Lakosh and Lakosh
[2008] FMCAfam 205
•8 May 2008
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| LAKOSH & LAKOSH | [2008] FMCAfam 205 |
| FAMILY LAW – Alteration of property interests – overseas property – proceeds of sale – impracticability of order being carried out – futile orders. |
| Family Law Act 1975, s.79A(1)(b) |
| Cawthorn v Cawthorn (1998) FLC ¶92-805 Franklin and McLeod (1994) FLC ¶92-481 Humane Society International Inc v Kyodo Senpaku Kaisha [2004] FCA 1510 La Rocca and La Rocca (1991) FLC ¶92-222 |
| Applicant: | MR LAKOSH |
| Respondent: | MS LAKOSH |
| File Number: | CAM 1357 of 2005 |
| Judgment of: | Neville FM |
| Hearing date: | 26 February 2008 |
| Date of Last Submission: | 26 February 2008 |
| Delivered at: | Canberra |
| Delivered on: | 8 May 2008 |
REPRESENTATION
| Counsel for the Applicant: | Mr Lakosh appeared on his own behalf |
| Counsel for the Respondent: | Ms Haughton |
ORDERS
All previous Orders are discharged.
All pending applications are dismissed.
In the event that the proceeds of sale are transferred to Australia, both parties are restrained from dealing with or distributing those funds without either of the following:-
(a)prior written agreement of both parties, or, in the absence of agreement
(b)a Court order that specifies the apportionment of the funds to be distributed.
In the event that there is no agreement between the parties, the proceeds of sale are to be paid in to Court and not released until after there has been a judicial determination of the apportionment of the proceeds of sale between the parties.
In the event the proceeds of sale are transferred to Australia, either party may reapply to the Court upon 21 days notice.
IT IS NOTED that publication of this judgment under the pseudonym Lakosh & Lakosh is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT CANBERRA |
CAM 1357 of 2005
| MR LAKOSH |
Applicant
And
| MS LAKOSH |
Respondent
REASONS FOR JUDGMENT
Introduction
The parties to these proceedings have filed or contested multiple applications over a number of years. The most recent application was filed by Mr Lakosh on 4th December 2007. For current purposes it matters little that it was filed as a “General Federal Law” application, or that it was filed on the insistence of Mr Lakosh, clearly over some protest by the officials of the Court Registry. In that application, Mr Lakosh seeks a range of orders, many or most of them either to enforce - by increasingly punitive means - previously made orders, or to allow or prosecute astonishingly expansive investigatory measures, such as the following: “That the Court makes an Order and requests of all banks in Canberra to check if any overseas payments have been made to either Ms Lakosh’s accounts or credit cards or our son’s [S]’s accounts.”
In a Response filed on 18th January 2008, Ms Lakosh seeks dismissal of Mr Lakosh’s December application, and further orders pursuant to s.79A of the Family Law Act1975 to vary or set aside earlier Orders of this Court. Those Orders have been made variously by FM Mowbray and more recently by me.
Procedural History
As already intimated, these proceedings have a significant history. The substantive issues between the parties procedurally date to May 2006 before FM Mowbray. I need not repeat chapter and verse of the plethora of applications and interlocutory hearings since then, except to note the following.
The principal dispute between the parties concerns the division of property. Respectfully, the property holding is modest. The ongoing contest relates to Mr Lakosh obtaining the proceeds of sale, or a significant portion thereof, of a home unit in Zagreb. The unit was sold, according to Mr Lakosh, for 96,000.00 Euros in 2007.
Ms Lakosh’s brother, Mr K, acted as agent on the sale. He claims to be owed moneys by Mr Lakosh and, according to Ms Lakosh, Mr K will not release any funds to either of the parties, and determinedly not to Mr Lakosh while ever he is owed money by Mr Lakosh. Ms Lakosh claims 80% of the proceeds of sale. Mr Lakosh claims entitlement to 64,094 Euros. If my calculations are correct, this represents approximately 67% of the proceeds of sale.
Notwithstanding Ms Lakosh signing relevant authorities and or forwarding messages to her brother (who lives in Croatia) requesting that funds be transferred to Australia, no funds have arrived. Such has been the case now for many months with little or no evidence or prospect of the contested funds being released to either of the parties by Mr K.
Mr Lakosh suspects, but seems not to have any formal proof, that Mr K has already transferred the funds to a separate account of Ms Lakosh or to an account belonging to one of their children – hence him seeking the order set out in paragraph 1 above.
There is no agreement as to the division of the proceeds of sale. As already indicated, the respondent wife seeks that she receive 80% of the proceeds. The applicant husband seeks payment of 64,049.67 Euros. An amount only of 7900.00 Euros was agreed to be deducted by Ms Lakosh. It would appear that that amount has not been paid.
Since orders were made on 9th November 2007, Ms Lakosh has been reporting to a local police station on a weekly basis. By earlier orders of FM Mowbray, she was required to surrender her passport. It was also ordered (by me) that the proceeds of sale, once arrived in Australia, were to be paid in to Court prior to the ultimate determination of what percentage should be paid to each party. As indicated above, no funds have been received to date; there is, in my view, no prospect that they will arrive while ever Mr K claims to be owed moneys by Mr Lakosh. Mr Lakosh is just as determined not to pay him anything.
There are competing claims as to what the relevant law in Croatia is regarding the transfer of funds from that country.
Ms Lakosh states that she is required to attend personally in Croatia to collect the proceeds of sale. While this seems a remarkable proposition, there is no way of testing it either with expedition or, at this stage, any certainty or reliability. As with all other matters,
Mr Lakosh rejects her contention in this regard. As well, Ms Lakosh maintains that because of moneys owing to him, her brother refuses to release the proceeds of sale in any event. Mr Lakosh disputes both of these contentions.
Mr Lakosh is concerned that if permitted to leave Australia, Ms Lakosh will not return and will secret the funds elsewhere so as to deprive
Mr Lakosh of access to them.
In the light of these facts, the question for determination is what course, if any, is open to resolve the impasse. The options are few. The proceedings have effectively reached a complete stalemate. Indeed, the impasse may be said to fit the almost classical definition adopted in successive judicial discussions of s.79A(1)(b) where that section (or its operation) is likened to the doctrine of frustration. The next section discusses that definition and considers the application of legal principle to the facts of this case.
Section 79A(1)(b) provides for the setting aside of orders altering property interests where the Court is satisfied that “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.”
Legal & Other Considerations
As already indicated, the proceeds of sale from the Zagreb unit remain in Croatia. Obviously, this Court has no jurisdiction over funds, or in relation to persons, in that country. Ms Lakosh’s brother appears determined, either of his own volition or otherwise, not to release the funds. This Court has no means by which he can be compelled to transfer them to Australia.
The matter has been before this Court, either before a Federal Magistrate or a Registrar (in a conciliation conference), on numerous occasions. On 18th October 2007, I made orders that, inter alia, the amount to be paid to Mr Lakosh was 60,000.00 Euros. In making other orders dated 9th November 2007, which included a confirmation that the orders of 18th October remained in place, with a view to there being a full hearing of the dispute I noted that the quantum to be paid to the parties [out of the proceeds of sale of the Zagreb unit] may be re-considered once the disputed funds from Croatia were paid into Court.
Ms Lakosh has reported reasonably diligently to [X] Police Station each week pursuant to the orders of 9th November 2007. There are letters from the Australian Federal Police that record her attendance/reporting, which include some minor breaches.
Each time the matter comes before the Court, Ms Lakosh raises a new obstacle to explain why the funds so keenly sought by Mr Lakosh are not, or cannot be, forwarded to Australia. A consistent submission she makes, either personally, or through her ever-widening array of legal representatives (who regularly seem to file a Notice of Ceasing to Act quite soon after appearing in Court), is that until Mr Lakosh pays her brother moneys owed to him, the proceeds of sale will remain in Zagreb. Moreover, in her most recent affidavit of 11th January 2008 Ms Lakosh deposes to her brother discharging the mortgage of the Zagreb unit out of his own funds, so that the amount owing to him seems to be significantly more than originally comprehended, namely the costs associated with the sale of the unit.
Unsurprisingly, Mr Lakosh is increasingly frustrated at the failure of the funds to materialise, and equally at what he sees as Ms Lakosh’s obstructionist approach to the litigation and its resolution. He consistently contends that her claims regarding the law and procedures of the sale of real estate in Croatia are incorrect and are designed to frustrate this Court, as well as him. With increasing vigour, in oral submissions he has argued that the only proper course is to incarcerate Ms Lakosh until the funds are transferred. Leaving aside that a form of “debtor’s prison” is a somewhat outmoded judicial practice, the fact that weekly reporting to police has not resulted in any funds appearing in Australia suggests that a more severe regimen is equally unlikely to produce any financial fruit.
Were sympathy the basis for resolving this dispute, it is difficult not to empathise somewhat with Mr Lakosh. Moreover, it is difficult to comprehend some of Ms Lakosh’s actions, as well as some of her submissions or contentions. Not less curious is her insistence, at times, on the need for an interpreter. Remarkably, perhaps, during various hearings, she clearly has understood what has been submitted by
Mr Lakosh, or said from the Bench, such that she has dispensed with the interpreter and conveyed either comment or instructions directly to her legal representative. As well, it is difficult to understand what benefit there is to Ms Lakosh in prolonging the contest between she and Mr Lakosh rather than ensuring that it is resolved as soon as possible. It would, of course, only be conjecture to suggest that the prolongation of the dispute is the actual object of Ms Lakosh as some form of `cruel and unusual’ or retributive punishment upon Mr Lakosh. This is to say that, perhaps, her object is less to ensure that funds are returned to Australia and the proceeds distributed either by agreement or judicial determination, and more so that Mr Lakosh be constantly frustrated in his attempts to secure the proceeds of sale. As already indicated, in the absence of any formal evidence, these comments must be regarded as conjectural.
All of that said, the legal principles to be applied in applications of this kind are clear. Those principles are prescribed by Kay J in La Rocca and La Rocca, Moss J in Franklin and McLeod and the Full Court decision in Cawthorn v Cawthorn.[1]
[1] (1991) FLC ¶92-222, (1994) FLC ¶92-481 & (1998) FLC ¶92-805 respectively.
In La Rocca Kay J said (at p.78,538):
My own view is that the concept of impracticability, as referred to in this section [s.79A(1)(b)] 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 injustice to one of the parties if the happening of such events is not given effect to.
In standard contractual doctrine, I think that is as comfortably as anywhere described by Russell LJ in Re Badische Co Ltd (1921) 2 Ch 331 at 379, where his Honour said:
The doctrine of dissolution of a contract by the frustration of its commercial object rests on an implication arising from the presumed common intention of the parties. If the supervening events or circumstances are such that it is impossible to hold that reasonable men could have contemplated that event or those circumstances and yet have entered into the bargain expressed in the document, a term should be implied dissolving the contract upon the happening of the event or circumstance.
Now, in my view, what the appropriate application of s.79A(1)(b) ought to be is that circumstances that 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 Full Court in Cawthorn qualified somewhat Kay J’s comments in La Rocca. The Full Court said (at p.85,060)
On a case by case basis, reliance upon authority relating to the contractual doctrine of frustration in its various facets may at times prove to be of assistance. In so doing however, care must be taken and it must remain at all times in the forefront of the Court’s deliberations that the task before the Court is to interpret and administer a section of the Act.
Subject to the proper exercise of discretion, in accordance with the discussion by the Full Court in Prowse v Prowse,[2] the application of the principles outlined above to the current facts would, in my view, be sufficient to dispose of the application. However, there may also be another consideration or avenue to consider.
[2] (1995) FLC ¶92-557. See the discussion at p.81,566.
The doctrine of frustration can, strictly speaking, be said to operate only as between the parties. That is to say, it is an inter parties matter. A court intervenes or otherwise becomes involved only if and when one of the parties seeks an order either to confirm or to deny the applicability of the doctrine to the facts at hand.
However, it has long been the practice of Courts not to make orders where to do so would be utterly futile. Allsop J recently discussed this judicial principle or practice in Humane Society International Inc v Kyodo Senpaku Kaisha.[3] At [70], his Honour said: “The Court will not make futile orders. Whether or not they are futile may depend upon many matters, including but far from limited to the attitude of persons who are not present before the Court.”
[3] [2004] FCA 1510.
Allsop J’s remarks seem especially apt in the current circumstances where the attitude of Ms Lakosh’s brother, Mr K, who is not before the Court, seems determinedly to be to refuse to hand over any of the proceeds of sale.
Conclusion & Orders
In the circumstances of this matter, the question needs to be asked, `whether the current orders are, or any other orders would be, futile?’ In my view, given the complete impasse that has developed, and the zero prospects of any funds being transferred to Australia, the current orders seem to be utterly futile. Ms Lakosh’s continued weekly attendance at [X] Police Station seems pointless. It has not produced one cent, let alone one Euro.
The only relevant property (the proceeds of sale of the Zagreb unit), and the person who has control of them (Mr K), are both beyond the jurisdiction of this Court. In these circumstances, there is nothing, in my view, that would militate against me exercising my discretion to discharge all previous orders. An order to that effect will be made. In the circumstances of the case, including the inordinate amount of judicial resources that have been, and continue to be, expended on this contest between the parties, such an order, in my view, is just and equitable, as are those set out in the following paragraph.
In the event that the proceeds of sale are transferred to Australia, both parties should be restrained from dealing with or distributing those funds without either (a) prior written agreement of both parties or, in the absence of agreement, (b) a Court order that specifies the apportionment of the funds to be distributed. In the event that there is no agreement between the parties, the proceeds of sale are to be paid in to Court and not released until after there has been a judicial determination of the apportionment of the proceeds of sale between the parties. Otherwise all pending applications are dismissed. They may be reinstated upon 21 days notice. I make orders to the above effect.
I certify that the preceding twenty-nine (29) paragraphs are a true copy of the reasons for judgment of Neville FM
Associate: Renee Davidson
Date: 8 May 2008
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