Martin and Johns

[2008] FamCA 785

FAMILY COURT OF AUSTRALIA

MARTIN & JOHNS [2008] FamCA 785

FAMILY LAW – REVIEW – Application for review of orders made by a judicial registrar – contravention application – whether orders void – whether respondent had reasonable excuse – reasonable excuse established – contravention application dismissed

Bankruptcy Act 1966 (Cth) s 58(1)(b), 116
Family Law Act 1975 (Cth) s 68Q, 112AD

APPLICANT: Ms Martin

RESPONDENT: Mr Johns

FILE NUMBER: (P)NCF 70 of 2003

DATE DELIVERED: 18 September 2008

PLACE DELIVERED: Newcastle

PLACE HEARD: Newcastle

JUDGMENT OF: The Hon. Justice Ryan

HEARING DATE: 6 August & 10 October 2007

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Hamilton

SOLICITOR FOR THE APPLICANT: Baker Love Lawyers

COUNSEL FOR THE RESPONDENT: Mr Graham

SOLICITOR FOR THE RESPONDENT: Hunter Family Law Centre

Orders

1. The Court notes it is satisfied the husband contravened order 1(a) made by this court on 6 April 2005.

2. The Court is satisfied the husband has a reasonable excuse for his non-compliance with order 1(a) above referred to.

3. The Contravention Application filed by the wife on 16 November 2006 is dismissed.

4. Any costs application shall be dealt with upon publication of these reasons or in accordance with the applicable Family Law Rules.

5. The Court declares that order 4 made in this court on 6 April 2005 was beyond jurisdiction and it is thus set aside.

6. Subject to order 4 above all outstanding applications are dismissed.

IT IS NOTED that publication of this judgment under the pseudonym Martin & Johns is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth)

FAMILY COURT OF AUSTRALIA AT NEWCASTLE

FILE NUMBER: (P)NCF70 of 2003

MS MARTIN

Applicant

And

MR JOHNS

Respondent

REASONS FOR JUDGMENT

1. This is an application by the wife to review the decision of a judicial registrar dismissing her contravention application filed 16 November 2006. In essence, the wife alleges that her former husband contravened a s 79 order which required him to pay her a sum of money. The contravention application was heard by a judicial registrar on 6 February 2007. Although satisfied that the husband had contravened the orders in the manner alleged the judicial registrar found that the husband had a reasonable excuse and dismissed her application.

2. A review of a judicial registrar’s decision is a hearing de novo.  Consequently, the contravention application is determined on its merits on the basis of the evidence available to the Court at the review hearing.

3. This hearing concluded on 6 August 2007 at which time I reserved my decision.  Before I delivered judgment, on 27 August 2007 the wife filed an application for leave to re-open her case for the purpose of adducing further evidence and making further submissions.  On 10 October 2007 leave was given in the terms sought.  At the outset I apologise to the parties and their representatives that judgment has taken as long as it has.

The operative orders 

1. The s 79 orders which it is alleged the husband contravened were made by consent on 6 April 2005 and are set out below.

   1. That pursuant to s 79 of the Family Law Act:

   (a)The husband pay to the solicitors for the wife by 31/8/2005 at 4 pm but not earlier than 31/7/2005 at 4 pm $40,000 (the sum).

   (b)Should the sum not be paid by the husband by 31/8/2005 interest apply thereafter on so much of the sum that remains unpaid until full payment at the rate prescribed by Rules.

   (c)That the husband transfer to the wife the 9 carat rose gold Belcher necklace with padlock (purchase price $600 reduced from $900) and cause the said necklace to be delivered to the wife at the Raymond Terrace Court House at 10 am on 14/4/2005.

   (d)The husband transfer to the wife any interest he has otherwise in the personalty in the possession or control of the wife, including but not limited to interest in superannuation fund in her name.

   (e)The wife transfer to the husband all and any interest she has otherwise in the personalty in the possession or control of the husband including but not limited to superannuation in his name.

   2.Wife’s application filed 15/2/2005 and all property applications be withdrawn and dismissed.

   3.No order for costs.

   4.        That the wife cause the current AVO against the husband to be withdrawn        and for that purpose attend at Raymond Terrace Local Court on 14/4/2005 and take all action necessary to do so.

   5.It is noted that if the wife does not comply with order 4 the husband proposes proceedings in this Court for enforcement of order 4 and proposes to seek orders for costs.

2. By way of background, when the parties separated they had few assets. Their main asset comprised their family home which, at about the time the s 79 orders were made, the husband sold to his parents for $212,000. An earlier sale had fallen through. Between separation and April 2005 the husband refinanced the mortgage then secured on the home at which time he increased the sum secured by at least $75,000. From these increased borrowings, the husband paid his father about $60,000 and retained, but disposed of, $15,000. A small amount was paid to unsecured creditors. The payment to the husband’s father allegedly related to funds he advanced to the father, predominately after separation, upon condition he was repaid. The wife has never conceded the funds paid to the husband’s father were matrimonial liabilities. Through his solicitor the husband conceded there was a legitimate, albeit resisted, argument that these funds ought to be notionally added back in to the asset pool. Consequently at settlement of the sale of the family home, after paying out the mortgage and when selling costs were added meant the husband owed $213,000 on the home. He submitted, but it was not agreed, a further $10,000 to $13,000 was due to other unsecured creditors.

3. When the judicial registrar was addressed as to the efficacy of the proposed property order, he was advised that the parties major asset “is now a negative value”.  Provided the $75,000 was notionally added into the asset pool, the wife’s counsel submitted the total pool comprised assets worth about $85,000.  Of this amount the parties respective superannuation funds comprised $9,000.  The effect of this is that excluding notional and superannuation assets, the parties assets were worth about $1,000.

4. As a reading of the transcript reveals, the wife was conscious of the Courts ability to set aside transactions.  For commercial reasons and perhaps also the risks inherent in s 106B applications she decided against seeking to set aside those transactions by which the husband paid his father $60,000. The husband similarly advised the Court he was aware of these matters.  As the husband had no tangible assets the judicial registrar questioned his solicitor regarding the source of funds which his client would use to pay the wife.  His solicitor advised this would come from another loan to be advanced by the husband’s father.  The husband’s father was present during these exchanges however he was not joined as a party to the proceedings or orders.  There is nothing in the orders or which, by collateral agreement, required him to advance the funds so that the husband could comply with the proposed order.

5. Against this background it is not surprising the judicial registrar highlighted the enforcement difficulties which the proposed orders potentially raised. There is no doubt his observations were prescient. In any event aware of these potential difficulties both parties invited the Court to make the orders.

6. Neither the wife nor those representing her informed the judicial registrar that at that time she was an undischarged bankrupt. The effect of this is that the moneys to which the wife was ostensibly entitled is after acquired property and as soon as it devolved on her, it vested in the trustee of her bankrupt estate: s58(1)(b) Bankruptcy Act 1966 (Cth).

7. As the above history demonstrates the orders were duly made.

8. The wife was discharged from bankruptcy on 23 July 2005.  The estate was finalised without the trustee calling for proof of debts and on the basis of those debts identified in the wife’s Statement of Affairs.  This is because the trustee did not anticipate receiving funds which would provide a return to creditors.

9. The husband did not pay the wife the money which the orders required of him by the due date.  

10. Following the husband’s failure to pay, the wife’s solicitors wrote to him a number of times requesting payment.  When these failed to elicit payment, on 16 November 2006 she filed this s 112AD contravention application.  The wife formally contends that the husband contravened order 1(a) made 6 April 2005 in that “The husband failed to pay by 4.00 pm on the 31^st of August 2005 but not earlier than the 31^st of July 2005 at 4.00 pm the sum of $40,000 to the solicitors for the wife.” 

11. The wife’s contravention application was heard by a judicial registrar on 6 February 2007.  The judicial registrar made the following findings and orders:

    1.The husband has contravened the orders made by this Court on 5 (sic) April 2005.

    2.        The husband has a reasonable excuse.

    3.        The husband should be excused in respect of the contravention.

    4.The husband is to pay to the solicitor for the wife costs of the wife being costs of the earlier date and part of the costs of today assessed in the sum of $3,000 that payment to be made within three months from today’s date.

12. On 28 February 2007 the wife filed a review application in which she seeks judicial review of those orders dismissing her contravention application.  She does not challenge the costs order made in her favour.

13. The husband filed a Response to the review application on 29 March 2007.  As well as seeking dismissal of the review application he applied for a suite of procedural orders, none of which were pressed at this hearing. 

14. The wife’s review application came before me for hearing on 2 April 2007.  Both parties were present and each was represented.  The parties entered into heads of agreement in relation to which the Court made the following notations and orders:

    Notations:

    1.That the husband deliver by 4.00 pm on 28 May 2007 to Baker Love Rutter Morgan a bank cheque for $48,000 payable to that firm in full satisfaction of the order for alteration of property interests made on 6 April 2005, including interest and legal costs.

    2.The husband deliver to Baker Love Rutter Morgan the wife’s necklace referred to in the said order by 4.00 pm on 16 April 2007.

    3.Upon compliance with paragraphs 1 and 2, the wife seeks leave to withdraw the pending contravention application.

    4.That the contravention proceedings are adjourned to 29 May 2007 at 9.30 am. 

    5.If the husband has not complied with paragraph 1 and 2 the husband is to appear on the date specified in paragraph 4 herein.

    6.In the event the parties wish to take no further action in the proceedings I give leave to approach in writing to vacate the adjourned date and withdraw the adjourned contravention application.

    It is Ordered:

    7.That further consideration of this matter is adjourned to 29 May 2007 at 9.30 am.

    8.In the event the parties wish to take no further action in the proceedings I give leave to the parties to approach in writing to vacate the adjourned date.

15. On 29 May 2007 the wife’s review application was again before the Court.  The husband had not paid the moneys outstanding and thus the matter was listed for hearing on 6 August 2007. 

16. On 6 August 2007 this hearing commenced.  Both parties appeared and each was represented by counsel.  The husband was accompanied by his father who remained in court throughout the hearing.

17. As is commonly the case, the husband conceded service and waived formal charging.

18. As a preliminary point the husband’s counsel submitted that the orders are void.  This is because, it was submitted, the order requiring the husband to pay the wife was conditional upon the wife complying with order 4, which order is beyond the Court’s jurisdiction. Unless the orders are severable, it was submitted, if one order is ultra vires the entire suite of orders are void.   

19. In his written evidence the husband gives a detailed history of the parties prior Apprehended Violence Order (AVO) dealings, including his incarceration for 17 days without bail, on a 2003 breach of AVO charge.  He says the wife has manipulated the availability of AVO’s for forensic advantage following their separation.  It was to avoid the risk of being further, he would say wrongly, accused of breaching an AVO that the husband was adamant he would only make a payment if the AVO was discharged.  While this was part of the discussion and agreement on 6 April 2005 it is the orders with which the Court is concerned.   

20. Section 68Q of the Family Law Act 1975 enables the Court to make parenting orders which are inconsistent with an AVO. Order 4 is not expressed to be an order made pursuant to this section and clearly it is not. Ultimately the wife conceded there is no jurisdictional basis for order 4. This is beyond dispute. Consequently the suggestion contained in notation 5 is otiose. The husband submits that because order 4 is beyond power, and as it is an integral part of the parties’ overall agreement, all orders made on 6 April 2005 are void. I do not agree. These is nothing on the face of the orders which suggests orders 1 and 2 are conditional upon order 4. Nor were submissions made to the judicial registrar to the effect that orders 1 and 2 are conditional upon order 4. The 6 April 2005 orders fall into three categories. Orders 1 and 2 are made pursuant to s 79. Order 3 is made pursuant to s 117 and order 4, as I have found, is ultra vires. The rights or obligations created by these orders are not interdependent. Each stands alone and, provided each is validly made it is enforceable. So that it is clear, to the extent it submitted the s 79 orders are rendered void by the order 4 erroneous exercise of jurisdiction the submission fails.

21. Thus the husband’s preliminary argument fails.

22. In the event that he failed in the preliminary point, the husband conceded he had not complied with the order for payment.  The central issue became whether or not he has a reasonable excuse for non compliance.  Argument was not addressed to s 112AB and I infer the husband concedes his actions demonstrate he contravened the order within the meaning there defined.  Having regards to the nature of his excuse this approach is appropriate.   

23. The onus of establishing a reasonable excuse lies with the husband.  There is both an objective and subjective element necessary to establish a reasonable excuse which must be established to the civil standard.

24. The  husband’s asserted reasonable excuse is somewhat linked to his threshold argument.  Essentially, the hsuband says he believed that he was only required to pay the monies referred to in the 6 April 2005 orders if the wife complied with order 4.  When she did not, he says he believed he was relieved of his obligation to pay the wife the monies to which she was otherwise entitled.

25. There is no doubt the wife failed to do what order 4 required of her.  Apart from being jurisdictionally flawed the order erroneously suggests it was within her power to cause the then AVO be withdrawn.  A police officer was the informant on the relevant AVO.  Thus its withdrawal was a matter for the Police and the presiding magistrate. Following the making of the orders, the wife attended Raymond Terrace court house where she spoke with a court clerk and then a chamber magistrate.  She was correctly advised that unless she was prepared to give evidence to the effect she no longer feared the husband the order would not be discharged.  If she knowingly gave false evidence she may find herself charged with perjury.  When the wife signed the family law orders she was represented by an experienced family law solicitor and counsel.  It appears she informed them that she was the informant on the AVO and hence the advice she received suggested she could proceed as required by order 4.  The wife says it was only when she attended the chamber magistrate that she realised the difficulties she faced in securing a discharge if she maintained she still feared her former partner. As to this later point I do not accept her evidence.  The importance of conceding a lack of fear was discussed between lawyers on 6 April 2005 at which time the wife asserted she was no longer in fear of the husband and content to say so to a local court.   

26. In any event, on 14 April 2005 the wife’s solicitors wrote to the husband’s solicitors and advised she had reconsidered her position and was no longer willing to disavow fear of her former partner.  Consequently she could not and would not comply with order 4.

27. At the time the orders were made the AVO proceedings were not listed for 14 April 2005.  This possible re-listing formed part of the parties agreement and orders on 6 April 2005.  The wife decided against re-listing, as she decided doing so would be a waste of time and not achieve the desired outcome.

28. The husband attended court on 14 April 2005.  He says, and I accept, that when he was present, the wife was not.  The wife says she attended to receive her necklace but when she was there the husband was not.  Although no mention of this is made in her solicitor’s letter sent that day there is no reason to reject this evidence. 

29. Through his solicitors, on 15 April 2005, the husband wrote to the wife’s solicitors expressing astonishment at her changed approach.  Reading this and the wife’s solicitor’s letter referred to above, it is clear that the wife on 6 April 2005 indicated she was unafraid of the husband and on later reflection decided she wanted the AVO to remain. The husband proposed that the wife arrange a re-listing of the AVO order for 19 April 2005 so at to enable the wife to seek its discharge. She declined and the AVO continued until it expired in October 2005.

30. On balance I am satisfied the husband legitimately and reasonably believes the wife at best paid lip service to this part of the parties agreement.  There is nothing in his solicitors’ correspondence which suggests he was ever advised the order was ultra vires.  Indeed the suggestion they were instructed to file a contravention application leads me to infer that the husband was advised and believed he had, in order 4, a valid and enforceable order. 

31. There is a temporal element which lends support to the husband’s understanding of the effect of the orders.  The steps which order 4 required the wife take precede the date by which the husband was required to make his payment.  He says the reasons for this are twofold.  Firstly so that he could be satisfied the wife had withdrawn the AVO before he borrowed money to pay her.  I have no difficulty accepting this evidence.

32. Secondly so that the wife could keep the money he paid to her. The wife erroneously believed if she received her s 79 payment after she was discharged from bankruptcy she could keep it. The effect of which is that her creditors would receive nothing. Proceeding this way, the wife hoped to be able to pay her outstanding legal fees. As I have earlier commented these funds are after acquired property and were payable to the trustee. Had the judicial registrar been aware the wife was an undischarged bankrupt it is unlikely he would have approved the orders without hearing from the trustee and being persuaded about their efficacy vis-à-vis her unsecured creditors. The manner in which the wife presented these orders and her failure to notify the judicial registrar of their total effect warrants unfavourable comment. It is no answer that she mentioned her bankrupt status in documents filed with the Court. This case was heard in a duty list and the documents in which she makes her disclosure were not brought to the judicial registrar’s attention. There is no doubt that they should have been.

1. That the temporal elements of the orders served both parties purposes does not detract from that first part upon which the husband relied.

2. In any event, to a lay person, the staged process whereby the various obligations were to be fulfilled could reasonably be understood as requiring the first step to be taken and only when completed, the second and so on until all obligations are completed.  For a person in the husband’s position it is reasonable, although wrong, that he believe the wife did what she was first required to do and afterwards he did what was required of him.  Although he was a rude and unpleasant witness this does not mean I ought to reject his evidence.  The husband’s solicitors’ correspondence and his response to the wife’s failure to comply with order 4, at the time, highlight that this is what the husband believed and believes the orders mean.  This is no argument of convenience raised late.  Nor does the mere fact the husband was legally represented make it reasonable that I infer he had accurate legal advise as to the effect of the orders.  The history outlined above demonstrates that the parties’ lawyers presented orders which were, in some respects, ultra vires. The husband was apparently advised he could enforce order 4 through contravention proceedings.  The circumstances surrounding the making of the orders are somewhat unsatisfactory and in this instance I am not satisfied I should infer, that merely because he was legally represented, the husband was aware that the orders were not interdependent and his understanding was mistaken.

3. The husband was cross-examined at length concerning his financial circumstances since April 2005. His evidence was in many respects unsatisfactory.  To fairly routine questions, time and again the husband feigned ignorance.  He refused to answer questions unless directed and was frequently rude to his cross-examiner, the Court and about his former partner.  In these circumstances it was difficult to obtain sufficient evidence to obtain a detailed understanding of his finances from time to time.  Doing the best I can, it is apparent that since April 2005 the husband has been in and out of paid employment.  He has not acquired any assets of value and does not appear to have earned sufficient income to do more than meet his own reasonable day to day living expenses.  His father has provided him with the use of a car and advanced a modest sum used towards his legal fees incurred early in these proceedings.  The husband was subsequently given a grant of legal aid. It seems plain that unless the husband’s father loaned him the money to pay the wife, he has not had the capacity to pay her.  The evidence does not enable me to conclude that the husband has deliberately arranged his affairs so as to make it impossible for the wife to enforce the orders using the processes specifically designed for asset recovery and enforcement of non-compliance with money orders. The outcome of the financial evidence is that it neither lends weight to or detracts from the husband asserted reasonable excuse.

4. I am satisfied on balance that at the time of the contravention the husband did not understand the obligations the orders imposed upon him and that he ought to be excused in respect of the contravention.

5. The effect of these findings is that the wife’s contravention application filed 16 November 2006 will be dismissed.

6. As is usual procedure, the issue of penalty would have been dealt with separately.  Nonetheless as an indication of the style of submission which would have been made had I been satisfied the husband lacked a reasonable excuse the wife submitted that the Court would sentence him to a term of imprisonment. Without expressing a concluded view and conscious that evidence may have been available at the sanction phase of the hearing which suggested a different course, having regard to the totality of the circumstances discussed above it is difficulty to see how imprisonment or any of the other     s 112 AD sanctions would have been appropriate. 

7. At the end of the 6 August 2007 hearing I discussed my concerns regarding the wife’s failure to inform the judicial registrar of her bankrupt status and her reasons for delaying receiving her money. Clearly it was within contemplation, even if the contravention was proved, in the exercise of the Court’s discretion, I may dismiss it. After I reserved my decision, the wife contacted her trustee (ITSA) and informed them of the current situation. She clarified aspects of her Statement of Affairs and obtained from ITSA its advice that it would not have opposed the making of the original consent orders nor intervened in these proceedings. Nothing suggests ITSA was previously aware of the earlier action. ITSA advised any amount received remained after acquired property and would be distributed in accordance with s 116(1) of the Bankruptcy Act 1966.  The effect of this is that the wife may be able to use any funds received to pay her solicitors for the property and perhaps also these proceedings.  As it transpires nothing turns on this further evidence.

8. Notwithstanding that the AVO referred to in order 4 expired in October 2005 in the exercise of the Court’s inherent jurisdiction I am satisfied that I should formally correct the Court’s record and set aside this order.

9. By way of final observations, it is important the husband understands that although the wife’s contravention application has been dismissed he remains obliged to comply with the 6 April 2005 property orders.

10. For these reasons I make the orders identified at the start of this judgment. 

I certify that the preceding forty five (45) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Ryan

Associate: 

Date:  18 September 2008