Moorcroft & Moorcroft
[2020] FamCAFC 83
•17 April 2020
FAMILY COURT OF AUSTRALIA
| MOORCROFT & MOORCROFT | [2020] FamCAFC 83 |
| FAMILY LAW – APPEAL – FINANCIAL ENFORCEMENT – COSTS – Where the husband appeals an indemnity costs order made against him – Where the husband appeals an order that a Third Party Debt Notice be issued to his employer – Indemnity costs orders – Third Party Debt Notice – Enforcement hearings – Part 25.B of the Federal Circuit Court Rules 2001 (Cth) discussed – Where the Rules do not provide for the cross-examination of payees at an enforcement hearing – Adequacy of reasons – No material errors of fact or law – Where the primary judge did not take into account matters that were irrelevant or wrongly apprehended – Where no grounds of appeal succeed – Appeal dismissed. FAMILY LAW – APPEAL – COSTS – Husband to pay the wife’s costs of the appeal in a fixed sum – Payment of the wife’s costs to be delayed until the Third Party Debt Notice debts are paid. |
| Family Law Act 1975 (Cth) s 117(2A) Federal Circuit Court Rules 2001 (Cth) rr 25B.13, 25B.16, 25B.17, 25B.18 |
| Bennett and Bennett (1991) FLC 92-191; [1990] FamCA 148 D & D(Costs) (No. 2) (2010) FLC 93-435; [2010] FamCAFC 64 Kohan and Kohan (1993) FLC 92-340; [1992] FamCA 116 Limousin v Limousin(Costs) (2007) 38 Fam LR 478; [2007] FamCA 1178 Metwally v University of Wollongong (1985) 60 ALR 68; [1985] HCA 28 Moorcroft & Moorcroft (2018) FLC 93-881; [2018] FamCAFC 253 Pollard v RRR Corporation Pty Ltd [2009] NSWCA 110 Sun Alliance Insurance Ltd v Massoud [1989] VR 8 |
| APPELLANT: | Mr Moorcroft |
| RESPONDENT: | Ms Moorcroft |
| FILE NUMBER: | BRC | 5266 | of | 2012 |
| APPEAL NUMBER: | NOA | 57 | of | 2019 |
| DATE DELIVERED: | 17 April 2020 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Brisbane |
| JUDGMENT OF: | Strickland, Aldridge & Tree JJ |
| HEARING DATE: | 7 February 2020 |
| LOWER COURT JURISDICTION: | Federal Circuit Court of Australia |
| LOWER COURT JUDGMENT DATE: | 23 May 2019 |
| LOWER COURT MNC: | [2019] FCCA 1324 |
REPRESENTATION
| THE APPELLANT: | In person |
| COUNSEL FOR THE RESPONDENT: | Mr Shoebridge |
| SOLICITOR FOR THE RESPONDENT: | Stewart Family Law |
Orders
The appeal be dismissed.
The husband pay the wife’s costs of the appeal fixed in the sum of $6,913.89, with such payment to be made immediately after the debts that are the subject of the Third Party Debt Notice issued on 23 May 2019 are paid.
Note: The form of the order is subject to the entry of the order in the Court’s records.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Moorcroft & Moorcroft has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A (b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).
| THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT BRISBANE |
Appeal Number: NOA 57 of 2019
File Number: BRC 5266 of 2012
| Mr Moorcroft |
Appellant
And
| Ms Moorcroft |
Respondent
REASONS FOR JUDGMENT
Mr Moorcroft (“the husband”) and Ms Moorcroft (“the wife”) have been engaged in family law proceedings in the Federal Circuit Court of Australia since 2012. Final property settlement orders were made in March 2018.
On 23 May 2019, a judge of the Federal Circuit Court of Australia ordered the husband to pay the wife’s costs of and incidental to the property settlement proceedings “on an indemnity basis as assessed, on and from 21 August 2015” (Order (1)). The primary judge also found that the husband was indebted to the wife, pursuant to orders that had been made earlier in the proceedings in the sum of $130,893.04 and, ordered that a Third Party Debt Notice in that sum be issued to B Ltd, the husband’s employer (Order (2)). A number of other orders were made which were not the subject of the grounds of appeal.
A useful summary of the procedural history of the proceedings between the husband and the wife is found in the reasons for judgment of the Full Court of the Family Court of Australia in Moorcroft & Moorcroft (2018) FLC 93-881. In that appeal, the Full Court allowed the wife’s application for the husband not to be heard on his appeal because he was in breach of a number of orders. The Full Court said:
8.On 21 November 2014, the trial judge consensually ordered the husband to do all things necessary to secure the discharge of the joint loans secured against the family home (Order 29) and, if that could not be achieved within two months, the property was to be sold (Order 32). It was noted the home loans then exceeded the value of the property by approximately $290,000 (Notation C). The trial judge also ordered that, in the event of the sale of a second parcel of real property, its net sale proceeds were to be applied in diminution of the loans secured against the family home (Order 35(c)).
9.The husband was unable to re-finance the loans secured over the family home but, notwithstanding, the family home was not sold as the orders required. The husband opposed its sale because he sought final orders for the wife to conditionally transfer her joint proprietary interest in the property to him, the application for which orders he maintained until he, instead, sought orders for the sale of the property in the final written submissions he made to the trial judge in October 2017 after the evidence was closed. In the interim, the husband remained in occupation of the family home and made no effort to sell it.
10.In addition, the husband sold the second property to his new partner and delayed providing the wife with any pertinent information about the sale price and the manner in which the net proceeds of sale were disbursed. It subsequently transpired that, in wilful contravention of Order 35(c), the husband spent $197,863 of the net proceeds for his unilateral benefit. So much was positively found by the trial judge and acknowledged by this Court in the husband’s last appeal (see Moorcroft & Moorcroft [2017] FamCAFC 147 at [17]-[19], [24(b)]). The husband disregarded the order requiring him to use that money to reduce the loans secured by mortgage against the family home and the excuses he proffered to explain his breach were rejected by the trial judge as fatuous.
11.The wife was dissatisfied with the husband’s default of the orders made in November 2014 and, by way of an interim application filed in May 2016, sought more interim orders to resolve the impasse. On 1 August 2016, the trial judge determined the wife’s application by appointing her as trustee for the sale of the family home (Order 1). To facilitate the sale of the property, the husband was ordered to vacate it (Order 3), the wife was given sole use and occupation of it for the purpose of its preparation for sale (Order 5), and the husband was ordered to meet “all outgoings” in respect of the property until its sale (Order 6). The husband was additionally ordered to finalise the pending insurance claim in respect of the property (Order 4) and to pay the wife’s costs of the interlocutory dispute in the fixed sum of $9,436 (Order 9).
12.The husband appealed those orders and sought their stay, however the stay application was ultimately dismissed by the trial judge and the appeal was discontinued shortly before it was due to be heard. On 21 July 2017, this Court ordered the husband to pay the wife’s costs of the abandoned appeal in the fixed sum of $10,000 (Moorcroft & Moorcroft [2017] FamCAFC 147). By then, the trial had already commenced, was part-heard, and was shortly due to resume. For that and other reasons extensively explained, the appeal was futile.
13.On 14 August 2017, when the trial judge dismissed the husband’s stay application and delivered reasons (Moorcroft & Moorcroft [2017] FCCA 1910), the trial judge additionally ordered the husband to vacate the family home (Order 2) and made consequential orders to enable his ejection in the event of his default (Orders 3-5). The husband ignored those orders and remained in occupation of the property. It was not until 17 September 2017 that he forfeited possession of the property to the wife.
14.Until then, the husband had been paying reduced sums in only partial satisfaction of loan repayments but, upon vacating the family home, he ceased all payments. By the time orders were made by the trial judge to finally determine the proceedings in March 2018, the mortgage arrears stood at $20,309.
15.Consequently, the adverse financial implications for the wife of the husband’s multiple defalcations during the proceedings may be summarised as follows:
(a)The husband’s expenditure of $197,863 from the net proceeds of sale of the second property for his own benefit, in breach of Order 35(c) made on 21 November 2014, meant the loans secured by mortgage over the family home were not diminished by that amount and, since the wife is jointly liable for the mortgaged loans, the husband’s breach caused her to lose the benefit of one-half of that sum ($98,931.50). Of course, the mortgagee is free to enforce the entire debt against her severally, but an allowance of only one-half is not unreasonable. That computation makes no allowance for the extra interest which would have been levied against the greater debit loan balance from the time the second property was sold in December 2015, which cost could otherwise have been saved. Nor does the computation make any allowance for money which would have been saved by the timely sale of the family home in accordance with the orders first made in November 2014, which sale the husband thwarted. In breach of the orders, he failed to finalise the insurance claim, failed to vacate the property, and frustrated the wife’s attempts to effect repairs in readiness for its sale.
(b)The husband has still not paid the wife’s costs in the sum of $9,436 in satisfaction of Order 9 made on 1 August 2016.
(c)The husband has still not paid the wife’s costs in the sum of $10,000 in satisfaction of the order made by this Court on 21 July 2017.
(d)The husband failed to pay “all outgoings” in respect of the family home in satisfaction of Order 6 made on 1 August 2016.
The wife did not quantify in her affidavit the value of all the outgoings the husband failed to pay, but her counsel informed us the outgoings in the nature of mortgage repayments, rates, utilities, insurances and the like approximated $38,000, which figure subsumes the mortgage arrears. The husband’s counsel neither accepted nor refuted that estimate, but did not require the wife to adduce evidence of the fact. No doubt documentary evidence could have been collated by the wife, but given the tortuous litigious history, the parties had no time or money to waste on adjournments. Without objection, we accepted the estimate as accurate for the purpose of the application at hand.
(e)While the husband finally complied, in September 2017, with the orders made in August 2016 and August 2017 requiring him to quit occupation of the family home, his delayed compliance deprived the wife of its use and caused her to continue incurring rent for alternate accommodation.
The wife did not depose to the rental cost of her deprivation of the family home. We were informed by the wife’s counsel her rent was $850 per week for the period between August 2016 and September 2017, when the husband finally quit possession. Again, the husband’s counsel neither accepted nor refuted that fact, but did not require the wife to give evidence of it. Similarly, without objection, we accepted as correct the unverified representation from counsel. Calculated over a period of about 13 months, the wife was put to extra rental expense of about $49,000.
16.Therefore, in all, the husband’s disobedience of numerous orders over a number of years deprived the wife of not less than about $205,000.
There were three applications before the primary judge.
The first was filed by the wife on 19 April 2018 and sought an order that the husband pay the wife’s costs fixed in the sum of $292,071.16, or in the alternative, in the sum of $48,780.
The second application which was filed by the wife on 3 August 2018, sought an order in relation to a superannuation splitting order which is no longer relevant, and also sought the following order:
…
2.That the husband pay the wife’s costs of:
a)This Application; and
b)The Third Party Debt Notice filed on the same day as this Application.
(Wife’s Application in a Case filed 3 August 2018)
Attached to that application was a Third Party Debt Notice addressed to B Ltd in the sum of $75,640.07.
Finally, by an Application in a Case filed 22 November 2018, the wife sought the following orders:
1.That there be an Enforcement Hearing in relation to the Orders made 1 August 2016, 21 July 2017, 22 March 2018 and 17 October 2018.
2.That the Court make such Orders as may be necessary to enforce payment by the Husband to [the] Wife the amount of $136,595.04 including but not limited to Orders issuing a Third Party Debt Notice to [B Ltd] to deduct from the Husband’s earnings each pay day an amount of $5,327 until $136,595.04 has been paid in full and for the seizure and sale of any assets of the Husband.
3.That the Husband pay the Wife’s costs of this Application.
(Wife’s Application in a Case filed 22 November 2018) (As per the original)
It can be seen that Order (2) sought by the wife in the last application filed 22 November 2018, superseded the relief sought in relation to the Third Party Debt Notice attached to the second application filed 3 August 2018.
The Appeal
The husband’s appeal is opposed by the wife. In the wife’s Summary of Argument filed 6 December 2019, she proposed that the husband not be heard on the appeal because he had failed to comply with an order made by a judge of the Federal Circuit Court of Australia on 3 July 2019, which provided for the husband to pay the wife’s costs of the application then before his Honour, in the sum of $9,050. That argument fell away because shortly before the hearing of the appeal, the husband paid that debt to the wife.
It was not clear from the husband’s Summary of Argument filed 15 November 2019 whether he intended his written submissions under Grounds 3 and 4 to apply to both those grounds of appeal or whether there were simply no written submissions in respect of Ground 3. This was because the two headings appeared together with no written submissions made that were relevant to Ground 3.
It became apparent during the course of the husband’s oral submissions at the hearing of the appeal that the husband did intend to address Ground 3 separately. The husband sought leave to rely on an Amended Summary of Argument, which not only provided written submissions as to Ground 3, but significantly amended the husband’s written submissions in relation to the other grounds of appeal. The husband was given leave to rely on the Amended Summary of Argument only insofar as it related to Ground 3.
The wife was granted leave to reply to these new submissions in writing. The wife’s written submissions were filed on 28 February 2020 and written submissions in reply were filed by the husband on 13 March 2020.
Were the reasons for the indemnity costs order adequate? (Grounds 1 and 2)
It is convenient to deal with Grounds 1 and 2 together as they both challenge the same order made by the primary judge (Order (1)). Ground 1 asserts that the primary judge erred by failing to give adequate reasons for “the very great departure from the normal standard in ordering indemnity costs.” Ground 2 raises a similar point and asserts that the primary judge failed to identify the exceptional circumstances necessary to warrant such an order.
The obligation to give reasons is well known. In Bennett and Bennett (1991) FLC 92-191 at 78,266-78,267, the Full Court of the Family Court of Australia adopted the principles expounded in Sun Alliance Insurance Ltd v Massoud [1989] VR 8, saying:
In Sun Alliance Insurance Ltd v Massoud (1989) VR 8, the Full Court of the Supreme Court of Victoria, consisting of Fullagar, Gray and Tadgell JJ, followed the principles established by the New South Wales Court of Appeal. Gray J, who delivered the principal judgment, said, at 18:
“The adequacy of the reasons will depend upon the circumstances of the case. But the reasons will, in my opinion, be inadequate if: —
(a)the appeal court is unable to ascertain the reasoning upon which the decision is based; or
(b)justice is not seen to have been done.
The two above stated criteria of inadequacy will frequently overlap. If the primary Judge does not sufficiently disclose his or her reasoning, the appeal court is denied the opportunity to detect error and the losing party is denied knowledge of why his or her case was rejected.”
We think that the test propounded by Gray J is a particularly useful one, and one which also applies to discretionary judgments. In Maday and Maday (1985) FLC 91-636, Fogarty J, in a judgment with which the other members of the Court (Emery and Murray JJ) agreed, took the view that these principles clearly did apply to discretionary judgments and, in particular, judgments in custody matters.
In Pollard v RRR Corporation Pty Ltd [2009] NSWCA 110, the New South Wales Court of Appeal said:
57.The giving of adequate reasons lies at the heart of the judicial process. Failure to provide sufficient reasons promotes “a sense of grievance” and denies “both the fact and the appearance of justice having been done”, thus working a miscarriage of justice.
58.The extent and content of reasons will depend upon the particular case under consideration and the matters in issue. While a judge is not obliged to spell out every detail of the process of reasoning to a finding, it is essential to expose the reasons for resolving a point critical to the contest between the parties.
59.The reasons must do justice to the issues posed by the parties’ cases. Discharge of this obligation is necessary to enable the parties to identify the basis of the judge’s decision and the extent to which their arguments had been understood and accepted… it is necessary that the primary judge “ ‘enter into’ the issues canvassed and explain why one case is preferred over another”.
(References omitted)
His Honour considered the question of costs generally at first and then dealt with the various considerations under s 117(2A) of the Family Law Act1975 (Cth) (“the Act”) that were raised by the parties.
First, the primary judge found that the financial position of the husband was more favourable than the financial position of the wife who also had the primary care of the children (at [59]–[64]).
The primary judge then found that the husband had repeatedly breached orders made by the Court over a significant period of time (at [67]–[71]), which his Honour considered was a relevant consideration under s 117(2A)(c) and s 117(2A)(d).
Finally, the primary judge took into account the fact that the wife had been successful in her case, whereas the husband had not (at [82]) (s 117(2A)(e) and s 117(2A)(g)).
The husband does not challenge these findings, which are also relevant to the issue of indemnity costs, because the various considerations raised by s 117(2A) of the Act apply equally to a consideration of whether costs should be assessed on an indemnity basis and to whether there should be a costs order at all.
His Honour continued:
83.The real issue is whether I make an award for indemnity costs.
84.I said earlier that I would not take into account unsworn evidence of previous costs.
85.But that does not mean an indemnity costs order should not be considered.
86.Indemnity costs are considered where there are circumstance of acts or omissions occurring in a case outside of acts or omissions which would be part and parcel of the normal course of litigation with people acting reasonably with regard to the litigation.
87.To ignore orders and utilise money regulated by those orders in a manner inconsistent with the orders is a serious action for a litigant.
88.Not only does it put the other side to great expense and no doubt a lot of anxiety, without sound and reasonable excuse, ignoring court orders can bring the justice system into question.
89.There can be no system of more importance to people having their disputes settled than confidence in the courts and an expectation that the courts will uphold orders made.
90.On that basis I am going to order indemnity costs, but to be assessed, so that proper expenditure is covered.
These paragraphs clearly identify the exceptional circumstances relied upon by the primary judge to justify the order for indemnity costs and explain the importance of them.
The reasons are therefore adequate because it is clear why the order was made.
We accept the husband’s submission that indemnity costs orders are awarded only in exceptional circumstances (Kohan and Kohan (1993) FLC 92-340; Limousin v Limousin(Costs) (2007) 38 Fam LR 478; D & D(Costs) (No. 2) (2010) FLC 93-435).
There was no challenge to the primary judge’s findings that the husband had repeatedly breached Court orders and used funds that were the subject of them for his own benefit, contrary to the orders. It is clear from his Honour’s reasons that regard was had to the long history of the husband’s non-compliance with orders, which had the effect of inflating the wife’s legal costs.
In the circumstances of this matter, the finding that there were exceptional circumstances which justified an indemnity costs order was easily available.
The husband’s submissions, however, did not deal in detail with these issues. Rather, the husband’s main point was that the primary judge failed to engage with his case and simply “brushed it aside, dismissing it without due consideration” (Husband’s Summary of Argument filed 15 November 2019, paragraph 1). In support of that proposition, the husband put two submissions; the first was that the primary judge did not consider his evidence and the second was that he was not permitted by the primary judge to cross-examine the wife.
Did the primary judge consider the husband’s evidence?
The husband’s Summary of Argument filed 15 November 2019 focused only on the evidence relating to the Third Party Debt Notice, which is the subject of other grounds of appeal, and not the indemnity costs order. Nonetheless, it is convenient to deal with it here, as it bears on the factors taken into account in relation to costs. In short, the husband submits that his evidence that he had in fact paid some of the debts which were said to be owing, was ignored.
On 17 October 2018, the Full Court of the Family Court of Australia ordered the husband to pay the wife’s costs fixed in the sum of $10,000. Paragraph 16 of the husband’s written submissions to the primary judge filed 4 February 2019, which deals with that debt, stated:
The Wife has had the benefit of Costs Orders made for the Husband to pay the Wife’s costs of $29,436. These amounts have been paid in full. (see paragraphs 4 (g) (i), (ii) and (iii) of the Wife’s affidavit filed 22nd November 2018).
(As per the original)
In those subparagraphs of her affidavit filed 22 November 2018, the wife referred to three separate costs orders made on 1 August 2016, 21 July 2017 and 17 October 2018, in the amounts of $9,436, $10,000 and $10,000 respectively, and said that they had not been paid (Wife’s affidavit filed 22 November 2018, paragraph 4).
In his affidavit in reply, the husband referred to that paragraph of the wife’s affidavit and said:
…
(g)Denied. I do not agree that the amount of money owed is $136,595.04. Further, I state that no Court Orders have been made to create such obligation.
(i)Agreed, however, I am in the process of obtaining monies through a personal loan. I anticipate paying such monies to the Stewart Family Trust account within 48 hours, on or about 12 December 2018.
(ii)Agreed, however, I am in the process of obtaining the monies through a personal loan. I anticipate paying such monies to the Stewart Family Trust account within 48 hours, on or about 12 December 2018
(iii) Denied. No Court Orders have been issued by the Court of Appeal. I am awaiting the reasons for judgment in regard to this matter to decide on my legal options.
…
(Husband’s affidavit filed 11 December 2018, paragraph 4) (As per the original)
It can be immediately seen that the husband’s Summary of Argument is wrong insofar as he suggests that his evidence was that the debt of $10,000 which was ordered to be paid by the Full Court of the Family Court of Australia had been paid. Rather, the husband’s evidence appears to challenge any obligation to pay that debt, which is an entirely different thing (Husband’s affidavit filed 11 December 2018, paragraph 4(g)(iii)). Alternatively, if, in fact, the debt of $10,000 discussed in the husband’s written submissions is a reference to the debt referred to at paragraph 4(g)(ii) of his affidavit filed 11 December 2018 and outlined above, his evidence was that it had not yet been paid.
His Honour’s reasons on this issue were:
29.The husband said this about the third costs order made on 17 October 2018 by the Full Court of the Family Court of Australia:
“The third amount, your Honour, there has been – no report has issued from the Full Bench of the Family Court from the appeal as yet. I’m just waiting on the order and the reasons for judgment for that.”
30.Counsel for the wife … said that on the day the order was made the order was explained to the husband’s barrister by Kent J and he was given 28 days from the date to pay it. [Counsel for the wife] confirmed the order issued.
31.The husband queried that and said it had not issued and he had not received it.
32.I then sought a copy of the sealed order and the court’s computer system should have held a copy of that sealed order.
33.I was satisfied that the money was owed pursuant to a costs order made on 17 October 2018. I was satisfied that the orders ought be enforced and I was satisfied that if the husband did not pay the costs, then a Third Party Debt Notice should issue. To achieve that I will declare that the monies owed are a debt.
(As per the original)
It can be seen that the husband’s oral submission, which was directly quoted by the primary judge, accurately reflects his evidence. This is consistent with what his Honour said later in the reasons, which was:
112.Other than that, I have no confidence at all in anything the husband tells the court and given his tardiness in meeting previous costs orders, and given his opposition to paying the $10,000 cost order as ordered by the Full Court of the Family Court of Australia on the basis that he had not seen a sealed order, despite the fact that he was in court when Kent J explained the orders, in my view the husband will say anything and do anything to delay the matter further.
The husband’s evidence, such as it was, was not ignored and this aspect of the appeal fails.
Did the primary judge err by not permitting the husband to cross-examine the wife?
The second point raised by the husband is that he was not afforded procedural fairness because he was not permitted to challenge the wife’s evidence as to what amounts were said to be outstanding pursuant to the various costs orders.
Critical to the husband’s submissions is his contention that the matter before the primary judge was an enforcement hearing within the meaning of r 25B.17 of the Federal Circuit Court Rules 2001 (Cth) (“the Rules”), which he asserts had the effect of giving him a right to cross-examine.
It is helpful to refer briefly to the Rules before returning to the husband’s submissions.
Part 25B of the Rules deals with the enforcement of orders to pay money. Under r 25B.16(1), the payee under the relevant order must give the payer a written notice requiring him or her to complete and serve a financial statement before a payee may apply for an enforcement order under r 25B.13, which provides for a suite of orders to compel the payment of a financial obligation or property order.
A payee may, by filing an Application in a Case, require a payer to attend an enforcement hearing (r 25B.17(1)). At such a hearing, the payee may require the payer to produce documents relevant to the enforcement application (r 25B.17(2)). Rule 25B.18 imposes an obligation on the payer to attend the enforcement hearing to answer questions, to provide any documents required and, to serve on the payee, at least 7 days before the hearing, a financial statement in accordance with the approved form, setting out the payer’s financial circumstances.
The enforcement hearing described in the Rules is akin to an examination summons, as it is called in most civil courts, where a person under a financial obligation can be examined about their financial position so that the unpaid payee may determine the best method for enforcement of the debt. As can be seen, this is an examination of the payer’s circumstances and the Rules make no provision for the payee to be cross-examined. Indeed, at such a hearing it would be difficult to see upon what matters the payee could properly be examined.
Nonetheless, as one of the steps to be taken in obtaining an enforcement hearing, the payee must, amongst other things, serve on the payer, a brochure approved by the Chief Judge, “giving information about enforcement hearings and the consequences of failing to comply with an obligation” (r 25B.17(3)(b)). The husband relies on the brochure he had, which states:
…
ENFORCEMENT HEARING – a hearing conducted on the application of a payee where the respondent and any witnesses are cross-examined about a payer’s financial affairs and ability to pay a financial obligation.
(Exhibit 1A)
However the husband also relies on the following, which appears under the heading “[w]hat happens at an enforcement hearing” (Emphasis removed):
…
The payer may be asked about:
· the reason for the failure to pay
· their income, property, debts and resources, and
· any disposable of property.
The payee and the payer (or their lawyers) will be given an opportunity to ask questions of the other and any witnesses (known as cross-examination).
(Exhibit 1A)
The husband therefore says that he had an entitlement to cross-examine the wife at the enforcement hearing and, as he was not permitted to do so, there was a want of procedural fairness, which justifies the orders being set aside on appeal.
There are a number of difficulties with this submission.
We have already set out the orders sought in the various applications filed by the wife. They were, relevantly, an order for interim costs, the listing of an enforcement hearing and the issuing of a Third Party Debt Notice. Thus, an enforcement hearing comprised just one of the three applications before the Court.
The husband did not raise the issue of cross-examination at any time during the hearing of the matter before the primary judge or in his extensive written submissions that were before his Honour.
In those submissions, the husband asserted that the wife had failed to establish any obligation for him to pay money under r 25B.17, or accurately to quantify the amounts claimed. The husband then gave 10 reasons why he said that was so. None asserted a need to cross-examine. It is now too late to take the point. The hearing was run on the basis that there was no cross-examination and the husband cannot now assert that the primary judge erred by failing to permit such a course (Metwally v University of Wollongong (1985) 60 ALR 68).
Finally, we do not agree that the payer has the right to cross-examine the payee at an enforcement hearing. The purpose of such a hearing is to obtain information to assist the payee in enforcing the payment of the debt owed to them. Such information can then be used in an application for enforcement orders. However, no fact in issue is determined at such a hearing and it is difficult therefore to see what role cross-examination could play.
The relevant Rules do not provide for cross-examination of payees at an enforcement hearing. It follows that, whatever the brochure might say, the payer has no right to cross-examine the payee at such a hearing.
It may be, as was the case here, that the enforcement hearing is conducted at the same time as the hearing for the enforcement orders. Applications for the latter are interlocutory in nature and as such there is no absolute right to cross-examine. However, the primary judge was not called upon to exercise any discretion as to whether cross-examination should have been permitted.
It follows that there is no merit in Grounds 1 and 2.
Did the primary judge make material errors of fact and law? (Ground 3)
This ground of appeal concerns the wife’s application filed 3 August 2018 which sought a Third Party Debt Notice for payment of the following:
1.$10,000 pursuant to a costs order of the Full Court of the Family Court made on 17 October 2018;
2.$3,734 being the costs of two Applications in a Case filed by the wife on 3 August 2018 and 22 November 2018; and
3.$117,159.04 which were outgoings in relation to A Street, Suburb N (“the A Street property”) which the husband was obliged to pay pursuant to orders of the Court, which he had not paid.
The A Street property was the family home and was subject to three mortgages.
The husband submits that the primary judge’s decision making erred because:
·His Honour failed to find that the husband had paid the costs order made on 17 October 2018;
·The order for costs in the sum of $3,734 should not have been made because the applications to which it referred had not yet been finalised;
·The wife did not expend the money claimed under the mortgages;
·The damage to the property that required repair, should have been the subject of an insurance claim made by the wife, or alternatively, the relevant documents should have been given to the husband in order for him to make the insurance claim;
·His Honour permitted the wife to recover funds for furniture acquired by her; and
·His Honour failed to accept the husband’s evidence.
Was the costs order of 17 October 2018 paid by the husband?
We have already discussed the husband’s contentions as to whether this debt was paid and have rejected them. The husband’s evidence, as opposed to his submissions, did not establish that the debt had been paid.
Should there have been a costs order for $3,734?
We have already recorded two of the wife’s applications before his Honour (filed 3 August 2018 and 22 November 2018) and have set out the orders sought in each. Other than for Order (1) sought in the wife’s application filed 3 August 2018 (which was dismissed by the primary judge), orders were largely made in accordance with them, including an order for the husband to pay the wife’s costs of each application, in the sum of $1,867, making a total sum of $3,734 (at [123]).
Order (1) of the wife’s application filed 3 August 2018 sought an order that the husband sign a consent form for a superannuation splitting order that had already been made. The primary judge found that since the husband had already been ordered to take steps to give effect to the superannuation splitting order and, that if he did not comply then a Registrar could do so on his behalf, there was no point to the order sought by the wife (at [16]–[20]). His Honour noted that a further application seeking a similar order had been filed but not yet dealt with (at [20]–[21]). Nonetheless, his Honour resolved to dismiss that aspect of the application.
It follows that we do not accept the husband’s submission that the subject matter of the two applications remained to be determined at the time that the orders were made. The applications before the Court were fully determined by the primary judge on 23 May 2019 and it is not to the point that a further application remained outstanding.
Did the wife expend the money pursuant to the mortgages?
The husband submits that, properly understood, the outgoings on the A Street property which was owned by the parties and subject to mortgages, did not include the mortgage repayments and that, in any event, he had paid all that the mortgagee required him to pay.
On 22 March 2018, the husband was ordered to pay the outgoings on the A Street property for a period of up to 12 months or until the property was sold (Order (4) made on 22 March 2018). There had been an order of similar effect made on 21 November 2014 which expressly required the husband to meet the mortgage repayments as well as the outgoings generally (Order (33) made on 21 November 2014). Thus, even if the order made on 22 March 2018 did not extend to the mortgage repayments, the order made on 21 November 2014, which was never discharged, had that effect.
However, it is clear to us that the word “outgoings” clearly encompasses the mortgage repayments because they are an expense associated with the property. It follows that the husband was obliged to meet the mortgage repayments.
At one stage, the husband entered into an arrangement with the mortgagee to pay a reduced amount under the mortgages for a short period of time. The husband made those payments. However, the obligations under the mortgages to make regular payments of interest were not discharged – the mortgagee simply determined that it would accept a lesser payment for the short term without regarding the mortgages as being in default. The payments made by the husband were less than the regular mortgage repayments which caused the mortgages to fall into arrears.
We do not accept the husband’s submission that the arrangement had the effect of reducing the outgoings due under the mortgages because it simply reduced, for a period of time, the amount that the mortgagee would accept. The regular instalments remain unpaid and due. They were, therefore, outgoings within the meaning of the orders, which were not paid.
For the same reason, we do not accept that the repayments due were not outgoings until they were paid.
The husband also submits that because the parties were jointly and severally liable under the mortgages, the payment by the husband of the outstanding sums due under the mortgages to the wife, would not reduce the mortgage. Of course, that is so, but as the purpose of the orders is to ensure payment of the mortgages, once the wife receives those monies she will be able to effect the payment to the mortgagee.
Should the damage to the property have been the subject of an insurance claim?
It was common ground that the A Street property had suffered some damage which needed to be repaired before its sale. The husband submits that he was not obliged to pay the costs of the repairs because they should have been the subject of a claim under the parties’ policy of insurance.
The orders of 22 March 2018 appointed the wife as trustee for the sale of the A Street property and provided for her to take the necessary steps to prepare it for sale. That obviously obliged her to take steps to repair the damage to the property for that purpose, however the damage may have been caused.
A similar order had been made on 1 August 2016, by way of a set of interim orders. Included amongst those orders was an order that the husband “do all acts and things necessary to finalise the insurance claim” (Order (4) made on 1 August 2016) in relation to the A Street property. There is no evidence that he did so.
It is not essential that damage be repaired before an insurance claim is made and indeed most insurance policies require notice of damage and for claims to be made as soon as possible after the damage is suffered. Given the circumstances of this case, which were marked by the husband’s non-cooperation and failure to comply with orders, one can see the reluctance of the primary judge to find that the wife, who was appointed as trustee for the sale of the property only in 2018, was somehow delinquent in pursuing an insurance claim, when the husband had ample time to do so and had failed to comply with an order requiring him to do so.
Further, as his Honour pointed out at [108]–[109], the husband had disputed almost everything raised by the wife throughout the history of the matter and that many of the husband’s submissions sought to go over issues that were decided at the final hearing. The issue of the insurance claim was one, if it was not the subject of debate in the final property settlement proceeding, it should have been.
The fact remained that repairs were required which were undertaken by the wife and which were outgoings that the husband had to pay.
We do not see any merit in this aspect of the ground of appeal.
Did the primary judge wrongly include the furniture purchased by the wife as an outgoing?
The wife purchased furniture to assist in the sale of the A Street property. The husband submits the primary judge erroneously included this as an outgoing.
The wife’s evidence as to the money that she had spent renovating the property and readying it for sale included the following:
…
g)General styling to ready the property for sale in accordance with advice received from a stylist who attended the property with the Real Estate Agent to give me ideas on how to present the property for sale. This amount includes the cost of lamps, indoor plants, natural bed linen, pictures and art for the walls and furniture for the children’s rooms – $4,500
(Wife’s affidavit filed 22 November 2018, paragraph 4(xxii)(g))
The primary judge accepted this evidence and having done so was entitled to find that the expenses were part of the outgoings necessary to prepare the property for sale.
Should the primary judge have accepted the husband’s evidence in preference to the wife’s?
The quintessential task of a trial judge is to choose between disputed versions of facts, which can involve expressing a preference for one party’s evidence over the other. His Honour did not accept the husband’s evidence (at [112] outlined above).
That was a course that was entirely open to his Honour. This ground of appeal has no merit.
Did the primary judge take into account matters that were irrelevant or wrongly apprehended as being part of the costs application? (Ground 4)
Under this ground of appeal, the husband first complains that the wife provided no documentary evidence of receipts with respect to the debts claimed by her. That is not a bar to her evidence being accepted.
The second point raised by the husband was in relation to the mortgages for which he says that he and the wife were jointly liable. The husband submits that this undoubted fact meant that he alone should not be responsible for the mortgage repayments. As we have earlier pointed out, the orders of 21 November 2014 and 22 March 2018 made the husband solely responsible for them.
The husband submits that the wife, having been appointed as trustee for the sale of the A Street property, failed to fulfil her obligations because she did not register her interest as a trustee under s 109 of the Land Title Act1994 (Qld). We do not see what relevant effect any such failure had for the purposes of the proceedings before the primary judge. The orders operated whether or not the wife’s position as a trustee for the sale of the A Street property was registered.
Finally, the husband submits that the wife was not permitted to make the claim for expenses in relation to the property because s 33(1)(b) of the Trusts Act1973 (Qld) (“the Trusts Act”) prohibits a trustee from expending money, including capital money, in excess of $10,000 for “the improvement or development of the property” except with the sanction of the Court.
As the husband’s written submissions expressly state, the amount claimed by the wife is claimed for “renovations and improvements” (Husband’s Summary of Argument filed 15 November 2019, paragraph 29) which are to be contrasted with expenses for the improvement or development of the property. Section 33(1)(a) of the Trusts Act, on the other hand, permits a trustee to expend money, including capital money, “for the repair, maintenance, upkeep or renovation of the property”. No sanction of the Court is required.
There is no merit in this ground of appeal.
Did the primary judge err in “failing to provide [r]easons from which his [Honour’s] intentions or the evidence on which [his Honour] relied to discern the $117,159.04 expended by the [w]ife”? (Ground 5)
In the husband’s submissions made under this ground of appeal, he repeats that the amounts claimed by the wife are “unsubstantiated and cannot be reasonably reconciled with the evidence before the Court” (Husband’s Summary of Argument filed 15 November 2019, paragraph 32). The husband submits that the wife failed to provide full and frank disclosure and again repeats the submissions already dealt with in relation to the payment of the mortgages.
We have already dealt with these matters and this ground of appeal does not succeed.
Did the primary judge err in “failing to make proper findings as to the extent of the [a]pplication by the wife for her expenditure and her [a]pplication for [c]osts”? (Ground 6)
Under this ground of appeal, the husband submits that there are no circumstances which justify a costs order because the wife had misrepresented the financial circumstances of the parties to the Court. The husband’s Summary of Argument filed 15 November 2019 sets out what he asserts is the correct financial position of the parties. They are, of course, submissions and not evidence. The husband did not seek to adduce any further evidence on the appeal.
The primary judge found that the husband’s income at trial was $325,000 per year (at [59]). At trial, the wife adduced evidence that, according to the husband’s PAYG payment summary for the year ending 30 June 2016, the husband’s gross income was $325,134 (Annexure “[W]-4” to the wife’s affidavit filed 3 August 2018).
The husband accepted that to be the case and stated that his gross income in “2016/17” was $322,006 (Husband’s affidavit filed 14 August 2017, paragraph 8(b)).
The husband further deposed that his gross weekly income was $5,500 (or $286,000 per year) (Husband’s affidavit filed 14 August 2017, paragraph 7). It is not clear whether that includes all of the bonuses to which the husband might have been entitled. In any event, the husband’s written submissions made to the primary judge accepted that he “has a greater income than that of the [w]ife” (Husband’s written submissions in relation to costs filed 31 January 2019, paragraph 55).
His Honour’s conclusion was that “[n]o matter which way this matter is viewed, the husband is in a position where he earns more money than the wife” (at [64]).
Not only is this finding in accordance with the evidence, it is also in accordance with the husband’s submissions. The husband’s submissions to us, to the contrary, carry no weight at all.
There is no merit in this ground of appeal.
Conclusion and Costs
It follows that the appeal will be dismissed.
The appeal has been wholly unsuccessful (s 117(2A)(e)). In the circumstances, it is appropriate that the husband pay the wife’s costs, which have been calculated by her to be $5,678.34 at scale. Further, the wife sought the payment of $1,235.55 as the costs of responding to the husband’s Amended Summary of Argument. These costs should also be paid by the husband.
The husband sought an order delaying the payment of any costs until after the debts that are the subject of the Third Party Debt Notice have been paid. The wife agreed and we will also make that order.
I certify that the preceding ninety-seven (97) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court (Strickland, Aldridge & Tree JJ) delivered on 17 April 2020.
Associate:
Date: 17 April 2020
0
4
2