Hough & Stenberg
[2003] FamCA 1353
•19 December 2003
[2003] FamCA 1353
FAMILY LAW ACT 1975
| IN THE FAMILY COURT OF AUSTRALIA AT SYDNEY | No. SYF4503 of 2001 |
| IN THE MATTER OF | HOUGH Nicholas Bowman Applicant Husband |
| AND | STENBERG Lynette Mary Respondent Wife |
| Coram: | The Hon. Justice Rose |
| Date of Hearing: | 24 April 2002 |
| Date of Judgment: | 19 December 2003 |
| Date of Orders: | 19 December 2003 |
REASONS FOR JUDGMENT
THE HONOURABLE JUSTICE ROSE
| Appearances: | Mr M Anderson of Counsel instructed by Stewart Cuddy & Mockler, Solicitors, Level 2, 222 Clarence Street, Sydney NSW 2000 (DX 929 Sydney), |
| Mr P Brereton SC instructed by Broun Abrahams, Family Lawyers, |
CATCHWORDS
PROPERTY ADJUSTMENT - JURISDICTION – MAINTENANCE AGREEMENT approved pursuant to section 87 ("the section 87 agreement") after decree absolute - parties re-married and separated - property settlement proceedings then instituted - the section 87 agreement remained operative - whether evidence of contributions in respect of the first marriage of the parties and in relation to the financial matters dealt with in the section 87 agreement is admissible.
REPORTABLE
INTRODUCTION
By her Amended Application (Form 8) filed 2 April 2003 (“the amended application”), Lynette Mary Stenberg (who for convenience I shall refer to as “the wife”) has sought the following interlocutory orders:
“1.That pursuant to Order 16 Rule 9, paragraphs 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32 (as to the second sentence), 33, 34, 25, 26 and 37 of the affidavit of Nicholas Bowman Hough sworn 25 February 2002 be struck out.
2.Alternatively, that pursuant to Order 4 Rule 2, or alternatively pursuant to section 38(2) and High Court Rules Order 35 Rule 2 and/or Order 36 Rule 6, the question of whether the jurisdiction of the court in this proceeding extends to financial matters arising out of the First marriage of the parties in respect of which a decree of dissolution became absolute on 17 July 1988, be determined separately and before the other issues in the proceedings.”
The respondent, Nicholas Bowman Hough (who for convenience I shall refer to as “the husband”) by his Amended Response filed 4 April 2002 (“the amended response”) has sought an order that the amended application be dismissed with costs.
In essence, the wife seeks determination as a preliminary question of law a jurisdiction issue as to whether or not “financial matters” arising out of the first marriage of the parties which was subsequently dissolved by decree absolute may be the subject of pending property settlement proceedings between the parties instituted subsequent to their re-marriage and following separation.
In that regard, the husband has sought to rely upon contributions alleged to have been made by him in relation to the parties’ first marriage and which became the subject of a maintenance agreement entered into by them approved by the Court in accordance with the provisions of section 87(3) of the Family Law Act.
HISTORICAL BACKGROUND
The following are further relevant historical matters.
The parties first commenced to cohabit in about January 1978.
The parties first married on 30 September 1978.
In August 1981 the parties separated.
The marriage was dissolved by decree nisi made on 16 June 1988 which became absolute on 17 July 1988.
On 2 April 1986 a maintenance agreement entered into between the parties embodied in a Deed of that date (“the section 87 agreement”) was approved by the Court pursuant to section 87(3).
During May 1997 the parties recommenced cohabitation.
On 23 August 1997 the parties re-married.
On 26 May 2000 the parties agreed to separate.
On 7 June 2000 the parties physically separated and have continued to live separate and apart from each other since that time.
On 21 June 2001 property settlement proceedings were instituted by the husband in accordance with his Application filed that day.
On 25 October 2001 the wife filed a Response which sought dismissal of the husband’s application; an order causing her to deliver to an agent of the husband certain items of personalty and that he pay her costs of the proceedings.
On 27 November 2001 a decree nisi of dissolution of the marriage was made which became absolute on 28 December 2001.
THE SECTION 87 AGREEMENT
I summarise the following relevant recitals and operative clauses:
(a)The parties were the registered proprietors as tenants-in-common of the property situate at 242 Moore Park Road, Paddington (“the Moore Park Road property”) subject to two mortgages (“the first mortgage” and “the second mortgage”). (Recital “D”)
(b)The parties were the owners of certain personalty in the property situate at 118A Windsor Street, Paddington (“the Windsor Street property”). (Recital “E”)
(c)The husband held shares in Grosvenor Computers (Holdings) Pty Limited (“the company”) and its subsidiaries, two of which were in voluntary liquidation. (Recital “F”)
(d)The parties expressed their desire “to have crystallised once and for all the financial matters in dispute between them”. (Recital “H”)
(e)Each of the parties received independent advice in respect of their rights under Part VIII of the Act. (Recital “I”)
(f)The parties had reached agreement “in relation to such financial matters”. (Recital “J”)
(j)The husband transferred to the wife the whole of his interest in the Moore Park Road property. (Clause 2)
(k)The wife covenanted to deliver to the husband personalty in the Windsor Street property which was the property of the company as well as the husband’s personal effects. (Clause 3)
(l)The wife provided an indemnity to the husband in relation to any claim made upon him arising out of the first mortgage. (Clause 4)
(m)The husband provided an indemnity in favour of the wife in respect of any claim made upon her in respect of the second mortgage and the husband bound himself to discharge that mortgage within four years. (Clause 5)
(n)The parties provided the standard clause that was fundamental to attract section 87 whereby they agreed that the maintenance agreement so reached “relates to the whole of the financial matters between them personally and that it is intended to operate in relation to such financial matters in substitution for any rights of either of the parties under Part VIII of the Act”.[1]
[1] s87(1); Wright and Wright (1977) FLC 90-221 at 76,147 followed in Suters and Suters (1983) FLC 91-365 at 78,455-6
THE APPROVAL BY ORDER OF A MAINTENANCE AGREEMENT PURSUANT TO SECTION 87 OF THE ACT
Section 87(3) gave the Court power to approve a maintenance agreement between the parties which dealt with the financial matters between them.
Section 87(3) of the Act is in the following terms:
“(3)In proceedings for the approval of a maintenance agreement, if the court is satisfied that the provisions of the agreement with respect to financial matters are proper, the court shall, by order, approve the agreement, but if the court is not so satisfied, it shall, by order, refuse to approve the agreement.”
Section 4(1) defines “financial matters” as follows:
“In relation to a party to a marriage, means matters with respect to:
(a)the maintenance of one of the parties;
(b)the property of those parties or of either of them; or
(c)the maintenance of children of the marriage.” {emphasis added}
It is not a matter of controversy in these proceedings that the section 87 agreement relates to “the financial matters” of the parties in accordance with section 4(1)(b).
It is well established that an approved maintenance agreement between parties to a marriage in accordance with the provisions of section 87(3) has the following legal consequences:
(a) The maintenance agreement is binding between the parties.
(b)It operates as a bar to the successful institution of subsequent proceedings for property settlement and spousal maintenance provided that in relation to the latter section 87(4A) of the Act has been complied with.
(c)The order approving the maintenance agreement may only be revoked on the establishment of one of the grounds set forth in sections 87(8) of the Act or following the making of a declaration provided for in section 87(11)[2].
[2] Suters and Suters (1983) FLC 91-365 at 78,446
In Perlman v Perlman, Wilson J held:[3]
“Once the approval is given, s. 87(3) takes effect. Unless and until the approval is revoked, no court having jurisdiction under the Act may make any order with respect to those financial matters which are dealt with in the agreement. Save for the one exception referred to in the sub-section - which is contained in s. 87(9) - s. 87(3) is tantamount to a clear declaration that there can be no further proceedings under the Act in relation to the financial matters contained in the approved agreement.” {emphasis added}
[3] (1984) 155 CLR 474
THE CURRENT PROPERTY SETTLEMENT PROCEEDINGS
In his Application filed 21 June 2001, the husband sought orders for property settlement. The orders so sought required the wife to pay to the husband $200,000.00 and to deliver to him or his agent certain paintings and other items of personalty.
In support of his application for property settlement the husband swore an Affidavit on 25 February 2002 filed on that day. In that affidavit it is clear by its structure and content that a substantial part of it is devoted to historical matters and contributions alleged to have been made by the husband during the period of what is described as “initial cohabitation of the parties” and his financial position at the date of the section 87 agreement.
The balance of the affidavit sets forth relevant history and alleged contributions during the “second period of cohabitation” which commenced in May 1997 as well as “history since second separation in June 2000”.
It is that part of the husband’s affidavit which deals with the “initial cohabitation of the parties” and the financial position of the parties at the date of the section 87 agreement which is under challenge by the wife on the basis that the Court lacks jurisdiction to hear the pending property settlement proceedings with regard to receiving those matters into evidence.
RELEVANT AUTHORITIES
Counsel have referred me to a number of judgments of the Full Court and at first instance which essentially are in two categories.
The first category is in respect of property settlement proceedings instituted subsequent to the approval of a maintenance agreement pursuant to section 87.
The second category is in regard to proceedings subsequent to orders for property settlement having been made and where one of the parties has sought to set aside those orders and substitute different orders for property settlement in accordance with section 79A(1) or section 79(A)(1A).
It is trite that the principles upon which an order was made approving a maintenance agreement pursuant to section 87 are different to those for the purpose of making orders for property settlement in accordance with section 79.
Likewise, the grounds for revoking an order for approving a maintenance agreement pursuant to section 87 are different in part to those which may be relied upon for the purpose of setting aside or varying orders for property settlement.
Consequently, in my view it is the first category of cases that are particularly relevant in these proceedings.
I will now proceed to consider those cases.
In Banhidy and Banhidy[4] the parties had entered into a maintenance agreement which was approved pursuant to section 87 of the Act. The parties whilst still married, subsequently resumed cohabitation and then separated again. The marriage was dissolved by decree nisi. The wife then commenced property settlement proceedings. The husband sought an order that such proceedings be dismissed for want of jurisdiction. The husband was successful. The wife appealed. The Full Court dismissed the appeal. In the course of doing so, Evatt CJ held:
“The Act is clear. So long as the agreement remains on foot, no property proceedings can be commenced. While there may be circumstances relating to a resumption of cohabitation which could amount to a mutual rescission or waiver or which could estop a party from denying consent to such rescission or waiver, the facts here alleged fall far short of this.”
[4] Banhidy and Banhidy (1983) FLC 91-302 at 78,065
In Drew and Drew[5], Fogarty J gave judgment in proceedings in which the husband sought dismissal of the wife’s application for property settlement on the basis that the Court lacked jurisdiction to hear such proceedings given that there had been an order pursuant to section 87 approving a maintenance agreement entered into between the parties. The maintenance agreement had been carried out. The parties reconciled and subsequently engaged in various financial transactions together. The parties separated again and the wife commenced the property settlement proceedings that were under challenge. At all relevant times the parties were not divorced.
[5] Drew and Drew (1985) FLC 91-601
Fogarty J held that:
“Whilst the approval of the agreement stands there is no power or jurisdiction in this Court with respect to the financial matters dealt with in the agreement. That conclusion is clear from terms of sections 87(1) and 87(4)(b).”
His Honour found that “financial matters” dealt with in the agreement covered the whole area of potential operation of Part VIII of the Act. He proceeded to refer to and rely upon the judgment of Wilson J in the High Court in Perlman[6].
[6] ibid, (1984) FLC 91-500 at 79,063
As a consequence of the 1983 amendments to the Family Law Act, the grounds upon which the Court may revoke approval of a maintenance agreement were set forth in section 87(8) as well as section 87(11). The latter provided for the validity, enforceability and effect of an approved maintenance agreement to be determined according to principles of law and equity which are relevant to contracts. That sub-section had particular relevance to a ground available to seek revocation of an order for approval of an agreement as set forth in section 87(8)(c), namely that “the agreement is void, voidable or unenforceable”.
His Honour concluded that having regard to the way in which the proceedings were conducted before him, a declaration had been sought pursuant to section 87(11) and a consequent order for revocation for approval of the maintenance agreement pursuant to section 87(8)(c).
His Honour held that given the facts as he found them relating to the revival of the parties’ financial relations and the conduct of their affairs, the parties had rescinded the maintenance agreement. He made a declaration pursuant to section 87(11) and held that the ground pursuant to section 87(8)(c) had been established. Accordingly, the approval of the maintenance agreement was revoked.
I will now turn to what I have described as the second category of cases.
In B and B[7] the Full Court was concerned with the interpretation of sub-sections 79A(1)(a), (b) and (c) in circumstances where the wife made an application to set aside property settlement orders pursuant to section 79A. The parties marriage had previously been dissolved and after property settlement orders were made they were reconciled. They engaged in joint financial transactions before separating again.
[7] B and B (1985) FLC 91-610
In Kowalski[8] the Full Court’s judgment related to proceedings that had been instituted pursuant to section 44(3) of the Act. The parties previous marriage had been dissolved. They subsequently reconciled before separating for a second time. They did not remarry. The Full Court held that in the circumstances of those proceedings, contributions made whether before, during or after marriage fell within Part VIII of the Act.
[8] Kowalski (1993) FLC 92-342
In McCabe and McCabe[9] the parties had obtained orders for property settlement subsequent to which they reconciled before finally separating. The wife made an application pursuant to section 79A(1A) and contended that there had been an implied consent by the husband to consent orders being set aside. The Full Court considered the circumstances in which as a matter of law consent can be implied by conduct to enable the Court to set aside property settlement orders and then proceed to make other such orders.
[9] McCabe (1995) FLC 92-634
In Sommerville and Sommerville[10] the Chief Justice sitting at first instance found that the parties by their conduct had consented to the setting aside of consent orders for property settlement. He applied the Full Court’s decision in McCabe.
[10] Sommerville (2000) FLC 93-042
CONCLUSION
I have concluded that with respect, the judgments in what I termed the second category of cases have little relevance to the issues in these proceedings.
As distinct from these proceedings, in which there has been an order approving the section 87 agreement, those cases involved either proceedings under section 79A in which orders were sought to set aside prior property settlement orders or an application for leave to commence proceedings pursuant to section 44(3). Different principles apply in those cases to the principles which are relevant in the proceedings before me.
I should emphasise that contrary to any of the judgments to which I have been referred, whether in the first or second category of cases, the following relevant facts do not form part of the background in any of the cases in either category:
(a) The parties in these proceedings re-married subsequent to the section 87 agreement.
(b)No application has been made by the husband for an order revoking the approval of the section 87 agreement on any of the grounds contained in section 87(8).
(c)No application has been made by the husband for a declaration pursuant to section 87(11).
(d)No submissions were made that were directed to section 87(8) and/or section 87(11).
It is not disputed that the order approving the section 87 agreement continues to be operative. In those circumstances “there is no power or jurisdiction in this Court with respect to the financial matters dealt with in the agreement”.[11] {emphasis added}
[11] ibid, Banhidy; Perlman; Drew
That is not to say that the husband’s pending application for orders for property settlement fails for want of jurisdiction. On the contrary, it represents a matrimonial cause as it is a proceeding between parties to a marriage with respect to the property of these parties or either of them, being proceedings “arising out of the marital relationship” as provided in section 4(1)(ca). Indeed, the contrary was not submitted by Senior Counsel for the wife.
The relevant marriage is the re-marriage of the parties which occurred after the section 87 agreement.
It is also not disputed that the husband may adduce evidence in relation to “financial matters” other than “the financial matters dealt with in the agreement” {emphasis added}.[12]
[12] section 87(1)
It follows that I accept the submissions made on behalf of the wife that the Court lacks jurisdiction to entertain proceedings that relate to the financial matters dealt with in the section 87 agreement.
Accordingly, those paragraphs of the Affidavit of the husband sworn 29 February 2002 which relate to the cohabitation of the parties prior to the section 87 agreement and in the period between the parties’ separation and the approval of the section 87 agreement are inadmissible.
I will make the order as sought by the wife in paragraph 1 of the amended application.
ORDERS
The order I make is:
1.That pursuant to Order 16 Rule 9, paragraphs 8, 9, 10, 11, 12, 13, 14, 15, 16, 17, 18, 19, 20, 21, 22, 23, 24, 25, 26, 27, 28, 29, 30, 31, 32 (as to the second sentence), 33, 34, 25, 26 and 37 of the affidavit of Nicholas Bowman Hough sworn 25 February 2002 be struck out.
2.That further directions be made at the earliest convenient time for the further conduct of the proceedings and for the hearing of the application of the wife for an order for costs.
I certify that the preceding 58 paragraphs
are a true copy of the reasons for judgment
delivered by the Hon. Justice Rose
……………………………..
Associate
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Family Law
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Statutory Interpretation
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Jurisdiction
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Statutory Construction
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