Knight & Ellington
[2019] FamCA 488
•23 July 2019
FAMILY COURT OF AUSTRALIA
| KNIGHT & ELLINGTON | [2019] FamCA 488 |
| FAMILY LAW – PROPERTY – Where the husband seeks to vary the consent orders under s 79A(1)(c), or alternatively, the court exercise its accrued inherent jurisdiction to vary its orders – Where the consent orders included that the property be sold – Where the husband argues the event of default is the failure of the wife to sell the property – Where the wife argues the parties’ agreed that the payment of $25,000.00 to the husband was intended to discharge the wife’s obligations to him under the consent orders – Where the court satisfied the husband knowingly surrendered his entitlements under the consent orders in exchange for the payment – Where enforcement of the consent orders is not just or equitable. |
| Family Law Act 1975 (Cth) ss 79A, 80, 84, 105 Judiciary Act 1903 (Cth) ss 79 Limitation Act 1969 (NSW) ss 17 Limitation of Actions Act 1958 (Vic) ss 5 Limitation of Actions Act 1974 (Qld) ss 10 |
| Blackwell & Scott [2017] FamCAFC 77 Purcell v F C Trigell Ltd [1971] 1 QB 358 Kerr & Kerr (1983) FLC 91-329 Peabody & Peabody [2011] FMCAfam 835 Prismex Technologies Pty Ltd v Taggert [2013] NSWSC 292 Collins & Olsthoorn (2005) FLC 93-216 Barrak & Barakat (2005) FLC 93-234 Dennehy v Reasonable Endeavours Pty Ltd (2003) 130 FCR 494 Southern Cross Mine Management Pty Ltd v Ensham Resources Pty Ltd [2005] QSC 233 Streeter v Western Areas Expiration Pty Ltd (No 2) (2011) 278 ALR 291 |
| APPLICANT: | Mr Knight |
| RESPONDENT: | Ms Ellington |
| FILE NUMBER: | CSC | 677 | of | 2007 |
| DATE DELIVERED: | 23 July 2019 |
| PLACE DELIVERED: | Cairns |
| PLACE HEARD: | Cairns |
| JUDGMENT OF: | Tree J |
| HEARING DATE: | 13, 14 March and 24 May 2019 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Richardson |
| SOLICITORS FOR THE APPLICANT: | Vernon Da Gamma & Associates |
| COUNSEL FOR THE RESPONDENT: | Ms Lawrence |
| SOLICITORS FOR THE RESPONDENT: | Berger Kordos Lawyers | |
Orders
The husband’s Initiating Application filed 10 August 2017 is dismissed.
Note: The form of the order is subject to the entry of the order in the Court’s records.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Knight & Ellington has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).
| FAMILY COURT OF AUSTRALIA AT CAIRNS |
FILE NUMBER: CSC677/2007
| Mr Knight |
Applicant
And
| Ms Ellington |
Respondent
REASONS FOR JUDGMENT
INTRODUCTION
On 8 November 2007, orders were made by consent in the Family Court at Cairns resolving the parties’ property proceedings. Now, by Initiating Application filed 10 August 2017, Mr Knight (“the husband”) seeks, pursuant to s 79A(1)(c) of the Family Law Act, to vary those consent orders, or alternatively, that such variation be undertaken “pursuant to the accrued inherent jurisdiction of the Family Court of Australia to enforce its own orders in a fair and just manner and give efficacy to those orders.” Ms Ellington (“the wife”) seeks that the husband’s application be dismissed.
On 24 May 2019 the trial of the proceedings concluded before me, and I reserved my decision. This is that decision and the reasons for it.
THE FACTS
The parties and their relationship
The husband was born in1969, and hence is presently 50 years of age. The wife was born in1973, and hence is presently 45 years of age. The husband completed his training in hospitality 1988, and thereafter obtained employment using not only that qualification, but some further qualifications as well. By 1999 he had commenced working in those capacities in businesses providing luxury accommodation which were operating, as I read his curriculum vitae which is in evidence, in Europe, the United States and Australia. For her part, it seems as though the wife also obtained employment in these businesses, but whether that was prior to or after the parties’ marriage in 1998, is unclear. What is clear is that after their marriage, the parties were both employed in the same businesses.
In September 2002, the parties ceased working in the businesses, and both obtained employment at City M in the United States. It was during this period that the parties’ only child to their relationship, X, was born in 2004.
Whilst the parties were working overseas, they commenced to acquire assets in Australia, principally real properties. One of those properties, being a home at B Town in North Queensland, was acquired by them in 2004 for $750,000.00, which was funded by borrowings of $705,000.00 from the National Australia Bank.
In June 2005 the parties returned to Australia. They sold two properties that they owned, and with the proceeds, reduced the B Town mortgage to $229,284.00, and it remained their only property. According to his CV, upon return to Australia, the husband obtained employment at C Town.
The parties are agreed that they separated on 8 August 2006. Their relationship therefore spanned something approaching 8 years.
Post separation events
Initially the wife and child moved out of the B Town property, and the husband remained residing in it. However the husband then moved out of the property in May 2007, and according to the unchallenged evidence of the wife, she and the child then moved into the property, and lived there until November 2007. At that time, according to the wife, it was listed for sale.
By then the parties had engaged in both parenting and property proceedings. The parenting proceedings settled by consent order made 9 August 2007, pursuant to which the child was to live with the mother, and spend time and communicate with the father as may be agreed.
The mother says that by then, the father was abusing both alcohol and other drugs. She says that it was with that in mind, that there was a specific term of the parenting orders that the father must not spend time with the child if under the influence of drugs or alcohol, or in the company of others who were under the influence.
Next, on 8 November 2007, the parties resolved their property disputes by consent order. Under those orders, the B Town property was to be listed for sale by private treaty with agents and at a price to be agreed, and after meeting the costs of sale and discharging the mortgage, the balance was to be divided to the husband to the extent of 30% and to the wife 70%. Both parties were obliged to continue contributing to the mortgage until sale, and each would be equally responsible for rates and insurance. Pending sale, the wife was permitted to have sole occupancy of the home. Otherwise each party was to retain the assets and liabilities then in their possession or name.
The events of 13 March 2008
There is no dispute that on 13 March 2008 the husband signed a number of documents at the wife’s solicitor’s office. These included a transfer of his interest in the B Town property to the wife, a letter to the National Australia Bank, a Power of Attorney in the wife’s favour, and an authority to release the mortgage. There is also no dispute that on that day, from a line of credit associated with the National Australia Bank mortgage over the B Town property, the husband was paid the sum of $25,000.00.
However the parties are in strong disagreement as to the terms of the agreement which underpinned those actions. For his part, the husband says that the transfer and Power of Attorney were intended to enable the wife to solely effect the sale of the property whilst he was overseas, and the $25,000.00 was an advance on his ultimate entitlements under the consent orders. For her part, the wife says that the agreement was that the husband would receive the $25,000.00 in full discharge of his entitlements under the consent orders.
In order to determine which parties contention is correct, it is therefore necessary to traverse in some detail the facts which led up to the events of 13 March 2008, and also to assess the parties’ conduct thereafter, to see whether they acted consistently with one or other party’s contentions.
The husband’s version is contained at paragraphs 18 to 20 of his affidavit filed 13 February 2019 as follows:
18. On or about February 2018, I told the respondent that I wanted to go overseas to work for some time and that I wanted to pay out my tax bill and credit card debt before I left, especially if the sale of the former matrimonial home was possibly going to be delayed. The respondent said she would think about it and that she would get in contact with her solicitors in Town G and let me know.
19. A few days later I spoke with the respondent again, and she said that she had discussed the situation with her solicitor and she was happy for me to redraw an amount of $25,000.00 from the line of credit attached to the mortgage, in order to pay outstanding tax liability that I had with the ATO (which debt arose while the respondent and I lived together as husband and wife) and to pay down the balance of my credit card with the National Australian Bank, which was a joint liability that accrued whilst the respondent and I lived together. The respondent also said to me words to the effect that, as I was going to be away and because it might be difficult to contact me that it would make sense to transfer my interest in the former matrimonial property to the respondent. I told the respondent that I wouldn’t mind doing that as long as she agreed to sell the former matrimonial property in accordance with the consent orders dated 8 November 2007 and let me know when the property had been sold. At the end of the call the respondent mentioned that I would have to see her solicitors in Town G again to sign some documents.
20. A couple of days later, I attended the respondent’s solicitor’s office in Town G together with the respondent, at which time the respondent’s solicitors presented two documents to us and requested they be signed. I recall that one of the documents I signed related to a transfer of the property and I think the other was a letter to the bank. At no time did I ever obtain any legal advice regarding the arrangements made between the respondent and I in March 2008, not did Mr D or the respondent suggest that I should obtain legal advice. In fact, I do not recall Mr D saying very much to me on this occasion other than his request that I sign the documents that I mentioned earlier.
For her part, the wife’s version is as follows:
61. In late January through to early February 2008, the applicant became desperate to leave Australia. He told me that he had been staying with a friend and had a falling out with this friend over missing drugs. He was begging me to “set him free” referring to paying his debts for him. He said that he needed to get out of the town. It was going to kill him or he would end up in jail. Stating that he did not wish to ever live in far north Queensland again and he saw no point in paying towards a house that he was never going to live in. He had burnt most of his bridges and was finding it hard to find work due to several problems relating to his addictions. He stated that he just wanted out. He wanted to give the house to X and me. I recognised that he wished to leave me with an unserviceable loan and did not want to accept this offer in which he was originally asking for $50,000.00. I had great concerns about my abilities to keep the house from the bank as we had already had Default notices. I had an extremely difficult time supporting X and paying the maintenance for the house, rates of the property since X and I moved back into it in May 2007. The property market was heavily depressed. Initially, I did not accept his offer of retaining the house and the mortgage – knowing that the property market was not going to improve quickly and being a single mother, I could not afford to accept it.
62. The applicant responded by sending me the following text message on 27 February 2008 at 10:22am:
You flatten me im running out of time I will give up its only a matter of when ive lost a lot of interest in life and if u turn ur back on me again explain to [X] what happened to his daddy.
63. The applicant’s persistent emotional abuse and manipulation led me to agree to settle our property matters on the basis that he will receive his entitlement early in the form of cash whilst I was left with the house and the mortgage. By agreeing to the settlement in March 2008, I allowed the applicant to take his entitlement and leave overseas and not be responsible for the property until it was sold.
…
66. He said words to the effect of “I know I have spent a lot of money and don’t deserve anything more but now you can have it all.” He promised he would change for X’s sake if given the “chance for a fresh start.” He said he would make up for his past wrongs, paying money towards X once he commenced working overseas. He asked if I could straighten out his bills left in Australia, which included transferring money to his credit card as he sent it back to Australia.
…
68. By March 2008, when the property failed to sell, the applicant had secured employment in France. As he was planning to leave Australia, he did not want to wait for the B Town property to sell before he received his entitlements and instead wished to receive his entitlements urgently to enable him to travel. There was a sense of urgency in him as he indicated to me that he could not delay commencing work.
69. Given the applicant’s need for an early settlement, he and I came to an arrangement to give effect to the Consent Orders and finalise our property settlement in March 2008... Our agreement was that I would pay the applicant a sum of $25,000.00 and discharge the applicant’s then tax liability towards the ATO in the sum of $1,503 and in exchange, he will transfer his interest in the B Town Property into my sole name.
Of considerable relevance, because it is contemporaneous and relatively independent, are the contents of the wife’s solicitor’s file.
The first relevant entry that bears any date appears to be 11 February 2008, and records an attendance of the wife’s solicitor, Mr D, upon her for 15 minutes. The first part of that note records “[The husband] wants out for 30k.” The note further records that Mr D advised the wife that she had two options, the first being to have the property transferred to her name in exchange for a payment, or alternatively to vary the consent orders. There is a clear note that the solicitor recommended “she gets it into her name.”
The next consultation appears to have been on 19 February 2008, when the solicitor’s note records that the wife did not want to pay the husband $30,000.00, as that would increase the mortgage by $45,000.00 (seemingly including another $15,000.00 in respect of payment of the husband’s tax).
There was a further consultation on the following day. The note relating to that records that, if the house was worth $800,000.00, and the mortgage was worth $400,000.00, then the equity in the property would be $400,000.00, of which the husband’s 30% would be $120,000.00. Importantly the wife is recorded as having told Mr D “[The husband] now will accept 25.” Unsurprisingly, his notes record his suggestion that she take him up on that.
The wife again attended Mr D on 6 March 2008 for 30 minutes. In that consultation she told him that the husband had apparently recently threatened to commit suicide, and was drinking and smoking (presumably cannabis) in front of the child when he was in his care. She was concerned that the father not have further unsupervised access with the child until he had undertaken some rehabilitation.
There was then a telephone attendance on 10 March 2008. In its entirety the relevant file note of it reads:
On 10 March [the wife] stated that agreement had been reached with [the husband] and that [the husband] was to receive the sum of $25,000 in exchange for the transfer of his interest in the property to [the wife] and [the wife] assuming liability under the mortgage.
On the following day, even though there was an appointment for both the husband and wife to attend Mr D, in fact only the wife did so. There was a 45 minute consultation. In the solicitor’s file it is recorded that the wife told him that the husband was “happy to walk away with nothing wanting [the wife and child] to have it all.”
The next part of the file note reads:
Wants to cover debts and go o/s.
[The wife] happy to cover mortgage to property sells.
Doesn’t want any dollars other than to clear debt.
Has 6K tax and credit cards.
Mr D’s unchallenged evidence was that, on that occasion, he had prepared the necessary transfers and other documents for the parties’ signature, but that only the wife signed, as the husband was absent.
There are file notes for 12 March in evidence, but I do not need to refer to them in this chronology.
There were then, it would seem, at least three attendances recorded in the notes in the solicitor’s file for 13 March. It is not possible to conclusively put them in order. One of them appears to be largely irrelevant, save for the question of the valuation of the property, in that it records the valuation at the time as being $830,000.00. The next in time appears to likely be a telephone communication between Mr D and the wife, in which it is noted that the release of mortgage was yet to be signed by the husband. Further, he advised her that the Power of Attorney could be revoked by the husband at any time.
The next note in time, at least according to the solicitor’s file structure, records that the husband is to authorise the release of the signed transfer, that there would need to be a letter for the bank, and that there would need to be $25,000.00 paid to the husband from the joint account, which is described as “final payment.”
It appears as though that note does not relate to any attendance by Mr D on the husband on 13 March 2008, because it concludes “about 2:00pm,” which Mr D, in evidence, conceded was an indication of the time when the husband was to attend upon him later that day.
Although Mr D appears to have been something of a religious note taker, as his profession requires, there does not appear to be any note of his attendance with the husband and wife at 2:00pm. I must say I find that a little surprising, and although I have attempted to construe the several file notes for 13 March as if they may have been recording what transpired at the 2:00pm meeting, it does not appear that any of them do so. What can be ascertained with certainty, is that at about 2:00pm the husband and wife both attended Mr D, and that the several documents had been signed by the husband by 2:38pm, as there is a facsimile transmission report bearing that time, comprising a record of the husband’s and wife’s direction to the National Australia Bank.
It is pertinent to record the body of the letter to the bank in these reasons. It reads:
We advise we are acting on behalf of [the wife] and have had a meeting at our office with [the wife and husband] in relation to the resolution of property matters between them.
It has been agreed that the freehold will be transferred from [the husband] to [the wife] and in return [the wife] shall pay to [the husband] the sum of $25,000.00.
Payment of the sum of $25,000.00 will be effected by a drawing from the joint account.
The drawing of $25,000.00 will be carried out by way of a cheque to the ATO to an amount to be advised and the balance to [the husband’s] National Australia Bank credit card.
Confirmation of this arrangement is verified by the signatures of [the wife] and [the husband] appearing at the foot of this letter.
Yours faithfully.
… (emphasis added)
According to his affidavit, Mr D’s recollection of the events of 13 March 2008 is as follows:
7. On 13 March 2008 the respondent and the applicant attended my office for the purpose of the applicant executing a transfer of the property in exchange for the arrangement effected between the respondent and the applicant. The applicant was happy to walk away with nothing further than the payment of $25,000. The applicant stated that he was happy for his son, X and the respondent, [Ms Ellington] to “have it all.”
8. The applicant presented as a personable fellow, he was relaxed in his demeanour and was alert and clearly appeared to understand what was happening.
9. My file notes indicate that a payment of $25,000 to the applicant was to be a final payment.
10. As the parties had already effected an arrangement whereby monies could not be drawn down unless there were joint signatures, I prepared a letter addressed to the National Australia Bank at K Street, C Town which was to be signed by both the applicant and the respondent authorising the withdrawal from their account to be paid to the applicant.
11. I recall the respondent stating that she was happy to continue with the mortgage until the property was sold thus relieving the applicant of the obligation to contribute.
12. The applicant did not want anything more from the respondent.
13. The applicant appeared happy to have his debts cleared and have funds in his pocket to be on his way as he was intending to travel and work overseas.
14. It appeared to be a win, win situation for the applicant in that he got money in his pocket when it was unknown as to when the respondent would get any money and further, he was relieved of his obligations to contribute to the mortgage and could set off on his travels.
15. There was no discussion in my office as to the applicant being entitled to any further monies in the event that the property was to sell at some stage in the future.
16. The arrangement was clear in that the applicant would:
(i)be released from mortgage and house maintenance obligations; and
(ii)take money from the respondent to enable him to relocate.
Post 13 March 2008 events
On 19 March 2008 Mr D wrote to the wife confirming the events of 13 March. Unfortunately two purported file copies of that letter appear in Mr D’s file, and he could not be confident as to which was the actual file copy of the sent letter, but logically preferred that which was uppermost on the file as being the most recently placed upon it. Assuming that is correct, the relevant correspondence reads as follows:
Further to the developments in relation to the resolution of property matters between yourself and [the husband] as they unfolded in the week ending 14 march 2008 we confirm that we now have written instructions from [the husband] to release to your benefit the signed transfer which has the effect of transferring the property to you in consideration for you paying him the sum of $25,000.00 which we note was to be paid by way of a draw down from the loan which in turn is in joint names. [The husband] has stated he will continue to meet an equal share of the mortgage payment thereon.
This transfer arrangement is outside the scope of the Consent Order which was sealed on 8 November 2007.
If at a later stage [the husband] does come back to you after you have sold the house then you can offset against the amounts claimed by him, the shortfall of payments due by him and your costs and expenses in having the property transferred to you.
The adage is that possession is 9/10ths of the law and for that reason we have been in favour of you proceeding with the transfer.
The Consent Order does have the effect that when the property is sold that 30% of the net proceeds are paid to [the husband]. On the other hand as [the husband] has transferred the property to you it may be that you decide not to sell the property and in the event no monies will be payable by you to [the husband].
We understand that [the husband] is shortly to leave Australia to travel overseas however should he return on occasions and want to see [the child] then he should be mindful of the fact that he no longer has a legal interest in the house and in that matter you should be entitled to call the Police if he entered the property against your wishes.
As discussed on Monday 17 March 2008, stamp duty is payable within one month of the date of the transfer. The transfer is dated 11 March 2008. Stamp duty is due 11 April 2008. You have advised that you have had discussions with the Office of State Revenue and you feel that you are entitled to a concession on the stamp duty. We have prepared a Form 2.1 and 2.2 to be signed by you. We will lodge the documentation with the Office of State Revenue to enable an assessment of stamp duty to be issued.
You are to be obtaining an assessment or appraisal of market value from a Real Estate Agent who in providing the assessment must also provide three comparative sales.
It is in your interest for the market appraisal to be kept as low as possible as that will result in a lower stamp duty obligation.
We wait to hear from you.
…
As I pointed out to counsel for the wife during submissions, the third paragraph of that letter seems to contemplate the continued operation of the consent orders. Likewise the fifth paragraph seems to proceed on that basis too. On the other hand, the document does not support the contention of the husband, that the payment of $25,000.00 to him was merely some early release of funds.
Almost immediately, the wife set upon a process of effecting subdivision of the B Town property into two lots. That was because her intention was to holiday let the main house on the property, but to avail herself of an offer to move a small portable dwelling onto the site, to enable her and the child to live there whilst managing the holiday let. In fact that holiday letting began in July 2008, because by then the property market had significantly declined, and it was obvious that the property was not going to sell for anywhere near the figure that the wife wanted. The wife says that to enable the holiday letting to occur, she and the child started living in a van, with an outdoor makeshift kitchen and bathroom, on a part of the property, but because of rain, that became untenable and it proved that she needed to move between various friends’ homes. Later, she rented a shack for $75.00 per week, which she utilised whenever the B Town house was holiday let.
The wife says at paragraph 84 of her trial affidavit that:
From March 2008 to December 2014, I did not hear anything from [the husband] in relation to the sale of the B Town property or his alleged claim. During the six years and nine months, [the husband] did not enquire from me as to the progress of the sale or my dealing with the B Town property. To the contrary, the applicant continued to lead me to believe that the B Town property was mine and he had nothing to do with it.
According to the husband’s CV, during the period from April 2008 until February 2010, he was working in businesses providing luxury accommodation in, initially, Europe, but then the United States and the Pacific. It seems he returned to Australia in about February 2010.
Interestingly, this seems to correspond with one of the oddities of this case, namely that notwithstanding the wife’s case that the 13 March 2008 events were intended to conclude the parties’ financial interactions, for a period, in fact the husband thereafter continued to make payments into the line of credit attached to the parties’ mortgage, to the extent of $47,191.87, (although also made withdrawals to his credit card from that line of credit to the extent of $21,917.00). The husband says that this shows that he was paying the mortgage consistent with the consent orders, but the wife points out that, if one takes into account bills that she paid for the husband, the child’s medical expenses and education expenses, and outstanding child support, the amount of any payment is much less.
The husband’s explanation for why he ceased making payments into the joint line of credit in 2010 is rather difficult to fathom. He says that, in conversations with the wife, he was told that the B Town property was paying for itself, which he interpreted as meaning that it was making sufficient from rental income from holiday letting to meet the repayment of the mortgage. However curiously, in tables proffered by counsel for the husband, it is tellingly demonstrated that the property has always operated at a loss.
I am satisfied that the reason why the husband stopped paying into the mortgage in 2010 was likely, at least in part, because he had ceased working for the businesses providing luxury accommodation, from which employment he had derived a considerable income. Rather, in February 2010, he had returned to Australia, where his income was much less.
It appears as though the husband, after his return to Australia, has intermittently spent time with the child. The wife says that some of that time has been spent with the child at her parents’ home in City H.
It seems not to be in dispute that the work involved in holiday letting the B Town property was extremely time consuming for the wife, who was otherwise in full time employment. That led her to, in 2012, move with the child to City L, where she took up employment as a boat captain earning about $109,000.00 per annum. It seems as though from the time she moved to City L, the B Town property ceased to be holiday let, and instead was a residentially let.
On 4 December 2014, the husband, who by then had retained solicitors, had them write to the wife’s solicitors, in the following terms:
I have seen [the husband] who has handed me a Consent Order made at the Family Court at Cairns on 8 November 2007, which has Terms of Settlement exhibited thereto. You acted as her solicitor at that time, and I understand that you are still acting for [the wife].
Pursuant to the Terms of Settlement the property at B Town was to be sold, and after payment of the selling expenses, and the mortgage, the net monies remaining were to be divided 30% to [the husband], and 70% to [the wife].
I understand that the home was not sold at that time because real estate prices collapsed, but I have been advised that real estate prices have since recovered in recent times. I understand that the home has been rented out since 2007, and that the rental has been used to pay the mortgage instalments.
My client now wants the property sold, and wants 30% of the net proceeds remaining from the sale in accordance with the Terms of Settlement made in 2007.
I understand that your client may require some allowance for unpaid child maintenance. However, my client has responded by saying that her income has been much higher than his income as a partially employed worker, and for this reason little is owing by him for unpaid child maintenance.
I await your response to my client’s proposal that the home in B Town be sold, and that the net proceeds from the sale be divided 30/70 as aforesaid.
Interestingly, there is no reference in that letter to any credit to the wife for the $25,000.00 that had been allegedly advanced to the husband, on his case. Indeed there is no mention in that letter of the events of 13 March 2008 whatsoever.
On 11 February 2015 the wife’s solicitors responded. The letter is too long to recite in these reasons, but confusingly, it commences with addressing the terms of the consent order, and making a claim for one half of the wife’s subsequent expenditure, totalling $409,416.00. It is only after that consideration has been addressed, that the following paragraphs appear:
Our file notes that in 2008 your client presented at our office and provided communications that he wanted to walk away from ownership of the property as he wanted our client and their son, X, “to have it all.” [The husband] wanted to cover his personal debts and get some money to travel overseas. He said that he was happy to cover one half of the mortgage payments until the property sold and he stated that he didn’t want any other monies other that $25,000.00 and payment of his ATO debt thereby allowing him to travel debt free.
As a result, the parties signed a Letter of Direction to the National Australia Bank on 13 March 2008. A copy of that letter bearing the signatures of both parties is enclosed.
Subsequently the sum of $25,000.00 was paid to [the husband] and he in turn consented to the release of a Form 1 Transfer which thereby enabled the property to transfer into our client’s name as sole proprietor. A copy of that consent is attached and is dated 13 March 2008.
…
As your client has received funds as noted above, and agreed to transfer the title to our client for $25,000.00 and as our client is now the sole proprietor of the property, it is the case that the parties have jointly agreed to waive the obligations of the Consent Order and the property settlement between the parties is at an end. We do not see that there is any equity left in the property to your client nor is he entitled to any payment from our client.
…
We wait to hear from you within 30 days. If no response is received we will consider that the matter is permanently closed.
…
No response was ever received from the husband’s then solicitors. Rather, more than another two years elapsed, until the husband’s present solicitors, on 21 June 2017, wrote back to the wife’s solicitors.
However, before I detail the terms of that correspondence, it is important, in my view, to note some further events that occurred in the interim.
On 10 January 2015, the parties divorce order was made.
Next, in November 2015, the wife sought to register with the Child Support Agency. She discovered that the husband was liable to pay $87.50 to her per month in respect of the child. This apparently enraged the husband, who in the course of less than one hour, sent the wife four text messages as follows:
Now I can get my 30% and look after [the child] properly
Yippee
$87.50 a mth was it worth it? Happy now xx
You still don’t get it, be nice to me and I’ll help you be a Cunt and get what you give.
All the while, the wife was pressing on with her subdivision application for the B Town property. Her evidence, which was not challenged, was to the effect that there were a number of onerous conditions sought to be imposed on the subdivision by the local Council, which required a great deal of negotiation by her to minimise. At all events, in November 2016 subdivision approval was close, however the wife’s evidence is that the National Australia Bank required to be paid out as a condition of consenting to the subdivision. As luck would have it, earlier in 2016 the wife’s mother had received an inheritance, and hence she was able to loan the wife’s the sum of $404,029.42 to discharge the NAB mortgage. Subdivision was then finally achieved on 1 September 2016.
On 14 September 2016 the wife and her mother signed a loan agreement acknowledging the debt. The wife’s unchallenged evidence was that her understanding with her mother was that, once subdivided, the properties would be sold, and her mother’s loan repaid. Indeed in August 2016 the wife had listed the B Town property for sale by auction, which took place in October of that year, but no offer was received.
On 12 May 2017, the husband conducted a property search of the B Town property and discovered that it had been subdivided. He then lodged caveats against both of the titles. It was against that background that his new solicitors wrote to the mother’s solicitors on 21 June 2017, responding to their letter of some two years earlier.
The relevant parts of that letter are as follows:
…
We note that you assert as is set out in your file notes. Our client emphatically denies that he provided communication as alleged to the effect that he wanted to walk away from the ownership of the B Town property or that he did so, as he wanted your client and X to “have it all.” Whilst it is true that our client did receive a sum of $25,000.00 from your client, our client, towards part payment for his miscellaneous expenses, received that payment.
It can hardly be suggested that the sum of $25,000.00 equated with our client’s 30% share entitlement under the Consent Orders. Our client instructs that when he received the sum of $25,000.000 from your client he was asked to sign documentation and did so in good faith and without independent legal advice. At no point in time was it even suggested to our client, or at no point in time was our client under any belief that he was receiving the $25,000.00 in full and final satisfaction of his entitlements to his 30% share pursuant to the Consent Orders. Our client’s instructions are that he was given to understand and bona fide believed that the transfer of the B Town property to your client was only being done for the sake of convenience to have the B Town property sold, by your client, given that our client was to move out of the B Town region and live at a distance from the B Town property.
…
On 10 August 2017 these proceedings were commenced by the husband.
On 22 January 2018, a mortgage in favour of the wife’s mother was registered over both titles of the B Town property, securing her loan to the wife.[1] Seven days later, the wife obtained a further mortgage from the National Australia Bank in the sum of $100,000.00, which although initially drawn down, has varied in balance from time to time thereafter. It appears as though those funds have largely been used to pay her legal fees in these proceedings.
[1] It seems that although lodged, the husband’s caveats were not registered, for some reason which the evidence does not adequately explain.
As at the time of trial before me, the wife remained the sole registered proprietor of both titles of the B Town property, and remains employed in City L. The B Town properties are presently, as I understand it, let out under a residential tenancy.
For his part, the husband is now employed in Victoria.
THE S 79A APPLICATION
The husband’s application
In his Case Outline, the husband sought orders as follows:
1.That pursuant to s 79A(1)(c):
(a)The orders made by the Family Court of Australia at Cairns on 8 November 2007 be varied such that clauses 3 and 4 thereof be vacated and set aside;
(b)That the respondent be ordered to forthwith do all acts and things and sign all necessary documents to effect the sale by immediate public auction of the following real properties being:
iLot … on Survey Plan …, Title Reference … (“the First B Town property”);
iiLot … on Survey Plan …, Title Reference … (“the Second B Town property”)
(formally described by their parent title being Lot … on … being situated at J Street, B Town, Queensland, Title Reference …)
and by way of consequential arrangement that shall be made for the purpose of effecting a sale:
iThe First and Second B Town properties shall be put on the market for sale by public auction with a real estate agent to agreed upon by the parties;
iithe applicant’s solicitor and/or it’s nominated agent shall have carriage of the conveyance of the sale of the First and Second B Town properties.
(c)Upon completion of the sale of the First B Town property, the proceeds of the sale be applied as follows:
iFirstly, to pay all costs, commission and expenses of the sale and to pay any council and water rates outstanding in respect of the real property;
iiSecondly, to discharge the mortgage(s) and any other encumbrances affecting the real property;
iiiThirdly, the sum of $12,500.00 to be paid to the respondent;
ivFourthly, the balance remaining to the applicant to a thirty per cent (30%) share and the respondent to a seventy per cent (70%) share.
(d)Upon completion of the sale of the Second B Town property, the proceeds of the sale be applied as follows:
iFirstly, to pay all costs, commission and expenses of the sale and to pay any council and water rates outstanding in respect of the real property;
iiSecondly, to discharge the mortgage(s) and any other encumbrances affecting the real property;
iiiThirdly, the sum of $12,500.00 to be paid to the respondent;
ivFourthly, the balance remaining to the applicant to a thirty per cent (30%) share and the respondent to a seventy per cent (70%) share.
(e)That:
iEach party shall do all acts and things reasonably required by the other including the signing or execution of all necessary documents to give effect to the provisions of clause 1(b) above within 14 days of being requested to do so.
iiIf either party refuses or neglects to sign or execute and return a document within 14 days of a written request to do so then the Registrar of the Melbourne Registry of the Federal Circuit Court is hereby appointed under Section 107A of the Family Law Act 1975 to sign or execute such document on behalf of that party upon lodgement of such document and the filing of an affidavit of a solicitor on behalf of the requesting party as to the said neglect or refusal.
iii.A defaulting party shall pay the other party’s costs of and incidental to such request and production of documents to the Registrar on an indemnity basis.
Although those proposed orders were somewhat modified during the course of final submissions, nonetheless they remain, in broad terms, the relief under s 79A(1)(c) which is sought by the husband.
In effect, it can be seen that the only real variation from the consent orders of 8 November 2007, is to change the real property details, and to provide a more aggressive means of effecting sale, by public auction, seemingly without reserve.
Relevant statutory provisions and legal principles
Section 79A(1)(c) relevantly provides:
(1) Where, on application by a person affected by an order made by a court under s 79 in property settlement proceedings, the court is satisfied that:
…
(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
…
the court may, in its discretion, vary the order or set the order aside and, if it considers appropriate, make another order under s 79 in substitution for the order so set aside.
This provision has been considered in a number of Full Court authorities, most recently Blackwell & Scott [2017] FamCAFC 77. Although in that case there were some divergent views, I do not understand that what Kent J said at [46] was controversial:
46. Specifically with respect to subsection (c) of each of s 79A(1) and s 90SN(1), the subsection is only engaged when a person is in default of a property adjustment order. Given that the usual civil remedy when default of an order occurs is enforcement, the purpose of each subsection can be seen to reflect the recognition that in some instances of default, enforcement will be an inadequate remedy to achieve justice and equity. Likewise the corollary, that is, in some instances of default (as will shortly be referred to) it will be unjust and inequitable to permit an enforceable order to stand. Ensuring that justice and equity is achieved in the context of default of an order having occurred is the central purpose of subsection (c).
Where the court in Blackwell & Scott (ibid) was not in agreement, was in relation to what relevant circumstances can be taken into account as having arisen as a result of the default. As to that, the majority view appears to be reflected in the judgment of Aldridge J at [6]-[14] as follows:
6. It is clear therefore, as Kent J points out, that there must be a causal link or nexus between the default and the circumstances that have arisen. This is made plain by the use of the words “have arisen as a result of that default” in the sub‑section.
7. The question then is how does the court determine the relevant circumstances that have arisen as a result of the default?
8. The issue of causation, or more correctly in this case, the application of the words “the circumstances that have arisen as a result of that default”, is a question of fact to be resolved as a matter of common sense: Fitzgerald v Penn (1954) 91 CLR 268 at 277; March v E. & M. H. Stramare Pty Limited (1990) 171 CLR 506 at 515 and 522-3.
9. As to the present case, it is therefore necessary to look at the circumstances in a practical and common sense way in order to see if they have arisen as a result of the husband’s default. In doing so it is necessary to bear in mind the purpose of s 90SM and s 90SN and answer the question posed in the preceding paragraph in that light. As Gaudron J stated in Chappel v Hart (1998) 195 CLR 232 at [7], “[q]uestions of causation are not answered in a legal vacuum. Rather, they are answered in the legal framework in which they arise”.
10. What then is the legal framework? Section 90SN applies to orders for property division made under s 90SM and empowers the court in the limited circumstances set out in that section to set those orders aside or to vary them. Section 90SM requires the court to consider whether it is “just and equitable” to divide the property of the parties and that any division of the property of the parties made by the court must be “appropriate”.
11. The question posed by s 90SN is whether the property orders made under s 90SM continue to be just and equitable or appropriate, subject to the terms, in this case, of s 90SN(1)(c) being met, including the requirement that the relevant circumstances must have arisen as a result of default. It is therefore entirely proper to look at the content and effect of the s 90SM orders to identify the relevant changed circumstances.
12. The primary judge found, without challenge, that the evident purpose of the property settlement orders was to achieve an equal division of the property of the parties. Thus, to use the words of s 90SM, it was just and equitable and appropriate that there be such a division and that that division be effected by a payment to the wife of $130,000.
13. The husband’s delay in complying with the orders was lengthy and substantial. By the time he did comply with the obligations imposed upon him by the orders, the wife did not receive anything close to 50 per cent of the matrimonial property, which was both the intent and effect of the orders at the time the parties consented to them. I agree with the analysis of this issue by Kent J in [58] to [61] of his Honour’s Reasons.
14. Thus whilst it is entirely correct to say that the husband’s default did not cause house prices to rise, that is not the relevant enquiry. The relevant enquiry is whether circumstances have arisen as a result of the husband’s default that would make it just and equitable to reconsider the earlier orders. The circumstances that arose were that, as a common sense proposition, the wife received significantly less than an equal division of the property and the husband received considerably more. That difference resulted directly from the husband’s delay in complying with the orders. The primary judge was therefore entitled to find that the position of the wife had arisen as a result of the husband’s breach.
I do not detect any departure in Blackwell & Scott from the earlier Full Court decision in Monticone & Monticone (1990) FLC 92-114. As to that case, the Full Court in Blackwell & Scott at [52] said as follows:
52. In Monticone the husband was ordered to pay to the wife $325,000 on or before 25 May 1988. Upon that payment, the wife was to transfer title to the former matrimonial home to the husband. Default provisions in the orders provided that if the husband failed to pay, the matrimonial home would be sold and the proceeds divided equally between the parties. At a time when the husband remained in default in paying the full amount (he had paid most of the sum) the wife sought enforcement of the default provisions. The husband at that time being in a position to pay the balance of the sum cross-applied under s 79A(1)(c) to set aside the default provisions. Commencing at 77,755 the Full Court said:
Section 79A(1)(c) provides that the Court may in its discretion vary or set aside an order made under sec. 79 if the Court is satisfied that:
“(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”
The meaning of that provision was considered by Gee J. in Rohde and Rohde ; 10 Fam. L.R. 56. In that case the husband was ordered pursuant to sec. 79 to pay the wife $115,000 and was restrained from encumbering his property further till the sum was paid. During the hearing the husband had been seeking further loans to irrigate his farming property which were effected by a third and fourth mortgage registered over the property prior to judgment being delivered. At the hearing the husband did not refer to these negotiations. After judgment was delivered, the husband’s financial position deteriorated due to failure to pay under the third mortgage. The husband sought to set aside the order pursuant to sec. 79A(1) of the Act.
His Honour in FLC 91-592 at p. 79,769 ... came to the conclusion that the husband had defaulted under the order rejecting the argument that this word should be confined to a deliberate flouting of an order. Likewise in the present case the husband by his non-compliance with the deadline as extended has defaulted.
The important question in Rohde, as in this case, was whether it is just and equitable to vary the orders or set them aside. In seeking to elucidate the meaning of that term as used in sec. 79A(1)(c), Gee J. said…:
“What the Court has to do in considering what is ‘just and equitable’ under sec. 79A(1)(c) is to exercise a judicial discretion and one exercisable after a consideration of all the circumstances that have arisen as a result of the default referred to in the provision: see Cominos v. Cominos (1972) 46 A.L.J.R. 593, especially per Mason J. at p. 601.
In the course of the judgment of Barwick C.J. in Sanders v. Sanders(1967) 116 C.L.R. 366, his Honour refers to the phrase ‘just and equitable’ in sec. 86(1) of the Matrimonial Causes Act 1959-1966. His Honour refers to that phrase as embodying ‘cogent considerations of justice founded on the conduct and circumstances of the parties’. (See p. 376.)”
On the facts of Rohde, his Honour came to the conclusion that the husband had materially and primarily contributed to his difficulties in complying with the orders through his conduct prior to the delivery of judgment, which conduct could have been disclosed to the Court at the hearing. In those circumstances it would not have been consonant with cogent considerations of justice to relieve him of the consequences of such conduct. We respectfully agree both with his Honour's reasons and with his conclusion in that case.
Evaluation
The husband says that the event of default relied upon by him is the failure of the wife to sell the B Town property. Central to whether or not she has defaulted, is whether the parties agreed to, in effect, practically replace the consent orders with such agreement as underpinned the 13 March 2008 events. It is at this point that I therefore need to determine which of the parties’ contentions is correct. For her part, the wife says that her version is inherently the more plausible one because:
·The agreement between the parties was to, in effect, pay out the husband’s entitlement under the consent orders to suit his immediate needs, with the wife remaining sole registered proprietor of the property, but assuming a significant mortgage as well;
·That the husband’s subsequent inactivity in seeking to press for the sale of the property until 2014 is best explicable by reference to that agreement;
·That the husband’s subsequent reinvigoration of his claim was likely precipitated by his adverse reaction to a child support assessment being raised against him.
For his part, the husband’s case squarely raises the unlikelihood that he would have surrendered his interest in a property, which he believes to be worth at least $1 million, for a paltry payment of $25,000.00.
It was in relation to this that the parties engaged in a valuation war. The wife asserted that the value of the property as at 13 March 2008 was only some $600,000.00, and yet she had, at the time, an appraisal from an agent at $830,000.00, and indeed that was the value of the property used for the assessment of stamp duty on the transfer from the husband to her of his interest in it. I reject the wife’s attempt to persuade me that the property was only worth $600,000.00 in March 2008, and I do not accept her evidence that she only used the appraisal value of $830,000.00 so as to create a public perception that the property was worth more than $600,000.00. To my mind, that evidence was a clear fabrication.
However the wife says in her material, and was not seriously challenged in relation to it, that in March 2008 the husband was in a somewhat unfortunate position, in that he appeared to have drug and alcohol issues, was living beyond his means, and had obtained employment, yet again, in the businesses providing luxury accommodation, with all of the attractive lifestyle and income (to say nothing of tax benefits) which employment on them afforded him.
Moreover, by February 2008, the B Town property, notwithstanding having been listed for sale for some time, had failed to attract any interest, which was impeding the husband getting on with his life. The liabilities associated with the B Town property were considerable, and the husband did not have any means of meeting his commitments under the mortgage.
In this regard Mr D’s evidence assumes real significance. Although somewhat defensive at times, I formed the view that he was unquestionably honest, and that his recollection of the events was still reasonable, notwithstanding they occurred some 11 years ago. I am a little troubled about the lack of any file note of his attendance upon the husband and wife on 13 March 2008, but I am ultimately of the view that it is likely explicable because it was largely a formal attendance by him, in circumstances where he was not able to readily make contemporaneous notes of the event.
As to his letter of 18 March 2008, it does not support the husband’s case, although it does harm the wife’s. Nonetheless I am satisfied that the purpose of that correspondence was to alert the wife to the prospect that, so long as the 2007 consent orders remained undischarged, or were not varied, there was a chance of precisely the sort of attack which the husband now makes. However I am satisfied that he accurately recorded that he was being told by the wife that the intention was that the $25,000.00 was a final payment to the husband.
Further, I accept the evidence of Mr D that the husband, during the course of the meeting with him on 13 March 2008, said words to the effect that he wanted the wife and child to “have it all.” True it is he may have been somewhat euphoric, either because of his substance abuse issues, or given the prospect of starting a new life again with the luxury businesses, but it is not contended on his part that he was suffering from some disability which precluded him from being able to give contractual consent, or that he was not able to comprehend the documents that he was signing. In that respect, the letter to the NAB is telling.
Ultimately, and with only slight hesitation, I accept the version of events of the wife, particularly because it is supported by the evidence of Mr D, and most significantly, his contemporaneous notes.
I am therefore satisfied that the agreement between the parties was that the payment of $25,000.00 to the husband was intended to discharge the wife’s obligations to him under the consent orders, and that, upon that payment, the parties intended not to thereafter rely upon the consent orders.
I acknowledge that there is some inconsistency between this conclusion and the husband’s continued payment of the mortgage, until he ceased working in the luxury businesses, however I accept Mr D’s evidence that at the conclusion of their meeting on 13 March 2008, the husband intimated that he intended to do so, and that the reason why the husband ceased doing so is less likely to be because of some belief that the wife was managing to pay the mortgage, but more likely because he had ceased working for the luxury businesses, and his income had significantly declined.
I acknowledge that the effect of the 2008 agreement was, on the appraisal value held by the wife at that time, a significant discounting of the husband’s entitlement under the November 2007 consent orders. However there were many other considerations which were at play, including the prospect of employment in the luxury businesses, the husband’s substance abuse issues and, as the wife asserts (which I accept) issues with the husband’s associates, including some drug debts.
Against that background I then turn to consider whether or not the wife has defaulted in carrying out an obligation imposed by an order. In strict terms, she plainly has. But so has the husband. He has not done anything in relation to effecting a sale of the property, for something in excess of nine years now has not complied with the obligations under the orders to maintain payments in relation to the mortgage and other outgoings in relation to the property, and made no attempt to enforce the orders for well in excess of six years. Moreover, until 21 June 2017, despite being told by the wife’s solicitor’s letter of 11 February 2015 that, unless they received a response within 30 days, the matter would be considered at an end, the husband did not respond, but waited more than two years before instructing fresh solicitors to do so. There is no evidence as to the explanation for that delay.
Accepting that, strictly speaking, the wife (to say nothing of the husband) is in default of an obligation imposed by the consent orders, the question then becomes whether the circumstances that have arisen as a result of that default, make it just and equitable to vary the consent orders.
The first question is what circumstances has the wife’s (and the husband’s) failure caused? Not the subdivision, to be sure, and yet that essentially is the change to the orders sought by the husband, accepting that he also seeks a rather more prescriptive set of machinery orders relating to the mechanism for the sale, than were contained in the 8 November 2007 consent orders, and particularly that the sale be by way of public auction, seemingly unreserved.
Perhaps the circumstance caused by the default is nothing more than the fact that the properties remain unsold, and yet I have found that the parties agreed to replace the consent orders with the 13 March 2008 events.
However assuming it be the latter, then the next inquiry is whether it is now, in light of the failure to effect a sale, just and equitable to order the sale of the properties, and division of the proceeds of their sale, as the husband proposes.
I am firmly of the view that it is not. Particularly:
·The parties agreed in 2013 to, in effect, waive compliance with the November 2007 orders;
·The husband has had the benefit of the $25,000.00 payment for 11 years;
·The husband has delayed inordinately in bringing this claim. There is no adequate explanation for that delay;
·The husband has not complied with his obligations under the consent orders to contribute equally to the mortgage and other outgoings in relation to the B Town property, and does not, at least in his formally articulated proposal, afford any credit to the wife for her payments of the mortgage and other outgoings of the property, over the intervening years;
·Post November 2007, the wife has solely shouldered the burden of maintaining the property, operating it as a holiday let, effecting subdivision, managing it as a rental property, and otherwise servicing liabilities associated with it (accepting the husband made some payments into the mortgage until February 2010).
I am therefore not satisfied that, notwithstanding the default of the wife, it is now appropriate, much less just and equitable, to revisit the 2007 consent orders which, in any event, in my view, have been practically discharged by the parties’ conduct in March 2008.
THE ENFORCEMENT APPLICATION
The husband’s application
The orders which the husband sought under this alternative were not distinguishable from those which he sought under s 79A, and were in the following terms:
2.Further or in the alternative to clause 1 above and pursuant to the accrued inherent jurisdiction of the Family Court of Australia to enforce its own orders in a fair and just manner and give efficacy to those orders:
(a)That the orders made by the Family Court of Australia at Cairns on 8 November 2007 be varied such that clauses 3 and 4 thereof be vacated and set aside.
(b)That the respondent be ordered to forthwith do all acts and things and sign all necessary documents to effect the sale by immediate public auction of the following real properties being:
iLot .… on Survey Plan …, Title Reference … (“the First B Town property”);
iiLot .… on Survey Plan …, Title Reference … (“the Second B Town property”)
(formally described by their parent title being Lot .. on … being situated at J Street, B Town, Queensland, Title Reference …)
and by way of consequential arrangement that shall be made for the purpose of effecting a sale:
iThe First and Second B Town properties shall be put on the market for sale by public auction with a real estate agent to agreed upon by the parties;
iithe applicant’s solicitor and/or it’s nominated agent shall have carriage of the conveyance of the sale of the First and Second B Town properties.
(c)Upon completion of the sale of the First B Town property, the proceeds of the sale be applied as follows:
iFirstly, to pay all costs, commission and expenses of the sale and to pay any council and water rates outstanding in respect of the real property;
iiSecondly, to discharge the mortgage(s) and any other encumbrances affecting the real property;
iiiThirdly, the sum of $12,500.00 to be paid to the respondent;
ivFourthly, the balance remaining to the applicant to a thirty per cent (30%) share and the respondent to a seventy per cent (70%) share.
(d)Upon completion of the sale of the Second B Town property, the proceeds of the sale be applied as follows:
iFirstly, to pay all costs, commission and expenses of the sale and to pay any council and water rates outstanding in respect of the real property;
iiSecondly, to discharge the mortgage(s) and any other encumbrances affecting the real property;
iiiThirdly, the sum of $12,500.00 to be paid to the respondent;
ivFourthly, the balance remaining to the applicant to a thirty per cent (30%) share and the respondent to a seventy per cent (70%) share.
(e) That:
iEach party shall do all acts and things reasonably required by the other including the signing or execution of all necessary documents to give effect to the provisions of clause 1(b) above within 14 days of being requested to do so.
iiIf either party refuses or neglects to sign or execute and return a document within 14 days of a written request to do so then the Registrar of the Melbourne Registry of the Federal Circuit Court is hereby appointed under Section 107A of the Family Law Act 1975 to sign or execute such document on behalf of that party upon lodgement of such document and the filing of an affidavit of a solicitor on behalf of the requesting party as to the said neglect or refusal.
iii.A defaulting party shall pay the other party’s costs of and incidental to such request and production of documents to the Registrar on an indemnity basis.
As has been seen, the jurisdiction relied upon was the “accrued inherent jurisdiction” to “enforce [this court’s] own orders in a fair and just manner and give efficacy to those orders.” In the trial, little attention was given to this asserted jurisdiction, and particularly whether it contained a power to vary orders by way of enforcement. In any event, the first question would need to be whether the 2007 consent orders should now be enforced. As shall be seen in the following discussion, that is a statutory power, at least in part; there was no suggestion that the test for enforcement would be markedly different under any “accrued inherent jurisdiction.”
Relevant statutory provisions and legal principles
The discretion to enforce
Part XII of the Family Law Act provides for the enforcement of decrees. Within that Part, section 105(1) provides as follows:
Subject to this Part, the Regulations and to the applicable Rules of Court, all decrees made under this Act may be enforced by any Court having jurisdiction under this Act.
It is well established by binding authority that the use of the word “may” in s 105 establishes a judicial discretion to enforce or refuse to enforce the relevant order: see Ramsey & Ramsey (1983) FLC 91-301 and, for instance, In the Marriage of Kerr (1983) 8 FamLR 1023 at 1026 per Nygh J, and Yilmaz & Yilmaz [2014] FamCA 663 at [183] per Le Poer Trench J. However it is less clear what is required to be established in order to justify the exercise of that discretion, as I shall discuss shortly.
The following statements of general principle applicable to the exercise of the discretion under s 105 may be drawn from the authorities.
Firstly, it is only facts or circumstances arising since the date of the orders sought to be enforced that will inform the discretion under s 105.[2]
[2] In the Marriage of Spry and Roet (1977) 29 FLR 425 at 428, 430; Watson & Watson [2006] FMCAfam 293 at [32].
Secondly, the question for the court’s consideration is whether in all the circumstances it is inequitable to enforce the order. However it is not immediately clear in what sense the word “inequitable” is used, and particularly whether it is by reference to equitable doctrine, or only general notions of fairness.
A convenient starting point to review the relevant authorities is the Full Court decision of Ramsey & Ramsey [1983] FLC 91-301. That was a case where, after orders awarding the former matrimonial home to the wife had been made, the parties resumed their relationship, cohabited in that home, and jointly effected improvements to it over several years. Presumably given the reconciliation, the husband never transferred his interest in the home to the wife as required under the orders. Upon their final separation, the wife then sought enforcement of the original orders; the husband opposed it on, amongst other grounds, that the wife was estopped from seeking to enforce the orders. In doing however, he relied not upon s 105, but s 84 of the Family Law Act, although the Full Court held that the correct source of power was s 80.
The appeal was argued and allowed on the narrow point of whether the trial judge erred by not allowing the father to cross-examine by reference to his estoppel argument. However in the course of its discussion of the husband’s estoppel argument, the Full Court referred, seemingly with approval, to the earlier English Court of Appeal decision of Thwaite & Thwaite [1981] 2 All ER 789.
Thwaite was a case where the parties had, by consent, submitted to orders that the wife return with the parties’ children to the United Kingdom, and within 28 days of her doing so, the husband would transfer his interest in the former matrimonial home to the wife. Whilst the wife did return from abroad, she left again with the children prior to the transfer having been effected. She nonetheless sought enforcement of the transfer to her. Initially a Registrar so ordered, but an appeal therefrom to a single Judge was allowed on the grounds that, given the wife’s conduct “it would be unjust to compel the husband to transfer his interest in the house to her.” The wife’s appeal from the primary Judge’s decision was dismissed by the Court of Appeal. In the course of doing so, the court observed 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: Mullins v Howell (1879) 11 Ch D 763 and Purcell v F C Trigell Ltd [1970] 3 All ER 671 at 676-677, [1971] 1 QB 358 at 367-368. Where the consent order derives its legal effect from the contract, this is equivalent to refusing a decree of specific performance; where the legal effect derives from the order itself the court has jurisdiction over its own orders: per Jessell MR in Mullins v Howell (1879) 11 Ch D 763 at 766.
In order to understand that passage, and particularly its reference to “inequitable to do so”, it is necessary to consider in greater detail the two cases which the Court of Appeal referred to.
Purcell (supra) involved an action for damages for personal injury. The defendants were very tardy in answering interrogatories. Ultimately the plaintiff and defendants agreed to an order that in the event the answers to the interrogatories were not delivered within a certain timeframe, the plaintiff would be entitled to enter judgment against both defendants. Indeed the answers were not delivered within time, and accordingly a Registrar entered judgment. An appeal to a Judge from the Registrar failed. However the defendants then sought leave to extend the time for appealing from the original consent order which had facilitated the entry of judgment. The time was extended and the appeal allowed. From that decision the plaintiff appealed.
The first two points argued by the appellant plaintiff have no bearing on the issue I am presently considering. However in relation to the third aspect of the appeal, Lord Denning MR said:
Thirdly: the defendants asked the court to exercise its discretion so as not to enforce this consent order. Counsel for the defendants pointed out, with force, that the failure to answer these interrogatories was a mere oversight – an oversight by the lawyers – and the defendants ought not to be made to suffer for it. Certainly not the first defendants, who answered their interrogatories satisfactorily. They ought not to suffer for the mistakes of the second defendant. I would be much in favour of this submission, if the defendants had behaved properly in the earlier stages of this litigation. But, having regard to the history of the case, I do not think that any mercy should be shown to the defendants or either of them. Their conduct has been deplorable. The plaintiff has acted properly throughout, but he has been subjected to intolerable and inexcusable delays by the defendants or their solicitors at every turn. This delay has been such as to prejudice the plaintiff in his case. The defendants are not in a position to ask for any discretion to be exercised in their favour.
It is a little difficult to understand how this third point arose on the limited history of the proceedings contained in the Court of Appeal judgment. It might be that, as part of the appeal arose from the consent order, there was some ground relating to discretionary enforcement raised; the alternative which seems more probable, is that in conjunction with the appeal there was also, in effect, an order sought to stay enforcement of the consent order. Assuming the latter to be the case, the point which can be drawn from Purcell therefore, at least from the reasons of Lord Denning MR, is that poor conduct of the defendant and prejudice to the plaintiff was sufficient basis for the court to decline to exercise its discretion not to enforce the consent order. Importantly however, none of that was characterised by Lord Denning MR in equitable terms, but rather in terms consistent with general notions of fairness.
It does not appear as though either of the other two Court of Appeal Judges dealt with this aspect of the appeal in their separate reasons, and appeared to agree with Lord Denning MR in relation to it.
The Court of Appeal in Purcell also referred to Mullins v Howell (supra), albeit in the context of whether an appeal lies from a consent order.
Mullins v Howell involved the making of a unilateral mistake, in that the defendant gave an undertaking in wider terms than he had intended. The undertaking was part of the final settlement of the proceedings. Upon the undertaking not being complied with, the plaintiff sought to attach the defendant by sending him to prison. The court declined. Lord Jessel MR said:
I do not think that the rules which have been laid down as the rules under which the court will enforce agreements apply to enforcing orders of the court because the court has jurisdiction over its own orders and there is a larger discretion as to orders made on interlocutory applications than as to those which are final judgments.
Here there is not only an undertaking but an agreement to which the Rules of Equity would apply, so being satisfied that the Defendant made a mistake, I should not follow the Rule in Equity, enforce the agreement as against him, and a fortiori, I should not enforce the undertaking against him.
I do not read his Lordship’s reasons in the second paragraph as suggesting that there needs to be an equitable remedy or basis underpinning a court declining to enforce its orders. Rather his Lordship appeared to be saying that because there was an agreement which underpinned the orders, being an agreement which equity would not enforce, that informed the exercise of the exercise of the discretion to enforce the resultant orders.
Against that background review of both Mullins and Purcell, it seems plain that when the subsequent Court of Appeal in Thwaite used the words “inequitable to do so” it was not invoking equitable doctrine, or restricting the exercise of the inherent discretion to enforce the Court’s orders to strict equitable doctrine. If it were intending to do so, then it is curious that it referred to cases, and particularly Purcell, which appear to be authorities to the contrary. Thus the citing of Thwaite with approval by the Full Court of this court in Ramsey (supra) should not be construed as restricting the exercise of the statutory discretion under either s 80 or s 84 only to circumstances where a court of equity would intervene.
Indeed, the preponderance of cases since Ramsey appear to have so construed its purport. For instance, in Kerr & Kerr (1983) FLC 91-329, Nygh J was dealing with an application to enforce an order for the sale of the former matrimonial home, and for the net proceeds of sale to be equally divided between the husband and wife. Subsequently the husband proposed to the wife that he in fact buy her interest in the matrimonial home for $12,000.00, which he ultimately did. However he withheld from the payment some monies which he believed should be offset pursuant to the orders made by the trial Judge. The wife then sought enforcement of the original orders for the sale of the home. The husband argued that the wife was estopped from so doing.
At 78,250 Nygh J said:
I have come to the conclusion that the wife is estopped from asserting that the orders made on 25 March 1977 are still enforceable, by reason of her conduct since that date and that furthermore, even if she were not so estopped it would be, in the circumstances of the case by reason of her conduct and her delay in seeking such enforcement, inequitable to exercise my discretion to enforce the orders…
The point which I distil from that is that whilst Nygh J recognised that in the event that there were an enforceable equity, that would inform the exercise of his discretion, even absent that equity being established, the discretion would be exercised by notions of general fairness.
To like effect are two decisions of the then Federal Magistrates Court, of Watson & Watson [2006] FMCAfam 293 and Peabody & Peabody [2011] FMCAfam 835, and a more recent first instance decision of Le Poer Trench J in Yilmaz & Yilmaz [2014] FamCA 663 at [183].
I should say that although on one view, the judgment of Brereton J in Prismex Technologies Pty Ltd v Taggert [2013] NSWSC 292 might support a different interpretation of the word “inequitable” – see for example paragraphs [49] and [63] – in any event, there his Honour was dealing with the inherent jurisdiction of the New South Wales Supreme Court, and not a statutory discretion, such as afforded by s 105.
Finally I should advert to Collins & Olsthoorn (2005) FLC 93-216. At [14] the Full Court said “It is well settled that the Court has the discretion to refuse to enforce one of its own orders (see Ramsey & Ramsey (1983) FLC 91-301).” The Full Court refused to disturb the exercise of the discretion to refuse the enforcement sought, being the appointment of the appellant wife as trustee for sale of certain property owned by the husband, although it is difficult to identify any specific equity which the primary judge relied upon in refusing to enforce the judgment. Rather it appears as though the primary judge was troubled that the default in payment of the full sum payable by the husband in that case was, in the overall scheme of things, a very small amount, some $500.00 short of what the court required him to pay.
It therefore appears that there is no decision of the Full Court which specifically restricts the exercise of the s 105 discretion only to circumstances where an equitable remedy or discretionary bar to relief arises.
Thirdly, the onus upon showing that it is not equitable to enforce the order is upon the party so contending.[3]
[3] Yilmaz & Yilmaz [2014] FamCA 663, [2042]; In the Marriage of Ramsey & Ramsey (1983) FLC 91-301, at 78,061.
Fourthly, delay in the nature of laches is a relevant consideration. In this context, also relevant will be the absence of any Commonwealth limitation period for enforcement, and the existence of any relevant State limitation period for the enforcement of judgments.[4]
[4] Watson & Watson [2006] FMCAfam 293 at [32].
As to the power to vary orders by way of enforcement, no authorities demonstrating such a power were cited in argument. Moreover, the primary power of enforcement is, as shall be seen, a statutory one, found in s 105 of the Family Law Act. It seems to me that, given s 105, there is probably no need to have recourse to any asserted “accrued inherent jurisdiction” of this court, which, in any event, would be unlikely to involve any different considerations to those enunciated by courts dealing with s 105.
Limitation issues relating to enforcement of judgments
Whilst it is correct to say that there is no limitation period for enforcement of money judgments in this court, the Full Court in Barrak & Barakat (2005) FLC 93-234 followed the earlier decision of the Full Court of the Federal Court in Dennehy v Reasonable Endeavours Pty Ltd (2003) 130 FCR 494, to the effect that by virtue of s 79 of the Judiciary Act (1903) (Cth) provisions of the relevant State limitation statutes are potentially relevant to such judgments. However both Full courts drew a distinction between actions upon a judgment on the one hand, and actions to enforce a judgment on the other. In Dennehy the Full Court was concerned with s 5(4) of the Limitation of Action Act 1958 (Vic) which provided:
An action shall not be brought upon any judgment after the expiration of 15 years from the date on which the judgment became enforceable.
In Barrak the Court was concerned with s 17 of the Limitation Act 1969 (NSW), which by sub-section (1) provided:
An action on a cause of action on a judgment is not maintainable if brought after the expiration of a limitation period of 12 years running from the date from which the judgment first becomes enforceable by the plaintiff.
In both cases the Full Courts preferred a narrow construction of the relevant provisions, such that enforcement of a judgment was not an action brought upon a judgment, and hence the limitation period applicable under those provisions did not bar the relevant proceedings.[5]
[5]Interestingly, neither court appears to have considered the statutory provisions dealing with time bars on “actions” to recover interest on, inter alia, judgments. It is unnecessary for me to consider the correctness of both decisions, as I am plainly bound by Barrak, although I have some reservation as to its correctness.
Section 10(4) of the Limitation of Actions Act 1974 (Qld) provides:
An action shall not be brought upon a judgment after the expiration of 12 years from the date on which the judgment becomes enforceable.
Its terms are indistinguishable from those under consideration in Dennehy, which was expressly followed by Barrak. I am therefore bound by the Full Court in Barrak, to hold that an action for enforcement is not an action brought upon a judgment, and hence the limitation period in s 10(4) does not apply in this case.
Delay and laches
Laches is a discretionary bar to relief based on equitable claims. It is not a defence to common law actions, much less an action or activity brought in furtherance of a statutory right. Therefore to the extent that cases such as Peabody (supra) seem to contend that laches may cause a party to “lose the right to insist on the performance of an obligation”[6] I would respectfully disagree. However the analysis of delay, and its consequences, which is undertaken when considering a defence of laches, is nonetheless relevant to the exercise of the discretion under s 105. Particularly, relevant to establishing the equitable bar are the following:
·That the delaying party had full knowledge of the material facts, or knowledge of circumstances from which the relevant facts are a clear inference;[7]
·That the delaying party has acquiesced and assented to the other party’s conduct or position, or alternatively, that the delaying party’s delay has caused the other party to prejudicially change their circumstances.[8]
[6]At [33].
[7]Southern Cross Mine Management Pty Ltd v Ensham Resources Pty Ltd [2005] QSC 233 at [631].
[8]Streeter v Western Areas Expiration Pty Ltd (No 2) (2011) 278 ALR 291 at [635].
Further, the cases demonstrate that, absent acquiescence or prejudice, delay of itself does not readily excite equitable intervention.
Evaluation
In large part, the conclusions which I have made in relation to the parties’ conduct in March 2008, impact upon this limb of the application as well. I am satisfied that on 13 March 2008, the husband knowingly, voluntarily, and deliberately, surrendered his entitlements under the 2007 consent orders in exchange for the immediate accelerated payment of $25,000.00. I am therefore not persuaded that enforcement of those orders is now just. Again I rely upon the following matters as demonstrating that it is not just to enforce those orders:
·The parties, in effect, agreed to replace those orders with the payment of $25,000.00 to the husband;
·The husband thereafter made no claim in relation to the enforcement of those orders for more than six years, and that delay has not been adequately explained;
·The husband has not complied with his obligations under the consent orders, and does not, at least on his articulated proposal, seek to have the wife’s contributions to the mortgage, outgoings and maintenance of the property, taken into account;
·The wife has, for more than 11 years, undertaken all work associated with the B Town property, and whilst she had the advantage of income from it, as the husband demonstrated, it has always run at a loss. Such tax advantages as the wife may have therefore obtained cannot disguise the fact of those losses.
The husband may now deeply regret his actions in March 2008, but that, although quite understandable, does not inform where the justice of this case now lies. He may have then been suffering from the effects of substance abuse, depression, and somewhat buoyed by the prospect of starting a new life, but ultimately that does not persuade me that it is just to nonetheless enforce the 2007 consent orders.
Accepting that the onus is on the wife to persuade me that it is not equitable to now enforce the November 2007 consent orders, I am so persuaded. To the extent that the “accrued inherent jurisdiction” of this court to vary orders by way of enforcement may place some onus on the husband, it has not been met. This aspect of the husband’s claim therefore also fails.
CONCLUSION
For these reasons I will order that the husband’s application is dismissed.
I certify that the preceding one hundred and twenty two (122) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Tree delivered on 23 July 2019.
Associate:
Date: 23 July 2019
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