Murcutt and Murcutt (No 2) - [2013] FamCA 573

FAMILY COURT OF AUSTRALIA

MURCUTT & MURCUTT (NO 2)

[2013] FamCA 573

FAMILY LAW – PROPERTY – Property settlement – Consent orders – Application to set aside – Where there has been partial compliance with the orders – Whether the valuation of property is proper – Where it cannot reasonably be suggested that the circumstances of the valuation being higher than the husband had thought possible is a circumstance which has made it impracticable for the orders to be carried out – Where it remains practicable for the orders to be carried out – Application dismissed.

Family Law Act 1975 (Cth) – s 37A, s 79A, s 79A(1)(b)

Harris v Caladine (1991) FLC 92-217; 14 Fam LR 593
In the Marriage of Cawthorn 23 Fam LR 86; (1998) FLC 92-805
In the Marriage ofRohde (1984) 10 Fam LR 56; FLC 91-592
In the Marriage of Prowse (1995) FLC 92-557; 18 Fam LR 348

APPLICANT:

Mr Murcutt

RESPONDENT:

Ms Murcutt

FILE NUMBER:

SYC

1258

2009

DATE DELIVERED:

26 July 2013

PLACE DELIVERED:

Parramatta

PLACE HEARD:

Sydney

JUDGMENT OF:

Johnston J

HEARING DATE:

7 December 2012

REPRESENTATION

COUNSEL FOR THE APPLICANT:

Mr Gilbert

SOLICITOR FOR THE APPLICANT:

Hunt & Hunt Lawyers

COUNSEL FOR THE RESPONDENT:

Mr Grieve, QC with Ms Coulton

SOLICITOR FOR THE RESPONDENT:

DC Legal

Orders

That the husband’s Initiating Application filed on 5 March 2009 as amended be dismissed.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Murcutt & Murcutt 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 PARRAMATTA

FILE NUMBER: SYC 1258 of 2009

Mr Murcutt

Applicant

And

Ms Murcutt

Respondent

REASONS FOR JUDGMENT

The issue in these proceedings is whether there is a basis to set aside certain final property orders pursuant to s 79A of the Family Law Act 1975 (Cth) (“the Act”).
The parties are Mr Murcutt and Ms Murcutt. For convenience I shall refer to them as “the husband” and “the wife”.
On 27 May 2005 final consent orders were made by a Deputy Registrar of this Court in relation to the parties’ property. I shall refer in some detail to these orders below. At this point, suffice it to say that while there has been partial compliance with the requirements of the orders, fundamental obligations remain outstanding.

Applications

The husband seeks orders to the following effect:
·That pursuant to s 79A(1)(b) of the Act orders 15.5 and 15.6 of the orders made on 27 May 2005 be set aside;
·That in their place the following orders be made:
(a)That the husband transfer to the wife 66.66 percent of the total shareholdings held by him in all private and public companies as at the date hereof; and
(b)That the husband transfer to the wife 66.66 percent of the total entitlements that he has in shares or other benefits pursuant to the provisions of the Murcutt Family Trust; and
(c) Such further or other order as the Court considers appropriate.
On the other hand the wife seeks an order that the husband’s application be dismissed and that he pay her costs.

Background

The husband, 66 years of age and the wife, 57 years of age commenced cohabiting upon their marriage on 12 April 1981. They separated on 17 March 2004.
There are 3 adult children of the marriage. They are C, born in 1981, D born in 1984 and E, born in 1991.
At the time of marriage the husband was employed by F Pty Ltd. He had commenced employment with this company in 1967 and continues to be employed by the company.
On 27 May 2005, the parties had consent orders made for the purpose of resolving their property dispute. To facilitate understanding, I shall set these orders out in full as follows:
1.The Husband shall pay to the Wife a sum equivalent to two thirds of the valuation by Mr G registered valuer of the properties situate and known as [1 H Street, Suburb I], [2 H Street, Suburb I] and [J Street, Suburb K] ("the properties") within 60 days of the date hereof less the sum secured by a mortgage upon the title of the property situate and known as [1 H Street, Suburb I] together with the sums referred to in orders 15.5, 15.6 and 15.7 less a sum of 6,212.08.
2.Upon compliance with order 1 hereof the Husband is declared the sole legal and beneficial owner of the properties.
3.Pending compliance with order 1 the Husband is restrained from charging, mortgaging or otherwise encumbering the title of any of the properties without the written consent of the Wife.
4.Orders 5 to 15.6 inclusive shall operate in the event that the Husband fails to comply with order 1, but not otherwise.
5.The Husband and the Wife shall do all acts and sign all documents necessary to immediately list the properties for sale by public auction with a real estate agent to be agreed upon between the Husband and the Wife.
6.In the event that the Husband and the Wife cannot reach agreement as to a real estate agent to be appointed for the sale of the properties by public auction then the Husband and the Wife shall do all things and sign all necessary documents to request the President of the Real Estate Institute of NSW to nominate an agent to conduct the sale of the properties by public auction.
7.In the event that the Husband and the Wife cannot reach agreement as to a real estate agent to be appointed for the sale of the properties by public auction then the Husband and Wife shall do all acts and sign all documents necessary to accept the nomination that may be made by the President of the Real Estate Institute of NSW and shall appoint the real estate agent who shall be nominated by the President of the Real Estate Institute of NSW to conduct the sale of the properties by public auction.
8.The Husband and the Wife shall instruct the agent to sell the properties at public auction for a reserve price equivalent to the valuations assigned to the properties by Mr G.
9.The Husband shall pay the auctioneer any sums requested for advertising expenses in relation to the sale of the properties by public auction.
10.The Husband and the Wife shall instruct a Solicitor to be agreed between the parties or in the event that agreement cannot be reached, the Husband and the Wife shall instruct [Mr L] of [M Solicitors] to act in relation to the sale of the properties by public auction and the preparation of contracts for sale of the properties.
11.The Husband and the Wife shall cooperate in every way with the agent in relation to the auction sale of the properties.
12.If the properties or any of them are not sold by auction or by private negotiation within fourteen (14) days after the said auction then the Husband and the Wife shall do all acts and sign all documents necessary to procure a second auction within 6 weeks of that date upon the same terms and conditions as applied to the first auction of each of the properties provided that the reserve price for the sale of the properties shall be reduced by 5 per cent on each occasion that the properties are re-submitted for sale by public auction.
13.If the properties or any of them are not sold at the second auction or within 14 days thereafter further auctions shall take place upon the same terms and conditions as applied to the first auction every 6 weeks until all of the properties shall be sold provided that the reserve price for the sale of the properties shall be reduced by 5 per cent on each occasion that the properties are re-submitted for sale by public auction.
14.The Husband shall pay for all of the loan repayments and bank charges pertaining to the loan or loans secured by a mortgage registered upon the title of the properties or any of them together with all taxes, rates and like upon the properties as and when they fall due pending settlement of the sale of the properties by public auction.
15.The Husband and Wife shall do all acts and sign all necessary documents to disburse the net sale proceeds of the properties in the following manner and priority:
15.1In payment of real estate agent's commission, advertising and auction expenses (if any) due on the sale;
15.2In payment of legal costs and disbursements of and incidental to the sale;
15.3In payment of any money payable with respect to the discharge of the mortgage or mortgages upon the title of the properties;
15.4In payment of a sum equivalent to two thirds of the net proceeds of sale to the Wife less a sum of $6,212.00;
15.5In payment to the Wife of a sum equivalent to two thirds of the value of all shares owned by the Husband in all private and public companies as at the date hereof as assessed by [Ms B];
15.6In payment to the Wife of a sum equivalent to two thirds of the value of any entitlement that the Husband may have as a beneficiary under the [Murcutt Family Trust] as assessed by [Ms B];
15.7In payment to the Wife of a sum equivalent to two thirds of the value of the Husband's [SUV] motor vehicle registered number … less a sum equivalent to the value of the Husband's [compact] motor vehicle registered number …;
15.8In payment to the Wife of a sum equivalent to two thirds of the sums referred to in orders 15.1 to 15.2;
15.9Subject to order 16 the balance is to be paid to the Husband,
16.The Husband shall give all necessary instructions and sign all necessary documents to cause his share of the net proceeds of the sale of the properties to remain in the trust account of the solicitor who shall act in relation to the sale of the properties until he has paid to the Wife all of the money that he is obliged to pay to her pursuant to these orders.
17.That in accordance with Section 90MT(1)(b) of the Family Law Act 1975 the Wife is entitled to be paid two thirds of each splittable payment out of the Husband's interest under the AON Master Trust Fund ("the fund").
18.There shall be a corresponding reduction in the entitlement of the Husband's interest in the fund.
19.The trustee of the fund and/or the Husband shall do all such acts and things and sign all such documents as may be necessary to calculate, in accordance with the requirements of the Family Law Act 1975 and the Family Law (Superannuation) Regulations 2001, the entitlement of the Wife created in orders 17 and 18 of these orders.
20.The trustee of the fund shall do all such acts and things and sign all documents as may be necessary to pay the said entitlement to the Wife whenever the trustee makes a splittable payment out of the Husband's interest in the fund.
24.(sic) Orders 17 to 20 inclusive shall operate 4 days from the date of these orders.
25.The Husband shall inform the Wife's solicitor within 7 days of the date of these orders of the names of any other superannuation funds in which he has an interest other than the AON Master Fund together with all other information pertaining to such funds as may be requested by the Wife's solicitor in writing.
26.The Husband shall within 21 days do all things and sign all necessary documents to assign to the Wife his right title and interest in a [compact] motor vehicle registered number ...
27.The Husband is declared the sole legal and beneficial owner of a [SUV] motor vehicle registered number ...
28.The Husband shall pay to the Wife within 60 days of the date hereof a sum equivalent to two thirds of all moneys held by the Husband in bank accounts, and/or financial institution accounts and the like including but not limited to accounts with the National Bank, Commonwealth Bank and St George Bank as at the date hereof.
29.The Husband shall forthwith pay to the Wife a sum equivalent to two thirds of the value of any real or personal property that has not been disclosed by him in his most recently sworn financial statement including but not limited to any interest in a superannuation fund.
30.The Court notes that the Husband has made a complete disclosure in his most recent financial statement of all real and personal assets beneficially owned by him and that the Wife has relied upon such disclosure for the purpose of consenting to these orders.
31.The Husband shall do all things and sign all necessary documents, instructions and/or consents to enable [Ms B] of [N Valuers] to have access to any documents pertaining to any real or personal property owned by the Husband or any documents pertaining to the Husband's interest in any superannuation fund or any document pertaining to the company [O Pty Ltd] or any company related to [O Pty Ltd] or any company in which the Husband has an interest.
32.For the purpose of the implementation of orders 15.5 and 15.6 the Husband and the Wife shall accept the value of any shares or entitlements owned by the Husband as assessed by [Ms B].
33.In the event that the Husband or the Wife shall refuse or neglect to execute any deed or instrument necessary to give effect to these orders then a Registrar of the Family Court of Australia at Sydney shall be appointed pursuant to Section 106A of the Family Law Act (1975) to execute such deed or instrument in the name of the Husband or Wife and to do all acts and things necessary to give validity and operation to the said deed or instrument provided that such Registrar shall be satisfied upon affidavit evidence of the party alleging the refusal or neglect that the other party is in beach of these orders.
34.The Husband and the Wife shall each have the liberty to apply to the Family Court of Australia in relation to the implementation or interpretation of these Orders upon giving the other party 7 days written notice of his or her intention to do so.
Following the making of the orders referred to above, the husband endeavoured to refinance the properties in order to raise the funds necessary to comply with the orders. It was not possible, however, for him to do so within the 60 day period required by the orders. He then sought the wife’s agreement to an extension of time for compliance which was forthcoming.
On 15 August 2005, a bank cheque for $994 422.64 was deposited by the husband’s solicitors into the wife’s solicitors’ trust account by way of compliance with paragraph 1 of the orders.
The parties engaged Ms B to value the interest of the husband in the F Group and in P Pty Ltd, as trustee for the Murcutt Family Trust. On 2 December 2005, Ms B reported that in her opinion, the husband’s shares in these entities had a total value of $2 674 000. This valuation was based on Ms B adopting a capitalisation of future maintainable dividends as her methodology for valuing the F Group. She also opined that on an asset backing of the shares in F and including a goodwill component for the Q Group, the husband’s shareholding would have a value of $3 347 000.
The husband was astonished at this valuation. It was a much higher valuation than he had anticipated. He had just re-financed the three properties to pay the wife in accordance with the orders. He said that he had no further borrowing capacity and therefore could not pay the wife the equivalent of two thirds of this valuation in accordance with paragraphs 1, 15.5 and 15.6 of the orders.
On 24 March 2006 the wife’s solicitors wrote to the husband’s solicitors requesting payment of the sum of $1 777 300, as well as certain other (somewhat modest) amounts by way of satisfaction of the husband’s obligations under the orders. This amount was calculated on the lower valuation by Ms B namely, $2 674 000. The solicitors also indicated that in their opinion the husband was in breach of order 1 of the orders and therefore the (default) provisions of orders 5 to 15.9 inclusive operated. The letter went on to suggest three agents who might be appointed to manage the sales of the three relevant properties. A subsequent letter on the same day indicated that the wife was not interested in receiving a transfer of any part of the husband’s shareholding in any public or private company.
In July 2007 the husband’s solicitors wrote to the wife’s solicitors informing the wife that the husband did not accept the valuation by Ms B. The letter included some details of specific issues which the husband had with the methodology used by Ms B. The letter also indicated that the valuation took no account of capital gains tax implications if the husband was to sell the shares at the valuation assessed. The relevant shares in the F Group could only be transferred with the approval of the directors. The letter also indicated that the company F Pty Ltd would be prepared to purchase two thirds of the relevant shares of the husband, the inference being that the husband would then pay the proceeds to the wife. The relevant amount was $220 992.
In December 2006 a Mr R of S Estate Agents was nominated by the President of the Real Estate Institute of New South Wales to act as agent for sale of the property at J Street, Suburb K.
Throughout 2007 and 2008, the solicitors for the husband and the wife continued discussions about possible ways to resolve the parties’ dispute.
In mid 2008 a Mr V of W Real Estate, Suburb M was appointed by the President of the Real Estate Institute of New South Wales to manage the sale of the properties at 1 and 2 H Street, Suburb I.
During 2008 the wife was endeavouring to have the properties sold and the husband was endeavouring to negotiate with the wife to resolve his concerns about the Ms B valuation. On 13 August 2008 he informed the wife’s solicitors that if the wife pressed ahead with her endeavours to achieve a sale of the properties he would have no alternative than to file a s 79A application.
On 5 March 2009, the husband filed an Initiating Application seeking that the orders made on 27 May 2005 be set aside and that alternative final property orders be made instead. In these circumstances the properties at 2 H Street and Suburb K were withdrawn from sale.
On 9 March 2009 I made orders to the effect that scheduled auctions for each of the three properties be postponed until after the husband’s s 79A application to set aside the substantive orders had been determined.
In September 2009 the husband offered to transfer to the wife two thirds of his shareholding in the F Group of Companies, or alternatively the wife might accept the company’s offer to purchase two thirds of the said shareholding, the proceeds of which after allowing for capital gains tax would be paid to her. The husband also offered to pay an additional $50 000 to the wife.
On 24 August I made directions for the filing of evidence in the s 79A proceedings.
On 10 December 2010 I extended the time for filing the wife’s affidavit and financial statement. I also noted the following matters:
-that a major issue was the now long-outstanding valuation of shares by Ms B and that either the parties would be able to have Ms B prepare corrections and update of such valuation or a new single expert would have to be appointed, and
-that the cost of preparation of Ms B’s updated report would be between $30 000 and $40 000.
On 30 June 2011 I made orders by consent to the following effect:
-that the orders of 9 March 2009 which postponed the auction sales of the properties at 4 and 2 H Street, Suburb I be discharged;
-that the husband and the wife endeavour immediately to sell the properties as specified;
-that the proceeds of sale be paid to pay sale costs including legal costs on sale, to discharge the mortgage, to pay $300 000 to the wife and to pay the balance to a controlled monies account;
-that at the cost of the husband Ms B prepare an updated version of her valuation report including answers to questions from the husband and the wife; and
-the Court noted that the parties hoped that by the adjourned date, 21 November 2011, they would have been able to resolve the matter on the basis of a revised valuation by Ms B.
On 15 November 2011 Ms B quoted the parties approximately $60 000.00 to provide an updated report.

On 21 November 2011 a further consent order was made to the effect that the parties obtain an updated valuation report from Ms B or such other expert valuer as agreed between them, on or before 30 March 2012. The proceedings were otherwise adjourned by consent to 16 April 2012.
Subsequently, the property at 1 H Street, Suburb I was sold.
In November 2011 the husband paid to the wife from the proceeds of sale of 1 H Street, Suburb I, the sum of $45 617.36 by way of partial compliance with the order of 30 June 2011 that she be paid $300 000. The other properties remained unsold.
The husband subsequently sought an order to the effect that accountants, T Accountants, at his expense, prepare an updated valuation of his interest in the F Group. Such an order was not made.
The husband has continued to live in the property at 2 H Street, Suburb I.

Cross-examination

The husband was cross-examined. The wife was ill and did not attend court.

Submissions

The husband

The submissions on behalf of the applicant husband were to the following effect.
Sub-section 79A(1)(b) enables the Court to set aside a property order where the Court is satisfied that in the circumstances that have arisen since the order was made it is impracticable for the order to be carried out or impracticable for a part of the order to be carried out.
Within three months of the consent orders having been made (27 May 2005) the husband paid the wife the sum of $994 422 in accordance with order 1 of the orders.
As soon as the valuation became available, the orders became incapable of being complied with because they required the husband to pay to the wife an amount which, on any view of the assets, he could not possibly raise.
The default provisions required sale of properties. The properties at Suburb K and 2 H Street would have had a value after discharging the mortgage of approximately $400 000 to $500 000 between them.
The parties then had lengthy negotiations in an endeavour to resolve matters. In relation to any criticism of the husband for not commencing his s 79A proceedings until early 2009, this was because of negotiations. In any event, similarly, the wife did not take any enforcement proceedings. This demonstrates that the parties were endeavouring to arrive at some resolution. They were trying to work something out on the basis of a valuation about which the husband was “astonished”. He instructed his solicitors to engage those of the wife to ascertain whether the wife would be prepared to accept a transfer by the husband of two thirds of his shares in the entities. It is true that at no time has the wife been attracted to the husband arranging transfer of shares to her, notwithstanding that the Board for the Group has approved such a transfer if required.
By resisting this application the wife is endeavouring to do her very best to maintain her right to receive more than $1.7 million. If she truly believed that the valuation was proper and truly believed that the husband could realise the shares on the open market for anything like the amount of the valuation, she would take the shares.
It would be hard to find a set of facts which would demonstrate impracticability as much as exists in the present case.
Learned senior counsel for the wife has been somewhat critical of the husband for not placing before the Court evidence which might demonstrate error in Ms B’s valuation. But the husband has been trying since February 2012 to persuade the wife to join with him to engage T Accountants, to prepare a valuation of his interests in the Group and the Trust. The wife has not cooperated in this.
There is no evidence in proper form which would tend to suggest that it is likely that the F Group will be restructured to free up capital which could then be made available to the husband to enable him to comply with the Court orders.
If the Court was to accede to the wife’s response and dismiss the husband’s application to set aside the orders, the husband would proceed to sell the properties at 2 H Street, Suburb I and 301 J Street, Suburb K. He would receive net proceeds of approximately $400 000, which would mean that the wife would still be owed something like $1.3 million which would force the husband into a situation of virtual destitution and bankruptcy. The husband being 66 years of age, that is not an outcome that the Act would envisage.

The wife

The submissions on behalf of the wife are to the following effect.
The applicant’s case is misconceived. Firstly, because it ignores the fact that the husband holds shares which have considerable value and secondly, the submissions on behalf of the husband are against authority and the manner in which s 79A(1)(b) has been interpreted.
The parties, with their eyes wide open, consented to orders that the shares be valued by Ms B. She produced the valuation of approximately $2.6 million. Her higher valuation was just a cross-check method of valuation.
The husband has made no effort to obtain any evidence to establish that in some way Ms B has made an error in her valuation.
The consolidating work sheet for F Pty Ltd for the nine months ended 31 March 2011 shows total assets in excess of $161 million and liabilities in excess of $69 million. This would reflect net assets in excess of $90 million. The husband’s interest in the group is 6.32 percent which would be between $5 million and $6 million. Accordingly, it could not be said that Ms B is wide of the valuation mark. While it is true that such assets are held by a proprietary company, there appears to be some succession planning underway. In all the circumstances the Court should infer that the shareholders of the group are unlikely to accept a situation indefinitely where they accept modest dividends in circumstances where, on winding up, there would be such a significant amount of capital available. It was submitted that it is clear from the evidence that some moves are being taken within the group to “unlock the treasure trove”.
The husband accepted that the consent orders represented a fair and reasonable division of assets between the parties.
It was submitted that there is a well-established line of authority which confines the ambit of s 79A(1)(b). Learned senior counsel referred to the cases of In the Marriage of Rohde (1984) FLC 91-592; Fellows v Fellows (1988) FLC 91-910; In the Marriage of La Rocca (1991) 14 Fam LR 715; FLC 92-222 and Cawthorn v Cawthorn (1998) FLC 92-805.
The orders were made on the footing that the parties would comply with them regardless of any future development. If there was any measure of uncertainty about the outcome of the valuations to be undertaken by Ms B, that was a “risk” which the parties assumed on the basis that they respected her expertise as a valuer and agreed to be bound by her determination. This was reinforced by order 32 of the consent orders which expressly provided that the husband and wife accepted that the value of the relevant interests was to be as assessed by Ms B. In such circumstances, the law, as between parties to a commercial contract, is clearly stated in the New South Wales Court of Appeal case of A Hudson Pty Limited v Legal and General Life of Australia Ltd [1984] 1 NSWLR 1. This Court should apply the same principles.
A consideration which is relevant to the exercise of the Court’s discretion is the amount of time taken by the husband in bringing his application. The orders were made more than 7½ years ago and contained many time constraints. The husband has not demonstrated a willingness to observe such constraints.
As a matter of construction, order 1 of the consent orders bound the husband to pay two discrete sums of money. The first was a sum equivalent to two thirds of the value of the specified properties. The second was the payment based on Ms B’s valuation. The second payment was not in any way subject to, or conditional upon, any assessment of the value of the properties.

Discussion

Sub-section 79A(1)(b) of the Family Law Act 1975 provides as follows:
79A(1)Where, on application by a person affected by an order made by a court under section 79 in property settlement proceedings, the court is satisfied that:
…
(b)in the circumstances that have arisen since the order was made it is impracticable for the order to be carried out or impracticable for a part of the order to be carried out
…
the court may, in its discretion, vary the order or set the order aside and, if it considers appropriate, make another order under section 79 in substitution for the order so set aside.
As indicated above it is contended by the husband that he was astonished by the high value placed on his shares in the F Group by Ms B. He takes issue with the valuation. In any event, the shares are held in a proprietary company and he is unable to sell them other than at a price which would represent only a small fraction of the valuation by Ms B. He does not have anything like the money which would be required to pay the balance required by the orders. The equity in the remaining two items of real estate would not be anywhere near sufficient to meet the balance required. As indicated in the submissions referred to above, a sale of those two properties would still leave the husband significantly short of what he would owe to the wife under the orders based on Ms B’s valuation. He has offered to arrange for the transfer of two thirds of his said shares to the wife, or a sale as indicated above. But the wife has informed him that she has no interest in accepting any such transfer of his shares to her.
As indicated above, it is submitted that orders 15.5 and 15.6 should be set aside because by reason of the above matters, particularly what is said to be the high valuation, being circumstances which have arisen since the orders were made, it is impracticable for the orders to be carried out.
As learned senior counsel for the wife has indicated, the meaning of s 79A(1)(b) was considered by the Full Court of this Court in In the Marriage of Cawthorn 23 Fam LR 86; (1998) FLC 92-805. In that case the husband, in seeking to establish a ground of impracticability under s 79A(1)(b), sought to rely on the deterioration of his financial position caused by problems which arose in his accountancy partnership. One of his partners embezzled funds.
At page 92 (Fam LR) the Full Court said as follows:
… it becomes important … to give consideration to the approach taken by Kay J in La Rocca … His Honour, after setting out the relevant facts, said (at 78,536):
“In those circumstances where the husband is apparently insolvent can it be said that circumstances have arisen since the making of the order making it impracticable for the order to be carried out? Can it further be said that if such circumstances do exist should the Court exercise its discretion to set aside any part of this order?
There have been surprisingly few decisions on the meaning of s 79A(1)(b) since its enactment in 1983. A section with identical import appears in s 87(8) of the Act in dealing with the circumstances in which the court ought to revoke the approval of a maintenance agreement. There are, as I understand it, only two reported decisions on either section.
In In the Marriage ofRohde (1984) 10 Fam LR 56; FLC 91-592 Gee J examined the meaning of the word ‘impracticable’ and concluded that it was something different from impossible and said at Fam LR 64 ; FLC 79,768:
“(a) It is not enough that circumstances have arisen since the order was made which make it unjust for the order or part of the order to be carried out; the onus is upon the applicant to establish to the reasonable satisfaction of the court, that in the circumstances that have arisen it is impracticable for the order or part of the order to be carried out.
(b) The word ‘impracticable’ means gleaning a definition from the Shorter Oxford Dictionary, ‘not practicable’, ‘that cannot be carried out or done’; ‘practicably impossible’; ‘unmanageable’; ‘intractable’.”
The section, in my view, is capable of a very narrow application or a very broad application depending upon as best as I can glean it, the intent of Parliament. The section has to be read in an enactment which includes s 83, that spells out the circumstances in which Parliament thinks it is appropriate to vary orders made under the Family Law Act where a change of circumstances makes it appropriate to no longer require the earlier order to be complied with.
The court has a general power in respect of maintenance orders to vary or discharge an order but there should not be a variation unless since the order was made or last varied the circumstances of the person for whose benefit the order was made have so changed, or the circumstances of the person liable to make payments under the order have so changed to justify it in so doing.
The distinction between the variability of maintenance orders and the variability of property orders was, in my view, one of the underlying bases upon which the Family Law Act was established. Reference is made to that distinction in the report of the Joint Select Committee of the Family Law Act at para 5.90 when citing Murphy J in Taylor v Taylor (1979) 5 Fam LR 289 at 301; FLC 90-674 at 78,597 the Committee repeats his Honour’s observation:
“The difference in legislative treatment of property and maintenance orders is due to strong policy considerations in not reopening property orders after time for appeal has elapsed.”
After referring, at some length, to the Joint Select Committee’s report, and to the opinions of text writers and commentators, Kay J at Fam LR 720; FLC 78,538 continued:
“My own view is that each of the subsections of s 79A have to be seen in context. They have to be seen against the comments of Murphy J, of the dichotomy between property and maintenance, and of the narrow bases upon which it is said it is appropriate to step away from the permanency of a property order.
…
My own view is that s 79A(1)(b) should be narrowly interpreted. …
My own view is that the concept of impracticability, as referred to in this section, is akin to the application of the doctrine of frustration in contractual matters. What the Parliament is concerned with and what ought to be concerning the court is the happening of events which cannot be reasonably foreseen, which will have the effect of causing an injustice to one of the parties if the happening of such events is not given effect to.
In standard contractual doctrine, I think that is as comfortably as anywhere described by Russell J. in Re Badische Co Ltd (1921) 2 Ch 331 at 379, where his Honour said:
‘The doctrine of dissolution of a contract by the frustration of its commercial object rests on an implication arising from the presumed common intention of the parties. If the supervening events or circumstances are such that it is impossible to hold that reasonable men could have contemplated that event or those circumstances and yet have entered into the bargain expressed in the document, a term should be implied dissolving the contract upon the happening of the event or circumstances.’
Now, in my view, what the appropriate application of s 79A(1)(b) ought to be is that circumstances that have arisen in which it becomes impracticable to carry out the orders are circumstances that could not reasonably have been contemplated and that in such circumstances, whilst impossibility is not the test and impracticability is, it may then become just and equitable to change the orders.
The potential insolvency of one of the parties in the future is not such a matter, in my view. In every case before the Court property values may change, go up or down, business may flourish or not flourish, the vicissitudes of life may affect one of the parties.
In an appropriate case, such as the extreme circumstances described in Barder and Barder (1987) 2 All ER 440 in the House of Lords, where the mother killed herself and the children after the making of the order, then appeal out of time and fresh evidence is the appropriate answer. However the commercial failure of one of the parties post the making of the orders which will lead to the orders not being capable of being fully implemented does not, in my view, amount to a basis on which to set the order aside.
That situation leads to a problem with enforcement. It may be that the bankruptcy laws would have to take over, but it is not an appropriate basis for having orders set aside and fresh orders made at the behest of the party who has suffered the financial embarrassment. There is no provision in the legislation to have matters looked at a second time if one of the parties suddenly becomes wealthy and, in my view, I do not see that the legislation can be appropriately read as applying when one of the parties becomes suddenly poor, in normal business circumstances.”
The general approach of Kay J in La Rocca's case appears to have been generally followed by Moss J in Franklin and McLeod (1993) 17 Fam LR 793 at 805; (1994) FLC 92-481 at 81,025 where he said:
“The expression ‘to be carried out’ where it appears in s 79A(1)(b) may not be the most felicitous, especially in relation to orders which require the payment of money by one party to the other, or on behalf of the other. The same expression in s 87(8)(d) is in a context where it can be readily understood. But, in the case of orders of the court, the court, when called upon to do so, enforces its orders to the extent that its powers and its jurisdiction, and the capacity of the parties to discharge the obligations imposed by the orders, permit it to do so. Whenever a court makes an order that one party pay money to or on behalf of the other party that order may only be enforced to the extent the relevant party has the financial capability of discharging the obligations under the order. If it be relevant, the statutory provision does not speak of it being impracticable to enforce an order.”
The Full Court went on to say (at page 95) that it is important to preserve the dichotomy between maintenance orders which are variable and orders for property settlement which are basically permanent in their nature. They said that this concept has underpinned the Family Law Act from its inception. They said for this reason they confirmed the approach taken by Kay J that the provisions of s 79A should be construed strictly.
It seems to me that it should have been reasonably foreseeable by both parties that one or other of them might be disappointed by the valuation of Ms B. But as was submitted by learned senior counsel for the wife, this was a risk which was taken at the time. In these circumstances, in my view, it cannot reasonably be suggested that the circumstances of the valuation turning out to be higher than the husband had thought possible is a circumstance which as such has made it impracticable for the orders to be carried out.
As Gee J said in Rohde (above), the word “impracticable” means “not practicable” or “that cannot be carried out or done”, or “practicably impossible”.
In my view, it remains practicable for the orders to be carried out. After all, what each of orders 15.5 and 15.6 require is no more than a payment to the wife the quantum of which is defined in a particular way which is quite clear.
It remains practicable for the husband to pay the wife. All he must do is the act of payment of money. It might be unjust for him to do so. But that is not the term used in the sub-section.
It was suggested on behalf of the wife that the Court would be cautious about the husband’s assertions that his capacity to pay the wife was as limited as claimed by him. I have referred above to the suggestion in the submissions by learned senior counsel that there might be assets in the F Group with a value in excess of $90 million.
I must say I am far from being persuaded about this.
There were some emails between the accountants for the F Group, T Accountants, and a Mr U, secretary of the Group during 2011 which came into the evidence as Exhibit 5. These appeared to indicate that some advice had been given by the Group’s accountants to Mr U concerning the possibility of restructure of the Group and about succession planning.

There was also some suggestion that the accountants had been asked by F Pty Limited to prepare a market valuation report of the issued capital of the company for stamp duty purposes as at 31 March 2012. Amongst the documents in Exhibit 5 was a document which appeared to be such a draft report as at the conclusion of the financial year ending 30 June 2011.
In my view, these documents are of no real assistance in these proceedings. All they can demonstrate is that at the time, the company appeared to have sought advice from the accountants about the matters referred to.
In his financial statement sworn on 4 September 2012 the husband estimated the value of all items of his property including his shares (at a value of $336 000) as being $1 651 800. He estimated his liabilities including his outstanding legal costs as being $916 285. He also included his superannuation with a value of $340 000. This would be total net assets of $1 075 515. Presumably the superannuation would not be readily available. In any event, two thirds would have to be paid to the wife pursuant to order 20 of the orders.
Clearly this would be far from sufficient to satisfy the requirements of the order.
But this fact that the husband would appear not to have the funds available to fulfil his obligations under the orders is relevant to enforcement and not to impracticability. It might mean that the orders are not capable of being fully implemented. But in my view that is a different thing from what is required to enable the Court to set the orders aside under s 79(1)(b).

Conclusion

Accordingly, in my view, considering the manner in which s 79A(1)(b) has been interpreted by this Court, I am bound to find that it is not available to the Court to set aside orders 15.5 and 15.6 of the orders of 27 May 2005 as has been sought by the husband. That is, not on the basis that in the circumstances that have arisen since the orders were made, it is impracticable for the orders to be carried out.
Having arrived at this conclusion I shall have to dismiss the husband’s application.

Further Observations

To some extent I have wondered why the husband did not include in his application, an application for leave to file out of time a review of the exercise of power by the Deputy Registrar in making the consent orders of 27 May 2005.
Depending on available evidence, it might be possible to demonstrate that there has been a defect in the process of the making of the order.
There can be no question about the constitutional validity of the relevant provisions of s 37A and the rules under which the Deputy Registrar was delegated power to make the consent orders. This was upheld by the High Court in Harris v Caladine (1991) FLC 92-217; 14 Fam LR 593.
But the High Court also made observations about what would be required of Judges and Registrars in properly exercising their power to make a consent order about property. These matters were discussed by Mason CJ and Deane J at FLC page 78,470; Fam LR 598, by Brennan J at FLC page 78,474; Fam LR 603 and by Dawson J at FLC pages 78,485 and 78,486; Fam LR 617.
The principles involved were also the subject of consideration by the Full Court of this Court in In the Marriage of Prowse (1995) FLC 92-557; 18 Fam LR 348.
As I have said, there was no such application before the Court. Such an application, of course, depending on the evidence, might have had the potential for the orders to have been set aside in total, opening up the way for new property proceedings.

I certify that the preceding seventy-eight (78) paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Johnston delivered on 26 July 2013.

Associate:

Date: 26 July 2013