Harry & Harrison (deceased)
[2011] FamCA 457
•17 June 2011
FAMILY COURT OF AUSTRALIA
| HARRY & HARRISON (DECEASED) AND ORS | [2011] FamCA 457 |
| FAMILY LAW – PROPERTY SETTLEMENT – Death of party – Where respondent husband died while proceedings were on foot – Where the legal personal representatives sought to be substituted in the proceedings for the respondent husband – Whether the Court has jurisdiction to make the consent orders sought by the applicant wife pursuant to s 79(8) – Whether the order was just and equitable per s 79(2) FAMILY LAW – WORDS AND PHRASES – Meaning of “legal personal representative” and r 6.15 FAMILY LAW – PRACTICE AND PROCEDURE – Joinder – Where the second to eighth respondents sought to be joined to the proceedings |
| Family Law Act 1975 (Cth), ss 79(2), 79(8) Family Law Rules 2004 (Cth), rr 1.10, 6.03, 6.15, 8.01 |
| Capelinski & Patton [2010] FamCA 1243, cited Fisher v Fisher (No. 2) (1986) 161 CLR 438, applied Midhurst (deceased) & Midhurst [2008] FamCA 393, cited S (deceased) & S [2002] FamCA 1281, applied Smith v Smith (1986) 161 CLR 217, discussed Whitehouse & Whitehouse [2009] FamCAFC 207, discussed |
| APPLICANT: | Ms Harry |
| RESPONDENT: | The Legal Personal Representatives of Mr Harrison (Deceased) |
| SECOND RESPONDENT: | Mr B Harry (in his personal capacity and atf the Harry Estate and Harry Family Settlement) |
| THIRD RESPONDENT: | Ms C (in her personal capacity and atf the Harry Estate and Harry Family Settlement) |
| FOURTH RESPONDENT: | Ms D (in her personal capacity and atf the Harry Estate and Harry Family Settlement and the E Trust) |
| FIFTH RESPONDENT: | F PTY LTD ACN … (in its own capacity and atf the F Property Trust) |
| SIXTH RESPONDENT: | G PTY LTD ACN … (in its own capacity and atf the F Property Trust) |
| SEVENTH RESPONDENT: | HARRY HOLDINGS PTY LTD ACN … (in its own capacity and atf the I Trust) |
| EIGHTH RESPONDENT: | H PTY LIMITED ACN … (in its own capacity and atf the Harry Family Investment Trust) |
| FILE NUMBER: | MLC | 8172 | of | 2009 |
| DATE DELIVERED: | 17 June 2011 |
| PLACE DELIVERED: | Melbourne |
| PLACE HEARD: | Melbourne |
| JUDGMENT OF: | Young J |
| HEARING DATE: | 15 June 2011 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Taussig QC |
| SOLICITOR FOR THE APPLICANT: | Taussig Cherrie Fildes |
| COUNSEL FOR THE RESPONDENT: | Mr Shepherd |
| SOLICITOR FOR THE RESPONDENT: | Maddox Lawyers |
| COUNSEL FOR THE 2ND RESPONDENT: | Mr Baring (Solicitor) |
| SOLICITOR FOR THE 2ND RESPONDENT: | Maddox Lawyers |
| COUNSEL FOR THE 3RD RESPONDENT: | Ms C (in person) |
| SOLICITOR FOR THE 3RD RESPONDENT: | Ms C (in person) |
| COUNSEL FOR THE 4TH RESPONDENT: | Ms D (in person) |
| SOLICITOR FOR THE 4TH RESPONDENT: | Ms D (in person) |
| COUNSEL FOR THE 5TH TO 8TH RESPONDENTS: | Mr Sheppard |
| SOLICITOR FOR THE 5TH TO 8TH RESPONDENTS: | Maddox Lawyers |
ORDERS DELIVERED ON 15 JUNE 2011
IT IS ORDERED BY THE COURT:
That the following persons, companies and other entities be joined as parties in the proceedings:
a.Mr B Harry in his personal capacity and in his capacity as joint trustee of the Harry Estate and joint trustee of the Harry Family Settlement;
b.Ms C in her personal capacity and in her capacity as joint trustee of the Harry Estate and joint trustee of the Harry Family Settlement;
c.Ms D in her personal capacity and in her capacity as joint trustee of the Harry Estate and joint trustee of the Harry Family Settlement and as trustee of the E Trust;
d.F Pty Ltd ACN … both in its own capacity and in its capacity as trustee of the F Property Trust;
e.G Pty Ltd ACN … both in its own capacity and in its capacity as the former trustee of the F Property Trust;
f.Harry Holdings Pty Ltd ACN … both in its own capacity and in its capacity as trustee of the I Trust;
g.H Pty Ltd ACN both in its own capacity and in its capacity as trustee of the Harry Family Investment Trust.
That, pursuant to Rule 6.15(3) of the Family Law Rules 2004 (Cth), Ms D, Ms C and Mr B Harry, as the joint Legal Personal Representatives of the deceased husband Mr Harrison (also known as Mr Harry) (“the Legal Personal Representatives of the Husband”), be substituted for the deceased Husband in these Proceedings.
IT IS FURTHER DECLARED BY THE COURT:
The Court Declares pursuant to section 79(8) of the Family Law Act 1975 (Cth) that:
a.The Court is of the opinion that it would have made an order with respect to property if the deceased party had not died; and
b.That it is still appropriate to make an order with respect to property;
IT IS ORDERED BY CONSENT:
Orders 4 to 57 were ordered by consent inclusive of Notations A to CC, Schedules 1 and 2 and Annexures A and B.
IT IS NOTED that publication of this judgment under the pseudonym Harry & Harrison is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| FAMILY COURT OF AUSTRALIA AT MELBOURNE |
FILE NUMBER: MLC 8172 of 2009
| Ms Harry |
Applicant Wife
And
| The Legal Personal Representatives of Mr Harrison |
Respondent Husband
And
| Mr B Harry |
Second Respondent
And
| Ms C |
Third Respondent
And
| Ms D |
Fourth Respondent
And
| F Pty Ltd |
Fifth Respondent
And
| G Pty Ltd |
Sixth Respondent
And
| Harry Holdings Pty Ltd |
Seventh Respondent
And
| H Pty Ltd |
Eighth Respondent
REASONS FOR JUDGMENT
This matter came before the Court on 15 June 2011 at a case management hearing. At the hearing the parties provided a minute of the consent orders sought as prepared by the applicant wife’s solicitors.
The consent orders provided for a final property settlement between the parties pursuant to s 79 of the Family Law Act 1975 (Cth) (“the Act”).
The relevant background to the proceedings is as follows.
On 11 September 2009 the wife filed an initiating application seeking final property orders pursuant to s 79 of the Act.
On 30 November 2009 the parties appeared before Registrar Marrone and by consent it was ordered that the husband file a response and financial statement within 21 days and that the parties attend a conciliation conference on 22 March 2010.
The husband filed the response and financial statement on 24 December 2009.
On 16 March 2010 the parties requested that the conciliation conference of 22 March 2010 be adjourned for approximately three months as the parties were “discussing a reconciliation”.
On 18 March 2010 by letter the Registry Manager confirmed that the conciliation conference had been adjourned to 4 June 2010.
Prior to the June conciliation conference on 5 April 2010 the respondent husband died at the age of 73 years.
The husband was born in 1936 and the wife in 1937. The parties were married in 1961. The parties were not divorced prior to the husband’s death and were married for 50 years. There are three children of the marriage, Ms D, Ms C and Mr B Harry (“the children”). The wife is now 73 years old and the children are respectively 48, 47 and 42.
Application for the children to be substituted as the Legal Personal Representatives of the deceased respondent husband
By affidavit filed 15 June 2011, Ms C, in her capacity as one of the joint executors of the respondent husband’s Will, annexed the Grant of Probate dated 13 December 2010 and the last Will of Mr Harrison (also known as Mr Harry) of 9 July 2008.
At the hearing on 15 June 2011 the children in their capacity as joint executors of the Will of their late father sought an order pursuant to r 6.15(3) of the Family Law Rules 2004 (Cth) (“the Rules”) that they be substituted as the joint legal personal representatives of the deceased respondent husband in these proceedings. Rule 6.15 states that:
6.15 Death of party
(1) This rule applies to a property case or an application for the enforcement of a financial obligation.
(2) If a party dies, the other party or the legal personal representative must ask the court for procedural orders in relation to the future conduct of the case.
(3) The court may order that the legal personal representative of the deceased person be substituted for the deceased person as a party.
Note 1 The court may make other procedural orders, including that a person has permission to intervene in the case (see rules 1.12 and 6.05).
Note 2 For the effect of the death of a party in certain cases, see subsections 79(1A), 79(8), 79A(1C), 90SM(2), 90SM(8), 90SN(5), 90UM(8) and 105(3) of the Act.
The term “Legal Personal Representative” is not defined in s 4 of the Act or the Dictionary forming part of the Rules, however, the explanatory guide to the Rules provides the following “explanation” of the term:
legal personal representative, for a deceased party — the executor or administrator of the party’s estate.
In the absence of a statutory definition the observations of Mullane J in S (deceased) & S [2002] FamCA 1281 at paragraphs 10, 14 and 15, are of particular utility:
Legal personal representative” is not used elsewhere in the Family Law Act in relation to property proceedings and is not defined in that Act. In particular, there is no provision for a person to qualify as, or be appointed as, the legal personal representative of a deceased party.
. . .
Judicial Registrar Loughnan, the learned author of the commentary on the Family Law Rules in the Butterworth Service “Family Court Legislation” expresses the view (at O 15 r 8.3) of Order 15 Rule 8 that:
“The legal personal representative will generally be the executor/executrix of the deceased person.”
The expression “personal representative” is a legal term and thus as such means, in relation to a deceased person, the executor of the Will of the deceased (whether probate has been granted or not) or a person to whom a grant of Letters of Administration has been made for the estate of the deceased (see 17 Halsbury's Laws 4th Edition para 704; Vol 3, Words and Phrases Legally Defined, Butterworths 3rd edition; Strouds Judicial Dictionary 5th Edition, Sweet and Maxwell Volume 4 at 1930; Butterworths Australian Legal Dictionary (1997) 873).
In relation to the power to substitute a person or persons as the legal personal representative or representatives of a deceased party to proceedings his Honour stated at paragraphs 25 to 27 that:
Subsection 79(8) does not give power to this Court to appoint someone as “legal personal representative” of a deceased party to be substituted to continue the proceedings or to be the person against whom the proceedings may be continued. It does not appear to contemplate an appointment by the Court of a representative like a guardian ad litem, for example. Indeed, par 79(8)(a) says:
“The applicable Rules of Court may make provision in relation to the substitution of the legal personal representative as a party to the proceedings.”
Clearly from the language of the section and the authorities, the person who is to be substituted must already be the legal personal representative of the deceased. This Court has no power to appoint a person as legal personal representative of the deceased.
In the present circumstances, the Applicant would need to obtain from the Supreme Court, Letters of Administration with the Will annexed, or Letters of Administration ad litem making her the legal personal representative of the deceased wife before the Court can make an Order under s 79(8) substituting her for the deceased party.
In these proceedings as the Grant of Probate has been executed and the children are the joint executors of the respondent husband’s Will, as evidenced in clause 1 of annexure “RLH1” to the affidavit of the third respondent filed 15 June 2011, the Court has the power to substitute the children as the joint legal personal representatives of the deceased respondent husband in accordance with r 6.15(3). On 15 June 2011 the Court made an order for the children to be substituted as the joint legal personal representatives of the respondent husband in these proceedings.
Application to join the second to eighth respondents to the proceedings
At the hearing on the 15 June 2011 the children sought to be joined in their personal capacities and as trustees of various estates and trusts as the second to fourth respondents.
Additionally, the fifth to eighth respondent companies, by their solicitor, in accordance with r 8.01(2), sought to be joined as respondents in the proceedings in their own capacity and as corporate trustees for various trusts.
The second to eighth respondents sought to be joined to give effect to the consent orders proposed by the applicant wife and to enable the final division of the property of the parties pursuant to s 79 of the Act.
The children and companies were not named as the second to eighth respondents in the wife’s initiating application, or in an amended application or response, in compliance with r 6.03.
However, in view of consent orders proposed by the wife requiring the second to eighth respondents to be joined to the proceedings to give effect to the consent orders, it was appropriate for the Court to order pursuant to r 1.10(1) that the children in their personal capacities, and as joint trustees of the Harry Estate and the Harry Family Settlement, and in the case of the fourth respondent in her capacity as trustee of E Trust, be joined to the proceedings.
Further, it was appropriate for the Court to order pursuant to r 1.10(1), on the application of the solicitor for the companies, that the fifth to eighth respondent companies be joined to the proceedings in their own capacity and as former or current corporate trustees of the F Property Trust, the I Trust and the Harry Family Investment Trust.
Background to the proceedings and the final consent orders sought
The commercial properties and the personal assets of the husband and wife that form the martial asset pool are or were held by the various respondent companies as corporate trustees of the F Property Trust, the I Trust and the Harry Family Investment Trust.
I was advised by Senior Counsel for the applicant wife and the solicitor for the second to eighth respondents that in or about the year 2000 the husband and wife purchased commercial properties in Hobart for $9 million dollars. Those properties are now estimated to be worth $68 million.
In the late 2000s divisions arose within the family leading to conflict in the marital relationship between the husband and wife.
Prior to 2009 the personal assets and the commercial properties of the parties were controlled in equal parts by the husband and wife within the relevant corporate structures. However, prior to the separation of the husband and wife, and the wife commencing proceedings in this Court in September 2009, the husband gained majority control of the corporate structures.
The husband prior to his death in early 2010, when he and the wife were discussing a reconciliation, sought to modify the structure of the corporate entities to again provide for an equal share of control as between the husband and wife.
As at the time of the husband’s death in April 2010 the husband and wife were living together.
However, Senior Counsel for the wife advised that at the time of the husband’s death in April 2010 the financial conciliation conference between the parties in relation to the s 79 proceedings was still set down for 4 June 2010 and it was not known whether the reconciliation between the husband and wife was temporary or permanent.
In view of those submissions by Senior Counsel for the wife, and in the absence of submissions to the contrary by the legal personal representatives of the deceased respondent husband, I find that at 5 April 2010 and after that date the s 79 proceedings commenced by the wife in 2009 in this Court remained on foot.
Jurisdiction to make the consent orders sought by the applicant wife and legal personal representatives of the deceased respondent husband
It was submitted by Senior Counsel for the applicant wife and by Counsel for the Legal Personal Representatives of the respondent husband that the Court had the jurisdiction to make the consent orders proposed by the wife pursuant to s 79(8) of the Act.
Section 79(8) states that:
(8) Where, before property settlement proceedings are completed, a party to the marriage dies:
(a) the proceedings may be continued by or against, as the case may be, the legal personal representative of the deceased party and the applicable Rules of Court may make provision in relation to the substitution of the legal personal representative as a party to the proceedings;
(b) if the court is of the opinion:
(i) that it would have made an order with respect to property if the deceased party had not died; and
(ii) that it is still appropriate to make an order with respect to property;
the court may make such order as it considers appropriate with respect to:
(iii) any of the property of the parties to the marriage or either of them; or
(iv) any of the vested bankruptcy property in relation to a bankrupt party to the marriage; and
(c) an order made by the court pursuant to paragraph (b) may be enforced on behalf of, or against, as the case may be, the estate of the deceased party.
That section provides per s 79(8)(b) that if the Court is satisfied that it would have made an order with respect to property if the respondent husband had not died and it is still appropriate to make an order, the Court may make such order as it considers appropriate with respect to the property of the parties to a marriage. Further in accordance with s 79(8)(c), any order made may be enforced against the estate of the respondent husband.
Counsel for the legal personal representatives cited the decisions of Midhurst (deceased) & Midhurst [2008] FamCA 393 and Capelinski & Patton [2010] FamCA 1243 as authority for the proposition that in the circumstances of these proceedings the Court has jurisdiction to make the consent orders sought under s 79 of the Act.
It was submitted that as the Court had determined and substituted the legal personal representatives of the deceased husband, the Court had jurisdiction to make an s 79 order if the Court was of the opinion that it was appropriate to make such an order pursuant to the considerations in s 79(8) and if the order is just and equitable in all the circumstances pursuant to s 79(2).
It was submitted that the difficulties that arose in Whitehouse & Whitehouse [2009] FamCAFC 207, where both parties to the property proceedings were deceased, did not arise in the proceedings before the Court and were therefore not applicable.
However, as observed in the written submissions of legal personal representatives, in Whitehouse the Full Court referred to the decision of the High Court in Fisher v Fisher (No. 2) (1986) 161 CLR 438 in which the constitutional validity of s 79(8) was upheld and the scope of that section was discussed in the reasoning of Brennan J at 457 to 458. His Honour stated that:
The question in this case is whether a jurisdiction can be created to make such an order after the death of one spouse. That jurisdiction is not created by s. 79(1), but by s. 79(8) of the Act. Section 79(1) in conjunction with par. (ca)(i) of the definition of “matrimonial cause” in s. 4(1) empower the Family Court in “proceedings between the parties to a marriage” to make an order “altering the interests of the parties in the property”. Those words cannot be satisfied if one of the parties to the marriage has died and that party has disposed by will of his or her interests in property or those interests have devolved on others. The language of s. 79(1) temporally restricts the exercise of the jurisdiction it confers to the lifetime of both parties to the marriage. Section 79(8), however, authorizes the making of an order after the death of one party.
Section 79(8) does not confer jurisdiction on the Family Court to entertain proceedings commenced after the death of one of the parties to the marriage. The proceedings to which it relates are proceedings commenced between the parties to a marriage with respect to the property of those parties or either of them arising out of the marital relationship or otherwise falling within par. (ca) of the definition of “matrimonial cause” in s. 4(1) of the Act. The proceedings must have been a matrimonial cause commenced pursuant to s. 79(1). The death of a spouse will not always extinguish or satisfy the moral claims of the surviving spouse and children to which effect would have been given if the proceedings had been completed. Section 79(8) empowers the Family Court to give effect to the moral claims made in respect of the property of the spouses which was made available to answer those claims by the commencement of the proceedings, provided “it is still appropriate to make an order with respect to property”: s. 79(8)(b)(ii). That qualification on the power, coupled with par. (ca)(i) of the definition of “matrimonial cause”, ensure that the jurisdiction is exercised only in cases where the moral obligations arising out of the marriage remain unsatisfied.
Section 79(8) provides machinery for the discharge of those moral obligations in priority to any rights in the property of a party to a marriage which arise by testamentary disposition of that party’s property or by any other devolution of that property on that party’s death. That is a law which governs an incident of marriage in that it provides the machinery for enforcing the moral obligations with respect to property arising from a spouse’s marital relationship. It is a law with respect to marriage.
That is not to say that the exercise of the jurisdiction under s. 79(8) is governed by precisely the same considerations as govern the making of orders under a testators’ family maintenance Act, much less to suggest that there is any inconsistency between s. 79(8) and legislation of that kind: see Smith v. Smith. However, there will be occasions when an order made under s. 79(8) will satisfy or go towards satisfying a moral obligation which might otherwise have warranted the making of an order or an order in a larger amount under testators’ family maintenance legislation.
It follows from what I have written that the validity of s. 79(8) would not be affected if it related to the continuation of proceedings after both spouses had died provided the proceedings were being carried on to obtain an order satisfying the moral obligations owed to their children. But it is clear from the context of s. 79(8) that “either party” should not be construed as both parties. The provisions of par. (a) show that the sub-section is intended to operate when there is but one “deceased party” by or against whose legal personal representative the proceedings may be continued.
The decision of Smith v Smith (1986) 161 CLR 217 referred to in Fisher involved an application for a deed to be approved by the Family Court for the division of the property of parties to a marriage where the deed contained mutual releases and indemnities in respect of claims under the Family Provision Act 1982 (NSW). The High Court determined that there was no inconsistency between s 87 of the Act and s 31 of the State Act within the scope of s 109 of the Constitution and that the Family Court did not have accrued jurisdiction to exercise the power conferred on the Supreme Court of New South Wales pursuant to s 31 of the State Act. However, the High Court per Mason, Brennan and Deane JJ stated at 244 that:
Proceedings with respect to the property of parties to a marriage or either of them, pending at the death of a party, may be continued by or against his or her legal personal representative, but the making of an order in the proceedings is subject to certain conditions set out in s. 79(8)(b). Similar provision is made by s. 79A(1C) with respect to pending proceedings to vary or set aside an order made under s. 79. And orders made under ss. 79(1), 79(8)(b) or 79A(1C)(b) may be enforced on behalf of, or against, the estate of the deceased party: see ss. 79(1A), 79(8)(c) and 79A(1C)(c) respectively.
The decision in Smith is not relevant to the current proceedings before the Court.
However, it is clear from the decision in Fisher that s 79 property proceedings can survive the death of one of the parties if a valid legal personal representative is substituted for the deceased party and the Court is satisfied that it would have made an order with respect to property if the deceased party had not died and further determines that it is still appropriate to make an order with respect to property.
The Court has the jurisdiction to make the consent orders sought by the applicant wife pursuant to s 79 of the Act.
Conclusions
In the particular circumstances of the proceedings before the Court, in view of the valid substitution of the legal personal representatives for the deceased respondent husband made pursuant to r 6.15, and given that the proceedings were still on foot as at the date of the respondent’s death I find that the Court would have been in a position to make an order with respect to property if the respondent had not died and it is appropriate that the Court make the consent orders with respect to the property of the parties.
In doing so the Court is making order directed to discharging “moral obligations in priority to any rights in the property of a party to a marriage which arise by testamentary disposition of that party’s property or by any other devolution of that property on that party’s death” and is enforcing that moral obligation with respect to property arising from the marital relationship between the applicant wife and the deceased respondent husband.
In determining, per to s 79(8)(b)(ii), that it is still appropriate to make the consent orders proposed by the applicant wife, and agreed to by the personal legal representatives of the respondent husband, and the second to eighth respondents, the final consideration that the Court must undertake is whether it is just and equitable to make the orders as drafted per s 79(2) of the Act.
Senior Counsel for the wife tendered an exhibit “W1” which provides an illustration of the current asset pool and the financial effect of consent orders proposed by the applicant wife. The consent orders provide that the wife retain 41.58 per cent of the asset pool and enable a restructuring of the corporate entities to effect that division. The consent orders also provide for the tax implications of such a division and the discharge of various liabilities of the parties on a just and equitable basis.
I conclude that in all the circumstances of these proceedings and in view of the significant assets held by the parties it is just and equitable to make the consent orders as proposed and drafted by the applicant wife and agreed to and executed by all parties on proper legal advice.
I certify that the preceding forty-five (45) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Young delivered on 17 June 2011.
Legal Associate:
Date: 17 June 2011
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