Kirk and Martens

[2008] FamCA 596

FAMILY COURT OF AUSTRALIA

KIRK & MARTENS [2008] FamCA 596

FAMILY LAW – PROPERTY – Transaction to defeat claims – s 106B – setting aside consent orders – s 79A – exercise of discretion – factors relevant to exercise of discretion
FAMILY LAW – ORDERS – Notations to orders – undertaking – undertaking contained in notation

Family Law Act 1975 (Cth) s 79A, s 106B

Gilbert and the Estate of Gilbert (decd) (1990) FLC 92-125
Gould & Swire Investments Ltd (1993) FLC 92-434
Mullane and Mullane  (1983) 158 CLR 436
Naughton and Naughton (1983) FLC 91-327

FIRST APPLICANT: Ms Kirk

SECOND APPLICANT: Ms M Martens

THIRD APPLICANT: Mr P Martens

RESPONDENT: Ms Martens

FILE NUMBER: BRC 4828 of 2007

DATE DELIVERED: 1 August 2008

PLACE DELIVERED: Brisbane

PLACE HEARD: Brisbane

JUDGMENT OF: Murphy J

HEARING DATE: 15 May 2008

REPRESENTATION

COUNSEL FOR THE APPLICANTS: Mr Conrick

SOLICITOR FOR THE APPLICANTS: Norman & Kingston

COUNSEL FOR THE RESPONDENT: Mr Byrne

SOLICITOR FOR THE RESPONDENT: Brennans Solicitors

Orders

1. The Application for Final Orders filed by Ms Kirk on 6 September 2006 be dismissed.

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

FAMILY COURT OF AUSTRALIA AT BRISBANE

FILE NUMBER: BRC 4828 of 2007

Ms Kirk

First Applicant

Ms M Martens

Second Applicant

Mr Martens

Third Applicant

And

Ms Martens

Respondent

REASONS FOR JUDGMENT

1. On 17 March 2006 the respondent Ms Martens’ husband passed away at the age of 93, having been married to Ms Martens for approximately 20 years.

2. Ms Martens and the deceased were in a relationship on 19 January 1984.  On that date, consent orders were made effecting a settlement of property between the deceased and his former wife, an applicant in these proceedings.

3. The applicants, by application made on 6 September 2006, seek, pursuant to s 79A of the Family Law Act 1975 (as amended) (“the Act”), to set aside those Orders made some 24 years ago.

4. Pursuant to the consent orders, property owned solely by the deceased remained his to the exclusion of his former wife.  On 2 August 1990 – that is about 6½ years after the orders were made - that property was transferred into the names of the deceased and Ms Martens as joint tenants.

5. By the application filed in September 2006, the applicants seek to set that disposition aside.

6. Ms Martens is the respondent to these proceedings. The deceased’s estate is not a party.

The Consent Orders and Notation

1. The consent orders provide:-

   BEFORE THE HONOURABLE MR JUSTICE BULLEY

   THE 19^TH DAY OF JANUARY, 1984

   UPON application made to the Court this day, Mr George, of Counsel, appearing for the HUSBAND and Miss May, of Counsel, appearing for the WIFE,

   IT IS ORDERED BY CONSENT:

   (1)That in settlement of the WIFE’S claim for property settlement the HUSBAND forthwith transfer to the WIFE all his right, title and interest in:

   (a)The property situated [at W] in the State of Queensland and described as […] in the County of [W] on Registered Plan No. […] containing an area of 14 acres 1 rood 11 perches;

   (b)The motor vehicle described as Datsun Duel Cab Registered No. […].

   (2)That all chattels or other items of property presently in the possession of either party shall forthwith vest in them.

   (3)That the HUSBAND transfer and sign all documents and do all things necessary to transfer his interest in C.B.F.C. Account No. […] to the WIFE as trustee for the children of the marriage, [Ms M Martens] and [Mr P Martens] in satisfaction of the WIFE’S claim for maintenance of the said children. Further that such moneys be held by the WIFE for the children’s education and welfare and advancement and the WIFE be at liberty to use such moneys to purchase a house property for the benefit of the children to be held by her in trust for the children in such shares as contributed to the purchase price by the capital and the WIFE will monthly account to the HUSBAND for any withdrawals made from such account.

   (4)That the WIFE forthwith sign all documents and do all acts necessary to transfer to the husband her interest in any bank accounts or other investments held jointly by the HUSBAND and the WIFE.

   (5)That either party have liberty to apply on 7 days’ notice to the other.

   IT IS NOTED:

   (6)That the HUSBAND undertakes that no matter what may happen in the future those two children will be the major beneficiaries of his estate.

Factual Context of the Current Dispute

1. The factual background to the current dispute is largely uncontroversial.

2. The applicant and the deceased had separated on 30 October 1982, after some seven years of marriage (and a relationship commencing about a year earlier).

3. That marriage produced the two children named in the Orders, Ms M Martens and Mr P Martens.  Each is now an adult and each is also an applicant in these proceedings (although, for ease of reference, I will refer to the deceased’s former wife Ms Kirk as “the applicant” in these reasons).  At separation, Ms M Martens was aged five and Mr P Martens four.

4. The deceased, it might be noted, was aged about 71 when the Orders were made and the applicant about 29.

5. The applicant and deceased had together run a small produce farm.  The landholding was brought to the relationship by the deceased.

6. On 12 February 2003, about three years prior to his death, the deceased made his last will.  At that time, the two children were aged about 25 and 24.

7. By that will, the deceased Mr Martens left a sum of money to each of his children, the residue to the respondent and a list of assets described as being “jointly owned with [Ms Martens] (the respondent)”.

8. Those “jointly owned assets” included the land previously referred to. The application also refers specifically to shares and money in bank accounts.

9. Each passed to the respondent by survivorship upon the deceased’s death.  The estate remaining to be distributed was, in turn, of small value.  The land passing to the respondent had been worked on by her during the course of the relationship with the deceased.

10. In 1999, solicitors then acting for the deceased wrote to the applicant seeking that the deceased be released from the undertaking contained in the notation to the orders.  The applicant refused to do so.

11. There was no communication between the parties resulting from that letter.  The applicant deposes to the fact that she had not spoken to the deceased since about 1989.

Jurisdiction and Parties

1. Each of the parties provided written submissions.  Those submissions each primarily related to the issue of whether the notation to the consent orders was an “order” and, in a similar vein, whether the undertaking contained within the notation was an “order”.

2. The issue of “jurisdiction” was, however, raised in written submissions on behalf of the respondent and in oral argument by both parties.

3. It was submitted on behalf of the respondent (under the heading “Jurisdiction to Entertain Proceedings”):

   Respondent ([Ms Martens]) was not a party to original proceedings and is not a party within the meaning of s 4 Family Law Act [FLA].  The proceedings have been rregularly commenced and the present application on its face does not relate to “parties to a marriage. [footnote omitted]

4. The written submissions go on to refer to points which, it seems, are related to the central assertion just quoted.  The thrust of the submissions might be described as relating to whether the respondent is a “proper party” but, at least as it seems to me, conflate that issue (and the issue of jurisdiction generally) with the issue of the “status” of the notation and undertaking.

5. For example, in consecutive paragraphs it is submitted:

   2.Applicants 2 and 3 [i.e. the children] are also not “parties” within the meaning of s 4 FLA and have not currently sought the leave of the court to intervene in the proceedings. If the 2^nd and 3^rd Applicant are deemed to be “interested parties” within the meaning of s 79A(2) the proper construction of their interest is that pursuant to the terms of the undertaking ….

   3.In order for the Applicant to claim the jurisdiction of the Court under s 79A(1)(b) the applicant must establish:

   (a)That the “undertaking” is an order within the meaning of s 79

   (b)It is impractical for the “undertaking” to be carried out.

   4.If respondent is deemed to be a party because she is the executrix of deceased party’s estate the “undertaking” relates to the deceased entering into an agreement to execute a document and does not relate to an order which could be made under s 79 ….

6. This court does not have a system of pleadings.  No part of the material filed by the applicants makes it plain, in terms, whether the applicant’s action is against the wife in her personal capacity or in her capacity as executor of the deceased’s estate (although the tone of the material suggests the former).

7. The issue of “jurisdiction” became, as I see it, somewhat blurred by the arguments as to the effect of a notation and undertaking.  I mean no criticism to either counsel in that respect; indeed I suspect I may have contributed to that. 

8. It is, though, important to clarify the position in these reasons.

9. In terms of jurisdiction properly so called, Dr Dickey summarises the position succinctly:

   Proceedings under s 79A come within the scope of para (f) of the definition of “matrimonial cause” in s 4(1). They are accordingly not limited to proceedings between parties to a marriage. (Family Law 5^th edition at 610)

10. Equally, there is no doubt that s 79A proceedings can be commenced against the estate of a deceased after death. (Gilbert and the Estate of Gilbert (decd) (1990) FLC 92-125). And, an order varied or made after successfully invoking s 79A may be made, relevantly, against the deceased’s estate. (s 79A (1B)).

11. In the present case, the setting aside of the s 79 order might obviously have ramifications for the interests of Ms Martens and, as it seems to me, she ought properly be a party to the proceedings as a person whose rights might be affected by the proceedings.

12. Equally, however, no application seeking to set aside the original consent orders pursuant to s 79A can be sought against Ms Martens personally as she is not a party to, or bound by, any s 79 order.

13. Thus, properly framed, the s 79A proceedings ought to have sought an order setting aside the s 79 orders as against the estate of the deceased. So, too, in the absence of success in the s 106B application, any relief consequent upon the success of the s 79A application could see new s 79 orders made only against the property of the estate.

14. The position thus outlined should have been articulated by me during the course of argument and was not (or, at least, not in a way which, with hindsight, made the position as clear as I would have liked).  In those circumstances, I have considered whether natural justice demands the parties being further heard on the issue.

15. I have come to the conclusion that it does not, primarily for the reason that, as will emerge, the addition of the estate of the deceased as a party, would not at all affect my judgment as to the outcome. 

16. Put conversely, if I considered that the current action would fail merely because no s 79A order can be made against the respondent in her personal capacity, I would have little hesitation in affording the parties a further opportunity to be heard. That, in my judgment, is not the situation here.

17. I am also, of course, acutely conscious of the fact that to invite further submissions (either orally or in writing) which, in my judgment, will not affect the outcome, involves the parties in additional expense which, as seems clear from the evidence, none could readily afford.

18. I will, then, proceed to consider the arguments in respect of s 79A - to the extent necessary - in the manner in which the hearing itself was conducted, that is, as if the estate was a party to the proceedings.

19. I should add for the sake of completeness that considerations different to those just outlined apply to the application pursuant to s 106B.

20. Whilst, relevantly, completed proceedings and an existing order must be established, and the respondent was a party to neither, s 106B relief is properly sought against Ms Martens in her personal capacity because the disposition was to her and the relevant property is in her hands (as opposed to the estate) by reason of the application of the doctrine of survivorship.

21. The court has jurisdiction to entertain s 106B proceedings against a person not a party to the relevant marriage. (Gould & Swire Investments Ltd (1993) FLC 92-434).

The s 106b Case

1. Whilst much attention at the hearing focussed upon the claim pursuant to s 79A, in truth, ultimate success for the applicants in these proceedings, must depend upon the success of their claim pursuant to s 106B.

2. Ultimate success upon the s 79A application here would see the court exercise its discretion to make a fresh order pursuant to s 79. That order can, axiomatically, only be made in respect of the property of the parties or either of them. Here, relevantly, that is the property vested in the estate. It is common ground that any such property is negligible.

3. Thus, if there is to be substantive ultimate success, the property amenable to any s 79 order must include the property currently owned solely by the respondent who is not a party to the relevant marriage.

4. That property can only become amenable to a s 79 order if the s 106 B application is successful.

5. It is clear that at least some of the preconditions for the application of s 106B are met.  There are here completed proceedings and an existing order.  So, too, there is “a disposition” by the deceased as required by the section. 

6. The real contentions in the present case concern whether the disposition was likely to defeat an existing Order.  That issue, in turn, requires a consideration of the issue to which most attention was directed in the hearing before me and in the written submissions of each of the parties, namely the “status” of the notation and its terms expressed as an undertaking.

7. However, interesting though those questions and arguments may be, in my judgment the answer to the applicant’s case lies in a different, but central, aspect of s 106B relief, namely the exercise of the court’s discretion to grant relief even if the preconditions for it are met.

8. The factors relevant to the exercise of that discretion include:

   ·    The disposition occurred some eight years after separation and some six years after the s 79 order was made;

   ·    The consent Order provided Ms Kirk with a property settlement;

   ·    The disposition occurred in the context of a relationship between the deceased and the respondent which, at the time of the disposition, had subsisted for about as long as the relationship between Ms Kirk and the deceased;

   ·    The property was held by the respondent and deceased as joint tenants for some 16 years prior to the death of the deceased;

   ·    The property was held by the respondent and the deceased as joint tenants for some 16 years prior to any claim being made in respect of it by the applicants;

   ·    The respondent worked on the real property the subject of the disposition;

   ·    The relationship between the respondent and the deceased subsisted for about 20 years prior to his death; the relationship between the deceased and Ms Kirk subsisted for about eight years;

   ·    The children of Ms Kirk and the deceased are now well into adulthood.

9. Further, it is conceded that the respondent should be regarded as “an innocent third party” (or, in terms of the section, as a “bona fide … person interested”) in her acquisition of the property as joint tenants with the deceased. Her interests as such must be considered (s 106B(3)).

10. Taken together those factors present, in my judgment, a compelling case for the exercise of the discretion against the making of a s 106B order.

11. I would, then, dismiss the application pursuant to s 106B on that basis irrespective of the merits or otherwise of other components of the s 106B case.

12. That being the case, leaving aside any other issues relating to the s 79A application, there is, in my judgment, no basis for the exercise of the discretion to set aside the consent orders pursuant to s 79A even if the estate was a party and even if one of the two grounds contended for was made out.

Additional Issues

1. In my judgment, the application also fails for other reasons.

2. As noted earlier in these reasons, much of the argument, both in written submissions and orally, was addressed to the issue of the effect of the notation and the undertaking contained within it and, in particular, whether the latter was an “order”.

3. A precondition for the application of s 79A is that there be an “order made by a court under s 79”.

4. In my judgment, a notation is not an “order” nor, specifically, “an order made … under s 79”.  (See Naughton and Naughton (1983) FLC 91-327).

5. In Naughton and Naughton, an order was made relating to children, maintenance and the payment of other money.  That order included a provision that “… by consent orders be made in terms of para 4 and 9 of “Terms of Settlement” marked as Exhibit A and filed herein …”. The order then went on to quote paras 4 and 9.  At the end of the Orders, it was provided: “AND THE COURT NOTED the contents of para 5 and 7 of the said Terms of Settlement”. 

6. The Full Court held at 78,225 and 78, 226 that:

   …it seems clear…from the decree formally recording it that no order was made in those terms: the agreement of the parties in relation to para 7 was noted

   …the decree is no more than an order that the terms of settlement be noted; it is not an order in respect of property. [emphasis in original]

7. Submissions on behalf of the applicants argue that the notation merely records an undertaking and the undertaking has force and effect in its own right:  the written submissions argue “In this case the order might equally have been framed ‘Upon the undertaking of the husband.’.”

8. Those written submissions go on to argue that:

   16.      An undertaking given to a court has the same legal effect as an injunction i.e. an order made by that Court”

   …

   35.      The undertaking was part of and had the same force and effect as an order of the court, i.e. an existing order, being, in effect, a mandatory injunction that the deceased leave the majority of his then estate to his two children.

9. Accepting for a moment the proposition that an undertaking is of the same force and effect as an injunction (about which I express no opinion), in my view the requirements of s 79A are, nevertheless not satisfied. A mandatory injunction is, in my view, not an “order … under s 79”.

10. The High Court held in Mullane and Mullane  ((1983) 158 CLR 436):

    In our opinion, therefore, s 79 on its proper construction refers only to orders which work an alteration of the legal or equitable interests in the property of the parties or either of them. An interest in property is a right of a proprietary nature, not a mere personal right… (at 445)

11. There, an order in the nature of a mandatory injunction was held not to be an order made under s 79 even though it gave a party a right to occupy property.

12. The best case for the applicants is that the undertaking in the instant case is, or should be seen as, a mandatory injunction. But even on that best-case view, the undertaking is not an order made under s 79. It is an order made under s 114.

13. The latter needs to be distinguished from the former precisely because the former are only amenable to variation pursuant to s 79A whereas the latter are not so restricted.

14. Accordingly, even on a best-case view of the nature of the notation and undertaking for the applicants, they are unable to avail themselves of s 79A.

15. Finally, as is clear from paragraph 35 of the written submissions of the applicants, the argument is also dependant on the undertaking being certain – that is, capable of interpretation – and, in turn, on the expression “the estate” meaning the estate of the deceased as at the date of the orders.

1. In my view, even if the undertaking was an order under s 79 the ordinary and natural meaning of the expression “the beneficiaries of his estate” (particularly when the preceding words make clear reference to the future) is beneficiaries of his estate existing as at the date of his death.

2. Even if s 79A proceedings were properly framed as against the estate, I would not, then, be persuaded that either of the s 79A grounds contended for by the applicants (impracticability in carrying out of the order as a result of the circumstances that have arisen since it was made (s 79A (1)(b)) and default in carrying out of the order (s 79A (1) (c)) could be made out on the facts of this case.

Conclusion

1. For the reasons given, the application must fail.

2. I order accordingly.

I certify that the preceding seventy paragraphs (70) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Murphy

Associate:  …

Date:  1 August 2008