LASKY & GANTOS
[2011] FMCAfam 867
•2 September 2011
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| LASKY & GANTOS | [2011] FMCAfam 867 |
| CHILD SUPPORT – Application for departure from assessment – jurisdiction of court – no finding under s.116(1)(b) available. FAMILY LAW – Practice & Procedure – application by applicant for enforcement of consent agreement – application by respondent seeking previous consent orders be discharged and/or stayed – whether an extension of time should be granted – factors to be considered – no basis to justify extension of time for review of Registrar’s decision. FAMILY LAW – Practice & Procedure – application by respondent seeking that the previous consent orders be set aside pursuant to s.79A – consideration of terms of agreement – consideration of whether purpose and effect of agreement was to defraud revenue authorities – no basis available to set aside the consider order pursuant to s.79A. |
| Child Support (Assessment) Act 1989 (Cth), s.116(1)(b) Family Law Rules 1984 (Cth) |
| Australian Broadcasting Commission v Australasian Performing Rights Association (1973) 129 CLR 99 Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337 Greetham & Greetham [2010] FamCA 246 Harris v Caladine (1990-91) 99 ALR 193 Holdcroft v Market Garden Produce Pty Ltd [2001] 2 Qd R 381 Hoyts Pty Ltd v Spencer (1919) 27 CLR 132 LG Thorne & Co Pty Ltd v Thomas Borthwick & Sons (A’asia) Ltd (1956) SR (NSW) 81 McGuiness & Cowie [2002] FamCA 461 MWJ v R (2005) 222 ALR 436 National Mutual Life Association of Australasia v S.H. Hallas Pty Ltd [1992] 2 Qd R 531 Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd (1992) 110 ALR 449 R v MAP [2006] QCA 220 Re Jensen; Ex parte Jensen (1982) 45 ALR 574 Reid (1999) FLC 98-007, [1999] FamCA 699 Sanders (1993) FLC 92-426 White Industries Aust Ltd v Commissioner of Taxation [2007] FCA 511 Yaroomba Beach Development Co Pty Ltd v Coeur de Lion Investments Pty Ltd (1989) 18 NSWLR 398 |
| Applicant: | MS LASKY |
| Respondent: | MR GANTOS |
| File Number: | BRC 9586 of 2008 |
| Judgment of: | Burnett FM |
| Hearing dates: | 7 December 2009, 8 December 2009 and 12 February 2010 |
| Date of Last Submission: | 12 February 2010 |
| Delivered at: | Brisbane |
| Delivered on: | 2 September 2011 |
REPRESENTATION
| Counsel for the Applicant: | Mr C. Forrest |
| Solicitors for the Applicant: | Jones Mitchell Lawyers |
| Counsel for the Respondent: | Mr P. Hackett |
| Solicitors for the Respondent: | Evans & Company Family lawyers |
ORDERS
Direct the parties submit a minute of order giving effect to the terms of the judgment on or before 4.00pm on 16 September 2011.
IT IS NOTED that publication of this judgment under the pseudonym Lasky & Gantos is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT BRISBANE |
BRC 9586 of 2008
| MS LASKY |
Applicant
And
| MR GANTOS |
Respondent
REASONS FOR JUDGMENT
Following a relationship of nine years during the course of which the parties married and produced two children, they separated and divorced. The parties agreed to resolve their financial arrangements by entering into consent orders on 19 June 2000 pursuant to order 14 rule 2 of the then extant Family Court orders.
An application was made for consent orders pursuant to order 14 rule 2 in terms of Form 12A. The form incorporated material relevant to the financial orders sought. That material addressed assets and liabilities but not information relating to maintenance or parenting issues.
Orders were ultimately made and the parties entered into the executory phase of their agreement. In particular clause 21 of the agreement provided:
“21(a)The husband will cause to have the wife to be employed by a trading entity owned and/or controlled by the husband, on a casual basis as an [occupation omitted] for a term not less than 15 years from the date that these Orders are made. The husband will procure or will cause the payment to the wife for such employment of an amount not less than $750.00 gross per week by the employer or at a piece rate of $25.00 gross per hour whichever is the higher.
(b)That the husband will cause the wife’s remuneration to be reviewed annually and increased each year in accordance with the Consumer Price Index (Brisbane), and that the wife is to be responsible for submitting the appropriate calculation to the husband to inform him of the increases in the Consumer Price Index in each year during the term of her employment. The increase in the Consumer Price Index will be effective from the end of the March quarter each year commencing April 2001 and yearly thereafter. In no circumstances will remuneration paid to the wife following any review be less than the remuneration paid to the wife immediately prior to such review. Any CPI increase will be subject to a maximum increase of 5% in any one financial year.
(c)The husband will procure or cause the payment of all and any statutory superannuation to the wife’s superannuation fund as nominated in writing by her.
(d)That in the event of default of the payment by the trading entity owned and/or controlled by the husband of any of the obligations set out in paragraphs 21(a), (b) or (c) herein the husband be liable for and indemnify the wife in respect of those payments.”
The parties performed the terms of the agreement including clause 21 except that the respondent did not require the applicant to undertake any of the duties contemplated by the terms of clause 21(a). The respondent did however perform that part of clause 21(a) which involved causing payment to the applicant of an amount of not less than $750.00 gross per week as indexed in accordance with the provisions of clause 21(b). He continued in the performance of that agreement until he ceased to continue making those payments in May 2008.
By correspondence dated 26 May 2008 addressed to the applicant by the respondent, the respondent wrote:
“[Ms Lasky]
[X] has been residing with me for the past 14 months and now [Y] for the past 4 months, this being the case I continued to pay you the agreed weekly primary carer’s payment. I can no longer sustain the contribution of $934.00 gross ($741.00 net) plus superannuation. I advise that the payment received on 20th May 2008 for week ending 23rd May 2008 will be the last.
[Mr Gantos]”
Since that time the parties have been in dispute concerning performance of the agreement disputing the proper construction of the agreement incorporated in the consent orders and in respect of child support matters.
Basis for Application
The applicant simply seeks to enforce the agreement. The respondent however contends that the obligations created by paragraph 21 of the terms of settlement be discharged and/or stayed and that there be orders and directions for the conduct of s.79A proceedings between the parties. Although not expressed as such I assume it is upon that basis that he seeks the relief in respect of clause 21.
In simple terms the underlying basis of the respondent’s claim is not plainly articulated. Terms of settlement were incorporated in consent orders made on 19 June 2000 by a Deputy Registrar of the Court. Those orders were made pursuant to Order 14 Rule 2 of the then extant Family Law Rules 1984. By operation of the Family Law Amendment Rules 2004 (No.2) the matter is now subject to the 2004 Rules. Broadly the rules invested Deputy Registrars with the power of the court to make consent orders in respect of property proceedings. Being final orders altering the interests of parties in property they may only be set aside and/or varied in terms and circumstances permitted by the Act or its rules; Harris v Caladine (1990-91) 99 ALR 193.
Part 18.2 of the Family Law Rules deals with the review of Registrar’s orders. Specifically Rule 18.08 provided that an application to the Court to review the exercise by the Registrar of any of the powers of the Court pursuant to delegation had to be made within seven days after the day on which the Registrar exercised the power. FLR 1.14(1) provides the time that the court may extend time.
If a review proceeds that review proceeds by way of a hearing de novo; FLR 18.10(1). The circumstances relevant to the consideration of the question of whether or not time ought to be extended was a subject for consideration in Greetham & Greetham [2010] FamCA 246 where a court was considering an application for extension of time to review a Registrar’s decision in respect of consent orders. In that case there had been a significant amendment to the provisions of the Family Law Act 1975 dealing with the treatment of superannuation monies. That matter was of particular significance to the parties to that application and the applicant sought leave to extend time for review to enable a de novo hearing of the property application. No doubt to enable a more favourable consideration of the parties’ superannuation as could be occasioned by reference to the then new provisions. In considering the question of an extension of time to review the Registrar’s orders (commencing at para [48]) his Honour noted:
“[49] The principles with respect to the grant of an extension of time, are well settled (see Gallo v Dawson (1990) 93 ALR 479, In the marriage of McMahon (1976) FLC 90-038 and In the marriage of Tormsen (1993) FLC 93-392). Gallo v Dawson is, of course, a High Court decision, and McMahon and Tormsen are two Full Court decisions of this Court.
[50] …The authorities mainly address extensions of time in the context of appeals. However, the principles are also largely applicable to applications for an extension of time to seek a review of the exercise of Registrar’s powers. In Tormsen (supra) the Full Court said at 80,017 that:
“[t]he fundamental issue in application for extension of periods of time prescribed by rules of court is whether this will enable the court to do justice between the parties …[and that a] failure to explain the delay adequately can certainly lead to a conclusion that justice demands that the application be dismissed.”
However, the Full Court did indicate that:
“…in appropriate cases the interests of justice may outweigh the absence of an adequate explanation.”
…
[52] It is quite apparent that the principal issue for determination in an application for an extension of time is the issue of justice between the parties.”
His Honour’s conclusion at para [52] in essence paraphrases some of the considerations addressed by Purvis J in Sanders[1] which is extracted at para [51].
[1] (1993) FLC 92-426
Considering the three matters identified. First, explanation of delay. The delay in the application is because the matter was never argued and I surmise, that the terms of settlement were concluded on the basis the children would continue to reside with the applicant and that the respondent would not have to assume the physical burden of them living with him. However against that background it is noteworthy that the application has been brought by the applicant to enforce the terms of settlement agreement. The respondent’s application in respect of clause 21 is in response to that application. Arguably, but for the applicant’s application to enforce the terms of settlement, the respondent would have delayed further in the bringing of this application. Furthermore it is noteworthy that the respondent has not formally sought to prosecute this claim and I have raised it in seeking to find a jurisdiction to consider the relief sought. I think in the circumstances it is fair to conclude that there is no reasonable explanation for the delay by the respondent in seeking this relief.
Notwithstanding that finding a more significant issue is whether or not there are substantial issues to be tried. For reasons which follow I have concluded that there is no substantial issue to be determined and accordingly upon that basis alone the respondent has failed to demonstrate that there should be an extension of time as a matter of justice between the parties.
Finally in the respondent’s favour I note that there is no question of any non-compensable hardship or prejudice to be suffered by the applicant by reason of leave being granted because what is at issue between the parties is merely a matter of money.
It follows in my view that there is no basis to justify the exercise of the Court’s discretion under FLA 1.14 to extend time for review of the Registrar’s decision and accordingly the respondent is not permitted to prosecute a de novo application as he plainly has sought to do.
Section 79A
The only ground properly advanced on notice by the respondent on notice is his intention to make application pursuant to s.79A FLA. The formal basis for his application pursuant to s.79A and in particular the relevant clause relied upon within s.79A has not been formally articulated. What the respondent actually complains of is that the circumstances have changed since settling upon the terms of settlement such that the effect of clause 21 of the terms of settlement afford the applicant something of a windfall because in the respondent’s mind that provision was intended as a maintenance provision.
For reasons which follow I do not think it is material what the respondent had in mind at the time the agreement was struck. However that of itself does not inform the Court as to which clause in s.79A (1) is relied upon by the respondent. However dealing generally with applications under s.79A(1) the observations and approach of Strickland J in Greetham & Greetham are of assistance:
“[41] In the initiating application filed by the wife she sought “that paragraphs 1[a][i] and [ii] of the orders for property settlement made in this matter on 2 January 1998 be discharged” pursuant to s 79A(1)(a) of the Act. In submissions, the basis for this application was the claim that the order was invalid. Now, I have found otherwise but that does not exclude other bases for a finding of a miscarriage of justice. In that regard I note that paragraph 19 of the wife’s affidavit filed on 18 August 2009 the wife said this:
“In the alternative, I ask the Court to exercise its discretion under s 79A(1)(a) to vary the final orders made on 2 January 1998 on the grounds that ‘there has been 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.’ While I do not claim that there has been fraud or wrong doing of any kind, I say that the confluence of circumstances including the husband’s bankruptcy, the disparity in the husband’s and my respective ages, my difficulty in obtaining employment, the change in the minimum age at which superannuation can be accessed, and the poverty in which I now live have resulted in a miscarriage of justice caused by ‘any other circumstance’.”
[42] Although the wife did not pursue this at the hearing, I can say that there is no basis here for a finding of miscarriage of justice within the meaning of s 79A(1)(a).
[43] In Barker and Barker (2007) Fam LR 650, the Full Court (Bryant CJ, May and Boland JJ) summarised the authorities with respect to the meaning of “miscarriage of justice “ in the context of s 79A as follows:
“120. A miscarriage of justice under s 79A(1)(a) will occur if circumstances exist which “for some significant reason, make the order contrary to law and justice according to law as it relates to the integrity of the judicial process [original emphasis]” (Bigg v Suzi (supra) at 84,982). See also Suiker (supra); Public Trustee (as executor of the estate of Gilbert) v Gilbert (supra)). Whilst cases such as Suiker (supra), Holland v Holland (1982) FLC 91-243 and Gebert v Gebert (1990) FLC 92-137 indicate that the words “miscarriage of justice” should not be construed narrowly and the phrase “integrity of the judicial process” should not be taken only to refer to the hearing in the court, the circumstances creating the miscarriage must nevertheless have been such as to have had an influence on the outcome of the litigation. As the Full Court said in Holland (supra):
To succeed in an application under sec. 79A, the wife must show some circumstance leading to a miscarriage of justice. Agreement to a consent order which may not adequately reflect a party’s entitlements under sec. 79 does not, of itself, show that there has been a miscarriage of justice. There may be cases where the order consented to is so far outside the ambit of what is just and equitable that the Court may infer that a party has acted under duress, in ignorance or as a result of incompetent advice.”
[44] Significantly, in the case of Molier and Van Wyk (1980) FLC 90-911, the Full Court found that a miscarriage of justice within the context of s 79A can only occur before or at the time of the making of the order, saying that the term “miscarriage of justice” “does not seem apt to apply to matters which arise after the order has been made.” Thus this would exclude consideration of the current circumstances of the wife, her difficulty in finding employment, and any change to the time when the husband’s superannuation can be accessed.
[45] That leaves the husband’s bankruptcy, but that occurred approximately two years before the consent order and, in my view, can have no bearing upon it. Likewise with the disparity in ages of the husband and the wife, that has nothing to do with the judicial process.
[46] In paragraph 18 of the affidavit of the wife filed on 18 August 2009 the wife also raised the applicability of s 79A(1)(b) and she deposed as follows:
“…I seek leave for this application to be considered by a judge and in particular to consider whether the Court may exercise it’s discretion to vary or alter final orders under s 79A(1)(b) of the Family Law Act, that is, that “in the circumstances that have arisen since the order was made, it is impracticable for the order to be made, or for a part of the order to be carried out”. At the time the orders were made I believed that the husband’s superannuation would be released in around 2009. I did not foresee that the law would change to extend the compulsory preservation age.”
[47] Again, the wife did not pursue this at the hearing before me, but in any event I do not consider that this sub-paragraph applies. It is not “impracticable” for the order to be made or carried out. It has simply turned out that the wife apparently cannot access her entitlement as early as she anticipated and I quote from the decision in Rohde and Rohde (1984) FLC 91-592 as follows:
“In considering the terms of sec. 79A(1)(b), so far as it is necessary to consider them for the purposes of their application for the present case, I would make the following observations:
(a) It is not enough that circumstances have arisen since the order was made which make it unjust for the order or part of the order to be carried out; the onus is upon the applicant to establish to the reasonable satisfaction of the Court, that in the circumstances that have arisen since …it is impracticable for the order or part of the order to be carried out.
(b) The word “impracticable”' means, gleaning a definition from the Shorter Oxford Dictionary, “not practicable”; “that cannot be carried out or done”; “practically impossible”; “unmanageable”; “intractable”.
(c) ‘“Impracticability” is a conception different from that of “impossibility”; the latter is absolute, the former introduces at all events some degree of reason and involves some regard for practice’ (per Veale J. in Jayne v. National Coal Board (1963) 2 All E.R. 220).
(d) Provided that more than one circumstance exists, and that the circumstances have arisen since … it does not matter what the circumstances are or by whom they are brought about.””
In this case the facts giving rise to the respondent’s complaint that the orders now affect a “miscarriage of justice” and accordingly ought be set aside pursuant to s.79A arise from a change of circumstances which occurred approximately eight years after the agreement was concluded and orders made. There is no evidence of any “fraud, duress, suppression of evidence, the giving of false evidence or any other circumstances” which infect the order that was made by the Court under s.79 in property settlement proceedings. Nor has any evidence been adduced to demonstrate that circumstances have arisen since the order making it impracticable for the order to be carried out. From the facts none of the other matters proscribed in s.79A(1)(c), (d) or (e) are apposite.
As matters presently stand there is no basis available to set aside the order pursuant to s.79A. In the circumstances the application for orders or directions for the conduct of s.79A proceedings should be dismissed pursuant to s.17A Federal Magistrates Court Act the circumstances justifying a summary dismissal of the claim being one with no reasonable prospects of success: White Industries Aust Ltd v Commissioner of Taxation [2007] FCA 511. In reaching this conclusion I am also mindful of the two principal issues raised by the respondent in argument and which are addressed below.
The Agreement
The consent orders constitute an agreement incorporated in a court order. The applicant contends the orders are property orders, expressed in plain and unambiguous terms constitute the terms of her property settlement agreement and she ought be entitled to the benefit of the agreement. She seeks to enforce its terms and recover the sums outstanding since 23 May 2008 being the date of the last payment made by the respondent.
The respondent says that the term is plainly a term governing maintenance arrangements made pursuant to s.74 of the Family Law Act 1975 (FLA) and accordingly should be discharged retrospectively pursuant to s.83 FLA because no basis for such an order now exists in view of the applicant’s changed circumstances.
As a matter of general principle in the process of construction the first task is to ascertain the scope of the agreement. In this instance the agreement appears to be confined to the terms of the consent order. It is well settled that:
“If the parties agree to commit their agreement to writing, what is written is the conclusive record of their agreement, and, unless the document was not intended as the complete record of their bargain, no oral evidence can be admitted to qualify it.”[2]
[2] Hoyts Pty Ltd v Spencer (1919) 27 CLR 132 at [145].
The balance of authority appears to support the view that in deciding whether a document was adopted as the whole agreement the Court is bound by the appearance of the document and cannot adduce evidence on the issue; LG Thorne & Co Pty Ltd v Thomas Borthwick & Sons (A’asia) Ltd (1956) SR (NSW) 81.
Each party sought to adduce evidence in matters leading to the final bargain including negotiations detailing the modification of the terms and set-out of the agreement which are now contended to support constructions advanced as to what was meant by the agreement. Such evidence is not admissible to assist in determining the point of whether or not the agreement is intended to constitute the whole. It may be admissible, as is later discussed, to assist in resolving an ambiguity within the terms of an agreement but not otherwise. Its introduction was permitted on the basis or submissions made by counsel for the respondent. The applicant’s counsel did not oppose that course. For reasons which follow I do not consider the evidence the parties sought to adduce helpful or relevant to the resolution of the issue in this case.
Given the agreement was incorporated into a consent order it seems plain that the full terms of the agreement were intended to be expressed within its body and I proceed on that premise.
Notwithstanding the unsuccessful attempt to characterise the agreement as one which is to be supplemented by other terms the respondent contended in effect, the agreement is infected by ambiguity as to the meaning of clause within its body such as to permit resort to extrinsic evidence to resolve the ambiguity.
As a matter of fundamental principle an agreement must be construed as a whole; Australian Broadcasting Commission v Australasian Performing Rights Association (1973) 129 CLR 99. It is also fundamental that an agreement will be construed against its objective contextual background comprised of facts notorious to both parties at the time of agreement; Codelfa Construction Pty Ltd v State Rail Authority of NSW (1982) 149 CLR 337 at 352.
In this instance the agreement was concluded in the context of Order 14 of the then extant orders of the Family Court.
Order 14 was headed “Consent Orders and Orders under section 87 of the Act”. Division 1 of those orders deals with “Consent Orders”.
The form of application is in Form 12A. It is generated under the auspices of then Order 14 Rule 2. In that respect it is particularly noteworthy that sub-rule 2(2) provided the “… rule does not apply to an application to which Order 11 Rule 3A applies”. Order 11 Rule 3A deals with “applications for step parents to maintain”.
Otherwise sub-rule 2(1) provided:
“(1) Despite any other provision of these rules, a person may make an initiating application for consent orders in accordance with Form 12A”.
On its face Order 14 permitted a wide-ranging cross section of applications provided they were proceedings in respect of which orders could be made by consent pursuant to Order 14 Rule 2. That included, relevantly, applications for consent orders in respect of financial matters which by definition include matters relevant to property settlement and maintenance.
It is against this broad regulatory background that the agreement was concluded.
However before progressing to examine the agreement it ought also be noted that the consent orders made by an appropriate officer of the Court have the same force and validity as if it had been made after a hearing by the Court. For the proper exercise of the powers an appropriate officer would be required, as best the supporting material permitted, to consider the material against the relevant statutory criteria provided by s.79(4) for property matters and s.74(1) for maintenance matters.
Section 79(4) particularly provides those matters that must be considered in property settlement proceedings. Section 74(1) provides the Court may only make such orders as it considers “proper for the provision of maintenance in accordance with this part”.
These matters are significant because they inform the exercise of the power especially when read in conjunction with the application. The application sought orders in terms of the orders attached as an annexure to the application and signed by the parties.[3]
[3] See para [53] of the Initiating Application.
Within the body of the application there were references to the generic term “financial orders”. Given the controversy between the parties it is an unhelpful descriptor in the circumstances.
The attached agreement itself was in turn headed “Terms of Settlement” and provided:
“the parties consent to the following orders being made in satisfaction of all matters in issue and, insofar as these orders pertain to the settlement of property, it is the intention of the parties that full force and effect be given hereby to the provisions of section 81 of the Family Law Act”.
The reference to s.81 was entirely consistent with the orders being limited to proceedings for the alteration of property interests. Section 81 requires courts, so far as is practicable, to make such orders as will finally determine the financial relationship between parties to avoid further proceedings between them. It applies except in respect of, inter alia, “maintenance payable during the subsistence of a marriage”. By inference maintenance following a dissolution of a marriage is not exempt from s.81 and indeed it would seem final resolution of ongoing spousal maintenance is entirely consistent with that provision.
The terms of settlement are then divided into three sections headed “Property”, “Costs” and “General” respectively. The sections headed costs and general do not generate controversy. However clause 21 is found within the section headed “Property”.
The respondent maintains that clause 21 is not properly a property clause and is more appropriately characterised as a maintenance clause. On the respondent’s case, given its characterisation, he says the clause ought be given no effect from May 2008 because of the applicant’s changed circumstances no longer warranting enforcement of that maintenance order in her favour or indeed any other maintenance order. The respondent contends the order ought be discharged in full.
From an orthodox contractual perspective there is no ambiguity in clause 21, nor indeed any other provision contained within the terms of settlement. Set against its contextual background the terms of settlement pertain to matters to be taken into consideration in the alteration of property interests pursuant to s.79(4) which in particular includes matters which ought be considered pursuant to s.75(2) (being matters to be taken into consideration in relation to spousal maintenance). In the absence of any apparent ambiguity it is entirely improper to have regard to extrinsic evidence in such circumstances. In the absence of any contention advanced except the nature of the clause itself which is addressed below there is no apparent ambiguity justifying resort to extrinsic material.
In argument the respondent relied heavily upon the discussion by Professor Wade in his text “Property and Division upon Marriage Breakdown”[4] and the relevant chapter and title of distinction between property and maintenance provision. In particular the respondent’s Counsel relied particularly upon that section of Professor Wade’s text commencing at 7-004 where the author examined the categorisation of orders by reference to form, label, purpose and other categorisation factors.
[4] CCH Australia
However before proceeding to a discussion of those matters it is worthwhile considering the matters identified by the author as “reasons for making the distinction”. At 9-041 he stated:
“There are various reasons why interspousal maintenance orders under sec.74 or “pure” property and mixed property – maintenance orders under sec.79 should be distinguished, both at the time when they are applied for, and at the time when they are made.
These reasons include:
(1) It is expensive, time-consuming and uncertain to attempt an ex post facto distinction between maintenance and property orders and provision.
(2) A maintenance order to benefit either a spouse or children of the marriage is variable in many circumstances under sec.83, whereas a property order is variable only in a limited number of circumstances under sec.79A.
…
[Pending maintenance proceedings and existing maintenance orders cannot be continued and enforced against the estate] these two important distinctions…make orders or applications under s.79 whether for a “pure” property distribution or a mixed property order with a maintenance element added, far more secure than applications or orders under sec.74 for maintenance. The former survive the occurrence of a respondent/payer’s death; the latter do not.”
The author noted that in the absence of express categorisation by an order or agreement it will sometimes become necessary ex post facto to classify a provision as “maintenance” in the nature made under s.74 or “property” in the nature made under s.79. In that regard issues of categorisation arise. Relevantly he noted commencing at 7-004:
“Financial orders under the Family Law Act have three possible classifications:
· Property orders under sec.79;
· Property orders with maintenance components or elements added under sec.79(4)(d);
· Child or spousal maintenance order under sec.74.
As a matter of degree, the last is readily variable whereas the former two as less subject to judicial variation. Classification of a final order into one of these three categories is determined cumulatively by the three tests of form, designation (label) and purpose of the order.”
The respondent’s case proceeded to examine and contend that clause 21 when considered alone was plainly a maintenance provision particularly when regard was had to purpose.
I do not think it is necessary to determine that issue. What is apparent from Professor Wade’s text and accords with the provisions of s.79 FLA and the terms of settlement is that the terms of settlement constitute either a “pure” property agreement or a mixed property maintenance order. In either event they are orders under s.79 and in that regard are entirely distinguishable from a maintenance order under s.83.
In support of his submission, the respondent’s Counsel, in discussing “form” he, respectfully in my view, misconstrued the author’s observation. Again it is important to emphasise that in this instance the terms of settlement, as informed by the application, involve complex orders concerning various corporate entities having a value approximating $10M together with its related debt. The circumstances are entirely distinguishable from those such as were considered in Re Jensen, ex parte Jensen (1982) 45 ALR 574 where the so-called property order was one which made provision for a property distribution by one spouse in favour of another by the payment of four sums over a future period which sums could not be assigned to any current assets than held by the parties.[5]
[5] At [577].
Likewise his submissions concerning “label” confine the argument to clause 21. For reasons I have earlier addressed it is simply inapposite to seek to construe an entire agreement by reference to one clause.
The respondent further contends that if form and label are left out then regard can be had to purpose to assist in the correct categorisation of financial orders. He submitted in particular that:
“…Prima facie, an order which aims predominantly to compensate a person for his or her past contributions to the marriage is a property order under sec.79; whereas one which aims predominantly to satisfy an applicant’s future needs from the respondent’s “surplus” financial resources, is a maintenance order under sec.74.”
Unhelpfully, the respondent’s Counsel did not proceed to note Professor Wade’s continuing observations that:
“However, in a subsequent case where one party seeks to vary a financial order, it will often be very difficult to fill in an omitted categorisation without reconsidering in detail the facts of the earlier decision. Moreover, the correction of an incorrect categorisation is arguably a task for an appeal court rather than a trial court at the time of application to vary. To compound the difficulty, there are many different conceptual bases for a maintenance order ranging from part contribution to the future needs of the applicant”.
In this case, irrespective of the irrelevant material adduced by the parties concerning purpose and intention at the time of the completion of the agreement, there is no evidence which assists in the resolution of detail necessary to be considered to make an appropriate order under s.84. In fact there is no material at all to indicate what, if any, material was considered by the parties prior to their consent orders. In terms of Professor Wade’s considerations these submissions fail in liminie in the absence of even that scant evidence.
Finally, the respondent relies upon “other categorisation factors”. In respect of that matter the respondent principally relied upon the periodic nature of the payments provided for in clause 21. In particular reliance was placed upon the authority of Jensen; Ex parte Jensen (supra). As I have earlier noted that case is clearly distinguishable given that the four future payments provided for were on their face not capable of being claimed against a particular fund. In this case the respondent received in exchange for an immediate payment provided by clause 1 an assignment of interests in various companies set out in clause 8. The companies in particular are listed in a schedule attached to the application which schedule also identifies their value of approximately $10M. Whilst arguably the companies’ value at $10M is offset by a debt of approximately an equivalent amount the entities had some value to the respondent. It is not for this court to speculate about the commerciality of the transaction the parties entered into. Plainly however, assuming the parties acted rationally, and there was no reason not to, all those matters were factored into the agreement comprising the terms of settlement. It is not the case as was evident in Jensen that the future income stream the respondent agreed to provide to the applicant was not founded in some financial resource. That is to say, it is open to infer that in desiring to maintain the incorporation of the various entities listed in the schedule to the application in circumstances where the listed occupation of the respondent was “businessman”, the respondent did adopt a business-like approach in calibrating the value of that transaction.
Plainly the terms of settlement constitute an alteration of property interests agreement in terms contemplated by s.79. The agreement may or may not incorporate a provision for maintenance as is required by s.79(4) but that matter is not determinative of the issue of whether or not the terms of settlement constitutes a property agreement or a maintenance agreement. In my view it is not a maintenance agreement.
As a property agreement it can only be set aside pursuant to s.79A. As I have earlier noted no basis for an application is presently apparent for the respondent to seek to set the agreement aside on that basis.
Fraudulent Purpose
Additionally, the respondent contends that following evidence adduced at trial clause 21 of the consent orders ought not be enforceable for its express purpose was to effect a fraud upon the revenue by making something tax deductible when it was not. Arguably this could constitute “any other circumstance” for the purpose of s.79A(1)(a). For reasons which follow it is unnecessary to consider whether that conduct impacts only upon clause 21 or whether it infects the whole agreement: a matter neither party addressed me on.
There is no issue that as a matter of general principle if a party executes a document with the intention of using it for the fraudulent purpose of deceiving and thereby defrauding the revenue that party is disentitled from relying on that document in subsequent proceedings to enforce rights conferred by that document; National Mutual Life Association of Australasia v S.H. Hallas Pty Ltd [1992] 2 Qd R 531 at 535; Alexander v (1936) 1 Kb 196 at 196; Holdcroft v Market Garden Produce Pty Ltd [2001] 2 Qd R 381 at [26]; Yaroomba Beach Development Co Pty Ltd v Coeur de Lion Investments Pty Ltd (1989) 18 NSWLR 398 at 418.
In her affidavit filed 9 November 2009 the applicant stated that up to the time of separation she generally worked five half days per week in the businesses conducted by she and the respondent. She noted that by that time her input had been restricted to such tasks as “cleaning up the kitchen and ensuring the office supplies were up to date. My position within the business became untenable. The staff would not speak to me about company matters and displaying signs (unwillingness to answer questions, sympathetic facial expressions and body language, hesitation in their voices, etc) of being uncomfortable talking with me about business matters when I spoke to them. I was at all times ready and willing to continue working for the business both before and after separation.” It is apparent by reference to paragraph 42 of her affidavit and her observation that after their separation the respondent informed her he did not want her to attend to the office, that there were issues between the parties concerning her ongoing employment in one of the respondent’s businesses. In any event the matter was not further addressed in her affidavit.
In the respondent’s affidavit filed 10 November 2009 at paragraph [13] he swore that “the applicant has never undertaken employment with me or any entity that I have controlled since the making of the orders in 2000”. Further he noted that the applicant never presented to work and indeed “she was not available to work”. He swore that when he asked her to present for work in accordance with the orders she refused responding with the words “you don’t want me to do that [Mr Gantos] you won’t want me in your business at all. You won’t want me working with your staff.”
The respondent concluded by reason of the circumstances that his poor relationship with the applicant was such that he could not employ the applicant in his business as he was then fearful that the applicant would sabotage his business activities or work against him on any level in which she might be involved in the business. He considered the situation would be unworkable given the difference between “the obligation created by the orders being inconsistent with legislation which entitles me to terminate employment for conduct, performance or on the basis of redundancy – as well as my obligation to create a workplace which is appropriate for other workers, who could be effected by the conduct engaged in by the applicant in furtherance of our poor relationship”. Furthermore he noted that his new spouse had since become involved in the business and that “in furtherance of my duties to my staff, I believe that if I cannot control workers and their behaviour because one of their number has protected status as a result of a court order I could be sued or made the subject of complaints to statutory authorities.” At paragraph [17] of his affidavit he concluded “I cannot envisage any situation where the applicant would take direction from me or fulfil the role of an employee who had my best interests at heart or to act in furtherance of supporting any business activities in which I was involved.” The evidence in chief of neither party suggested that at the time clause 21 was negotiated it was done with a fraudulent purpose in mind, that is, it was structured to defraud the revenue.
Needless to say the risks of this arrangement are and ought to have been patently obvious. However notwithstanding that risk the parties sought the contract in those terms. In evidence adduced by the respondent from his accountant, Mr F., it was deposed that at some point discussion occurred between those parties on a tripartite basis. During the course of those discussions it was suggested that a sum of money would be provided on a weekly basis to provide for ongoing support for the applicant such that she could look after the children of the marriage and that the payment be by way of wage. The accountant stated that he made that recommendation because he was “a tax adviser and it’s my job to save people tax”.
The evidence in chief of the accountant went no further than that and those matters were never put by the respondent’s Counsel to the applicant. The respondent in evidence in chief orally adduced made a similar statement. Likewise this statement was never put to the applicant. Although it might be expected that in accordance with the rule in Browne & Dunn[6] and as a matter of general fairness this matter ought to have been put to the applicant[7] it would in this instance be unfair to strictly apply that rule. Neither the evidence of Mr F. or the respondent extended to suggest any unlawful purpose and as it stood prior to cross examination of the respondent it appears to have been addressed generally to pre-contractual negotiations which in the strict sense are irrelevant.
[6] Browne v Dunn (1893) 6 R 67
[7] See MWJ v R (2005) 222 ALR 436, [38] – [40]; R v MAP [2006] QCA 220 [55].
The issue of a fraudulent scheme got life, if it was to get any, by cross examination by the applicant’s Counsel of the respondent. However for reasons which follow from a consideration of the passage of evidence below even that cross examination does not assist the respondent’s case. Concerning this issue the following exchange ensued:
“Question: Now [Ms Lasky] wasn’t working for you at the time you saw Mr F.?
Answer: Yes, she was.
Question: That was after you came back from Fiji, wasn’t it?
Answer: In a diminished way, like I said before.
Question: Well is it your evidence, Mr Gantos, that she worked for you in this diminished way, what, until the order was made and then stopped?
Answer: I can’t recall the exact time it was just – it got to a frustration time where it just wasn’t working.
Question: Well in your evidence how did she stop working for you?
Answer: I don’t know if you really want me to say that.
Question: Well I’m asking you the question. How did she stop working for you? Did she just stop turning up?
Answer: By abusing staff, etcetera.
Question: Yes, so she stopped working for you because you told her to stop coming?
Answer: No.
Question: All right. Well what do you say, she stopped by just not turning up?
Answer: Pretty much, yes.
Question: Well that’s not correct. She stopped coming after you came back from Fiji she didn’t come again because you told her she wasn’t welcome back at your business premises?
Answer: And you know that how?
Question: Sorry?
Answer: And you know that how?
Question: Could you just answer my question. I put it to you that that’s what happened?
Answer: No. No, you told me. You didn’t put it to me. You told me.
Question: I put it to you that she stopped working for you?
Answer: And again I will say no, she was there in a diminished role.
Question: And you knew, when the notion was converted to an order that she was to be paid a wage, that she wasn’t working for you for that wage?
Answer: She was working in a diminished way with potentially being able to continue to work, but it didn’t work out that way.
Question: You didn’t want her working for your business for 15 years, Mr Gantos, did you?
Answer: In a diminished role under the right circumstances it wouldn’t have been a problem, but it didn’t turn out that way.
Question: Well when was it that it didn’t turn out and she stopped coming?
Answer: Difficulties with the staff, getting on with the staff, etcetera.
Question: No, that was why. When was it?
Answer: I couldn’t tell you exactly.
Question: She certainly wasn’t working for you on 16 June when the order was made, was she?
Answer: Is that 2000 or ’99?
Question: 16 June 2000 when the order was made?-- - 2000.
Answer: Probably not, but it’s hard to say.
Question: And can I suggest to you that she has never worked for you since?
Answer: Yes.
Question: now the tax effectiveness of paying her a $750 a week wage would only arise if you claimed it as a wages expense against the business, wouldn’t it?
Answer: I don’t know. You could have asked [first name omitted] when he was here because he does that.
Question: Sorry?
Answer: That’s a [first name omitted] question not me. I don’t do the tax effectiveness.”[8]
[8] Transcript 8 December 2009 pages [77] and [78].
Notwithstanding the precise lack of harmony between the applicant’s Counsel’s cross examination of the respondent and the applicant’s evidence it is plain that at the time the agreement was struck she had been working for the respondent in one of his businesses. The respondent was plainly content for her to continue in his business provided she was not disruptive and undertook her duties in a reasonable manner.
Although the standard of proof in a civil proceeding such as this is proof on the balance of probabilities; s.140 Commonwealth Evidence Act 1995 particular care must be taken when allegations of fraud and matters involving potential criminality are involved. As the High Court stated in Neat Holdings Pty Ltd v Karajan Holdings Pty Ltd (1992) 110 ALR 449:
“The ordinary standard of proof required of a party who bears the onus in civil litigation in this country is proof on the balance of probabilities. That remains so even where the matter to be proved involves criminal conduct or fraud. On the other hand, the strength of the evidence necessary to establish a fact or facts on the balance of probabilities may vary according to the nature of what it is sought to prove. Thus, authoritative statements have often been made to the effect that or cogent or strict proof is necessary ‘where so serious a matter as fraud is to be found’. Statements to that effect should not, however, be understood as directed to the standard of proof. Rather, they should be understood as merely reflecting a conventional perception that members of our society do not ordinarily engage in fraudulent or criminal and a judicial approach that a court should not lightly make a finding that, on the balance of probabilities, a party to civil litigation has been guilty of such conduct.”[9]
[9] At [170]– [171].
I am not satisfied to the requisite standard that the parties in this instance have sought to effect a fraudulent purpose in the negotiation of the terms of settlement or clause 21 in particular. It follows in my view that clause 21 remains enforceable.
Chid Support Assessment
The parties also seek a departure from a child support agreement entered into between the applicant and respondent dated 1 June 2000.
Following the applicant’s initiating application the applicant filed a subsequent application for a child support departure order. She sought departure from a child support agreement entered into between she and the respondent dated 1 June 2000. The child support agreement was a comprehensive agreement which by its recitals appears to have contemplated the children residing with the applicant. Following the applicant’s application for departure from the agreed child support agreement, the respondent also applied for orders that the agreement be discharged from operation with effect from the date of the change of living arrangements.
The material in the application is not particularly helpful. The focus of the application was upon the terms of the property settlement agreement with the child support issue being purely ancillary. While there was some basic evidence such as affidavits including financial statements and material directed to the income of the parties placed before the Court that material is at best confusing. For instance the respondent’s financial material does not make sense. He deposes to an average weekly income of $3,500.00 but outgoings of $5,335.00. That includes total household expenditure including allowance for children the subject of the application of $3,315.00. Notwithstanding that apparent deficiency in cash flow, there appear to be no loans made to support that cash outgoing. For instance, one would expect to see an overdraft or other cash facility evident in the liability section of the financial statement to support a contention that outgoings exceed income. Perhaps it is the case that the financial statement merely represents a snapshot of his circumstances on that day for the week preceding its date of execution. Even still that is puzzling because I would expect to see a credit card statement or claim in respect of outstanding credit cards to address even that minor cash shortfall. It is noteworthy that the respondent’s position did not materially change between the two financial statements filed 22 January 2009 and
30 November 2009 which only serves to reinforce my concerns about the figures provided in the financial statements.
Likewise for the applicant there is a deficiency between her income and outgoings. That appears to range between approximately $126.00 in January 2009 and $388.00 in November 2009; on a worse case scenario about $38,000.00 negative cash flow over that period. However the applicant’s liabilities appear to have grown by $232,000.00, in part reflected in a significant growth in “other mortgages”. Overall however the applicant’s financial position is equally puzzling. No effort was made by either party to address these anomalies/deficiencies in either evidence or submissions.
These matters are of significance because the Court’s jurisdiction to entertain an application of this kind as opposed to requiring the parties to undergo the usual administrative assessment process including reviews that follow such processes it is enlivened by operation of s.116(1)(b) of the Child Support (Assessment) Act 1989. Relevantly that provision provides:
“Application for order under Division
“ (1) A liable parent or a carer entitled to child support may, in respect of an administrative assessment of child support for a child, apply to a court having jurisdiction under this Act for an order under this Division in relation to the child in the special circumstances of the case if:
…
(b) both of the following apply:
(i) the liable parent or carer entitled to child support is a party to an application pending in a court having jurisdiction under this Act;
(ii) the court is satisfied that it would be in the interest of the liable parent and the carer entitled to child support for the court to consider whether an order should be made under this Division in relation to the child in the special circumstances of the case; …”
In this instance a question arises as to whether the Court can be satisfied an order should be made “in the special circumstances of the case”. The phrase “in the special circumstances of the case” is a phrase which is liberally stated throughout the relevant Part and Division of the Child Support (Assessment) Act. It is however not subject to statutory or judicial definition. At best it appears to be defined by reference to common language usage.
“Special” in its adjectival sense is defined as: “3. relating or peculiar to a particular person, thing, instance etc: the special features of a plan…6. distinguished or different from what is ordinary or usual: a special occasion 7. extraordinary; exceptional; exceptional in amount or degree; special; special importance.”[10] It follows in this context the special circumstances of the case are those extraordinary, exceptional or peculiar features of the circumstances of the case that would warrant a departure from the customary legal process of administrative assessment and permit a truncation of customary process as would occur if the court heard the application.
[10] Macquarie Dictionary, Revised Third Edition 1997
In Reid (1999) FLC 98-007 that matter was considered. At 95-307 the Full Court observed at [45]:
“[45] It is quite clear, in my view, that the intention of the Legislature was that this Part was to provide a summary and inexpensive procedure to enable child support departure orders to be made, without the necessity for protracted Court proceedings.
[46] The wife, in this case, chose by the filing of a Form 63 to effectively ignore the provisions of Part 6A, and to proceed to make a departure application to the Court. The husband, in my view, was perfectly entitled to take the view that this measure had been inserted into the Act to enable these matters to be resolved without the necessity for expensive litigation. It is also quite clear that that was the view also taken by the legislature, when it enacted section 115, which was also substituted by Act No. 151 of 1992, and subsequently amended in 1995.
[47] The intention of the legislature was that the departure order would normally only be dealt with in circumstances described under section 115(b) - where there had been either the making or refusal of a determination by the Registrar under part 6A. Section 115(c) was, however, introduced with the very sensible object of enabling the Court, in special circumstances, to deal with a departure application at the same time as other litigation already before the Court.
[48] In this case, as at 30 January 1998, it is quite clear that there was no other matter before the Court, other than the Form 7, which certainly would not have been dealt with together with this application. His Honour therefore, at that stage, had no jurisdiction to entertain the matter.”
Plainly in this case the jurisdiction of the Court is enlivened provided the special circumstances of the case warrant the exercise of the power. However in making that observation it is worthwhile noting the circumstances surrounding the introduction of those provisions to the Child Support (Assessment) Act and the purpose for their insertion. In McGuiness & Cowie [2002] FamCA 461 at [26] Kay J observed the intention of the enactment as explained by the explanatory memorandum as follows:
“[26] The Child Support (Assessment) Act came into operation in 1989. It provided for an administrative assessment of child support to be made by reference to the taxable incomes of each of the parties. If either party was dissatisfied with the assessment the Act made provision for an application to be made to a court of competent jurisdiction seeking a departure order. The Child Support Legislation Amendment Act (No. 2) 1992 amended the legislation to introduce Part 6A reviews. Instead of going directly to the court to seek a change in the assessment, parties were generally obliged to seek an administrative review of the assessment. The Registrar was given power to alter the assessment to take into account the types of matters that a court would need to consider on the hearing of a departure application. The Registrar was however only given limited powers as to the manner in which he/she could alter the assessment.
[27] The accompanying explanatory Memorandum to the 1992 amendment bill clearly indicated that the Court’s jurisdiction to deal with departure applications was not being removed, but was being curtailed in certain circumstances.
[28] The relevant text of the memorandum reads at page 37 (emphasis changed):
“(7) Repeal the existing section 115 and replace it with a new section 115. The new section ensures that there are three distinct types of cases that can go directly to court or be considered by a court under the departure provisions [Clause 25].
The intention is that all pre Part 6A cases are eligible to be considered by a court, that cases where the Registrar has made, or refused to make, a determination under Part 6A may go to court and any other case at all where another matter is pending before the court (including pre Part 6A cases and Part 6A cases already decided by the Registrar) and the court is of the view that an assessment for a year starting on and after 1 July 1992 should be departed from, may be considered at the same time as the other matter, notwithstanding that it should otherwise go before the Registrar under Part 6A. This avoids the situation of having to apply to different places when the one place, the court, can consider and decide all the matters together.”
[29] The memorandum explained that there remained three paths to the court. The legislation sensibly sought to avoid the requirement of parties having to fight the one battle on several fronts.”
As his Honour summarised at paragraph [30] the object was to see that “one stop shopping remained available if appropriate”. While factors of speed and economy are important so too is justice and fairness to the parties including the children. As I have observed the term “in the special circumstances of the case” where it is employed in s.116(1)(b)(ii) does not appear to be informed by any definition in the Act or explained by any judicial determination. Accordingly it seems the words can be construed by reference to the last sentence in the explanatory memorandum as explained by Kay J in para [30] of his judgment. That is to avoid multiple proceedings and have the matter resolved on the one occasion if appropriate. That is to say if the parties have other litigation on foot and the child support departure application is prepared and submitted for consideration in a manner which would permit it determination together with the other providing that may constitute such a special circumstance of the case.
In the context of this application the parties have plainly failed to consider the material placed before the Court and its affect. Here the application appears to have been an afterthought in the litigation and conducted as a matter which is entirely incidental to the significant issue in contention between the parties. Further each of the liable parent and the carer entitled to child support have by their conduct of the proceeding suggested complete indifference to matters pertained to the child support application. Each of these factors militate against a finding under s.116(1)(b)(ii) for these circumstances do not demonstrate any intention to take advantage of the relative economies to be enjoined by having the child support proceeding resolved with the other matter. The conduct of each of the parties does not demonstrate that the special circumstances of the case warrant an order by the Court permitting the parties the opportunity to proceed to have the matter determined by the Court. They should be determined in accordance with the usual administrative procedures.
Accordingly I refuse the application pursuant to s.116(1)(b).
Orders
Direct the parties submit a minute of order giving effect to the terms of the judgment on or before 4.00pm on 16 September 2011.
I certify that the preceding seventy-nine (79) paragraphs are a true copy of the reasons for judgment of Burnett FM
Date: 2 September 2011
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