Malaka & Lasso
[2021] FedCFamC1F 278
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Malaka & Lasso [2021] FedCFamC1F 278
File number(s): SYC 5913 of 2017 Judgment of: WILSON J Date of judgment: 10 December 2021 Catchwords: FAMILY LAW – ARBITRATION – application for enforcement of award – husband in default of consent award – husband not permitted to rely on wife’s default when his own default caused or was a precursor to her default – time for executing documents and doing things as provided for under the consent award to be recalibrated. Legislation: Family Law Act 1975 ss 13H, 105 and 106A Cases cited: Bailey & Bailey (No 2) [2018] FamCA 632
Bebbington and Bebbington [2017] FamCAFC 72
McDermott v Black (1940) 63 CLR 161
McKay & Dick (1881) 4 App Cas 251
Secured Income Real Estate (Aust) Ltd v St Martins Investment Pty Ltd (1979) 144 CLR 596
Texts Lewison, K, Interpretation of Contracts, (1989) Division: Division 1 First Instance Number of paragraphs: 41 Date of hearing: 23 November 2021 Place: Melbourne Solicitor for the Applicant: AS Family Lawyers Solicitor for the Respondent: ALP Lawyers ORDERS
SYC 5913 of 2017 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS MALAKA
Applicant
AND: MR LASSO
Respondent
ORDER MADE BY:
WILSON J
DATE OF ORDER:
10 DECEMBER 2021
THE COURT ORDERS THAT:
1.The further hearing of this application is adjourned to 10:00am on 1 March 2022.
2.On or before noon on 24 February 2022 the parties must file and serve –
(a)a minute of proposed orders that give effect to these reasons; and
(b)written submissions in support of the orders proposed.
3.Both parties’ costs of and incidental to this application are reserved.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonyms Malaka & Lasso has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
WILSON J
INTRODUCTION
Following the arbitration of this proceeding, the parties agreed on terms of settlement which the arbitrator approved as a consent award on 14 July 2021. The award was registered by consent on 16 July 2021 and thereby took effect as a decree under s 13H of the Family Law Act. The parties have not complied with certain aspects of the consent award which the husband (the respondent in the arbitration) now wishes to enforce.
Two parcels of real property were relevant to this application. The first, being the whole of the land described and known as E Street Suburb F in the State of New South Wales, was called the “the Suburb F Property” and the second, being the whole of the land described in folio identifier lot … and known as G Street, Suburb H in the State of New South Wales, was called the “the Suburb H Property”.
Pursuant to the terms of the consent orders made in the arbitration, a regime was agreed by which transfers of title to the Suburb F property and the Suburb H property were to be effected. In prècis form, once funds in court were disbursed to the parties as to $100,000 to the wife and the balance to the husband –
(a)the husband was to refinance the mortgage in favour of Commonwealth Bank over the Suburb H property;
(b)the husband was to procure the discharge of the Commonwealth Bank mortgage then transfer all of his right, title and interest in the Suburb H property as to 50% to the wife and the balance in equal shares to Mr R, Mr S and X; and
(c)the husband was to transfer all his right, title and interest in the Suburb F property to the wife.
The terms of the consent award required the steps set out above to be undertaken at different times. The steps set out in paragraph 1 of the consent award were required to be done in seven days of the registration of the award. The steps in paragraph 2 of the consent award were required to be done within seven days of the date of the award. The refinancing contemplated by paragraph 3 of the consent award was to be done within 90 days of the date of the award and thereafter the husband was to discharge the Commonwealth Bank mortgage then transfer his title to the Suburb H property partially to the wife and the other parties.
The consequences of a failure of the wife to comply with paragraph 3 of the consent award were recorded in paragraphs 5 and 6 of the award.
The parties resolved the arbitration without the need for a formal determination of all contested issues. In pronouncing consent orders the arbitrator gave reasons leading to the expression of the arbitrator’s satisfaction that the consent award was just and equitable. The arbitrator provided 40 paragraphs of reasons for making the consent award, paragraphs 36 to 40 of which were as follows –
36. What persuades me that the proposed terms of settlement that I will be incorporating into my Award, is the effect of the Orders. The wife is left with the matrimonial home at Suburb F unencumbered, and approximately $450,000 should she dispose of her 50% interest in the Suburb H property. She is gainfully employed in secure employment and has the assistance of her two adult sons, who reside with her and contribute to some part of living expenses. She has modest superannuation in an amount of $35,559 and has a relationship with a long-standing boyfriend with whom she spends several nights per week. In summary, the wife has a modest but comfortable lifestyle, and is financially secure.
37.It is difficult to compare the husband's financial circumstances with those of the wife resulting from my Award, as much of what is left of the parties' assets is located outside the Australian jurisdiction and is subject to complicated family arrangements. What is clear is that the husband has a proven entrepreneurial ability. This business acumen has existed since his formation of his business in Country B and progressed to his ownership of a transport business. His property development in Australia, and an apparent ability to supplement his entrepreneurial activities with mundane tasks such as courier work leave me with little doubt the husband has a compendium of skills and ability that will facilitate a rapid financial recovery, should it transpire that he may have received very little in the way of readily available tangible assets in the Terms of Settlement. And, without exploring the intricacies of his inheritances, Country B presents as a fertile ground for whatever the husband elects to turn his hand to.
38. It follows that on a financial reconciliation alone, I am not persuaded the economics of the proposed Terms of Settlement contain the requisite ingredients to satisfy a finding that my Award amounts to a just and equitable settlement. However, whatever doubts linger are assuaged by the knowledge that both parties had competent and experienced legal representation who I doubt would have allowed a settlement that was outside an acceptable range on the facts as they know them and have advised their respective clients as to the commercial advantages of a negotiated settlement.
39. Importantly, the conclusion of the proceedings provides both parties with the freedom to move on with their lives, unfettered by the prospect of having their future financial affairs dragged into the mire of litigation. Given their ages, this future relief is an advantage that cannot be measured in economic terms but can result in benefits to each that eclipse the need to search out each and every last dollar or question each other's motivation and integrity.
40. For all these reasons, I find the Terms of Settlement that I shall incorporate into my Award satisfy the requirement of being Just and equitable as between the parties.
EVENTS SUBSEQUENT TO THE CONSENT AWARD
The respondent’s solicitor deposed to factual matters in support of the husband’s application for orders in terms of paragraph 5 of the consent award. The application was made in pursuance of s 105 of the Family Law Act. Paragraph 5 of the consent award provided as follows –
5. In the event that the wife fails to comply with Paragraph 3:
a)The husband shall have a further thirty (30) days from the date of default to pay the wife the additional sum of $325,000 as she may direct in writing; and upon him doing so:
i) Paragraph 4 of this Award will not come into effect; and
ii) The husband shall be declared, to the exclusion of the wife, the owner at law and equity of the Suburb H property.
The respondent’s solicitor made an affidavit on 26 October 2021. Relevantly synthesised, the deponent deposed to the following –
(a)on 29 July 2021 the husband executed the PEXA authorisation form;[1]
(b)on 11 September 2021, the wife’s solicitor wrote and sent by email a letter in relation to the Suburb F property pointing out that the Commonwealth Bank remained listed on the title documentation as the mortgagee. Interpolating, paragraph 2 of the consent award required the husband to do all things to transfer to the wife unencumbered all his right, title and interest in the Suburb F property within seven days of 14 July 2021. Seven days was 21 July 2021. By 11 September 2021 the husband had not done all things as he agreed to do to transfer to the wife unencumbered his interest in the Suburb F property. He should have done as he agreed by 21 July 221 and by 11 September 2021 his obligation under that paragraph remained unperformed;
(c)Mr OO said he ascertained from the husband that the mortgage over the Suburb F property had been paid off but not discharged so Mr OO arranged for the husband to execute a discharge document the same day and Mr OO exhibited a copy discharge authority dated 11 September 2021 apparently executed by the husband;
(d)on 13 September 2021 Mr OO deposed to directing a member of his staff to communicate with the wife’s solicitor to inform the wife’s solicitor that the loan secured by the mortgage over the Suburb F property had been paid off but that it would be discharged simultaneously upon transfer of title and that Mr OO’s staff member did as he was directed to do. To interpolate, paragraph two of the consent award did not make provision for registration of the discharge of the mortgage over the Suburb F property simultaneously with the transfer of title of the Suburb F property to the wife. Paragraph two of the consent award required the transfer of unencumbered title in the Suburb F property to be effected within seven days from the date of the consent award. Irrespective of conveyancing practice or parties’ convenience, paragraph two was plain in its provisions. Unencumbered title was required to be given to the wife to the Suburb F property by 21 July 2021. By late September 2021 that had not been done. To that extent the husband was, on one view of the events, in breach of the consent award;
(e)the wife’s solicitor again asked about the transfer on 21 September 2021;
(f)Mr OO said that on 22 September 201 he attempted to set up a PEXA workspace for the purpose of transferring the Suburb F property to the wife; and
(g)the wife’s solicitor was not registered with PEXA so Mr OO was unable to set up a PEXA workspace.
[1] The document exhibited by Mr OO, the husband’s solicitor is blank. No title particulars or other details were completed. It is impossible to tell what the form relates to.
The respondent’s solicitor deposed to there being no capacity for the husband to transfer the Suburb F property to the wife without the wife’s solicitor being invited to a PEXA workspace.[2] Mr OO deposed to receiving a PEXA invitation from the wife’s settlement agent on 14 October 2021. Mr OO said the PEXA invitation arrived without notice and his office was closed on 14 October 2021.
[2] Before me, no evidence was adduced in relation to the manner in which PEXA worked, how subscribers undertook their roles, what invitations were and how they worked or whether, in the absence of a PEXA subscriptions or an invitation to participate, electronic property conveyancing could proceed.
Mr OO deposed to instructing a member of his staff on 18 October 2021 to send to the wife’s solicitor an email attaching the discharge of mortgage that needed to be executed by the wife as a preliminary step to transferring the Suburb F property to her. Precisely why that task could not have been done within seven days of 14 July 2021 was not stated. At all events, on 19 September 2021 the wife’s solicitor confirmed receipt of the discharge of mortgage and communicated with the husband’s solicitor that the document had been sent to the wife for execution.
Mr OO deposed to the wife’s solicitor’s agent arranging settlement on 21 October 2021 at 2:00pm. Mr OO stated that by the date on which his affidavit was made (26 October 2021) he had not received the discharge of mortgage executed by the wife.
Mr OO asserted that he had done his best to comply with paragraph 2 of the consent orders. Rather ambitiously, he asserted that “there was certainly no delay” on his part, his firm or his client. I disagree. He should have, but failed to, prepare the discharge of mortgage in a matter of days of the making of the consent orders. He should have, but failed to, detect complications associated with the wife’s solicitor’s PEXA registration status so that the electronic settlement could have been effected much earlier than late October 2021 at which time the issue remained unresolved.
Equally, in an era in which electronic title transfers are undertaken using the PEXA platform, the wife’s solicitor put the wife in a position where settlement was rendered near impossible by reason of the failure to subscribe to PEXA.
On behalf of the wife Mr RR made an affidavit on 25 October 2021. To that affidavit Mr RR mainly exhibited correspondence and stated that in order to facilitate settlement the wife needed from the husband any applicable land tax clearance certificates, capital gains tax withholding clearance certificates, replies to requisitions, a tenancy agreement, tenancy ledger details and rental bond details. Precisely why those were requested by Mr RR was not stated. Whether any dispute existed in relation to the provision of those documents was not stated. To the extent that they reflected ordinary conveyancing practice, then the usual exchange of correspondence should have been given.
Turning to the correspondence Mr RR exhibited to his affidavit, from 7 August 2021 the exchange between solicitors commenced with Mr RR exhibiting many, although not all, of the correspondence exhibited by Mr OO. Mr RR wrote to Mr OO on 14 October 2021 making a request for Mr OO to accept the invitation to the PEXA workspace. At 3:27pm Mr RR wrote to Mr OO disputing Mr OO’s assertion that Mr OO was ready, willing and able to settle. Mr RR wrote in similar terms on 20 October 2021.
The husband’s solicitor made a further affidavit on 18 November 2021. That affidavit was made in support of the husband’s application for orders under s 106A of the Family Law Act authorising a registrar of this court to sign certain documentation. The matters to which Mr OO deposed were as follows –
(a)on 14 October 2021 Mr OO said Mr RR provided a PEXA invitation that was accepted the same day;
(b)Mr OO’s office was closed on 14 October 2021;
(c)on 18 October 2021 Mr OO requested a staff member to communicate with Mr RR which Mr OO’s staff member did on 18, 19, 20 and 26 October 2021;
(d)since the making of the consent award, 113 days had elapsed; and
(e)he requested a registrar of the court to execute the discharge of mortgage as well as the original transfer already executed by husband.
SUBMISSIONS
On behalf of the wife, written submissions dated 21 November 2021 were prepared by Mr PP, the wife’s solicitor. Relevantly synthesised, the propositions urged on behalf of the wife were as follows –
(a)neither property has been transferred;
(b)in relation to the Suburb F property the husband failed to do as he agreed to do by the date agreed, namely 2 July 2021;
(c)the PEXA authorisation process was initiated by the husband on 29 July 2021, being a date by which the deadline had passed;
(d)the husband failed do what he was required to do in relation to the Suburb F property in accordance with the date set out in the consent award;
(e)the husband failed to do what he was required to do in relation to the Suburb H property in accordance with the date set out in the consent award;
(f)it is not just and equitable for this court to accede to the husband’s request for strict adherence to the time regime in the consent award in circumstances where the husband failed to abide by the seven day requirement in relation to the Suburb F property;
(g)the consent award is inconsistent in its provisions;
(h)the husband has failed to provide documents that are required to enable the transfer of both properties to be effected;
(i)acceding to the husband’s application for orders under s106A of the Family Law Act would unduly prejudice the wife and the children in circumstances where the consent award involved the husband transferring his interest as to a half share to the wife and as to the other half share jointly to the three children; and
(j)in accordance with the observations in Bailey & Bailey (No 2),[3] non-observance of inconsequential mechanical provisions ought not be determinative of the situation.
[3] [2018] FamCA 632.
On behalf of the husband it was argued in reliance upon Bebbington & Bebbington,[4] that time stipulations should be strictly construed where substantive rights are involved.
[4] [2017] FamCAFC31 72.
CONSIDERATION
Although not in the sequence that the wife’s legal representative argued the point, logically the first issue to be decided is the contention that the date stipulations in the consent award are inconsistent and unclear.
At the outset I reject that argument.
The consent award was made by the arbitrator upon the parties providing to the arbitrator terms of settlement. Those terms were the product of negotiations between the parties and the parties’ legal representatives. The parties must account for their own authorship of those terms and so any issue about construing the terms is of their own making. Be that as it may, as with any contract (terms of settlement being an accord and satisfaction)[5] the terms should ordinarily be construed according to a plain and ordinary meaning.[6] No inconsistency exists nor lack of clarity in the chosen form of wording in paragraphs one, two and three of the consent award. In one instance the relevant phrase used is “within seven days of the registration of this award”, in one instance the relevant phrase is “within seven days of this award” and in one other instance the relevant phrase used is “within 90 days of the date of this award”. All three dates are readily capable of comprehension. The award was registered on 16 July 2021. While the dates are different, they are not unclear. To the contrary, they are capable of immediate comprehension. The wife endeavoured to demonstrate that inconsistency existed leading to a particular consequence, namely –
It is submitted that this inconsistency raises the need for the Court to exercise the proper discretion to enable the just and equitable transfer of the Suburb H property to the Wife/children.
[5] McDermott v Black (1940) 63 CLR 161.
[6] Lewison, K, Interpretation of Contracts, (2020) Sweet & Maxwell.
I do not agree. Paragraphs one, two and three of the consent award suffer from no inconsistency nor want of clarity.
Next, the wife argued that the husband failed to transfer both the Suburb F property and the Suburb H property. The fact that the two properties were not transferred seemed to be common cause. The real question is why that was so.
It became necessary to construe the consent award.
Pursuant to paragraph one, the parties were required to procure the disbursement of funds in court in the manner set out in that paragraph. That had to be done within seven days of 16 July 2021, that is to say, on or before 23 July 2021. Independently, within seven days of the date of the award that is it say, on or before 21 July 2021, the husband was required to do all things and sign all documents to transfer to the wife, unencumbered, his right title and interest in the Suburb F property.
At all events, the husband’s obligations incorporated the requirement for him to provide unencumbered title. By definition, that required him, on or before 21 July 2021, to have dealt with the encumbrancer and to have procured the removal of the encumbrance, or at least for the encumbrancer to have to have provided in registerable form the removal of the encumbrance. Here, the husband did not set in train the removal of the encumbrance until well after 21 July 2021. He was therefore in breach of paragraph two from 22 July 2021. Whether the wife could have terminated the agreement for breach was a point not explored before me and so I say nothing further about it. Here, according to the chronological sequence of events taken from Mr OO’s affidavit material, on 11 September 2021 the wife’s solicitors brought to the husband’s solicitors attention that the bank remained on title as mortgagee. The husband should have procured the removal of the mortgage in mid July 2021. Even by September 2021 the husband had done next to nothing to comply with paragraph two. In my view, the evidence given on behalf of the husband about Mr RR’s PEXA registration was a red herring. No evidence of any description had been adduced to indicate the husband had begun, still less completed, the task he promised to do in pursuance of paragraph two of the consent award.
I accept that the wife was required to take one or more steps to enable the husband to comply with paragraph two of the consent award. That much accorded with the implied term that underpinned paragraph two and arose from authorities such as McKay v Dick[7] and Secured Income Real Estate (Aust) Ltd v St Martins Investment Pty Ltd.[8] However, the husband agreed to a tight timeline in the terms of settlement as were recorded in the consent award. He bound himself to procure the transfer to the wife of the unencumbered title to the Suburb F property within a very short timeframe. He should have, but failed to, set in train all necessary steps to deal with the mortgagee so as to do all he was required to do to comply with the paragraph two of the consent award.
[7] (1881) 4 App Cas 251, 263.
[8] (1979) 144 CLR 596, 615.
Further, even if Mr RR’s status as a subscriber to the PEXA platform was important, the husband had not taken any steps to make the PEXA registration relevant until well after the period limited by paragraph two of the consent award expired.
Neither party advanced any argument about time being of the essence in the performance of the consent award.
Next, it became necessary to consider the wife’s argument that the husband failed to provide certain documents to enable both properties to be transferred. The evidence did not address this issue, especially why each document was said to have been necessary. It seemed that Mr PP raised this issue in an endeavour to negate Mr OO’s argument that the husband was ready, willing able to settle. It was put by Mr PP that by reason of the husband’s omission to provide certain documentation, by definition, the husband was not ready, willing and able to settle. In my view it is not necessary to pronounce on this issue having regard to my determination of this application.
Next, the wife argued that an extension of time should be given to enable the husband to transfer his interest in the manner set out in the consent award. The wife submitted that by granting the husband the relief he seeks, serious prejudice will be occasioned to the wife and the adult children. I accept the force of that submission.
Next, the wife argued that an extension of time should be granted because her finance has been approved. In opposition, Mr Maluga relied on the decision of Bebbington & Bebbington.[9]
[9] [2017] FamCAFC31 72.
To my mind, the analysis of this situation is different to the way it was debated. The correct analysis is as follows. First, the parties themselves resolved their litigation on terms of settlement that became the consent award. Next, the task confronting the court is not so much the characterisation of the default but rather it is a matter of construing the obligation recorded in the terms and whether a breach has occurred, understanding the reason for the breach and then ascertaining whether the terms of settlement make provision for the consequence of the breach.
Here, the arbitrator determined that the terms of settlement were just and equitable. The arbitrator then gave reasons in support of the terms. Those terms were embedded in the award that was duly registered. In the passages essayed above I have recorded how in my view the husband breached paragraph two. I do not agree that the obligation imposed under paragraph two was purely mechanical. To the contrary, it was a provision of enormous significance in the circumstances of this case and was a critical platform in the assessment of the justice and the equity of the resolution reached by the parties.
Further, the parties specifically addressed in the terms of settlement certain consequences of the provisions of the consent award not being performed according to their terms. However, the consequences reposed in paragraph five and six of the consent award related to a failure by the wife to comply with paragraph three, itself premised on the wife’s inability to refinance the mortgage over the Suburb H property. But that is not the issue in this case because the wife does in fact have mortgage finance to refinance the Suburb H mortgage. The default in this case first emerged by reason of the husband’s failure to provide unencumbered title to the Suburb F property, whether within the agreed time or at all.
A question arises, but was not debated, whether upon making an order for the registration of the award I am functus officio in the manner considered in Bebbington & Bebbington. I am not. I say that for two reasons. First, this is a matter in the National Arbitration List (“NAL”) of which I am judge-in-charge, no other judge of the court having power to determine applications in cases in the NAL. Second, on behalf of the wife, soon after this application was called on, Mr PP announced that the case was before me pursuant to s 105 of the Family Law Act. There seemed to be no doubt about the legislative source of power for the bringing of this application especially as the husband relied on s 106A as a means of obtaining the outcome which he was propounding, namely orders empowering the registrar to execute conveyancing documentation so as to give him the Suburb H property.
It is next necessary to address the husband’s application under s 106A. I refuse it. Having failed to perform his obligations under paragraph two of the consent orders, the husband then argued that the wife was in default of her obligations, even though paragraph three of the consent award only became operative 90 days after 14 July 2021 by which date, had paragraph two been properly performed, the husband would have and should have transferred the Suburb F property to the wife. Instead, he attempted to entirely sidestep his own default by arguing that the wife was in default and that he was entitled to orders in his favour. Such a result is anathema to a just and equitable outcome of family law litigation. I refuse the husband’s application.
FURTHER CONDUCT
Recognising the danger in making orders without giving the parties an opportunity of being heard ahead of the pronouncement of those orders, it seems to me that the parties should have an opportunity of considering the foregoing before I receive submissions on the orders to be made. One outcome which may find favour with the parties is a recalibration of dates for the performance of the steps in paragraph two of the consent award. It should be kept in mind that where either party fails, refuses or neglects to execute a document so as to give effect to the consent award (erroneously described in paragraph 22 as “these orders”), paragraph 22 of the consent award empowers a registrar to execute the document.
It seems to me that any alteration to the timeline ordered pursuant to the consent orders should be by consent and made pursuant to the combined operation of s 13K(1), that is to say varying the award, and s 13K(2)(c), that is to say that circumstances have arisen since the award was made making it impracticable for some or all of the award to be carried out on the dates ordered.
I propose to adjourn the further hearing of this application to 1 March 2022. By noon on 24 February 2022 I require the parties to file and serve –
(a)a minute of proposed orders that gives effect to these reasons; and
(b)written submissions in support of the orders proposed.
Both parties’ costs of and incidental to this application are reserved.
I certify that the preceding forty-one (41) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Wilson. Associate:
Dated: 10 December 2021
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