Huish and Huish - [2008] FMCAfam 68

FEDERAL MAGISTRATES COURT OF AUSTRALIA

HUISH & HUISH

[2008] FMCAfam 68

FAMILY LAW – Enforcement of orders for property – payment of interest – was loss attributable to actions of husband – interest and damages – application of s.117B.

Family Law Act 1975, ss.4, 79, 117B

Cross v Beaumont [2007] FamCA 123
JEL v DDF [2001] FamCA 907
Jones & Jones (1990) FLC 92-143

Applicant:

MS HUISH

Respondent:

MR HUISH

File Number:

SYC 3850 of 2007

Judgment of:

Altobelli FM

Hearing date:

19 November 2007

Date of Last Submission:

19 November 2007

Delivered at:

Sydney

Delivered on:

7 February 2008

REPRESENTATION

Solicitor Advocate for the Applicant:

Mr Twigg

Solicitors for the Applicant:

Adrian Twigg & Co

Counsel for the Respondent:

Mr Jackson

Solicitors for the Respondent:

Wight & Strickland

ORDERS

The parties are to forthwith do all things necessary to implement the orders for property settlement made 30 January 2004 save as otherwise provided in these orders.
Out of the husband’s share of the funds to which he is entitled to receive pursuant to the orders made 30 January 2004, he is to first pay to the wife the following sums:
(a)$3,500.00; and
(b)interest on $3,500.00 calculated in accordance with the Family Law Rules 2004 and calculated from 30 March 2004; and
(c)$5,000.00; and
(d)interest on $5,000.00 calculated in accordance with the Family Law Rules 2004 and calculated from 30 June 2004.
Leave is granted to the parties to re-list this matter before me at any time prior to 15 March 2008 as regards interpretation, implementation and enforcement of these orders.

IT IS NOTED that publication of this judgment under the pseudonym Huish & Huish is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

FEDERAL MAGISTRATES
COURT OF AUSTRALIA AT
SYDNEY

SYC 3850 of 2007

MS HUISH

Applicant

And

MR HUISH

Respondent

REASONS FOR JUDGMENT

Introduction

This application is brought by the wife, Ms Huish. In effect it is all about compensating her for the loss she claims she sustained as a result of an alleged breach by her husband of orders for alteration of property interests made by the Family Court of Australia on 30 January 2004. The respondent is Mr Huish, the husband. He is a carpenter by trade. The applicant argues that losses she has suffered were as a result of acts or omissions of the husband, and that they are recoverable pursuant to s 117B of the Family Law Act. The husband denies that any losses that might have been incurred were attributable to any act or omission on his part, and he disputes that s.117B empowers the Court to make the orders sought by the wife.

Background

The parties married in 1988, separated on 28 August 2000 after cohabiting for 12 years, and were divorced on 22 April 2003. They have two children, K who is now 16 years old, and M now 12 years old. The mother has now repartnered with Mr L. For all practical purposes, the only asset of the marriage was their home at Property [A], which was subject to a mortgage to the NAB. The husband remained in occupation of the home at separation and, indeed, right up until the settlement of the sale of the home in late 2007.
As part of their property settlement the parties agreed to refinance their NAB mortgage (which had a balance of $58,000 at the time) with the ING Bank. They borrowed $115,000 which was to be used as follows:
a)To discharge the NAB mortgage: $58,000;
b)To effect repairs to the driveway to the home: $7,000;
c)To pay to the wife $50,000 as part of the property settlement.
The consent orders dated 30 January 2004 provided as follows:
1)That within 30 days of the making of the orders herein the husband pay to the wife the sum of $50,000.00.
2)The husband is until the sale of the [A] property pursuant to order 3 herein granted the right to occupy the [A] property and whilst in occupation he is hereby liable to pay all rates and taxes on the [A] property as they fall due and will meet the mortgage repayments as they fall due both on “the principle sum” and on the “Home Loan Saver”. The husband’s right to occupy the [A] property is subject to any need the wife may have prior to the sale of the [A] property to return to occupation together with the children and the wife will not during such period of occupation apply for an Apprehended Domestic Violence Order against the husband.
3)That on or before 1 December 2005 the husband and wife shall do all acts and things and sign all documents necessary to cause the sale of the [A] property by private treaty and in particular shall:
a.place the [A] property with an estate agent in the area (hereinafter called “the agent”) as agreed between the parties and failing agreement an agent nominated by the President of the Real Estate Institute or his nominee for sale by private treaty at the earliest possible date at a sale price to be agreed between the parties and failing agreement at a sale price recommended by the agent.
b.execute all documents requested by the agent for the sale of the [A] property by private treaty.
c.request the agent to recommend a price to be placed on the [A] property for the purpose of the sale and accept such recommended price.
d.pay to the agent equally any sum requested for advertising expenses in relation to the sale.
e.give such instructions as are necessary to a solicitor for the preparation of a contract for sale and for the contract for sale to be made available to the agent prior to sale.
f.accept the advice of the agent as to the acceptance of a price less than the reserve price.
g.execute the contract for sale.
h.cooperate in every way with the agent in relation to the sale of the [A] property including making a key available, allowing inspection of the [A] property at all times requested by the agent and ensuring that the [A] property is in a neat and clean condition at the time of inspection by prospective purchasers.
i.execute all other documents necessary to complete the sale.
4)That on the [A] property being listed for sale pursuant to the orders the husband shall do all acts and things to effect a sale including making a key available, allowing inspection of the [A] property at all times requested by the agent and ensuring that the [A] property is in a neat and clean condition at the time of inspection by prospective purchasers.
5)Upon the sale of the [A] property the proceeds of sale be paid in the following manner and priority:
a.Payment of agent’s commission and sale expenses if any due on the sale of the [A] property.
b.Payment to I.N.G. Bank Limited of all moneys outstanding for the principal sum registered on the title of the property.
c.Payment of legal costs on the sale of the [A] property.
d.Water rates, Council rates and other applicable conveyancing adjustments.
e.The balance to be distributed in the following order and priority:
i. one half to the wife;
ii. the remaining half after repayment of the Home Loan Saver be paid to the husband.
6)That unless otherwise specified in these Orders and except for the purpose of enforcing the payment of any money due under there or subsequent Orders:
a.each party be declared the sole legal and beneficial owner, to the exclusion of the other party, of all other property (including chose-in-action) registered in his or her name or in his or her possession or control;
b.each party hereby foregoes any claim they may have to any superannuation benefits belonging to or earned by the other party; and
c.each party be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to there Orders.
7)That the husband do all acts and things to transfer to the wife any right, title and interest he may have in the outdoor furniture, the wash table with the marble top and blue tiles and that the wife have access to the [A] property to collect such items by arrangement with the husband prior to finalization of the sale of the [A] property.
8)That with the exception of the items in Order 7 hereof the husband retain the furniture contained in the [A] property.
9)That in the event that either party refuses or neglects to comply with the provision of any order herein the Registrar of the Family Court at Sydney is hereby appointed pursuant to Section 106A of the Family Law Act to execute all deeds and documents in the name of either the husband or the wife and do all acts and things necessary to give validity and operation to the said order and the defaulting party shall pay the other party’s costs of and incidental to obtaining the Registrar’s signature on a solicitor/client basis.
There are a number of important features of these orders that should be noted:
a)Both parties were legally represented at the time of the making of these orders and, indeed, the husband was represented by the same solicitor at the present hearing.
b)Order 2 grants to the husband a conditional right of occupation of the home.
c)Order 3 required the sale of the home on or before 1 December 2005.
d)Order 9 specifically deals with the possibility of non-compliance.
e)No enforcement proceedings were commenced prior to 29 May 2007.
It is common ground that settlement of the sale of the home took place on 2 November 2007, and that the home was sold for $685,000. After payment of the various expenses of the sale and discharge of the ING mortgage the net sale proceeds of $558,145.32 were paid into a controlled monies account. At the conclusion of the hearing, the parties agreed that the wife should receive $93,344.41 out of the controlled monies account. The balance remaining is, therefore, $464,800.91. The wife contends that she should receive most of these funds.

Summary of Affidavit Evidence

In the wife’s affidavit filed 29 May 2007 the main allegations that she makes are as follows:
a)The husband convinced her that they should not sell the home straight away because he could renovate the home with a view to enhancing its value. He would remain in the home to undertake this work.
b)The husband agreed to repair the driveway and they borrowed $7,000 for this purpose. He has not done so but he did have access to the $7,000.
c)Even though it is not reflected in the consent orders itself, the parties agreed that the husband would, as owner/builder, undertake specified renovation work.
d)In February 2004, shortly after the consent orders were made, a tree fell on the side of the home during a storm, causing substantial damage to the house. As a result of negotiations with their insurer, NRMA, the parties obtained a cash payment of $28,670 on the basis that the husband would himself repair the roof.
e)Part of the NRMA monies were applied for the husband’s personal uses, and he exerted pressure on the wife to give him access to the funds.
f)Neither the roof repairs, nor the renovations, were fully completed, and the house fell into disrepair.
g)Throughout 2005, 2006 and into 2007 the wife raised with the husband the lack of progress of work on the home, and the need to list it for sale.
In the husband’s affidavit filed 25 July 2007 the main allegations he makes are as follows:
a)The wife was in no rush to sell the home before 2007 because she felt the property market was slow.
b)His agreement with the wife was not to renovate the house as she asserts, but rather that he would “tidy the property up before it is sold”.
c)When the tree fell on the property, they collected the insurance payment, and the husband agreed to “finish the property as best we can and then we market the property”.
d)He denies that $7,000 was drawn on the mortgage to complete the driveway and says it was released to buy materials to repair the property. The driveway has not been completed.
e)Asbestos was found in the property when undertaking the roof repairs, and this delayed and complicated the repairs.
f)He agrees that he was otherwise delayed in completing the work he undertook to do, and that as at the time of his affidavit the roof had still not been repaired.
g)He denies that he exerted any duress on the wife.
h)Apart from the asbestos problems with the house, it also suffers from white ants throughout the walls and ceilings.
i)He has been paying the mortgage on the property.
The wife filed an affidavit in reply on 31 July 2007, in which she provides further evidence of the discussions with the husband about repairing the home. She denies that she was reluctant to sell the home because of a slow market. The wife’s partner, Mr L, provides corroborating evidence in his affidavit filed 31 July 2007.

The Oral Evidence of the Parties

Both parties gave oral evidence and were cross-examined. Neither party was impressive or created a good impression during their oral evidence.
I found the wife’s evidence that she was pushed into the settlement by her husband, and subsequently coerced into agreeing to let him receive money, quite unconvincing. She was at all relevant times legally represented as well as being in a new relationship, both factors that would have contra-indicated the coercion she asserts. Her insistence that there was an agreement about doing renovations as opposed to merely tidying the property up was unconvincing. She insisted that the husband had agreed to this on more than one occasion in front of other people, but could produce no evidence from these other people despite the significance and importance of this evidence. She was unable to produce correspondence with the husband in which, she claims, demands were made to the husband to comply with the agreement, notwithstanding an opportunity to produce this evidence. The wife described herself as naive, and I think that is an accurate insight and reflection as how she handled events since the orders were made.
The husband’s answers on cross-examination were sometimes evasive and unresponsive but he doggedly insisted at all times that he merely agreed to “tidy the place up”. He consistently rejected the proposition that he agreed to renovate the home and explained that from his perspective as a carpenter renovations meant structural work such as constructing a wall or a roof. He was unconvincing, however, about the use of $7,000 to do the driveway, but agreed he used some of it for personal purposes.

The Issues to be Determined

A number of factual and legal issues seem to arise from the evidence. The issues can be conveniently expressed as questions, in the following terms:
a)Was there an agreement between the parties, outside of the consent orders, to do certain work to the property and if so, what were the terms of that agreement?
b)Was there an agreement between the parties, outside of the consent orders, to postpone the sale of the property having regard to market conditions, or any other reason, and if so what were the terms of that agreement?
c)What impact, if any, on the consent orders and the parties’ agreements referred to above, did subsequent events have, especially the damage caused by the fallen trees, but also the discovery of asbestos and white ants on the property?
d)What are the financial implications on the parties of all of the above, and in particular do these facts give rise to a claim by the wife against the husband that he should compensate him for the losses that she says she has incurred?

The Applicable Law

It is important to understand that by the time of the hearing before me there was no order left to be enforced in the sense that the home had in fact been sold, and the sale proceeds were being kept in trust pending the outcome of these proceedings. Accordingly, Mr Twigg, the solicitor for the wife could only frame the legal basis of the wife’s claim on s.117B of the Family Law Act. That section provides:
(1) Subject to any order made by the court under subsection (2), where, in proceedings under this Act, a court makes an order for the payment of money (other than an order for the payment by way of maintenance of a periodic sum), interest is payable, at the rate prescribed by the applicable Rules of Court, from:
(a) the date on which the order is made; or
(b) the date on which the order takes effect;
whichever is later, on so much of the money as is from time to time unpaid.
(2) A court that makes an order for the payment of money as mentioned in subsection (1) may order that interest is not payable on the money payable under the first‑mentioned order or may order:
(a) that interest is payable at a rate specified in the order, being a rate other than the rate prescribed by the applicable Rules of Court; or
(b) that interest is payable from a date specified in the order, being a date other than the date from which the interest would be payable under subsection (1).
Mr Twigg referred me to a passage in the Full Court’s decision in Jones & Jones (1990) FLC 92-143 at page 77 994:
We are of opinion that on its proper construction sec. 117B when it refers to ''an order for payment of money'' prima facie means an order for the payment of money by one party to the other. Ordinarily it would not refer to a situation such as the one here, where jointly owned property is to be realised by the parties and where the proceeds of such realisation are to be distributed between the parties. In the present case each of the parties was required by the order to join in the sale of the home and the distribution of the proceeds. To order the husband to pay interest on moneys payable to the wife, the bulk of which had to be raised by the wife herself out of her own share in the home, was quite unjust and not a result which was intended by sec. 117B.
There may be cases where one party has the sole use of the property to the exclusion of the other until a sale takes place and in such a case it might be appropriate to order the payment of interest or to make some other adjustment pending the completion of the sale. Similarly, it might be appropriate to order the payment of interest where one party unreasonably delays or frustrates the ordered sale. However, this was not such a case. In our opinion the order for the payment of interest by the husband to the wife cannot be justified.
Mr Twigg thus submits that this is a case where I should order the payment of interest in favour of the wife because of the unreasonable delays on the part of the husband relating to the sale of the property.

Discussion and Findings

In many ways the outcome of this case is influenced by the reasons for the delays in the sale of the home. There was clearly a delay in the listing of the home and then there was a delay before the home was actually sold. There are complex issues of causation involved. Thus, e.g., even if I found that there was a delay in the listing of the property for sale, there is no evidence to indicate that it would have been sold anyway. Even when the property was listed for sale, for the wife to succeed on her claim she must establish that the sale was unsuccessful because of an act or omission of the husband. Thus, even if the wife suffered a loss, it may not be attributable to the husband but to other causes. Alternatively, it may be attributable to him in part, or for some finite period.
The evidence of the husband and the wife clearly conflicts. The testing of the affidavit evidence in cross-examination did little to clarify the conflict. Indeed the parties’ representatives wanted to deal with this entire matter without cross-examination. I would not accede to this request as I perceived the need to make findings of fact. Perhaps the cross-examination could have been more meticulous, on both sides. As findings of fact are necessary in this case I have had to rely on such evidence as there was, and common sense.

I find that there was an agreement between the husband and the wife to do some work on the property before it was listed for sale. I find that they had also agreed to postpone the sale, not just because work was to be done on the property, but because of concerns both had as to the slowness of the market. In consent orders date 30 January 2004 the parties agreed to sell the home “on or before 1 December 2005” (Order 3), 22 months later. The delay is clearly contemplated by the orders, and I infer that the reasons for that are as stated above. Notation P(a) clearly contemplates repairs to the driveway, and a common sense reading of notation F leads to the conclusion that the parties had contemplated that $7,000 (i.e. $65,000 minus $58,000) was needed for this purpose.
I find, however, that the scope of the agreed works was as alleged by the husband, not the wife. It is illogical to conclude that whereas the parties had agreed that $7,000 would be borrowed and used to pay for the driveway, no financial provision was to be made to undertake the works asserted by the wife at paragraph 9 of her affidavit filed 29 May 2007. Even if one were to assume that the husband would contribute his own labour at no expense to the wife, the cost of materials would have been substantial. Based on the picture of financial and personal irresponsibility painted by the wife of the husband, it is hardly likely that she believed he was going to fund this himself. The agreement between the parties was, therefore, a very vague one to the effect that the husband would “tidy the property up before it was sold”. This is consistent with the wife’s own letter to the husband dated 29 November 2006, annexed to her affidavit.
Irrespective of the agreement of the parties, I find there were a number of intervening acts which were beyond the control of either party. As a result of a storm a tree fell on to the side of the house. The wife asserts this was in February 2004, shortly after the consent orders were made (wife’s affidavit filed 29 May 2007, paragraph 11). The husband asserts that the tree fell on the roof of the property in mid-2005 (husband’s affidavit 25 July 2007, paragraph 15). The wife asserts that a second tree fell on the roof of the home in June 2007 following the long weekend (wife’s affidavit 31 July 2007, paragraph 15). She says the first incident was covered by NRMA insurance, the second was not because they were uninsured following the first payout. The second tree incident is corroborated by the wife’s partner, Mr L, in his affidavit (filed 31 July 2007 paragraph 2.4). Curiously, the husband does not refer to the second tree in his affidavit.
I accept the wife’s assertion that the first tree came down in February 2004. I also accept her evidence that a second tree came down in June 2007. As from February 2004, further problems became apparent. Firstly asbestos was discovered on the property, certainly in the roof materials, but possibly elsewhere. Secondly, but possibly at some date after February 2004, white ant activity was discovered in the property.
Thus there are at least four circumstances clearly not contemplated by the parties as at the time of the consent orders: two incidents of damage caused by falling trees; discovery of asbestos on the property; discovery of white ants on the property. All of these circumstances were beyond the control of either party. All of them would have had an impact on, and indeed did delay the eventual sale of the home.
It is clear that as at 1 December 2005, the originally contemplated date of sale, circumstances had changed dramatically. I find that it was not until 29 November 2006 that the wife, by her letter to the husband of that date (annexure F, wife’s affidavit filed 29 May 2007) insisted on the husband completing the works she had agreed to him undertaking, and listing the property for sale. Of course the nature of those works had also changed dramatically, and had expanded by then to include repairs as a result of the first tree incident.
The evidence indicates that when the property was finally listed for sale in 2007, there was at least one buyer, and possibly more, who would not proceed with the purchase due to white ant activity in the home (husband’s affidavit filed 25 July 2005 paragraphs 8 and 10; wife’s affidavit filed 31 July 2007 paragraph 22). I find that the reason why the property did not sell had nothing to do with the delays in listing the property for sale prior to 29 November 2006. I find that even if the property had been listed for sale before then, no prudent purchaser would have completed the purchase due to the problems inherent in the property. In any event, the second tree incident on the June long weekend in 2007 once again had a dramatic impact on the saleability of the home.
The sale price that was eventually achieved was $685,000. This is consistent with the estimated price range given to each of the parties by the respective real estate agents they consulted. There is no suggestion, therefore, that when the parties eventually sold, they sold at less than market value.
Having regard to all of these matters, the wife has suffered no loss attributable to acts or omissions of the husband, from the sale of the property. The delays were attributable to unforseen and uncontrollable circumstances. It is worth acknowledging that even if the husband had done the work asserted by the wife I find that she acquiesced in postponing a sale until after 29 November 2006. But even if I am wrong on this, the first tree incident and the discovery of white ants and asbestos would have been, in my opinion, the causal factors for the property not selling, even before the second tree incident in June 2007. The wife may well feel aggrieved by this. The fact is that at any time after 1 December 2005 she could have invoked Order 9 of the consent orders. Indeed one wonders whether the circumstances would not have justified an application under s.79A(1)(b) or (c) of the Act. She chose to do nothing before commencing these proceedings on 29 May 2007.
The wife is not entirely without remedy however. The husband has had the exclusive personal benefit of two amounts of money that are clearly funds of both the husband and the wife. He had the benefit of the $7,000 designated for the driveway. I do not have evidence as to when, precisely, he received this money but, erring on his side I will assume it was no later than 30 March 2004, two months after the consent orders were made. The husband also had the benefit of $10,000 out of the NRMA insurance claim. I accept the wife’s evidence in this regard (wife’s affidavit filed 29 May 2007, paragraph 14) in preference to the husband’s evidence (husband’s affidavit filed 25 July 2007, paragraph 19). I don’t have evidence about when he received these funds, but erring in his favour, I will assume he received the $10,000 no later than 30 June 2004. The wife is therefore entitled to $3,500 together with interest calculated by reference of the Family Law Rules from

30 March 2004
, and $5,000 together with interest aforesaid as from

30 June 2004
in each case until the day of payment. I am satisfied that these amounts fall within s.117B of the Act. If the parties cannot reach agreement about the interest calculations, they are at liberty to relist the matter before me for that purpose.
Accordingly, the orders made 30 January 2004 should now forthwith be implemented by the parties in accordance with its specific terms, subject only to the provision for the payments plus interest in favour of the wife to which I refer above, to be paid out of the husband’s share before he receives the same.
The husband makes no application for reimbursement or otherwise of expenses or efforts involved in his work on the home. I would not have granted such an application, having regard to the evidence before me.
In conclusion, and by way of obiter dictum, I opine that it is unlikely that s.117B was intended for the purpose advanced by Mr Twigg. The comments of the Full Court in Jones & Jones[1] to which he referred me were purely obiter. In any event he sought to quantify the wife’s loss on various scenarios, one of which included giving the wife not just interest from 1 December 2005 but half the rental value of the property during the husband’s occupancy of the same. The latter is clearly not in the character of interest, but rather in the nature of damages. The Full Court in Jones & Jones[2] refers, of course (at 77 994) to the “payment of interest or to make some other adjustment pending the completion of the sale” (emphasis added). It seems to me that s.117B is about penalising a party for breach of an order, not compensating the other party for an economic loss they have suffered. This can be two different things, often dramatically different, depending on the facts of each case. There is no doubt that s.117B authorises the imposition of a rate of interest other than the then current prescribed rate, and the circumstances of the parties may justify the imposition of a different rate, higher or lower eg JEL v DDF [2001] FamCA 907 (paragraphs 38-45); Cross v Beaumont [2007] FamCA 123 (paragraphs 40-54). I am unsure whether a claim for economic loss, or damages, as between spouses is a matrimonial cause for the purposes of s.4(1) of the Act. Even paragraph (ca) of the definition refers to “proceedings…with respect to the property…arising out of the marital relationship…or in relation to proceedings”. Does a claim for damages or economic loss have the clear nexus with the marriage that is required by the definition of matrimonial cause? That is an issue for another Court to decide as it does not arise of the facts of this case.
[1] (1990) FLC 92-143
[2] Ibid

I certify that the preceding thirty (30) paragraphs are a true copy of the reasons for judgment of Altobelli FM

Associate: Lisa Molloy

Date: 7 February 2008