Lamark & Lamark
[2024] FedCFamC1F 793
•10 December 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Lamark & Lamark [2024] FedCFamC1F 793
File number(s): ADC 1147 of 2016 Judgment of: KARI J Date of judgment: 10 December 2024 Catchwords: FAMILY LAW - ORDERS – Application to vary/set aside final property settlement consent order pursuant to s 79A(1)(c) Family Law Act 1975 (Cth) – Threshold determination of whether there has been a default in carrying out an obligation of the final order – Where numerous breaches of the obligations of the final order are pleaded – Where the Court is satisfied that there has been default in carrying out an obligation of the final order Legislation: Evidence Act 1995 (Cth) s 140
Family Law Act 1975 (Cth) ss 79, 79A, 117B
Family Law Rules (2004) (Cth) r 1.21
Cases cited: Blackwell & Scott [2017] FamCAFC 77
Cawthorn & Cawthorn (1998) FLC 92-805
Dace & the Estate of the Late A Dace [2015] FamCAFC 215
Demeny & Ogden [2021] FedCFamC1A 21
Gabel & Yardley (2008) FLC 93-386
Hatfield & Rivas [2024] FedCFamC1A 202
I Limited & Chester and Ors (2010) FLC 93-456
Kowalski & Kowalski (1993) FLC 92-342
Lancer & Lancer [2008] FamCAFC 112
Lane & Lane (2016) FLC 93-699
Lim v Comcare (2019) 165 ALD 217
Monticone & Monticone (1990) FLC 92-114
Repatriation Commission v Nation (1995) 57 FCR 25
Rohde and Rohde (1984) FLC 91-592
Division: Division 1 First Instance Number of paragraphs: 91 Date of hearing: 28 May 2024 and 11 September 2024 Place: Heard in Adelaide, delivered in Sydney Counsel for the Applicant: Mr Roberts Solicitor for the Applicant: Thomson and Associates Counsel for the Respondent: Mr Bullock Solicitor for the Respondent: Griffins Lawyers ORDERS
ADC 1147 of 2016 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MR LAMARK
Applicant
AND: MS LAMARK
Respondent
ORDER MADE BY:
KARI J
DATE OF ORDER:
10 DECEMBER 2024
THE COURT ORDERS THAT:
1.That the proceedings be listed for further case management at 10.30 am on 8 December 2024.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Part XIVB of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish an account of proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Lamark & Lamark has been approved pursuant to subsection 114Q(2) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
KARI J:
INTRODUCTION
These proceedings have arisen subsequent to a final order adjusting property between the parties, made by consent between them on 13 October 2020 (“the final order”).
Whilst the current tranche of the proceedings started their life in the form of enforcement proceedings commenced by the husband on 23 February 2022, the outcome sought by the husband changed over the life of the current litigation such that he is now seeking to invoke the jurisdiction of the Court to vary and/or set aside the final order pursuant to s 79A(1)(c) of the Family Law Act 1975 (Cth) (“the Act”).
By orders made across two hearings on each 18 December 2023 and 15 February 2024, a preliminary question was set down for separate determination; namely whether or not there had been a breach of the terms of the final order by the wife, thus enlivening the potential for the Court to exercise discretion to set aside or vary the final orders pursuant to s 79A(1)(c).
There is a genuine dispute between the parties as to whether or not the obligations created by the final orders were in fact the subject of default by the wife.
For the reasons that follow, I am satisfied that there has been default of various obligations created by the final orders. The husband however, through his counsel, has already conceded that some of those breaches would not enliven the Court exercising discretion to vary or set aside the final order. Of the remaining alleged breaches, I am satisfied that the wife has defaulted in carrying out an obligation imposed on her by the final order. The question remains whether firstly there are circumstances which have arisen as a result of the default which now make it just and equitable to vary or set aside the final order.
BACKGROUND
The parties to the proceedings were married in 1996, separated on 12 May 2015 and divorced in 2017.
The applicant husband (“the husband”) was born in 1967 and was almost 57 at the time of the hearing of the current application.
The respondent wife (“the wife”) was born in 1972 and was almost 52 at the time of the hearing of the current application.
The initial financial proceedings were commenced by the husband following the breakdown of the parties’ marriage on 29 March 2016. Those proceedings were ultimately listed for trial commencing on 12 October 2020. The proceedings however resolved by agreement between the parties, with a final order made by consent by Berman J on the second day of trial, being 13 October 2020 (“the final order”). The terms of the final order shall be set out in further detail later in these reasons.
The current tranche of the proceedings were commenced by the husband on 23 February 2022 in the Federal Circuit and Family Court of Australia, Division 2 (“Division 2”), when he filed an Enforcement Application (“the Enforcement Application”), seeking to enforce certain terms of the final orders.
It is not necessary to detail the procedural history of the current tranche of the proceedings other than to record:
(a)On 21 June 2022 the wife filed an Application in a Proceeding by which she sought orders dismissing the Enforcement Application.
(b)On 30 August 2022 the husband filed an Application for Final Orders by which he sought orders pursuant to s 79A(1)(c) of the Act for the discharge of certain paragraphs of the final orders and that the Court make fresh orders adjusting the parties’ interests in property.
(c)On 1 September 2022 the proceedings were transferred to the Federal Circuit and Family Court of Australia, Division 1 (“Division 1”).
(d)In or about October 2022 the proceedings were docketed to a judge for case management and hearing.
(e)On 11 November 2022, the wife filed a Response to the Application for Final Orders which had been filed by the husband, in which she relevantly sought an interlocutory order for the Court to separately decide the question of whether s 79A ought be invoked.
(f)On 6 December 2022 Mead J listed the question of whether to bifurcate the determination of the s 79A and any subsequent s 79 issues for hearing on 14 February 2023. That hearing however did not proceed.
(g)In early March 2023 the proceedings came into my docket as a result of the extended ill health of the Mead J.
(h)On 25 May 2023, an order was made by consent providing for the bifurcation and separate determination of the s 79A question.
(i)The proceedings were thereafter marred by discovery issues which included claims of legal professional privilege and a challenge to the same.
(j)Ultimately, and in an attempt to narrow the disputed issues requiring determination, at a hearing on 18 December 2023, the Court indicated an intention to hear and determine as a separate question, “the question of whether there has been any breach and/or breaches of the final orders made 13 October 2020”. At the request of the wife, orders were also made that day directing the husband to file an affidavit “setting out the alleged breach and/or breaches of the final orders”. He did so on 19 January 2024.
(k)That separate question was ultimately listed for hearing (with oral evidence) on 28 May 2024, with one day allowed.
(l)The hearing did not conclude within the allocated time frame, and a further day was listed on 11 September 2024 (the delay between hearings a result of a combination of judicial and counsel availability).
It is clear from the current tranche of the proceedings, that a significant source of contention between the parties relates to the property known as “Property B”, from which the parties operated a business during their relationship.
The final orders provided for Property B to be sold, effectively with the wife controlling and being responsible for all aspects of the sale.
It is the wife’s case that the husband left her to deal with the financial ruins of the marriage and that he was content to receive a sum certain by way of property settlement. The wife contends that the net effect of the final orders saw her take on all risks associated with Property B and the business. It is the wife’s case that in taking on those risks, she understood, as should have the husband, that if Property B was ultimately sold for less than the parties anticipated when the final orders were made, the wife would be left with a less financially favourable outcome, whilst conversely reaping any financial advantages if Property B sold for more than the parties anticipated when the final orders were made. The wife asserts that it is only now, that the Property B property has sold for more than the parties anticipated, that the husband seeks to disrupt and revisit the final orders made. In support of this contention, the wife points to the fact that the current tranche of the proceedings began as enforcement proceedings commenced by the husband. Whether or not the wife is correct about the husband’s motivation for the current application, is not a question the Court at this stage, if ever, needs to resolve.
Leaving the ultimate sale of Property B to one side, the husband’s position, in part at least, appears motivated by the very lengthy delays in the payment to him of the settlement sum provided for in the final orders, being a total amount of $1,050,000.
At the time that the husband filed the Enforcement Application on 23 February 2022, it is undisputed that Property B had not been sold. The parties otherwise agree the following facts in relation to the sale of Property B:
(a)In 2020 the wife signed a sales agency agreement for the sale of Property B.
(b)Two written offers were received by the wife for Property B, in 2021 and in early 2022. Both of these offers were rejected by the wife.
(c)In mid-2022 the wife signed a new sales agency agreement with a different agency.
(d)In late 2022 the wife received a written offer for Property B, which was accepted by her.
(e)Two days later in 2022 a contract for the sale of Property B was executed by the wife and the proposed purchasers, with a settlement date of mid-2023.
(f)The contract for the sale of Property B was provided to the husband’s solicitors for his signature in late 2022.
(g)Having received no response from the husband’s solicitors the following month in late 2022, the applicant again requested, through her legal representative, that the husband sign the contract for the sale of Property B.
(h)Ultimately an Application in a Proceeding relating to the sale of Property B was filed by the wife on 22 November 2022. The husband filed a Response thereto on 23 November 2022. On 24 November 2022, orders were made by Mead J which relevantly provided:
1.BY CONSENT and on or before 12noon on Friday, 25 November 2022 the husband sign the contract of the sale of the property known as “[Property B]” between the husband and the wife as vendors and [the prospective buyers] a copy of which is annexed to the affidavit of the wife filed herein on 11 November 2022 in annexure “[ML]2” appearing at page 33 and following of the wife’s said affidavit.
2.Failure by the husband to comply with the terms of paragraph one (1) of this order will result in paragraph 1.21 of the final consent order of 13 October 2020 being effected by Judicial Registrar De Corso or such other Judicial Registrar as she shall nominate.
…
(i)The husband ultimately signed the contract for the sale of Property B in late 2022.
THE TERMS OF THE FINAL ORDER
It is necessary to set out the terms of the final order in full:
1.That in full and final settlement of all claims that either party may have against the other of them by way of property settlement and spousal maintenance under Part VIII of the Family Law Act 1975 (as amended) past present and future:
1.1That all previous orders in respect of the property settlement proceedings be discharged.
1.2The wife shall pay to the husband a total amount of $1,050,000.00 (hereinafter referred to as “the settlements sum”) as follows:
1.2.1Within 60 days of the date of this order (or such earlier date as the wife may be able to pay once finance is approved) the wife shall pay to the [C Lawyers] Trust Account for and on behalf of the husband the sum of $400,000.00 (hereinafter referred to as the “Interim Payment”) or such lessor sum as may be approved with the Interim Payment in all respects being subject to the wife and/or the Partnership [Mr & Ms Lamark] ABN […] (hereinafter referred to as ‘The Partnership’) being able to obtain finance from the National Australia Bank and the husband shall provide to the wife and the National Australia Bank his authority to deal exclusively with the wife on behalf of The Partnership in respect of the application for finance and the husband shall provide all and any authority either in writing or otherwise as may be required by the wife or The Partnership and/or the National Australia Bank to provide such finance, with the wife and/or The Partnership to make the application for finance within 14 days of these orders with The Partnership to pay the payments in respect of this further liability until discharged.
1.2.2Any remainder sum still payable after payment of the Interim Payment (by example for the avoidance of doubt if $400,000 was paid as the Interim Payment then the remainder amount would be $650,000) to be paid to the husband on the 31st July 2021.
1.3Contemporaneously with the payment provided for in paragraph 1.2.1 hereof the husband shall deposit the sum of $17,500.00 into the bank account referred to hereinafter as “[X]’s Expense Account”.
1.4The wife shall open a bank account in her name as trustee for the parties’ daughter [X], within 28 days of this order referred to as “[X]’s Expense Account” and contemporaneously with the husband making payment as provided for in paragraph 1.3 hereof, the wife shall pay the sum of $17,500 into [X]’s Expense Bank Account from which the wife shall thereafter meet payment of [X]’s school expenses including but not limited to her tuition costs, books and stationary, uniform costs, excursions and other related educational expenses including the costs of [X]’s mobile phone and following [X] completing her schooling and attaining 18 years of age (which ever later shall occur) any sum remaining in the bank account shall be provided to [X] absolutely noting that this order shall not in any way impact on any Child Support Assessment that might be made by the relevant agency.
1.5That pending the payment of the any Interim Payment provided for in these orders, The Partnership shall pay:
1.5.1the premiums for the husband’s life insurance […] policy current held by him with [D Insurance], however immediately following the Interim Payment the husband shall thereafter be liable and responsible for all payments of the [D Insurance] policies.
1.5.2 The sum of $225 per week to the husband,
Provided that if there is no Interim Payment then pending the payment of the settlement sum.
1.6That the Wife shall solely and subject to her absolute discretion do all things necessary to continue to manage and maintain The Partnership being the [business] of the parties as a going concern until settlement of sale referred to herein.
1.7The wife shall market for sale and sell the property known as “[Property B]” including but not limited to the real estate […] and any other item associated with the [business] in any manner she determines such that she can in her absolute discretion decide all issues related to the sale of [Property B] including the following:
1.7.1She shall be solely entitled to determine the timing of the sale of any of the items referred to in this order,
1.7.2She shall be hereinafter authorized to solely instruct and sign any sales agency agreement with any sales agent (including but not limited to such other agents as may be required to sell the land and/or the [business]),
1.7.3She shall be released from any obligation to consult with the husband in respect of any sale process or any offer received in respect of the sale of any item that might arise from time to time,
1.7.4She shall be authorized to sign any document required to give effect to the sale of any item,
1.7.5She shall be solely authorized to accept any offer to purchase any items referred to in this order,
1.7.6The wife shall retain all proceeds of sale of any of the items referred to herein,
1.7.7The wife shall retain all and any income that is received by The Partnership until The Partnership is wound up in accordance with these orders, notwithstanding that income may be split for taxation purposes in accordance with paragraph 1.12 herein,
1.7.8The husband shall sign any document that might be required to give effect to these orders within 3 days of same being presented to him.
1.8 Hereinafter the wife shall retain the following:
1.8.1Her personal furniture and effects in her possession power and control save and except the […] table and other items referred to in paragraph 1.11 herein,
1.8.2 [Motor Vehicle 1],
1.8.3Any income received by The Partnership from the date of this order notwithstanding that it may be split for taxation purposes as provided for in paragraph 1.12 herein or any other benefits that might arise from time to time or be received by her from the business partnership from the date of this order in any respects,
1.8.4Any savings in her name as at the current date or accumulated hereinafter,
1.8.5 Any life insurances, superannuation or other entitlements,
1.8.6 The [Town E] real estate in her name,
1.8.7 Any other assets in her possession or control.
1.9To give effect to the wife retaining [Motor Vehicle 1], the husband shall transfer same to the wife within 28 days and sign all such documents as may be required to effect to the transfer at the wife’s expense.
1.10 Hereinafter the husband shall retain the following:
1.10.1His personal furniture and effects in his possession power or control,
1.10.2 [Motor Vehicle 2],
1.10.3[Motor Vehicle 3] and [Motor Vehicle 4] in his possession,
1.10.4Any savings in his name as at the current date or accumulated hereinafter,
1.10.5His [D Insurance] life insurance, superannuation or other entitlements,
1.10.6 Any other assets in his possession or control.
1.11The husband shall attend at 4.00pm on either the 22nd October 2020 or 29th October 2020 to collect the […] table, framed photographs […] and 2 photo albums of photographs predating the parties marriage.
1.12The wife shall solely instruct [the accountants] to wind up by [mid] 2022 The Partnership being the [business] of the parties in such manner as she solely considers appropriate in whatever tax efficient manner as she may determine following receiving that advice from [the accountants] including to do the following:
1.12.1Allocate for taxation purposes by splitting the taxable income between the parties personally provided that the wife shall pay from the proceeds of sale of the [Property B] enterprise any and all taxation liability that is consequent to either party by the said splitting of income, provided that any tax losses to which either party is entitled to shall be utilised in the assessment of same,
1.12.2Meet payment of any other taxation liability that flows to both parties from any income received following the sale of the [business’s] equipment which shall be for taxation purposes split between the parties with such taxation liability being paid from the proceeds of sale of the [Property B] enterprise that is consequent to either party provided that any tax losses that either party is entitled to shall be utlised in the assessment of same,
1.12.3Meet payment of any Capital Gains Tax liability that may be for taxation purposes split between the parties with such liability being paid from the proceeds of sale of the [Property B] enterprise that is consequent to either party provided that any tax losses that either party is entitled to shall be utlised in the assessment of same.
1.13That the Husband be restrained and an injunction be granted restraining him from attending at [Property B], or stopping at or within within 50 metres of same without the written permission of the Wife.
1.14That the Husband be restrained and an injunction be granted restraining him from authorizing or permitting any act which interferes with the Wife’s quiet enjoyment of the [Property B] property.
1.15That the Husband be restrained and an injunction be granted restraining the Husband from accessing or withdrawing any funds from the bank accounts associated with the [business] (being NAB account […46] and NAB account […77]), pledging the joint credit of the parties or pledging the credit of the [business], without the written consent of the wife.
1.16That the Husband be restrained and an injunction be granted restraining him from accessing the mail delivered to [Property B] property or to the PO Box […], or from causing any personal mail of the Wife or mail for the [business] to be directed to himself.
1.17The husband and the wife are restrained and an injunction is granted restraining each of them from increasing the liability of The Partnership beyond that which is in accordance with the current liability with NAB in the amount of $1,650,000 in addition to the sum required to meet the Interim Payment provided herein.
1.18The husband and wife shall divide the [F Shares] on an equal basis in specie with the husband to retain [half of the] shares and the wife shall retain [half of the] shares and the parties shall do all things required of them to give effect to his order.
1.19Each party shall pay their own costs of and incidental to these proceedings.
1.20In the event of the wife defaulting in making the payment referred to in paragraph 1.2.2 hereof then thereafter interest shall accrue on the default amount from the date of the default until the date of payment in accordance with the Family Law Rules.
1.21In the event either party refuses or neglects to sign any document to give effect to these orders within 7 days of same having been tendered to him or her for that purpose then and in each such case, a registrar or deputy registrar of this Honourable court upon proof by affidavit of such refusal or neglect is hereby appointed to execute any such document on behalf of either party hereto and if in his/her opinion it shall be necessary so to settle the same and to do all such other acts and things and execute all such other documents as shall be necessary to give full force and effect hereto and shall execute to do the same and the party in default shall pay the other parties costs as agreed or tax.
1.22 That all proceedings do stand dismissed.
(As per the original)
THE LEGAL PRINCIPLES
The basis upon which the husband rests his application to set aside the final order is the power conferred by s 79A(1)(c) of the Act, which provides:
(1)Where, on the application by a person affected by an order made by a court under section 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 section 79 in substitution for the order so set aside.
When having regard to a number of authorities[1], the principles that emerge when considering any application made pursuant to s 79A of the Act are as follows:
[1] See for example Rohde and Rohde (1984) FLC 91-592, cited with approval in Monticone & Monticone (1990) FLC 92-114, Lane & Lane (2016) FLC 93-699, Lancer & Lancer [2008] FamCAFC 112 at 34-35, Cawthorn & Cawthorn (1998) FLC 92-805, Blackwell & Scott [2017] FamCAFC 77.
(a)The resolution of a two-part enquiry:
(i)Firstly, the threshold test of whether a ground in s 79A has been made out, which has been described as the “fact-finding” exercise; and if, and only if, such a ground is made out
(ii)Whether the Court should exercise discretion to vary, or set aside the order and make another order pursuant to s 79.
(b)Where s 79A(1)(c) is concerned:
(i)The threshold test simply requires a finding of default in carrying out an obligation imposed by the order, the extent of the default is irrelevant; albeit the extent of default may be highly relevant to any exercise of discretion to vary or set aside the order.
(ii)There is a second fact-finding exercise which is a precursor to any consideration of whether it is appropriate to exercise discretion to vary or set aside the order. This secondary fact-finding exercise is directed to the events which have taken place since the making of the order.
(iii)There must be a causal link between the default and the circumstances that have arisen.
(iv)The party seeking to invoke the jurisdiction of the Court to set aside or vary the order must come to Court with “clean hands” and cannot rely on their own default, unless that circumstance is beyond their control.
(c)The onus of proof rests with the party asserting that one of the grounds in s 79A is enlivened.
In the course of submissions, the wife’s counsel referred the Court to the unanimous decision of the Full Court in I Limited & Chester and Ors (2010) FLC 93-456 (per May, O’Ryan & Le Poer Trench JJ,), as to the approach to be taken by the Court to the construction of a final order made by consent. In particular, counsel took the Court to the following passage (which incidentally was cited with approval by May J sitting as a single judge on appeal in Dace & the Estate of the Late A Dace [2015] FamCAFC 215):
173.The effect of a consent order may be construed by reference to the surrounding circumstances. It is not, however, permissible to look at the actual intention of the parties or their legal representatives. In General Accident Fire & Life Assurance Corporation Ltd v Inland Revenue Commissioners [1963] 1 All ER 618 Plowman J at 627 articulated the proposition in the following terms: “A consent order must, in my judgment, be construed in the light of any admissible evidence of surrounding circumstances, but without direct evidence of the parties’ intention”: see also Ernst & Young (a firm) v Butte Mining [1996] 2 All ER 623 at 634-5 per Robert Walker J and Kirkpatrick v Kotis (2004) 62 NSWLR 567 at 573-575 per Campbell J.
174.This approach is consistent with that adopted in relation to the construction of contracts. In Pacific Carriers Ltd v BNP Paribas (2004) 218 CLR 451 Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ at 462-63 explained the principle of objectivity by which the rights and liabilities of parties to a contract are determined. In Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd & Ors (2004) 219 CLR 165 Gleeson CJ, Gummow, Hayne, Callinan and Heydon JJ observed at 179: “The meaning of the terms of a contractual document is to be determined by what a reasonable person would have understood them to mean. That, normally, requires consideration not only of the text, but also of the surrounding circumstances known to the parties, and the purpose and object of the transaction” (citations omitted): see also Lion Nathan Australia Pty Ltd v Coopers Brewery Ltd (2006) 156 FCR 1 per Weinberg J at 12-13, Kenny J at 22 and Lander J at 48.
More recently in Hatfield & Rivas [2024] FedCFamC1A 202, Austin J sitting as a single judge on appeal commented (at [61]) “… Orders are construed objectively (Repatriation Commission v Nation (1995) 57 FCR 25 at 33–34; Lim v Comcare (2019) 165 ALD 217 at [40]–[41])…”
It therefore would appear uncontroversial that the orders are to be construed objectively, without regard to the parties’ subjective intentions at the time that the orders were made.
Additionally, it would appear that in construing the final orders, it is necessary to consider the terms of the final order as a whole, as against considering any individual term of the order in isolation (Demeny & Ogden [2021] FedCFamC1A 21 at [45]).
Whilst the intention of the parties is not a relevant consideration when construing the final orders, it is conversely apparent that the intention of the parties may well be a relevant consideration when the court is considering whether or not to exercise discretion to set aside or vary the final order.
During the course of submissions, counsel for the husband appeared to take issue with the use of the term “breach” as against the word “default” as contained in s 79A(1)(c). In that regard:
(a)The Oxford English dictionary defines:
(i)the word “default” as “failure to fulfil an obligation”; and
(ii)the word “breach” as “an act of breaking or failing to observe a law, agreement, or code of conduct”.
(a)As can be readily seen, when the word “breach” is used in the context of an obligation created by an order, there is no meaningful difference between the words “default” and “breach”.
(b)Throughout these reasons, the two words have been used interchangeably, much as they were during the course of the hearing.
As these are civil proceedings, the burden of proof to findings made throughout these reasons “is the balance of probabilities” (Evidence Act 1995 (Cth) s 140).
DOCUMENTS RELIED UPON
Each of the parties complied with orders for the filing of written submissions:
(a)The husband relied on written submissions filed 24 May 2024; and
(b)The wife relied on written submissions filed 24 May 2024, together with supplementary submissions filed 10 September 2024.
Having regard to the husband’s written submissions, he relied on the following documents:
(a)The Amended Initiating Application of the husband filed 1 December 2022; and
(b)Two affidavits of the husband filed each 23 February 2022 and 19 January 2024.
Having regard to the wife’s written submissions, she relied on her affidavit filed 15 March 2024.
The Court additionally ordered the parties to confer and provide a schedule of agreed facts. That document was filed on 6 May 2024 and was before the Court.
Each of the parties had also filed Costs Notices on 24 May 2024 and they were each also before the Court.
The Court received three separate exhibits during the course of the hearing. In addition, at the commencement of the hearing, the Court indicated to the parties that the documents annexed to each of the parties’ respective affidavits before the Court would be received in evidence.
Regardless of whether specific reference is made in these reasons, I have had regard to all of the material relied upon by each of the parties, together with the oral evidence given during the course of the hearing.
So far as the oral evidence of the parties is concerned, detailed notes of the parties’ respective evidence was taken during the hearing, together with a record of their presentation and any impressions formed. I have had regard to those contemporaneous notes.
HAS THERE BEEN A DEFAULT IN CARRYING OUT THE OBLIGATIONS IMPOSED BY THE FINAL ORDER?
It is the husband’s position that the wife has defaulted/breached a number of obligations created by the terms of the final order.
By his affidavit filed 19 January 2024 the husband asserts that Orders 1.2, 1.3, 1.4, 1.5, and 1.12 the final order have been breached by the wife.
It is therefore convenient to consider each alleged default separately.
Did the wife default in her obligation to make the “interim payment” to the husband – Order 1.2.1?
Order 1.2 is concerned with the settlement sum to be paid by the wife to the husband.
Order 1.2.1 relates to the payment of an initial instalment of the settlement sum.
The terms of Order 1.2.1 do not stand in isolation and they must be read in conjunction with the entirety of Order 1.2, within which they fall.
To that end, it is clear and I find that Order 1.2 required:
(a)The wife to make a total payment to the husband in the amount of $1,050,000.
(b)The payment to the husband was to be made in instalments.
(c)The first instalment of $400,000 (described as an “interim payment”) was to be paid (Order 1.2.1):
(i)Within 60 days of the date of the order; and
(ii)Was subject to finance approval from the National Australia Bank (“NAB”) for borrowings to meet the payment as obtained by the wife and/or the partnership, Mr & Ms Lamark; and
(iii)If borrowings in the amount of $400,000 were not approved by the NAB, the interim payment was to be in an amount of whatever lesser sum was approved by the NAB; and
(iv)The husband was to provide an authority to enable the wife to deal exclusively with the NAB in respect of the application for finance; and
(v)The application for finance by the wife was to be made within 14 days of the orders.
(d)The final instalment (described as the “remainder sum”) was to be paid:
(i)By 31 July 2021; and
(ii)Was to be in an amount to effect the total payment to the husband of $1,050,000, taking into account whatever sum had been paid by way of the “interim payment”.
I accept the submissions made on behalf of the wife that Order 1.2.1 has two principal components requiring compliance by the wife. The first being the application for finance within 14 days, and the second being the date for payment 60 days from the making of the orders.
In relation to those two dates, I calculate:
(a)14 days from the date of the orders was Tuesday 27 October 2020; and
(b)60 days from the date of the orders was Saturday 12 December 2020, which by virtue of r 1.21(4) of the Family Law Rules (2004) (Cth) (“the Family Law Rules”) in force at the time takes the date to Monday 14 December 2020.
With reference to the agreed schedule of facts, the agreed facts are:
(a)The husband did not comply with his obligation to provide an authority to the National Australia Bank for the finance application until January 2021.
(b)A loan was approved by the National Australia Bank in favour of the Partnership in February 2021.
(c)A loan agreement was signed by the wife in February 2021 and by the husband a day later in February 2021.
(d)The interim payment was made to the husband by the wife in the amount of $300,000 in February 2021.
In her affidavit filed 14 March 2024, the wife deposed that she sent a text message (“ML1”) to Mr G from the NAB in October 2020 to “commence the process of obtaining an increase of the Partnership’s existing loan facility in the sum of $400,000”.
Taking into account the evidence deposed by the wife and her oral evidence given during the hearing, and in the absence of any evidence to the contrary, I accept that:
(a)The text exchange between the wife and Mr G was part of an informal process of the wife making an application for finance;
(b)The wife told Mr G that she wished to extend the finance of the partnership by $400,000, but was told that she could not do so; and
(c)Ultimately an extension of an additional $300,000 was provided to the existing loan facility of the partnership, and it was this loan extension from which the interim payment was made to the husband.
I do not accept the husband’s assertions that the terms of Order 1.2.1 required the wife to pay the husband $400,000 absolutely. When Order 1.2 is read as a whole, as already identified, Order 1.2.1 could not be construed this way and the husband’s assertions in this regard are misconceived.
As earlier discussed, Order 1.2.1 only required the payment of $400,000 in full, if finance had been approved by the NAB for borrowings either to the wife directly or additional borrowings on behalf of the partnership of $400,000. There is however no evidence that the NAB approved borrowings to the wife of $400,000, nor additional borrowings to the partnership of $400,000. I therefore do not consider that, so far as the amount paid by the wife in satisfaction of Order 1.2.1($300,000), there was any default in the obligation created by the order.
Otherwise, so far as the timing obligations created by Order 1.2.1, and with regard to those matters already discussed and the findings made:
(a)I am satisfied that the communications between the wife and Mr G commencing no later than October 2020 satisfied the wife’s obligations to make an application for finance within 14 days of the orders.
(b)Clearly the wife did not make the interim payment to the husband within 60 days of the order. However, I do not consider that the wife was in default of her obligations because:
(i)I have already found that the interim payment was entirely conditional on finance to fund the payment being obtained by NAB.
(ii)Where it is an agreed fact that the finance approval was not forthcoming until February 2021, there is no foundation upon which to ground a default in this regard.
(iii)I also accept the wife’s contention that in circumstances where the finance was not approved until after the date the interim payment became due, the wife was not obliged to make any payment to the husband and all that would have been left for the wife was to pay the remainder sum, which would have been the full settlement sum of $1,050,000. I am fortified that this is an accurate construction of Order 1.2.1 when regard is had to the final sentence in Order 1.5, which makes it clear that the parties anticipated the possibility of there being no interim payment, by inference a foreseeable outcome if no finance was approved.
It is to the wife’s credit that she ultimately made the interim payment in February 2021, despite her obligations to do so pursuant to the orders having lapsed. For the sake of clarity, I am satisfied that the wife’s payment of $300,000 in February 2021 was an interim payment of the settlement sum, and that this is the appropriate date from which the balance of orders that refer to the interim payment shall have regard.
For all of these reasons, I do not consider that the wife defaulted in her obligations pursuant to Order 1.2.1.
Did the wife default in her obligation to pay the balance of the settlement sum to the husband – Order 1.2.2?
As earlier identified, Order 1.2.2 required the wife to pay the remainder sum by 31 July 2021.
In light of the interim payment of $300,000 paid in February 2021, the remainder sum required to discharge payment of the full settlement sum of $1,050,000, was $750,000.
With reference to the schedule of agreed facts, the parties agree that the wife made the remainder sum payment to the husband in May 2023. The amount paid was $750,000 together with interest in accordance with Order 1.20 in the amount of $90,885.61, bringing the total amount paid to $840,885.61.
The parties agree that the interest paid by the wife in May 2023 was the applicable amount payable by her pursuant to Order 1.20. I have accordingly not considered that calculation.
It is the husband’s position that the wife defaulted in her obligation to pay the remainder sum by 31 July 2021 in accordance with Order 1.2.2. Whilst not argued in this fashion by counsel, the husband’s position appears to be that the obligations created by Order 1.20 are therefore irrelevant.
Conversely, it is the wife’s position that Order 1.2.2 should be read together with the “default clause” in Order 1.20, and that when read collectively, the wife has not defaulted as she made the payment of the remainder sum together with interest as required in a fashion that was entirely consistent with the overall obligations created by the order in relation to the payment of the remainder sum.
The wife’s position is that where the parties contemplated that there may be a default in the wife meeting her payment obligations by 31 July 2021, and where the parties made provision in the orders for how any such default was to be remedied, the threshold requirement in s 79A(1)(c) is not enlivened.
I do not, for the purpose of the threshold enquiry, agree with the wife’s approach. The date of 31 July 2021 was not an arbitrary date. Rather it was a date that the parties agreed the wife was to meet her payment obligations for the payment of the remainder sum.
Whilst I agree that the payment of interest was designed to remedy a default in the wife meeting her payment obligation, the fact remains that it was only triggered if in fact the wife was in default of her obligation to make the payment by 31 July 2021 pursuant to Order 1.2.2.
Where the wife did not pay the remainder sum by 31 July 2021 as required by Order 1.2.2, I am satisfied that the wife defaulted “in carrying out an obligation imposed” on her by the final order.
Moreover, the existence of Order 1.20 was in my view was unnecessary, as it did not more than confirm obligations already created by the statute. In particular:
(a)Section 117B of the Act in existence at the time the final order was made (which has not since been amended) provided as follows:
117B Interest on moneys ordered to be paid
(1) Subject to any order made by the court under subsection (2), where, in proceedings under this Act, a court makes an order for the payment of money (other than an order for the payment by way of maintenance of a periodic sum), interest is payable, at the rate prescribed by the applicable Rules of Court, from:
(a) the date on which the order is made; or
(b) the date on which the order takes effect;
whichever is later, on so much of the money as is from time to time unpaid.
(2) A court that makes an order for the payment of money as mentioned in subsection (1) may order that interest is not payable on the money payable under the first‑mentioned order or may order:
(a) that interest is payable at a rate specified in the order, being a rate other than the rate prescribed by the applicable Rules of Court; or
(b)that interest is payable from a date specified in the order, being a date other than the date from which the interest would be payable under subsection (1).
(b)The applicable rule at that time the final order was made provided:
17.03 Rate of interest
The prescribed rate at which interest is payable under paragraphs 87(11)(b), 90KA(b) and 90UN(b), and subsection 117B(1) of the Act is:
(a) in respect of the period from 1 January to 30 June in any year—the rate that is 6% above the cash rate last published by the Reserve Bank of Australia before that period commenced; and
(b) in respect of the period from 1 July to 31 December in any year—the rate that is 6% above the cash rate last published by the Reserve Bank of Australia before that period commenced.
(c)When regard is had to Order 1.20 and its reference to the rate of interest being that prescribed pursuant to the “Family Law Rules”, the effect of Order 1.20 is no different to the obligations created by s 117B of the Act.
When seen in context, s 79A is a remedial section of the Act. As identified by Kent J in Blackwell & Scott [2017] FamCAFC 77:
44.Given that the power to make orders under s 79 or s 90SM altering property interests is exercisable only upon satisfaction that “in all the circumstances it is just and equitable to make the order” (s 79(2) or s 90SM(3)) and the order must be “appropriate” by reference to prescribed considerations to be taken into account (s 79(1) and (4) or s 90SM(1) and (4)) the intended remedial purpose of each of s 79A and s 90SN is clear – to afford a discretion designed to permit the Court to relieve a party affected by a s 79 or s 90SM order of an injustice.
45.This is not to say that orders under s 79 or s 90SM are to be regarded as provisional and subject to ready circumvention under s 79A or s 90SN. That would be inconsistent with, for example, s 81 and s 90ST respectively and the basic principle that there can be only one property settlement between the parties to such proceedings.[2] The point is that it is consistent with the language and purpose of s 79 and s 90SM, respectively, to construe s 79A and s 90SN liberally to achieve their intended remedial purpose.
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).
(Emphasis added)
[2] As discussed in, for example, Kowalski & Kowalski (1993) FLC 92-342 and Gabel & Yardley (2008) FLC 93-386.
While it shall be a question for a separate hearing, the wife’s ultimate compliance in paying the remainder sum together with interest as provided for in Order 1.20, are likely to be relevant factors in the Court’s determination as to whether to exercise discretion to vary or set aside the final order; particularly because in the present case it is apparent from the transcript form the hearing on 13 October 2020, that the parties had come to a “commercial” agreement to resolve their competing claims, and unlike in Blackwell & Scott, the finding of the Court that the proposed orders were just and equitable was not grounded on the final orders effecting a particularised percentage division of property between the parties.
Did the wife default in her obligation to make a payment into “[X]’s Expense Account” – Orders 1.3 and 1.4?
When regard is had to Orders 1.3 and 1.4 I am satisfied that those orders obliged:
(a)The wife to open “[X]’s Expense Account” within 28 days of the order (Order 1.4); and
(b)Each the husband (Order 1.3) and the wife (Order 1.4) to deposit the sum of $17,500 into X’s Expense Account contemporaneously with the payment of the interim payment to the husband.
I calculate and find:
(a)the date upon which the wife was required to open X’s Expense Account as 10 November 2020; and
(b)the date upon which the parties were required to make a deposit into X’s Expense Account as 23 February 2021, being the date earlier identified that I am satisfied that the wife made the interim payment to the husband (despite my earlier finding that the wife had no obligation to make such payment at the time it was made).
The parties agree:
(a)That the wife opened X’s Expense Account in January 2021 and that she deposited $17,000 into the account that same day.
(b)The husband deposited $17,500 into X’s Expense Account in February 2021.
With reference to the agreed facts, it would appear that neither party complied with their obligations pursuant to Orders 1.3 and 1.4, and in that regard:
(a)The wife did not create the account by 10 November 2020 and she did not deposit $17,500 into the account contemporaneous with the interim payment. She did however deposit a figure of $17,000 into the account before she was obliged to do so.
(b)The husband did not make his deposit into the account on the day that he received the interim payment. Instead, he made the required deposit into the account three days later.
While I am satisfied that both parties breached the obligations created by the order, the breach by each of them is so trifling that it could never give rise to the exercise of discretion to vary or set aside the final order pursuant to s 79A(1)(c). So much was conceded by the wife’s counsel during the course of submissions when he indicated that the husband “wouldn’t be here if that was all”.
In light of that submission, it is unfortunate that this matter was raised by the husband, as it appears that the parties and the Court have unnecessarily spent time addressing the same during these proceedings.
Did the wife default in her obligation to pay the husband’s life insurance policies and an amount of $225 per week – Order 1.5?
I am satisfied that Order 1.5 created two separate obligations for the Partnership, which pursuant to Order 1.6 the wife was to “at her absolute discretion… manage and maintain”. The two obligations of the wife, through the Partnership pursuant to Order 1.5 were:
(a)To pay the husband’s D Insurance life insurance policy payments until payment of the interim payment by the wife; and
(b)To pay the husband the sum of $225 per week until payment of the interim payment by the wife.
These obligations, however, were conditional on the wife making the interim payment to the husband.
As I have already determined, I am satisfied that the payment by the wife of $300,000 in February 2021 was the interim payment despite my earlier finding that by the time the wife made this payment she had no obligation pursuant to Order 1.2 to make the interim payment.
Accordingly, I am satisfied that the date the Partnership was required to meet the payments pursuant to Order 1.5 to, or for the husband’s benefit was 23 February 2021.
When regard is had to the schedule of agreed facts and the oral evidence of the husband given during the hearing, I am satisfied that:
(a)Payments were made to the husband’s D Insurance life insurance policies until November 2020; and
(b)The payments of $225 per week were paid to the husband until March 2021.
As the husband received payments of $225 per week until a date slightly beyond receipt by him of the interim payment, I am satisfied that there was no breach of the wife’s obligation to cause the Partnership to make payments to the husband pursuant to Order 1.5.2.
In relation to the obligation to make payments to the husband’s D Insurance policies, during the husband’s oral evidence he identified that in around November 2020 he personally contacted D Insurance and made changes to his payment arrangement, such that the premium payment no longer occurred by way of direct debit from the Partnership account as it had been until that time. No evidence was put forward by the husband that he advised the wife of this change he had made. Accordingly, I am satisfied that he did not advise her of the change.
Accordingly, while I am satisfied that the wife defaulted in her obligation to cause the partnership to meet the husband’s D Insurance policy payments pursuant to Order 1.5.1, I am equally satisfied that this default was not as a result of an action on her part, but rather as a result of the husband’s own actions. In light of this finding, and consistent with the earlier cited authorities I do not consider that ultimately when moving beyond the threshold question, the husband has come before the court with clean hands.
Moreover, again, the husband’s counsel conceded during submissions that this breach was not one of such consequence that would enliven the Court’s discretion to set aside or vary the final order. Again, it is regrettable that this issue was raised by the husband, given the time spent traversing the same at the hearing.
In any event, during the course of final submissions the Court was told that between the husband giving evidence about these matters and the Court hearing final submissions, the wife has made a payment to the husband to rectify the two months of missed premium payments.
Did the wife default in her obligations in relation to the winding up of the Partnership – Order 1.12?
Order 1.12 relates to the business partnership operated by the parties during the relationship. When read as a whole, Order 1.12 sets out a regime for the Partnership to be wound up on the wife’s sole instruction.
There is disagreement between the parties as to the obligations created upon the wife pursuant to Order 1.12.
The husband contends that the order required the wife to instruct the named accountants to wind the Partnership up by 30 June 2022.
The wife’s contention is that the only proper construction of Order 1.12, is that it only created an obligation upon the wife to instruct the named accountants to wind up the Partnership. To that end, the wife acknowledges that the order could thereafter be construed in two different ways:
(a)Firstly, that the instruction was to be given by 30 June 2022; or
(b)Secondly that the instruction was to be given at any time but that the instruction was to be on the basis that the winding up occur by 30 June 2022.
The wife further contends that it matters not which construction is given to the first two lines of Order 1.12, because when read as a whole Order 1.12:
(a)Left the winding of the Partnership to the wife’s sole discretion after receiving advice from her accountants; and
(b)Contemplated by the inclusion of 1.12.1-1.12.3, that the Partnership may not be wound up until Property B was sold.
I largely agree with the wife’s construction of Order 1.12 and find:
(a)That the obligation created by the first two lines of Order 1.12 was for the wife to instruct the named accountants to wind the Partnership up by 30 June 2022; and
(b)Thereafter effecting the winding up of the Partnership was to be at the wife’s sole discretion and taking into account the accounting advice of the named accountants; and
(c)The wife was required to meet, from the proceeds of sale of Property B in relation to consequences that flowed from the date of the order until any winding up of the Partnership:
(i)any income tax consequences arising from the allocation of income to the husband from the Partnership (Order 1.12.1);
(ii)any other taxation liabilities of the husband following the sale of partnership assets (Order 1.12.2) ; and
(iii)any capital gains tax liability of the parties respectively (Order 1.12.3).
I am satisfied that this is the proper construction of Order 1.12, because:
(a)If the order required something more than an instruction to be given by the wife, the first two lines of the order would have included the additional words “with such winding up to be effected by 30 June 2022” to make that position clear.
(b)When read as a whole the entire purpose of Order 1.12 was to wind up the Partnership in the most tax effective manner, with the wife being responsible for all taxation and capital gains tax consequences and liabilities of the husband.
(c)When the final order itself is read as a whole, and where there is no date upon which the sale of Property B was to be effected and where the payment of the settlement sum to the husband was not tied to the sale of Property B, it is clear that the orders anticipated two possible outcomes in relation to Property B; firstly that it might take a significant length of time for Property B to be sold, or secondly, that the wife may retain Property B.
(d)If the latter was to have occurred, there is on any view given my earlier findings, a significant drafting flaw in the orders, as there would have been no date for the winding up of the Partnership to have occurred.
When considering all of the evidence before the Court about these matters, I am satisfied:
(a)The wife instructed the named accountants (in concert with both of the parties’ legal representatives) to wind up the Partnership, with those instructions being given possibly as early as January 2021, and certainly no later than January 2022 (“ML8”).
(b)The instructions given by the wife to the accountants included that the Partnership be wound up by 30 June 2022.
(c)The accountants advised the wife that the Partnership could not be wound up until all of the assets of the partnership had been sold.
(d)The last of the partnership assets were sold in January 2024.
(e)The Partnership was wound up thereafter.
(f)The wife has paid the taxation consequences of the husband to the extent requested by him.
In light of all of these findings, I do not consider that the wife has breached her obligations pursuant to Order 1.12.
CONCLUSION
In light of my finding that the wife defaulted in the obligations pursuant to Order 1.2.2 to pay the remainder sum by 31 July 2021, it follows that the proceedings will need to be listed for further hearing.
Orders shall be made listing such hearing after hearing further submissions from the parties as to the appropriate path forward.
I certify that the preceding ninety-one (91) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Kari. Associate:
Dated: 10 December 2024
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