Lotta and Lotta (No 2)

[2015] FamCA 551

FAMILY COURT OF AUSTRALIA

LOTTA & LOTTA (NO 2) [2015] FamCA 551

FAMILY LAW – PROPERTY – Spousal maintenance – Application seeking enforcement of arrears of spousal maintenance previously ordered – where it was communicated by the wife’s solicitors to the husband that she was “no longer pressing” her spousal maintenance application – where wife received significant funds from the sale of property subsequent to spousal maintenance order – where the wife is now in a de facto relationship – where orders enforced in part.

Family Law Act 1975 (Cth) s 105
Family Law Rules 2004 (Cth) r 20.07

Collins, MH and Olsthoorn, QPW [2005] FamCA 138
Ramsey (No 2) (1983) 8 Fam LR 1005
Watson & Watson [2006] FMCAfam 293

APPLICANT: Ms Lotta

RESPONDENT: Mr Lotta

FILE NUMBER: PAC 3435 of 2013

DATE DELIVERED: 17 July 2015

PLACE DELIVERED: Parramatta

PLACE HEARD: Parramatta

JUDGMENT OF: Foster J

HEARING DATE: 12 June 2015

REPRESENTATION

COUNSEL FOR THE APPLICANT: Ms Beck

SOLICITOR FOR THE APPLICANT: Thurlow Fisher Lawyers & Consultants

SOLICITOR FOR THE RESPONDENT: Samuel Jones Legal Services

Orders

1. That the amount owing by the husband to wife by way of spousal maintenance as ordered on the 14 November 2013 is $14,800.

2. That the husband pay $14,800 within 14 days from this date to the wife or as she may otherwise direct the husband in writing.

3. In default of the husband paying the sum provided for in Order 2 the wife is appointed trustee for sale of the whole of husband’s public company shareholdings in IAG and AMP at the best price reasonably obtainable and for the purposes of this order the said shares shall vest in the wife and the wife  shall thereupon pay the proceeds of sale as follows:

   (a)       In payment of $14,800 to herself,

   (b)       In payment of reasonably incurred selling costs and costs incurred in enforcing these orders if any,

   (c)       In payment of the balance then remaining to the husband.

4. That the husband do all necessary things and sign all necessary documents to give effect to these orders.

5. That in the event that either party refuses or neglects to execute any deed, document or instrument necessary to give effect to these orders, the registrar of the Court is appointed pursuant to s 106A of the Act to execute such deed, document or instrument in the name of such party and to do all acts and things necessary to give validity to the operation of the deed, document or instrument upon the Registrar being provided with verification of such refusal or failure by way of affidavit.

6. That the wife file and serve submissions as to costs sought if any within 14 days from the date of these orders and the husband file and serve any submissions in response within a further 14 days.

7. Liberty to apply as to implementation or enforcement of these orders.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Lotta & Lotta has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT PARRAMATTA

FILE NUMBER: PAC3435 of 2013

Ms Lotta

Applicant

And

Mr Lotta

Respondent

REASONS FOR JUDGMENT

1. The issue for determination by the Court is one as to spousal maintenance. The wife seeks enforcement of arrears of spousal maintenance ordered on 14 November 2013. The husband initially sought a variation or discharge of his spousal maintenance obligation pursuant to the said order. That application was abandoned as it encompassed the same issues as were raised in the wife’s application for enforcement as will be seen below.

2. As a consequence of a concession made by the wife during hearing that she would be only seeking to enforce arrears until 19 January 2015 on which date she entered into a de facto relationship the ultimate question for determination was whether arrears of spousal maintenance to that date should be enforced against the husband.

3. The power of the Court to enforce orders made pursuant to the Family Law Act 1975 (Cth) (“the Act”) is contained in s 105 of the Act, which sets out the following:

   S 105: Enforcement generally
   (1) Subject to this Part, to the regulations and to the applicable Rules of Court, all decrees made under this Act may be enforced by any court having jurisdiction under this Act…

4. The Family Law Rules 2004 (Cth) (“Family Law Rules”) further set out, inter alia, the following:

   R 20.07: General enforcement powers of court
   The court may make an order:
   (a) declaring the total amount owing under an obligation;
   (b) that the total amount owing must be paid in full or by instalments and when the amount must be paid;
   (c) for enforcement (see rule 20.05);
   (d) in aid of the enforcement of an obligation;
   (e) to prevent the dissipation or wasting of property;
   (f) for costs;
   (g) staying the enforcement of an obligation (including an enforcement order);
   (h) requiring the payer to attend an enforcement hearing;
   (i) requiring a party to give further information or evidence;
   (j) that a payer must file a Financial Statement;
   (k) that a payer must produce documents for inspection by the court;
   (l) dismissing an application; or
   (m) varying, suspending or discharging an enforcement order.

5. It is well settled that the power of the Court under s 105 is discretionary rather than absolute (Collins, MH and Olsthoorn, QPW [2005] FamCA 138). Nygh J, in Ramsay (No 2) (1983) 8 Fam LR 1005 said at 1013:

   The Full Court in the appeal in this case [1983] FLC 91-031 held that the power of enforcement which the wife sought to exercise under s 105 was discretionary and not absolute and I am clearly bound by that decision. The question then arises whether circumstances have arisen in which it would be inequitable to enforce the original order.

   As the English Court of Appeal stated in the passage cited with approval by their Honours in Thwaite v Thwaite (1981) 3 WLR 96 at 102: “Where the order is still executory, as in the present case, and one of the parties applies to the Court to enforce the order, the Court may refuse if, in the circumstances prevailing at the time of the application, it would be inequitable to do so.”

6. In Watson & Watson [2006] FMCAfam 293, Riethmuller FM stated the following:

   [31] I am not convinced that the discretion to enforce is limited to protecting subsequent equitable rights or interests. I see no reason that the broad discretion in s 105 should be limited by equity’s doctrines. If it were, Thwaite’s case is difficult to rationalise. Rather the discretion would be exercised after consideration of the relevant facts and circumstances in the context of the legislative scheme.

   [32] I am satisfied that the discretion needs to be founded on conduct or events that occurred after the orders were made (for conduct prior to the order the appropriate course is to apply under s 79A). As a result, delay may be the basis for the exercise of the discretion, analogous to laches being a basis for not exercising the discretion to grant equitable relief. However, delay, of itself, would rarely be sufficient, particularly if the delay is less than the limitation period for enforcement of judgments generally in the jurisdiction. Whilst there is no Commonwealth limitation period, the Limitations of Actions Act 1958 (Vic) provides for a 15 year period on enforcement of judgments in the state courts: see s 5(4).

   [33] Significant weight must be given to the importance of litigants being able to enforce orders: prima facie orders should be enforced If the discretion is to be exercised against enforcement, it appears to me that it would be important to clearly identify the facts or circumstances relied on.

Context

1. It is common ground that the husband paid spousal maintenance until 19 December 2013. Arrears to 19 January 2015 for 56 weeks are $22,400. The wife has had to borrow from family to meet her expenses.

2. The wife relied upon:

   a)her Application in a Case filed on 5 February 2015,

   b)her financial statement,

   c)her affidavits filed on 5 February 2015 and 13 March 2015.

3. The husband relied upon:

   a)his Application in a Case filed on 12 February 2015,

   b)his financial statement filed on 13 June 2015.

4. At the commencement of the interlocutory hearing the husband sought to rely upon an affidavit filed by him on 10 June 2015. Directions for the preparation of the hearing were made on 18 May 2015 and such directions provided for the husband to file affidavit material to be relied upon in support of his application by 29 May 2015 and that thereafter the wife file material to be relied upon by her by 10 June 2015.

5. The directions on 18 May 2015 were made facilitate the wife, should she wish, to issuing subpoena for the production of documents in relation to any issue that may arise as a consequence of the affidavit material relied on by the husband. Directions were made granting the parties leave to issue subpoenas returnable no later than 11 June 2015, being the day prior to the hearing.

6. In such circumstances the husband was not granted leave to rely upon the affidavit filed on 10 June 2015 contrary to directions made.

7. The background to this matter was set out in Lotta & Lotta [2015] FamCA 360 :

   7.     The wife is presently 42 years old. The husband is 43 years old. The husband is a solicitor in private practice. The parties married in 1993 and there are three children of that marriage aged 19, 18 and 11. The parties separated in September/October 2008.

   8.     The wife contends that during the marriage it was the husband that controlled and managed the family finances.

   9.     Subsequent to separation the wife remained residing in a property at Suburb B owned in her name. It was a large property which the wife contends was isolated and a distance from her friends and family. The wife in December 2008 purchased a home for herself and the three children at C Street, Suburb D for $525,000.

10.  The wife financed the purchase with a bridging loan from St George Bank secured over the property at Suburb B and the new home at Suburb D that was registered in her name. The husband says he was unaware of the transaction.

11.  In February 2009 the husband was injured in a motorbike accident and subsequently stayed at the wife’s property at Suburb D for four weeks while he recovered. During that time the parties spoke about the wife’s borrowing secured against the Suburb B property that facilitated the purchase of the Suburb D home. The mortgage borrowing from the St George Bank was $570,000 (“the Suburb D loan”).

12.  The wife’s bridging finance became due for repayment in about March 2009. The wife says that husband represented to her that with money available from savings and otherwise the Suburb D loan could be discharged.

13.  On 2 March 2009 the wife attended at the husband’s legal practice to sign documents.  The husband requested her to sign the documents so that “he could arrange for the loan to be paid off”. The wife signed the documents as requested without reading them and the husband informed her that he would have the documents witnessed at a later time by his friend. The documents signed by her were a guarantee and indemnity given by the wife in favour of the Westpac Banking Corporation in respect of monies advanced to the husband with the wife’s guarantee being secured over her new home at Suburb D by way of mortgage. It appears that the guarantee and indemnity was for $246,451.

14.  On 8 April 2009 the husband facilitated a payment of $400,000 by way of bank cheque to the Suburb D loan. He now says that these funds were advanced to him by his brother. Subsequently other significant deposits were made to the credit of the Suburb D loan by the husband and or the wife and on 3 February 2010 a final payment of $17,000 was paid to discharge the loan.

15.  Notwithstanding the discharge of the Suburb D loan the wife still remained liable under the guarantee and indemnity signed by her on behalf of the husband. The wife contacted the Westpac Bank and as a consequence it appears that the husband’s capacity to further access to loan facility was restricted. The wife’s property at Suburb D remained subject to the mortgage to the Westpac Bank securing her guarantee and indemnity in favour of the husband.

16.  In early November 2010 the wife received correspondence from Centrelink in relation to a review of benefits received by her. The benefits represented the wife’s sole source of income. The husband, she says, suggested that he prepare and they sign a document that will assist in the review.

17.  Later the husband attended at the wife’s home at Suburb D. He had prepared some documents. The wife asserts that he suggested to the wife that the documents be backdated to 14 April 2009 for Centrelink purposes. The husband contends that the agreement was signed on the date that appears on it:  14 April 2009.

18.  The wife signed the two documents put to her by the husband. The documents comprised a parenting plan and a “financial agreement for the purpose of dividing matrimonial property”.  He contends somewhat ingenuously that the documents were prepared jointly by them and similarly says he was not aware that independent legal advice was necessary. This notwithstanding the very terms of the agreement referred to below (Clause 7).

19.  The parties’ signatures on the documents are not witnessed. The wife asserts that she signed the documents not understanding what if any legal consequences might flow from them. It is common ground that the wife was not provided with any legal advice as to the documents or their consequences nor did she receive any independent legal advice as to the documents or their consequences.

20.  Pursuant to the “financial agreement” the husband facilitated the transfer of the Suburb B property from the wife to himself to a transfer that was marked exempt from stamp duty on 21 December 2010.

21.  The wife complains that the husband duped her into signing the documents in particular the “financial agreement” which he assured her had no weight or value.

22.  Notwithstanding the terms of the “financial agreement” the husband refused to transfer to the wife the motor vehicle that she was to retain the use of and indeed in later after the “agreement” attempted to take possession of that vehicle from the wife.

23.  It is the wife’s contention that the estimated assets of the parties in November 2010 were as follows:

Wife  Suburb D property               $   545,000

Wife  Superannuation  $     38,000

$   583,000

Husband               One half share Suburb E property    $   700,000

Husband               Suburb B property  $1,000,000

Husband               Superannuation  $     70,000

Husband               IAG shares  $     8,132

Husband               AMP shares  $     3,941

Husband               Motor vehicle 2  $    40,000

Husband               Motor vehicle 1  $    15,000

Husband               Westpac term deposit  $  276,260

Husband               AMP policies  $    65,000

Husband               Cattle  $    30,000

Husband               Two motorbikes  $    50,000

$2,258,333

24.  At the commencement of cohabitation the wife contends that the only asset of significance was the husband’s one third interest in vacant land at Suburb E. The husband contends he had significant other real estate property.

25.  Subsequently and in October 2013 the Westpac security secured over the wife’s Suburb D property was discharged by the husband. The wife has no knowledge as to how he procured the discharge. It appears that this was facilitated by the husband providing to Westpac security over the Suburb B property once it was transferred to him.

26.  Subsequently in September 2014 the wife sold the Suburb D property for $802,000.

The spousal maintenance order and thereafter

1. In the context of that background an interim order was made in the Federal Circuit Court of Australia for spousal maintenance in favour of the wife on 14 November 2013 in the sum of $400 per week “pending the adjourned date”.

2. On 14 November 2013 interim issues were listed for hearing on 17 December 2013 with the respondent husband ordered to file a Response and affidavit.

3. On 17 December 2013 interim proceedings were further adjourned to 14 February 2014. The respondent husband was ordered to file an Amended Response and affidavit by 18 January 2014.

4. On 14 February 2014 further interim parenting orders were made by the Court and it was further ordered that the “previous order in relation to spousal maintenance to continue”. Proceedings were adjourned for interim hearing to 6 May 2014 with the parties to file and serve all affidavits to be relied upon by 24 April 2014. On 24 April 2014 proceedings were further adjourned to 18 July 2014 for hearing of the spousal maintenance application. The parties were ordered to file and serve the affidavits upon which they wished to rely by 11 July 2014.

5. On 18 July 2014 the interim spousal maintenance application was adjourned part heard to 4 September 2014 and the parties were ordered to file and serve affidavits which they sought to rely upon by 22 August 2014. By letter dated 18 August 2014 the wife’s solicitor informed the husband that the wife was “no longer pressing” her spousal maintenance application. The circumstances of that communication are somewhat perplexing. Either the wife was abandoning her application entirely or allowing the interim order to continue without pressing for the larger periodic sum of $800 per week on an interim basis as sought in her application filed 13 February 2014.

6. It is of note that the sale of Suburb D was imminent and that sale was without the knowledge of the husband and in breach of injunctive orders. There is a strong inference that the wife did not wish to proceed to a hearing on spousal maintenance for fear that her sale of Suburb D be disclosed. It is the husband’s contention, not unreasonably, that he believed that his obligation as to spousal maintenance was to cease from 4 September 2014.

7. On 4 September 2014 proceedings were transferred to this Court.

8. Following the sale by the wife of the Suburb D property in September 2014 the net proceeds of sale available to her were about $721,000. From that the wife paid $59,000 to her solicitor for legal costs, repaid her brother $10,000 and deposited the remaining $661,000 into her bank account. It is to be inferred that even at a 2 per cent return the wife would accrue interest at about $250 per week on that sum.

9. In May 2014 the wife and her then companion entered into an arrangement for the purchase of land at Suburb F for $509,000 by her companion and for the wife to fund the construction of a home thereon at a cost of about $485,000. Of the proceeds of sale the wife has about $30,000 remaining.

10. As at February 2015 the wife remained in occupation of the Suburb D property having leased it from the new owners for $630 per week.  By this time the wife had commenced to reside in a de facto relationship with her new partner Mr G and had then ceased to receive any Centrelink benefits for herself.

Discussion

1. The wife concedes that the order should be enforced in full until 19 January 2015 on which date she commenced to reside in a de facto relationship with her current partner.

2. It was the husband’s contention that the order should be enforced only until 18 August 2014, the date of the letter from the wife’s solicitor referred to above, it being represented to him that the wife was “no longer pressing” her spousal maintenance application. That application was next before the Court on 4 September 2014.

3. It was shortly after 4 September that the wife received significant funds from the sale of her Suburb D property.

4. The sum in issue for the period from 18 August 2014 to 19 January 2015 is about $8,000.

5. In the circumstances set out above it is appropriate to enforce the spousal maintenance order until 4 September 2014.

6. The arrears under the order as at that date are for 37 weeks at $400 per week being $14,800. A declaration to that effect will be made.

1. The wife seeks to recover the sum found owing.

2. The husband holds public company shareholdings that as at the date of hearing were:

   IAG 1142 shares at $5.52 $6,303

   AMP 934 shares at $6.36 $5,940

3. It is appropriate that in default of the husband paying the amount owing within a short period that the wife be appointed trustee for sale of such of the shares as will satisfy the amount owing.

4. Orders will be made accordingly.

I certify that the preceding thirty-three (33) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Foster delivered on 17 July 2015.

Associate:

Date:  17 July 2015