Matheson and Matheson
[2010] FamCA 772
•6 September 2010
FAMILY COURT OF AUSTRALIA
| MATHESON & MATHESON | [2010] FamCA 772 |
| FAMILY LAW – PROPERTY – Where property orders were entered into and set aside by consent – Where the substantive asset of the parties is a motor vessel – Where a partial property settlement was made by consent – Where there is dispute about the interpretation of an Order – Where the Wife submits that her entitlement should be prioritised over her former solicitors – Issue of outstanding cheques – Where the solicitors contend that the Court no longer has jurisdiction to deal with monies in the trust account – Whether the Court is functus officio – Application of the slip rule |
| APPLICANT: | Ms Matheson |
| RESPONDENT: | Mr Matheson |
| FILE NUMBER: | BRF | 1279 | of | 2005 |
| DATE DELIVERED: | 6 September 2010 |
| PLACE DELIVERED: | Brisbane |
| PLACE HEARD: | Brisbane |
| JUDGMENT OF: | Barry J |
| HEARING DATE: | 30 July 2009 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | The Applicant Wife appearing in person |
| COUNSEL FOR THE RESPONDENT: | The Respondent Husband appearing in person |
| Mr Z, Solicitor appearing on behalf of the Trustee for Z Lawyer’s Trust Account |
Orders
Of the Court’s own motion order 7 of the order of the 23 July 2008 is amended to read:
“a.All outstanding applications filed by [D Matheson] are dismissed and these proceedings removed from the active pending cases list.
b.The applications filed by the Applicant and First Respondent on the 21 January 2008 are dismissed.
c.The issue of property settlement is adjourned to a date to be fixed.”
(2)
(a)Z Lawyers are to pay to the Collector of Public Monies at the Brisbane Registry of the Family Court from monies held in their trust account in the name of the wife the sum of $4,739;
(b)Z Lawyers are to continue to hold the balance of funds in their trust account in the name of the wife pending the determination of final orders for property settlement by this Court.
The Collector of Public Monies at the Brisbane Registry is to pay the SPER fines in the name of the Wife for all amounts outstanding as at 12 April 2007. The Collector of Public Monies is to satisfy himself that the monies owing to SPER by the Wife as set out in Exhibit 1 were all incurred in the period prior to the 12 April 2007 less any monies paid by the Wife to SPER between the
12 April 2007 and the present time.
The Collector of Public Monies is to reimburse the Wife any monies she has paid to SPER since the making of the orders of the 12 April 2007 referrable to fines accumulated prior to the 12 April 2007.
I direct the Registrar to formally notify the Wife, the Husband, Forbes Dowling as solicitors for Mr Y and Ms Y as Trustees for the Y Family Trust (the Sixth Respondents) and the Trustee in Bankruptcy for the husband of a date for a directions hearing for the outstanding property settlement issues.
IT IS NOTED that publication of this judgment under the pseudonym Matheson and Matheson is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| FAMILY COURT OF AUSTRALIA AT BRISBANE |
FILE NUMBER: BRF1279/2005
| MS MATHESON |
Applicant
And
| MR MATHESON |
Respondent
REASONS FOR JUDGMENT
The Marital History
The parties were married in 1995 and separated in approximately March 2005. There are three children of the marriage, namely: J born in October 1991, K born in December 1993 and A born in August 1996. The children were the subject of proceedings for parenting orders that were ultimately settled by consent.
Property orders were entered into by consent on 12 May 2005. Those orders provided for the sale of certain real estate and for the Husband to be responsible for various liabilities of the parties. On the application of the Wife those orders were set aside, again, by consent, on 15 May 2006.
The substantive property of the parties may be succinctly identified as the Motor Vessel known as “[…]” which I will hereafter refer to as “the vessel”.
The Litigation History
The matter progressed to a trial on property settlement issues before me on 10, 11 and 12 April 2007. Ultimately by consent the matter settled on an interim basis on the third day when orders for a partial property settlement were made. The settlement was prompted by the results of a search that had been conducted on the previous evening by the solicitor for the Wife. The search revealed that the Husband had been bankrupted on 4 December 2000, and had not been discharged in the normal course (namely three years from that date). Consequently, as at 11 April 2007 the Husband was an undischarged bankrupt—a circumstance which would enliven s 79(11) of the Act, requiring the Trustee in Bankruptcy to be joined as a party to the proceedings.
The orders provided for the appointment of Mr H of P Partners as Trustee for sale of the vessel. The orders further provided direction as to how the proceeds of the sale would be applied—namely in satisfaction of a number of creditors. The matter was then adjourned to 6 and 7 August 2007 for “further determination of the proceedings in respect of property settlement, the children’s issues and the Wife’s contravention application”.
As previously outlined, the children’s issues were settled by consent on
6 August 2007, generally providing that the children live with the Mother and spend time with the Father every fourth weekend. The children’s orders were further amended on 26 October 2007, but not substantially varied.
Pursuant to the orders of 6 August 2007, the property issues were adjourned to
10 December 2007. On 10 December 2007 the property settlement was further adjourned to the 14 April 2008 but ultimately was not dealt with at that time.
At the hearing on the 14 April 2008 the Court had before it three distinct applications other than the adjourned application for property settlement:
· An application by D Matheson (the husband’s brother) for leave to intervene with consequent declarations as to his entitlement to any assets. That application with supporting material had initially been filed on 10 April 2007 being the first day of the property settlement hearing. At that time, for reasons given, I refused to permit D Matheson to intervene on the basis that it would have necessitated the adjournment of a trial where there were numerous respondents. Clearly D Matheson had had notice of the Family Court proceedings for some years as he had filed an affidavit in 2006. There was evidence that the monies he had advanced to his brother were traceable to the proceeds used to acquire the vessel.
The consent orders of the 12 April 2007 by order 13 provided:
“13.That [D Matheson] be given leave to appear on the adjourned date to determine whether pursuant to s 90AE the Wife should be liable for any monies said to be owed to him.”
D Matheson filed an amended application in a case on 8 April 2008 seeking orders in the following terms:
“1.That [D Matheson] have leave to intervene in these proceedings.
2.That pursuant to S79A of the Family Law Act 1975 Orders 4 and 6 of the Orders made by consent on 12 April 2007 be set aside.
3.That this matter be remitted for re-hearing.
4.That pending further Order [Mr H] of [P Partners] be and is hereby restrained from disposing of the net proceeds of sale of the […] Motor Vessel known as “[…]” and/or “[…]”.”
Clearly that application had to be determined before the outstanding property settlement issue could be finalised. On 14 April 2008 I received submissions from Mr Vaughan Massey, solicitor of Sydney, who pressed for orders that his client be given leave to intervene and orders that the consent orders for partial property settlement be set aside and his client be given the opportunity to pursue substantive orders in the proceedings.
The Husband and Wife each appeared on the 14 April 2008 as did
Ms Heyworth-Smith of Counsel who appeared for Mr and Mrs Y, the Sixth Respondents. I have perused the transcript of that day and there is no mention of the outstanding property proceedings other than a speculation as to the amount of the surplus remaining after the orders of 12 April 2007 were to be carried out.
There was considerable merit in D Matheson’s claim but for reasons I delivered on 23 July 2008 I ruled that D had knowledge of the proceedings in the Family Court, could have litigated at any time over the previous years in the Civil Courts of New South Wales or Queensland to obtain judgment against his brother but had failed to do so. It was inappropriate at this point in time to allow him to litigate in this jurisdiction; he was of course free to pursue remedies in the State Courts. At all times there was an expectation that the vessel when sold would realise in the range of $750,000 to $850,000 based on estimates of its value. The price realised was about $550,000.
·
Subsequent to the consent orders for partial property settlement of
12 April 2007, on 21 January 2008 the Husband and Wife each filed an application in a case seeking orders that the consent orders for partial property settlement of the 12 April 2007 be set aside so far as they related to the payment of creditors and for the Court to direct the Trustee, Mr H of P Partners, not to make any disbursements from the sale proceeds of the vessel.
· On the 14 April 2008, the Wife sought to withdraw her application. The Husband persisted with his application but I ruled that as an undischarged bankrupt he had no standing to bring such an application without the permission of the Official Trustee in Bankruptcy which was not forthcoming.
The judgment delivered on 23 July 2008 dealt with those three applications that were before the Court. Order 7 was in the following terms:
“7.All outstanding applications be dismissed and the proceedings are removed from the active pending cases list.”
Z Lawyers have interpreted order 7 as a dismissal of the outstanding property settlement applications. I do not accept that this is a correct interpretation. Although I had summarily dismissed D Matheson’s amended application filed on 8 April 2008 by way of oral direction, no order to that effect had issued. Similarly, although the Wife sought leave to withdraw her application of 21 January 2008 no formal order permitting that to be done had issued.
The only orders for property settlement at that point in time were the orders for partial property settlement. The monies from the sale of the boat were held by Mr H but he had not forwarded same, in terms of order 6(n) of the April 2007 orders as he was waiting for the Husband to file business activity statements and provide other documentation which would allow for a refund from the Australian Taxation Office. For his part the Husband was doing all in his power to sabotage the orderly conclusion of the litigation. There was evidence he had at some stage separately sold life rafts and other safety equipment of the vessel. Despite considerable time elapsing and numerous requests from the Trustee for sale, he had not lodged the necessary documentation with the Taxation Office.
As the monies realised on the sale of the vessel had been several hundred thousand dollars less than had been anticipated, it was likely that there would either have to be a pro-rata distribution to the creditors or there would be only a small surplus. Orders 5 and 6 of the orders of the 23 July substituted the Collector of Public Monies to attend to payment of the outstanding creditors in lieu of Mr H. The motivation for this was to try to save costs. There was no application to this effect before the Court at this stage but as 15 months had elapsed with the creditors still unpaid, I directed that whatever monies from the sale of the vessel were held by Mr H the Trustee for sale, be forwarded to the Collector of the Public Monies at the Brisbane Registry of this Court. Had the Trustee for sale proceeded to attend to the disbursements in terms of that paragraph there was a concern the additional fees would erode what little prospect there was for a surplus from the sale.
The remaining Live Issue
The matter comes back now on the motion of the Court to hear an outstanding issue relating to the finalisation of the property settlement application.
Pursuant to order 6 of the consent orders of 12 April 2007, the vessel was to be sold and the monies disbursed to the named creditors. Order 6 was in the following terms:
“6. Upon completion of the sale, the trustee will apply the proceeds of sale as follows:
(a)in payment of reasonable costs, sale costs, commissions and any taxation consequences arising out of the sale;
(b)[…] Finance Ltd in the amount of $10,661.10;
(c)[…] Marina Pty Ltd in the amount of $4,806.50;
(d)[…] Pty Ltd in the amount of $25,840.71;
(e)[Mr and Mrs Y] as trustees for the [Y] Family Trust in the amount of $150,000;
(f)[Mr A] as liquidator of the Fifth respondent in the amount of $11,0000 for insurance paid by him for the vessel;
(g)[Mr A] as liquidator of the Fifth respondent in the amount of $40,000 for the costs of the administration and liquidation of the Fifth Respondent;
(h)Westpac Visa Card in the name of the Wife being account number […] in the sum of $12,323;
(i)BMW Financial Service Collections loan number […] in the name of the Wife in the amount of approximately $33,592;
(j)Esanda Hire Contracts […] and […] in the name of the Wife in the amount of approximately $2,412;
(k)GE Finance in the name of the Wife in the amount of approximately $31,862;
(l)Suncorp bank account in the name of the Wife being account number […] in the sum of approximately $2,412;
(m)Queensland State Penalties Enforcement Registry (SPER) Fines in the name of the Wife;
(n)UNTIL FURTHER ORDER by this Court the balance to the trust account of the Wife’s solicitors, [Z] Lawyers, and such sum may be invested in an interest bearing account in the Wife’s name.”
After disbursing the monies as per orders 6(a) to (m), the remaining amount was the sum of $16,936.00 which was forwarded by the Registrar, by way of cheque, to Z Lawyers on 14 October 2008 (the “first cheque”).
A further cheque was received by the Court on 6 January 2009 in the sum of $3226.89 from P Partners, being funds received from the Australian Taxation Office (“ATO”). It appears this amount was a GST refund and represents the ATO refund amount less a deduction of $618.11 (being fees owed to the accountants). This further cheque was received by the Collector of Public Monies and forwarded by the Registrar on 26 March 2009 to Z Lawyers for deposit in their trust account.
A letter dated 21 April 2009 was sent to the Court from Z Lawyers. The correspondence indicated that the first cheque had been in the trust account but had been moved to the general account “on account of costs and outlays” in reduction of the Wife’s outstanding fees. The GST cheque had been received, but was not being deposited until further order of the Court.
As previously noted, Z Lawyers had considered that order 6 of 12 April 2007 had been discharged by order 7 of 23 July 2008.
The letter of 21 April 2009 further noted that the amount of the first cheque had been transferred back into the trust account pending direction or order of the Court.
The Wife corresponded with the Registrar on 16 June 2009 in relation to the monies remaining and outstanding payments under Order 6.
The Wife’s Case
The Wife appeared in person on 30 July 2009 and handed up submissions in the form of two handwritten pages. Summarily her submissions suggest that she is entitled to the remaining funds as she had received virtually nothing to date in the property settlement and she has now sole responsibility for providing for her children. She argued that her entitlement should be prioritised over Z Lawyers as they had failed to see her through the litigation as they had agreed.
In person the Wife made further submissions in relation to cheques not being received in accordance with order 6 of 12 April 2007. These are the cheques to Suncorp Metway Ltd bank (“Suncorp”) and State Penalties Enforcement Registry (“SPER”). I will turn firstly to the written submissions, then the issue of the outstanding cheques.
Written Submissions
The Wife’s complaint against her former solicitors is really two fold. Firstly, that they ceased to act for her part way through the litigation and secondly, that they had agreed to payment on a contingency basis, commonly referred to as a “no win no fee” basis. A third complaint may well have been they should have conducted a search prior to the commencement of the litigation to ascertain whether the Husband was an undischarged bankrupt. There was compelling evidence that the Husband was acting in a dishonest fashion and had engaged in a series of sham transactions, intended to defeat the Wife’s claim. Annexed to the Wife’s affidavit filed on the 30 June 2006 was a transcript of a conversation she had had with the Husband on the 9 June 2006 which, if accepted, clearly demonstrated he was a person not to be trusted. It would have been easily ascertained that the Husband had been previously bankrupted at the start of the decade.
A considerable amount of costs were incurred in disclosing the sham nature of the transactions and in pursuing the Husband, but it was not until the matter actually proceeded to trial with five respondents that the basic search of making the enquiry if and when he had been discharged from his bankruptcy, was conducted.
In her oral submissions the Wife asserted that the firm had agreed to a “no win no fee” basis. While this may be viewed as a side issue, it is an issue of some importance to the general administration of justice and I asked Mr CooZper about this point directly. He replied:
“…if that were true we all should be very much reprimanded…[we] didn’t require [the wife] to pay us to pay us (sic) until a certain event. That’s all.”
In addition to that submission, Mr Z undertook to send to the Court a copy of the client’s costs agreement as well as correspondence in relation to such agreement. These documents were received on 3 August 2009.
The costs agreement, dated 20 December 2005, is missing its first page. I note that correspondence was sent to the Wife on 9 January 2006 and 12 December 2006, in identical terms, enclosing the agreement and requesting the first page be returned signed. It seems this was never done.
Irrespective, on pursuing the part of the agreement that has been forwarded to the Court, it seems, as per cl 22, no initial advance was required by the firm, and per cl 2.5 (that is, part 5 of the second cl 2 to be found directly under cl 46 and entitled “Acknowledgements”) the Wife acknowledges that “neither the amount of the accounts rendered nor payment is contingent on the outcome or result of the engagement”.
It seems that the Wife was in error in thinking the arrangement was on a “no win no fee” basis though I note that I need not, and specifically do not, make a finding in this regard.
It is true enough for the Wife to submit that Z Lawyers ceased to act for her part way through her claim. On 6 August 2008 Counsel for the Wife sought leave for the Wife’s legal representatives to withdraw. This was granted. It was not unreasonable for the Wife to be disgruntled by this fact, particularly given a letter to her dated 30 August 2006 that expressly states “we have agreed to carry your file until the conclusion of your property settlement matters”. It would seem this representation was not honoured once it was appreciated the sale proceeds of the vessel were for less than anticipated.
Suncorp Cheque
When before me on 30 July 2009 the Wife raised some issues of compliance with order 6 of the April 2007 orders. The Wife contends that an amount of $2,412.00 pursuant to order 6(l) which, should have been deposited into an account at Suncorp is unaccounted for. The correspondence on the Court file shows that the cheque was forwarded to Suncorp on 20 October 2008 but was returned under cover of a letter dated 22 October 2008. The letter indicates that the correct account number was not forwarded with the cheque.
The cheque was then re-sent to Suncorp on 24 October 2008, this time with the BSB details included, as well as a copy of a past statement. The cheque was not returned to the Court again.
At the hearing, I asked the Wife about the Suncorp monies. She responded that she had never received them, and went on to say that “I don’t have a Suncorp bank account. [The husband] does, though.” At that time I examined the correspondence earlier referred to in these reasons and stated:
“His Honour: So it may well be, that you’ve got $2400.
[The wife]:I haven’t. I did have a Suncorp bank which is probably about eight years ago but I have never used it.
His Honour: Well, it’s in the orders there.
[The wife]:Okay.”
In the light of the Wife’s statements, it is not clear why consent orders for partial property settlement provided for monies to be paid to the Suncorp account. It is possible that unintentionally the monies were received by the Husband who may have had access to that account or else there is still an account in her name which she is free to access.
SPER Cheque
Order 6(m) provides for payment of the Wife’s SPER fines out of the proceeds from the sale of the vessel. The order does not particularise the fines owed by the Wife.
The Court file reveals correspondence sent from the Registrar to each of the parties dated 14 October 2008 detailing the distribution of funds and the amount being sent to Z Lawyers It states in the third paragraph:
“Pursuant to Order 6(m), there is to be deducted from this amount, monies owing to SPER being fines in the name of the wife, up to and including 12 April 2007. As no claim has been submitted pursuant to Order 6(m), his Honour has directed that the balance of monies be distributed in accordance with Order 6(n) to the trust account of the Wife’s solicitors [Z] Lawyers. Accordingly a cheque has been sent to the Trust Account of [Z] Lawyers in the sum of $16,396.00.”
It seems what has happened is the Wife has failed to provide any particulars in relation to the fines owed. As I indicated on 30 July 2009, the Registrar is unable to pay an account where there is no record of it. The Registrar tried on a number of occasions to contact the Wife to obtain these details unsuccessfully, and in the end sent the monies to Z Lawyers.
Exhibit 1 to the current proceedings, handed up by the Wife, is an Instalment Payment Notice issued by SPER and dated 13 July 2009. It records an outstanding debt owed by the Wife in the amount of $4,739.00, and an agreement to pay $10 per week until 9 August 2018. There is currently no evidence with respect to what the total amount of the fines were or the quantum due as at 12 April 2007.
Assuming there is evidence to confirm that the amount $4,739 was outstanding as at 12 April 2007, a question is raised as to whether it should now be payable out of the monies in Z Lawyers’ trust account. I am firmly of the view it should be and for reasons soon to be given propose to so Order.
Z Lawyers’ Case
Mr Z appeared on 30 July 2009 on behalf of the Trustee for the Z Lawyer’s trust account. In his oral submissions Mr Z outlined two primary difficulties, firstly that the second cheque appears to be for the administration of a company rather than the sale of the vessel – and so is not dealt with by order 6 – and secondly that the Court no longer has jurisdiction to deal with the monies in the trust account.
Nature of the GST Cheque
I accept the proposition that if the GST cheque relates to the administration of a company it would not fall within the terms of order 6 and should not be held by Z Lawyers. Confusion could easily arise on the wording of the Registrar’s letter dated 26 March 2009 where he wrote the cheque “represents the GST refund owing to the administration”. I note that the Registrar’s wording is in almost identical terms to those used in P Partner’s letter to the Court dated 6 January 2009.
There is, however, on file a record of a conversation between the Registrar and staff at P Partners that took place on 9 January 2009. It unequivocally records that the GST relates to the sale of the vessel, not the administration of any other company. I further note that the extent of P Partner’s involvement in the proceedings was as Trustee for the sale of the vessel. It was not required to wind up any companies or be involved in the administration of any company. I am prepared to find a refund of GST constitutes part of the proceeds of sale.
Therefore the first difficulty raised by Mr Z has been overcome.
Functus Officio
The second point raised on behalf of Z Lawyers’ trust account is considerably more complex. It was argued that order 7 of 23 July 2008 effectively places the monies in their trust account beyond the reach of this Court, as the Court has become “functus officio” given there is no current application before the Court.
Mr Z foreshadowed that his client would be seeking a direction relying on s 96 of the Trust Act 1973 (Qld) to deal with those monies, and ultimately, to have them applied to the outstanding account of the Wife. Section 96 merely gives a Trustee a right to apply for direction in relation to trust property; and the Z Lawyer’s trust would take this course in the Supreme Court as they argue it is the appropriate jurisdiction. It was indicated from the bar table that the Wife’s outstanding legal fees are a little over $100,000. If they are able to apply the funds in this way there will be no remainder left for the Wife.
Mr Z does not cavil with the proposition that the orders of 12 April 2007 must be carried out. He concedes that the first cheque was received by their firm on 14 October 2008, post the orders of 23 July 2008 dismissing all applications.
The issue was raised, however, that order 6 is directed to the Trustee and subsequently (in orders 4 and 5 of the order of 23 July 2008) to the Registrar of the Court. Mr Z argues that effectively that means that the Court would need to order Z Lawyers to pay the sum, but that it may not do that as it is now “functus officio”. In this way the Court has no jurisdiction to make orders to ensure compliance with the orders of 14 April 2007.
As I indicated on 30 July 2009, I find this argument unconvincing. Mr Z foreshadowed that if that were the case then the Trust would request a stay of any order I make pending appeal. I pause to note briefly that I found Mr Z’s manner during his submissions, and particularly at this juncture, was terse to the point of disrespectful. He would do well to remember his primary role as an officer of the Court.
It is useful here to turn to a consideration of the law in relation to “functus officio”.
Dealings with the First Cheque
In light of their interpretation of the Orders of 23 July 2008, Z Lawyers appropriated the monies from their trust account to their general account, pursuant to the terms of the costs agreement which appears to have been dated the 20 December 2005.
The letter from the Registrar to Z Lawyers forwarding the cheque was dated the 14 October 2008 and did not advise that the property settlement proceedings had been heard and determined. It simply expressed that the monies were forwarded pursuant to the terms of order 6 of the orders for partial property settlement of the 12 April 2007.
Z Lawyers would only be able to lawfully appropriate the monies to their general account under the terms of the costs agreement if the Wife was beneficially entitled to such monies. The mere fact that the order of 12 April 2007 provided for the trust account to be in the name of the Wife does not of itself confer beneficial ownership. Any subsequent order dismissing an application does not confer ownership.
Regardless of the firm’s interpretation of order 7 of the order of 23 July 2008, there had been no final adjudication on who was entitled to the remaining funds.
Claimants would include:
·The Wife.
·The Husband.
The Trustee in Bankruptcy has filed a notice of address for service but has not otherwise sought to intervene. It may be inferred it was ascertained that the small amount of the surplus does not make any intervention worthwhile. Simply because the Husband is a bankrupt does not mean he cannot contest property settlement claims by his Wife. Still less does it mean the Wife has an automatic entitlement to the whole of the assets of the parties. I note on the 14 April 2008 the Husband indicated he was not seeking for any order in his favour but it is still a matter for this Court to determine.
·The Husband’s Trustee in Bankruptcy.
·Creditors who claimed interest on the amount owing pursuant to the Order of the 12 April 2007.
A letter of the 1 September 2008 was received from solicitors Forbes Dowling acting on behalf of Mr and Mrs Y calculating interest on the amount owing to their clients at $23,436.
Clearly no consideration had been given to this aspect when the orders were made on the 12 April 2007. The monies owing to the creditors were not paid until October 2008.
Counsel for the Ys on the 14 April 2008 also sought an order for costs of the proceedings to be paid out of the surplus funds.
The most basic enquiry of the Court by the solicitors would have ascertained there had been no determination of the property settlement issues, which is the essence of the Court’s jurisdiction in this matter.
The orders of the 12 April 2007 were for partial property settlement only. Common sense would have indicated that the property settlement proceedings could not have been finalised by the orders of 23 July 2008 as exact monies had not even been received from the Trustee for Sale at that point in time and there was still the outstanding issue of any GST refund.
At the hearing before me on the 30 July 2009 the legal representative for Z Lawyers submitted:
“In those circumstances, failing a specific authority from [the wife] to disburse those monies, which supports my client’s lien, what my client proposes to do is to seek a direction pursuant to s 96 of the Trust Act (Qld) with the Supreme Court of Queensland to deal with those monies simply on the strength and somewhat conservative basis that this Court has lost its jurisdiction to deal with those monies. They no longer being matrimonial funds.”
The monies in question were the proceeds of the sale of the motor vessel. Order (4) of the orders was a declaration that the Wife was the legal and the beneficial owner of the motor vessel. I fail to see how the Supreme Court pursuant to s 96 of the Trust Act (Qld) could exercise jurisdiction in circumstances where the funds are clearly matrimonial assets which were placed with the solicitors pursuant to consent orders for partial property settlement.
I do not accept the validity of the arguments put forward by the legal representatives for the solicitors. I come to this conclusion on three grounds, namely:
·I reject the submission that the doctrine of “functus officio” is applicable in circumstances where there has been no final order made and indeed no final adjudication or hearing of the nature contemplated by the orders of the 12 April 2007.
·In accordance with the principle confirmed in Pera v Pera [2008] FamCAFC 87 the Court has jurisdiction to interpret its Orders and the orders of the 23 July 2008 are to be interpreted as relating to the applications which at that time were before the Court. The transcript of the hearing of 14 April 2008 supports this.
·Application of the slip rule.
Functus Officio
The general rule as established by the authorities to which reference is made in Ex Parte Hassell [1937] 37 SR 192 at 195 is that:
“When an arbitrator or Judicial Officer has given his award or adjudication as the case may be he is functus officio and cannot add to amend or detract from what he has done.”
A trial Judge does not become functus officio until the orders flowing from his or her reasons for judgment have been issued formally by the Court. The Judge is entitled to change his or his reasons and amend his or her orders prior to that time (Swaney & Ward (1988) FLC 91-928).
Gaudron J observed in FAI General Insurance Co Ltd v Southern CrossExploration NL [1988] 165 CLR 268 at 289:
“The converse of that rule namely that a Court of record may vary an order before the order is entered must rest on the notion that a Court is not functus officio while there remains any Judicial function which may be performed in relation to a proceeding, even if it be only that of ensuring that the final order correctly records the meaning of the Court.”
There is ample authority by way of example, that entering a judgment in a property settlement matter does not make the Family Court “functus officio” on the issue of costs.
In the matter of B v B [2000] FamCA 1744, the Full Court (Holden, Coleman and Watt JJ) on the 16 August 2000 determined an appeal where the trial Judge held he had no jurisdiction to deal with a costs application after the Full Court had dealt with an appeal and cross appeal by the parties. The Full Court held the trial Judge was not functus officio even though the matter had been finally determined before it.
In DJL v Central Authority [2000] 201 CLR 226, the High Court (Gleeson CJ, Gordron, McHugh, Gummow and Haine JJ) was dealing with a situation where the Full Court had sought to set aside orders that were final orders and had been perfected. The High Court at paragraph 7 noted:
“7.No question arose in the Family Court and none arises here with respect to interlocutory orders made by the Full Court or the revision of its final orders after they had been pronounced before they had been entered.
It has been assumed, no doubt correctly, that both in the Full Court and in this Court, that the Family Court has power to act in that way before the entry of its orders.”
Court’s Power to Interpret its Own Orders
In Pera v Pera [2008] FamCAFC 87 the Full Court (Coleman, May and Boland JJ) was dealing with an appeal from Cronin J where his Honour had made property orders by consent. Subsequently a dispute arose between the parties about the interpretation or implementation of the orders. The parties dispute about interpretation and enforcement of the orders was dealt with, “on the papers” by the trial Judge who delivered reasons and pronounced orders on a subsequent date. The appeal relying on the principle of “functus officio” was dismissed.
The Court had at the hearing on the 14 April 2008 summarily dismissed the applications by the Husband and Wife to set aside the orders of the 12 April 2007. The Wife had sought to withdraw her application in those terms and that application had been granted, the Court struck out the Husband’s claim as he was still an undischarged bankrupt.
The primary matter before the Court was the claim by D Matheson that he be allowed to intervene in the proceedings. There had been various orders sought by D Matheson in the application filed on the 8 April 2008 being an amended form of application and the previous application that had been before the Court in April 2007. It was intended that D Matheson’s outstanding applications and the two applications filed on 21 January 2008, be removed from the active pending cases list.
Slip Rule
The proceedings of the 14 April 2008 involved a contest between D Matheson on the one hand and Mr and Mrs Y as the Sixth Respondents opposing the application. The Husband and Wife were present in relation to their respective applications filed 21 January 2008. They did not seek to make submissions in relation to D Matheson’s application.
There was no consideration at the relevant time of property settlement issues as it was not even known if the funds remaining after the Trustee deducted his costs would be sufficient to pay the agreed creditors 100 per cent of the amount specified in the order of the 12 April 2007.
The monies in question were never awarded to the Wife. There has been no final property settlement determination. There have been no final property settlement orders issued. In R v R [1999] FamCA 1875 the Full Court (Ellis, Finn and Mushin JJ) quoted with approval from a recent determination of Lockhart J in a decision of the Full Court of the Federal Court, Elyard Corporation Pty Ltd v DDB Needham Sydney Pty Ltd (1995) 133 ALR 206 at 209-211 where his Honour made the following observations:
“Traditionally a court’s power to correct errors in orders arising from accidental slips or omissions is conferred by an express rule of court (e.g. Order 35 rule 7 of the Federal Court Rules); but it exists whether provision is made by express rule or not.
The slip rule is a qualification of the rule that a court may not vary a duly passed and entered order which brings a proceeding to an end because it is obviously desirable that the litigation should be brought to an end.
The rule is very wide in its scope; but is not available as a matter of course: …
Courts have an inherent or implied jurisdiction to amend judgments which do not correctly state what was actually decided and intended. Indeed, after a decree or order has been passed and entered a court will not, unless by consent, permit it to be altered without a rehearing, except in cases of mistakes or errors from accidental slips or omissions. …
It is well settled that the application of the slip rule is not confined to giving effect to the intention of the judge at the time when the Court’s order was made, or judgment given. It extends to the intention which the Court would have had, but for the failure that caused the accidental slip or omission: Symes v Commonwealth of Australia (1987) 89 FLR 356. …”
In Milham v Stanford [2001] FamCA 294 the Full Court (Kay, Coleman and Penny JJ) made reference to the judgment of Kirby J in the High Court determination of DJL v Central Authority 170 ALR 659 at 685 where his Honour noted that the slip rule applied in circumstances:
“… when it can be shown that a court order does not correctly reflect the Court’s decisions as contained in its reasons, rectification of the order is viewed as nothing more than a mechanical task.”
At paragraph 27 of its judgment the Full court observed:
“This principle was more recently affirmed by McHugh JA in Storey & Keers Pty Ltd v Johnstone (1987) 9 NSWLR 446 at 453 where he stated:
“The rationale of the slip rule also requires that an omission or mistake should not be treated as accidental if the proposed amendment requires the exercise of an independent discretion or is a matter upon which a real difference of opinion might exist: cf Brew v Whitlock (No. 3) (at 506). In general the test of whether a mistake or omission is accidental is that applied by Lord Herschell in Hatton v Harris (at 558) if the matter had been drawn to the court’s attention would the correction at once have been made?””
[underlining added]
In Noetel v Quealey [2005] FamCA 677 the Full Court (Bryant CJ, Finn and Boland JJ) observed at paragraph 68:
“… The slip rule may be invoked irrespective of whether the order has been drawn up, passed and entered: …”
A number of authorities both English and Australian were quoted in support of this proposition.
In Sangara v Hamwood [2007] FamCA 1353 Boland J was sitting as a single Judge on appeal hearing an appeal from the Federal Magistrates Court. Her Honour there was dealing with a situation where the Federal Magistrate had made an order almost identical to the terms of paragraph 7 of the orders made on 23 July 2008. The orders in that particular case were in the following terms:
“All outstanding applications otherwise be dismissed and the matter removed from the list of cases awaiting finalisation.”
The Federal Magistrate subsequently held that she was not “functus officio” in entertaining an application for costs. The Father appealed on the grounds that there was no jurisdiction for the Federal Magistrate to so order.
The appeal was dismissed.
In Newmont Yandal Operations Pty Ltd v The J Aron Corporation and The Goldman Sachs Group Inc and Others [2007] NSWCA 195 the Court of Appeal (Spigelman CJ, Santow JA and Handley AJA) was dealing with a situation not dissimilar to this matter although the amount in dispute was significantly greater. The Full Court held:
“Whatever be the parameters of the exercise of the inherent jurisdiction of the Supreme Court to amend its own order, even when perfected, where it is necessary for the administration of justice in New South Wales, that jurisdiction can be exercised where the order contains an adjudication upon that which the Court has never adjudicated upon, or the order has not expressed the real order of the Court, or so as to carry out the intention and express the meaning of the Court at the time when the order was made.
A court’s order which has consequences which were not intended by the judge making that order, as objectively determined, can constitute an “error” within the meaning of the slip rule.
Carrying into effect the actual intention of the judge making the order, and making sure that the order did not have a consequence which the judge clearly intended to avoid, falls within the natural and ordinary meaning of the word “correct” in the slip rule, particularly as understood in the light of the overriding purpose of the rules of court as set out in s 56 of the Civil Procedure Act 2005, and such rule will apply to correct an order which extends too far by resolving matters that were not in issue.”
[underlining added]
I note in relation to ascertaining the intention I make reference to the transcript of the proceedings on the 14 April 2008. At transcript 13 I observed to the solicitor appearing for D Matheson:
“HIS HONOUR: Mr Vaughan Massey, before you came on the phone, I indicated that there was nothing to intervene in for your client because the proceedings were at an end, but that’s not quite correct because the orders are only partial property settlement orders. So there was always anticipated that we’d get rid of all the creditors, get rid of all the other parties and then narrow it down to what should be done with the surplus.”
At transcript page 14 I observed:
“HIS HONOUR: But subsequently I would look at the situation as to the surplus that wasn’t covered by the orders for partial property settlement. AS I say that’s rapidly diminishing. Commissioner of Taxation might claim it all, I don’t know.”
I am satisfied the cases cited above are good authority that the “slip rule” may be invoked in the present case.
Rule 1.10 is in the following terms:
“Court may make orders
(1)Unless a legislative provision states otherwise, the Court may make an order, on application or on its own initiative in relation to any matter mentioned in these Rules.
(2) When making an order, the Court may:
a. impose terms and conditions;
b. make a consequential order;
c.specify the consequences of failure to comply with the order; and
d.take into account whether a party has complied with a pre-action procedure.”
[underlining added]
In reliance on the general power of the Court’s ability to move of its own motion I propose to amend order 7 of the order of the 23 July 2008 to read:
“a.All outstanding applications filed by [D Matheson] are dismissed and these proceedings removed from the active pending cases list.
b.The applications filed by the Applicant and First Respondent on the 21 January 2008 are dismissed.
c.The issue of property settlement is adjourned to a date to be fixed.”
Rule 17.1 deals with errors in orders. By paragraph 5 of the Rules a Judicial Officer may, after giving each party a reasonable opportunity to be heard, rectify a suspected error referred to the Judicial Officer.
The Second, Third, Fourth and Fifth Respondents have no interest in the outcomes of these proceedings. The only parties who could relevantly wish to be heard were heard when the matter was before me on the 30 July 2009.
As the solicitors are no longer involved in the litigation there seems little point in the monies remaining in their trust account but the terms of the order of
12 April 2007 provide for that and at this point in time I will not make an order for the monies to be paid into Court other than the sum of $4,739 which remains unpaid but is payable pursuant to the orders of 12 April 2007.
I would request the Collector of Public Monies to confirm with SPER that the outstanding fines of $4,739 were all fines due and owing as at the time of the making of the orders on the 12 April 2007. I have proceeded on the basis that this is a correct assumption and the order is to be interpreted that only monies owing by the wife to SPER as at the 12 April 2007 are to be paid on her behalf. Similarly any monies paid by her can be returned to her provided it relates to payments of the fines prior to the 12 April 2007.
I direct the Registrar to formally notify the Wife and Forbes Dowling as solicitors for Mr and Mrs Y as Trustees for the Y Family Trust (the Sixth Respondents) and the Trustee in Bankruptcy of the further hearing of this matter and to make directions for the final determination of property settlement issues.
I certify that the preceding eighty-one (81) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Barry
Associate:
Date: 6 September 2010
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