Kent and Kent
[2008] FMCAfam 127
•22 February 2008
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| KENT & KENT | [2008] FMCAfam 127 |
| FAMILY LAW – Property – enforcement of consent orders – whether payment made in accordance with agreement made subsequent to consent orders – non-compliance not established – whether application for summary dismissal should be granted – application for security for costs – application to re-open applicant’s case at conclusion of respondent’s case – all applications dismissed – leave to make written submissions as to costs. |
| Family Law Act 1975, s.4(1)(ca) |
| Bourke & Bourke (No. 2) (1994) FLC 92-479 IC & WP [2006] FamCA 941 Kerr & Kerr (1983) FLC 91-329 Limousin & Limousin (Security for Costs) [2007] FamCA 1179 Ramsey (1981) FLC 91-301 Smith v New South Wales Bar Association (1992) 176 CLR 256 Thwaitev Thwaite (1981) 2 All ER 789 |
| Applicant: | MR KENT |
| Respondent: | MS KENT |
| File number: | WOC 640 of 2007 |
| Judgment of: | Altobelli FM |
| Hearing date: | 29 January 2008 |
| Date of last submission: | 29 January 2008 |
| Delivered at: | Sydney |
| Delivered on: | 22 February 2008 |
REPRESENTATION
| Solicitor – Advocate for the Applicant: | Mr Fernie |
| Solicitors for the Applicant: | Rita Thakur and Associates |
| Counsel for the Respondent: | Mr Levy |
| Solicitors for the Respondent: | Dignan and Hanrahan |
ORDERS
The husband's application filed 30 May 2007 is dismissed.
The Respondent’s written submissions as to costs must be filed and served within 14 days, such submissions not to exceed 500 words in length.
If the Applicant opposes the Application for Costs he must file and serve any written submissions in reply within 28 days, such submissions not to exceed 500 words in length.
IT IS NOTED that publication of this judgment under the pseudonym Kent & Kent is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
WOC 640 of 2007
| MR KENT |
Applicant
And
| MS KENT |
Respondent
REASONS FOR JUDGMENT
Introduction
The applicant in this case was Mr Kent, and the respondent his wife Ms Kent. The husband's application was to enforce orders for property settlement that were made by consent in the Local Court at Bxxx on 7 May 2003. In effect, the husband asserts that there is a payment outstanding to him pursuant to those orders and that he should receive interest on the amount outstanding. In the wife's response she asks for an order that the husband's application be dismissed, and that he pay her costs. She says, in effect, that all monies payable by her to the husband have been paid. The amounts in question were relatively small, having regard to the cost of this litigation. The husband alleged that $4,779 was outstanding, and the amount of interest that had accrued on that amount under the Family Law Rules was $2,718.80. Hence, the total amount claimed by the husband was $7,497.80. In addition, the husband sought an order that the wife pay his costs which he was able to quantify at $7,590. In other words, this is an example of a case where the cost of the pursuit had exceeded the value of the prize to be gained.
Background
The husband is almost 63 years old, and the wife almost 58. They married in October 1987 and separated in September 2000 after a period of cohabitation of about 23 years.
On 7 May 2003 consent orders were entered into pursuant to the Family Law Act in the Local Court at Bxxx. For present purposes, the relevant orders are extracted below: -
1. That within thirty (30) days of the date of these Orders the Wife pay to the Husband the sum of $146,400.00.
2. That within one calendar year of the date of these Orders the wife pay to the Husband a further sum of $20,000.00…
4. That forthwith upon compliance with Orders 1 and 3 the Husband do all acts and things and sign all documents necessary to assign all of his right title and interest in Property L being all that piece and parcel of land identified as Folio Identifier 1xxx and Property B, being all that piece and parcel of land identified as Folio Identifier 5xxx “the properties” into the Wife’s name only.
…
8. In the event that the Wife fails to comply with Order 2 within the required time she shall forthwith do all acts and things and sign all documents necessary to forthwith list the real property known as Property L to be placed for sale by public auction with the proceeds of sale to be distributed as follows:
(a) in payment of any outstanding mortgage on the property;
(b) in payment of all real estate and legal fees associated with the sale;
(c) the sum of $20,000.00 plus interest calculated at the Family Law rate as and from the date of these Orders until the date of settlement;
(d) balance to the wife.
It is common ground between the parties that the only outstanding issue arising under the consent orders is payment pursuant to Order 2, i.e. $20,000 which, in accordance with the orders, was payable within one calendar year. The consent orders were, in fact, dated 29 April 2003, even though not made until 7 May 2003. Nothing turns on this, for all practical purposes. As the terms of settlement did not take effect until they are made orders of the Court, I read Order 2 as requiring the payment by the wife to the husband of $20,000 on or about 7 May 2004.
It is common ground between the parties that on 20 June 2004 they entered into a subsequent agreement in the following terms: -
I, Mr Kent hereby agree to extend the time for compliance with orders of Family Court [sic] as per settlement that took place on 5th June, 2003, as follows –
Ms Kent to pay $5,300 in June 2004,
$4,900 in November 2004 with an interest payment of $20.41
$4,900 in June 2005 with an interest payment of $98.00
$4,900 in June 2005 with an interest payment of $205.80
Interest rates/payments were calculated by St George Bank contact line on the 20th June, 2004 at 4.12pm.
I note that this subsequent agreement was entered into within a few months of the due date for compliance with Order 2 made 7 May 2003.
The evidence about payment pursuant to the subsequent agreement may be summarised in the form of a table: -
AMOUNT
DUE DATE
DATE PAID
AMOUNT PAID
$5,300
June 2004
16 June 2004
$5,300
$4,900
November 2004
19 January 2005
$4,921
$4,900
June 2005
6 July 2005
$5,000
$4,900
June 2006
28 April 2007*
$5105.80*
The only issues in dispute between the parties relate to the figures that have been marked with an asterisk in the table. In other words whilst the wife asserts that $5,105.80 was paid to the husband on 28 April 2007, the husband disputes this.
It is possible that the parties had, in fact, entered into further variations to their subsequent agreement insofar as payment was required to be in cash or by bank cheque, and that a signed application for divorce was to be exchanged for the payment. For the reasons set out below, nothing turns on whether the subsequent agreement was in fact varied and, if so, what the terms of such variation were. A further issue is whether the husband and the wife agreed that payment to the husband could be effected through the parties' daughter, Ms M.
The wife's case is that she withdrew $5,105.80 from her account with the National Australia Bank on 10 April 2007, in cash. The wife asserts that on 28 April 2007 she gave the money, which was in an envelope, to her friend, Ms W, who then took the money, met with Ms M and paid the money to her in order to pass on to the husband. This transaction was witnessed by Ms S, a friend of the wife and Ms W. Both the husband and Ms M deny the fact of payment.
Issues
Despite the small amount of money involved in this case and the relatively narrow factual issues I was required to rule on a number of procedural issues in respect of which I now provide detailed reasons. It is convenient to treat those procedural issues as separate issues in these reasons. Accordingly, the issues that needed to be determined in this case are as follows:-
1.Whether I should grant the wife's application for what was, in effect, summary dismissal, before the commencement of the evidence.
2.Whether I should grant the wife's application for security for costs, at the commencement of the case.
3.Whether I should grant the husband's application to re-open his case at the conclusion of both the husband's case and the wife's case.
4.The factual issue of whether payment was made by the wife pursuant to an agreement with the husband.
I propose to deal with the applicable law as and when it arises in the context of the issues referred to above.
The wife’s summary dismissal application
The principles relevant to an application for summary dismissal are set out in a judgment of Finn J in the Family Court of Australia in IC & WP [2006] FamCA 941 (1 September 2006) at paragraphs 6 -14 of the judgment. It is not necessary for me to set out that extract in the present context. Suffice it to say that the authorities indicate that an application for summary dismissal should not be lightly granted, even if a case appears weak. Moreover, and relevantly on the facts of this case, the authorities indicate that an application for summary dismissal advanced by a respondent must be determined on the basis only of the material put forward by the respondent. This was a formidable obstacle for the respondent because, for example, the untested affidavit material before the Court at the time of the summary dismissal application did not contain any objective evidence in support of the wife's assertion as to payment. That objective evidence, in the form of an NAB bank statement indicating a withdrawal of $5,105.80 on 10 April 2007 did not come into evidence until the husband was cross-examined.
Nonetheless, in order to do justice to the submissions made in favour of summary dismissal by Mr Levy, counsel for the wife, it is worth setting out these submissions and dealing with them.
In his written summary of argument Mr Levy argued that that as a result of the subsequent agreement entered into between the parties on 20 June 2004, which constituted a binding agreement between the parties, the husband was estopped from seeking enforcement of the original order, and in any event as a matter of discretion in the circumstances of the case I would not enforce the original consent orders, nor would I order interest on the amount outstanding. Moreover, the subsequent agreement between the parties was not an agreement that could be enforced in this Court as it was a contractual arrangement between the parties, and not an order of the Court that could be enforced as such.
Mr Levy referred me to the Full Court's decision in Ramsey (1981) FLC 91-301 where the Court cited with approval the following passage from a decision of the English Court of Appeal in Thwaite v Thwaite (1981) 2 All ER 789 where the Court of Appeal said at 794:-
Where the order is still executory, as in the present case, and one of the parties applies to the Court to enforce the order, the Court may refuse if, in the circumstances prevailing at the time of the application, it would be inequitable to do so.
Mr Levy also referred me to the Full Court's decision in Bourke & Bourke (No. 2) (1994) FLC 92-479 as authority for the proposition that a subsequent agreement between parties purporting to set aside Court orders was to be enforced unless there were circumstances that made it inequitable to do so.
There is no doubt in my mind that the husband and the wife entered into a subsequent agreement dated 20 June 2004, as I have set out in the introduction to these reasons. The real issue in this case is how that subsequent agreement is to be construed, particularly in terms of its inter-relationship with the consent orders made 7 May 2003. When one considers the terms both of the consent orders and the subsequent agreement of 20 June 2004, it is apparent that the substantive agreement that the parties entered into on 7 May 2003 was unchanged. Both parties clearly received what they had originally contemplated in their consent orders. In the subsequent agreement the husband was to receive the final payment of $20,000, but at a later point in time. A possible delay in payment of this final instalment was, in fact, contemplated in Order 8 of the consent orders. The interest for late payment that was contemplated in the consent orders is in fact reflected in the subsequent agreement. From the husband's perspective, therefore, the subsequent agreement only gave him what he had originally agreed to receive, but in the subsequent agreement he agrees to forego the right to cause a sale of the Property L. From the wife's perspective, the subsequent agreement has precisely the same effect, in substance, as the consent orders. She was obliged to pay $20,000 together with interest and that is precisely what she agreed to do in the subsequent agreement. The inter-relationship between the subsequent agreement and the consent orders needs, therefore, to be seen in context. The parties agreed that one term only of the original consent orders should be changed and only as regards the timing of payment. Their substantive agreement as reflected in the consent orders remained intact. The parties chose to vary Order 2 but did not vary Order 8.
The facts of this case, therefore, are materially different to the various cases referred to by Mr Levy. For example, Bourke & Bourke (No. 2) (1994) FLC 92-479 involved a case where the later agreement between the husband and the wife was embodied in signed minutes of proposed orders (that were never made) which proposed to set aside the original consent orders. In Kerr & Kerr (1983) FLC 91-329 the Court found that the basis upon which the parties entered into a later agreement was that the original order was no longer operative. On the facts of that case an order for the sale of the former matrimonial home was varied by subsequent agreement between the parties to enable the husband to buy out her interest in the home. In Ramsey (1982) FLC 91-301 parties had entered into orders whereby the husband was to transfer his interest in a former matrimonial home to the wife, but the subsequent agreement arose out of a resumption of cohabitation. These three cases all have in common an agreement between parties entered into after formal orders of Court which substantially changed the nature and substance of the initial obligations and rights contained in the consent orders. They were clearly substantive. With respect, it was clearly appropriate for the Courts in each case to have regard to and uphold subsequent agreements, particularly where one party has acted to their detriment. But in this case, the situation is both qualitatively and quantitatively different. The parties made no substantive changes to their agreement. The changes were only relatively minor.
Mr Levy asserts that, as a preliminary issue, the husband's application should have been summarily dismissed because it was inequitable for him to attempt to enforce the original orders, on the facts of the case, having regard to the later agreement. In a situation, however, where the main factual issue that arises on a reading of the affidavits is whether the wife had in fact complied with her obligations under that subsequent agreement, I think it would be inequitable to the husband if the wife could invoke a later agreement which she may have not complied with herself.
In short, the cases to which I was referred by Mr Levy are all distinguishable on their facts and the inequity invoked by him in fact works against his client, not in favour of her. That which is being enforced in this case is a consent order made on 7 May 2003 that was varied, as to one provision only, and as regards time only, by the subsequent agreement dated 20 June 2004.
Mr Levy also based his argument for summary dismissal on the related argument that if the subsequent agreement dated 20 June 2004 was, in fact, binding on the parties it could not be enforced by this Court. Implicitly, Mr Levy was submitting that the Court lacked jurisdiction to enforce a private agreement made between parties long after their separation and entering into consent orders under the Act. It is an interesting submission to make and while I am not called upon to decide it because of what I have said above, I nonetheless make the observation that paragraph (ca) of the definition of matrimonial cause in s.4(1) of the Family Law Act refers to proceedings between the parties to a marriage with respect to the property of the parties to the marriage being proceedings arising out of the marital relationship. Particularly in view of the cases to which Mr Levy referred me to, I would be very surprised indeed if a family law court were to find that it lacked jurisdiction to enforce an agreement such as that which was entered into by the parties in this case. If the Court recognises a subsequent agreement varying consent orders for the purposes of creating an estoppel or some other form of equity against a person seeking to enforce a prior but inconsistent order, then surely the Court would enforce it given its clearly marital nature. This is, perhaps, what the Full Court was alluding to in Ramsey in the penultimate paragraph of the Full Court's judgment.
In any event, for present purposes, the wife's application for summary dismissal fails for all of the reasons set out above.
The wife’s application for security for costs
When I declined the wife's application for summary dismissal of the husband's application, her counsel then made an application for security for costs arguing that the husband's case lacked merit and that his own evidence indicated an inability to meet any order for costs that might be made against him. The Full Court of the Family Court of Australia has recently looked at the issue of security for costs in Limousin & Limousin(Security for Costs) [2007] FamCA 1179 (28 September 2007). The Full Court sets out the principles governing an application for security for costs at paragraphs 11-16 of the judgment. There is no need for me to set out those principles in this case. The general principle remains that each party should bear his or her own costs. The financial means of an applicant to satisfy an order for costs if he is unsuccessful is but one factor that is taken into account in determining whether security for costs ought to be granted. The prospects of success is a relevant matter to take into consideration but, at the particular stage of the case when the application was made, it was not possible to undertake a detailed assessment of the likelihood of the applicant's claim. This is particularly so in light of the fact that the respondent’s evidence of drawing moneys from her account in purported payment of the final instalment was not evidence that was available on the affidavits and only came out after the hearing of the matter commenced. There was nothing to indicate on the papers that the claim was anything but bona fide. There was a delay in commencing the enforcement proceedings, but the delay could be adequately explained by reference to the terms of the subsequent agreement entered into by the parties. The consequences of granting an application for security for costs would have been, inevitably, to delay the final hearing of the matter that could, and was completed on the day in question. For all of these reasons, the application for security for costs was declined.
The husband’s application to re-open his case
A further procedural matter that required determination was the application by the husband to re-open his case at the conclusion of the evidence of the respondent wife. It was apparent that the application to re-open the case was to try to adduce evidence that was clearly available prior to the hearing. The evidence in the husband's case, consisting of his affidavit, and that of Ms M, were both filed on 19 December 2007. Even though the husband is the applicant, the material filed in the wife's case, consisting of the affidavits of the wife, Ms W and Ms S, were all filed in July 2007. The issues raised in this case should have been clearly apparent once the wife's affidavit material had been filed. The solicitor advocate appearing on behalf of the husband at the hearing, Mr Fernie, could offer no explanation on behalf of the husband as to why the material now sought to be adduced as part of his re-opened case could not have been filed at the same time as the other affidavit material on which he relies.
The High Court of Australia deals with the circumstances in which leave should be granted to re-open a case in Smith v New South Wales Bar Association (1992) 176 CLR 256 at paragraphs 26-32. Clearly the Court has the power to re-open, and it is a discretionary power. As the High Court noted at paragraph 32 it was relevant to inquire why the evidence was not called at the hearing, and if it becomes apparent that a deliberate decision not to call such evidence was made, that will tell decisively against the application. I am entitled to infer under the circumstances that, for whatever reason best known to the husband's legal advisors, the decision was made to not adduce in affidavit form the evidence that was sought to be adduced in another fashion at the hearing. I also observe that there might have been other ways for the husband's solicitors to have adduced that evidence including, for example, through a subpoena. The fact is that none of that took place. Under the circumstances, I decline the application to re-open the case and adduce further evidence. It was important for this litigation to be finalised.
Was Payment Made?
The fundamental factual issue to be resolved in this case is whether payment was made pursuant to the agreement of the husband and the wife. The wife asserts that payment was made to the husband through the agency of Ms W and Ms M. The husband denies that any payment was made to him. The husband's application filed 30 May 2007 cannot succeed unless he can establish, on the balance of probabilities, that the wife did not pay him the final instalment pursuant to their supplementary agreement. The onus of proof rests on the husband in this regard.
I record here that there are a number of irrelevant factual matters that, in my opinion, have no bearing on the outcome of this case. I regard it as irrelevant, for example, whether there was an agreement that payment be in the form of cash, or in the form of cash or bank cheque. I regard it as irrelevant as to whether payment was to be made at a time and context where such payment was, in effect, in exchange for the husband handing over to the wife signed divorce papers. This is irrelevant because, even if there was such an agreement, on the wife's and the husband's evidence, they had abandoned this as a precondition to the final payment. Whether or not there was an agreement that payment to the husband would be via the agency of Ms M is also irrelevant because the husband gave evidence that if Ms M had received the money, there would be no need for these proceedings. Thus, from the husband's perspective, if payment had been made to
Ms M it was for all practical purposes payment to him. It follows, therefore, that the husband bore the onus of proof to establish that payment had not been made to Ms M.
The husband believes that payment was not made to Ms M because she says so. He certainly did not see the payment take place and I accept his evidence that he was not paid by Ms M.
The wife paid money to Ms W, to pay to Ms M. She believes that
Ms W did pay Ms M, but she did not observe this. The wife does give evidence, which I accept, that on 10 April 2007 she withdrew $5,105.80 from her NAB account.
The determination of the factual issues in this case really depends on the evidence of Ms M, Ms W, and Ms S.
Whilst the evidence of Ms M was that she did not receive any money from her mother, Ms W, or Ms S, as alleged as part of the mother's case, the fact is that she is the only person with a motive not to tell the truth. This was because her relationship with the respondent wife, who is her mother, had broken down. Their relationship foundered as a result of a dispute which led to Ms M's arrest by police, and subsequent apprehended violence proceedings in the Cxxx Local Court. Does the existence of a motive not to tell the truth necessarily lead to an inference that she was not, in fact, telling the truth in denying that she had received any payment, as alleged in the wife's case? Apart from the motive created by the ill feeling between the wife and Ms M, there is no other reason to disbelieve Ms M. Even if there is a motive for not telling the truth about a payment to her it is, at best, circumstantial evidence. In a case such as the present one where ascertaining whether payment was in fact made is crucial to the outcome of a case, and where it is very difficult indeed to establish where the truth lies, it is tempting to reject the evidence of the only witness who seems to have a motive not to tell the truth. I agree with the learned authors of Cross On Evidence[1], Australian edition, to the effect that it is easy to attach too much weight to evidence of motive, even when it is illogical to do so. I therefore do not place much weight at all on the existence of a motive on the part of Ms M to conceal payment to her as a way of exacting revenge on her mother. For the Court to find that Ms M did, in fact, receive payment would mean, on the facts of this case, that she wrongfully appropriated her mother's funds and kept those funds away from her father. Even if there is a motive to harm her mother, there seems no motive to harm her father. I accept the father's evidence, i.e. the husband's evidence, that he did not receive payment. Based on
Ms M's evidence alone, therefore, I do not know whether she received payment.
[1] Cross, R. Et al. (2004) Cross on Evidence 7th Ed,, Butterworths, Sydney.
Whereas the evidence of Ms M was affected by the shadow of possible motive, the evidence of Ms W and Ms S is affected by the inconsistencies in their evidence about what took place on 28 April 2007 when, according to both of them, they went to a Square at Cxxx for the purposes of giving an envelope (which according to Ms W contained $5,105.80) to Ms M. I need not go into these inconsistencies save to describe them in general terms as relating to the time when they went to the shopping centre, where they were, and precisely what they did. These differences can be explained by the normal human phenomena of people attempting to recall insignificant details of events that took place quite some time in the past. Nothing turns on these inconsistencies. Moreover, nothing turns on certain parts of their affidavit evidence that are identical. I certainly do not accept that their evidence was untruthful because, in part, it was identical. I cannot say that Ms W and Ms S are not telling the truth but I do not know for sure whether they are. Ms W is in a relationship with the wife, but it was never suggested that she would not be truthful in her evidence because of that. Ms S is totally independent. In the face of two witnesses saying that the wife made payment to the husband through the agency of Ms M, the husband bears the onus of proof to establish that the payment did not take place. The husband has not discharged that onus.
The husband was the applicant in this case. It fell upon him to satisfy me, on the balance of probabilities, that he had not been paid. His evidence was that if Ms M had been paid, he never would have commenced the proceedings. He has commenced the proceeding thus reflecting his belief that Ms M had not been paid. It was incumbent on him to establish that she had not been paid. Even if I am not satisfied that she has been paid, that is not enough. The onus was, at all times, on him to establish that she had not been paid. The husband's claim fails and it follows that this application must be dismissed.
It is apparent from the circumstances of this case that costs is an issue and accordingly I will direct that if the respondent wishes to make submissions in support of an application for costs she should file and serve those written submissions not exceeding 500 words within 14 days. If the applicant opposes the application for costs he must file and serve any submissions in reply within a further 14 days.
I certify that the preceding thirty-five (35) paragraphs are a true copy of the reasons for judgment of Altobelli FM
Associate: Lisa Molloy
Date: 22 February 2008
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