Maybury & Maybury & Ors
[2012] FamCAFC 57
•26 April 2012
FAMILY COURT OF AUSTRALIA
| MAYBURY & MAYBURY AND ORS | [2012] FamCAFC 57 |
| FAMILY LAW – APPEAL – PROPERTY – Financial orders – Where the parties obtained from the second respondent a line of credit and a mortgage secured on the title of the former matrimonial home to establish a business – Where the parties defaulted on obligations to the second respondent and the orders of the Federal Magistrate included a provision that the parties deliver up possession of the property to the second respondent – Where the parties’ company entered into a lease granted by the third respondent and defaulted on the lease obligations – Where the third respondent obtained a judgment sum in another court against the parties – Where the husband unsuccessfully asserted the contracts with the second and third respondents were the responsibilities of the wife only – Where the husband failed to demonstrate that the orders were not just and equitable – Where the husband failed to establish that the Federal Magistrate erred in his treatment of the liabilities to the second and third respondents – No appealable error demonstrated – Appeal dismissed. FAMILY LAW – APPEAL – PRACTICE & PROCEDURE – Application for leave to proceed in the appeal without a transcript – leave granted. FAMILY LAW – APPEAL – COSTS – Where no formal application for costs was filed or served by the wife – Where the husband was not aware of the application and consequently did not file submissions in response – Where the Federal Magistrate made an order for costs based on the unfiled submissions of the wife – Appeal allowed. |
| Family Law Act 1975 (Cth) - s 93A(2) |
| CDJ v VAJ (1998) 197 CLR 172 Kowaliw and Kowaliw (1981) FLC 91-092 Official Trustee in Bankruptcy v Citibank Savings Ltd and Others (1995) 38 NSWLR 116 |
| APPELLANT: | Mr Maybury |
| RESPONDENT: | Mrs Maybury |
| SECOND RESPONDENT: | Suncorp Metway Pty Ltd |
| THIRD RESPONDENT: | K Pty Ltd |
| FILE NUMBER: | BRC | 9198 | of | 2009 |
| APPEAL NUMBER: | NA | 55 | of | 2011 |
| DATE DELIVERED: | 26 April 2012 |
| PLACE DELIVERED: | Brisbane |
| PLACE HEARD: | Brisbane |
| JUDGMENT OF: | Faulks DCJ, May & Stevenson JJ |
| HEARING DATE: | 20 April 2012 |
| LOWER COURT JURISDICTION: | Federal Magistrates Court |
| LOWER COURT JUDGMENT DATE: | 10 June 2011 1 March 2012 |
| LOWER COURT MNC: | [2011] FMCAfam 540 [2011] FMCAfam 581 |
REPRESENTATION
| THE APPELLANT: | In person |
| THE RESPONDENT: | In person (by telephone) |
| SOLICITOR FOR THE SECOND RESPONDENT: | No appearance |
| SOLICITOR FOR THE THIRD RESPONDENT: | No appearance |
Orders
The husband is granted leave to proceed with his appeal in the absence of a transcript of proceedings in the Federal Magistrates Court.
The husband is granted leave to amend his Notice of Appeal filed on
8 July 2011 so as to include an appeal against the costs order of 1 March 2012.
The husband’s appeal against the order for costs made on 1 March 2012 is allowed and the order is set aside.
The wife have liberty to make an application for costs in the substantive proceedings within 21 days of the making of this order and upon such application being made, the matter be listed before Federal Magistrate Coates for directions.
The husband’s appeal is otherwise dismissed.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Maybury & Maybury & Ors has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT BRISBANE |
Appeal Number: NA 55 of 2011
File Number: BRC 9198 of 2009
| Mr Maybury |
Appellant
And
| Mrs Maybury |
Respondent
And
| Suncorp Metway Pty Ltd |
Second Respondent
And
| K Pty Ltd |
Third Respondent
REASONS FOR JUDGMENT
The Proceedings
These proceedings are the husband’s appeal against financial orders made on 10 June 2011 and an order for costs made 1 March 2012, both by Federal Magistrate Coates. The parties to those proceedings were the applicant wife, Mrs Maybury, the respondent husband, Mr Maybury, and intervenors Suncorp Metway Ltd (“Suncorp”) and K Pty Ltd (“company K”).
Suncorp held a mortgage and a line of credit secured on the title to the former matrimonial home at C. This mortgage provided security for a line of credit held by a company known as H Pty Ltd (“company H”), of which the wife is the sole director and the parties are equal shareholders.
On 22 August 2008 the husband and wife each executed a deed of guarantee and indemnity in relation to this line of credit, to secure the original advance of $100,000. On 1 October 2008 they each signed an application to increase the limit of the line of credit to $150,000. The Suncorp funds were used to establish and/or operate a business at M.
Company K granted a lease of the business premises to company H on
8 September 2008, by way of a deed of assignment of an existing rental agreement. On 8 September 2008 the husband and wife both executed a guarantee and indemnity in relation to the obligations of company H pursuant to this lease.
Background
The husband, who is now 46, and the wife, who is presently aged 43, married and commenced cohabitation in June 1990. They had commenced a relationship in approximately 1985. They separated in December 2008, when the husband and the two children of the marriage remained in the family home. The husband commenced a relationship with his current partner early in 2009.
The wife moved to New South Wales early in 2009. She entered into a brief de facto relationship but has lived with her parents since June 2009.
During the marriage the husband was employed as a public servant until 1999 and thereafter took on a variety of jobs of a part time or casual nature. The wife was the primary homemaker and parent, but engaged in part time employment at various times during the parties’ cohabitation.
The parties bought and sold real estate during their marriage. The last property which they owned was the former matrimonial home at C.
Approximately two months after the commencement of the business at M, company H began to default on its obligations pursuant to the lease from company K and, by March 2009, the arrears of rental amounted to $27,385. The sole director and shareholder of company K, Mr I, served a Notice of Remedy of Breach of Covenant on company H on 23 March 2009.
On 27 April 2009, as this default continued, Mr I caused a Statement of Claim to be served upon the husband, the wife and company H. On 14 February 2011 company K obtained judgment in the sum of $128,228.75 against the husband and wife. They were ordered to pay the costs of company K on an indemnity basis. During the hearing of the appeal the husband informed us that his appeal to the Supreme Court of Queensland was dismissed.
The learned Federal Magistrate found that the Suncorp debts consisted of a home loan mortgage of E$135,000 at the time of separation and $136,462.88 at the time of final hearing, and the line of credit of $158,409.26 at separation and $164,148.46 at final hearing. The orders of the Federal Magistrates Court included a provision that the husband and wife deliver up possession of the former matrimonial home to Suncorp to enable its sale. Suncorp issued to the husband and wife a Notice of Exercise of Power of Sale in May 2010.
According to the parties’ respective summaries of argument, Suncorp sold the former matrimonial home for $400,000 in November 2011. The mortgage and line of credit were discharged from the proceeds of sale.
The wife voluntarily entered into bankruptcy on 21 December 2011. By letter dated 19 April 2012, the wife’s trustee in bankruptcy advised that he did not wish to appear in the appeal.
In his summary of argument the husband suggested that he was a bankrupt. During the hearing of the appeal, however, he informed us clearly that he is not a bankrupt.
The company K and Suncorp took no part in the appeal. As appears below, this company has communicated with the wife’s trustee in bankruptcy concerning the fate of the balance of the sale proceeds of the former matrimonial home.
Applications in the Appeal
The husband filed an Application in an Appeal on 18 November 2011, by which he sought an order to dispense with the requirement of a transcript of the proceedings in the Federal Magistrates Court. This application was supported by his affidavit filed on 29 November 2011, in which he deposed that he was unable to afford a transcript but that he at no time intended to abandon his appeal.
The wife filed an Application in an Appeal on 20 April 2012, which seemed to seek leave to adduce further evidence in these proceedings. She swore an affidavit on 10 April 2012, which was filed contemporaneously with her application. This affidavit annexed a report to creditors prepared by the trustee of her bankrupt estate.
Section 93A(2) of the Family Law Act 1975 (Cth) provides:
(2)Subject to section 96, in an appeal the Family Court shall have regard to the evidence given in the proceedings out of which the appeal arose and has power to draw inferences of fact and, in its discretion, to receive further evidence upon questions of fact, which evidence may be given:
(a) by affidavit; or
(b) by oral examination before the Family Court or a Judge; or
(c) as provided for in Division 2 of Part XI.
The general principles relating to the discretion to receive further evidence were described by the High Court in CDJ v VAJ (1998) 197 CLR 172. In that case it was said, at page 201:
One consideration in construing section 93A(2) is its remedial nature. Its principal purpose is to give to the Full Court a discretionary power to admit further evidence where that evidence, if accepted, would demonstrate that the order under appeal is erroneous. The power exists to facilitate the avoidance of errors which cannot be otherwise remedied by the application of the conventional appellate procedures. A further, but in practice subsidiary, purpose is to give the Full Court a discretion to admit further evidence to buttress the findings already made.
Further, at page 202 it was said:
…The power to admit the further evidence exists to serve the demands of justice. Ordinarily, where it is alleged that the admission of new evidence requires a new trial, justice will not be served unless the Full Court is satisfied that the further evidence would have produced a different result if it had been available at the trial. Without that condition being satisfied, it could seldom, if ever, be in the interest of justice to deprive the respondent of the benefit of the orders made by the trial judge and put that person to the expense, inconvenience and worry of a new trial.
There is no doubt that the evidence contained in the report of the wife’s trustee in bankruptcy was unavailable at trial. She entered into bankruptcy only in December 2011, after Suncorp took possession of the former matrimonial home and exercised its power of sale.
If the husband’s appeal succeeds, it would be necessary that we have a realistic appreciation of the current assets, superannuation, liabilities and financial resources of the husband and wife for the purpose of determining whether there should be a re-exercise of the discretion or remittal of the proceedings for retrial in the Federal Magistrates Court. We thus determined to accede to the wife’s application and receive as evidence her affidavit annexing the report of the trustee in bankruptcy.
This report recorded that the former matrimonial home was sold by Suncorp for $400,000. On settlement of the sale on 22 December 2011, only $18,205 remained after discharge of the secured debts to Suncorp. This sum is held in a solicitors trust account pending the outcome of these proceedings.
The report indicated that company K has approached the trustee to seek release of these funds in partial satisfaction of its judgment debt. Otherwise, the wife’s assets consist of a bank account with a balance of $100, a motor vehicle and superannuation benefits.
The Grounds of Appeal
The husband’s grounds of appeal read as follows:
1.Errors of fact in Federal Magistrate Coates judgment have led to a miscarriage of justice.
2.The decision of Federal Magistrate Coates is not just and equitable.
3.Federal Magistrate Coates erred in not giving significant weight to the financial contributions of the appellant.
4.Federal Magistrate Coates erred in not adding back post separation debts incurred by the respondent (applicant in Federal Magistrates Court).
Ground One
In his outline of argument the husband stated, “It is well known that debts should be shared, however, it is subject to the general principle that, financial losses will not be shared where one party has acted deliberately, recklessly, negligently or wantonly in diminishing assets. It is the appellant’s submission that the respondent acted in this way.” This contention obviously was extracted from the well known authority of Kowaliw and Kowaliw (1981) FLC 91-092.
The husband contended that the wife “repudiated” a contract with company K and failed to repay the line of credit with Suncorp. He asserted that “both of these contracts were between the respondent and intervenors one and two.”
It is factually incorrect that the wife alone was a party to the contracts with company K and Suncorp. As the learned Federal Magistrate noted and found, the husband signed deeds of indemnity and guarantee when company H assumed liability pursuant to the lease from company K and accepted the line of credit with Suncorp. The husband clearly was a party to these contracts and failed to establish at trial that he lacked capacity to enter into these binding agreements.
The husband next asserted that the learned Federal Magistrate was aware that he had lodged an appeal in the Supreme Court of Queensland when he ordered the sale of the former matrimonial home at the behest of Suncorp. The husband took us to no evidence that the Federal Magistrate was informed of any appeal to the Supreme Court, nor the status of any such proceedings at the time of trial. The husband confirmed during his submissions that the appeal to the Supreme Court had been dismissed.
The husband asserted that Suncorp “undersold the matrimonial home,” suggesting that the property was valued at $662,000 at the time of the increase in the limit of the line of credit in October 2008. The sale of the property, at a price of $400,000 occurred some six months after the orders of the Federal Magistrates Court. Obviously, this information was unknown to the learned Federal Magistrate and played no part in his Honour’s reasoning process.
For these reasons, we conclude that there is no substance to ground one of the appeal.
Ground Two
The husband contended that his financial contributions were “at least 80% more than those of the respondent” and that her non-financial contributions were “matched” by those made by him. He then submitted that the wife “gambled with the assets of the appellant and lost them” and “diminished the value of the asset pool”.
The husband’s submission that the orders of the learned Federal Magistrate were not just and equitable relies heavily on his contention that the wife alone should bear responsibility for the Suncorp and company K liabilities. He argued unsuccessfully at trial that he signed the guarantees and indemnities while suffering from a psychological condition which allowed the wife to subject him to duress.
At trial the husband failed to produce any evidence that he suffered from such a psychological impairment at the relevant time. He made a bare assertion to that effect in his affidavit and suggested that the wife bore an onus to rebut this proposition. The learned Federal Magistrate correctly ruled that the onus rested on the husband to provide evidence to support his contention that his will was overborne by the wife when he executed the guarantees and indemnities.
At paragraph 105 of the judgment, the learned Federal Magistrate stated: “The wife carefully listed at paragraph 73 of her affidavit filed 14 July 2010 all of the work relating to the business they did together. This went unanswered by the husband.”
In this affidavit the wife deposed as follows:
73.Initially, as had been planned, [Mr Maybury] was very involved in the business. [Mr Maybury]:
(a)Together with me participated in all negotiations;
(b)Together with me attended all meetings with the Accountants;
(c)Together with me attended all meetings with the Solicitors;
(d)Together with me attended all meetings with Suncorp-Metway Ltd;
(e)Together with me met some Artists from whom we were looking at taking some paintings from on consignment;
(f)[Mr Maybury] attended meetings with [the relevant Licencing body];
(g)Initially [Mr Maybury] also:
(i)Sourced out suppliers, …;
(ii)Set up an account with a supplier …;
(iii)Obtained supplies for the business;
(iv)Did the … course as were intending to secure a … licence for the business;
(v)A little customer service work in the business;
(vi)Did [manual work in the business];
(vii)Helping me with merchandising in the retail side of the business;
(viii)If stock arrived when [Mr Maybury] was there, he would help put it away.
In the absence of a transcript we are unaware of what evidence, if any, the husband gave at trial in relation to these assertions. It is thus impossible for him now to demonstrate that this finding of his Honour was incorrect.
The evidence before his Honour thus was that the husband and wife jointly embarked upon the establishment of a business venture, having executed guarantees and indemnities four months before their separation. As noted, on 1 October 2008 the husband and wife both signed an application to increase the limit of the line of credit from $100,000 to $150,000.
The fact is that each of the parties had a legal obligation, in terms of servicing the line of credit and the guarantee of payment of rent by company H to company K. In our view, his Honour was correct in treating the company K and the Suncorp debts as joint liabilities of the husband and the wife. For these reasons it seems to us that the husband failed to demonstrate that the orders of 10 June 2011 were not just and equitable.
Ground Three
In paragraphs 33 to 112 of the judgment the learned Federal Magistrate identified the contributions made by the husband and wife over the course of a 23 year relationship which entailed 18 years of cohabitation. At paragraph 70 his Honour referred specifically to the husband’s inheritance of $92,000 in 1993 and to his superannuation, which he characterised as “large contributions”. His Honour then observed at paragraph 72: “In my view, the parties used the two extraordinary contributions in unison as they bought and sold properties in NSW, then bought a property in Queensland and then attempted to start a profitable business.”
The learned Federal Magistrate also identified the financial and non-financial contributions made by the wife. His Honour concluded:
68.The wife carefully listed at paragraph 50 of her affidavit filed 14 July 2010 all of the housework she undertook over the years they were together, some important sometimes undervalued, for the parties and this cannot be given mere token weight. Nor can the important role of childcare.
I should say at paragraph 53 she lists the non-financial contributions made by the husband so it is not the case that she is claiming all of the credit. She is being fair.69.While the husband made the major financial contributions, it cannot be said on the evidence produced or attained in cross examination that the wife’s contributions could be regarded as poor, inadequate or that they ought to be given a low value.
The husband asserted in his outline of argument: “Federal Magistrate Coates erred by starting from a position of equal contributions, this was a case involving assets not accumulated during the marriage as a result of the joint efforts of the parties. This marriage involved pre-marriage assets, initial contributions and inheritance.” It is clear that the learned Federal Magistrate made a finding of equality of contribution only after identifying and balancing all of the contributions of a financial and non-financial character by both the husband and the wife over the course of a relatively long relationship. The husband failed to demonstrate that his Honour commenced with a presumption of equality of contribution.
In our view, there is no substance to this ground of appeal.
Ground Four
It was our impression that the essence of the husband’s complaint was that the learned Federal Magistrate should have made orders with the effect of casting the whole of the liability for the company K debt upon the wife. We have observed that the husband executed a guarantee and indemnity in respect of payment of rent by company H and that he failed to demonstrate at trial that he lacked capacity to enter into this agreement.
According to the affidavit of Mr I at paragraphs 10 and 11, company H paid the full amount of rental due to company K in September and October 2008. From that time, rental payments were made in reduced amounts. In the absence of a transcript, we are unaware whether there was any challenge to this evidence at trial. To the extent of our knowledge, therefore, the husband acquired a legal obligation to company K before his separation from the wife and the debt began to accrue some two months prior to that time.
For these reasons, we conclude that the husband failed to establish that the learned Federal Magistrate was in error in his treatment of the Suncorp and company K liabilities. The husband took us to a decision of Bryson J in Official Trustee in Bankruptcy v Citibank Savings Ltd and Others (1995) 38 NSWLR 116, but we are of the view that this authority provides him with no assistance. We consider that the facts in the present situation are different and distinguishable.
In Official Trustee in Bankruptcy v Citibank Savings Ltd and Others Mr Ralph and Mrs Rosa Panebianco obtained advances from Citibank secured by a mortgage on the title to their home. The husband’s parents, Mr Innocenzo and Mrs Saveria Panebianco, provided security for further advances by a mortgage on the title to their home. These advances were made to a company known as Wytoe Pty Ltd, of which the husband and wife were the sole directors and shareholders. The husband’s parents had no control whatsoever over Wytoe Pty Ltd and entered into their obligations without consideration. The trustee of the bankrupt estates of the husband and wife failed in his attempt to enforce the debt to Citibank against the property of the parents.
At pp 118 – 119 Bryson J held:
Indemnity for obligations incurred on request and without consideration:
When it is established that the second defendants entered into their obligation without consideration at the request of Ralph Panebianco the principle upon which the High Court of Australia disposed of Israel v Foreshore Properties Pty Ltd (1980) 54 ALJR 421; 30 ALR 631 is attracted. The law applied in that case was stated by Aickin J with the concurrence of the other members of the Court (at 423-424; 636) in these terms:
‘The case may thus be regarded as one in which money was paid without consideration by Foreshore at the request and for the benefit of Mitta, Israel and the Carpenters, or as one in which Foreshore, at the request of Mitta, Israel and the Carpenters, undertook the obligation of a surety for them at their request. The obligation so undertaken was Foreshore's promise to pay the McLaughlins $65,000 with interest incorporated in the instrument of mortgage, such payment being secured by mortgage of its land. A person who acts on such a request to pay, or who accepts the role of surety in that manner and who pays the debt, is entitled to an indemnity from those who made the request to pay or to act as surety. This is trite law as appears from Rowlatt on Principal and Surety, 3rd ed (1936) at 182-188, especially at 184, and the cases there cited. As long ago as 1799 Lord Kenyon CJ said in Exall v Partridge (1799) 8 Term Rep 308 at 310; 101 ER 1405 at 1406: ‘I admit that where one person is surety for another, and compellable to pay the whole debt, and he is called upon to pay, it is money paid to the use of the principal debtor, and may be recovered in an action against him for money paid, even though the surety did not pay the debt by the desire of the principal. …’ The same general principle applies to a case of money paid by one party at the request and for the benefit of another.’
The principle stated by Aickin J appears to me to be a sufficient basis for the dismissal of these proceedings. Innocenzo and Saveria Panebianco gave their guarantee without consideration at the request and for the benefit of Ralph and Rosa Panebianco. There clearly was a benefit for Ralph and Rosa Panebianco in the provision of credit to their company. The second defendants have a right at law to be indemnified against any liability arising under the guarantee, and the existence of this right negates the asserted right to contribution. …
In the present case, the husband and wife were both found to have participated in the acquisition of the business and its early operation. They were equal shareholders in company H, hence they each had control over its activities. The husband in these proceedings was thus in a vastly different position, in both legal and practical terms, to Mr and Mrs Panebianco Senior in Official Trustee in Bankruptcy v Citibank Savings Ltd and Others.
For all of these reasons, we conclude that there is no substance to ground four of the appeal.
The Appeal against the Order for Costs
Along with final property orders on 10 June 2011, his Honour also made an order that “any costs application is to be filed and served within 28 days of this Order and any response to such application within a further 14 days”. The wife did not file an application in a case for costs. On 8 July 2011, the wife’s solicitors emailed to the court submissions, said to be in support of a costs application, and made reference to the 10 June 2011 orders. While those submissions were not filed, it is clear they were accepted by the Federal Magistrate as they are on the court file. There is no response or submissions from the husband about costs on the court file.
The husband informed us, and we accept, that he was never served with the wife’s application for costs or the submissions in support thereof. He said that he would file submissions if this part of the appeal were allowed; the costs order set aside and that issue remitted to the learned Federal Magistrate for rehearing.
The judgment in respect of the wife’s application for costs made no reference to service upon the husband. We were taken to no evidence of service of the application and/or submissions upon the husband. In these circumstances, we conclude that the husband’s appeal against the order for costs must be successful. We would observe that orders for costs on an indemnity basis are regarded as the exception rather than the rule.
As the order in relation to costs was made on 1 March 2012 it is necessary for us to grant leave to the husband to amend the notice of appeal. As there is substantial merit in the proposed appeal we allowed the husband to amend the notice of appeal and we also allow the appeal in respect of costs.
I certify that the preceding fifty three (53) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court (Faulks DCJ, May and Stevenson JJ) delivered on 26 April 2012.
Associate:
Date: 26 April 2012
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