Harper and Harper
[2012] FamCAFC 46
•22 March 2012
FAMILY COURT OF AUSTRALIA
| HARPER & HARPER | [2012] FamCAFC 46 |
| FAMILY LAW – APPEAL – Property – Appeal against s 79 property enforcement orders – Where the appellant had made a cross application under s79A in the enforcement proceedings seeking an adjustment of the orders to reflect changes in the parties’ financial circumstances – Where the appellant claimed that earlier orders the subject of the enforcement orders were defective, however had not appealed those earlier orders – Where the defect in the orders was said to be because of unawareness of the obligation to fulfil the order, or a lack of consent to the order, or an incapacity to pay the order – Where no clear evidence for these arguments were presented to the Federal Magistrate at the s 79A hearing or on appeal – Where the appellant claimed the property orders had not been complied with, alleging fraudulent action on the part of the respondent wife’s solicitors – Where the orders were clearly complied with and no fraudulent action was made out – Where the appellant did not seek to challenge the decision of the percentage division of property between the parties – Appeal dismissed. FAMILY LAW – APPEAL – Right of a bankrupt party to appear in an appeal – Where the respondent wife is bankrupt – Where the trustees in bankruptcy did not wish to appear in the appeal – Where wife was allowed to appear and make submissions. |
| Family Law Act 1975 (Cth) s 79A |
| CDJ v VAJ (1998) CLR 172 LGM & CAM (2006) FLC 93-267 Mead v Mead (2007) 235 ALR 197 Monticone (1990) FLC 92-114 |
| APPELLANT: | Mr Harper |
| RESPONDENT: | Mrs Harper |
| FILE NUMBER: | BRC | 4259 | of | 2009 |
| APPEAL NUMBER: | NA | 13 | of | 2011 |
| DATE DELIVERED: | 22 March 2012 |
| PLACE DELIVERED: | Brisbane |
PLACE HEARD: | Brisbane |
| JUDGMENT OF: | May J |
| HEARING DATE: | 24 November 2011 |
| LOWER COURT JURISDICTION: | Federal Magistrates Court |
| LOWER COURT JUDGMENT DATE: | 1 February 2011 |
| LOWER COURT MNC: | [2011] FMCAfam 744 |
REPRESENTATION
| SOLICITOR FOR THE APPELLANT: | In person |
| SOLICITOR FOR THE RESPONDENT: | In person |
Orders
The appeal is dismissed.
The appellant’s application in an appeal filed 25 October 2011 is allowed in part.
The respondent’s application in an appeal filed 10 November 2011 is allowed.
There is no order as to costs.
IT IS NOTED that publication of this judgment under the pseudonym Harper & Harper is approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| THE APPELLATE JURISDICTION OF THE FAMILY COURT OF AUSTRALIA AT BRISBANE |
Appeal Number: NA 13 of 2011
File Number: BRC 4259 of 2009
| Mr Harper |
Appellant
And
| Mrs Harper |
Respondent
REASONS FOR JUDGMENT
I mention at this introductory stage that this appeal is to be determined by me as a single Judge of the Family Court pursuant to arrangements made under s 94AAA(3) of the Family Law Act 1975 (“the Act”).
An amended notice of appeal was filed by the husband on 25 October 2011 against the orders of Federal Magistrate Spelleken made 1 February 2011. The orders concern the enforcement of property orders made earlier on 17 September 2010.
The wife in these proceedings is now bankrupt. At the directions hearing for the appeal a solicitor appeared for the trustee in bankruptcy. The solicitor indicated that the trustee did not seek to be heard on the appeal and “will abide the order of the Court”. In the circumstances of this case I allowed the wife to appear and make submissions.
One of the concerns of the husband arising from these proceedings is that the wife may bring proceedings against him leading to his bankruptcy.
The husband has not filed a notice of appeal from the orders of 17 September 2010. It should also be mentioned at the outset that most likely the husband needs leave to appeal. If there is merit in the appeal leave would be granted.
History
As will later be explained the Federal Magistrate apparently determined on 13 May 2010 by way of final property orders that the parties property be divided 55 per cent to the wife and 45 per cent to the husband. The husband does not seek to challenge that decision.
The proceedings before the Federal Magistrate which gave rise to the reasons and orders delivered 17 September 2010 concerned the wife’s application for orders in relation to the sale of two properties owned by the parties and for the proceeds of sale to be distributed 55 per cent to the wife and 45 per cent to the husband. The properties were located at K Street and at E Road.
The husband opposed the making of orders providing for the appointment of a particular agent, the setting of a reserve price for the auction of each of the properties, any orders requiring him to leave the K Street property prior to the settlement of its sale, certain orders regarding the payment of monies and challenged the division of the assets and liabilities.
The orders made by the Federal Magistrate on 17 September 2010 were final property orders apparently following the decision made on 13 May 2010 dividing the property of the parties 55 per cent to the wife and 45 per cent to the husband. The orders made on 17 September 2010 relevant to this appeal provided:
NOTATION
Save for the net sale proceeds of the [K] Street property and the [E] Road property, the parties agree that the pool of assets is as follows, with the following agreed values-
Asset/liability
Value
The Husband’s 1996 Ford Falcon utility
$5,000.00
The Husband’s business tools and chattels
$8,000.00
The Wife’s chattels
$5,500.00
The Husband’s combined superannuation entitlements
$10,786.62
The Wife’s combined superannuation entitlements
$4,691.00
Net value
$33,977.62
…
(2)The Husband shall pay to the Wife, that sum representing one half of the total costs of the family report writer (relating to the preparation of the family report dated the 14th February 2010) including professional costs of the report writer and his outlays (including travelling and other reasonable expenses) and for that purpose-
…
(4) The properties situated at -
(a) [K] Street, … in the State of Queensland (and more particularly described as lot […], parish … and contained in title reference […]) (“the [K] Street property); and
(b) [E] Road, … in the State of Queensland (and more particularly described as […], parish … and contained in title reference […] (“the [E] Road property”),
shall be sold by public auction by [B Real Estate Agency] on the terms and conditions set out in the following clause.
(5) For the purposes of the preceding paragraph-
(a) The agents appointed to conduct the auction of both properties shall be [Ms L] and [Mr A] (“the agents”) of [B Real Estate Agency];
(b) The Husband and Wife shall forthwith do all such things and sign all such documents necessary to engage [B Real Estate Agency] and to conduct an auction of both properties;
(c) The reserve price for the [K] Street property shall be $280,000;
(d) The reserve price for the [E] Road property shall be $200,000;
(e) The agents shall be authorised to incur preliminary costs (“the initial auction costs”) in respect to each property as follows-
…
(f) The initial auction costs shall be paid by the Wife and the Husband’s one half share of those costs shall be paid to the Wife by the Husband from the Husband’s share of the net sale proceeds pursuant to clause 7 of these orders. If the Husband’s share of the net sale proceeds is insufficient for that purpose, then the Husband’s one half share of the initial auction costs shall be a debt due and owing by the Husband to the Wife;
(g) The Respondent Husband shall vacate the [K] Street property fourteen clear days prior to the auction of the said [K] Street property;
(h) The parties shall forthwith do all such things and sign all such documents necessary to terminate any tenancy of the [E] Road property;
(i) Following the termination of the tenancy of the [E] Road property, the Respondent Husband shall remain away from the said property;
(j) The Wife shall, upon the tenant vacating the [E] Road property be at liberty to enter the property to clean, re-paint and properly present the property prior to auction;
(k) The Wife forthwith upon the Husband vacating the [K] Street property as referred to in order 5(g) of these orders, be at liberty to enter the property to clean, re-paint and property (sic) present the property prior to auction;
(l) The Wife may incur reasonable costs associated with such presentation and the Husband’s one half share of those costs shall be paid to the Wife by the Husband from the Husband’s share of the net sale proceeds pursuant to clause 7 of these orders. If the Husband’s share of the net sale proceeds is insufficient for that purpose, then the Husband’s one half share of these costs shall be a debt due and owing by the Husband to the Wife;
(m) The parties shall engage the Wife’s solicitors to act as the solicitors for the parties on sale of the [K] Street property and the [E] Road property;
(n) Either party shall have liberty to apply to the court for further directions regarding the sale of either property or the other party’s failure to comply with any part of order 5 of these orders on two (2) days notice one to the other.
(6) Pending the sale of both properties-
(a) The Husband shall make all payments of principal and interest (and shall indemnify the Wife in respect to the same) associated with-
(i) NAB flexi-plus mortgage facility number […];
(ii) NAB flexi-plus mortgage facility number […];
(iii) NAB business cheque account number […].
(b) Neither party shall further encumber, transfer, charge, sell or deal with in any manner whatsoever (unless with the express written consent of the other party), his or her interest in the [K] Street or [E] Road properties.
(7)Following the sale of either or both of the [K] Street property and the [E] Road property, the sale proceeds shall be paid in the following manner and priority, namely-
(a)In discharge of mortgage number […] in favour of the National Australia Bank Ltd;
(b)In discharge of mortgage number […] in favour of the National Australia Bank Ltd;
(c)In payment of agent’s commission (if any) and legal fees (if any) on sale;
(d)In payment of statutory conveyancing adjustments;
(e)In payment of any other amount agreed upon between the parties in writing to be paid;
(f)In payment of any capital gains tax in respect to the sale of the [E] Road property and for that purpose, the Husband shall-
(i)utilise all expenses/deductions available to the parties with a view to either increasing the cost base or otherwise minimising the parties’ ultimate capital gains tax exposure upon the sale of the [E] Road property (and in particular those expenses listed in the expense schedule at item 4.13 of the Wife’s list of documents); and
(ii)instruct his accountant to provide an estimate to the parties of the potential capital gains tax liability on sale of the [E] property.
(g) The sale proceeds then remaining (“the net sale proceeds”) shall be distributed between the parties as follows-
(i) To the Wife, such sum as is calculated by reference to the following formula, namely
A = 55% (B + $33,977.62) - $10,191.00
Where
A = the amount to be paid to the Wife
B = the net sale proceeds
(ii) in the event that there is a balance then remaining, then such balance shall be paid to the Husband.
(8)In the event that the net sale proceeds are insufficient to pay to the Wife her entitlement in accordance with paragraph 7(g)(i), then the Husband shall pay to the Wife such sum as is required to make up the balance within seven days of settlement of the sale of both the [K] Street property and the [E] Road property.
…
(10)Both parties shall do all such things and sign all such documents necessary to give effect to these orders and if either party shall refuse or neglect or is unable to sign any document or do any such thing as may be reasonably required to give effect to these orders within fourteen (14) days of the service of a demand upon him or her to execute such document or to do such thing, then pursuant to Section 106A of the Family Law Act -
(a) The Federal Magistrate of this Court is empowered to sign such documents and to direct such things to be done in the name of the party in default to give validity and operation to these orders;
(b) The party in default shall for the purpose of enforcing these orders, pay all reasonable solicitor/client costs incurred by the other party, such costs, if not otherwise agreed, then to be taxed; and
(c) The affidavit of the solicitor for the party seeking to give effect to these orders shall be sufficient proof of the default of the other party.
(11) Each party shall pay their own costs of and incidental to these proceedings.
(12) All pending property settlement applications shall be otherwise dismissed.
(emphasis added)
Following those orders there were disputes between the parties and further applications were brought by both the wife and the husband.
The orders made 1 February 2011 from which the husband appeals provide:
(1) That the Respondent Husband, within twenty-four (24) hours of the making of this Order, attend at the offices of the solicitors for the Applicant Wife and sign –
(a) The contract in the form annexed to this application as annexure A;
(b) The transfer annexed to this application as annexure B;
(c) A discharge authority in the form annexed to this application as annexure C.
(2)That in default of the Respondent Husband signing the documents referred to in the preceding paragraph, then the Registrar of this court is hereby authorised (on the written request of the Applicant’s solicitors) to sign such documents for and on behalf of the Respondent Husband and to sign such further ancillary documents as might reasonably be required by the Applicant’s solicitors to effect settlement of the sale of the [E] Rod (sic) property.
(3)That the Respondent Husband pay to the Applicant Wife, the costs of this application in the sum of one thousand, five hundred dollars ($1,500.00) fixed.
The husband explains under the heading Grounds of appeal:
I am appealing the courts decision in failing the husbands Cross Application heard on 1st Day of February 2011. A default in Order dated 17/09/2010 had occurred, and a 79A(1) application was submitted to change the orders to reflect a just and equitable spilt between the parties to repair the financial implications of the Default.
1. Under 79A(1) (c) (Default in carrying out an obligation imposed by the order and, in the circumstance that have arisen as a result of that default , it is just and equitable to set or vary the order)
Mr [Harper] innocently Defaulted in carrying out paragraph 6(a) of the Order (Dated 17th September 2010).
The National Australia Bank (N.A.B.) issued “Notice of Cancellation” letters for all joint facilities on the 13th of September 2010, 4 days prior to the Order.
Compliance with Order (17/09/2010) was not possible and the N.A.B. made it “Beyond Mr [Harper]’s Control”;
Afterwards, the former family home ([K] St) was sold fraudulently through the direct intervention of the former wife’s solicitor’s action; And;
Her Honour did not set or vary the Order dated 17/09/2010 (On the day of the hearing 1/02/2011) to reflect a Just and Equitable spilt between the parties. The Order dated 17/09/2010 is now defective.
Mr [Harper]’s 79A(1) (c) Application to the Court was effectively dismissed, the Federal Magistrate quotes “Must Fail”, essentially because she deemed there would be a significant delay in determining if the circumstances were beyond the former Husbands control.
[ A variation of a payment clause in favour of an innocently defaulting husband was held to be just and equitable in the circumstances, in preference to the wife’s enforcement proceedings, in Monticone (1990) FLC 92-114 (FC) ]
2. Under 79A(1)(a) (A miscarriage of justice by reason of fraud, duress, suppression of evidence (including failure to disclose relevant information), the giving of false evidence or any other circumstance)
The former Wife’s solicitor acted ultra-vires in instigating a miscarriage of justice via executing the necessary transfer of ownership documents via a registrar of the court to enable the former family home transferred into the Wife’s parents names at a price $20,000.00 under the reserve price without a legally binding house contract in December of 2010 prior to the Hearing on the 1/02/2011. (original emphasis)
Should the appeal be allowed the husband asks:
1. The property Settlement Order made on 17th of September 2010 between the parties be set aside.
2.By way of final adjustment the former wife receive the entire net sale proceeds of the properties known as “The [K] St Property” and “The [E] Rd Property” less a lump sum payable to the former Husband of $2,366.29 to be a lump sum child support payment payable by Baker O’Brien Toll Solicitors to the Child Support Agency (C.S.A.) for and on behalf of the former Husband.
3.Baker O’Brien Toll Solicitors pay the child support payment within Seven (7) days of receiving this Order.
4.Each party shall pay their own costs of an incidental to these proceedings.
5.All prior or pending property settlement Orders and/or applications shall be void and otherwise dismissed.
During the submissions enquiries were made about the orders sought against Baker O’Brien solicitors. They have not been served with the Notice of Appeal.
The husband also seeks what is characterised as a “Subsequent Consent Order” as follows:
Paragraph 7 of the Orders made 17th September 2010 be amended to include paragraph 7 (b 2) as follows:-
(b 2) In Discharge of Business Overdraft number […] in favour of the National Australia Bank Ltd;
Applications in an appeal
Each party has filed applications to adduce further evidence.
The usual difficulty attendant on such applications was magnified in this case as both parties appeared for themselves.
Husband’s application in an appeal
An application in an appeal was filed by the husband on 25 October 2011. The husband asks that leave be granted to adduce further evidence.
The husband also seeks orders in relation to the transcript of proceedings before the Federal Magistrate. It is asked that either an extension of time to file the transcript be granted or that the appeal proceed in the absence of the transcript.
In the affidavit filed in support of the husband’s application he explains that he is experiencing difficulty in arranging the funds to purchase the transcript. It is quite clear that the husband will not have the necessary funds in the near future. It has thus been necessary to hear the appeal without a transcript of the proceedings.
The husband is unemployed and currently in receipt of Commonwealth income support payments. It is said that as “the current combination of the two Court Orders deem [the husband] insolvent to the former wife” the husband is “legally unable to continue working as a contract carpenter (Contract License Conditions)”. The husband explains that “the majority reason for [his] appeal” is that he wants to go back to work.
The further evidence the husband seeks to adduce include:
· The husband’s submissions filed 15 July 2010, including, the minute of orders sought by the husband; and the husband’s affidavit filed 15 July 2010 (Document No. 15);
· The wife’s submissions filed 15 July 2010 (Document No. 16); and;
· A number of exhibits including;
·The three National Australia Bank facility cancellation letters dated 13 September 2010 (Exhibit Number (E1));
·The Child Support Agency Order letter from Baker, O’Brien Toll Solicitors dated 17 December 2010 (Exhibit Number (E2));
·The letter from Baker O’Brian Toll Solicitor’s letter advising $6,622.65 dated 2 March 2011 (Exhibit Number (E3)).
In the accompanying affidavit the husband explains the purpose of the further evidence he seeks to adduce. He states:
6.The Two additional requested documents noted as Document No.15 (paragraph 3) and Document No.16 (paragraph 4) in my Application for “additional documents” are relevant as they are absolutely necessary in providing my 79A(1) claim and proving that I innocently defaulted.
…
12.After the Hearing on 1st of February 2011; in March, I drew up a minute consent Order concerning the discharge of the N.A.B. Overdraft facility as agreed in court at the hearing 1/02/2011; I posted the document to Baker O’Brien Toll solicitors (B.O.T) for my Former Wife’s to sign, I also forwarded a copy onto her home address; I have not had any response from either B.O.T. or my former wife in relation to this matter.
The wife opposes the husband’s application and appeal. In her response, filed 10 November 2011, the wife asks that the appeal be dismissed due to the husband’s failure to comply with the orders of Registrar Spink made 5 October 2011 being directions made for the conduct of the appeal.
As to the transcript the wife submitted that the husband initiated the appeal in February 2011 and therefore had “ample time to prepare and to obtain this document”. The wife regards the transcript as important as she submits it “will provide crucial evidence with regard to Mr [Harper]s conduct at that trial as well as the opportunities which were given to Mr [Harper] by Judge Skelleken (sic) to fully explain his case and the depth of the discussion which took place”.
In regard to the other documents sought to be adduced as further evidence the wife contends that the husband should not be allowed to rely on documents relating to previous proceedings before the Federal Magistrate. The wife submits that as the husband did not appeal the 17 September 2010 orders the documents are not relevant to this appeal.
Should the appeal proceed the wife asks that only the documents in order 6, as sought by the husband in his application in an appeal be made. That order as sought by the husband asks that the three National Australia Bank facility cancelation letters dated 13 September 2010 be adduced as further evidence. The wife explains that “[t]hese documents are relevant in that they show the pressure that we were under from the National Australia Bank to sell the properties. They are not, however, in any way proof that Mr [Harper] ‘innocently defaulted’ on the courts orders as he suggests. They did not prevent him from making payments”. As the wife does not oppose the admission of these documents they will be allowed.
It is appropriate to deal with the husband’s applications to adduce further evidence as part of the consideration of the merits of the appeal. This can best be understood when reference is made to the well known parts of the decision by the High Court in CDJ v VAJ (1998) CLR 172 where the majority McHugh, Gummow and Callinan JJ said:
104.In the exercise of the discretion conferred by a power such as s 93A(2), the critical factor is the subject matter of the proceedings with which the appeal is concerned. This is because the purpose of the power to admit further evidence is to ensure that the proceedings do not miscarry. Tests such as those stated in Wollon Guan Corporation based on the need for finality in litigation are therefore not necessarily applicable to cases in which the interests of third parties, such as children, are at stake, although factors such as finality, discoverability of the evidence and its likely effect on the orders made are usually relevant to the exercise of the discretion. In an application at common law to admit further evidence, the court applies principles, bordering on fixed rules. In an application under s 93A(2) and similar provisions, the Full Court or Court of Appeal weighs factors, although it may of course develop guidelines for weighing those factors and exercising the discretion. [footnotes omitted]
…
109.One consideration in construing s 93A(2) is its remedial nature. Its principal purpose is to give to the Full Court a discretionary power to admit further evidence where that evidence, if accepted, would demonstrate that the order under appeal is erroneous. The power exists to facilitate the avoidance of errors which cannot be otherwise remedied by the application of the conventional appellate procedures. A further, but in practice subsidiary, purpose is to give the Full Court a discretion to admit further evidence to buttress the findings already made.
…
111.… The power to admit the further evidence exists to serve the demands of justice. Ordinarily, where it is alleged that the admission of new evidence requires a new trial, justice will not be served unless the Full Court is satisfied that the further evidence would have produced a different result if it had been available at the trial. Without that condition being satisfied, it could seldom, if ever, be in the interests of justice to deprive the respondent of the benefit of the orders made by the trial judge and put that person to the expense, inconvenience and worry of a new trial. (footnotes omitted)
Wife’s application in an appeal
On 10 November 2011 the wife filed an application in an appeal seeking to adduce further evidence. The material the wife seeks to adduce include:
· The signed Contract of Sale for [K] Street dated 18 November 2010;
· The three National Australia Bank cancellation notices dated 13 September 2010;
· A letter sent to the husband’s solicitors dated 30 March 2011, including a “Notice Assessment of Wifes Entitlements Pursuant to the Order of Federal Magistrate Spelleken made 17/09/2010”
· The wife’s Notification of Bankruptcy dated 19 October 2011.
In the wife’s accompanying affidavit she explains the necessity for the further evidence. She desposes:
1.The signed ‘Contract of Sale’ for [K] Street dated 18/11/2010 is relevant in proving that Mr [Harper] willingly signed a Contract for the sale of [K] Street. In his grounds for appeal Mr [Harper] states that the house was sold ‘without a legally binding house contract’. This is a legally binding Contract of Sale signed by Mr [Harper]. It also contains all of the conditions of sale.
2.The 3 National Australian Bank ‘Cancellation Notices’ dated 13/09/2010 are relevant in proving that the default that Mr [Harper] made was within his control. In his grounds for appeal Mr [Harper] states that the NAB made it “impossible” for him to comply with court orders made 17/09/2010 (by making payments) and therefore the default was “beyond his control”. It clearly is stipulated on these ‘Cancellation Notices’ that the NAB will accept payments (without prejudice).
3.The letter to Mr [Harper]’s Solicitor is relevant in showing that Mr [Harper] was informed of his obligations pursuant to the orders 17/09/2010. It includes a ‘Notional Assessment of Wifes Entitlements Pursuant to the Order of Federal Magistrate Spelleken made 17/09/2011’. This document is relevant in showing how the ‘Notional Assessment of Wifes Entitlements Pursuant to the order of Federal Magistrate Spelleken made 17/09/2010’ has been calculated and includes evidence to support those calculations (by way of NAB Bank Statements and the Invoices which were used to make the calculations).
4.Ms [Harpers] Notification of Bankruptcy is relevant in showing the wifes financial position and her creditors at the time of bankruptcy. It clearly shows that the reasons for her bankruptcy were related to legal proceedings regarding child matters and ongoing property settlement proceedings. All of Ms [Harper] creditors at that time were related to legal costs (associated with Mr [Harper]).
It would not do justice to the parties in this case if this further evidence was not allowed to be adduced. They are documents containing information which is relevant and incontrovertible.
reasons of the federal magistrate – 17 September 2010
Although there is not an appeal from these orders it is essential to this appeal to appreciate why the orders of 17 September 2010 were made. The Federal Magistrate said at the outset of her reasons:
1.The applicant asks the Court to make final orders in relation to property settlement that provide for the sale of two properties owned by the parties, one a (sic) [K] Street… and the other at [E] Road… by auction and for a division of the property of the parties as to 55% to the wife and 45% to the husband in accordance with Reasons delivered by the Court on 18 May 2010 (sic).
…
10.After hearing some evidence from the husband and submissions from both Counsel for the husband and wife, the Court reserved its decision in relation to issues relating to Faith and the division of the parties’ property and on 18 May 2010 (sic) Reasons for Judgment were delivered in relation to both issues, with the Court deciding in relation to property settlement that the property should be divided as to 55% to the wife and 45% to the husband.
…
13.It seems that despite some attempts by the wife’s solicitors to resolve issues with regard to finalising the orders, they were unable to do so and a request was made on behalf of the wife’s solicitors for the matter to be re-listed.
In the orders the Federal Magistrate also included liberty to apply provision should there be further disagreement.
On both occasions, 17 September 2010 and 1 February 2011, the husband appeared in person, the wife was represented by solicitors Baker O’Brien & Toll.
Reasons of the Federal Magistrate – 1 february 2011
It was explained by her Honour that there were two applications before the court.
First, the wife’s amended application in a case. The wife asked that an order be made requiring the husband, within 24 hours of the making of the order to attend upon the wife’s solicitors for the purpose of signing the contract for sale of the E Road property for the purchase price of $175,000, a transfer document and a discharge authority form. The wife also asked that in the event that the husband failed to comply with that order, that a Registrar of the Court be granted the power to sign the required documents on the husband’s behalf.
The husband was said to accept that in default of him signing the required documents to execute the sale of the E Road property, that a Registrar of the Court should be empowered to do so.
Second, was the husband’s application, contained in his response to the wife’s application, asking that a number of orders be made.
The husband asked that order 7 of the orders made 17 September 2010 be amended pursuant to the slip rule. It was proposed that an order be inserted providing that from the sale of the properties the overdraft be discharged. Counsel for the wife submitted that it was intended by the original orders that the overdraft which was secured on those properties or one or both of those properties would be paid out. Consequently it was argued that the order was effectively made by consent.
The husband also asked pursuant to s 79A(1)(c) that an order be made providing:
That the wife receive the net sale proceeds as defined in order 7(g) of the earlier orders, together with a payment from the husband to the wife of $8,496.69 with such sum to be payable within seven days of settlement of the sale of both the [K] Street property and the [E] Road property.
The Federal Magistrate dealt with the husband’s application first. Her Honour explained that in seeking such an order the husband was wanting “to establish a figure that the wife would ultimately be entitled to, so as to establish what the shortfall would be that he would be responsible to pay the wife to effectively finalise… the legal obligations as between Mr and Mrs [Harper] as they relate to their property settlement”.
It was explained by the Federal Magistrate that although there is some sense in setting the amount owed by the husband to the wife such an amount would be difficult to quantify, given that the amount was dependent on the net proceeds of sale of the E Road property. Her Honour explained that such an order could only be made with the consent of the parties.
The Federal Magistrate acknowledged that the husband relied on s 79A(1)(c) of the Act as the provision enabling the court to make the order he seeks. Her Honour did however have regard to the totality of s 79A of the Act in considering the husband’s application.
Her Honour said at paragraph 10 of the reasons:
Before I go to section 79A of the Act however, I should say that I understand there are two reasons that there may be an amount owing by the husband to the wife once the properties at [K] Street and [E] Road settle. Firstly, whether that be a contract in favour of Mr [Harper] or a member of his family for $170,000 or a contract in favour of Mr [H] or someone else in the amount of $175,000 the orders provided for Mr [Harper] to meet the mortgages and loans secured over the properties and that he has not made those payments for reasons that he attempts to explain in his affidavit. Secondly, and more significantly however, the [K] Street property sold for an amount far less than the parties may have believed it was worth some time ago or for an amount less than what was provided for as the reserve price in the orders dated 17 September 2010. It seems that the [E] Road property will also sell for an amount less than what the parties may have anticipated it was worth and less than the reserve that is set out in the orders of 17 September 2010.
After considering each of the five separate grounds for setting aside orders pursuant to s 79A , it was said by her Honour that the only section “that could apply or goes anywhere near being established in the circumstances of this case, is Section 79A(1)(c)”. Her Honour said:
17.It is my view, however, that this ground has also not been established in this case for these reasons. In a 1990 decision of the Court in Monticone (1990) FLC 92-114, the Court found that a party cannot rely, (in this case, Mr [Harper]) cannot rely upon his or her default as a ground, unless that circumstance is beyond his or her control.
18.Mr [Harper], in his material, refers to financial difficulties he has had and the reasons why he has not been able to meet his obligations pursuant to the order to pay the mortgage and various other loans secured by the properties of the parties. He refers to the tragic death of his brother as a circumstance which caused difficulties for him and I understand that that would have been the case. No doubt this was a tragic time for him and his family. I also note, however, that he was not meeting his obligations with regard to the payment of the mortgage prior to that time.
19.The Court in deciding whether to exercise its discretion to set aside or vary the orders should also consider, and this is not an exhaustive list, but the factors that are relevant here that should be taken into account include the financial position of the parties, hardship, delay and prejudice.
20.In making a decision as to whether Mr [Harper]’s inability to pay the mortgage was beyond his control I would need to be satisfied at least that Mr [Harper] was unable to pay those mortgages. There would need to be a consideration, complete consideration of his financial circumstances during the relevant period, the relevant period being from the day of the trial when it was agreed he would be responsible for the payment of the mortgages up until his default. So the Court would need to establish from the time that Mr [Harper] and Mrs [Harper] agreed to that part of the orders, until now, whether or not Mr [Harper] was in a financial position to make those payments. That is certainly not something that could be determined in the duty list. It would be a matter that might take some hours. It may involve cross-examination; it might involve further discovery and disclosure with regard to the husband’s financial circumstances. That would mean, in practical terms, that there would be a significant delay in determining that part of Mr [Harper]s application.
21.This is clearly a matter where, as every day goes by without the sale of, in particular, the [E] Road property and a payout of the mortgage, and while the mortgage payments are not being made, every day results in further moneys being owed by both parties to the mortgagee. Every day this matter continues without the sale of the property or rectification of the arrears of the loans that are outstanding at the moment, the bank continues to be in a position to step in and effectively sell this property themselves.
22.Significant prejudice would not only be caused to Mrs [Harper] in that regard, it would also be caused ultimately to Mr [Harper] because ultimately the result would be that the amount Mr [Harper] owes the wife would increase with time. Having said that, it is not my view in any event, that Section 79A(1)(c) applies in the circumstances of this case.
It was ultimately found by her Honour that:
23.Taking into account all of those factors, it is my view that the Court should not exercise its discretion in this matter and set aside or vary the orders. I should also record in these reasons that Mr [Harper] says in his material and to the Bench today that he is not only asking the Court to set aside or vary the orders, he is asking the Court to establish and fix the amount he owes the wife. The amount the husband will ultimately owe the wife may be the subject of an enforcement application in the future once the properties are sold. It is not proper for the Court to determine that amount at this time prior to the sale of the properties. So therefore I will dismiss that part of Mr [Harper]’s application.
The Federal Magistrate then considered the wife’s application for orders requiring the husband to sign a contract for sale of the E property with the purchase price of $175,000. The price was considerably lower than the reserve price set in the 17 September 2010 orders of $200,000. Her Honour noted that the orders granted leave to both parties to apply to the court for further orders regarding the sale of either or both of the properties.
In determining to make the order Her Honour said:
25.I note that the orders provided for both properties to be auctioned. I understand the [E] Road was auctioned. It was passed in, as I understand it, for $175,000. The reserve which set by the orders was $200,000 or, no doubt, as might have been agreed between the parties. But it seems there was not any agreement between the parties that the reserve price should change and as I said before, it is not in dispute that it was passed in at $175,000.
26.It also does not seem to be the case of Mr [Harper] that he disputes that the property is now worth $175,000. There is an offer for $175,000. It was passed in for $175,000. The wife is asking me to make an order for a contract to be signed for $175,000. There is no evidence to suggest that that is not, although sadly, it is a lot less than the parties may have, or the wife may have believed it was worth at one time; the husband may have believed it was worth at one time. It is worth less – it is less than the reserve. But it seems to be an amount, since the property has been sent to the market, that is reflective of the current market value of that property and is $5,000 more, of course, than the amount that, at one time or maybe even currently, a member of Mr [Harper]’s family was offering to pay for the property.
27.In those circumstances it seems that it is appropriate to, and it does not prejudice either party for the Court to make that order.
The husband was also ordered to pay the costs of the wife fixed in the sum of $1,500. Her Honours reasons for making the costs order was in summary the financial circumstances of the parties and the fact that the wife was successful in her application while the husband was wholly unsuccessful in defending it. The Federal Magistrate was also mindful of the real cost to the wife in having to make the application, it was noted that it would have been a sum “probably many times more than $1,500”.
Submissions of the husband
It became clear in oral submissions that aside from the husband’s concerns in relation to the impact of the orders on his ability to work, his appeal has two main grounds. Both are in relation to the 17 September 2010 orders, from which no appeal has been filed or grounds relied on to support those orders being set aside.
First the husband says that order 6(a) of those orders, that “the Husband shall make all payments of principal and interest” on the mortgages for both properties was defective. In essence, the husband now seeks to avoid liability for the $11, 376 which has arisen from non-compliance with that order, that is, the interest arising from a failure to make mortgage repayments.
In oral submissions the husband canvassed three alternative bases for why this order was “defective”. It must be noted before addressing these that the orders of 17 September 2010 were made after submissions; the husband appeared in person at the hearing. The husband was represented and receiving legal advice until approximately May 2010, when he decided to continue in person. First, the husband said that notwithstanding the clear wording of the order, he was unaware he would be solely responsible for the repayments. The husband then continued to submit that he had not agreed to an order to this effect and that the wife’s former solicitor had acted improperly by presenting to the Federal Magistrate orders which the solicitor said were agreed to when there was in fact conflict between the parties about the content.
The husband was however, unable to demonstrate that there was any evidence before the Federal Magistrate at the hearing of his s 79A application in support of these claims. The only evidence which the husband was able to point to demonstrated not his lack of knowledge about the responsibility to pay or his lack of consent, but rather the evidence went to his inability to pay. The husband referred to paragraph 10 of his affidavit before the Federal Magistrate filed 28 January 2011 where he said: “in my limited earnings, because of the grief and grieving process that affected me and my family upon my brother passing I was not in a position to make the payments of principle and interest.” In oral submissions in the appeal, the husband went on to say that at the time of his brother’s death he was in negotiations with the NAB to apply for an interest free period, which was refused and he was warned by the bank that if the amounts in arrears were not paid the bank would be carrying out enforcement proceedings.
In the absence of clear evidence the only inference that can be drawn is that the husband knew of his obligation to make the mortgage payments. (See LGM & CAM (2006) FLC 93-267 (May J dissenting) and Mead v Mead 235 ALR 197.)
Having provided no evidence either before the Federal Magistrate or on appeal to support his claim that order 6(a) of the 17 September 2010 orders was “defective” this ground of appeal cannot succeed.
Second the husband says that the K Street property was sold fraudulently because the sale did not occur in accordance with the relevant parts of the 17 September 2010 orders which provided for the property’s sale. In oral submissions he submitted that there was no legal or lawful contract to sell the K Street property, because the wife’s former solicitors knowingly submitted the transfer papers to a registrar of the court without his express written consent to the selling of the property for twenty thousand dollars less than the reserve price. He stated the submission of the transfer papers to the registrar was a fraudulent act because it was against order 6 (b) of the 17 September 2010 orders which provided that “neither party shall further encumber, transfer, charge, sell or deal with in any manner whatsoever (unless with the express written consent of the other party), his or her interest in the [K] or [E] Road properties”.
The husband does not deny that he signed the contract for sale for the K Street property at a value of $260, 000 on 18 November 2010. However in oral submissions the husband explained that after the contract for sale of the E Road property to him was terminated by the solicitors for the wife during the cooling off period, “out of frustration” he then refused to sign the transfer documents for the K Street property sale. He stated that he had understood the court orders to give him the protection of reserve prices, and he did not expect that the solicitors for the wife would approach the registrar and execute the necessary transfer documents.
Having signed the contract for sale which clearly purported to sell the property at a value less than the price set for the sale, it is plainly reasonably to conclude that the husband had provided his express written consent to sell his interest in the K road property. The obligation created by the signing of that contract in effect displaced the “protection” of the reserve price as named in order 5 (c). Accordingly, the wife’s solicitors were entitled to proceed in seeking to have the registrar give effect to the contract, which sought to give effect to the orders, as provided for in paragraph 10 (a) of the 17 September 2010 orders. There is therefore no merit in this ground of the husband’s appeal.
The husband has several other areas of complaint unrelated to the orders. There is a lump sum payable to the Child Support Agency of $2,366.29 by the former solicitors for the wife, Baker O’Brien & Toll. This amount was to have been paid directly from the net sale proceeds of the K Street and E properties to the Child Support Agency. The husband submitted that the solicitors have not paid this amount because the husband owes money to them and that they believe that he is not entitled to any of the net sale proceeds. The husband maintains that the sale of the properties was fraudulent. An appeal is not the correct vehicle for dealing with this dispute.
In respect of the husband’s application to adduce further evidence, even if the evidence he seeks to adduce were to be admitted the merits in the appeal would not be advanced. Reference has already been made to the wife’s application that further evidence be adduced on appeal and her submissions generally. The application of the husband should be allowed only in part.
Conclusions
In essence the husband argues that due to his default in not paying the mortgage and as the properties were sold at an undervalue he has not received 45 per cent of the property as ordered. It is argued by him that the Federal Magistrate should have set aside the orders pursuant to s 79A(1)(c) because the current state of the financial orders is not just and equitable.
The husband does not regard himself as being wholly responsible for the failure to pay the bank. The difficulty with this argument is that the orders provided that he meet the mortgage repayments. There is no doubt that the husband had to deal with a number of very difficult issues at that time but there is no escaping his obligation under the orders to pay the mortgage.
Second, the husband complains that the property at E Road was sold at undervalue and that the K Street property was wrongly sold to the wife’s parents at an undervalue. The orders of the court provided that the registrar, as an officer of the Federal Magistrates Court, could sign all documents necessary to effect a transfer in order to give effect to the orders. It was not necessary to obtain the husband’s consent.
The orders asked by the husband on appeal include that the husband and the wife be equally responsible for the mortgages owing to the NAB. The first difficulty is that the husband has not appealed the orders dated
17 September 2010. The second is that it is not apparent from the orders and reasons of 17 September 2010 or 1 February 2011 that the Federal Magistrate made an error.
Furthermore, the court is unable to provide any remedy which would satisfy the husband’s complaints. The properties have been lawfully sold, the respondent wife is a bankrupt and there are no funds with which to attempt to give effect to the original 45 per cent division to the husband. No error having been established, while the circumstances which have led to the mortgage interest debt being payable and the sale of the property for considerably less than hoped by the parties are unfortunate, this Court has no jurisdiction or power to make the orders by way of property settlement or to order that the trustee in bankruptcy for the wife not pursue the husband for payment of that debt should they see fit.
Costs
In the unfortunate circumstances of this case there should be no order as to costs.
I certify that the preceding 66 (sixty-six) paragraphs are a true copy of the reasons for judgment of the Honourable Justice May delivered on 22 March 2012.
Associate:
Date: 22 March 2012
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