MILAN & MILAN
[2014] FamCA 647
•13 August 2014
FAMILY COURT OF AUSTRALIA
| MILAN & MILAN | [2014] FamCA 647 |
| FAMILY LAW – ENFORCEMENT OF ORDERS – where the husband has failed to comply with final property orders and a child support agreement – enforcement application by the wife – leave to proceed undefended with no appearance by the husband. |
| Child Support (Assessment) Act 1989 (Cth), Part 6. | |
| APPLICANT: | Ms Milan |
| RESPONDENT: | Mr Milan |
| FILE NUMBER: | MLC | 2641 | of | 2008 |
| DATE DELIVERED: | 13 August 2014 |
| ORDERS DELIVERED: | 5 August 2014 |
| PLACE DELIVERED: | Melbourne |
| PLACE HEARD: | Melbourne |
| JUDGMENT OF: | Thornton J |
| HEARING DATE: | 5 August 2014 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Geoffrey Dickson, Q.C. |
| SOLICITOR FOR THE APPLICANT: | Coote Family Lawyers |
| THE RESPONDENT: | No appearance |
IT IS ORDERED ON AN UNDEFENDED BASIS THAT:
The husband do all things and sign all documents necessary in his capacity as the sole director and shareholder of Milan Pty Ltd to forthwith transfer to the wife as Trustee for sale the properties, described in particular as follows:
(a) Certificate of Title Volume … Folio …;
(b) Certificate of Title Volume … Folio …;
(c) Certificate of Title Volume … Folio …;
(d) Certificate of Title Volume … Folio …;
(e) Certificate of Title Volume … Folio …;
(f) Certificate of Title Volume … Folio …;
(g) Certificate of Title Volume … Folio …;
(h) Certificate of Title Volume … Folio …;
(i) Certificate of Title Volume … Folio …;
(j) Certificate of Title Volume … Folio …;
(k) Certificate of Title Volume … Folio …;
(l) Certificate of Title Volume … Folio …;
(m) Certificate of Title Volume … Folio …;
(n) Certificate of Title Volume … Folio …;
(o) Certificate of Title Volume … Folio …;
(p) Certificate of Title Volume … Folio …;
(q) Certificate of Title Volume … Folio …;
(r) Certificate of Title Volume … Folio …;
(s) Certificate of Title Volume … Folio …;
(t) Certificate of Title Volume … Folio …;
(u) Certificate of Title Volume … Folio …;
(v) Certificate of Title Volume … Folio …;
(w) Certificate of Title Volume … Folio …; and
(x) Certificate of Title Volume … Folio … (“the B Town properties”).
The wife be at liberty to sell the B Town properties on such terms and conditions as she deems appropriate and the husband sign all documents necessary to give effect to the sale of any of the B Town properties.
The proceeds of the sale of the B Town properties be applied as follows:
(a) First in payment of all costs, commissions and expenses of sale;
(b)Second to discharge of the NAB mortgages encumbering the properties at C Street, Suburb D (“the Suburb D property”) and E Street, Suburb F (“the Suburb F property”) and any mortgages secured over the B Town properties;
(c)Third to pay to the wife the sum of $891,800 (“the para 2(b) Payment”);
(d)Fourth, to reimburse the sum of $70,114.40 to the ING investment policies held on behalf of the children; and
(e)To pay to G School and H School, any and all arrears of school fees and expenses incurred on behalf of the children as are outstanding as at the date of settlement of the sales of the B Town properties ; and
(f)The balance to the husband.
In the event the proceeds of sale of the B Town properties are insufficient to release the Suburb D and Suburb F properties and to meet the whole of the payment to the wife pursuant to clauses 3(b), (c), (d) and (e) herein, then the husband do all things and sign all documents necessary to transfer to the wife as Trustee for sale the property at I Street, J Town (“the J Town property”).
The proceeds of the sale of the J Town property be applied as follows:
(a)First in payment of all costs, commissions and expenses of sale;
(b)Second to discharge such of the obligations set out in paragraphs 3(b) to (e) inclusive of these orders as is then outstanding;
(c)To pay to G School and H School, any and all arrears of school fees and expenses incurred on behalf of the children as are outstanding as at the date of settlement of the sales of the J Town sale
(d)The balance to the husband
In the event the husband fails to execute any documents necessary to give effect to the transfers and sales referred to in these orders, then a Registrar of the Melbourne Registry of this Court be appointed pursuant to s 106A of the Family Law Act1975 (Cth) to execute such documents on the husband’s behalf, and an Affidavit from the solicitor for the wife deposing to the husband’s default shall constitute sufficient evidence thereof.
The husband pay the wife’s costs of and incidental to these proceedings, fixed in the sum of $8,054.15, such sum to be paid from the husband’s share of the proceeds of the sale(s) referred to in these orders.
Certify for Counsel.
The wife’s Amended Application in a Case filed 2 July 2014 be otherwise dismissed.
AND THE COURT NOTES THAT:
A.The respondent was called outside of Court at 10.10 am today and there was no response to that call by the respondent.
IT IS NOTED that publication of this judgment by this Court under the pseudonym <pseudonym> has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| FAMILY COURT OF AUSTRALIA AT MELBOURNE |
FILE NUMBER: MLC 2641 of 2008
| Ms Milan |
Applicant
And
| Mr Milan |
Respondent
REASONS FOR JUDGMENT
Final property orders were made in this Court on 26 March 2008 by consent and it was noted in that order that the parties intend to enter into a child support agreement contemporaneously with the orders to provide for payment by the husband of all private school fees and associated expenses and all medical expenses.
On 18 March 2008, the parties signed a child support agreement which was registered with this Court on 26 March 2008 pursuant to r 23.01 of the Family Law Rules 2004 (Cth). This agreement was registered with the Child Support Agency under the Child Support (Assessment) Act 1989 (Cth). Because the agreement referred to non-periodic child support it was not a “registrable maintenance liability” within the meaning of the Child Support (Registration and Collection) Act 1988 (Cth) and that Act does not apply.
The parties were married in 1988 and separated on 28 June 2007 and finally on 19 January 2009. There are three children of the marriage:
(a)K born in 1999, who is undertaking Year Nine at G School;
(b)L born in 2000, who is undertaking Year Eight at G School; and
(c)M born in 2003, who is undertaking Grade Five at H School.
Procedural history
The wife filed an application in a case, which was returnable before Registrar Marrone on 18 June 2014, seeking to enforce the final property orders and the payment of outstanding school fees under the child support agreement. On
18 June 2014 the husband did not attend Court and the following orders were made in his absence:
1)The hearing of the application be adjourned to 5 August 2014;
2)Both parties appear and/or be represented at the next hearing date;
3)On or before 2 July 2014, the wife file and serve upon the husband any amended initiating application and further affidavit;
4)On or before 30 July 2014, the husband file and serve upon the wife a response, a financial statement and an affidavit;
5)In the event the husband fails to comply with the orders, then the wife have liberty to apply for any application by the husband to be dismissed and for the wife’s application to proceed undefended on the next hearing date;
6)On or before 23 June 2014, the wife serve a sealed copy of the orders upon the husband; and
7)The costs of 18 June 2014 be reserved.
Then, on the same day the orders were made, the solicitors for the wife served a copy of the orders on the husband.
The wife filed and served her further material and the husband did not.
An address for service was filed by the husband’s solicitors who indicated that they had no instructions to take any active steps or incur any additional costs on behalf of the husband.
The wife’s affidavit filed 2 July 2014 annexed a letter from the husband’s solicitors dated 17 June 2014[1] notifying the wife’s solicitors that the husband had instructed that he “will not be taking any active step in the present proceedings”. The solicitor for the husband also advised his instructions that no answering material would be filed and that he was not to generate any legal costs for his client. The letter also noted that the husband had instructed the solicitor to convey that:
(1)There was a verbal agreement regarding the Suburb D property that the title would be released when the bank has been repaid and the wife signed security documents with the bank on that basis;
(2)The husband states that he “is not making any money” and he disputes “the obligations to pay school fees and maintenance”.
[1] Annexure AM-4.
The wife’s amended application in a case and second affidavit were served on the husband on 2 July 2014.[2] The husband has not filed any further material.
[2] Exhibit A.
After being called three times outside Court, the husband made no appearance at the hearing on 5 August 2014.
I was satisfied that in all the circumstances the husband was accorded procedural fairness and elected not to participate in the hearing of the application. Accordingly, leave was granted to the wife to proceed on an undefended basis.
The wife’s application was brought pursuant to r 20.03 of the Family Law Rules and s 109A of the Family Law Act 1975 (Cth). The documents relied upon in support of the application are listed in Annexure 1.
Final property orders
Under paragraph 1 of the final property orders, the husband was to transfer all of his right, title and interest in the property at C Street, Suburb D (“the Suburb D property”) to the wife. This is a property in which the wife resides. This property is registered in the joint names of the husband and the wife.
Paragraph 2 of the final property orders provided the husband with a period of 24 months to discharge the mortgage encumbering the title of the Suburb D property at which time the Suburb D property was to be transferred to the wife unencumbered.
Paragraph 3 of the final property orders provided that the husband do all things and sign all documents to transfer or cause to transfer to the wife, unencumbered, the property at E Street, Suburb F (“the Suburb F property”), and the husband was to be responsible for all costs associated with the transfer.
I am satisfied on the evidence of the wife that the husband has not complied with these orders.
The husband is a self-employed builder/developer, working in his own company, Milan Pty Ltd (“Milan Pty Ltd”). The husband is the sole director and shareholder of that company.[3]
[3] Annexure AM-2 of the wife’s affidavit filed 21 May 2014 – company extract from Milan Pty Ltd dated 5 May 2014.
I accept the evidence of the wife that Milan Pty Ltd were developing a subdivision and building development in B Town. I accept her evidence that, at the time the final property orders were made, she agreed to allow the husband a period of two years to refinance the mortgage encumbering the Suburb D property in order for the B Town development to proceed.
I accept the evidence of the wife that she nevertheless required the husband to meet his obligations under the orders.
The wife executed a guarantee and an indemnity to the National Australia Bank on 23 February 2009 whereby the Suburb D and Suburb F properties were secured and her liability as guarantor was for the amount of $1,180,000.
I accept the evidence of the wife that over the next few years the husband continued to request that she agree to guarantee further extensions to the Milan Pty Ltd finance facilities and that she did so on the basis that it would secure the ultimate discharge of the Suburb D and Suburb F properties. I accept the wife’s evidence that on each occasion the husband assured her that the whole of the debt would be discharged.
The wife agreed to guarantee the business in April 2010 and August 2011. In 2013, the wife signed an agreement varying and extending the existing facilities so that the total outstanding liability as at 26 March 2014 was $4,665,185.
I accept the evidence of the wife that she has made repeated requests of the husband to comply with the final property orders and to release the Suburb D or Suburb F properties which are still held as security by the bank.
I accept the evidence of the wife that the bank has advised her that they are not prepared to release either the Suburb D or Suburb F properties without a substantial reduction of the loan. This can only be achieved by the sale of the B Town subdivision properties.
On 16 April 2014 the solicitors for the wife wrote to the husband requesting that he make immediate arrangements for the release of the Suburb D and Suburb F properties, failing which the wife would have no alternative but to issue proceedings.[4]
[4] Annexure AM-3 of the wife’s affidavit filed 21 May 2014.
Payments to the wife
Under paragraph 9 of the final property orders, the husband was to make a payment to the wife totalling $1,447,900 to be paid as follows:
a) The sum of $2,000 per week from 1 January 2008 to 31 December 2009;
b) The sum of $2,100 per week from 1 January 2010 to 31 December 2013;
c) The sum of $2,200 per week from 1 January 2014 to 31 December 2020;
d) The sum of $2,300 per week from 1 January 2021 to 31 December 2021.
Under paragraph 10 of the final property orders, in the event that the husband defaults in any of the periodic payments within 21 days of the due date then the whole of the unpaid amount of the payment shall fall immediately due.
From 1 January 2014 the husband was due to commence paying the wife $2,200 per week but did not and continued to pay $2,100. The husband has not made any payments to the wife since 1 April 2014 and is now more than 21 days’ in arrears. Accordingly, the whole of the payment is due and payable.
The children’s ING policies
Under paragraph 14 of the final property orders, any proceeds received from the ING policies upon the children attaining the age of 21 are to be paid by the wife to the children.
I accept the evidence of the wife that around May 2013 she was requested by the insurance broker to release the funds held in the children’s accounts because the husband required funds to meet outstanding contractor debts. I accept the evidence of the wife that she agreed reluctantly on the basis that the monies would be reimbursed upon the sale of the B Town properties and that the total amount transferred from the husband to the children’s accounts was $70,114.40.
On the basis of the evidence of the wife and the final property orders made in this Court, I am satisfied that it is appropriate to reimburse the amount of $70,114.40 to the children’s accounts from the proceeds of sale of the B Town properties.
I accept the evidence of the wife that the husband’s business has not improved. The uncontested evidence of the wife is that in the past year the husband’s business has been significantly hampered by his increased alcohol abuse which has affected his ability to work and sustain working relationships with contractors and clients.
The periodic payments due to the wife which have not been paid since 1 April 2014 have been calculated as follows:
· 1/4/14 to 31/1/20 – 351 weeks at $2,200 = $772,200.
· 1/1/21 to 31/12/21 – 52 weeks at $2,300 = $119,600.
TOTAL $891,800.
The fact that the wife advanced funds at the request of the husband to provide financial assistance does not alter the legal position. There is no s 79A application by the husband seeking to assert that the wife’s conduct is inconsistent with maintaining the obligations under the orders. Accordingly the orders remain in force and are enforceable.
School fees
The husband has not challenged the obligations payable under the child support agreement signed by the parties in 2008. The evidence of the wife of the arrears currently owing to G School and H School is uncontradicted. The jurisdiction to enforce non-periodic child support obligations arises from s 109A of the Family Law Act (Cth) and Chapter 20 of the Family Law Rules. The obligation is not a “registrable maintenance liability” within the meaning of the Child Support (Registration and Collection) Act 1988 (Cth).
The wife sought to secure not only the arrears of the school fees but security for the future payment of school fees for the three children until the end of Year Ten, however it was conceded by counsel for the wife that the agreement refers to the school fees when they fall due and does not include future school fee payments. Accordingly he accepted that only the arrears of school fees and expenses are enforceable.
Rule 20.03 of the Family Law Rules is the basis of the wife’s application as a person seeking to enforce payment of a child support liability that is not an order and is not taken to be an order. The wife has complied with r 20.03(2) by filing an application in a case and an affidavit setting out the facts relied on in support of the application. There is no liability under s 113A of the Child Support (Registration and Collection) Act 1988 (Cth) and the Child Support Agency is not the payee, so r 20.03(2)(b) does not apply. The child support agreement was not made by the Court under s 86 or s 87 but was registered under r 23.01 of the Family Law Rules and I am satisfied that the child support agreement signed by the parties was registered with the Family Court under that provision on 26 March 2008.
Wife’s proposals
I am satisfied that by way of enforcement it is appropriate to order that the husband as sole director and shareholder of Milan Pty Ltd Pty Ltd do all things necessary to transfer the B Town properties to the wife to be held on trust for sale and that the wife be at liberty to sell the properties on such terms and conditions as she deems appropriate. The net proceeds of the B Town properties, upon sale, should be applied in reduction and discharge of the National Australia Bank mortgages encumbering the Suburb D and Suburb F properties and following the release of the Suburb D and Suburb F properties, the net proceeds should be applied to satisfy the payment of the amount of $891,800 to the wife in accordance with the final property orders.
The balance of the proceeds of sale should be paid to reimburse the sum of $70,114.40 to the ING investment policies held on behalf of the children. The balance of the proceeds of the sale are to be paid to G School and H School for all arrears of school fees and expenses incurred on behalf of the children as are outstanding at the date of settlement of the sale of the B Town properties.
The remainder is to be paid to the husband.
Default mechanism
I am satisfied that the husband has not met his obligations under the final orders which were made and the agreement to pay the children’s school fees and expenses.
The final property orders, made by consent, did not provide for an automatic default mechanism, however the Court has the power to enforce orders under
Chapter 20 of the Family Law Rules and s 109A of the Family Law Act. Paragraph 23 of the final property orders reserved liberty to the parties to apply and while no default provision was contemplated in the orders, they plainly envisaged the B Town properties under paragraph 2(b) as a resource.
Should the sale of the B Town properties not realise sufficient funds to enforce the orders made by the Court to release the Suburb D and Suburb F properties as security, then the property in which the husband resides at I Street, J Town (“the J Town property”) should be sold. The wife, pursuant to her obligations under the final property orders, transferred her share of that property to the husband so that he is the sole proprietor of the J Town property. The proceeds of the sale of that property should be applied to satisfy the mortgages encumbering the Suburb D and Suburb F properties and to satisfy the payment to the wife of the sum of $891,800 and to reimburse the sum of $70,114.40 to the ING investment policies held on behalf of the children. The balance is to be paid to G School and H School for arrears of school fees and expenses incurred on behalf of the children as are outstanding as at the date of settlement of the sale of the J Town property and the balance to the husband.
Costs
The general rule under s 117 of the Family Law Act (Cth) is that each party bear their own costs unless there are circumstances that justify a departure from that principle. I am satisfied that a departure from s 117 is appropriate, having regard to the factors under s 117(2A). The proceedings have been necessitated by the husband’s failure to comply and the husband has filed no material, despite being ordered to do so. There is no basis for considering his financial position to be any different from the position when he consented to the final orders.
I am satisfied that it is appropriate to award costs and to fix those costs in the amount of $8,054.15 on a party-party basis.
I am satisfied that the costs, having been calculated on scale, on a party-party basis are reasonable and appropriate. There was no certainty that the husband would not attend the hearing and make his own representation despite the fact that he had instructed his solicitors to take no further action and communicated this to the wife. The wife was entitled to instruct her solicitors to prepare on the basis that the application may have been contested. I also note that there are photocopying expenses of $414 which I accept as reasonable having been charged on scale and for numerous American Express statements which were required to be prepared for the hearing. It was also appropriate for counsel to attend the hearing having regard to the uncertainty surrounding the husband’s response.
I can have no confidence that the husband will comply with orders to pay outstanding costs and accordingly I am satisfied that the costs due to the wife fixed in the amount of $8,054.15 should be paid from the balance of the proceeds of the sale of the properties.
I certify that the preceding forty-seven (47) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Thornton delivered on 5 August 2014.
Associate:
Date: 13 August 2014
ANNEXURE 1
Documents relied upon by the wife:
(1)Amended Application in a Case filed 2 July 2014;
(2)Wife’s affidavit sworn and filed 21 May 2014;
(3)Wife’s affidavit sworn 1 July 2014 and filed 2 July 2014;
(4)Exhibit A – correspondence from the wife’s solicitor to the husband’s solicitor;
(5)Exhibit B – correspondence from the husband’s solicitor to the wife’s solicitor;
(6)Exhibit C – schedule of fees at H School and G School for 2014.
Key Legal Topics
Areas of Law
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Civil Procedure
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Family Law
Legal Concepts
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Appeal
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Costs
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Jurisdiction
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Procedural Fairness
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