Kallen and Alvin and Anor
[2014] FamCA 734
•5 September 2014
FAMILY COURT OF AUSTRALIA
| KALLEN & ALVIN AND ANOR | [2014] FamCA 734 |
| FAMILY LAW – PROPERTY – Where final property adjustment Orders were made in August 2013 pursuant to s 79 of the Family Law Act 1975 (Cth) – Where the applicant wife now seeks orders pursuant to s 79A of the Act to vary the Order – Where it is just and equitable to vary the Order . |
| Family Law Act 1975 (Cth) s79A |
| XX Firm and ZZ Firm and Ors [2013] FamCA 1007 |
| APPLICANT: | Ms Kallen |
| RESPONDENT: | Mr Alvin |
| INTERVENER: | B Law Firm |
| FILE NUMBER: | BRC | 11120 | of | 2009 |
| DATE DELIVERED: | 5 September 2014 |
| PLACE DELIVERED: | Brisbane |
| PLACE HEARD: | Brisbane |
| JUDGMENT OF: | Forrest J |
| HEARING DATE: | 19 August 2014 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Ms Anderson of Counsel |
| SOLICITOR FOR THE APPLICANT: | Johnsons Solicitors & Attorneys |
| COUNSEL FOR THE RESPONDENT: | Mr Hackett of Counsel |
| SOLICITOR FOR THE RESPONDENT: | Michelle Porcheron Lawyers |
| SOLICITOR FOR THE INTERVENER: | Mr B B Law Firm |
Orders
The Order made on 30 August 2013 by Forrest J is set aside and the following is substituted for that Order.
The applicant, having paid the sum of $708,971.49 to NAB Account BSB: …, Acc No. … in the name of Johnsons Solicitors as Trustee for Ms Kallen and Mr Alvin on 30 April 2014, shall release that sum to the solicitors for the respondent only upon the releases required by paragraphs (7) and (8) hereof being obtained and exchanged.
Any amounts presently held in that account in excess of the sum of $708,971.49 be forthwith returned to the applicant and upon the release of that sum in accordance with paragraph (2) hereof, any accretions to the account be paid to the applicant.
The applicant and the respondent (and their solicitors) are restrained from taking any steps to deal with the sum of $708,971.49 otherwise than in accordance with this Order or further Order of this Court.
The respondent shall forthwith provide to his solicitors an irrevocable authority and instructions requiring them to pay from the sum referred to in paragraph (2) hereof immediately upon its receipt by the solicitors for the respondent and upon the undertaking of Michelle Porcheron Solicitor that she will claim no lien over any part of the funds referred to below:
(a)the sum of $14,000.00 to the trustees of the M Superannuation Fund;
(b)the sum of $55,380.55 together with interest thereon to the intervener, Mr B, in full and final settlement of the indebtedness of the respondent to the intervener and in return for payment to the intervener, the intervener will provide to the respondent a Request to withdraw Writ in respect of the property at F Street, Suburb G.
Upon release of the sum referred to in paragraph (2) hereof:
(a)the respondent shall transfer to the applicant all his share and interest in and to the company known as N Pty Ltd ACN … ;
(b)the respondent shall resign as a director and secretary of the company, N Pty Ltd;
(c)the applicant shall indemnify the respondent and hold him indemnified in relation to any liabilities of the company, N Pty Ltd or relating to such company including any personal liability of the parties under the commercial bill facilities to the CBA Hong Kong;
(d)the applicant shall forthwith do all acts and things and sign all documents reasonably necessary to cause the respondent to be released from the personal guarantees given by him to the Westpac Bank and Commonwealth Bank of Australia for the loan facilities held in the name of N Pty Ltd;
(e)the applicant shall forthwith do all such things and execute all such documents necessary to cause N Pty Ltd to transfer and assign to the respondent the benefit of the loan agreement executed by N Pty Ltd and R Pty Ltd in or about the month of August 2006 relating to a sum of $165,681.00 together with interest;
(f)the applicant shall forthwith do all such things and execute all such documents necessary to transfer and assign to the respondent the indebtedness of N Pty Ltd to R Pty Ltd in the sum of $20,000.00.
The respondent will forthwith do all such things and execute all such documents necessary to refinance the security registered over the property at F Street, Suburb G and necessary to release the applicant from the unlimited personal guarantee provided to secure the loan from CTB Australia Ltd and to release N Pty Ltd from any guarantee given by that company relating to that loan facility.
The respondent shall indemnify the applicant and N Pty Ltd and hold them indemnified in relation to any and all liabilities of R Pty Ltd including any personal liability of the applicant and N Pty Ltd to CTB Australia Ltd as well as any and all undertakings given by the applicant and N Pty Ltd to indemnify the other guarantor security providers in respect of R Pty Ltd’s loan facility with CTB Australia Ltd against any shortfall in repayment of the total loan facility to the Bank.
The applicant shall forthwith resign as a director and secretary of J Pty Ltd.
The respondent will indemnify the applicant and hold her indemnified in relation to any and all liabilities of J Pty Ltd including any personal liabilities of the applicant arising from her having held office as a director of that company.
The applicant will forthwith resign from any office held by her in Alvin Pty Ltd.
The applicant will transfer to the respondent all her share and interest in Alvin Pty Ltd.
The respondent shall forthwith cause Alvin Pty Ltd as trustee for the Alvin Family Trust to transfer to the applicant or to the nominee of the applicant the 100 shares in N Pty Ltd owned by the Trust.
The respondent will indemnify the applicant and hold her indemnified in relation to any and all liabilities of Alvin Pty Ltd including any personal liabilities of the applicant arising from her having held office as a director of that company.
The respondent will upon payment to him of the sum referred to in paragraph (2) hereof, pay to the Trustee of the M Superannuation Fund the sum of $14,000.00.
The respondent will forthwith resign as a trustee of the M Superannuation Fund.
The M Superannuation Fund will pay to the respondent or rollover into a fund nominated by him a sum calculated by way of the ratio of his member entitlement compared to the value of the Superannuation Fund after the accountant for the Superannuation Fund has completed and lodged all outstanding taxation returns for the Fund in order to bring it up to date and after any taxation liabilities and expenses associated with the lodging of the returns are paid.
The applicant shall within thirty (30) days of the date of these Orders transfer to the respondent all of her right, title and interest in and to the property situated at F Street, Suburb G, more particularly described as Lot … on SP… County of … Parish of … and upon such transfer the applicant will provide to the respondent a withdrawal of caveat to remove caveat … from the title to the said property.
The respondent will indemnify the applicant and hold her indemnified in relation to any liabilities of the applicant relating to the property at F Street, Suburb G.
The respondent shall transfer to the applicant:
(a) 50 woods lots in AB Timber Plantation;
(b) 30 droves of cattle in CD Beef Cattle Project.
Each of the parties shall forthwith do all such things and execute all such documents to cause the closure of the jointly owned bank accounts with Westpac Bank and St George Bank following the removal of any funds remaining on those bank accounts by the applicant.
The parties shall do all acts and things and sign all documents reasonably necessary to forgive the following loans:
(a) Loans owing to N Pty Ltd by the parties;
(b)Loan owing by Alvin Pty Ltd as trustee for the Alvin Family Trust to N Pty Ltd;
(c)Loan owed by J Pty Ltd as trustee for the J Trust to N Pty Ltd.
The respondent shall retain in his possession and ownership and the applicant shall relinquish any claim in respect thereto and shall do all acts and things and sign all necessary documents to transfer to the respondent all the applicant’s right title and interest in and to the respondent’s bank accounts and the property chattels and personal possessions of the respondent held by him at the date of these Orders.
The applicant shall retain in her possession and ownership and the respondent shall relinquish any claim in respect thereto and shall do all acts and things and sign all necessary documents to transfer to the applicant all the respondent’s right, title and interest in and to the applicant’s bank accounts and the property chattels and personal possessions of the applicant held by her at the date of these Orders.
In the event that either party defaults in the doing of any act and/or signing of any documents necessary to give effect to these Orders then a Registrar or a Deputy Registrar of this Court is hereby appointed to do all acts and execute all necessary documents in the name of either party to give validity and operation to the terms of these Orders.
Pending compliance with paragraphs (7) and (8) hereof the respondent is restrained and an injunction hereby issues restraining the respondent from encumbering or further encumbering any interest in property he has and/or retains pursuant to this Order save as is necessary to comply with this Order.
Liberty to the parties is reserved to apply in relation to the enforcement of these Orders and, in particular, should the husband not have complied with his obligation pursuant to paragraph (7) hereof to cause the release of the applicant from the unlimited personal guarantee provided to secure the loan from CTB Australia Ltd and to release N Pty Ltd from any guarantee given by that company relating to that loan facility by 31 March 2015, any further application of any of the parties is to be listed before me in the first instance.
All previous Orders are discharged.
All other outstanding applications are dismissed.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Kallen & Alvin and Anor 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 BRISBANE |
FILE NUMBER: BRC 11120 of 2009
| Ms Kallen |
Applicant
And
| Mr Alvin |
Respondent
And
| B Law Firm |
Intervener
REASONS FOR JUDGMENT
The Applicant wife makes an application pursuant to s 79A of the Family Law Act 1975 (Cth) (“the Act”) to vary the Order made by me at the conclusion of substantive proceedings between the parties in respect of property adjustment pursuant to s 79. Her application is opposed by the Respondent husband and the Second Respondent, an intervening creditor of the husband.
That s 79 property adjustment Order was made on 30 August 2013 after I had published my Reasons for Judgment on 26 July 2013 and given the parties time to reach agreement on the terms of the Order to be made to give effect to my decision. On 26 August, 2013, the Court was informed by the legal representatives of the parties that all of the terms of the Order had been agreed between the parties as reflecting my Reasons for Judgment, save in respect of one point upon which I was asked to hear and determine argument. I heard that argument, considered the draft that had been presented to me by the legal representatives of the parties and made the final Order, as I have said, on 30 August 2013, satisfied that it was appropriate and just and equitable.
The wife, represented now by different lawyers to those who represented her last year, submits that s 79A(1)(a) and (b) apply in this case so as to enliven the Court’s discretion to vary or set aside the Order. She also submits that the circumstances are such that the discretion should be exercised to vary the Order in the way that she seeks.
The Order
I consider it appropriate to set out the entirety of the Order that the wife seeks to vary:
(1)Within sixty (60) days of the date of these Orders, the applicant shall pay or cause to be paid to the respondent the sum of $708,971.49 which sum shall be deemed to have been paid by the applicant upon the deposit of such sum to the trust account of the solicitors for the respondent.
(2)The respondent shall forthwith provide to his solicitors an irrevocable authority and instructions requiring them to pay from the sum referred to in paragraph 1 hereof immediately upon its receipt by the solicitors for the respondent and upon the undertaking of Michelle Porcheron Solicitor that she will claim no lien over any part of the funds referred to below:
(a)the sum of $14,000.00 to the trustees of the [M] Superannuation Fund;
(b)the sum of $55,380.55 together with interest thereon to the intervener, [Mr B], in full and final settlement of the indebtedness of the Respondent to that firm and in return for payment to the intervener, the intervener will provide to the respondent a Request to withdraw Writ in respect of the property at [F Street, Suburb G].
(3) Upon payment of the sum referred to in paragraph 1 hereof:
(a)the respondent shall transfer to the applicant all his share and interest in and to the company known as [N] Pty Ltd ACN … ;
(b)the respondent shall resign as a director and secretary of the company, [N] Pty Ltd;
(c)the applicant shall indemnify the respondent and hold him indemnified in relation to any liabilities of the company, [N] Pty Ltd or relating to such company including any personal liability of the parties under the commercial bill facilities to the CBA Hong Kong;
(d)the applicant shall forthwith do all acts and things and sign all documents reasonably necessary to cause the respondent to be released from the personal guarantees given by him to the Westpac Bank and Commonwealth Bank of Australia for the loan facilities held in the name of [N] Pty Ltd;
(e)the applicant shall forthwith do all such things and execute all such documents necessary to cause [N] Pty Ltd to transfer and assign to the respondent the benefit of the loan agreement executed by [N] Pty Ltd and [R] Pty Ltd in or about the month of August 2006 relating to a sum of $165,681.00 together with interest;
(f)the applicant shall forthwith do all such things and execute all such documents necessary to transfer and assign to the respondent the indebtedness of [N] Pty Ltd to [R] Pty Ltd in the sum of $20,000.00.
(4)The respondent will forthwith do all such things and execute all such documents necessary to refinance the security registered over the property at [F Street, Suburb G] and necessary to release the applicant from the unlimited personal guarantee provided to secure the loan from CTB Australia Ltd and to release [N] Pty Ltd from any guarantee given by that company relating to that loan facility.
(5)The respondent shall indemnify the applicant and [N] Pty Ltd and hold them indemnified in relation to any and all liabilities of [R] Pty Ltd including any personal liability of the applicant and [N] Pty Ltd to CTB Australia Ltd as well as any and all undertakings given by the applicant and [N] Pty Ltd to indemnify the other guarantor security providers in respect of [R] Pty Ltd’s loan facility with CTB Australia Ltd against any shortfall in repayment of the total loan facility to the Bank.
(6)The applicant shall forthwith resign as a director and secretary of [R] Pty Ltd.
(7)The respondent will indemnify the applicant and hold her indemnified in relation to any and all liabilities of [R] Pty Ltd including any personal liabilities o he [sic] applicant arising from her having held office as a director of that company.
(8)The applicant will forthwith resign from any office held by her in [Alvin] Pty Ltd.
(9)The applicant will transfer to the respondent all her share and interest in [Alvin] Pty Ltd.
(10)The respondent shall forthwith cause [Alvin] Pty Ltd as trustee for the [Alvin] Family Trust to transfer to the applicant or to the nominee of the applicant the 100 shares in [N] Pty Ltd owned by the Trust.
(11)The respondent will indemnify the applicant and hold her indemnified in relation to any and all liabilities of [Alvin] Pty Ltd including any personal liabilities o he applicant arising from her having held office as a director of that company.
(12)The respondent will upon payment to him of the sum referred to in paragraph 1 hereof pay to the Trustee of the [M] Superannuation Fund the sum of $14,000.00.
(13)The respondent will forthwith resign as a trustee of the [M] Superannuation Fund.
(14)The [M] Superannuation Fund will pay to the respondent or rollover into a fund nominated by him a sum calculated by way of the ratio of his member entitlement compared to the value of the Superannuation Fund after the accountant for the Superannuation Fund has completed and lodged all outstanding taxation returns for the Fund in order to bring it up to date and after any taxation liabilities and expenses associated with the lodging of the returns are paid.
(15)The applicant shall within thirty (30) days of the date of these orders transfer to the respondent all of her right, title and interest in and to the property situated at [F Street, Suburb G], more particularly described as Lot … on SP… County of … Parish of … and upon such transfer the applicant will provide to the respondent a withdrawal of caveat to remove caveat … from the title to the said property.
(16)The respondent will indemnify the applicant and hold her indemnified in relation to any liabilities of the applicant relating to the property at [F Street, Suburb G].
(17)The respondent shall transfer to the applicant:
(a)50 woods lots in [AB] Timber Plantation;
(b)30 droves of cattle in [CD] Beef Cattle Project.
(18)Each of the parties shall forthwith do all such things and execute all such documents to cause the closure of the jointly owned bank accounts with Westpac Bank and St George Bank following the removal of any funds remaining on those bank accounts by the applicant.
(19)The parties shall do all acts and things and sign all documents reasonably necessary to forgive the following loans:
(a)Loans owing to [N] Pty Ltd by the parties;
(b)Loan owing by [Alvin] Pty Ltd as trustee for the [Alvin] Family Trust to [N] Pty Ltd;
(c)Loan owed by [J] Pty Ltd as trustee for the [J] Trust to [N] Pty Ltd.
(20)The respondent shall retain in his possession and ownership and the applicant shall relinquish any claim in respect thereto and shall do all acts and things and sign all necessary documents to transfer to the respondent all the applicant’s right title and interest in and to the respondent’s bank accounts and the property chattels and personal possessions of the respondent held by him at the date of these orders.
(21)The applicant shall retain in her possession and ownership and the respondent shall relinquish any claim in respect thereto and shall do all acts and things and sign all necessary documents to transfer to the applicant all the respondent’s right title and interest in and to the applicant’s bank accounts and the property chattels and personal possessions of the applicant held by her at the date of these orders.
(22)In the event that either party defaults in the doing of any act and/or signing of any documents necessary to give effect to these orders then a Registrar or a Deputy Registrar of this Court is hereby appointed to do all acts and execute all necessary documents in the name of either party to give validity and operation to the terms of these orders.
(23)Liberty to the parties is reserved to apply in relation to the enforcement of these orders.
(24) All previous orders are discharged.
(25) All other outstanding applications are dismissed.
As can be seen from the terms of that Order, the husband and the wife had an array of interests in property, owned by them through various corporate and trust structures. These included a minority interest in a company that owned a Brisbane commercial building, where there were other shareholders involved. These included the ownership of another company that owned a Gold Coast commercial building. These also included residential real property interests. Not unusually, debt for financing investments had been incurred and various forms of security for the debts had been provided by the husband and the wife, including mortgages over their various real properties and the provision of personal guarantees.
At the end of the trial, submissions had been made by Queens Counsel for the husband in respect of the particular form the Order would require to give the husband and the wife the best possible outcome having regard to the impact of revenue law on the requisite transactions. This was, principally, the reason why the parties were given the opportunity to agree on the form of the Order.
In my Reasons for Judgment I had, relevantly, said the following in respect of the former couple’s interest in the Brisbane commercial building:
135.I am of the view that it is most appropriate for the husband to retain that interest if he can. He has the relationships with the other business partners in that investment and the wife does not. He has had involvement in that investment through the relationships with those business partners that the wife has not. It will, however, be critical for him to be able to refinance any debt that exists in respect of that property currently secured by any of the remaining real properties that the wife is to retain. In my determination, the properties to be retained by the wife must be free of encumbrance that secures any debt relating to the [Brisbane commercial] building investment for orders giving effect to this division to be just and equitable. Only if the husband can achieve that will it be just and equitable and appropriate to make orders that otherwise facilitate his retaining the parties’ interest in that particular investment.
136.If that can be done, it is appropriate and just and equitable, in my view, for the wife to then pay to the husband the further sum of $870,352.70 to finalize property division between the parties.
The Order that was made on 30 August 2013 provides in paragraph 1 for the wife to pay the husband the sum of $708,971.49 within 60 days of the Order. That the figure is different to the amount included in paragraph 136 of the Reasons for Judgment was explained in Reasons I gave also on 30 August 2013. That figure had been arrived at by agreement between the husband and wife about the assignment from one to the other of certain debts that had been taken into account in a different way in the valuation of their interests that I had relied upon in determining my Judgment.
On 26 August 2013, I was assured by Queens Counsel who appeared for the husband and counsel who appeared for the wife that the terms of the draft Order they handed me reflected my Reasons for Judgment. When I considered them, as I observed on 30 August 2013, I was satisfied that they did.
As I understood the Order, it was drawn to facilitate the husband’s retention of the former couple’s interests in the Brisbane commercial building. Relevantly, paragraph (4) obligated the husband to:
… forthwith do all such things and execute all such documents necessary to refinance the security registered over the property at [F Street, Suburb G] and necessary to release the [wife] from the unlimited personal guarantee provided to secure the loan from CTB Australia Ltd and to release [N] Pty Ltd from any guarantee given by that company relating to that loan facility.
11. That obligation of the husband was to be complied with “forthwith”. I understand that to mean “straight away”, “immediately”, “promptly”, “without delay”, or “within a reasonable time in the circumstances”.
Quite contrary to the submissions of counsel who appeared for the husband on the hearing of the wife’s application pursuant to s 79A, there was nothing included in the Order that limited the husband’s obligation to the “use of his best endeavours to effect the release of the Wife and [N] Pty Ltd from the guarantees provided to the Bank”. Rather, he was to “do all such things and execute all such documents necessary to refinance the security ... and necessary to release the [wife] from the unlimited personal guarantee”. That was the wording of the Order that the Court was told by Queens Counsel for the husband on 26 August 2013 reflected my Reasons for Judgment.
The wife was to pay the husband the amount of $708,971.49 within 60 days of the Order and upon payment of that sum each of the husband and wife had further obligations imposed upon them by paragraph (3) of the Order. Upon compliance with those paragraphs, (and others within the Order) the financial relationship of the husband and the wife was to end.
Apart from a paragraph by which a Registrar of the Court is appointed pursuant to s 106A of the Family Law Act, to do acts and sign documents in the name of a defaulting party, no other default provisions were included in the Order.
Subsequent Non-compliance
The husband did not cause the wife to be released from the unlimited personal guarantee provided to secure the loan from CTB Australia Ltd. He did not cause the company, N Pty Ltd to be released from security guarantees given by it to CTB Australia Ltd. That had still not happened to the date of the hearing of this s 79A application and, the Court was told, it is not known exactly when, or how, it will happen, save for the fact that the Brisbane building is expected to be sold.
The husband says he has tried to secure the releases but has not been successful. He says he can do no more than he has done to this point in time, but points to evidence that the relevant liabilities to CTB Australia Ltd are due to expire and, therefore, be refinanced in December this year and of the intentions of those involved in the investment in the Brisbane commercial building to sell the building and discharge all of the liability to CTB Australia Ltd.
The wife, unhappy with not being released from her unlimited personal guarantee to CTB Australia Ltd and unhappy with N Pty Ltd (the company she was to retain as hers) not being released from its guarantee to CTB Australia Ltd, did not pay the husband the money she was to pay him. At the same time, she has not complied with all of the obligations imposed upon her by paragraph (3) of the Order. She had not paid the husband to the date of the hearing of this application, although she had caused the required amount of money to be paid into the trust account of her solicitors awaiting the outcome of this application. She says that she cannot cause the husband to be released from personal guarantees he has given the Westpac Bank and Commonwealth Bank of Australia for the loan facilities of N Pty Ltd as those banks will not release the husband whilst the wife and that company remain liable to CTB Australia Ltd pursuant to guarantees.
The Wife’s s 79A case
Under the Heading “Setting Aside of Orders Altering Property Interests” s 79A(1) provides:
[Miscarriage of justice] Where, on application by a person affected by an order made by a court under section 79 in property settlement proceedings, the court is satisfied that:
(a) there has been a miscarriage of justice by reason of fraud, duress, suppression of evidence (including failure to disclose relevant information), the giving of false evidence or any other circumstance; or
(b) in the circumstances that have arisen since the order was made it is impracticable for the order to be carried out or impracticable for a part of the order to be carried out; or
(c) a person has defaulted in carrying out an obligation imposed on the person by the order and, in the circumstances that have arisen as a result of that default, it is just and equitable to vary the order or to set the order aside and make another order in substitution for the order; or
(d) in the circumstances that have arisen since the making of the order, being circumstances of an exceptional nature relating to the care, welfare and development of a child of the marriage, the child or, where the applicant has caring responsibility for the child (as defined in subsection (1AA)), the applicant, will suffer hardship if the court does not vary the order or set the order aside and make another order in substitution for the order; or
(e)a proceeds of crime order has been made covering property of the parties to the marriage or either of them, or a proceeds of crime order has been made against a party to the marriage;
the court may, in its discretion, vary the order or set the order aside and, if it considers appropriate, make another order under section 79 in substitution for the order so set aside.
The wife submits that sub-paragraphs (a) and (b) apply in the circumstances of this case. She submits there has been a miscarriage of justice because the Order made did not “carry into effect” the Court’s Reasons “contained in paragraphs 135 and 136” of the Judgment.
It is not submitted that the miscarriage of justice occurred by reason of fraud, duress, suppression of evidence or the giving of false evidence, but rather by reason of the fact that two very experienced barristers and three solicitors informed the Court that the terms of the Order reflected the Court’s Reasons for Judgment when, it is submitted, in fact they did not.
Counsel for the wife submitted that because the terms of the Order did not expressly state that the money was to be paid by the wife to the husband only upon the wife and the company she was to retain being released from their guarantees to CTB Australia Ltd that they did not actually reflect the Court’s Reasons.
With respect, as I observed during the hearing of the application, I do not agree with that submission. As I have already discussed, paragraph (4) of the Order quite clearly obliged the husband to cause the refinancing and releases of the guarantees “forthwith”. There was no limitation on his obligation and that obligation was presented to the Court in draft form by Queens Counsel representing the husband as reflecting my Reasons.
The terms of the draft presented to the Court gave the wife 60 days to pay the husband the money she was required to pay him.
Clearly, the expectation reflected in the terms of the Order the parties and their very experienced legal representatives produced in draft form was that the husband would meet his obligation “forthwith” and the wife would meet hers within 60 days; a reasonable period of time within which to expect the husband to have already met the obligation cast upon him before the wife had to meet hers.
Accordingly, I do not accept that the Court was somehow misled, either deliberately or inadvertently, by being told that the Order in the terms of the draft handed to the Court did reflect the Court’s Reasons for Judgment. In my view, that the husband did not actually meet the obligation the Order imposed upon him is not grounds to support a finding that at the time the Order was made the Court was misled in such a way as to constitute a miscarriage of justice.
In my view, reliance on sub-paragraph (b) of s 79A(1) is more fruitful for the wife. The Court’s discretion to vary a s 79 Order is enlivened if the Court is satisfied that, in the circumstances that have arisen since the Order was made, it is impracticable for either the whole or part of the Order to be carried out.
It is clear on the evidence that the failure of the husband to effect a refinancing of the subject liability and to secure the releases from the guarantees that paragraph (4) of the Order obligated him to do is not a matter more appropriately dealt with by enforcement proceedings. The evidence establishes that there are third parties, not parties to the proceedings, whose positions actually prevent compliance by the husband with paragraph (4) of the Order. CTB Australia Ltd will not release the guarantees without a complete refinancing of the debt and the other shareholders in R Pty Ltd have not to date facilitated that refinancing and the Order pursuant to which the husband’s obligation arose is now over one year old.
I am quite satisfied, on the evidence, that the combined positions of CTB Australia Ltd and the other shareholders in R Pty Ltd have made it impracticable for paragraph (4) of the Order to be carried out. Thus, I am satisfied, the discretion to vary the Order is enlivened.
At the outset of the hearing of the application, the case as presented for the wife only placed reliance on sub-paragraphs (a) and (b) of s 79A(1), but counsel for the husband, when directly asked, accepted that the discretion could also be enlivened pursuant to sub-paragraph (c) of s 79A(1) if the facts were found to bring the matter within that sub-paragraph as well. Counsel for the wife submitted the Court could also act pursuant to sub-paragraph (c) if it considered that to be the correct course.
Pursuant to sub-paragraph (c) the discretion to vary an Order is also enlivened where the Court finds that a person has defaulted in carrying out an obligation imposed on the person by the Order and, in the circumstances that have arisen as a result of that default, it is just and equitable to vary the Order and to make another in substitution for it.
As is already clear, I am satisfied that the husband has defaulted in carrying out the obligation imposed on him by paragraph (4) of the Order. That he may have done all he could do to try to get a refinancing in place and to secure the release of the wife’s guarantee is not, in my view, compliance with the plain meaning of the Order.
As I have also already observed, enforcement action against the husband in lieu of appropriate variation of the Order in respect of which he has defaulted will be ineffective to achieve the outcome that compliance with the Order would have produced.
Notwithstanding the husband’s position that he is not responsible for the non-compliance, he has maintained a robust stance against the wife that she must meet her obligation to pay him pursuant to paragraph (1) of the Order, even in the face of the evidence she has adduced of the prejudice to her position that his continued non-compliance causes.
For the husband, the Court was referred to evidence that the subject CTB Australia Ltd loan is to be “repaid by [R Pty Ltd] to the Lender on 17 December 2014” and the submission was made that:
If it is not repaid, refinanced or the building sold, one would expect the mortgagee to take steps to realise the security to recover the amount owed.
Further, evidence that R Pty Ltd is going to sell the building was referred to and the submission made that these matters support a finding that the indemnity given by the husband in paragraph (5) of the Order is “not infinite”. Additionally, it was submitted that the prospect of the wife being called upon in respect of the guarantees is remote in circumstances where the debt to CTB Australia Ltd is less than the value of the primary security attributed to it by me in my Judgment, not to mention the additional securities provided by the remaining shareholders.
I understood those submissions as raising matters that are relevant to the discretionary exercise to vary the whole or part of the Order in the event that I was satisfied that the discretion was enlivened, as well as being made for the husband in response to the ‘miscarriage of justice’ case.
I am not persuaded by those submissions that a variation of the Order is not now required as a just and equitable response to the findings of default and impracticability that I have made. The wife continues to suffer prejudice in the form of restrictions to her own further borrowing capacity whilst she remains subject to an unlimited personal guarantee to CTB Australia Ltd. She has been pressed over the better part of a year to pay just less than three-quarters of a million dollars to the husband although he has not complied with obligations imposed on him by an Order that he asked the Court to make whilst represented by Queens Counsel, simply saying, by way of excuse, that he has tried to comply but that actual compliance is out of his control. The evidence does not satisfy me that a refinancing of the debt and release of the wife from her guarantee is imminent or even an absolute certainty in the near future. I am as mindful of what I said in paragraphs 135 and 136 of my Reasons for Judgment in the substantive proceedings now, as I was then. I remain of the same view. Accordingly, I am quite satisfied that the Order of 30 August, 2013 should be varied.
The Order to be made in substitution
Counsel for each of the husband and the wife handed up drafts of an Order that each said the Court should make in the event of being satisfied that the discretion to vary or set aside the original Order was enlivened. Each draft had as its central feature payment by the wife to the husband of the sum of $708,971.49 only upon the husband actually complying with the obligation to refinance and secure the release of the wife and her company from their guarantees. The respective drafts differed in one major respect. For the wife it was submitted that the Order should include provision for the payment by the wife of the $708,971.49 to CTB Australia Ltd in reduction of R Pty Ltd’s liability in the event that the refinancing and release of guarantees is not effected by a certain date. For the husband it was submitted that no such provision should be included. The Second Respondent also made submissions against including such a provision.
For the wife it was submitted that as there is currently no certainty of a sale of the building and subsequent discharge of the CTB Australia Ltd debt and release of the guarantees that currently secure that liability, the only way to provide appropriate finality now is by ordering that the wife make the payment towards reducing the total liability to CTB Australia Ltd owed by R Pty Ltd so as to reduce her potential exposure in the event that action is taken against her on her guarantee.
For the husband, it was submitted that such a payment should not be ordered as a default option as it would not procure the release of the wife or her company from their guarantees in any event and that it would simply provide windfall benefits to the company, R Pty Ltd, and to third parties (the other shareholders) in circumstances where there is evidence that internal shareholder relations are already very poor.
The Second Respondent submitted that he has a “fruits of judgment” lien over the beneficial interest of the husband in the money ordered to be paid to him by the wife that arises the moment the Order is made and that to order the money to be paid to the bank in default of the refinancing and release of guarantees would wrongly deprive him of the benefit of that lien[1]. He submitted that the “level of mischief” within this part of the wife’s proposal outweighs any benefit, a matter of importance in the discretionary process of determining the appropriate order to make in variation of the original.
[1]See my discussion of a “fruits of judgment” lien and the authorities pertaining to such a lien in XX Firm and ZZ Firm and Ors [2013] FamCA 1007
I consider there is merit in the submissions of the husband and the Second Respondent on this point. Whilst I acknowledge and appreciate the wife’s concerns about the future in the event that the husband does not cause the refinancing of the liability and the release of the guarantees, I do not consider that a default order that provides windfall benefits to third parties as well as depriving the Second Respondent of his right is a just and equitable alternative to other default provisions that could provide, for example, for the wife to retain the former couple’s interest in the Brisbane building. I will not make that part of the Order sought by the wife.
In my view, making the husband’s receipt of the money conditional upon the refinancing of the subject liability and the release of the wife’s guarantee provides ample incentive for the husband to ensure that those things happen as soon as they can. I am fortified in my view that this will incentivise action on the husband’s part by the evidence that the company, R Pty Ltd, is now taking steps to sell the Brisbane building and discharge the liability in any event.
Another lesser difference in the respective drafts of the husband and wife was that the husband included provision for the wife to pay an amount representing interest on the sum of $708,971.49 from 29 October 2013 (the date when the amount was to be paid under the original Order) until the date she paid the amount into her solicitors’ trust account earlier this year. He also included provision for interest accruing on the amount of $708,971.49 until it is released to him to be paid to him.
In all the circumstances already discussed in these Reasons, I do not consider it appropriate for the husband to be paid interest on the amount that I originally determined he should not get without the wife being released from her guarantee and the potential for further liability in respect of the property interests he wanted to retain. I will not make such provision in the Order. I am satisfied that its inclusion would also reduce the husband’s incentive to ensure that his obligation to cause the wife to be released from that guarantee is met.
The husband and the wife both included in their respective draft Order an injunction restraining the husband from encumbering or further encumbering any interest in property he has and/or retains pursuant to the Order save as is necessary to comply with the Order. I agree that is appropriate in the circumstances.
I will also order that in the event that the husband has not caused the discharge of the guarantees of the wife and her company before 31 March 2015, any further application by any of the parties is to be listed before me.
I will make the Order set out at the commencement of these Reasons. As things currently stand, I consider this Order to be one that, as far as practicable, will result in final determination of the financial relationships between the parties and avoid further proceedings between them.
I certify that the preceding forty-seven (47) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Forrest delivered on 5 September 2014.
Associate:
Date: 5 September 2014
0