MADRANO & MADRANO
[2020] FCCA 1155
•13 May 2020
FEDERAL CIRCUIT COURT OF AUSTRALIA
| MADRANO & MADRANO | [2020] FCCA 1155 |
| Catchwords: FAMILY LAW – Non-compliance interim maintenance orders – enforcement – costs. |
| Legislation: Family Law Act 1975 (Cth), s.117(1) |
| Cases cited: Carchar & Hbenum [2011] FamCA 496 Yilmaz & Yilmaz and Anor [2014] FamCA 663 |
| Applicant: | MR MADRANO |
| Respondent: | MS MADRANO |
| File Number: | MLC 10541 of 2019 |
| Judgment of: | Judge Harland |
| Hearing date: | 30 April 2020 |
| Date of Last Submission: | 30 April 2020 |
| Delivered at: | Melbourne |
| Delivered on: | 13 May 2020 |
REPRESENTATION
| Counsel for the Applicant: | Mr Hannan |
| Solicitors for the Applicant: | Wilckens Roche Lawyers |
| Counsel for the Respondent: | Mr Puckey |
| Solicitors for the Respondent: | Taussig Cherrie Fildes |
ORDERS
That within two (2) business days of these orders, the husband pay or cause to be paid to the wife the total sum of $21,292 comprised of the following amounts:
(a)$8,000 as a consequence of his failure to comply with order 8 of the orders made by this Honourable Court on 6 November 2019 as and from 17 February 2020 to the date of these orders (inclusive of the weekly payment due for payment on 27 April 2020);
(b)$12,287 being the remaining amount payable by the husband to the wife pursuant to order 2 of the orders made by this Honourable Court on 17 February 2020; and
(c)$1,005 as a consequence of his failure to comply with order 6 of the orders made by this Honourable Court on 17 February 2020 to the date of these orders.
That within two (2) business days of these orders, the husband do all such acts and things and sign all such documents as are necessary to assign or transfer to the wife all of his right, title and interest in B Education Plan policy numbers:
(a)... (for X); and
(b)... (for Y).
That in the event the husband fails to make the payments pursuant to any of orders 1 and 2 or any part thereof, and/or order 8 of the orders made on 6 November 2019, the wife receive the amount of the payment shortfall immediately from the monies held on trust for the parties by the wife’s lawyers, Taussig Cherrie Fildes, and there be a corresponding reduction to the husband’s overall property settlement entitlement at the trial of this proceeding.
That the husband pay the wife’s costs for court appearances on 17 February 2020 and 30 April 2020 and for preparation for the financial aspects of these court appearances as agreed, and failing agreement by assessment, with the payment to be deduced from the monies held on trust for the parties by the wife’s lawyers, Taussig Cherrie Fildes, within 72 hours of the amount being determined.
That save as expressly provided for in these orders, the orders made by this Honourable Court on 6 November 2019 and 17 February 2020 remain in full force and effect.
That within 21 days of these orders, the wife provide copies of the following documents:
(a)all Bank statements in the sole name or joint name of Ms Madrano, A Pty Ltd or any other bank account from which the wife has access to either deposit or withdraw funds, from 1 September 2019 to current;
(b)all documentation in relation to the start-up business “B” and or any other start-up company in which she is involved;
(c)all documentation regarding any income received, whether by an employer or from Centrelink.
That each party comply with any request for further disclosure documents within 14 days of receipt of a request.
IT IS NOTED that publication of this judgment under the pseudonym Madrano & Madrano is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLC 10541 of 2019
| MR MADRANO |
Applicant
And
| MS MADRANO |
Respondent
REASONS FOR JUDGMENT
This matter has been before me on four occasions. It is necessary to refer to the previous occasions in order to give context to these reasons.
The husband commenced the proceedings on 16 September 2019 seeking final and interim orders for both parenting and financial matters.
The wife filed her response documents on 31 October 2019.
On the first return date being 6 November 2019 I heard contested interim arguments about parenting and financial issues including interim maintenance. Both parties were represented by counsel and after hearing argument I gave brief ex tempore reasons and made orders. The relevant orders included ordering the husband to pay the wife periodic maintenance of $800 a week and to pay the mortgage instalments over the former matrimonial home and the costs associated with the Motor Vehicle 1 the wife drives. I ordered that the husband receive the rental income from the three rental properties and pay the costs associated with those properties.
On 6 November 2019 the husband argued that he did not have liquid cash and could not pay the maintenance sought by the wife. It was very clear from the analysis of the husband’s financial statement filed with his initiating application on 16 September 2019 that it contained a number of inaccuracies.
The husband did not appeal the orders of 6 November 2019. Instead he filed an application in a case five days later on 11 November 2019 which essentially sought to re-agitate the financial issues I had just determined. His application was fundamentally flawed. Much of what he raised in this application was with respect to material available before the 6 November 2019 orders were made. The husband has also complained numerous times since, that when he prepared his September 2019 financial statement not all of the financial information was available to him. The evidence the husband produced to the Court was entirely within his control. It was open to him to file an amended financial statement prior to the 6 November 2019 hearing. He could have sought an adjournment. He did not.
The husband did not withdraw his application in a case filed on 11 November 2019 until its return date on 17 February 2020. I also made an order granting the husband leave to uplift the affidavit he filed on 14 February 2020 which included privileged material that I did not read. I have concerns about the costs the husband has incurred in preparing these flawed documents.
On 17 February 2020 the parties entered into consent orders which, in summary, relevantly provided for:
a)a payment to the wife the sum of $53,135 less various payments the husband has already paid;
b)a restraint on the sale of shares or investments in the husband’s name; and
c)a restraint on the sale of the four real properties without consent of the wife.
Part of the lump sum payment to the wife was the arrears of maintenance.
The husband sought to have the matter listed with respect to interim parenting matters after the release of the family report. I heard and determined that application on 17 April 2020, but expressed concern about the issues the wife raised with respect to the husband’s non-compliance with the financial orders. This was particularly troubling given the history of this matter. For this reason I listed the matter for interim argument about the financial issues.
In the husband’s affidavit filed on 22 April 2020 he repeats his assertion that he is not disregarding his obligations to pay periodic maintenance to the wife rather, he cannot afford it. At paragraph 6 the husband says that when he swore his financial statement in September 2019 he was still sorting out his own financial circumstances. He refers to the wife transferring funds from his account and says:
I provided details to my lawyers regarding accounts, my wage and payments, however, not all payments for the investment properties, C credit card and the outgoings for D Street were taken into account. The financial statement did not take into account payments that were made from the joint account as being mine solely, as outgoings were still being paid from the joint account it was not something that was equated to being paid for by myself and as such were omitted. This material was then filed in September, only two weeks after I had been depleted of funds. The figures were not current as not yet had all expenses been divided.
He refers to the orders I made for maintenance on 6 November 2019 as being based on that financial statement. Certainly that was a significant part of the evidence before me. The husband does not give any explanation as to why he did not file an amended financial statement before the hearing on 6 November 2019. When he prepared his financial statement he swore that the contents were true. At paragraph 7 he refers to tracking his income and outgoings since September 2019.
The husband sets out three versions of a budget in his affidavit. This is a document the husband has created and is not evidence. Whilst his Counsel was at pains to say that the husband was not seeking to revisit the maintenance order again, it is clear that this is exactly what the husband is seeking and he states precisely that at paragraph 8. He also spends a significant portion of that affidavit talking about the parties’ respective financial positions post separation and prior to the interim hearing on 6 November 2019 and complains about the wife’s expenditure.
In her affidavit filed on 28 April 2020 the wife says she cannot verify the husband’s budgets as he has not provided all the source documents. The husband complains about the wife’s disclosure as well, particularly with respect to her employment.
Heads of agreement
The husband refers to the parties reaching an in principle agreement at private mediation on 29 January 2020. He says that he did not realise that the wife changed her mind until he received her affidavit sworn on 12 February 2020. He goes on to say that on 17 February 2020, which was the return date of his application in a case filed on 11 November 2020, the parties had further negotiations and came to an agreement. He says the wife signed the heads of agreement and he understood that she was agreeing in principle to what would become the said orders. Whilst waiting for the consent orders he was told that she was no longer in agreement. The parties attended a roundtable conference on 30 March 2020 and again reached agreement. He says he was not aware that she had changed her mind until he received her affidavit filed on 17 April 2020, days before the interim contested hearing with respect to parenting issues.
As quite properly conceded by his Counsel, heads of agreement are not binding. The interim orders remain binding until discharged. The husband has been legally represented by the same law firm since these proceedings began and he is employed as a Professional. He also refers to having been in the military and therefore is understanding of what it means to abide by the law and comply with orders. This does not assist him.
The wife disputes the husband’s assertion that he told her about the sale of the Suburb E property on 12 March 2020 and says she only became aware of it during settlement discussions on 30 March 2020.
On 17 February 2020 where the husband says that the parties reached an agreement, this is the same day that the parties entered into interim consent orders, which importantly included restraints on selling the investment properties. At paragraph 4 of his affidavit the husband says he sold the investment property at Suburb E pursuant to a contract exchanged on 11 March 2020. He says that he advised the wife of the sale the next day.
It is apparent from the material filed in this matter that the parties’ solicitors have been in frequent communication. He says he later provided her with an email from an agent with respect to the price of the property, which was $30,000 less than the valuation the parties recently obtained. Whether or not the pandemic is having an effect on the current real estate values, and whether or not this effect is likely to be short or long term is something to be addressed with an expert. The husband has also sold the Suburb F property subject to the purchasers obtaining satisfactory building and pest inspections. It is telling that the husband goes on to say at paragraph 4 of his affidavit “[a]s such I see no reason to hold off on selling the properties and continue to proceed in accordance with the heads of agreement, as it is for the benefit of both parties.” There is absolutely no legal basis for the husband taking this approach. It is a striking insight into his attitude.
Even on his own version the husband did not tell the wife about the sale of the Suburb E property until the day after he exchanged contracts.
In her affidavit in reply filed on 28 April 2020 the wife complains that the husband is effectively seeking to re-agitate his challenge to the November 2019 orders and that she has been put to the expense of responding to it. This is correct.
She complains that the husband revealed for the first time that he has sold the Suburb F property in his affidavit sworn on 22 April 2020. His lawyers provided the contract for sale on 15 April 2020. She points out that this is two days before the matter was before me for the interim parenting matters. This takes on some significance because I raised my concerns about the apparent ongoing non-compliance with financial orders with his Counsel on previous occasions, on 17 February 2020 and 17 April 2020. His solicitor was also present.
In a letter annexed to the wife’s affidavit from her lawyers to the husband’s lawyers dated 21 April 2020, her lawyers refer to previous confirmation that the husband sold shares in January 2020 and that $82,000 from the proceeds of those shares were placed in his lawyers trust account, with some of it being used to meet his legal costs. The wife’s lawyers request particulars with respect to that in their letter. The husband refers to selling bundles of shares in January 2020.
The minute of orders submitted on the husband’s behalf further reflects his approach to the financial aspects of these proceedings. He seeks:
a)the amount of $8,000 to be paid by way of maintenance, be paid by way of adjustments at final hearing, or otherwise that the order for maintenance be discharged;
b)the proceeds of sale of the Suburb E property be dealt with by setting aside $60,000 dollars for any assessable tax liability with respect to the properties and the balance to be put towards the line of credit;
c)orders permitting him to sell the remaining investment properties and for him to set the reserve price;
d)orders to sell the matrimonial home where the wife and children are living; and
e)that he be able to access $40,000 from the redraw account for the mortgage on the former matrimonial home, whilst contracts have been exchanged, and that that be treated as an interim settlement payment to the wife for her to purchase a motor vehicle and for accommodation costs.
This all goes well beyond the issue of his non-compliance with the maintenance order. This flies in the face of his written submissions which start with the statement that he is not seeking to revisit or enliven his previous applications. He says he is responding to the wife’s allegations and seeks to provide reasons for any breach of the orders and to explain his current financial position. Whilst he is at some pains to say that he is not seeking to re-agitate the previous orders or enliven previous applications, with respect, it is plain from the orders he seeks and the details he goes into in both his evidence and submissions that he is trying to do just that via a backdoor method.
His submissions go on to say that the parties had established when negotiating that neither party would keep the properties. The husband uses this and the heads of agreement made on 17 February 2020 as justification to sell the investment properties. There is no reasonable basis to take that position. Presumably his lawyers would have advised him of the status of this agreement versus consent orders. Even if the Court was to accept the husband’s contention that he thought he was permitted to proceed with selling the investment properties, this could only apply to the Suburb E property and not the property he sold in April.
His submissions then go on to refer to his strained financial position and refers to an amended financial statement filed in March 2020 and bank statements.
The submissions go on to refer to what the husband alleges both parties were aware of at separation. This does not advance matters and the husband cannot speak to the wife’s understanding.
His submissions go on to discuss the periodic payments, however, he “acknowledges and understands that the orders must be complied with to date.” He said that he would only be able to comply with the periodic maintenance by way of adjustment from the final settlement unless payments for the matrimonial home and the Motor Vehicle 1 cease. This and the orders he seeks is yet another way of seeking a variation of the maintenance orders. Pursuant to the orders made on 6 November 2019 the husband is obliged to make these payments as well. He continues to say that the wife “has been made aware that the husband has not refused to comply with orders, he has not been in a financial position to do so.” It is simply not correct to say that has been established. That is his assertion.
His submissions then go on to talk about matters that predate the orders made on 6 November 2019 and then go on to talk about future projected financial difficulties. All this does is seek to indirectly revisit the maintenance order and raises potential issues that are not currently before the Court. A significant portion of the submissions canvassed these issues. Those submissions also complained about the wife changing her mind with respect to agreements reached and her failing to explain why she now objected to the sale of properties or shares to reduce the debts. Again, unless and until orders are made, the agreement reached does not have any binding status. The husband was still obliged to comply with the orders and at best it was reckless not to confirm via the wife’s lawyers as it is also assuming that there would be no dispute as to how those funds have been utilised. A significant portion of the funds have been used for his legal fees. Indeed one of the difficulties with the husband’s whole approach is that given the length and focus of his affidavit and submissions, which are noted as being prepared by the same solicitor, they are misconceived and without proper basis in law.
The husband’s Counsel sought to tender the agreement on the basis that the contents of the agreement were relevant to the Court’s inherent discretion with respect to enforcing the property orders. This was avoided as the wife’s Counsel conceded that the heads of agreement referred to the properties being sold. The husband’s Counsel referred to Carchar & Hbenum [2011] FamCA 496 and Yilmaz & Yilmaz and Anor [2014] FamCA 663, which discussed the court’s discretion to enforce orders. Both of those cases involved very different circumstances with respect to final orders.
The wife seeks orders in summary for:
a)the husband to pay her the sum of $21,292 which comprises of payments which have accrued due to the husband’s prior non-compliance;
b)that the husband transfer to the wife his interests in education bonds for the children;
c)that he pay the wife $60,000;
d)that he pay costs on an indemnity basis in the sum of $29,683; and
e)in the event the husband fails to make the payments as outlined, that such shortfall be paid from the monies held on trust for the parties by the wife’s solicitors.
In her written submissions the wife refers to the husband selling $130,000 worth of shares in January 2020 without the wife’s knowledge and consent and rather than rectify his defaults with respect to the periodic maintenance and also part of the lump sum owing, he has expended those funds, including placing $82,000 in his solicitor’s trust account for payment of legal fees. In his affidavit filed 22 April 2020 the husband refers to annexing a document setting out the disposal of the trust account statement from his solicitor. The annexures are missing from the e-filed copy of the affidavit. It is however apparent that the wife was served with a version that includes the annexures. Subsequently these were provided to chambers by consent. I have considered those annexures. There is considerable force in this submission. It says much about the husband’s attitude towards his obligations.
With respect to the husband’s conduct in selling the two investment properties, the wife’s written submissions dispute the husband’s reliance on the heads of agreement, quite apart from the fact that it is not binding and the orders restraining him from selling the properties remained in force, the documents the parties signed on 17 February 2020 were subject to discovery and the binding child-support agreement. With respect to the heads of agreement on 30 March 2020 the wife points out she did not sign them. The husband asserts that these were consent orders and not heads of agreement. This is irrelevant as unless and until the court makes the orders, all the parties enter into is a binding financial agreement which complies with the relevant provisions of the Family Law Act however, it has no status.
I accept the wife’s written submissions with respect to the husband’s attempt to re-litigate matters improperly. It is worth setting out paragraph 23 and 24 of the submissions:
23. Anshun estoppel, derived from the High Court decision in Port of Melbourne Authority v Anshun Pty Ltd, is authority for the principle that a party may be estopped from raising a claim or defense “if he or she, through negligence, inadvertence or even accident, failed to raise it in the prior proceedings when, given its relevance, and the identity between the parties, to the earlier proceedings, that failure was unreasonable.”
24. The effect of Anshun estoppel was described by the Court of Appeal (WA) in DP World Australia Ltd v Fremantle Port Authority [2009] WASCA 16 as follows:
73. [Anshun estoppel] rests upon the principle that the court requires parties to litigation to bring forward their whole case and will not permit a party to reserve a claim and make it later when it could and should have been made in the earlier proceedings. It stems from the well-known statement of Wigram VC in Henderson v Henderson [1843] EngR 917; (1843) 3 Hare 100; 67 ER 313 at 319:
… where a given matter becomes the subject of litigation in, and of adjudication by, a court of competent jurisdiction, the court requires the parties to that litigation to bring forward their whole case, and will not (except under special circumstances) permit the same parties to open the same subject of litigation in respect of a matter which might have been brought forward as part of the subject in contest, but which was not brought forward, only because they have, from negligence, inadvertence, or even accident, omitted parts of their case.
This is highly relevant to the wife’s costs application which I address below.
In the circumstances of this case it would not be appropriate to exercise discretion relieving the husband of his obligations.
The parties disagree about how the net proceeds of sale of the Suburb E property should be dealt with. The husband wants $44,000 set aside for capital gains tax (“CGT”). The wife’s Counsel agreed that the husband’s account had provided an estimate of the CGT but that it will not become due until May 2021. It is not pressing. I will not make that order.
It is appropriate to make orders as proposed by the wife so that in the event the husband continues to fail to meet his periodic maintenance application it can be paid from the money held on trust in her solicitor’s trust account, with it to be added back to the husband’s side of the ledger so that the wife is not effectively contributing to her own maintenance.
It is not appropriate for the husband to receive part of the trust monies in light of his recent sale of shares, a significant portion of which has been used to pay his legal fees. I decline to exercise my discretion to not enforce the orders. To do so would be to tacitly condone the husband’s non-compliance and his back door attempts to improperly re-litigate the same issues.
I am not satisfied that it is appropriate to order the husband to pay $60,000 to the wife at this stage. This goes beyond the issue of enforcement of the interim orders.
The wife agrees to an order being made for the sale of the remaining investment property but on the basis that the parties are jointly responsible for the sale and the price and so on. That is reasonable. The parties may submit a consent orders to chambers to that effect.
The issue of disclosure was also raised. The disclosure obligations of both parties are clear. It is an ongoing obligation. The husband seeks specific orders with respect to the wife’s business. The wife says this is unnecessary. She does not say that she has provided those documents. I will make the order as sought by the husband and will also order that the parties comply with any requests for further disclosure documents within 14 days of receipt.
Costs application
The wife seeks indemnity costs with respect to the interim hearings on 17 February 2020 and 30 April 2020.
In her affidavit filed 28 April 2020 the wife refers to incurring extra costs to lodge caveats over the remaining investment properties which she felt was necessary to protect her interests. Given the husband’s conduct and comments in his affidavit, this is reasonable. She also refers to having incurred increased costs in needing to respond firstly to his application in a case filed 11 November 2019, which he did not abandon until the matter was next in Court. She also refers to having to raise further non-compliance with financial orders and responding to his further affidavit and further argument before me on 30 April 2020. She acknowledges that some costs were with respect to parenting issues but says there has been significant expense with respect to the financial issues.
The wife seeks indemnity costs in the sum of $29,683 for the appearances on 17 February 2020 and 30 April 2020 and the preparation of material with respect to the financial aspects of the case for those two appearances. A breakdown of those costs is set out at annexure B to those submissions. The hourly rate for the wife’s solicitor referred to in Annexure B is not the same as the amount referred to in the costs agreement. I have not been provided with a schedule of the costs in accordance with the Federal Circuit Court scale of costs however I am satisfied that that scale, which is event based, would not sufficiently compensate the wife for the costs she has incurred because of the husband’s conduct.
In reliance of her application for indemnity costs she relies on well-known authorities in this area. Of course as s.117(1) of the Family Law Act states, the usual position is that each party pay their own costs in family law proceedings. Indemnity costs is a significant departure from this. The husband’s conduct in these proceedings and his failure to comply with orders, which I have discussed in the proceeding section, is of particular relevance to the consideration of ordering costs in this case.
The husband’s approach which has led to increased costs for both parties has also taken up court resources. The husband has been legally represented throughout the proceedings and presumably was advised as to the status of agreements and orders of the court. I do not accept the submissions by his Counsel that his affidavit and written submissions were not a backdoor way of seeking to re-litigate an issue already determined. This is all the more so given his previous flawed application. His affidavit filed 22 April 2020 and the written submissions, both of which are recorded as being prepared by his solicitor who also witnessed his affidavit, go far beyond seeking to provide an explanation for his conduct since the consent orders made on 17 February 2020.
I am satisfied that the husband should pay the wife’s costs with respect to the court appearances on 17 February 2020 and 30 April 2020 as well as her costs with respect to the preparation of the financial aspects of these court appearances. I will order the husband to pay those costs as agreed or assessed with the payment to be deducted from the money held in trust within 72 hours of that amount being determined. In the event the husband does not pay the amount, the wife will be permitted to deduct that sum from monies held on trust, with this to be taken into account with respect to adjusting the parties’ property interests at settlement or trial.
In her written submission the wife says she does not have the funds to pay her outstanding legal fees. It is not clear whether she is referring to legal fees with respect to the parenting aspects of the proceedings. She seeks the transfer of the education bonds worth approximately $25,000. She seeks an order that the bonds be transferred to her so she can apply them towards her legal costs. Given the joint funds the husband has recently applied to his legal fees it is appropriate that the wife be able to do the same. At trial the parties’ paid legal fees from joint funds will be taken into account.
Periodic maintenance by nature is designed to provide financial support for periodic expenses. The proposal that such an amount be adjusted at trial in the event the husband does not pay it defeats its purpose. Given the availability of funds held on trust, and given the husband’s track record with respect to payment of periodic maintenance, it should be deducted from monies held in trust as amounts fall into arrears with an appropriate adjustment at trial. The wife should not have to wait until the trial for maintenance payments.
I certify that the preceding fifty one (51) paragraphs are a true copy of the reasons for judgment of Judge Harland
Associate:
Date: 13 May 2020
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