Kumber and Worswicke
[2014] FamCA 6
•13 January 2014
FAMILY COURT OF AUSTRALIA
| KUMBER & WORSWICKE | [2014] FamCA 6 |
| FAMILY LAW – SUMMARY DISMISSAL – SECTION 90SN(1) – where the applicant seeks summary dismissal of the initiating application filed by the respondent – where the enforcement application filed by the applicant and the application pursuant to s 90SN of the Act filed by the respondent are dependent upon the outcome of the summary dismissal application – where the respondent seeks to vary paragraph 3.8 of the consent order made on 25 August 2011 and relies on s 90SN(1)(a), (b) and (c) of the Act to do so – where none of the grounds relied on by the respondent pursuant to s 90SN(1) can be made out – initiating application dismissed. |
| Family Law Act 1975 (Cth) – s 90SM(3), s 90SN(1)(a), (b) & (c), s 79A(1)(a) & (b) |
Family Law Rules 2004 (Cth) – r 10.12(d), r 10.14(a), (b) & (c)
| Bigg & Suzi (1998) FLC 92-799 |
| APPLICANT: | Ms Kumber |
| RESPONDENT: | Mr Worswicke |
| FILE NUMBER: | ADC | 316 | of | 2011 |
| DATE DELIVERED: | 13 January 2014 |
| PLACE DELIVERED: | Adelaide |
| PLACE HEARD: | Adelaide |
| JUDGMENT OF: | Strickland J |
| HEARING DATES: | 12 & 13 March 2013 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Ms Cocks |
| SOLICITOR FOR THE APPLICANT: | C M Tucker & Associates |
| COUNSEL FOR THE RESPONDENT: | Mr Mitchell |
| SOLICITOR FOR THE RESPONDENT: | Sydney G Maidment |
Orders
The initiating application filed by the respondent on 31 July 2012 be dismissed.
The application in a case filed by the applicant on 5 December 2011 be adjourned for mention to 9:15am on Monday 10 February 2014.
The application in a case filed by the applicant on 30 January 2013 be adjourned for mention to 9:15am on Monday 10 February 2014.
The application in a case filed by the applicant on 12 February 2013 be dismissed and removed from the pending cases list.
The application in a case filed by the respondent on 14 December 2013 be dismissed and removed from the pending cases list.
The question of costs be reserved.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Kumber & Worswicke has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| FAMILY COURT OF AUSTRALIA AT ADELAIDE |
FILE NUMBER: ADC 316 of 2011
| Ms Kumber |
Applicant
And
| Mr Worswicke |
Respondent
REASONS FOR JUDGMENT
Introduction
The applications listed before the court on 12 March 2013 were as follows (in chronological order):
a)The application in a case filed by the applicant on 5 December 2011 seeking to enforce the consent orders for property settlement made on 25 August 2011 in the Federal Magistrates Court (as it then was).
b)The initiating application filed by the respondent on 31 July 2012 seeking, inter alia, an order setting aside the consent orders for property settlement made on 25 August 2011 pursuant to s 90SN of the Family Law Act 1975 (Cth) (“the Act”).
c)The response to initiating application filed by the applicant on 9 August 2012 seeking the dismissal of the initiating application filed by the respondent.
d)The application in a case filed by the respondent on 14 December 2012 seeking, inter alia, orders for the transfer of properties.
e)The application in a case filed by the applicant on 30 January 2013 seeking an order for costs.
f)The application in a case filed by the applicant on 12 February 2013 seeking that the initiating application filed by the respondent on 31 July 2012 be dismissed (summarily).
Apart from the application in a case filed by the respondent on 14 December 2013, which was resolved with orders being made on 12 March 2013, the only application which was able to be heard in the time available was the application in a case filed by the applicant on 12 February 2013. However, necessarily that application, which in effect was an application for summary dismissal of the initiating application filed by the respondent, needed to be dealt with before the applicant’s enforcement application and the respondent’s application pursuant to s 90SN of the Act, the result of those applications being entirely dependent in the first instance on the result of the applicant’s application for summary dismissal.
The relevant factual background
The respondent was born in 1956 and the applicant was born in 1957. They commenced cohabitation in 1989 and separated on
22 July 2010.
There was one child of the relationship, namely K born in May 1993.
On 25 January 2011 the applicant filed an initiating application in the Federal Magistrates Court seeking final orders for property settlement and maintenance.
On 22 March 2011 the respondent filed a response to initiating application seeking final orders for property settlement.
On 9 May 2011 and 13 May 2011 joint valuation reports of all of the properties of the parties including the properties at Property A and Property B, C Street, Suburb D were obtained by the parties.
On 11 May 2011 a joint valuation report of the business operated by
E Pty Ltd was obtained by the parties.
On 19 May 2011 an order was made by Federal Magistrate Simpson (as he then was) listing the trial for hearing on 25 August 2011.
On 25 August 2011 consent final orders for property settlement were made by Federal Magistrate Simpson. Those orders were as follows:
1.That the applicant’s application for maintenance made herein on
25 January 2011 be and the same is hereby dismissed.2.That all orders for maintenance be discharged as and from the date hereof.
3.That in full and final satisfaction of all claims for property settlement that either party may have one against the other:
3.1That the applicant retain as her sole property the property situated at [I Street, Suburb H] in the State of South Australia being the whole of the land comprised and described in Certificate of Title Register Book Volume … Folio … (“the former matrimonial home”) and that the applicant be responsible for all outgoings with respect to the property past present or future including mortgage payments and do indemnify the respondent with respect thereto.
3.2That the applicant do retain as her sole property the property situated at [J Street, Suburb L] in the said State being the whole of the land comprised and described in Certificate of Title Register Book Volume … Folio … (“the [Suburb L] property”) and that the applicant be responsible for all outgoings with respect to the property past present or future and do indemnify the respondent with respect thereto.
3.3That the applicant transfer to the respondent as Trustee of the [Worswicke] Family Trust all of her right title and interest in the following properties:
3.3.1Allotment [M], Filed Plan … in the area named … of … being the whole of the land comprised and described in Certificate of Title Register Book Volume … Folio …;
3.3.2Allotment [N], Filed Plan … in the area named … of … being the whole of the land comprised and described in Certificate of Title Register Book Volume … Folio …; and
3.3.3Allotment [O], Filed Plan … in the area named … of … being the whole of the land comprised and described in Certificate of Title Register Book Volume … Folio …;
(“the [Suburb D] properties”) and that the respondent and the said Trust be responsible for all outgoings with respect to the said properties and do indemnify the applicant with respect thereto.
3.4That the respondent if so necessary discharge the loan secured by mortgage with the Bank of Western Australia Limited registered over the [Suburb D] properties being Mortgage Nos. …46 and …63.
3.5That the respondent transfer to the applicant all of his right title and interest in the … Lexus motor vehicle and the applicant do repay all monies due and owing to her sister with respect to monies borrowed from her to discharge the loan with St George Bank with respect to the motor vehicle and do indemnify the respondent with respect thereto.
3.6That the applicant retire from any position she holds in the [Worswicke] Family Trust (“the Trust”) and the respondent do indemnify the wife with respect to all debts and liabilities of the trust past or future.
3.7That with respect to the [Worswicke] Family Trust the respondent:
3.7.1Pay any liabilities of the said trust including any liabilities to the Australian Taxation Office; and
3.7.2Arrange and meet the cost of any documentation to ensure the applicant’s obligations pursuant to paragraph 3.6 herein.
3.8That the respondent pay to the applicant within 60 days by payment to the trust account of her solicitor CM Tucker & Associates the sum of TWO HUNDRED AND TEN THOUSAND DOLLARS ($210,000.00) together with any and all arrears having accrued pursuant to the orders for maintenance made herein on 15 March 2011, 30 March 2011 and 24 May 2011.
3.9That henceforth the property in the following:
3.9.1furniture and effects in the applicant’s possession,
3.9.2the applicant’s separate savings and investments,
3.9.3the applicant’s superannuation entitlements,
3.9.4any life insurance and/or life assurance of the applicant,
3.9.5the applicant’s motor vehicle,
3.9.6any other real or personal property and/or financial resources of the applicant in the applicant’s name and/or possession not otherwise specified herein
shall vest in the applicant absolutely free of all further claim or demand or right or entitlement of the respondent.
3.10That henceforth the property in the following:
3.10.1furniture and effects in the respondent’s possession,
3.10.2the respondent’s separate savings and investments,
3.10.3the respondent’s superannuation entitlements,
3.10.4any life insurance and/or life assurance of the respondent,
3.10.5the respondent’s motor vehicle,
3.10.6any other real or personal property and/or financial resources of the respondent in the respondent’s name and/or possession not otherwise specified herein
shall vest in the respondent absolutely free of all further claim or demand or right or entitlement of the applicant.
3.11That each party shall discharge without calling upon the other to contribute thereto their several debts contracted for or by them.
3.12That henceforth each party is restrained and an injunction is granted restraining each of them from pledging the credit of the other.
3.13That the wife acknowledges that she has no rights or entitlements in the [Worswicke] Family Trust, [E] Pty Ltd, [Business F] or any other businesses conducted by the parties past present or future whether by way of wages, employee entitlements, loan accounts, annual leave, long service leave, sick leave or WorkCover entitlements and does hereby relinquish any such claim and does assign to the respondent any such entitlement she may have in respect thereof and does indemnify the husband and the businesses with respect to any such claim.
3.14That if the respondent shall default in the payment of the sums due and owing to the applicant pursuant to paragraph 3.8 hereof then interest shall accrue thereon at the rate prescribed by the Rules of Court from the date of default until the date of payment and if such default shall continue for 14 days then the property at [Property B, C Street, Suburb D] shall be sold and the net proceeds shall be apportioned as to the sums due and owing to the applicant in accordance with these orders to the applicant and the balance to the respondent.
4. All outstanding applications be and the same are hereby dismissed.
5. Liberty to apply for consequential orders.
On 5 December 2011 the applicant filed an application in a case seeking orders for the sale of the properties at Property A and Property B, C Street, Suburb D by way of enforcement in default of payment by the respondent to the applicant of the sums of $210,000 and $5,380 (arrears of spousal maintenance).
On 9 March 2012 the respondent filed a response seeking dismissal of the application in a case and the setting aside of the orders made on 25 August 2011 on the basis that relevant amendments to the Act had not been proclaimed at the time that the order was made. I observe that this claim was subsequently abandoned by the respondent.
On 23 May 2012 the respondent filed a further response raising an issue as to the date of separation of the parties in relation to relevant amendments to
the Act, and the applicability of s 79A(1)(a) or (b) [sic] of the Act. I observe that the issue as to the date of separation of the parties was also subsequently abandoned by the respondent.
On 31 May 2012 the respondent filed Particulars of Claim in relation to his application now correctly described as pursuant to s 90SN(1) of the Act.
On 1 June 2012 the Federal Magistrate made an order transferring the proceedings to the Family Court of Australia.
On 31 July 2012 the respondent filed his initiating application seeking a declaration as to the date of the separation of the parties, that the order made on 25 August 2011 be set aside for want of jurisdiction, or in the alternative be varied or set aside pursuant to s 90SN of the Act. To repeat, the issues as to the separation of the parties and the jurisdiction of the court were subsequently abandoned by the respondent. Indeed, the applications in relation to those two matters were formally dismissed on 10 December 2012.
On 9 August 2012 the applicant filed a response to initiating application seeking that the initiating application filed by the respondent be dismissed.
On 14 December 2012 the respondent filed an application in a case seeking orders for the transfer of properties and permitting the respondent to refinance the loan secured by mortgages registered on the titles to the properties at C Street, Suburb D.
On 30 January 2013 the applicant filed an application in a case seeking an order for costs in relation to the aborted hearing listed for 10 December 2012.
On 31 January 2013 the respondent filed amended Particulars of Claim in relation to his application pursuant to s 90SN of the Act.
On 12 February 2013 the applicant filed an application in a case seeking, inter alia, that the initiating application filed by the respondent on 31 July 2012 be dismissed (summarily).
On 12 March 2013 orders were made for the transfer of properties and for an injunction restraining the respondent from encumbering or otherwise dealing with the properties save and except to enable him to carry out the refinancing of the loans secured by mortgages registered on the titles to the properties.
The hearing
The hearing proceeded on the papers with Mr Mitchell appearing as counsel for the respondent and Ms Cocks appearing as counsel for the applicant.
As ordered by the court each party provided an outline of argument, the applicant on 8 March 2013 and the respondent on 9 March 2013. The respondent also relied on his amended Particulars of Claim filed on 31 January 2013, and in which he also set out the further documents on which he relied.
Beyond her application in a case filed on 12 February 2013 and the brief affidavit of her solicitor filed on the same date the applicant did not identify the documents relied upon, but the affidavits to which the respondent responded in his documents were the applicant’s affidavits filed respectively on 5 December 2011, 31 May 2012, 25 September 2012 and 28 February 2013.
The relevant principles
Rule 10.12(d) of the Family Law Rules 2004 (Cth) (“the Rules”) provides that:
10.12A party may apply for summary orders after a response has been filed if the party claims, in relation to the application or response, that:
…
(d) there is no reasonable likelihood of success.
Rules 10.14(a), (b) and (c) of the Rules then provide as follows:
10.14 On an application under this Part, the court may:
(a) dismiss any part of the case;
(b) decide an issue;
(c) make a final order on any issue;
…
There are also a number of formulations of the principles which govern the exercise of discretion to dismiss proceedings summarily. For example, in Westpac Banking Corporation and Aldred (1986) FLC 91-753, Nygh J held that the court has the inherent power to dismiss an application which cannot succeed. This expression of the test has subsequently been adopted by the Full Court in a number of cases including Spellson & Spellson & Ors (1989) FLC 92-046 and Bigg & Suzi (1998) FLC 92-799. It is also relevant to note that in considering the case for relief it must be assumed that all the facts alleged are true and the party seeking summary dismissal cannot adduce any evidence to contradict the evidence of the other party or to seek to contradict any inference which may be drawn from that evidence.
The principles were also usefully distilled by Kirby J in Lindon v Commonwealth of Australia (No. 2) (1996) 70 ALJR 541 at 544-545 as follows:
The approach to be taken by the Court to the Commonwealth's application for summary relief is not in doubt:
1. It is a serious matter to deprive a person of access to the courts of law for it is there that the rule of law is upheld, including against government and other powerful interests. This is why relief, whether under O 26, r 18 or in the inherent jurisdiction of the Court, is rarely and sparingly provided.
2. To secure such relief, the party seeking it must show that it is clear, on the face of the opponent's documents, that the opponent lacks a reasonable cause of action or is advancing a claim that is clearly frivolous or vexatious.
3. An opinion of the Court that a case appears weak and such that it is unlikely to succeed is not, alone, sufficient to warrant summary termination. Even a weak case is entitled to the time of a court. Experience teaches that the concentration of attention, elaborated evidence and argument and extended time for reflection will sometimes turn an apparently unpromising cause into a successful judgment.
4. Summary relief of the kind provided for by O 26, r 18, for absence of a reasonable cause of action, is not a substitute for proceeding by way of a demurrer. If there is a serious legal question to be determined, it should ordinarily be determined at a trial for the proof of facts may sometimes assist the judicial mind to understand and apply the law that is invoked and to do so in circumstances more conducive to deciding a real case involving actual litigants rather than one determined on imagined or assumed facts;
5. If, notwithstanding the defects of pleadings, it appears that a party may have a reasonable cause of action which it has failed to put in proper form, a court will ordinarily allow that party to reframe its pleading. A question has arisen as to whether O 26, r 18 applies to part of a pleading. However, it is unnecessary in this case to consider that question because the Commonwealth's attack was upon the entirety of Mr Lindon's statement of claim.
6. The guiding principle is, as stated in O 26, r 18(2), doing what is just. If it is clear that proceedings within the concept of the pleading under scrutiny are doomed to fail, the court should dismiss the action to protect the defendant from being further troubled, to save the plaintiff from further costs and disappointment and to relieve the court of the burden of further wasted time which could be devoted to the determination of claims which have legal merit.
(Footnotes omitted)
Discussion
Section 90SN(1) of the Act relevantly provides as follows:
90SN Varying and setting aside orders altering property interests
(1)If, on application by a person affected by an order made by a court under section 90SM in property settlement proceedings, the court is satisfied that:
(a)there has been a miscarriage of justice by reason of fraud, duress, suppression of evidence (including failure to disclose relevant information), the giving of false evidence or any other circumstance; or
(b)in the circumstances that have arisen since the order was made it is impracticable for the order to be carried out or impracticable for a part of the order to be carried out; or
(c)a person has defaulted in carrying out an obligation imposed on the person by the order and, in the circumstances that have arisen as a result of that default, it is just and equitable to vary the order or to set the order aside and make another order in substitution for the order; or
…
the court may, in its discretion, vary the order or set the order aside and, if it considers appropriate, make another order under section 90SM in substitution for the order so set aside.
…
The provisions of this sub section are analogous to the provisions of s 79A(1) of the Act, and it is beyond doubt that they are to be interpreted in the same way and that the relevant authorities apply equally to them.
The respondent relies upon each of s 90SN(1)(a), (b) and (c), and the order sought to be varied is paragraph 3.8 of the consent order made on 25 August 2011.
Section 90 SN (1)(a)
Paragraph 13 of the respondent’s amended Particulars of Claim asserts:
In the circumstances in which the settlement agreement was reached which was then reflected in the Order it would be a miscarriage of justice to enforce the Order – Section 90 SN(1)(a) as contemplated by the words “any other circumstances”.
I agree with the submission of the counsel for the applicant that this Particular is misconceived. It is plain that the term “miscarriage of justice” in
s 90SN(1)(a) is “not concerned with the enforcement of the order: it is concerned with the judicial process which results in the making of the order” (see Clifton & Stuart (1991) FLC 92-194, at 78,336-78,337).
Thus, this ground is not made out, but the submissions of the respondent were not confined to the strict terms of this Particular of Claim, and despite it not being open to the respondent to go outside the Particulars given their purpose, namely to identify the basis of the claim for relief, in the circumstances I propose to address those submissions.
One such submission is that the order was based on a “common assumption held by both parties at the time … as to the value of the [C Street, Suburb D] properties …, and as to the ability for the regime created by the order to be carried out so as to discharge the order in its entirety.”
As to the issue of the value of the properties, the parties agreed those values in accordance with the joint valuations obtained in May 2011. There was no evidence that these values were not still accurate as at the date of the consent order. However, even if there was such evidence then that still may not matter. The Full Court in Barker & Barker [2007] FamCA 13 said this at [122]:
There will thus be many cases in which an order will be made, by consent or otherwise, based upon an agreed valuation which has been prepared many months earlier. There may be factors in the intervening period which have affected the value so agreed. Unless there is some particular act which impugns the process by which the orders were obtained, the mere effluxion of time and the consequent changes in the market during that period, whether they be upward or downward, will not of themselves create an injustice, nor require either of the parties to make further investigations of value if they choose not to do so.
Pausing there, the counsel for the respondent submitted that the respondent can take comfort from what the Full Court in Barker went on to say in paragraph 124, namely:
… There may also be circumstances in which the judicial process could be impugned by a sale after orders were made and in the absence of bad faith by either party or suppression of some relevant fact, if it led to a significant miscarriage of justice.
However, I do not accept that this comment assists the respondent here. It was obiter, and has to be read in the context of the facts of that case and the surrounding paragraphs. In that case there was evidence of higher values for the subject properties, before, at the time of, and subsequent to the date of the order; the latter arising from an actual sale of a property. However, here there was no sale, and there was no evidence to suggest that the values applied at the time of the order being made were not the actual values, and those facts alone provide a clear basis for distinguishing this case from Barker. Further, there were other relevant circumstances present in Barker, namely non-disclosure by the other party of offers that had been made for the property.
As to the issue of the order being able to be carried out, the respondent is there referring to his “ability to raise sufficient monies to discharge the existing mortgage and raise a further sum sufficient to pay … the settlement sum of $210,000 within 60 days of the date of the order”. However, as the counsel for the respondent submitted:
1There is no evidence of the Applicant’s state of mind (and thus it cannot be said that there is a common assumption);
2The final order provided the Respondent with an opportunity to retain the properties, upon conditions;
3It is apparent upon the face of the final order that the parties also envisaged other outcomes – as there is provision for the payment of interest to accrue in the event of late payment, and sale of a property in the event of continuing default;
4The Respondent’s eligibility for finance was a matter entirely within his own knowledge, and the timing of his enquiries was entirely within his control. From the material before the Court, it appears he did not make application in that regard until after the final order was made. Events subsequent to the order cannot constitute a miscarriage of justice.
The last sentence of the submission is an important one in this context. The respondent says that when he attempted to obtain finance the valuations obtained by the bank, approximately two months after the order, were less than the agreed valuations. However, apart from the comments that I have already made about this circumstance, this is a circumstance arising subsequent to the order, and the authorities are such that s 90SN(1)(a) only applies to circumstances occurring before or at the time of the order, and further, it is those circumstances which must result in the miscarriage of justice (Molier & Van Wyk (1980) FLC 90-911; Public Trustee (as Executor of the Estate of Gilbert) & Gilbert (1991) FLC 92-211). Of course, it is also clear from the authorities that the expression “miscarriage of justice”, “relates to the integrity of the judicial process”. For example, the Full Court in Suiker & Suiker (1993) FLC 92-436 said this (at 80,472):
As regards the view expressed in Clifton & Stuart that the expression ‘miscarriage of justice’ ‘relates to the integrity of the judicial process’ we are of the opinion that this passage was not intended to refer only to the hearing in the Family Court, but that the expression ‘judicial process’ can refer to a variety of matters and circumstances which had an influence on the outcome of the litigation.
However, given the agreement as to the values to be used for the purposes of making the consent order, it cannot be said that the circumstances relied on here “had an influence on the outcome of the litigation”.
It is suggested by the counsel for the respondent that the “regime created by the orders rather than effecting the intended 50/50 ‘roughly equal’ division of property, in fact effected a division in the order of 60/40 in favour of the applicant.”
It is correct that on 25 August 2011 both counsel put to the Federal Magistrate that “the division of property is roughly equal”, but the trap that the counsel for the respondent falls into in suggesting that it was a 60/40 division was to use the bank valuations obtained in October 2011 when the respondent was attempting to obtain finance, rather than the agreed values used at the time of the order. Thus there is still no miscarriage of justice here given again, the circumstances that create the miscarriage of justice must exist at or before the making of the order.
I also make two observations. First, in making the submissions about the alleged difference in outcome, the counsel for the respondent suggests that there is a relevant miscarriage of justice “if the effect of an order at the time it is made significantly departs from the intended effect of the order”. Again, on the evidence before this court, the effect of the order did not depart at all from the intended effect. I also note that the Full Court in Gilbert at 78,428, expressed “serious reservations about the notion of fundamental assumptions underlying orders.” The Full Court suggested that it was not open under
the Act to read clauses into orders based on assumptions, and to then set the orders aside because those assumptions are defeated by subsequent events. Secondly, it is important to note that the bank valuations which were undertaken subsequent to the order being made cannot be treated as evidence of the actual values of the properties; they were obtained for the specific purpose of whether the loan the bank was being asked to make would be secure, and they were not valuations which established the actual value of the properties, as were the agreed valuations that were used for the purposes of the consent order.
The next example of a submission made outside the particulars of claim is the suggestion that there was “a lack of ‘true’ consent”. This submission is again based on the misconception that the actual outcome was not a “roughly equal division”, and thus the submission cannot be maintained. Alternatively, it is put that the consent was not a true consent because the intended regime was not capable of being carried out “to effect the discharge of the order”. This submission cannot be maintained either because it confuses s 90SN(1)(a) with
s 90SN(1)(b) (impracticability). It also offends the basic proposition that the miscarriage of justice must arise from circumstances that existed at or before the making of the order, as explained above.
Further, the counsel for the respondent submitted that because the Federal Magistrate can be said to be satisfied that a “roughly equal” division was just and equitable (s 90SM(3) of the Act) it cannot be said that “his Honour would have been so satisfied had he been able to know that in truth the orders that were being proposed at the time they were made, did not in fact effect a roughly equal division”. Again, the basis for this submission is misconceived, and it simply cannot stand. Similarly, the further suggestion that if the submission made to the Federal Magistrate as to the effect of the order is “false” then that should enliven s 90SN(1) must fail for the same reason.
Finally, the counsel for the respondent submits that “the circumstances advanced by the respondent … are analogous to the circumstances that applied” in the case of Kokl & Kokl (1981) FLC 91-078. However, the facts of that case are clearly distinguishable from the facts of the case at bar, and thus that decision does not provide a basis for the respondent being successful here.
In Kokl there was evidence before the trial judge at the time of making the order sought to be set aside pursuant to s 79A of the Act that the value of the house property had increased significantly since the making of the initial property settlement order. Thus, it was clearly open to the court to find, as it did, that “the order … was one contrary to the justice of the case at the time when it was made”, and should be discharged. That is not the case here. There is no evidence that the values of the properties had changed since the earlier valuations were undertaken, and in any event the parties proceeded on the basis of those previous valuations being the agreed values.
In summary then, I find that the respondent has no prospect of success in his claim that the order should be set aside or varied pursuant to s 90SN(1)(a); there is no reasonable cause of action here.
Section 90SN(1)(b)
Paragraph 19.2 of the amended Particulars of Claim asserts:
19.2in the circumstances that have arisen since the Order was made through no fault of the Respondent it is impracticable for that part of the Order relating to the payment of $210,000.00 to the Applicant to be carried out – Section 90 SN(1)(b);
This Particular is amplified in paragraph 20.2 of the Particulars of Claim as follows:
20.2the consent of the Respondent to the Order in paragraph 3.8 was based on an assumption of fact by him and common to the Applicant that within the 60 day period limited by the Order the Respondent had the financial capacity to meet and the [Suburb D] Properties afforded the security for meeting the prevailing lending criteria of first tier banks to raise sufficient funds on the security of a mortgage of the [Suburb D] Properties to enable the Respondent to pay the amount referred to in paragraph 3.8 of the Order. That common assumption has not been met, the Order has been frustrated by a change in the financial circumstances which have arisen after the Order was made …
Immediately it can be seen that these Particulars proceed on a false premise, namely that there was an assumption, common to both parties, that within the relevant time period the respondent had the financial capacity to raise sufficient funds on the security of a mortgage to allow him to pay $210,000 to the applicant. To repeat, there is no evidence that this was an assumption made by the applicant. It was always entirely up to the respondent to satisfy himself that he could carry out the terms of the order he consented to. Indeed, the respondent was the only person who could ascertain his borrowing capacity in advance of the making of the final order. If he did not, as was the case, then that has to be his problem and cannot be the basis for setting aside or varying the order pursuant to s 90SN(1)(b). The respondent chose to assume a risk, by entering into the final order without securing finance.
Again, inappropriately, there is no necessary connect between the Particulars of Claim and the submissions made on behalf of the respondent in support of the application, and it is necessary to go outside the Particulars to address that application.
In his written submissions the counsel for the respondent identifies the circumstances relied on as follows (noting that they are not on all fours with the Particulars of Claim):
34.1.The common assumption, as to the value of the [C] Street properties, and the ability of the regime created by the order to be carried out so as to discharge the order in its entirety, has been shown to have been in error.
34.2.In the circumstances that have arisen as a result the Respondent is incapable of realising the majority of money required to pay all or most of the adjustment payment of $210,000 from a refinancing of the [C] Street properties.
34.3.By reason of the Respondent being incapable of realising the majority of cash from a refinancing and accordingly being incapable of paying the adjustment payment of $210,000 at settlement on the refinancing of the properties it has become impracticable for the Applicant, or alternatively she has been unwilling, to carry out order 3.3 requiring her to effect the transfer of the properties to the Respondent, as she would be required to do so in circumstances where she would not be receiving the full, or the majority of, the payment of $210,000 at settlement.
34.4.By reason of the impracticability, or unwillingness, of the Applicant to carry out order 3.3, the Respondent has been prevented from carrying out order 3.4 requiring him to discharge the loans the subject of the mortgage over the [Suburb D] properties.
34.5.By reason of the Respondent having been prevented from carrying out order 3.4, the property at [Property B, C Street] remains encumbered by a mortgage in excess of the value of the property, accordingly it is now impracticable for order 3.14 to be carried out, requiring [Property B, C Street] to be sold in the event of the default in payment of the adjustment amount.
In relation to each of these circumstances:
a)To repeat, there is no evidence as to any assumption by the applicant, and indeed, as the applicant’s counsel points out, “the final order contradicts this assertion, to the extent that it provides for the possibility of default by the respondent”.
b)This can be accepted as correct for the purposes of the application for summary dismissal, but it begs the question as to whether the circumstances enliven s 90SN(1)(b). For example, the respondent was not limited to refinancing the loans to raise the funds to pay out the applicant. There were other options such as selling assets, but there was no evidence that the respondent even considered this option. It is also insufficient to just demonstrate incapacity. That is only the first step, whereas the second step in order to enliven the paragraph, is to demonstrate that the circumstances were not reasonably foreseeable. Here, the respondent has not satisfied this requirement.
c)
This is a specious claim. There can be no suggestion that s 90SN(1)(b) applies because it became impracticable for the applicant to carry out paragraph 3.3 of the orders. It is not the case that the applicant could not comply with paragraph 3.3, and nor is it the issue; the only question is whether the circumstance of the respondent being unable to raise the finance to pay the sum of $210,000 to the applicant enlivens
s 90SN(1)(b).
d)This is also a specious submission. Again, the only issue is the respondent’s inability to raise the funds to pay the sum of $210,000 to the applicant. Everything else is dependent on this circumstance.
e)This is a continuation of the same submission, and the answer does not change. To repeat, the only circumstance that can be relied on by the respondent for the purposes of the paragraph is his inability to raise the funds necessary to pay out the applicant; there is nothing impracticable about selling the property in default of that payment in accordance with the terms of the order.
It can be seen that in these submissions, unlike in the Particulars of Claim where the impracticability of carrying out paragraph 3.8 is the sole issue raised, the respondent is attempting to suggest that the impracticability relates to paragraphs 3.3, 3.4 and 3.14. However, the reason those paragraphs were not carried out were not because it was impracticable to do so, but because the respondent was unable to raise the funds to pay out the applicant, which if he had been able to do that would have led to the obligations in these paragraphs being carried out.
There is no question that these paragraphs and paragraph 3.8 are all interrelated, but it is paragraph 3.8 which is the key. Indeed, as the counsel for the respondent recognised in paragraph 35.2 of his written submissions (although he continued to inappropriately suggest that compliance with paragraph 3.3, 3.4 and 3.14 became impracticable), the reason for those paragraphs not being complied with was “the impossibility for the respondent to comply with the payment of the adjustment amount from the proceeds of a refinancing”. In other words, the focus for the purposes of the paragraph can only be on this latter circumstance.
In relation to that circumstance the respondent asserted this in his Particulars of Claim, (apart from paragraphs 19.2 and 20.2 set out above):
i.“…subsequent change in market condition so that the underlying stratum upon which the Order was predicated has led to a frustration of the agreement reflected in the Order. Thus relevantly a frustration of the Order.” (paragraph 7 Particulars);
ii.“As an agreement reflected in the Order the agreement was liable to be set aside as… frustrated by supervening events namely a change in market conditions ie, values of the [Suburb D] Properties and lending criteria of first tier banks in particular Adelaide Bank.” (paragraph 9 Particulars);
iii.“…frustrated by a change in financial circumstances not contemplated by the parties which involve no fault of the Respondent…” (paragraph 16 Particulars);
iv.“…a change in financial circumstances external to the respondent and not contemplated by the parties at the date of the Order” (paragraph 18 Particulars);
…
However, I am not satisfied that these circumstances are such as would enliven s 90SN(1)(b).
The relevant principles here are well settled. For example, Kay J said this in La Rocca & La Rocca (1991) FLC 92-222 (at 78,538):
My own view is that the concept of impracticability, as referred to in this section, is akin to the application of the doctrine of frustration in contractual matters. What the Parliament is concerned with and what ought to be concerning the Court is the happening of events which cannot be reasonably foreseen, which will have the effect of causing an injustice to one of the parties if the happening of such events is not given effect to.
…
Now, in my view, what the appropriate application of s 79A(1)(b) ought to be is that circumstances what have arisen in which it becomes impracticable to carry out the orders are circumstances that could not reasonably have been contemplated and that in such circumstances, whilst impossibility is not the test and impracticability is, it may then become just and equitable to change the orders.
The potential insolvency of one of the parties in the future is not such a matter, in my view. In every case before the Court property values may change, go up or down, business may flourish or not flourish, the vicissitudes of life may affect one of the parties.
…
… the commercial failure of one of the parties post the making of the orders which will lead to the orders not being capable of being fully implemented does not, in my view, amount to a basis on which to set the order aside.
That situation leads to a problem with enforcement. It may be that the bankruptcy laws would have to take over, but it is not an appropriate basis for having the orders set aside and fresh orders made at the behest of the party who has suffered the financial embarrassment. There is no provision in the legislation to have matters looked at a second time if one of the parties suddenly becomes wealthy and, in my view, I do not see that the legislation can be appropriately read as applying when one of the parties becomes suddenly poor, in normal business circumstances.
It is not in dispute that the respondent only made enquiries as to the availability of finance to be able to raise the funds to pay out the applicant after the consent order was made. Thus, as emphasised above, the respondent chose to assume a risk by entering into the consent order without having ascertained whether he could comply with that order.
The respondent says that there was a change in the values of the relevant properties after the order, and in his financial circumstances generally which was not contemplated by the parties and could not be reasonably foreseen by them. However, that is simply not the case; a change in the values of real estate, and/or a change in a party’s financial circumstances are always possibilities, and thus foreseeable, as emphasised by Kay J in La Rocca. They are clearly within the vicissitudes of commercial life, and cannot be relied on for the purposes of the paragraph. Again, to repeat, the respondent chose to take the risk that he could not raise the necessary funds to enable him to retain the properties when entering into the consent order.
It is suggested that the extent of the reduction in value could not have been reasonably contemplated, but first, it must be remembered that the bank valuation subsequently undertaken cannot be treated as providing the actual value of the property, and secondly, to accept the proposition would entail imposing some arbitrary principle as to the level at which a change in value would become relevant.
Thus, I find that the respondent has no prospects of success in his claim that the order should be set aside or varied pursuant to s 90SN(1)(b); it has been demonstrated that he has no reasonable cause of action.
Section 90 SN(1)(c)
Paragraph 15 of the amended Particulars of Claim asserts:
The Respondent has technically defaulted in the carrying out of the financial obligation imposed by paragraph 3.8 of the Order but in the circumstances that have arisen since the Order it is just and equitable to vary the Order and make another Order in substitution for paragraph 3.8 of the Order – Section 90 SN(1)(c).
(Paragraph 19.3 is in similar terms).
This Particular is amplified in paragraph 20.3 as follows:
As stated previously the Respondent has defaulted in the payment of the lump sum ordered to be paid by paragraph 3.8 of the Order. The default of the Respondent is through no fault of his own making. By virtue of the terms of paragraphs 3.4 and 3.8 combined of the Order it is impracticable for the Respondent to carry out the terms of the Order and it is in the circumstances just and equitable to vary it to reflect the intention of the parties that the contemplated source of the lump sum payment in paragraph 3.8 of the Order and the only source was the re-financing authorised in paragraph 3.4 of the Order.
I agree with the submission of the counsel for the applicant that in these Particulars there is a lack of articulation “of the manner in which the circumstances the respondent asserts enliven s 90SN(1)(c)”, and that paragraph 20.3 is difficult to understand.
Nevertheless, and doing the best I can, the respondent seems to be relying on the submission he made in relation to the applicability of s 90SN(1)(b) to establish this ground. In other words, because it is impracticable to carry out the order it is just and equitable to vary or set it aside. However, this cannot be maintained in the light of my findings that it is not impracticable within the meaning of s 90SN(1)(b) to carry out the order.
There is even a more fundamental reason why this claim cannot succeed, and that is the default sought to be relied on is the respondent’s own default and that is not due to circumstances beyond his control (Cawthorn & Cawthorn (1998) FLC 92-805, at 85,061). As such it cannot be just and equitable to vary or set aside the order for this reason.
The counsel for the respondent submits that the default was not his fault, but as referred to above, it was his choice to enter into the consent order without securing, or even enquiring, as to the availability of finance; again, he chose to take the risk, and it is not open to him to suggest that the circumstances that arose were not able to be reasonably foreseen. Indeed, to also repeat, they were catered for in the terms of the order itself.
It is also relevant to note that the respondent did nothing about the order until the applicant instituted enforcement proceedings. Thus it can be implied that he did not consider that it was impracticable to carry out the order, or that because of his default it was just and equitable for the order to be set aside or varied. I hasten to add that although this is relevant for example to the exercise of discretion under s 90SN(1)(c), as would be the fact that the respondent remained in possession of the properties and the business, which he operated successfully, the fact that he defaulted on the mortgage, and the fact that he paid nothing to the applicant, but these factors may not by themselves be determinative. There are ample other reasons, as explained above, why the claim under s 90SN(1)(c) cannot succeed.
The respondent seeks to rely on the Full Court decision of Monticone & Monticone (1990) FLC 92-114 in support of his claim under s 90SN(1)(c). However, that case is clearly distinguishable from the case at bar. There the husband had paid $225,000 of the $325,000 he was obliged to pay under the order, and he sought and was granted by the wife an extension of time to pay the balance together with interest at 15 per cent per annum. The husband was unable to comply within the time allowed, but he did subsequently manage to accumulate sufficient funds to pay the outstanding principal together with interest. On the same date that his solicitor advised the wife’s solicitor of this, the wife filed an enforcement application seeking orders for sale of the property. The husband then filed a cross-application pursuant to s 79A(1)(c) of the Act seeking orders that would in effect would allow him to then pay the outstanding amounts, and he was ultimately successful in this regard on appeal.
That was a clear case where s 90SN(1)(c) is enlivened, although the default that arose was the husband’s. However, that case is far removed from the facts of this case and provides no assistance to the respondent.
I make two final comments. First, the respondent in the alternative seeks to rely on the “default by all parties” whereby paragraphs 3.3, 3.4, 3.8, and 3.14 of the order have not been complied with. However, as explained above, the key provision is paragraph 3.8, and the other provisions are dependent on compliance with that provision. Thus the only default that can be relevant for the purposes of s 90SN(1)(c) is the respondent’s failure to pay the sum of $210,000 to the applicant.
Secondly, the respondent’s counsel submits that the nature of the discretion that arises under s 90SN(1)(c), “is a discretion that can only in the most extraordinary of cases be exercised summarily, and that in the circumstances and where the respondent relies on section 90SN(1)(c) it is not appropriate for the applicant’s Summary Judgment application to succeed”. No authority is cited in support of this proposition, and it is not to be found in any of the principles espoused by Kirby J in Linden. In any event, I observe that those principles emphasise that it is only in cases where a reasonable cause of action is lacking that there can be summary judgment, and in assessing that it is to be assumed that all facts alleged by the respondent are true. That is the assessment that has been undertaken by the court here.
In summary then, I find that the respondent has no prospect of success in his claim that the order should be set aside or varied pursuant to s 90SN(1)(c); again there is no reasonable cause of action here.
Discretion
Given that none of the grounds relied on by the respondent pursuant to
s 90SN(1) can be made out it is unnecessary to consider whether the court would exercise its discretion under the section to set aside or vary the order.
Conclusion
As can be seen, none of the respondent’s claims for relief pursuant to
s 90SN(1) have any chance of success, and thus it is appropriate for his application in that regard to be dismissed.
I certify that the preceding seventy-seven (77) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Strickland delivered on
13 January 2014.
Associate:
Date: 13 January 2014
Key Legal Topics
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Civil Procedure
Legal Concepts
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Abuse of Process
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Appeal
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Jurisdiction
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Res Judicata
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Stay of Proceedings
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