Narkis & Narkis (No 3)

[2019] FamCA 278

FAMILY COURT OF AUSTRALIA

NARKIS & NARKIS (NO. 3) [2019] FamCA 278

FAMILY LAW – PROPERTY – where the wife did not participate in property proceedings and the court proceeded on an undefended basis – where the wife now seeks to argue that the power of the court to alter interests in property was not exhausted – consideration of the extent of the s 79 power – where the court finds that the property of the parties was dealt with by the orders and the power is therefore spent.

Family Law Act 1975 (Cth)

Bevan and Bevan (2013) FLC 93-545
Branchflower and Branchflower (1980) FLC 90-857
Florie and Florie (1988) FLC 91-913
Gabel & Yardley (2008) FLC 93-386
Hickey and Hickey and the Attorney-General for the Commonwealth of Australia (intervener) (2003) FLC 93-143
Horrigan & Jennings [2018] FamCAFC 206
Mullane v Mullane (1983) FLC 91-303
Narkis & Narkis (see [2016] FamCA 976; [2016] FamCA 1048; [2017] FamCA 52; [2017] FamCA 118; [2017] FamCA 184; [2017] FamCA 200; [2017] FamCA 225; [2017] FamCA 226)
Ramsay and Ramsay (No 2) (1983) FLC 91-323
Robson and Robson [2003] FamCA 217
Strahan and Strahan (interim property orders) (2011) FLC 93-466

APPLICANT: Ms Narkis

RESPONDENT: Mr Narkis

SECOND RESPONDENT/PROPOSED

INTERVENER:

Mr HH

FILE NUMBER: MLC 210 of 2014

DATE DELIVERED: 3 April 2019

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Cronin J

HEARING DATE: By Way of Written Submissions

SUBMISISONS RECEIVED FROM

COUNSEL FOR THE APPLICANT: Mr McEvoy QC With Ms Matson

SOLICITOR FOR THE APPLICANT: Farrar Gesini Dunn

COUNSEL FOR THE RESPONDENT: Ms Lane

SOLICITOR FOR THE RESPONDENT: Cantwell Family Lawyers

COUNSEL FOR THE SECOND RESPONDENT/PROPOSED INTERVENER: Mr Wraith

SOLICITOR FOR THE SECOND RESPONDENT/PROPOSED INTERVENER: Tisher Liner FC Law

Orders

1. That paragraph 7 of the wife’s amended initiating application filed 24 May 2018 is dismissed.

2. That Mr HH (as trustee of the Mr Narkis and Ms JK Family Trust) be joined as a party to the proceedings and forthwith file a Notice of Address for Service.

3. That all outstanding applications for final orders are adjourned to a date to be fixed to be listed for final hearing before a judge.

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 Narkis & Narkis 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).

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLC 210  of 2014

Ms Narkis

Applicant

And

Mr Narkis

Respondent

And

Mr HH

2^nd Respondent

REASONS FOR JUDGMENT

1. As long ago as 28 March 2018, orders were made that in respect of a substantive application by Ms Narkis (“the wife”) under s 79A of the Family Law Act 1975 (Cth) in which she also sought other relief, she would by 4 May 2018, file written submissions in relation to:

   (a)Her assertion that the power of the court pursuant to s 79 of the Act was not exhausted after the making of final orders on 13 April 2017 with respect to each of:

   (i)A superannuation fund; and

   (ii)A family trust; and

   (b)The joinder of the husband’s son Mr HH in his capacity as trustee of the family trust.

2. The first respondent to these proceedings is Mr Narkis (“the husband”).  He was to file a submission on the issues by 5 June 2018.

3. The second respondent is the husband’s son Mr HH in his capacity as the trustee of the Mr Narkis and Ms JK Family Trust. He was to file his submission by 15 June 2018.  The reference to “Ms JK” is to a person described as the husband’s former wife from his earlier marriage.

4. The focus of these reasons is on (a) and (b) in paragraph [1] of these reasons but mostly (a).

5. The wife’s submissions were filed on 24 May 2018.  The husband’s submissions were filed on 16 August 2018.  The second respondent’s submissions were filed on 28 October 2018.  In so filing, all parties were out of time with the ordered timetable but no-one appeared to take issue with the delays.

6. Having filed submissions for the wife, her then solicitors queried whether there might be a further mention for further oral submissions as had been foreshadowed in the orders.  Shortly after that query, an ancillary issue brought about an interlocutory application that was heard on 5 December 2018.  However, no specific orders were made for the filing of further material in relation to the submissions about (a) and (b) above.  The parties reached agreement amongst themselves that the wife would file a submission in reply to that of the husband (and presumably the second respondent).  That was to be done by 21 December 2018 but nothing was filed.  To an extent, these reasons have been delayed because of the prospect of those submissions being filed.  There was a further interlocutory and unrelated hearing in February 2019 at which the wife appeared without legal representation during which she complained that her solicitors had not filed material that she had given them instructions to so file.  Despite that, no further submission has been filed.  Accordingly, the determination of these issues is based upon the three submissions.

Background

1. For ease of convenience, I repeat paragraphs [3] and [4] of the reasons for judgment published on 28 March 2018.  There I said:

   [3]This case has an extensive and difficult history which does not need to be explained here but various orders and judgments have been published under the pseudonym Narkis & Narkis (see [2016] FamCA 976; [2016] FamCA 1048; [2017] FamCA 52; [2017] FamCA 118; [2017] FamCA 184; [2017] FamCA 200; [2017] FamCA 225; [2017] FamCA 226).

   [4]The wife did not participate (as she should have) in the April 2017 final orders; they were made on an “undefended basis” at the urging of the husband. An undefended hearing does not mean that the applicant obtains a judgment by default and in this case, the husband was required to establish that the orders he promoted were just and equitable (see s 79 (2) of the Family Law Act 1975 (Cth) (“the Act”)). In that truncated hearing, I expressed concern about the state of the evidence but the husband maintained that the Court should do the best it could. One consequence of that was, and is, an unresolved question of whether the Court’s power arising from its jurisdiction under s 79 of the Act is, and was, exhausted by the April orders.

2. Mention was then made that there was:

   …the question about whether the power of the court under s 79 of the Act is exhausted anyway. That issue also focuses on whether the parties self-managed superannuation fund was the subject of the orders. The April 2017 reasons dealt with my concerns about the evidence and relevantly, this was an interest in a self-managed superannuation fund.

3. At paragraph [35] of the March 2018 reasons, I said (and all parties agreed) that written submissions should be filed because the issue was one of law rather than fact.  I then remarked:

   In my view, that is the most efficacious way of handling the point because it seems to be the wife’s case that the power is not exhausted on that point in which case, if so found, the pursued s 79A relief may not be necessary.

The wife’s submissions

1. Senior counsel for the wife submitted that both parties were members of the Narkis Self-Managed Superannuation Fund and that the court had “refused” to deal with the parties’ interests in the fund when making the property orders in 2017. Consequently, it was submitted, the jurisdiction under s 79 of the Act in relation to that fund had not been exhausted.

2. Senior counsel pointed to the fact that in the April 2017 proceedings, the husband had sought orders that the wife resign from the fund and roll over all of her member entitlements to him.  The logic behind that had been that the husband was the sole director of the trustee of the fund which had been established prior to his relationship with the wife and all contributions to it had been made by him. 

3. Senior counsel observed that an examination of the reasoning of the court showed that there was no evidence as to what entitlement the wife had as a member yet the husband had said that the fund was “owned jointly”.  Senior counsel correctly observed that I had declined to make any order in respect of the self-managed superannuation fund and that at paragraph [99] of the April 2017 reasons, I had observed:

   [98]To compound matters, even though the husband makes reference to the fact that he made the contributions to the fund, that is only part of the assessment process imposed upon the court if it determines that it is just and equitable to make an order.  One of the considerations in that first step is to decide whether, as a result of what the parties have done, their entitlements are appropriately reflected in the existing legal or equitable interests.  The fact that the husband made the contributions from his earnings is only part of the issue.  I do not know what the trustee has done with those funds. 

   [99]Accordingly, I decline to make any order in relation to the self-managed superannuation fund.

4. It was then submitted that where the court had explicitly declined to make any order in relation to the “parties’ interest” in the fund, the court’s power to alter the interests remained extant.  No authority was given for that proposition.

5. Senior counsel then referred to a hearing in December 2017 in which I had acknowledged that the superannuation issue was unresolved and that therefore the jurisdiction was still alive but whether that was a correct statement of law or not is now the subject of these reasons.  For the reasons that follow, I consider it was not.

6. Senior counsel for the wife then turned his attention to the Mr Narkis and Ms JK Family Trust.  He mentioned that I had dealt with the trust as a financial resource available to the husband but an examination of the reasons in April 2017 will show that that was simply a recitation of what the husband was saying.  The absence of evidence from the husband about what that expression meant to him was one of the concerns about the state of his evidence.

7. Senior counsel then submitted:

   If the court accepts that the assets of the Trusts should properly have been regarded as property of both the Husband and the Wife then the court should conclude that the s 79 power has not been exhausted with respect to property of the trust.

   Again, no authority was provided for that proposition and reliance seemed to be entirely on the assertion that the trust was property of both the husband and the wife.  As I shall mention later in these reasons, the husband disavowed any interest in the trust albeit he was a beneficiary.

8. As senior counsel for the wife observed, I had been critical of the husband’s evidence in the 2017 undefended hearing on the basis that it was “vague, inadmissible or unhelpful”.  Importantly, it must be noted that despite having heard submissions from the husband’s counsel at that time, only days later, I had to bring the proceedings back again because I was concerned about the husband’s evidence.  The solicitor for the husband rather than his counsel represented him on that return date and she indicated that her instructions were that the court had to do the best it could with the evidence presented.  In other words, no application was made to re-open the case notwithstanding my expressed concern about the state of the evidence.

9. In the December 2017 hearing, having raised the question about the superannuation fund, the transcript showed that I raised the question in relation to the trust, querying whether it may be that the s 79 jurisdiction was not exhausted. I have now had the benefit of significant submissions and an opportunity to consider the law.

10. At paragraph [27] of the wife’s submissions, it was said that given the lack of evidence as to the value of the trust and the inconsistency between the husband’s evidence and the instructions that were given to the single expert witness who was obliged to value the group of corporate and trust interests of the husband (which group included this family trust) together with the wife’s argument that the assets of the trust ought to be treated as property of the parties (the wife’s present position):

    It must follow that the court retains jurisdiction to deal with the trust property pursuant to s 79, which power was not exhausted by the making of the Property Orders.

    For the reasons that I shall now set out, that does not address the jurisdiction issue at all.

11. In respect of the second issue concerning the joinder of Mr HH, senior counsel for the wife submitted that it was elemental that in circumstances where relief was sought which directly affected the trust, it was necessary to join Mr HH in his capacity as trustee. The submission said nothing more.

The husband’s submissions

1. Senior counsel for the husband (who had not appeared for the husband at the 2017 final hearing and some of the 2018 interlocutory hearings) submitted that the power of the court pursuant to s 79 of the Act was exhausted upon the making of the orders on 13 April 2017. The submission went on to say that all issues between the husband and the wife in relation to the alteration of interests in property were the subject of “res judicata, issue estoppel and/or anshun estoppel”. 

2. Senior counsel for the husband first turned to the orders made on 13 April 2017 and noted that they said that save as to issues of any superannuation entitlement, each party otherwise retained to the exclusion of the other, all other property in that person’s name as at that date and that the applications were otherwise dismissed. It was submitted that the court’s refusal to make orders in relation to the superannuation fund was itself an exercise of the s 79 power. It was further submitted that whilst the fact that paragraph [12] of the orders made reference to “save as to issues of any superannuation entitlement”, it did not act as a “carve out or reservation” of the power.

3. Senior counsel for the husband referred to Robson & Robson [2003] FamCA 217 (Full Court – Finn, Holden and Dessau JJ) wherein the plurality said that the court had power to dismiss an application on its merits if it considered it necessary to do so. At first instant, it seemed clear that there was virtually no property and the trial judge had dismissed the application. The unsuccessful applicant then applied under s 79A to set aside that dismissal order. On the s 79A application, the judge had concluded that there was no power to set aside orders dismissing an application because no order had been made to alter interests in property in the first place. The Full Court ultimately concluded that an order dismissing an application for orders altering interests in property could be held to be an order made under s 79 “for the purposes of s 79A”. This decision is not of much assistance because it relates to a case where there was no known property for the purposes of the alteration of interests.

4. Senior counsel for the husband submitted that my refusal to make any order in relation to the self-managed superannuation fund combined with the applications being otherwise dismissed was an exercise of the s 79 power. He submitted that declining to make any order combined with the determination of all other property interests meant that final orders relating to the superannuation fund had been made. I have interpreted that submission to say that as the husband had sought a splitting order to him as to 100 per cent of the wife’s interests in the fund, the refusal to make that order was an exercise of the power under s 79 of the Act. For example, if each party had a member account, a refusal to make a splitting order in either party’s favour and a dismissal of the proceedings would mean that each party retained the interest that they had in the fund as a member.

5. Ultimately, it was the submission of the husband that the court was now functus officio. It was submitted that the wife’s application for s 79 relief should be dismissed.

6. In relation to the family trust, it was argued on behalf of the husband that in making findings about the interests of the parties in property, the trust was excluded and thus, no further findings could be made.

7. In addressing the legal issues, it was submitted that the issue of the exhaustion of the s 79 power had to be considered within the statutory framework. Reference was made to a number of authorities. I deal with them briefly now.

8. In Branchflower and Branchflower (1980) FLC 90-857, the parties in 1971 had an application for divorce before the Supreme Court of Victoria. A consent order was made in the Supreme Court that the husband was not to deprive the wife of possession of the former matrimonial home until a certain date whereupon, it was to be sold and the wife was to be paid a certain sum. The wife then sought orders in the Family Court of Australia under the Act for the husband to transfer to her the home (and other alternate orders). That is, rather than take her cash entitlement on the sale as determined consensually in the Supreme Court, she sought the whole of the equity in the home. The Full Court held the power to alter interests in property was spent by the Supreme Court of Victoria orders. There was no suggestion however of unaltered property and accordingly, the wife had to fall back on s 79A of the Act.

9. In a similar vein, but with a clear focus on the alteration of property interests, the High Court of Australia heard a special leave application in Mullane v Mullane (1983) FLC 91-303. The relevance of this decision lies in the fact that the plurality concluded that s 79 did not authorise “a mere modification of the liberty to enjoy property”; its function was only to “work an alteration of the legal or equitable interests in the property of the parties or either of them”. Significantly, in contemplating the distinction, the plurality said that an interest in property was a right of a proprietary nature not a mere personal right.

10. What must now be considered is whether the 2017 orders altered rights of a proprietary nature or alternatively, amounted to a refusal to do so on the basis of an absence of justification for such an alteration. One question is whether such a refusal is an exercise of the s 79 power such as to exhaust that power.

11. In Florie and Florie (1988) FLC 91-913, the Full Court considered Mullane and said that the High Court of Australia did not address the situation where all property was concerned. The Full Court considered the High Court was “giving recognition” to the doctrine of merger and saying that jurisdiction could only be invoked under s 79 once and, having previously sought an order meant a further application “invoking the same jurisdiction” could not be made again. I consider the critical considerations of whether the power to make orders was spent rather than whether there was an order that affected property in what might (on one view) be seen as a partial exercise of that power. In the latter exercise, the order must have the appearance of an interim order pending a final order and one which can therefore be altered at a final hearing. This question also raised the issue of whether, when an interim or partial distribution of property occurs, the power is a s 79 exercise or rather, s 80. I do not need to answer that here but I examine it again when considering what I understand were the views expressed by Finn J.

12. In Ramsay and Ramsay (No 2) (1983) FLC 91-323, the parties’ divorce was granted under the Matrimonial Causes Act 1959 but, at the same time, the court made an order that the husband settle upon the wife his interest in the home. Nygh J questioned whether that latter order was an order equivalent to that which could be made under s 79 of the Act. His Honour held that this order “undoubtedly worked” an alteration of the legal and equitable interests in the home. As such, the only relief for the applicant lay in s 79A.

1. Reference was also made to Hickey and Hickey and the Attorney-General for the Commonwealth of Australia (intervener) (2003) FLC 93-143 wherein the Full Court said that an order under s 79 was a “once and for all” proposition. Their Honours added:

   Although there may be partial or interim orders (s 79(6) of the Act) ultimately there is only one exercise of power under s 79 in respect of the property of the parties.

2. Taking up the point I mentioned above in Florie, in Hickey, in referring to what might be described as the general “catch-all” type of order so often seen in this court, the Full Court said (at paragraph [61] and [62]):

   [61]The entire order does not cease to be an order pursuant to s 79 simply because one part of it confirms the interests of one party in certain property.

   [62] In our view, even if a provision (a catch-all) does not, in the circumstances, alter an interest in property, it stands as part of an entire order which adjusts the interest of the parties in the whole of their property. The order does not cease to be an order pursuant to s 79 simply because one paragraph of the order provides that otherwise each party shall retain what they already have, because, as a whole, the entire order works as an alteration of property interests between the parties.

   This latter point is relevant to the issue of the superannuation member accounts here.  As there was a refusal to make the order as sought by the husband, paragraph [12] of the orders becomes the focus.  That order read:

   [12]That save as to issues of any superannuation entitlement, each party otherwise retain to the exclusion of the other, all other property in that person’s name as at this date.

3. In the reasons for judgment with reference to paragraph [12] of the orders, I said as follows:

   [95]The evidence of the husband was that the trustee of the self-managed superannuation fund is Narkis Superannuation Pty Ltd and that it was formed in August 2000. He is the sole director and shareholder for the fund. A curious sentence then appears as follows in his affidavit:

   The wife is a member and has an account in this Fund?

   I am not entirely sure why the issue was questioned. 

   [96]…

   [97]He then obtained a valuation of those entities and that is how the figure of the value of the fund was determined.  There is no evidence as to what entitlement as a member, the wife has.  Accordingly, I am unable to determine the legal and equitable interests of the parties in that fund.  Even if I could, all the husband’s affidavit says is that the fund is owned jointly.  That is an odd statement having regard to the fact that the trustee is presumably the owner of the funds and the parties have member account entitlements subject to the provisions of the relevant trust deed. 

   [98]To compound matters, even though the husband makes reference to the fact that he made the contributions to the fund, that is only part of the assessment process imposed upon the court if it determines that it is just and equitable to make an order.  One of the considerations in that first step is to decide whether, as a result of what the parties have done, their entitlements are appropriately reflected in the existing legal or equitable interests.  The fact that the husband made the contributions from his earnings is only part of the issue.  I do not know what the trustee has done with those funds. 

   [99]Accordingly, I decline to make any order in relation to the self-managed superannuation fund.

4. The superannuation fund exclusion from the catch-all was undertaken because there was no ability to discern what interests (if any) each party had (as a member) and whilst the wife now argues that the exclusion meant there was no alteration of the parties’ respective interests, it does not mean that the order made was not an exercise of power.  This point seems to me to have been considered in Hickey at paragraph [85] where the Full Court referred to the permissive power of the court to alter interests of parties in a superannuation fund.  As their Honours said, the legislation made splitting orders “optional” rather than compulsory.  As it seems to me, in the 2017 proceeding, the court opted not to alter the interests and the parties therefore each retained those that they have or had. 

5. Senior counsel for the husband then discussed the distinction between varying substantive rights (as against machinery provisions) but in my view, that problem does not arise here.

6. The next authority to which counsel drew my attention was Strahan and Strahan (interim property orders) (2011) FLC 93-466. This decision focussed on interim or partial orders before the making of final orders. It was submitted that the Full Court was indicating that at an interlocutory stage, orders could be made prior to the final exercise of power but it was after the exercise of that final power that it was then spent or exhausted. It was submitted that much of the distinction between interim and final orders arose in Gabel v Yardley (2008) FLC 93-386. It was asserted by the husband that the wife’s submission arose from an implicit misunderstanding of dicta by the Full Court in Gable v Yardley.  I am not sure that there was any such misunderstanding. 

7. Albeit dicta, the reasoning of Bryant CJ and Coleman J (with whom Finn J ultimately agreed) is powerful and, as it seems to me, is decisive of the determination of this matter.  As such I return to it below.

8. Counsel for the husband addressed principles of res judicata, issue estoppel and/or anshun estoppel but because I consider the matter can be addressed on the spent or exhausted power issue, I think there is no need for me to address those particular matters.

9. In relation to the issue of the joinder of Mr HH, the husband agreed. I shall therefore make the orders.

10. In respect of the s 79 issue, the husband seeks that the wife’s application be dismissed. I agree that that is the appropriate order.

The submissions of the second respondent

1. At paragraph [2] of the second respondent’s submissions, it was said that as the wife had been given a reasonable opportunity to participate in the trial and had failed to do so, she ought not be heard to complain later that relevant matters were not adequately explored at trial. If that general observation was intended to be directed to the present interlocutory dispute, I reject it on the basis that those are matters for the s 79A trial.

2. It was submitted that an order identified as a final property order as distinguished from an order “until further order” determined the property rights of the parties and “extends to all the property of the parties at that time”. It was submitted that that proposition, “the finality principle”, is one of the underlying philosophies of the Act and is given expression in s 81 of the Act. I am unclear as to whether that was intended as a comprehensive statement of the law and if it was, I do not agree. Section 81 is not an exercise of power.

3. Significantly, the submission went on to say that the orders dismissing applications otherwise indicated a final order. 

4. The second respondent adopted the submissions of the husband and I therefore take into account that he has the same argument.

5. Counsel for the second respondent referred to Gabel and Yardley (supra) and distinguished it from the present case on the basis that it related to an application adjourned under s 79(5) of the Act. I agree with that proposition but it is the dicta of the Full Court that is interesting there.

6. In relation to the wife’s assertions about the reference to the clause relating to superannuation, I have already made observations about that but in any event, it was submitted that if I had intended to adjourn the matter under s 79(5) of the Act, I would have done so explicitly and with reasons but that did not happen. It was therefore submitted that, in express contradiction to any supposed implication, the proceedings were explicitly dismissed. I do not accept the issue here can be determined on that basis.

7. Counsel for the second respondent referred to the argument about whether or not the husband’s interest in the trust was or was not property and submitted that any complaint by the wife in relation to that had to be dealt with by either appeal or under s 79A.

8. It is unnecessary for me to deal with the rest of the submission having regard to the fact that the second respondent adopts the position of the husband. In my view, the outcome turns on the question of whether or not the power has been expended rather than the court having to deal with specific pieces of property.

The judgment of 13 April 2017

1. I have already referred to the various orders but the two that relate specifically to this determination are those set out in paragraph [12] and [15] of these orders.  I repeat those for the sake of clarity:

   [12]That save as to issues of any superannuation entitlement, each party otherwise retain to the exclusion of the other, all other property in that person’s name as at this date.

   …

   [15]That the applications be otherwise dismissed.

2. At paragraph [3] of the judgment, I referred to the fact that the husband’s solicitor had told me to do the best I could; in other words, to determine the matter on the basis of what evidence the court had.  As was well known, the husband made clear what the assets were (see [19] of the judgment) as he saw them.

3. The two issues that are controversial in the present proceeding and which gave rise to the orders [12] and [15] included that the husband asserted no interest in the family trust albeit that he said he had a financial resource.  As I observed at the time, from the documents provided, there was an identifiable loan to the trust from the husband.  That loan was included in the non-superannuation assets in respect of the finding that I made as to the legal and equitable interests of the parties but I clearly did not find that the husband had any other interest in the trust, nor could I, as there was no other evidence.  The husband had not addressed whether he controlled the trust or what he meant by being a beneficiary.

4. Having determined what non-superannuation assets there were, I turned attention to the superannuation and as I have already observed, there was no evidence as to what entitlement the wife had in circumstances where the husband identified her as a member of the fund.  I declined to make any order in relation to the superannuation fund on the basis that I did not know what the member entitlements were and therefore could not make an order that was just and equitable viz a viz the parties.

5. In relation to the orders that I did make, I said that the “net outcomes” reflected what I considered to be just and equitable having regard to all of the matters including the fact that there was a shortage of evidence provided by both parties.

The legal issues

1. It is uncontroversial that once final orders are made, the power in s 79 is exhausted. Orders so made can only be varied on the basis of s 79A unless they are to be altered on the basis they are of a machinery nature.

Dismissal of an application

1. The husband’s submissions about a refusal to make orders being an exercise of the s 79 power was supported by Bevan and Bevan (2013) FLC 93-545 at 87,237 and Horrigan and Jennings [2018] FamCAFC 206 at [27]. However to the extent it was intended to be submitted that a dismissal of an application was an alteration of property interests, it could not be so characterised (see Horrigan [24]). The relevance of the dismissal of an application for orders is only that it ends that proceeding. For the power to be exhausted, whatever orders are made, they have to effect an alteration of property interests.

2. I have also referred to Gabel & Yardley.  That was a case in which interim orders were made and the proceedings were adjourned under s 79(5) of the Act. A plain reading of the orders of the trial judge made clear he evinced an intention that there be further property orders. As also observed, the dicta of the Full Court addressed the issue of the use but also the nature of the s 79 power. Relevantly, distinguishing the nature and scope of the power from the nature and effect of orders, Bryant CJ and Coleman J observed:

   57.The legislative framework, and the authorities to which we have been referred, suggest that the Court’s power to make orders with respect to settlement of property is not necessarily exercisable at only one time, and can properly be exercised by a succession of orders until the power to make orders with respect to property is exhausted. Logic suggests that the power to make orders for settlement of property will be exhausted or “spent” when there remains no property of the parties to the marriage or either of them with respect to which orders by way of alteration of interests of property could be or have been made. In those circumstances there can be no matrimonial cause to enliven the jurisdiction to make orders for settlement of property. It is thus potentially more instructive to focus on the nature and scope of the power conferred by section 79 of the Act and the nature and effect of orders made in the exercise of the power than upon attempts to categorise the kinds of orders which may be made pursuant to the power.

3. Their Honours made reference to Mullane and specifically, the “proper construction” of s 79 which is that orders have to “work an alteration of the legal and equitable interests in property”. Having regard to what I earlier said, a refusal to alter interests by a dismissal (on the basis that there is no jurisdiction for so doing) is an exercise of s 79 power.

4. Similarly, a “catch-all” order that each party retains what they possess may, depending upon the circumstances and the wording, by its very nature, have the effect of altering the equitable interests in property. That too would be an exercise of the s 79 power.

5. In Mullane, the High Court of Australia observed that the “effect” of treating the order as if it had been made under s 79 is that, subject to the limited jurisdiction to vary it or set it aside, the power to make an order is treated “as having been exercised and as exhausted by that notional exercise”.

6. The principle just referred to seems to me to cover the circumstances I mentioned earlier about dismissal and refusal of orders and the “catch-all” order. They are all an exercise of the power in s 79.

7. In Gabel & Yardley, Finn J agreed with the proposed orders after reading the majority judgment but her Honour delivered her own reasons.  Her Honour noted the nature of the orders made by the trial judge was such that there “needed to be” further orders to finalise the proceedings.  Her Honour was, with respect, very careful to observe that the essential issue in the appeal was about a party wishing to take advantage of an alteration to the superannuation splitting laws.

8. The question of whether the s 79 power had been spent arose in Gabel because under the amending laws, the provision said that the new law did not apply if a s 79 order was in force. However, Finn J considered the earlier orders would have to be regarded as “an order pending the disposal of the proceedings” or “an order until further order” because there can only be one exercise of the power. Her Honour considered orders were made under s 80(1)(h) power and were capable of alteration in the final exercise of the s 79 power. Accepting that, the court had the power to make orders using the superannuation splitting orders powers in the Act.

9. Finn J concluded at [130]:

   …given the express adjournment of the proceedings, the single exercise of the s 79 power (as explained by the Full Court in Hickey) could not be said to have been completed because the anticipated superannuation entitlements remained to be dealt with.

10. Using the Finn J approach in the present case, there was no adjournment of the proceedings under s 79(5) to allow something else to be finalised relating to the assets of the parties. There was no order exercising the power in s 80 of the Act. Accordingly, the single exercise of power was completed by the orders.

11. Using the majority approach, there remains no property of the parties with respect to which orders by way of alteration of interest could be made because in respect of the superannuation, I declined to make the orders sought by the husband not being satisfied that it was just and equitable to do so.

12. To the extent that the wife had a proprietary interest as member of the fund, the dismissal of the husband’s application meant her interest remained extant. I not only did not alter it, I declined to do so because of the absence of evidence. That was an exercise of the s 79 power.

13. In respect of the allegation of the wife that the husband had an interest in the family trust, I noted the then unchallenged evidence of the husband as to the lack of such an interest (as distinct from the entitlement as a creditor or to the due administration of the trust as a beneficiary) and dismissed all outstanding proceedings for the property interests alterations.

14. In my view, notwithstanding discussions with senior counsel for the wife in interlocutory hearings, I am satisfied that an examination of the nature and scope of the power in this case indicates that it was spent by the 2017 orders. The evidentiary arguments in relation to the trust and the superannuation are matters relating to property which in one form or another, were canvassed in the 2017 proceedings and dealt with by the orders that were then made. Accordingly, there is nothing further that the court can do under s 79 of the Act.

15. I have already dealt with the issue of the joinder of Mr HH in his capacity as the trustee of the relevant trust and will make the joinder order. I otherwise dismiss paragraph 7 of the wife’s application seeking relief filed 25 May 2018 (and to the extent necessary, Relief B of the statement of claim dated 23 May 2018).

I certify that the preceding seventy-one (71) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin delivered on 3 April 2019.

Associate: 

Date:  3 April 2019