Higginson and Higginson and Anor

[2013] FamCA 902

FAMILY COURT OF AUSTRALIA

HIGGINSON & HIGGINSON AND ANOR [2013] FamCA 902

FAMILY LAW – PRACTICE AND PROCEDURE – Orders – Consideration of r 17.02 of the Family Law Rules 2004 (the slip rule) –Whether "slip rule" applies.

Family Law Act 1975 (Cth)
Family Law Rules 2004 r 17.02

Burrell v R (2008) 238 CLR 218
In the Marriage ofBailey (1990) 14 Fam LR 125
Vance & Vance (2011) FLC 93-461

APPLICANT: Mr Higginson

FIRST RESPONDENT: Ms Higginson

SECOND RESPONDENT: Ms I

FILE NUMBER: SYC 1824 of 2011

DATE DELIVERED: 19 November 2013

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Aldridge J

HEARING DATE: 18 October 2013 and by written submissions

REPRESENTATION

COUNSEL FOR THE APPLICANT:	Mr Kearney SC
SOLICITOR FOR THE APPLICANT:	Reid Family Lawyers

SOLICITOR FOR THE FIRST RESPONDENT: Goldrick Farrell Mullan Solicitors

SOLICITOR FOR THE SECOND RESPONDENT: Champion Legal

Orders

1. That the parties are directed to provide a short minute of order to give effect to these reasons.

2. That the matter is stood over before Justice Aldridge at 10am on Friday 22 November 2013 for mention.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Higginson & Higginson has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYC 1824 of 2011

Mr Higginson

Applicant

And

Ms Higginson

First Respondent

And

Ms I

Second Respondent

REASONS FOR JUDGMENT

Introduction

1. This is an application by Mr Higginson (“the husband”) seeking, pursuant to the “slip rule”, amendments to orders made by me on 20 February 2013 in proceedings by him against Ms Higginson (“the wife”).

2. It is submitted, in the events that occurred, the property division that will result from the orders that were made will be one that was not clearly intended by the orders. 

3. On 20 February 2013 I relevantly made the following orders:

   29.      Pursuant to s 79:

   (i)the wife shall, within one hundred and twenty (120) days, pay to the husband the sum of $213 778.00;

   (ii)the husband and wife shall each retain the motor vehicle in their possession and the husband shall retain the bicycles in his possession.

   (iii)the husband and the wife shall each retain the household contents in the premises in which they presently reside;

   (iv)upon the payment referred to in Order 28(i) above being made the husband is to take all necessary steps to:

   (a)  transfer his interest in [W Street, Suburb C], being Folio Identifier …, to the wife;

   (b)  the wife is to take all reasonable steps to refinance the property and assets remaining with her so as to remove the husband as a borrower and, in any event, to indemnify the husband in respect of any indebtedness or liability he may have with respect to mortgages he has entered into with respect to those properties;

   (v)the wife is to take all necessary steps to sell the properties at [P Street, Suburb C] being Lots … and … in Strata Plan … and, for the avoidance of doubt, [G Street, Suburb N] being Folio Identifier …;

   (vi)the parties are to take all necessary steps to sell the property at [A Street,  Suburb B], being Folio Identifier …;

   30.That for the purpose of implementing the sales referred to in Order 29 above the parties shall do the following:

   i.the parties shall list the properties for sale by public auction at the earliest possible date at a price to be agreed between the parties and failing such agreement, at a price nominated by the President of the NSW Division of the Australia Property Institute or his/her nominee;

   ii.with such agent as the parties may agree to appoint and failing agreement as to the agent within fourteen (14) days to any such agent nominated by the President of the NSW Division of the Australian Property Institute, (“the agent”), the costs of and incidental to such appointment to be borne equally by the parties as and when same fall due;

   iii.the parties shall each cooperate in every way with the agent including (without limiting the generality of the foregoing):

   (a)making the keys available to the agent;

   (b)allowing inspection of the properties at all reasonable times requested by the agent;

   (c)doing or saying nothing to hinder or prevent a sale being effected;

   (d)ensuring that the property including the grounds are in a neat and tidy condition at the time of inspection by the agent and prospective purchasers; and

   (e)signing all documents requested by the agents in relation to the listing for sale of the home except contracts or agreements for sale which have not been authorised by the parties’ solicitors.

   iv.the parties shall each execute contracts for sale in the forms prepared by the solicitors having the conduct of the sales at a price agreed upon by the parties or, in the absence of any agreement, at or above the prices nominated by the President of the NSW Division of the Australian Property Institute;

   v.the parties shall do all things and sign all documents necessary to instruct a solicitor or licensed conveyancer within seven (7) days of the date of these Orders to have the primary conduct of the sales on behalf of both parties and failing agreements such solicitor or conveyancer as nominated by the President of the NSW Division of the Australian Property Institute and any costs properly paid to the solicitors will be and form part of the legal costs of sales and be deducted from the proceeds of sale;

   vi.neither party may confer on any agent without the consent of the other party any right any sole or exclusive agency in respect of the properties or to any commission; and

   vii.if the agent shall certify in writing to the parties’ solicitors that it is reasonably necessary for the work specified in a notice of repairs to be carried out to the properties so as to assist in effecting a sale and provided the cost of any such work is less than $500.00 either party may cause such work to be carried out and the costs shall be recoverable by that party from the proceeds of sale.

   31.That the proceeds of sale of the properties referred in orders 29(v) and 29(vi) is to be disbursed as follows:

   (i)   in payment of usual sale costs;

   (ii)in discharge of any mortgages or other encumbrances over the properties;

   (iii)in payment of any capital gains tax arising out of the sale of the properties and to enable this to be paid a sum is to be set aside and retained by the wife and then paid when the capital gains tax due and for that purpose the sum to be retained is to be calculated by the wife’s accountants without taking into account CGT Retirement Exemption or SB Roll-Over with any surplus to be distributed in accordance with Order 31(iv); and

   (iv)the balance as to 62.5 percent to the wife and 37.5 percent to the husband.

The Orders Sought

1. Pursuant to Rule 17.02 of the Family Law Rules 2004 the husband seeks the following orders pursuant to his Amended Application in a Case filed 4 October 2013:

   10.That the sale proceeds of each of the [Suburb N] property, the [A Street] property and the [Suburb C] property deposited to a controlled money account in accordance with these Orders be distributed forthwith upon receipt in the following manner and priority:

   10.1in payment to the husband of 37.5% of such monies, if any, as are paid upon the sale of the [Suburb C] property, to the National Australia Bank in discharge/reduction of facilities secured on or by reference to the title of such property in excess of the amount of $675,500;

   10.2in payment to the husband of such monies, including interest thereon in accordance with the Family Law Rules, as are outstanding to the husband in accordance with order 29(i) of the Orders of 20 February 2013; and

   10.3    in payment of any balance then remaining to the wife.

   11.That pursuant to Rule 17.02 of the Family Law Rules 2004 the Orders of 20 February 2013 be varied to include the following Orders:

   11.1that the wife shall forthwith, and in any event prior to the sale of the [Suburb C] property, do all things necessary, including signing all documents and authorities required, to discharge all liability secured over or by reference to the title of the [Suburb C] property in excess of the amount of $675,500;

   11.2that forthwith upon the sale of the [Suburb C] property, the wife shall pay to the husband 37.5 % of such monies, if any, as are paid upon the sale of the [Suburb C] property to the National Australia Bank in discharge/reduction of facilities secured on or by reference to the title of such property in excess of the amount of $675,000; and

   11.3that the wife shall forthwith pay to [Mr D] the sum of $26,000 and shall indemnify the husband and keep him indemnified in respect of all liability to [Mr D] for the purchase by the parties of a motor home. 

   12.In the alternative to paragraph 11.3 herein, pursuant to rule 17.02 of the Family Law Rules 2004, the Orders of 20 February 2013 be varied to include the following Orders:

   12.1that order 29(i) of the Orders of 20 February 2013 be varied to omit $213,778 where appearing and insert in lieu thereof “$239,978”; and

   12.2that the husband shall forthwith pay to [Mr D] the sum of $26,000 and shall indemnify the wife and keep her indemnified in respect of all liability to [Mr D] for the purchase by the parties of a motor home.

The Principles to be Applied

1. Rule 17.02 (2) provides that a Registrar may rectify an error that appears obvious on reading an order. A party or the Registrar may refer the order to the Judicial Officer who made it for further consideration. In that case Rule 17.02(5) applies. It states:

   A judicial officer may, after giving each party a reasonable opportunity to be heard, rectify a suspected error referred to the judicial officer. 

2. There have been many cases in which the power of a court to amend final orders has been considered.  In Burrell v R (2008) 238 CLR 218 the High Court said at [21]:

   The power to correct the record so that it truly does represent what the court pronounced or intended to pronounce as its order provides no substantial qualification to that rule.  The power to correct an error arising from accidental slip or omission, whether under a specific rule of court or otherwise, directs attention to what the court whose record is to be corrected did or intended to do.  It does not permit reconsideration, let alone alternation, of the substance of the result that was reached and recorded. (Reference omitted)

3. In Vance & Vance (2011) FLC 93-461 Boland J said at [17]:

   Two essential criteria have been identified where the slip rule may be invoked:

   ·where there is a clerical mistake; and

   ·where there is an accidental slip or accidental omission. 

4. Thus, there can be amendment to the orders where there is a clear and obvious error or omission or where the orders do not express the intention of the court but “that power does not extend to supplementing the orders made by a further order on a point which was not argued, considered at or decided at the hearing” (per Mullane J in The Marriage of Bailey (1990) 14 Fam LR 125 at 128), or where the further order will involve the further consideration of the court or a re-exercise of its discretion.

The application in relation to W Street, Suburb C

1. At the time of the hearing the parties owned four properties.  One of them was the subject of an order for sale made by Fowler J but that order had not yet been complied with.  I found that the wife should retain the former matrimonial home situate at W Street, Suburb C (“the W Street property”) and the other three properties should be sold.  The wife was the owner of a real estate agency which had, as its major asset, a rent roll.  Pursuant to the orders the wife was to retain that business valued at $1,115,000. 

2. In paragraphs [138], [140] and  141] of the Judgment I said:

   138.After sale and payment of the costs of sale, mortgages and capital gains tax, the balance [after the sale of the properties being sold] is to be disbursed as to 62.5 percent to the wife and 37.5 percent to the husband.

   …

   140.I have found that the wife should retain the benefit of her business and the family home.  That will therefore mean there must be a payment to the husband so as to ensure he will receive 37.5 per cent of all of the net assets.  This means also taking into account that the liability of those assets and also the debts to MasterCard and the paternal grandfather.  The assets not being sold are:

The assets not being sold:
W Street Suburb C	$900,000
M Pty Ltd	$1,115,000
Van	$6,000
4WD vehicle	$20,000
Home contents (W Street)	$10,000
Home contents (A Street)	$1,500
Bicycles	$9,000
Wife’s superannuation	$15,121
Husband’s superannuation	$19,860
Total	$2,096,481
Liabilities
W Street Suburb C	$679,413
M Pty Ltd	$675,500
MasterCard	$48,000
The paternal grandfather	$26,000
Total	$1,428,913
Balance	$667,568

141.I therefore propose to allocate $250,338.00 to the husband (being 37.5% of the net assets not being sold) and $417,230.00 to the wife (being 62.5% of the balance of the assets not being sold).  As the husband is retaining assets with a value of $36,560.00 the amount to be paid to him by the wife to achieve this distribution is $213,778.00. (As per original)

The husband’s submissions

M Pty Ltd Liability

1. The husband submits that the clear intention of the judgment was that the wife would retain the W Street property and her interest in the business M Pty Ltd but be liable for the liabilities that attached to them namely $679,413 and $675,500 respectively.  It is only by allocating those liabilities to those assets, that the balance in payment of $213,778 to the husband is achieved.  The clear inference, therefore, is that the wife, having paid that sum to the husband and retaining those assets is to bear the burden of those liabilities identified above as attaching to them, to the exclusion of the husband. 

2. So much seems clear and obvious from the judgment.  This was reflected in the terms of Order 29(iv)(b).

3. The difficulty that arises is that “the entirety of the NAB facilities of the M Pty Ltd are cross-collateralised such that the entirety of those facilities will be discharged upon the sale of the Suburb C property” (husband’s submissions). This is a reference to a property at P Street, Road, Suburb C and not the W Street, Suburb C property.

4. The effect of this is that the wife will receive the M Pty Ltd Limited without the burden of $675.000 as foreshadowed in the list of assets to be retained set out in the judgment.  Thus, it is submitted, without a change to the orders, the husband will, in fact, receive 9.7 percent of the assets and not 37.5 percent. 

5. In opposition to these orders the wife submits that there is a real disagreement or difference about the orders that should be made so that it is inappropriate to apply the slip rule.  The wife submits:

   Your Honour found (RFJ paragraph 23) that the parties were indebted to banks in the sum of $3,129,902 at the time of the trial.  It is submitted that the Applicant Husband cannot demonstrate, by reference to anything in the reasons for judgment, or elsewhere, that the failure to make the order now sought with respect to the payment to the NAB Bank was that Your Honour overlooked, omitted, or otherwise accidentally or inadvertently failed to make such an order.

   It was said that the order for the sale of the properties (Order 29(v)) could not be clearer.

6. The clear intention of the judgment was that the wife should receive 62.5 percent of the property available for distribution.  The balancing sum she was to pay the husband to make that adjustment in relation to the assets that were not being sold, was derived on the basis that she would be retaining the W Street property and the M Pty Ltd and being liable to pay the mortgage on the W Street property of $679,413 and $675,500 in relation to the M Pty Ltd.  That seems to be abundantly clear. 

7. Order 29(iv)(b), as is clear from its terms, not limited to the W Street property, and was intended to include the liability in relation to M Pty Ltd.

8. The orders, however, overlooked the cross-collateralisation of the National Australia Bank and that the $675,500 liability would be discharged, in whole, or in part, upon the sale of P Street, Suburb C (“the P Street property”). 

9. That is to say, there was a clear omission from the orders which failed to give effect to the intention of the court.

10. Therefore, to give effect to the intention of the court as to the distribution of the property it is appropriate to make an order so that the burden of the liability referred to in the judgment will be borne in the proportion determined by the court in the event that the M Pty Ltd debt is required to be paid out of the P Street property or not.

11. To do so will not require a reconsideration of the case or a re-exercise of discretion.  It is the correction of a clear omission in the orders.

12. The orders proposed by the husband go further than that.  As the wife submits, even if they may be properly described as mechanical orders, they were not proposed by the husband at the hearing.  To give effect to them would require further consideration of the nature of the orders actually made.  That cannot be done.

13. The appropriate order may be to add to Order 29(i) the following:

    AND upon the sale of [P Street, Suburb C] pursuant to Order 29(v) below AND in the event the mortgage to the National Australia Bank is reduced and a sum of less than $675,500 remains owing by the wife she shall pay a further sum to the husband which is to be 37.5 percent of the difference between $675,500 and the amount of the liability assumed by her after the discharge of the NAB mortgage.

    I will, however, give the parties the opportunity to consider the form of an appropriate order and will direct them to bring in Short Minutes of Order to deal with the omission from the earlier orders.

$26,000 Loan

1. The debt to Mr D was dealt with in paragraph 100 of the Judgment as follows:

   100.I will include as a liability of the parties the sum of $26,000.00 which seems to be the amount owing by the parties to the paternal grandfather with respect to the purchase of the motor home.  It appears in both parties’ balance sheets.

2. It seems, however, that the adjusted payment derived of $213,778 was derived by allocating that liability to the wife. 

3. The husband therefore submits that such a course required the court to make an order that the wife bear responsibility for the payment of that debt as between the parties and to indemnify the husband against any liability he might have.  Alternatively, if the court intended that such liability be attributed to the husband, which apparently it was not, then the adjustment payment to be made by the wife itself needs to be adjusted to reflect that the husband would then otherwise be receiving net assets totalling $10,360 as opposed to $36,360.

4. The wife submits:

   The Wife’s Balance Sheet was received as an aide memoire and does not form part of the evidence before the Court at hearing to the extent that it constitutes a concession by the Wife as to it being an agreed liability, and more particularly an asserted liability that had attached to it a requirement for repayment such that it should be considered as forming part of the relevant assets and liabilities.

   The wife’s evidence, by way of closing submissions was that “he gave [Mr Higginson] $160,000 to buy a motor home.”  Such a submission cannot constitute a concession of a joint liability or any form of liability owed to Mr D.

   Nothing was put to the Respondent Wife by this Honourable Court nor by learned counsel for the Applicant Husband as to how the Court should consider treating the balance of money provided by [Mr D] for the purchase of a motor home, noting also that it was the Wife’s position that the Applicant Husband had the use of and unilateral control of the sale of the motor home post separation.

1. There is force in the wife’s submissions.

2. The position in relation to the payment of $26,000 cannot be regarded as sufficiently clear or obvious that would justify an amendment to the orders. The judgment indicates that the $26,000 was a joint liability but it seems to have been attributed to the wife in the balance sheet. To the extent there was an intention expressed in the judgment it was an intention the debt would be paid by the parties’ joint funds. If that was not an appropriate finding or if the orders do not properly reflect that finding that is not a matter for the application of the slip rule as appears in Rule 17.02.

3. According, the only order that will be made is the order identified earlier.

I certify that the preceding thirty (30) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Aldridge delivered on 19 November 2013.

Legal Associate: 

Date:  19 November 2013