Malaka & Lasso (No 2)
[2022] FedCFamC1F 161
•18 March 2022
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Malaka & Lasso (No 2) [2022] FedCFamC1F 161
File number(s): SYC 5913 of 2017 Judgment of: WILSON J Date of judgment: 18 March 2022 Catchwords: FAMILY LAW – NATIONAL ARBITRATION LIST – wife’s application to enforce arbitral award – husband seeking orders giving effect to the arbitral award insofar as it benefitted the husband – wife challenging husband’s compliance with orders – direction made to compel parties to recalibrate dates for doing acts ordered by the arbitrator – orders made. Legislation: Family Law Act 1975 s 105 Cases cited: Malaka & Lasso [2021] FedCFamC1F 278
McKay v Dick (1881) 4 App Cas 251
Second Income Real Estate (Aust) Ltd v St Martins Investments Pty Ltd (1970) 144 CLR 596
The Juliana (1822) 165 ER 1560
Division: Division 1 First Instance Number of paragraphs: 41 Date of hearing: 1 March 2022 Place: Melbourne Solicitor for the Applicant: AS Family Lawyers Counsel for the Respondent: Mr T. Mathews 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:
18 MARCH 2022
THE COURT ORDERS THAT:
1.The parties must bring in a minute of orders that gives effect to my reasons by 4:00pm on 24 March 2022.
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 a pseudonym has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
WILSON J
On 10 December 2021 I handed down reasons[1] in a contested application by the wife to enforce an arbitral award. I directed the parties to bring in a minute giving effect to my reasons, indicating that the most pragmatic way forward was to recalibrate the dates previously ordered by the arbitrator for the parties to do certain steps. I directed the proceeding to be mentioned before me on 1 March 2022.
[1] Malaka & Lasso [2021] FedCFamC1F 278.
On 1 March 2022 the wife’s solicitor informed me that the wife embraced my reasons handed down on 10 December 2022. Counsel for the husband informed me that I had made several factual errors in my reasons, at least insofar as those reasons revealed any failure by the husband to do as the arbitrator had ordered. In essence, counsel for the husband argued that the wife had foregone her rights under the arbitral award and that the husband should receive everything the arbitrator ordered the husband to receive.
Counsel for the husband contended that the wife’s enforcement application should be dismissed. The husband squarely rejected the concept ordered by me requiring the parties to recalibrate dates previously ordered by the arbitrator for steps to be done by each party.
ENFORCING THE AWARD
The wife relied on s 105 of the Family Law Act. The husband resisted the application made under that section. During debate on 1 March 222 I canvassed whether the matter before me could be treated as an application to vary the award by reason of the intervening events recorded in my 10 December 2021 reasons. Counsel for the husband rejected that suggestion and the wife’s solicitor pressed for the application to be dealt with pursuant to s 105.
THE HUSBAND'S CONCESSIONS
Before going to s 105, it is necessary to record the husband’s submissions in connection with what he said were errors of fact and law in my reasons of 10 December 2021. In making the observations that follow, the husband’s counsel told me his client was not appealing against my judgment of 10 December 2021 nor was the husband seeking a stay in relation to it. Instead, the husband was seeking orders giving effect to the arbitral award insofar as it benefitted the husband.
The husband’s counsel submitted that the arbitrator's award required the husband to transfer all of his unencumbered right, title and interest to the land known and described as the Suburb F property. The arbitrator ordered the husband to do that within seven days of the arbitral award. As the award was dated 14 July 2021, the husband was required to comply with the arbitrator's award by effecting that transfer on or before 21 July 2021. I said as much in my 10 December 2021 reasons. Counsel for the husband conceded the immediacy of the husband's obligations. At paragraph 3 of his submissions, counsel for the husband wrote as follows –
True it is that there was delay occasioned by the Husband in relation to the transfer of the unencumbered [Suburb F property] which was required within 7 days of the date of the Award.
The husband's counsel conceded, as he had no choice to do otherwise, that the husband did not commence the process of transferring his unencumbered title to the Suburb F property until at least September 2021. The husband’s counsel, while acknowledging the husband’s failure to commence the process to achieve the outcome required by paragraph 2 of the arbitrator’s orders until at least September 2021, inconsistently argued that the husband "sought to arrange the transfer by having the wife execute a discharge of mortgage document". Those are the words appearing in paragraph 4 of the husband’s submissions.
Those activities and those submissions, entirely missed the point. The arbitrator ordered the husband to transfer all his right, title and interest in the Suburb F property within seven days of 14 July 2021. The husband needed to undertake the required conveyancing steps to do so within an extremely tight timeframe. He failed to commence the requisite activities until a date in September 2021. Of the stipulations concerning dates in the arbitrator's orders I said the following –
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.[2]
[2] Malaka & Lasso [2021] FedCFamC1F 278, [21].
In paragraph 26 on my earlier reasons I set out the steps the husband should have taken. It is utile to repeat those observations –
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 procured the removal of the encumbrance, or at least for the encumbrancer 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.
The husband's counsel, most peculiarly, submitted that I somehow conflated (itself an inappropriate submission) the husband's obligations in relation to the Suburb F property with other obligations in relation to the Suburb H property.
That is incorrect. I reject that submission.
In any event, the seven days ordered by the arbitrator requiring the husband to do as he was required by paragraph 2 of the award came and went. The husband did not do as he was ordered. I reject the assertion that his tasks were somehow dependant upon the wife having earlier done other tasks. As I held elsewhere in my 10 December 2021 reasons, the obligations recorded in paragraphs 1, 2 and 3 of the arbitrator's orders are easy to follow and do not admit of complexity of comprehension.
The husband submitted that it was necessary to keep in mind that the husband's obligations in relation to the Suburb F property were different to his obligations in relation to the Suburb H property. I agree. They arose out of different orders the arbitrator made.
The husband’s counsel conceded that by paragraph 3 of the arbitrator’s orders the husband was required to do all acts and sign all documents to discharge the Commonwealth Bank mortgage. However, the husband’s counsel contended that the husband’s obligations were contingent on finance being obtained in relation to the Suburb H property within 90 days of the arbitrator's award. Paragraph 3 of the arbitrator's orders was as follows –
Within ninety (90) days of the date of this Award the wife shall take all steps and sign all documents required to refinance the Commonwealth Bank mortgage secured against the title to the property situate at [the Suburb F property] (noting Notation C contained herein), and to the extent required by Commonwealth Bank the husband shall do all acts and things and sign all documents required to cause the discharge of the said Commonwealth Bank mortgage.
The husband's obligations in that paragraph were expressed to be “to the extent required by the Commonwealth Bank". If so required, the husband was to do all acts and sign all documents required to cause the discharge of the Commonwealth Bank mortgage.
The husband's counsel submitted that the husband’s obligation to discharge the existing mortgage over the Suburb H property was contingent upon the wife obtaining refinance on the existing Suburb H property mortgage within 90 days. That is not what paragraph 3 on the arbitrator's orders says. Within 90 days the wife was required to (the word "shall" was used) "take all steps and sign all documents required to refinance" the Commonwealth Bank mortgage. The order did not state that the refinance had to be approved or that the refinance had to be completed. The tenor and import of paragraph 3 of the arbitrator’s orders related to document execution and steps anterior thereto. Nowhere in paragraph 3 of the arbitrator's orders is there any reference to the husband's obligations being contingent on the completion of refinancing by the wife.
The point may be tested by asking what obligation paragraph 3 imposed on the wife. She was required to "take all steps and sign all documents" as may have been required. Paragraph 3 of the arbitrator’s order did not stipulate that the refinancing by the wife had to take any particular form. The incorporation of notation C was relevant. That notation provided that nothing in the award precluded the wife from refinancing the mortgage of the Suburb H Property into a joint mortgage facility in the names of any of the children. On a proper construction of paragraph 3 on the arbitrator's orders, it seems to me that the husband’s argument that within 90 days of the award the wife had to refinance the existing mortgage was wrong. She may have elected to seek alternative mortgage lending such as naming one of the children as mortgagor.
The husband’s written submissions in paragraph 11 used the phrases "obtaining refinance" and "obtaining approval for refinance" interchangeably. The arbitrator's language in paragraph 3 of the orders did not use either phrase.
Ultimately, it became a task of construction in ascertaining the obligations imposed under paragraph 3 of the arbitrator's orders. The arbitrator saw fit to spell out what obligation was imposed on the husband in relation to a precise conveyancing activity. It was, to the extent required by the Commonwealth Bank, to “do all things and sign all documents” to cause the discharge of the mortgage. The arbitrator could have, but failed to, specify what precise steps the wife was required to undertake and what was encompassed by the verb "to refinance". As it is not a term of art, according to ordinary canons of construction the verb is to be accorded its ordinary and natural meaning. According to ordinary usage, the task of refinancing involves several steps, the first of which being an application to a lender. In this case the arbitrator contemplated that the proposed borrower may even have been one or more of the children. As a matter of common human experience, refinancing involves discharging an existing mortgage, sometimes even with a new lender to become the mortgagee. Frequently, the interest rate is different, ordinarily lower, and the term of the loan is shorter. On one construction of paragraph 3 of the arbitrator's orders, the steps anterior to the settlement of the refinance had to be completed within 90 days of the award. Further, the arbitrator appears to have contemplated the refinancing using a lender other than Commonwealth Bank because paragraph 3 of the orders speaks of discharging the Commonwealth Bank mortgage. Further, if other borrowers were proposed, replacement mortgage documentation would be required.
The husband asserted that the wife was required to notify the husband that she had obtained finance. He put the submission in the following terms –
Having obtained that finance it was implicit that the Wife was required to put the husband on notice of having obtained approval for refinance so that the husband could discharge his obligations under the Orders.
When counsel for the husband asserted that "it was implicit" for the wife to notify the husband, he did not argue that such implication arose from McKay v Dick[3] or from Second Income Real Estate (Aust) Ltd v St Martins Investments Pty Ltd.[4] However, the husband’s counsel said that the wife failed to notify the husband that she had obtained approval for refinance. The husband then advanced the submission (paragraphs 11.2 and 11.3 of his written submissions) that the wife’s failure to notify the husband that she had obtained finance brought about two consequences –
(a)the husband became entitled to the benefit of the regime provided for in paragraph 5 of the arbitrator's orders with the consequence that he be declared the sole owner of the Suburb H property upon passing the wife the sum of $325.00; or
(b)the parties should sell the Suburb H property and divide the proceeds in accordance with the regime provided for in paragraph 7 on the arbitrator's orders.
[3] (1881) 4 App Cas 251,263.
[4] (1970)144 CLR 596, 615.
The husband's counsel contended that it became necessary to determine whether the delay in relation to the Suburb H property was caused by the wife or the husband.
As I pointed out in my earlier reasons, that is not the correct question.
The arbitrator's orders established a chronological sequence of events pursuant to which a variety of things were to unfold. Chronologically, the first related to the tasks that fell to the parties to perform in accordance with paragraph 1, although there seemed to be no real dispute about the transfer of $100,000 to the wife. That had to be done within seven days of the registration of the award. The award was registered on 16 July 2021 so the date set out in paragraph 1 of the arbitrator’s orders corresponded to 23 July 2021.
The date for the purposes of paragraph 2 of the arbitrator’s award was 21 July 2021. The husband conceded he should have but failed to take certain (any) steps by that date. He and not the wife was in default of the award by 21 July 2021.
I do not accept the gravamen of the submission urged on behalf of the husband, namely, that I should look primarily at the parties' activities in relation to the Suburb H property, placing little to no emphasis or regard on the parties’ activities in relation to the Suburb F property. I reject altogether the submission made by the husband’s counsel that any conflation has occurred in my analysis of the husband's obligations.
The husband’s counsel told me that the husband had paid the wife the sum of $325,000[5] on 23 October 2021.[6] The wife’s solicitor told me that the wife has undertaken not to deal with the money and that she will retain the money for the benefit of the husband.[7]
[5] T5 L 13 hearing 1 March 2022.
[6] T7 L 31 hearing 1March 2022.
[7] T8 L35-39 hearing 1 March 2022.
ADDRESSING THE CURRENT IMPASSE
Self-evidently, the parties remain entrenched in their respective positions. The wife seeks enforcements of the decree made on 16 July 2021 pursuant to which the arbitral award was registered. Conversely, the husband seeks orders in his favour as are recorded in the award. The precise form of the orders sought the by the wife was –
1.That within 21 days of these Orders all documents, as may be advised to be supplied are supplied to registrable force to [Mr RR] to enable the transfer of [the Suburb H Property] to be effected in accordance with the Arbitral Award dated 16 July 2021.
2.That the Wife’s costs of and incidental to this application be paid by the Husband.
The husband argued that he had already paid the sum of $325,000 and that in accordance with paragraph 5 of the arbitrator's orders, the husband was entitled to an order declaring him the owner at law and in equity, to the exclusion of the wife, of the Suburb H property.
Turning first to the wife's application for orders under s 105 on the Family Law Act, in my view she has not demonstrated her entitlement to orders enforcing the arbitral award. She did not demonstrate to me that she has taken steps, let alone “all steps" provided for in paragraph 3 of the arbitrator’s orders to refinance the Commonwealth Bank mortgage. Yet, it must also be recognised that the husband did not comply with his obligations under paragraph 2.
Whether or not the wife was slow to set in train her obligations under paragraph 3 by reason of the husband’s failure to comply with paragraph 2 went beyond the matters in respect of which evidence was adduced.
During debate on 1 March 2022 the husband's counsel told me that on his revision of events the orders of the arbitrator were alive and well.[8] That was a curious submission having regard to his client’s non-compliance with paragraph 2 pursuant to which the husband was required to transfer to the wife unencumbered title to the Suburb F property. In debate the husband's counsel stated the husband’s 18 November 2020 affidavit revealed that transfer documents exhibited to that affidavit demonstrated that the husband proposed the transfer of the Suburb F property. The husband’s counsel repeatedly expressed his "trouble" with certain observations in my 10 December 2021 reasons in relation to the timeliness in the husband’s compliance with paragraph 2 of the arbitrator’s orders. Aside from the discourteous manner of his use of language, in making that submission the husband’s counsel ignored the fact that the husband himself conceded in paragraph 6 of his affidavit made 18 November 2021 “due to the NSW hard lockdown at the time, things were not moving as quickly (sic) and it took a number of weeks to implement the award." The husband said nothing in his affidavit on the steps he took (or, in reality failed to take) to do what the consent orders at paragraph 2 required him to do.
[8] T6 L2 hearing 1 March 2022.
The husband's counsel was at pains before me on 1 March 2022 to dispel the notion that the delay associated with the Suburb H property was attributable to the husband.
The precise genesis of the parties’ failure to adhere to the dates prescribed by the arbitrator in his orders was not adequately explained to me. The wife enthusiastically embraced my suggestion of the parties recalibrating dates for the performance of steps as ordered by the arbitrator. Conversely, the husband opposed any such suggestion. He contended that orders to be made by me (whether by consent or otherwise) altering dates ordered by the arbitrator took effect as a setting aside of the arbitrator's orders and their substitution by other orders which, so the husband said, should not be done because the husband had purportedly "acted upon paragraph 5 of the consent award".[9]
[9] T5 L47 hearing 1 March 2022.
I find that submission most unattractive for several reasons. First, before addressing the wife's obligations under paragraph 3, the husband was required to perform his obligations under paragraph 2, within the time limit prescribed. He failed to do so. Second, without any regard for the consequences of his failure to comply will paragraph 2, the husband asserted a breach by the wife of paragraph 3. Purportedly in reliance upon such an alleged breach, the husband then, somehow, purportedly invoked paragraph 5 by paying $325,000 and he now asserts an entitlement to declaratory relief pursuant to paragraph 5 (a)(i) of the arbitrator’s orders.
Declaratory relief is quintessentially equitable in nature. In formulating equitable relief, equity looks at every connected issue.[10] In my view, it would be quite wrong to grant the declaration sought by the husband in circumstances where he failed to do as he was required within the time he was required to do it. It would also be quite wrong to grant declaratory relief in the terms sought in circumstances where the husband wishes to invoke a time stipulation that appears in paragraph 5 when he treated the time stipulation in paragraph 2 as optional.
[10] The Juliana (1822) 165 ER 1560.
In short, I refuse to make the declaration sought by the husband.
What of the enforcement application? None of the dates previously ordered by the arbitrator any longer apply. In those circumstances it is not easy to see how orders can, or should, be made compelling performance with events by dates long passed. It seems to me that orders in the nature of relief under s 105 of the Family Law Act are presently inappropriate.
In the circumstances that present themselves at this time, several events have unfolded. They include –
(a)the transfer in relation to the Suburb F property has been executed;
(b)the husband has paid $325,000 in relation to the Suburb H property; and
(c)the wife asserts she has successfully refinanced.
The award should be given effect but in accordance with new dates.
I direct the parties to bring in a minute of orders that gives effect to my reasons.
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: 18 March 2022