
Budgeted increase in Company X
$105,212
Superannuation
Hamrock Superannuation Fund
$108,986
Liabilities
Property C mortgage
-$697,454
Property B mortgage
-$200,845
Money owed by the wife to Hamrock Superannuation Fund
-$11,500
2013 tax liability
-$70,000
Net property and superannuation entitlements
$1,215,672
Less cash payment to achieve 60/40 division
-$63,438
16The wife was to retain the following assets, liabilities and superannuation entitlements.
Assets
Proceeds of sale of Property A
Less
estimated costs of sale
preparation for sale
discharge of Bank A Loans
- for Company X loan #A
-for Company X
-for Property C loan #B
$2,150,000
-$53,750
NK
$60,620
$749,341
$376,343
Bank A savings
$377
Property B
$500,000
Funds distributed
$15,475
Partial property payment
$141,339
Motor Vehicle A
$23,200
Superannuation
Hamrock Superannuation Fund
$130,000
BT Superannuation
$3,392
Liabilities
Estimated capital gains tax
-$40,000
2013 tax liability
-$18,816
Net property and superannuation entitlements
$1,728,350
Plus cash payment to achieve 60/40 division
$63,438
CIRCUMSTANCES SINCE THE CONSENT ORDERS
The husband’s Tax Liability
17Pursuant to the Consent Orders, The husband’s 2013 estimated tax liability was capped at $70,000. In March 2015[17] his 2013 return was prepared. The husband was assessed to pay tax of $97,042.75, based upon his taxable income of $399,464, which included capital gains of $273,182.
Property A
[17] Exhibit 1 – The husband’s Taxation Estimate for the year end 2013 and Exhibit 32 the husband’s Income Tax Return for the year end 2013.
18Following the Consent Orders, both parties were speaking with agents about the state of the market, what was required to present Property A for sale and to facilitate the best price. The agents identified a number of matters to be attended to. I am not satisfied, to the relevant standard, that the delay in listing Property A was solely attributable to the wife. The wife selected the agent appointed by the parties.
19Property A was listed for sale with [Real Estate Agent A], pursuant to an agency agreement executed [in] July 2014.[18]
[18] Exhibit 45 – correspondence from Dwyer Durack dated 31 July 2014, enclosing executed agency agreement.
20Work was required to prepare Property A for sale. The wife sought the husband’s assistance in this regard. The husband did not always respond to her requests either at all, or in a timely manner. As a consequence, Property A was not listed on the market for sale until October 2014.
21Pursuant to the contract for sale, the parties were required to attend to electrical and plumbing repairs.[19] Settlement of Property A was initially scheduled for 18 March 2015.
[19] Exhibit 47 – email from the wife to the husband dated 9 February 2015.
22The wife sought to delay settlement until 25 March 2015, when she was able to move into Property B.[20] The settlement agent indicated the parties would be using their three-day grace period. The buyers confirmed they were ready to settle and would be claiming interest.[21]
[20] Exhibit 40 - correspondence from [Settlement Agent A] to Bank A dated 18 March 2015.
[21] Exhibit 41 - correspondence from [Law Firm B] dated 20 March 2015.
23The parties were charged penalty interest of $431.26 per day, for seven days. The wife’s case is the husband was responsible to repay the mortgage pending settlement and as such, he should pay the penalties. The husband’s case is settlement was delayed at the wife’s request and she should meet those costs. It was not put to the husband in cross-examination that he was responsible for the delay in settlement.
24The wife submits part of the delay was due to issues arising with the bank.[22] Apart from correspondence from her solicitors suggesting the bank were being evasive as to when settlement was scheduled,[23] I am not satisfied the evidence supports a finding that the bank contributed to the delay in settlement. I consider the wife was responsible for the delayed settlement, given the evidence.
[22] Exhibit 40 - correspondence from Bank A to Settlement Agent A to Bank A dated 23 March 2015.
[23] Exhibit 48 – correspondence from Dwyer Durack dated 25 March 2015.
25At settlement, the proceeds of sale of Property A were applied as follows:[24]
[24] Amended settlement statement for Property A, dated 25 March 2015, annexure B to The wife’s trial affidavit filed 18 September 2018.
(a)Agent’s selling fee and advertising costs $37,781.10
(b)Penalty interest $3,018.82
(c)[Law Firm A] $140,069.58
(d)Dwyer Durack trust account $10,000
(e)Adjustment for water consumption $86.78
(f)Credit adjustment of rates and taxes $1,051.39
(g)Bank A $1,040,093.74
(h)Payment to the wife $520,000
26That was not in accordance with the Consent Orders. Specifically, the Orders made no provision for payment of the husband’s legal fees to Law Firm A, and the payment to Bank A was less than the amount specified and not directed to the agreed accounts.
27On 26 February 2013, [Mr H] and [Mr P] registered a caveat against Property A, in relation to the husband’s outstanding legal fees. They were not prepared to withdraw the caveat, without payment. The wife voiced her objection at the time to any payment being made, but said she felt she had no option but to agree, to facilitate settlement.
28The Consent Orders provided that $1,186,304 be paid to Bank A, namely:
(a)$60,620 to discharge the personal loan [#A];
(b)$749,341 to discharge the Company X loan; and
(c)$376,343 to reduce the Property C loan [#B].
29Instead, only $1,040,093.74 was paid to Bank A, of which:
(a)$60,702.90 discharged the personal loan #A;
(b)$602,181.55 reduced the Property C loan [#C]; and
(c)$376,859.29 discharged the Property C loan #B.
30At settlement the husband’s Bank A personal loan [#D] in the sum of $749,341, was discharged and secured against Property C. On 24 April 2015 that debt was adjusted to loan [#E].
31Each party met costs preparing Property A for sale, for which they were reimbursed, and the balance was paid to the wife.
32On or before 30 June 2016, the husband was required to pay a further sum to provide the wife with the agreed 60% division. The wife calculates the husband owes her $216,155. The husband accepts if the Consent Orders are not set aside, he owes money to the wife. He disputes the amount the wife seeks, which in part, relates to whom is to pay penalty interest. It is not necessary at this time for findings to be made in this regard.
Motor Vehicle A
33Motor Vehicle A was transferred to the wife, at a cost of $662.25, which the husband met. Motor Vehicle A was owned by Company X. The husband says Motor Vehicle A was purchased on finance and there was a debt of around $58,000 associated with the vehicle, which he was required to pay. The husband was unable to confirm when that was, nor was he able to adduce documentation to substantiate the debt. The husband thought he paid $60,000.
Property B
34The wife received the rent for Property B between 6 February 2014 and 27 March 2015, while the husband continued to service the interest only repayments, together with the rates.
35The husband was also required by 30 June 2016 to discharge the mortgage secured against Property B, of $200,845.
36On 4 July 2016 the wife’s solicitors wrote seeking the husband’s compliance with the Consent Orders and foreshadowing an enforcement application.[25] The husband advised he was seeking finance.
[25] Correspondence from Dwyer Durack dated 4 July 2016 – annexure D to The wife’s trial affidavit filed 18 September 2018.
37On 3 August 2016 the wife’s solicitors wrote again, enclosing an updated schedule based upon the Consent Orders, calculating that the husband owed the wife $223,438.[26]
[26] Correspondence from Dwyer Durack dated 3 August 2016 – annexure E to The wife’s trial affidavit filed 18 September 2018.
38On 12 August 2016 the husband’s lawyers advised he was “making positive attempts to comply”. The husband complained his income had reduced and asserted there were falling property prices, which had resulted in a deterioration in his financial circumstances. The husband disputed the wife’s calculation of the proposed cash payment, but did not specify an alternative amount. The husband indicated he hoped to have a response from Bank A within 21 days.[27]
[27] Correspondence from Law Firm A dated 12 August 2016 – annexure E to The wife’s trial affidavit filed 18 September 2018.
39On 30 August 2016 the husband advised he was still waiting for a response from Bank A. On 6 September 2016 the wife’s solicitors wrote, complaining the husband had over 2 ½ years in which to make arrangements to meet his obligations, yet he had only recently begun to do so. She sought the husband disclose his finance application and supporting documents.[28]
[28] Correspondence from Dwyer Durack dated 6 September 2016 – annexure H to The wife’s trial affidavit filed 18 September 2018.
40On 9 September 2016 the husband provided his 2013 to 2015 income tax returns together with bank statements. The husband advised Bank A would only release security over Property B if he reduced his combined borrowings to:
(a)$868,000, without mortgage insurance, which would require a capital injection of $182,000; or
(b)$976,000, with mortgage insurance, which would cost him around $24,500. On this option the husband would need to make a capital payment of $74,000.
41The husband indicated he could not afford either option.[29]
[29] Correspondence from Law Firm A dated 9 September 2016 – annexure I to The wife’s trial affidavit filed 18 September 2018.
42On 21 September 2016 the wife’s solicitors wrote, repeating their request for disclosure. She observed at the time of the Consent Orders, The husband owed to Bank A $200,845 for Property B and $697,454 for Property C. However, based upon his updated disclosure, it appeared the husband had increased his borrowings, which potentially prejudiced his capacity to meet his obligations pursuant to the Consent Orders.[30]
[30] Correspondence from Dwyer Durack dated 21 September 2016 – annexure J to The wife’s trial affidavit filed 18 September 2018.
43The husband’s solicitors replied, “our client does not understand why you say his debt levels have increased since the date of the orders. His position is that is not the case.”[31] He disclosed the application for finance.
[31] Correspondence from Law Firm A dated 10 October 2016 – annexure K to The wife’s trial affidavit filed 18 September 2018.
44The wife’s solicitors replied, raising questions about the husband’s application for finance, which was incomplete and undated. She queried the husband’s involvement in [business ventures] with his wife and requested further disclosure.[32]
[32] Correspondence from Dwyer Durack dated 13 October 2016 – annexure L to the wife’s trial affidavit filed 18 September 2018.
45The husband’s solicitors confirmed his finance application was rejected, and the husband was unable to discharge the debt secured on Property B. The husband denied increasing his borrowings and provided details of [Ms K’s] [business ventures].[33]
[33] Correspondence from Law Firm A dated 2 November 2016 – annexure M to the wife’s trial affidavit filed 18 September 2018.
46The wife’s solicitors repeated her complaints as to the husband’s failure to meet his obligations. She suggested he consider selling Property C. She rejected the husband’s suggestion that the parties needed to come to some arrangement, other than in accordance with the Consent Orders. She pressed the husband to comply with his obligations.[34]
Property C
[34] Correspondence from Dwyer Durack dated 14 October 2016 – annexure N to the wife’s trial affidavit filed 18 September 2018.
47The husband retained Property C at an agreed value of $1,150,000 which was then subject to two borrowings with Bank A: loan #C of $697,454, and loan #B of $376,343. As indicated, at settlement of Property A, $602,181.55 was paid to reduce Bank A loan #C and loan #B was discharged.
48The husband rented Property C, which was insufficient to satisfy the loan repayments. In July 2018 the husband estimated the loan repayments were $953 each week, and the rent was $650 per week.
49The husband says there have been problems with Property C, including water leaking in the building, noise complaints associated with work to address the faults, and the lack of a pool or spa.
50The tenants at Property C failed to pay their rent, resulting in the husband commencing proceedings in [another jurisdiction]. He ultimately received payment of the arrears.
51On 18 September 2019 the husband accepted an offer to sell Property C for $870,000. On 25 September 2019 the wife was advised that settlement was scheduled for 23 October 2019.
52A dispute then arose about the application of the proceeds of sale of Property C. The wife did not agree to remove her caveat, unless it took priority over Bank A’s secured borrowings, which Bank A and the husband disputed.
53The wife’s case was that the debts secured in favour of Bank A, pursuant to the mortgage registered on Property C on 7 July 2010, had been improperly increased by the husband drawing down on the Bank A Loan #E, following registration of her caveat. She maintained that the debt ranked behind her interest in terms of priority.
54The husband explained that the debts were refinanced at settlement of Property A and it was simply the original mortgage which was restructured, as opposed to a new mortgage being registered against Property C.
55In September and October 2019 there was an exchange of correspondence, in an effort to agree upon the application of the proceeds of sale. Bank A and the husband did not agree with the wife’s proposals, resulting in settlement being delayed.
56Penalty interest was charged. Bank A were then joined as a party to the proceedings. Orders were made by consent between the husband and the wife for the wife to withdraw her caveat and the Property C proceeds of sale be applied to discharge the costs of sale, adjustment for rates and taxes and the balance be paid into an interest-bearing account with Bank A, with the interest to be set off against the husband’s loans with Bank A. Orders were made requiring the net proceeds to be held pending resolution by the Court of priorities, or agreement.
57On 2 December 2019 settlement took place. Contrary to the Orders of 25 November 2019, Bank A applied the proceeds of sale to discharge the registered mortgages and home loans and paid the balance, of approximately $16,000, to the husband. The husband has since returned that amount to Bank A.
Enforcement Proceedings
58The wife commenced enforcement proceedings on 1 December 2016. At that time and still at the time of trial, it is agreed that the husband remains in default of the following Orders:
4.An order that the overall net property of the parties, including superannuation assets, be adjusted so that the wife receives 60% and the husband 40% (“the overall division”) on the basis of values ascribed and in specie allocation of property as set out in the attached schedule (which schedule forms part of these orders) with the only variables to be:
(a)The final sale price of [Property A];
(b)Selling costs of [Property A];
(c)Costs of preparation [of Property A] for sale;
(d)Discharge amount of loans secured by mortgages on [Property A];
(e)The actual costs of the transfer of [Motor Vehicle A]; and
(f)The husband’s 30 June 2013 tax assessment up to a maximum sum of no more than $70,000.
8.The parties forthwith do all acts and sign all documents necessary to transfer the property situated at [Property B] [(“Property B”)], to the wife with the wife to pay the costs of the registration of the transfer.
10.On or before 30 June 2016, the husband do all acts and sign all documents necessary to discharge the mortgage secured over [Property B] and pending discharge the husband do pay or cause to be paid all instalments of any mortgage, loan or other encumbrance registered against the title of the property.
11.On or before 30 June 2016 the husband do pay or cause to be paid to the wife such further sum as is required to achieve the overall division.
59It is the wife’s case that the husband is also in default of Order 12, which the husband denies, namely:
12.Pending compliance with paragraphs 10 and 11, the husband be restrained by injunction and an injunction be granted restraining the husband from:
(a)Increasing any loans secured against [Property A];
(b)Increasing any loans secured against [Property B]; and
(c)Increasing any loans secured against [Property C] [(“Property C”)] save and except for compliance with these orders.
60The proceedings were initially listed for trial not before 10 June 2019, which was vacated on the husband’s application. He was ordered to pay $6,000 to the wife for costs thrown away. Various other procedural orders were made.
WHAT IS THE LAW?
61The authorities establish that:
•Section 79A is a remedial section, intended to overcome a miscarriage of justice and certain other specific difficulties or hardships. It is to be construed liberally, to give effect to its intended purpose.[35]
•Section 79A cannot be used to circumvent the basic principle that there can only be one property settlement between the parties to a marriage.[36]
•The legislation requires the Court to be firstly satisfied of the facts relied upon, secondly to determine whether there has been a miscarriage of justice by reason of those facts and thirdly if there was a miscarriage of justice, to determine in the exercise of discretion whether to set aside the order and make another order, vary the order or leave the order intact.[37]
•The words “miscarriage of justice” are not to be given a restrictive meaning.[38]
•A miscarriage of justice will occur if circumstances exist, which for some significant reason, make the order contrary to law and justice according to law as it relates to the integrity of the judicial process.[39]
Impracticable
[35] See Gilbert & Estate of the late Gilbert (1990) FLC 92-125.
[36] See Kowalski & Kowalski (1993) FLC 92-342.
[37] See Lane & Lane (2016) FLC 93-699.
[38] See Gebert & Gebert (1990) FLC 92-137 at 77,935.
[39] See Bigg & Suzi (1998) FLC 92-799.
62Impracticable is not defined in the Act. Impracticable does not mean impossible; it means that something cannot be carried out or be done, is unmanageable or practically impossible.[40] It has been described as a question of fact and degree in every case, and not a term of art.[41]
[40] See La Rocca & La Rocca (1991) FLC 92-222.
[41] See Nygh J in Parker & Parker (1983) FLC 91-364.
63Gee J said in Rohde & Rohde (1984) FLC 91-592 that “provided that more than one circumstance exists and that the circumstances have arisen since [the date the order was made] it does not matter what the circumstances are or by whom they are brought about”.[42]
[42] At 79,768.
64The fact that it is impracticable for an order to be carried out, does not mean that the property order must be varied or set aside, noting the Court’s discretion.
65It has been suggested that a property order should only be set aside, or varied, if a serious inequity has arisen as a result of the impracticability.[43]
[43] See La Rocca & La Rocca (1991) FLC 92-222.
66The Full Court in Cawthown & Cawthorn [1998] FamCA 37 agreed with Justice Kay’s analysis in La Rocca (supra), where his Honour observed that s 79A(1)(b) should be narrowly interpreted:
My own view is that the concept of impracticability…is akin to the application of the doctrine of frustration in contractual matters. What the Parliament is concerned with and what ought to be concerning the court is the happening of events which cannot be reasonably foreseen, which will have the effect of causing an injustice to one of the parties if the happening of such events is not given effect to.[44]
[44] At 78,538.
67In Cawthorn (supra) the husband’s financial circumstances had deteriorated after the orders. The Full Court said “financial problems, such as have arisen in respect of the appellant, have never given rise to the successful invocation of the doctrine of frustration”.[45] Further, in revisiting the doctrine of frustration they stated a “party cannot rely upon what has been termed ‘self-induced frustration’.”[46]
[45] At 85,060.
[46] At 85,061 – footnotes omitted.
68Moss J, in Franklin and McLeod (1994) FLC 92-481 stated at (45):
Great uncertainty (and in my opinion, great unfairness) would result if such cases were to be reopened on the basis that one of the parties had invested unwisely and was the poorer for having done so. A party may, for example, choose a particular investment because of the high returns it offers and enjoy those returns while the going is good, but that party can hardly expect the other party, in effect, to contribute to losses which occur when the investment proves unsound, which may, in any event be a situation reversed at some future time.[47]
[47] At 81,025.
69Moss J found the fact the husband’s financial situation might mean the consent orders would be more onerous upon him than he had anticipated, at the time the orders were made, could not lead to a conclusion the orders were impracticable within the meaning of s 79A(1)(b).
70Senior counsel for the wife referred to Sanger & Sanger (2011) FLC 93-489, in which the Full Court upheld the trial judge’s decision not to set aside a financial agreement on the grounds of impracticability. The husband in that case complained that his business, which was worth $400,000 had subsequently been placed into voluntary liquidation and the home, which had an agreed value of $750,000, had since sold for $650,000. The Full Court observed that the failure of an agreement to deliver a party the outcome they hoped for, did not render the agreement impracticable.
WHAT IS THE HUSBAND’S CASE?
71The husband’s case is that a culmination of events, which were not reasonably foreseen at the time of the Consent Orders, render it impracticable for him to comply. Those events have been to his detriment, but he acknowledges the wife has also suffered detriment.
72The husband says the agreed asset pool at the time of the Consent Orders was inflated and unrealistic, which has been borne out by subsequent events. He accepts the asset pool was not fixed and contained a limited number of variables, together with time limitations in which compliance was required.
73At the time of the Consent Orders, the parties’ agreed their property and superannuation entitlements were worth approximately $2.8 million. Assuming the sale of Property A at the agreed value, the wife would likely receive around $900,000 in net proceeds of sale. The husband anticipated being required to pay the wife around $63,000.
74The Consent Orders required the sale of Property A forthwith. Property A did not settle until March 2015, which resulted in the husband incurring costs in relation to both Property A and Property B, for longer than anticipated. He accuses the wife of delaying the sale, while she enjoyed ongoing occupation of Property A, free from expenses, together with the rental income on Property B.
75The husband did not expect his solicitors would insist on payment at settlement of Property A. The wife consented to the payment, notwithstanding her recorded reluctance. As a consequence, the balance of the proceeds of sale were not applied in the manner intended pursuant to the Consent Orders. $749,341 was required to be paid to discharge the Bank A loan #D. It was not. Instead, $602,181.55 was applied in reduction of the Bank A loan #C secured against Property C. The Bank A loan #D was removed as security against Property A and secured against Property C, which was adjusted into the Bank A, loan #E.
76The wife received $523,018.82 at settlement of Property A, as opposed to $515,828, which she would have received had the Bank A debts been discharged in accordance with the Consent Orders
77The husband says the following were all unforeseen events which render his compliance with the Consent Orders impracticable:
(a)The delay in settlement of Property A, the reduced sale price, the payment to his former solicitors and the reduced amounts then paid to Bank A.
(b)The ongoing expenses which he incurred in relation to Property B, which he was unable to claim as a tax deduction, and continues to incur.
(c)The additional tax liability he incurred for the 2013 financial year.
(d)The costs he incurred in transferring Motor Vehicle A to The wife, which was not taken into account in the Consent Orders.
(e)The requirement for him to repay to the Fund $11,000 which the wife had removed.
(f)The downturn in the property market. In that regard he refers to:
a.Property C has now sold for approximately $280,000 less than the agreed value at the time of the Consent Orders. Further, prior to sale, the rental income has been less than expected.
b.His financial circumstances. As an architect, through the Company X Group, his income has reduced, as has the value of his interest in Company X.
78The husband asserts that his debts exceed his assets and he is, in effect, insolvent:[48]
[48] The husband’s financial statement.
Assets
Bank A account
$417.80
23% Company X Group (Combine estimated interest)
$105,000.00
[Hamrock Family Trust] – 15% share in Company X
$281,194.00
[Z] Unit Trust (32 Units held by Hamrock Family Trust)
-$203,130.00
[Y] Unit Trust (1/6 units held by Hamrock Family Trust)
-$88,942.00
TOTAL ASSETS
$94, 539.80
Liabilities
Property A Mortgage
-$199,965.00
Current Outstanding Tax Liability
-$32,052.00
Personal Loan – [Company S]***
-$120,000.00
Personal Loan – [Ms W]
-$29,511.00
Personal Loan – [Ms Q]
-$120,000.00
Cash Payment to the wife (Court Order 6.02.14) $63,438 (estimated for her to receive 60%) and $140,069.58 that she did not receive from the sale from Property A
-$203,507.58
Bank A [Credit Card]
-$1,493.13
TOTAL LIABILITIES
-$706,528.71
NET ASSETS (EXCLUDING SUPER)
-$611,988.91
Hamrock Superannuation Fund
$897,291.00
Y Unit Trust (1/6 units held by Hamrock Superannuation Fund)
-$88,942.00
TOTAL SUPERANNUATION
$808,349.00
Net property and superannuation entitlements
$196,360.09
79The husband says since his filed application for finance in 2016, he has unsuccessfully made further enquiries. He has not made any formal applications for finance, for fear that would adversely impact upon his credit rating and potentially draw attention to his poor financial circumstances. He has no property to offer as security for any borrowings. He has no assets of substance and no capacity to comply with the outstanding obligations including paying any amount to the wife, nor discharge the debt secured against Property B.
THE HUSBAND’S DISCLOSURE AND OBSERVATIONS AS TO HIS EVIDENCE
80The wife complained that the husband had failed in his obligations to provide full and frank disclosure of his financial circumstances in a timely manner. She asserted he had not provided adequate disclosure of his attempts between the Consent Orders and June 2016 in which to comply and further, he had failed to provide disclosure of his current financial position.
81Many of the wife’s complaints about the husband’s disclosure were fairly made. The husband failed to disclose a number of relevant documents, some of which only came into the wife’s possession during the trial. Other documents the husband simply failed to disclose, for example, copies of his bank statements for 2018 and 2019.
82A review of the husband’s disclosure list revealed the late provision of a large number of documents, in the days prior to trial. That included the husband’s PAYG summaries from 2014 to 2019, his notices of assessment from 2015 to 2018, together with financial statements for various entities.[49] Almost all of the recently disclosed documents had been in the husband’s possession and control for some time. He was unable to provide any satisfactory explanation for the delay.
[49] Exhibit 12 – Applicant’s disclosure list dated 28 January 2020 – for example, A4.6 - 10, A8.5-8, B2.48-54, B4.23-24, B5.24-25, B6.19-20, B7.18-17, B8.21 -22, B14.1.
83It is well established that parties have a clear obligation to provide full and frank disclosure of their financial circumstances, in a timely manner.[50] It is not the role of the Court to audit a party’s financial records. Each party is required to present evidence as to their financial position in a clear and understandable form.[51]
[50] Reichstein & Reichstein [2006] FamCA 1422 at [80].
[51] Fotia & Welsh [2013] FCWA 112 per Walters J, at paragraphs [96] to [102].
84I do not consider that the husband provided evidence of his financial circumstances in a clear or understandable form. That was particularly the case in relation to his interest in the Company X Group, in which the husband is a director and through which he has an interest owned through both the Hamrock Family Trust and the Fund. The husband’s evidence about his interests was vague and unsatisfactory. For example:
(a)The husband referred to his director’s guarantees for Company X Group, which he said adversely impacted upon his capacity to borrow and refinance. He led no evidence to confirm the extent to which he was liable for any such debts owing by the Group, nor did he adduce any evidence to support what attempts, if any, he had made to be released from such debts. The husband’s evidence in cross-examination was that he had spoken with Bank A on “more than one occasion”, the last time being “sometime last year”. He was unable to confirm the current liabilities of Company X, or the extent of his exposure in terms of any guarantees, apart from saying “it is in the millions”.
(b)The husband was unable to adequately explain the financial operations, current asset position and general profitability of the Company X Group. He accepted these were not matters within his knowledge and that he relied upon his fellow directors and others in that regard. The husband conceded there were others within the Group who were better placed than him to provide evidence about financial matters, yet he failed to call any of them.
85The financial relationship between the husband and his wife was not adequately explained, nor had all relevant documents been disclosed that might have assisted. The husband’s explanation about these matters was unsatisfactory. For example, the husband:
(a)Relied upon a schedule attached to his Financial Statement[52] which set out the expenses of his household, including himself, Ms K and their children. He explained the schedule incorporated his and Ms K’s income, but later said he was unaware of what Ms K was paid. When the husband was unable to explain a number of entries in the schedule, the husband said that Ms K had prepared it. The schedule indicated a surplus of the family’s income over expenses.
(b)Acknowledged Ms K owned [Property D], where they lived and [Property E]. Ms K subdivided the properties and through the Company X Group, constructed homes on those properties.[53] The husband was personally involved in the construction. While the husband maintained Ms K alone had met the costs of the subdivisions and constructions, his salary was being paid into her accounts during part of those relevant periods.
(c)Appeared to suggest that Ms K’s properties were entirely funded by her. However, he acknowledged Ms K had received distributions from the Hamrock Family Trust and that his income was paid to her accounts from 2015, from which the payment of debts associated with Ms K’s properties, including mortgage repayments, were met.
(d)Property D was also rented through [a rental agency] which provided an additional source of income. That income did not appear to be included in his schedule, while the expenses relating to Property D were.
[52] Marked F – January 2020 budget.
[53] Exhibit 11 [Subdivider] statement printed 14 January 2020, for Ms K, Property E and Exhibit 14 – Subdivider statement printed 14 January 2020, for Ms K, [Property F].
86As a general observation, I held concerns about the veracity of the husband’s evidence. The husband claimed he arranged for his income to be paid to Ms K’s account, to prevent the wife stealing from him and referred to her actions withdrawing money from the Fund. The difficulty with his explanation is the wife’s actions predated the Consent Orders, yet the husband’s salary continued to be paid into his own bank accounts at that time.[54] It was only from 2015 that the husband directed his salary be paid into Ms K’s account. While there is nothing improper about his decision to do so, his explanation did not make sense.
[54] Exhibit 27 – The husband’s payslip 31 January 2014.
87Further, on 7 May 2019 the husband entered into a loan agreement,[55] in which he borrowed $120,000 from Company S. The loan attracted interest of 5% per annum, repayable on either the expiry of five years from 8 May 2019 or within 30 days of receipt of a Notice of Demand, unless otherwise agreed.
[55] Exhibit 25.
88The agreement was signed by the husband as the borrower and witnessed by [Mr M], Company X Group’s bookkeeper. [Mr N] executed the agreement as the lender, witnessed by [Mr O].
89The husband received $120,000 from which he paid $25,000 to Law Firm A, $31,287 to Company X, and $29,511 to his father-in-law [Mr K] in repayment of alleged loans, amongst other matters.
90The husband did not disclose the loan agreement entered into between the Fund and Mr O.[56] That agreement only came to light during the trial, when it was produced by Ms K pursuant to subpoena.
[56] Exhibit 13.
91The husband and Ms K in their capacity as trustees for the Fund, lent $120,000 to Mr O, on identical terms to the husband’s loan with Company S.
92The husband initially asserted his debt to Company S was a legitimate loan, with a third party, at arms’ length, unrelated to the loan agreement with Mr O. He deposed “they are different people and transactions”, despite the bank statements which confirmed:
(a)The withdrawal of $120,000 from the Fund’s Bank A Account[57] with the description “[Mr O] loan” dated 7 May 2019;
(b)The receipt by the husband of $120,000 from Mr O to him personally.
[57] Exhibit 7.
93After the husband was issued with a s 11 Certificate under the Evidence Act 1906 (WA) he then admitted he had caused the Fund to lend $120,000 to Mr O, who had then lent the money to him personally.
94The husband’s evidence in this regard did little to enhance his credibility. The husband was prepared to lie and deliberately seek to mislead the wife and the Court. The husband maintained the funds were withdrawn from his Fund, on advice. If that was true, he was badly advised.
95On The husband’s own case, the monies he paid to his solicitors and father-in-law for alleged debts arose after the Consent Orders. There was no evidence of any loan agreement between the husband and his father-in-law, nor evidence as to when the husband allegedly borrowed money, what the funds were applied for, any demand for repayment or the like. Similarly, there was an absence of any evidence in terms of any demand on the husband to pay his solicitors.
96I did not find the husband to be an impressive witness.
DISCUSSIONS
97The legal burden of establishing a case for variation under s 79A lies upon the husband. The husband has not paid any of the requisite sum due to the wife pursuant to the Consent Orders, nor has he discharged the mortgage secured on Property B of $200,000, both of which he was required to attend to on or before 30 June 2016.
98At the time of the Consent Orders, The husband was expecting to pay out the E$200,000 mortgage on Property B and to make a cash payment to the wife of E$63,000. Following settlement of Property A, the cash payment increased to over $200,000, with the precise amount depending on who is responsible for the penalty interest.
99Between the Consent Orders and 30 June 2016, the husband did not request an extension of time for compliance, nor did he seek to vary or discharge the Consent Orders. The husband did not advise the wife in that period that he was unable to comply with the Consent Orders.
100Since 30 June 2016 the husband has not offered to pay all, or part of the funds he owes to the wife.
101I accept at settlement of Property A, the wife received slightly more than she was entitled to, as a result of the reduced payment to Bank A.
102The husband took no steps until August 2016, over two years after the Consent Orders and after the date of compliance, to attempt to comply with his obligations, when he made an unsuccessful finance application. Prior to that time, he did not put aside any savings, he did not make any applications for finance, and he did not apply any of the funds available to him through his own facilities or resources, for either purpose.
103The husband’s primary complaint in terms of impracticability appeared to be based upon his claim that his income and financial circumstances have markedly diminished since the Consent Orders were made.
104In turning to the husband’s income, I observe:
(a)A review of the husband’s income tax returns and notices of assessment reveal he has continued to enjoy a reasonable income:
a. 2015 his taxable income was $83,718;[58]
b. 2016, his amended taxable income was $122,906;[59]
c. 2017, his taxable income was $161,918;[60]and
d. 2018 The husband’s taxable income was $200,043.[61]
The husband’s taxable income included deductions for Property C.
(b)In his most recent Financial Statement, The husband’s gross income is around $111,800 per annum. That income is greater than his 2014 income, which was $99,495.[62]
(c)The husband’s income is not limited to his salary. He continues to receive distributions through the Hamrock Family Trust, which also make distributions to his wife. For example in the financial year 2018, the Hamrock Family Trust paid $25,786.50 to both the husband and Ms K.[63] The husband retained the Hamrock Family Trust pursuant to the Consent Orders. [Company Z] is the trustee of the Trust, and the husband is the sole director and shareholder. The husband’s income and that of his wife are clearly intermingled.
[58] Exhibit 5.
[59] Exhibit 5.
[60] Exhibit 5.
[61] Exhibit 9.
[62] Exhibit 1.
[63] Exhibit 22 – financial report for the Hamrock Family Trust dated 30 June 2018.
105The husband acknowledged his income had increased, as a consequence of a declared franked dividend. The husband said that caused him to incur additional tax liabilities, without the benefit of any increased income. He was unable to adequately explain these matters, apart from suggesting, it “had to do with a loan in the company”.
106There was no admissible evidence to support a finding that the value of the husband’s interest in Company X was inflated at the time of the Consent Orders, nor was there any admissible evidence to support a finding about the value of the husband’s current interest in the Group.
107The husband’s interest in Company X had previously been valued by a Single Expert Witness, prior to the Consent Orders. The husband did not lead any expert evidence to support a finding that the previous valuation was wrong, or to support his assertions as to the current value of his interest in the Group. As indicated, the husband struggled to explain the financial dealings of the Group, yet he failed to adduce evidence from any of this fellow directors, the Group’s accountant, bookkeeper or financial controller.
108The husband asserted the business was performing poorly and he had borrowed money in 2019 to inject capital into the Group to avoid it going into bankruptcy. Again, there was no cogent evidence to support a finding that the Group was on the verge of bankruptcy. I make that observation, in circumstances where since the Consent Orders; firstly, the husband’s member balance in the Fund has increased by about $260,000, through the Group’s sale of properties, in which the Fund had an interest; secondly, arising from the Group’s sale of properties, they had retired debts, the details of which the husband was unable to specify; thirdly, while some entities’ within the Group had recorded losses, such as the [X] Unit Trust, [Company T] and the Y Unit Trust, the other entities including Company X, [Company W], [W] Unit Trust, and the Z Unit Trust had continued to trade at a profit; fourthly, a number of entities within the Group own property, of which there was no expert evidence as to their current values. The properties owned include the office of Company X which has a book value of $3 million.
109While the husband asserted many of the assets of Company X were worth less than their book values, there was no evidence to support such a finding.
110I have already referred to the absence of any evidence to demonstrate the husband had applied to either the bank or his fellow directors, to be released from his personal guarantees. There was also a lack of any evidence to enable the Court to make any findings about the extent to which the husband’s guarantees impacted upon his capacity to raise finance.
111The husband asserted that the Hamrock Family Trust had declined in value since the Consent Orders. The Trust receives distributions from the Company X Group. It continues to do so. For example, $54,367 in 2018, $58,691 in 2017, and $58,300 in 2016, which is similar to the income received in previous years.[64]
[64] For example $59,500 in 2015 and $57,201 in 2014 – Financial Statements of the Hamrock Family Trust – exhibit 22.
112The 2018 balance sheet for the Trust,[65] revealed the Trust had current assets including cash and an ATO refund worth $68,232 and non-current assets worth $958,273. The non-current assets comprise of units in unlisted unit trusts worth $58,273 and shares in listed companies worth $900,000. The husband confirmed the Trust had not sold any of its shares.
[65] 2018 Financial Statements of the Hamrock Family Trust being the most recently disclosed statement – exhibit 22.
113The Trust has liabilities including unpaid trust distributions of $276,495, which are owed to the husband, Ms K and the adult children of the husband and the wife. It also has borrowings of $750,000, which the husband confirmed was the loan secured against Property C. The husband was unable to explain how that debt was a liability of the Trust, when Property C was owned personally by him. It was unclear to me whether the debt had been discharged given the sale of Property C.[66]
[66] Noting the issues which had arisen about Bank A’s application of the proceeds of sale.
114The wife points out that despite the husband’s complaints about the deterioration in his financial circumstances since the Consent Orders, he has taken multiple holidays, including travel overseas, within Australia and within Western Australia; he continues to enjoy living with his wife in a home owned by her, in circumstances where they have pooled income.
115I had no evidence about the husband’s expenditure on overseas holidays, noting his evidence that at least one overseas trip was planned prior to the Consent Orders.
116Property A sold for less than what both parties had hoped. However, the sale price was contemplated to be a variable figure. The reduced price had a greater impact on the wife than the husband, in circumstances where her entitlements were 60% and the husbands were 40%. The net effect of the reduced sale price was that the wife received around $240,000 less than anticipated.
117It was plainly foreseeable the sale price may not be the same as the figure contained in the schedule attached to the Consent Orders. The reduced sale price of Property A resulted in an increase in the cash amount which the husband was required to pay to the wife.
118I am satisfied that settlement was delayed as a result of the wife’s request, as previously indicated. The parties incurred penalty interest of some $3,000, which has been paid. There was no serious suggestion that cost contributed to the husband’s case of impracticability. In my view, the wife ought to be responsible for that cost.
119I reject the husband’s suggestion that his outstanding legal costs and the actions of his former solicitors to pursue payment was unexpected. At the time of the Consent Orders, the husband owed around $120,000, as reflected in his solicitor’s cost notification dated 5 February 2014. The husband’s failure to meet that debt, resulted in the Property A proceeds of sale being reduced by $140,000. The husband’s debt to his solicitors was not a liability of the wife’s, nor did the Consent Orders provide that she should share in such a debt.
120Between the date of the Consent Orders and settlement of the sale of Property A, the husband apparently took no steps to discharge his liability to his solicitors, nor seek his solicitors remove the caveat secured on Property A.
121At settlement, Law Firm A received $140,000. Two days later, they paid $30,000 to the husband, which he directed be paid into Ms K’s account. The husband did not disclose receipt of the funds at that time to the wife, despite conceding the Consent Orders made no provision for any payment to be made to either him personally or his solicitors. The husband proffered no satisfactory explanation as to why those funds were not applied to either reduce the mortgage on Property B, or to the wife as part of his obligations, or otherwise to assist in his future compliance with his obligations, noting the time for compliance had not passed.
122The proceeds of sale of Property A which were paid to Bank A were not in accordance with the Consent Orders, as already identified. The Consent Orders contemplated $1,186,304 be applied to Bank A, but only $1,040,093.74 was paid, representing a reduced amount of $146,210.26. However, these were matters of the husband’s election and cannot be viewed in isolation of the fact that $140,000 was paid to his solicitors and to him.
123The husband has had the benefit of, directly or at his election, $1,180,093.74 in terms of how the proceeds were applied.[67] I accept the husband received at settlement, $6,210.26 less than what was contemplated in the Consent Orders. However, I do not consider that amount is material or relevant to the question of practicability, in light of the property the husband retained or the payments he was required to make to or on the wife’s behalf.
[67] $1,040,093.74 in terms of the payment to Bank A and $140,000 to him and his solicitors.
124I do not accept the husband’s ongoing obligation to continue to service Property A’s outgoings was unforeseen. As an architect, with experience in property development and sales, and with the benefit of legal representation, I reject the suggestion that a delay in sale and/or settlement was unexpected.
125I similarly reject the husband’s suggestion that his ongoing obligation to service the Property B mortgage was unforeseen or unexpected. It was specifically contemplated that he do so, noting he had until 30 June 2016 in which to discharge the mortgage. It was within the husband’s election, had he chosen to do so, to discharge the mortgage prior to that time.
126At the time of the Consent Orders, The husband was aware and anticipating an income tax liability. The Consent Orders were entered into some eight months after the end of the previous financial year. It was within the husband’s ability to obtain advice of the anticipated tax liability.
127The husband also refers to the debts he incurred in facilitating the transfer of Motor Vehicle A to The wife. I acknowledge the car was registered to an entity, and the husband’s evidence of borrowings associated with the car, which he was required to pay. The husband did not suggest he was unaware of these matters at the time of the Consent Orders. I accept the debt was not included in the schedule attached to the Consent Orders, however, the schedule did include agreed values for the husband’s interest in the Company X Group. To that extent, it is likely that the associated liabilities with each entity was taken into account.
128The husband suggested the reduced sale price of Property A impacted on his capacity to refinance the debt over Property B. The Consent Orders contemplated the husband finding $200,000 to discharge the Property B mortgage or otherwise refinance it. There was no suggestion that any of the proceeds of Property A would be applied in that manner or for that purpose. As identified, the husband had the substantial benefit of the funds he was entitled to pursuant to the Consent Orders.
129I do not accept that the husband’s requirement to repay to the Fund $11,000 was a material matter. It cannot be suggested that was unexpected or a surprise. To the contrary, it was contemplated by the Consent Orders.
130I accept that Property C has since sold in December 2019, for $280,000 less than the agreed value at the time of the Consent Orders, in 2014. The timing of the sale and the decision to sell were made by the husband. Subject to the determination of the competing claims between Bank A, The husband and the wife, it is likely that at least part of the proceeds will be applied to reduce the husband’s borrowings.
CONCLUSIONS
131After careful consideration of the available evidence, I am not satisfied that any of the matters raised by the husband as events that transpired since the Consent Orders were not reasonably foreseen. While they may not have been the circumstances the husband had hoped for, and indeed the wife either, in terms of the sale price of Property A, or the value of the property either were to retain, that is not the test.
132In my view, with respect to the husband, he conflated the issues of enforceability with impracticability. While the terms of the Consent Orders may result in him receiving less than what he anticipated, it does not follow that the terms of the Consent Orders are impracticable.
133For the reasons already articulated, the husband has not satisfied me it is impracticable to meet his obligations pursuant to the Consent Orders. It was incumbent upon the husband to demonstrate, through admissible evidence, that the outstanding obligations pursuant to the Consent Orders could not be implemented. He failed in his attempts to do so.
134The husband has simply not lead any cogent evidence to enable me to be satisfied that it is not practicable for him to comply with his obligations pursuant to the Consent Orders. Specifically, there is no admissible evidence to enable me to make any findings about the value of his interest in the Company X Group. Based upon the husband’s evidence, it may be that assets owned by the Hamrock Family Trust need to be sold, to enable him to satisfy his obligations to the wife.
135The evidence supports a finding that the husband has prioritised his personal financial circumstances over and above his obligations to the wife. That has included the husband’s expenditure in legal fees. Ignoring the funds taken from Property A, the husband has paid to his previous solicitors around $25,000 and to current solicitors $34,142 together with an additional $20,000 which was held on trust at the time of trial.[68]
[68] Exhibit 6 – Leach Legal cost notification.
136The husband took no serious or genuine steps, to attempt to meet his outstanding obligations to the wife, until after the time for compliance had lapsed. The husband has continued to enjoy a comfortable standard of living. He lives with his wife in a property owned by her. They share expenses. He has enjoyed a number of holidays, both within Australia and overseas. He says their combined income exceeds their expenses, yet he has not made, in my view, any reasonable efforts to pay the outstanding amounts owing to the wife, and he made limited efforts to discharge the mortgage.
137In every case it is conceivable and ought reasonably be contemplated that circumstances may change in the future. That is particularly the case here, where the Consent Orders contemplated a period of time, until 30 June 2016, in which the husband was to make payment to the wife and discharge the mortgage.
138As Justice Kay observed in La Rocca (supra):
The potential insolvency of one of the parties in the future is not such a matter, in my view. In every case before the Court property values may change, go up or down business may flourish or not flourish, the vicissitudes of life may affect one of the parties.
…
..the commercial failure of one of the parties post the making of the orders which will lead the orders not being capable of being fully implemented does not, in my view amount to a basis on which to set the order aside. That situation leads to a problem with enforcement… There is no provision in the legislation to have matters looked at a second time if one of the parties suddenly becomes wealthy and, in my view, I do not see that the legislation can be appropriately read as applying when one of the parties becomes suddenly poor, in normal business circumstances.[69]
[69] At 78,538.
139I respectfully agree and endorse his Honour’s comments. It may well be the case there will be difficulties for the wife in terms of enforcement. However, that is not a matter to be determined at this time.
140I am not satisfied that any of the wife’s actions have contributed to the financial position which the husband complains he now finds himself in. At the time of the Consent Orders, the husband knew he was obliged to refinance the Property B mortgage and make a payment to the wife, by 30 June 2016. He had around two years and five months in which to make the required arrangements. He failed to do so.
141The sale price on Property A resulted in the amount the husband had to pay the wife increasing, from the estimated $63,000 to around $200,000. By the time Property A settled, the husband was aware the amount he needed to pay the wife had increased. Again, the husband took no steps after that time seemingly, in which to make payment or put money aside to do so.
142After careful consideration of the evidence, I am not persuaded that the husband has established, to the requisite standard that it is impracticable to carry out the Consent Orders.
143In the alternative, if it were open for me to exercise my discretion pursuant to s 79A(1)(b), I am not satisfied that would be an appropriate exercise of my discretion. Firstly, the Orders were entered into by consent, with the husband having the benefit of independent legal advice from both solicitors and Queens Counsel. While the husband complained about the absence of him obtaining accounting advice and various other complaints about the Consent Orders, in terms of not knowing the precise amount of his 2013 income tax liability or the debt attached to Motor Vehicle A which he agreed to transfer to the wife, they were matters within his ability to obtain advice. Secondly, the time in which the husband was required to pay to the wife the lump sum to effect a division in accordance with the Consent Orders and discharge the Property B mortgage was 30 June 2016. The husband allowed almost a year to lapse before making his present application. His application was only made after the wife had commenced proceedings to enforce the Orders. Thirdly, the husband’s efforts to comply with the Consent Orders were not, in my view, genuine or sincere efforts, to which I have already referred. The husband has had access to funds which he could have, but chose not to apply, to reduce the debt he was required to refinance, or pay the funds owing to the wife. He did not otherwise apply funds in a manner that would have enhanced his capacity to meet his obligations pursuant to the Consent Orders.
144The fact the husband’s financial situation might mean that the effect of the Consent Orders may be more onerous upon him than he had anticipated, does not support a finding that it was impracticable for the orders to be carried out, within the meaning of s 79A(1)(b).
145I accept, as has been expressed by the Full Court, it would cause uncertainty and unfairness, if litigants were able to reopen cases after the making of final orders, complaining they had simply undergone significant financial changes for the worse, as The husband now seeks to do.
Proposed Orders.
146Subject to hearing from the parties, I propose to make orders as follows:
1.The Applicant’s Form 1 and the Respondent’s Form 1A be and are hereby dismissed.
2.The wife’s Form 2 enforcement application be listed for directions.
I certify that the preceding paragraph(s) comprise the reasons for decision of the Family Court of Western Australia.
CD
Secretary
31 MARCH 2020
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