Pacek & Saltzer (No 3)
[2024] FedCFamC1F 680
•17 October 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Pacek & Saltzer (No 3) [2024] FedCFamC1F 680
File numbers MLC 2954 of 2020 MLC 7293 of 2024 #...78 #...07 Judgment of WILSON J Date of judgment 17 October 2024 Catchwords FAMILY LAW – PROPERTY – enforcement application – objection on the basis the court was functus officio thereby having no power to enforce its own orders – enforcement application granted.
FAMILY LAW – JURISDICTION – whether this court possesses power to make orders for the enforcement of its own orders – statutory sources of such power examined – held, yes.
FAMILY LAW – MAJOR COMPLEX FINANCIAL PROCEEDINGS LIST – complex questions of statutory construction and of practice and procedure involved.
Legislation Commonwealth Acts Interpretation Act 1901
Corporations Act 2001
Family Law Act1975
Federal Circuit and Family Court of Australia (Family Law) Rules 2021
Cases cited Akbar v Gandega (2023) 67 Fam LR 593
Arkin & Blasberg [2019] FamCA 476
Ascot Investments Pty Ltd v Harper (1983) 148 CLR 337
Australian Competition and Consumer Commission v Clinica Internationale Pty Ltd (in liq) (No 3) [2016] FCA 284
Bass v Permanent Trustee Co Ltd (1999) 198 CLR 334
Bunbury v Fuller (1853) 156 ER 47
Cantrell v North [2020] FamCAFC 175
CBI Constructors Pty Ltd v Chevron Australia Pty Ltd [2021] WASCA 1
CGU Insurance Ltd v Blakeley (2016) 259 CLR 339
Clayton v Bant (2020) 272 CLR 1
Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation (1981) 147 CLR 297
DMW v CGW (1982) 151 CLR 491
Eberstaller v Poulos (2014) 87 NSWLR 394
Federated Engine-Drivers and Firemen’s Association of Australasia v Broken Hill Pty Co Ltd (1911) 12 CLR 398
Gabel v Yardley (2008) 40 Fam LR 6
Girlock (Sales) Pty Ltd v Hurrell (1982) 149 CLR 155
Harris v Caladine (1991) 172 CLR 84
HBSY Pty Ltd v Lewis [2024] HCA 35
Hill v Zuda Pty Ltd (2022) 275 CLR 24
Holloway v McFeeters (1956) 94 CLR 470
In the Marriage of Molier and Van Wyk (1980) 7 Fam LR 18
In the Marriage of Ravasini (1982) 8 Fam LR 903
Jess & Jess (No 4) [2022] FedCFamC1F 530
John Alexander’s Clubs Pty Ltd v White City Tennis Club Ltd (2010) 241 CLR 1
Kain & Kain and Ors [2020] FamCA 650
Kennon v Spry (2008) 238 CLR 56
Mulane v Mulane (1983) 158 CLR 436
Nana Ofori Atta II v Nana Abu Bonsra II [1958] AC 95
Neeta (Epping) Pty Ltd v Phillips (1974) 131 CLR 286
Penrice v Williams (1883) 23 Ch D 353
Pacek & Saltzer (No 1) [2024] FedCFamC1F 650
Pacek & Saltzer (No 2) [2024] FedCFamC1F 666
Project Blue Sky Inc v Australian Broadcasting Authority (1998) CLR 355
QYFM v Minister of Immigration, Citizenship, Migrant Services and Multicultural Affairs (2023) 97 ALJR 419.
Re HIH Insurance Ltd (in Liq) (2014) 101 ACSR 1
Re St Nazaire Company (1879) XII Ch D 88
Salomon v A. Salomon & Co Ltd [1897] AC 22
Secured Income Real Estate Australia Ltd v St Martins Investments Pty Ltd (1979) 144 CLR 596
Taylor v Taylor (1979) 143 CLR 1
Tepko Pty Ltd v Water Board (2001) 206 CLR 1
Trident General Insurance Co Ltd v McNiece Bros Pty Ltd (1988) 165 CLR 107
Verdon v Verdon (2020) 62 FamLR 573
Victoria v Sutton (1998) 195 CLR 211
Wardley Australia Ltd v Western Australia (1992) 175 CLR 574
Windsor Refrigeration Co Ltd v Branch Nominees Ltd [1961] Ch 375
Wong v Silkfield Pty Ltd (1999) 199 CLR 255
Wytcherley v Andrews (1871) LR 2
Division Division 1 First Instance Number of paragraphs 152 Date of last submission 30 September 2024 Date of hearing 30 September 2024 Place Melbourne In MLC 2954 of 2020 Counsel for the applicant Mr I. Coleman SC with Mr G. Thompson and Mr W. Newland Solicitors for the applicant ISAKOW Lawyers Counsel for the respondent Litigant in person In MLC 7293 of 2024 Counsel for the applicant Mr I. Coleman SC with Mr G. Thompson and Mr W. Newland Solicitors for the applicant ISAKOW Lawyers Counsel for the respondent Mr L. Magowan with Mr D. Kaufman Solicitors for the respondent J and K Law In #...78 Counsel for the plaintiffs Mr I. Coleman SC with Mr G. Thompson and Mr W. Newland Solicitors for the plaintiffs ISAKOW Lawyers Counsel for the defendant Mr L. Magowan and Mr D. Kaufman Solicitors for the defendant J and K Law In #...07 Counsel for the plaintiffs Mr I. Coleman SC with Mr G. Thompson and Mr W. Newland Solicitor for the plaintiffs ISAKOW Lawyers Counsel for the defendant Mr L. Magowan with Mr D. Kaufman Solicitor for the defendant J and K Law ORDERS
MLC 2954 of 2020 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN MS PACEK
Applicant
AND MR SALTZER
Respondent
MLC 7293 of 2024 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN MS PACEK
Applicant
AND MR SALTZER
First Respondent
AND H PTY LTD
Second RespondentAND Q PTY LTD
Third RespondentAND W PTY LTD
Fourth RespondentAND V PTY LTD
Fifth RespondentAND E PTY LTD
Sixth RespondentAND SALTZER PTY LTD
Seventh Respondent
#...78 IN THE SUPREME COURT OF VICTORIA
AT MELBOURNEBETWEEN H PTY LTD
First PlaintiffAND
SALTZER PTY LTD
Second PlaintiffAND Q PTY LTD
Third PlaintiffAND E PTY LTD
Fourth PlaintiffAND W PTY LTD
Fifth PlaintiffAND V PTY LTD
Sixth PlaintiffAND MS PACEK
Defendant
#...07 IN THE SUPREME COURT OF VICTORIA
AT MELBOURNEBETWEEN H PTY LTD
First PlaintiffAND Q PTY LTD
Second PlaintiffAND E PTY LTD
Third PlaintiffAND V PTY LTD
Fourth PlaintiffAND MS PACEK
Defendant
ORDER MADE BY
WILSON J
DATE OF ORDER
17 OCTOBER 2024
THE COURT ORDERS THAT –
1.Pursuant to order 24 of the final property orders of the Hon. Justice Bennett dated 14 April 2024 the following incorporated entities are hereby joined as a party to proceeding MLC 2954 of 2020–
(a)H Pty Ltd;
(b)Q Pty Ltd;
(c)W Pty Ltd;
(d)V Pty Ltd;
(e)E Pty Ltd; and
(f)Saltzer Pty Ltd.
“the companies”
2.I declare that the applicant Ms Pacek has complied with orders 3 to 9 of the final property orders made by consent by the Hon. Justice Bennett dated 14 April 2022.
3.The respondent Mr Saltzer in his personal capacity and his capacity as director of the companies and the companies themselves is hereby restrained from commencing a further proceeding in any court against the applicant arising out of the subject matter of proceeding MLC 2954 of 2020 or arising out of the subject matter of proceeding MLC 7293 of 2024.
4.The respondent Mr Saltzer in his personal capacity and his capacity as director of each of the companies must do all things and sign all documents prepared by the applicant Ms Pacek’s solicitors at his expense, required to release and discharge Ms Pacek from any and all claims that any of them may have against her and to pay and indemnify her in respect of all liability thereof.
5.Any affidavit material and submissions on which the wife intends to rely in relation to–
(a)her application for the dismissal of the two Supreme Court proceedings cross‑vested to this court by order of Delany J;
(b)her application to be indemnified in respect of costs she has incurred in the two Supreme Court proceedings cross-vested to this court by order of Delany J; and
(c)her application for costs of this proceeding or of the two Supreme Court proceedings
must be filed and served by midday on 18 November 2024.
6.Any affidavits and submissions on which the husband or the companies (as defined) wish to rely in opposition to the wife’s applications referred to in paragraph 5 hereof must be filed and served by midday 17 December 2024.
7.If any party wishes to be heard in respect of the matters set out in paragraphs 5 and 6 hereof, then I fix 3 February 2025 at 1.00pm for such a hearing.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Part XIVB of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish an account of proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under a pseudonym Pacek & Salzer has been approved pursuant to subsection 114Q(2) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
WILSON J
INTRODUCTION
Having addressed logistical issues in Pacek & Saltzer (No 1) [1] and having addressed the husband’s adjournment application in Pacek & Saltzer (No 2)[2] on 30 September 2024 I heard the matters referred to me by Alstergren CJ and those cross-vested to me by Delany J of the Supreme Court of Victoria.
[1] [2024] FedCFamC1F 650.
[2] [2024] FedCFamC1F 666.
In proceeding MLC 7293 of 2024, the wife sought enforcement of the orders made by consent on 14 April 2020. The husband opposed that application. The husband challenged the joinder of parties mentioned in the consent orders. He argued that this court has no power to enforce its own orders.
For the reasons that follow, I take the view that the wife’s enforcement application must be granted. I overrule the husband’s opposition to it.
RELEVANT FACTUAL SETTING
Proceeding MLC 954 of 2020 was compromised by an accord and satisfaction reached between the husband as applicant and the wife as respondent and recorded in consent orders pronounced by Bennett J on 14 April 2022.
An array of companies was relevant to that proceeding. Those included the following –
(a)W Pty Ltd of which the husband and wife were directors as at 14 April 2022;
(b)H Pty Ltd;
(c)Q Pty Ltd;
(d)V Pty Ltd;
(e)E Pty Ltd;
(f)C Pty Ltd;
(g)C2 Pty Ltd;
(h)C3 Pty Ltd;
(i)AE Pty Ltd; and
(j)Saltzer Pty Ltd.
The companies mentioned in the immediately preceding paragraph were defined in the consent orders made 14 April 2022 as “the Agreed [Saltzer] Entities”.
Pursuant to paragraph 10 of the consent orders, subject to compliance with paragraphs 3 to 9 of the consent orders, the husband and each of the Agreed Saltzer Entities released and discharged the wife from any or all claims that any of them may have had against the wife. In paragraph 11 of the consent orders the husband and the Agreed Saltzer Entities were to be solely liable for taxation payments and the Agreed Saltzer Entities agreed to further indemnify the wife. Pursuant to paragraph 21(c) of the consent orders the husband and wife agreed that the husband would retain each of the Agreed Saltzer Entities.
The contentious provision of the consent orders was paragraph 24. It read as follows –
“That to the extent required to give effect to these reasons, the parties may join various entities within the [H] Group as required to give effect to these orders.”
By paragraph 30 of the consent orders, it was recorded that the parties intended that under s 81 of the Family Law Act, the consent orders would as far as practicable finally determine the financial relationship between the parties.
The phrase “the [H] Group” is not defined in the consent orders. A dispute emerged about what entities made up the composition of “the [H] Group”.
After the consent orders in proceeding MLC 2953 of 2020 were made on 14 April 2022, H Pty Ltd and five other plaintiffs commenced proceeding #...78 in the Supreme Court of Victoria against the wife. In that proceeding, the plaintiffs sought an order directing the wife to forthwith provide to all plaintiffs all books within the meaning of s 9 of the Corporations Act and other property of the plaintiffs that the wife then had in her possession, power or control. The breadth of the relief presently being pursued in that proceeding was the subject of close questioning by me of Mr Magowan, counsel appearing on 17 September 2024 for the husband and the corporate entities he controlled. On 17 September Mr Magowan told me that all books and records the subject of proceeding #...78 had been returned to the plaintiffs in that case with the consequence that those plaintiffs only pursued costs, as was recorded in paragraph 39 of my reasons handed down on 20 September 2024.[3]
[3] [2024] FedCFamC1F 650 (at [39]).
On 30 September 2024 Mr Magowan was less forthcoming in relation to my question about what remained beyond a costs question in proceeding #...78. Mr Magowan made a variety of submissions about the relief sought in proceeding #...78. He submitted–
(a)while all records had been retrieved, the wife did not personally provide to the corporate plaintiffs in that case the entirety of those records;
(b)even though the totality of the records had to be retrieved through sources not involving the wife, all records had been fully retrieved;
(c)the wife’s personal performance of the task of physically providing all books and records of the plaintiffs to those plaintiffs was relevant to the question whether she was entitled to the benefit of the indemnities conferred by other provisions of the consent orders;
(d)the wife had not fully discharged her personal obligation to return all books and records, although Mr Magowan reluctantly conceded she had discharged her personal obligations insofar as she had returned some of those books and records; and
(e)a costs debate remained.
Getting to the point at which it was possible to distil Mr Magowan’s propositions in the manner set out in the immediately preceding paragraph was less than lineal.
In the upshot Mr Magowan conceded that the only thing remaining in proceeding #...78 was a costs question.
Proceeding #...78 was commenced in November 2022, that is to say, nine months after the consent orders were made by Bennett J in proceeding MLC 2954 of 2020 in this court.
Four corporate plaintiffs, one being H Pty Ltd, commenced proceeding #...07 in the Supreme Court of Victoria against the wife in August 2023. In broad terms, those plaintiffs asserted that the wife breached various fiduciary duties she owed the plaintiffs. That proceeding has stalled. It is nowhere near ready for trial. In it the plaintiffs’ so called expert evidence is not in the form of a single expert’s report, contrary to the Federal Circuit and Family Court of Australia (Family Law) Rules 2021. The wife’s enforcement application is made in two separate proceedings in this court, the first in the proceeding in which Bennett J made the consent orders (MLC 2954 of 2020) and the second in proceeding MLC 7293 of 2024, initiated on 18 June 2024.
As was recorded in Pacek & Saltzer (No 1) [4] Alstergren CJ made orders on 7 August 2024 requiring me to determine three applications on 30 September 2024. The Chief Justice’s order was in the following terms –
[4] [2024] FedCFamC1F 650.
(1)Proceeding MLC2954/2020 and MLC7293/2024 be listed before the Honourable Justice Wilson for hearing on 30 September 2024 at 10:00am for the hearing of:
(a)the respondents in proceeding MLC7293/2024’s response to initiating application dated 1 July 2024 (Objection Application);
(b)the applicant in proceeding MLC2954/2020’s enforcement application dated 29 April 2024 (Enforcement Application); and
(c)the applicant in MLC7293/2024’s initiating application dated 18 June 2024 (Initiating Application).
(2)In relation to the Objection Application:
(a)the respondents in proceeding MLC7293/2024 are to file and serve any further evidence and submissions on which they wish to rely by Monday, 2 September 2024;
(b)the applicant is to file and serve any evidence and submissions on which she wishes to rely by Monday, 16 September 2024; and
(c)the respondents in proceeding MLC7293/2024 are to file and serve any evidence or submissions in reply by Monday, 26 September 2024.
(3)In relation to the Enforcement Application and the Initiating Application:
(a)the applicant is to file and serve any evidence and submissions on which she wishes to rely by Monday, 2 September 2024;
(b)the respondents are to file and serve any evidence and submissions on which they wish to rely by Monday, 16 September 2024; and
(c)the applicant is to file and serve any evidence or submissions in reply by Monday, 26 September 2024.
AND THE COURT NOTES THAT:
A.This matter is travelling with MLC2954/2020.
B.There is a related proceeding currently stayed in the Supreme Court which returns on 12 August 2024.
C.The Applicant is overseas on 30 September 2024 and intends to appear at the hearing via video link.
As a result of various observations made in Pacek & Saltzer (No 1) [5], Mr Magowan’s clients chose to prepare and file documents in what seemed to be the mistaken belief that they had leave to do so. I gave no such leave. As it happened, the wife’s counsel led by the Hon. Ian Coleman SC, adopted the very pragmatic approach of formally registering a protest about there being no leave for the husband’s camp to adduce or seek to rely on documents not prepared in compliance with the orders made by Alstergren CJ yet saying nothing further on the point.[6] He submitted that the wife objected to aspects of the husband’s late filed material if I allowed the husband to rely on that material.
[5] [2024] FedCFamC1F 650.
[6] Transcript 30 September 2024 T 56 L 27.
THE WIFE’S AMENDED ENFORCEMENT APPLICATION
In the course of the debate with Mr Coleman SC on 30 September 2024 I asked whether any duplication was involved in the enforcement applications in proceeding MLC 2954 of 2020 and proceeding MLC 7293 of 2024 in that both involved applications concerning the enforcement of the consent orders made on 14 April 2022. The point piqued my curiosity because on one analysis, proceeding MLC 2954 of 2020 was concluded and the lis pendens brought to finality by Bennett J’s consent orders dated 14 April 2022, in consequence of which a new proceeding needed to be commenced so as to address enforcement of the proceeding that was compromised. The following was the exchange between Mr Coleman SC and me –
“HIS HONOUR: In common law courts of states, cases are generally settled, whether interlocutory or final, with terms of settlement, not necessarily court orders, that say that these terms – the parties agree to dispose of the proceeding – or consent to it being dismissed with a right of reinstatement, and that these terms can be produced as evidence of their consent. That doesn’t happen in this court, and parties generally don’t rely on terms of settlement; they rely on pronounced orders. What happens to the case – the actual piece of litigation that is compromised? Does it stand dismissed? The reason for asking – does one agitate and enliven the case that has – or was the subject of the lis pendens between the parties so as to bring enforcement, or must parties issue a new proceeding so as to compel performance of the consent orders?
MR COLEMAN: In our respectful submission, your Honour, in the context of this case, which is perhaps the most relevant context, order 29 of the orders of her Honour of 14 April 2022 says:
All extant applications be and are hereby dismissed.
And that, in our respectful submission, is the short answer to your Honour’s question.
HIS HONOUR: Well, that would have the effect of putting an end to that litigation, yes, and does it follow, therefore, that in order to agitate whether the orders have been satisfied or not – or complied strictly according to their terms, one would need to issue a separate proceeding to debate the point?
MR COLEMAN: Yes, and that’s what happened. That’s what happened here.
HIS HONOUR: Well, that –
MR COLEMAN: That’s why we’re here.
HIS HONOUR: So that explains why – although infelicitously described as the adjunct proceeding, that’s why you issued the second proceeding.
MR COLEMAN: We had to, because the –
HIS HONOUR: The other one was spent, exhausted
MR COLEMAN: The power
HIS HONOUR: and it became as statistics in the court records that say
MR COLEMAN: Yes.
HIS HONOUR: it has been disposed of.
MR COLEMAN: Yes. The dispositive powers of the court under part 8 were spent, exhausted, whatever, and that was made clear by the dismissal of all extant applications by her Honour on 14 April. Hence, we needed to invoke the jurisdiction to bring an application which raised, as we submit it does, for the reasons I’ve indicated in the section, reliance on the statutory scheme constituted a matrimonial cause. It’s as simple as that, and what we say is the only way, given section 8(1), that anyone could enforce those orders was, by doing that in a court exercising jurisdiction under the Act, and, of course, the consequence of our friend’s proposition is that this court can make orders, but can never enforce them, and that would offend 15AA, and would produce an absurd result and would – it would – if that was so, then, with respect, it would be the only court in the land that lacks the jurisdiction to enforce its own orders.”[7]
[7] T 72, T 73.
In developing that submission, Mr Coleman SC relied on the observations of the High Court of Australia in Mullane v Mullane[8] and in Clayton v Bant[9] to the effect that the dispositive power conferred on the court in pursuance of Part VIII of the Family Law Act is such that the court’s power to make orders under s 79 is spent once the court makes dispositive orders for the settlement of property. It follows that upon the court making those dispositive orders it is functus officio.[10] That observation is qualified by there being no successful appeal or successful s 79A application. If it is important to differentiate between interim property orders and final property orders, the decision in Gabel v Yardley[11] provides guidance.
[8] (1983) 158 CLR 436, 443-444.
[9] (2020) 272 CLR 1.
[10] In re St Nazaire Company (1879) XII Ch D 88 which is the locus classicus on the point.
[11] (2008) 40 Fam LR 6.
This court’s jurisdiction to entertain an enforcement application is reposed in a variety of statutory provisions of the Family Law Act. Mr Coleman SC catalogued them. It is utile to go to each. They were –
(a)s 105 of the Family Law Act which provides, in essence, that all decrees made under the Family Law Act may be enforced by any court having jurisdiction under the Family Law Act;[12]
(b)s 39(4) of the Family Law Act which provides, in essence, that a “matrimonial cause” may be commenced under the Family Law Act where it is of a kind referred to in the definition of “matrimonial cause” in ss 4(1) other than a proceeding for a divorce or a proceeding as defined in s 4(1)(f);[13]
(c)s 4CA of the Family Law Act which provides in essence that a matrimonial cause includes a proceeding between the parties to a marriage with respect to property being a proceeding arising out of the marital relationship;
(d)s 114(3) of the Family Law Act which provides, in essence, that the court may grant injunctions; and
(e)s 90 AF (2)(b) of the Family Law Act which provides, in essence in a proceeding under s 114 the court may make an order in relation to the property of a party to the marriage or in relation to altering “the rights, liabilities or property interests of a third party to the marriage”.[14]
[12] Under s 4 of the Family Law Act, a “decree” means a “judgment or order” and includes an order dismissing an application as well as a refusal to make a decree or order.
[13] Section 4(1)(f) or the definition of “matrimonial cause” provides that “matrimonial cause” includes any proceeding with respect to enforcement of a decree in relation to (among others) a completed proceeding.
[14] In relation to the corporations the wife wishes to join, Mr Coleman SC submitted that s 90AF (2)(b) did not depend on those companies being joined yet unless they are joined they cannot seek relief.
On behalf of the wife it was submitted that each of those provisions in the immediately preceding paragraph individually or all collectively more than amply demonstrated the jurisdictional foundation for the making of the enforcement orders sought by the wife.
Counsel for the husband did not engage with nor make submissions in opposition to Mr Coleman’s contentions concerning jurisdiction. That may well have been for the very sound reason that no arguable case could be sensibly mounted by the husband in opposition to Mr Coleman’s jurisdictional contentions. In my view, an enforcement application engages s 105 of the Family Law Act which expressly confers jurisdiction on this court to hear and determine an enforcement application in relation to a decree of the court. Consent orders are a decree of the court. An application in respect of a decree of the court concerning a completed proceeding is a matrimonial cause and this court possesses express power (by that I mean the authority to adjudicate)[15] over a matrimonial cause, including one that has been spent.
[15] Wardley Australia Ltd v Western Australia (1992) 175 CLR 574, 561, CGU Insurance Ltd v Blakeley (2016) 259 CLR 339, 349 and HBSY Pty Ltd v Lewis [2024] HCA 35 (at [95]).
Mr Coleman SC submitted that it would be an extraordinary state of affairs if this court could not enforce its own orders. In fact, Mr Coleman described such a result as being “absurd”[16] and contrary to s 15AA of the Commonwealth Acts Interpretation Act which embeds the doctrine of the equity of the statute and gives statutory voice to the canon of statutory construction that the interpretation which best achieves the purpose or objects of an enactment is to be preferred whether or not that purpose or object is expressly stated in the relevant legislation.[17]
[16] T 71 L 27
[17] David Wright, Common Law in the Age of Statutes; The Equity of the Statute (2015) Lexis Nexus Butterworths, chapter 9, paragraph 94 and see W.H.Lloyd, the Equity of A Statute (1910) 58 University of Pennsylvania Law Review 76.
As mentioned already, Mr Magowan did not join issue with Mr Coleman SC’s contentions about jurisdiction. Jurisdiction is binary – the court either possesses it or it does not.[18] A court’s first duty is to address its power to hear and determine the cause before it.[19] The court has power to hear contested facts on which a determination of its jurisdiction rests.[20] Parties cannot agree to jurisdiction if jurisdiction does not exist.[21] Whether or not parties raise the issue of jurisdiction, a court must independently satisfy itself of the existence of jurisdiction.[22]
[18] QYFM v Minister of Immigration, Citizenship, Migrant Services and Multicultural Affairs (2023) 97 ALJR 419.
[19] Federated Engine-Drivers and Firemen’s Association of Australasia v Broken Hill Pty Co Ltd (1911) 12 CLR 398 and Hazeldell Ltd v The Commonwealth (1924) 34 CLR 442.
[20] DMW v CGW (1982) 151 CLR 491.
[21] Bunbury v Fuller (1853) 156 ER 47 (Coleridge J) and Harris v Caladine (1991) 172 CLR 84, 133.
[22] Akbar v Gandega (2023) 67 Fam LR 593.
It is also utile to record other authorities on which counsel for the wife relied to make good the contention that in the arena of family law, the provisions of the Family Law Act cover the field in respect of matters meeting the definitions variously given of the phrase “matrimonial cause”.[23] Mr Coleman SC invited a consideration of the scheme of the orders made on 14 February 2022. He contended[24] that the orders made that day took the form of orders made in similar cases in virtually every case of its kind in this court. Mr Coleman SC submitted that such a case typically involves a resolution involving one party controlling corporations and trustees and the other party relinquishing entitlements (vested or contingent) where that party is released by all other entities. Mr Coleman SC submitted that when one examined the reality of the regime orchestrated by the consent orders in this case, several consequences followed, namely –
(a)the corporations (called “the Agreed [Saltzer] Entities” or “the [H] Group”) were the alter egos of the husband in the sense referred to by Barwick CJ of the High Court of Australia in Ascot Investments Pty Ltd v Harper;[25]
(b)the husband had direct and indirect legal control over those entities;
(c)those entities were not third parties, properly so called, but instead were controlled by the husband in the sense canvassed by the High Court in Kennon v Spry;[26] and
(d)nothing unusual whatsoever was effected by consent orders embedding such an outcome.[27]
[23] Those authorities include CBI Constructors Pty Ltd v Chevron Australia Pty Ltd [2021] WASCA 1, Eberstaller v Poulos (2014) 87 NSWLR 394 and Cantrell v North [2020] FamCAFC 175.
[24] T 80 L 25.
[25] (1983) 148 CLR 337.
[26] (2008) 238 CLR 56.
[27] T 80.
Mr Coleman SC submitted[28]that upon their proper construction, the consent orders made provision for the wife to remove herself from day-to-day machinations of the operation of the various corporate entities, she relinquished any vested or contingent interests or expectations for which the quid pro quo was the husband’s promise and that of his companies to indemnify her.
[28] T 82.
Mr Coleman SC submitted that the indemnities which the husband agreed with his wife to give were critical because, when properly understood, the husband’s modus operandii was to commence satellite litigation with a view to clawing back $2.8m without ever having to chance his arm by commencing and proving a s 79A application.[29]
[29] T 82.
Mr Coleman SC developed his submissions about the importance of insinuating the husband’s companies in this enforcement application by pointing out the operation of paragraph 12 of the consent orders. Under that clause the corporate entity V Pty Ltd must sell real property if the husband fails to do so. When asked how V Pty Ltd was somehow responsible for the husband’s liability under the consent orders, Mr Coleman was understandably unable to address how the husband and his companies were properly entitled in law or in equity to arrange their affairs to enable the company to do so. Mr Coleman made a powerful submission to the effect that the husband’s reliance upon the observations of the High Court in John Alexander’s Clubs Pty Ltd v White City Tennis Club Ltd[30] was “nonsense”, to use Mr Coleman’s SC word.[31]
[30] (2010) 241 CLR 1
[31] T 83.
Mr Coleman SC submitted that the husband treated the several corporations in issue in this case as his own assets. Mr Coleman SC said that explained why –
(a)by paragraph 10 of the consent orders the husband and the corporate entities discharged the wife from any claims the husband or the companies had against her; and
(b)by paragraph 24 of the consent orders, the husband consented to the joinder of his companies so as to give effect to the orders. Mr Coleman SC put the contention in the following terms –
“But, your Honour, the mischief that this court, in our respectful submission, would be condoning if not encouraging by declining to grant the relief sought with respect to the corporations, would be that it invites those corporations to act in direct breach of orders which the controller and owner of the corporations agreed that they would do.”[32]
[32] T 84.
Chief among the submissions advanced by the wife about the companies relevant to this enforcement application was the proposition that those companies are not, de facto and de jure, third parties because they are in all senses property of the husband, legally and practically.[33] But if that was somehow wrong, Mr Coleman SC submitted that the principle for which John Alexander’s Clubs[34] stands is subject to the exception mentioned in the plurality’s reasons.
[33] T 84.
[34] (2010) 241 CLR 1.
On behalf of the wife a contention was advance about the consequences of a party who could have, but who failed to, make arguments. A trilogy of authorities was pressed to make good the point, the oldest of which emanating in the ageing decision of the Privy Council in Nana Ofori Atta II v Nana Abu Bonsra II.[35] More recent applications of the principle emerged in Re HIH Insurance Ltd (in Liq)[36] and the last arising from the decision of Mortimer J (as the Chief Justice then was) in Australian Competition and Consumer Commission v Clinica Internationale Pty Ltd (in liq) (No 3).[37] Expressed most basically, it was argued that three common threads run through those authorities. First, as a general rule no person is to be adversely affected by a judgment in a proceeding to which that person was not a party because of the injustice of deciding an issue against that party in his, her or its absence. Second, to that general rule is the exception that a person who is “in privy” with the parties is bound equally with the parties. Third, a person may have so acted as to preclude himself from challenging the judgment in which case he is estopped by his conduct. In Nana Ofori Atta II v Nana Abu Bonsra II[38], Lord Denning on behalf of the Privy Council held that the conduct founding the estoppel may consist of a party in the same interest standing by and watching parties fight out their dispute in which case that party should not be permitted to reopen the case. Such a principle is founded on justice and common sense according to Lord Penzance in Wytcherley v Andrews.[39] To similar effect were the observations of Brereton J in Re HIH Insurance Ltd (in liq)[40] as well as Australian Competition and Consumer Commission v Clinica Internationale Pty Ltd (in liq) (No 3).[41]
[35] [1958] AC 95.
[36] (2014) 101 ACSR 1.
[37] (2016) FCA 284.
[38] [1958] AC 95.
[39] (1871) LR 2.
[40] (2014) 101 ACSR 1.
[41] [2016] FCA 284.
It could not be sensibly contended that by reason of the husband being the controlling mind of those companies now sought to be joined, those companies were otherwise than fully appraised of and cognisant of the precise terms of the consent orders. It would be absurd to suggest otherwise. Such a construction accorded with the common sense and justice of the situation. All companies among the Agreed Saltzer Entities must be taken to have been fully aware of the terms of the consent orders when made. Both the husband and wife knew of the obligations imposed on each in pursuance of the consent orders. Each is to be taken to have known which of the companies owned or controlled by each needed (as the company) to do a particular act to give effect to the consent orders. It is artificial in my view for the proposition to be advanced that in the circumstances of this case, principles concerning the separate legal entity of a company apply. The companies in this case were alter egos of their controllers. Principles of the sort adumbrated in Salomon v A. Salomon & Co Ltd[42] have limited to no application. In the passages below I address the husband’s contentions in that regard.
[42] [1897] AC 22.
Of course, as a first task the consent orders must be construed. No counsel advanced submissions about the proper approach, according to authorities binding on me, to be applied when the consent orders fall for construing. Not being legislation, it was not said whether principles applicable to the construction of an enactment applied.[43] Not being an agreement (although the consent orders no doubt arose from an accepted offer of compromise), it was also not said whether principles for the construction of an agreement applied.[44]
[43] Project Blue Sky Inc v Australian Broadcasting Authority (1998) CLR 355 and Cooper Brookes (Wollongong) Pty Ltd v Federal Commissioner of Taxation (1981) 147 CLR 297 to name but a few.
[44] Lord Justice Lewison, Interpretation of Contracts (2015) Sweet & Maxwell 6th edition.
That said, certain key provisions of the consent orders required construction, among which was paragraph 24. It provided as follows –
“To the extent required to give effect to these orders the parties my join various entities within the [H] Group as required to give effect to these orders”
Several component parts of the wording of that order are important. The first is “to the extent required to give effect to these orders”. That wording seemed to amount to “if it is required to give effect to these orders”, or “if the giving effect to these reasons required as much, then…”. It is readily apparent that the husband and wife, as parties to the compromised proceeding require resort to the orders so as to give effect to the orders. The husband and wife were parties to the matrimonial cause reposed in proceeding MLC 2954 of 2020. They instructed counsel to consent to the orders that were approved by Bennett J. No separate representation of any of the companies was recorded. The only parties to the consent orders were natural persons. It is trite that companies can only act through natural persons. When the consent orders were made, only proceeding MLC 2954 of 2020 was on foot, representing the dispute between the husband and wife. No allegations were then on foot about any breach of fiduciary duties or any other basis for the award of damages or equitable compensation. The consent orders operated in such manner that in respect of certain companies, shareholdings were to be altered. Mutual releases were contemplated by paragraph 10, subject to each party complying with the obligations in paragraphs three to nine of the consent orders.
It is utile to record the obligations assumed by the husband and wife respectively under the consent orders. The husband was to pay the wife $900,000 within 60 days of 14 April 2022. Contemporaneously with that payment the husband and wife as directors of W Pty Ltd were to procure W Pty Ltd to transfer to the wife Motor Vehicle 1. The wife was to resign as a director of and shareholder in the following companies making no claim thereafter –
(a)H Pty Ltd;
(b)Q Pty Ltd;
(c)W Pty Ltd;
(d)V Pty Ltd;
(e)E Pty Ltd;
(f)C Pty Ltd;
(g)C2 Pty Ltd;
(h)C3 Pty Ltd;
(i)AE Pty Ltd; and
(j)Saltzer Pty Ltd.
As has already been observed, the consent orders collectively described those ten companies as the “Agreed [Saltzer] Entities”.
The wife was restrained from causing any Agreed Saltzer Entities from distributing income or dividends to each other during any financial year. She agreed to resign a signatory from bank accounts. She agreed to return all books and records or documents in respect of the Agreed Saltzer Entities.
Paragraph 11 seemed to be at least one answer to the husband’s contentions in this case about the role of the Agreed Saltzer Entities in performing obligations under the consent orders. Even though none of the Agreed Saltzer Entities were parties to the consent orders, yet nevertheless by paragraph 11 of the consent orders each of the Agreed Saltzer Entities along with the husband “shall be solely responsible and liable for payment of any taxes both Federal and State including but not limited to capital gains and any other tax liabilities arising from the wife’s interest in the Agreed [Saltzer] Entities…”.
That provision was curious. An unmistakeable obligation was recorded in it by not only the husband but also by each of the Agreed Saltzer Entities. That obligation was to pay the wife’s tax liability arising from the wife’s interest in the Agreed Saltzer Entities. I say the provision was curious because, prima facie, the wife bore the personal obligation to pay her own tax liability. Rather than insisting on that, by paragraph 11 the husband and the Agreed Saltzer Entities took on that obligation. The consent orders provided that any one of 11 persons (the husband and any one of 10 entities making up the Agreed Saltzer Entities) could be called upon to pay the wife’s tax liability, even though none of the Agreed Saltzer Entities were expressed to be parties to any arrangements by which they became bound to do so by the terms of consent orders. It seemed readily apparent in that eventuality that one or more of the Agreed Saltzer Entities required to pay the wife’s tax liability, their absence as parties to the consent orders necessitated them becoming amenable to court process to compel them to do so. They were not privy to the consent orders. Yet the controlling mind of one of the parties to the consent orders was. He was the husband.
Another illustration of a similar point may be found in paragraph 15. That paragraph of the consent orders provided that paragraphs 16, 17 and 18 of the consent orders were binding upon X Pty Ltd. That company was not part of the companies defined to mean “the Agreed [Saltzer] Entities”. It seemed that the husband and wife made the consent orders as directors of and shareholders in that company. It was mentioned in paragraph 19 of the consent orders. Then in paragraph 21 of the consent orders, it was provided that the husband and the Agreed [Saltzer] Entities released the wife “and the Superannuation Fund” in respect of any claims made against the wife and the Superannuation Fund.
A superannuation fund is not a legal entity. The trustee of the superannuation fund was the relevant legal entity. Yet in paragraph 21 of the consent orders the release given by the husband and the Agreed Saltzer Entities was not in favour of the trustee of the superannuation fund,[45] but rather it purported to be given to the fund (a bank account).
[45] In many respects the drafting of the consent order was poor and revealed little to no attention to detail, especially to principles of privity of contract, proper legal entity and enforceable obligations.
Several conclusions may be reached about the consent orders. First they were not prepared with an eye keenly attuned to strictness or precision in definitions and in the identification of relevant corporate entities. Second, the parties proceeded on the basis that it was not necessary for all and every entity potentially affected by the performance of some obligation to be identified in the terms or specified as a party to the consent orders.
The parties seemed content to record the husband and wife as being the parties to the consent orders notwithstanding that one or more companies controlled by either of the husband and wife actually incurred the obligation to undertake some tangible step in consequence of the consent orders.
That state of affairs no doubt provided the reasoning behind the inclusion of paragraph 24 in the consent orders. As has already been observed, it became operative “to the extent required to give effect to these reasons.” Had the facts of the case unfolded in such manner that the husband (hypothetically) paid the wife the sum he agreed to pay yet the husband failed, refused or neglected to resign as a director of X Pty Ltd Investments Pty Ltd as required by paragraph 19 of the consent orders, in order to compel the husband to resign as a director of that company, the wife needed “to give effect to these orders” as paragraph 24 provided. X Pty Ltd Investments Pty Ltd was not a party to the consent orders nor was that company an “Agreed [Saltzer] Entity”. Yet on that scenario the wife needed to compel the husband to perform the obligation set out in paragraph 19 of the consent orders. Proceeding MLC 2954 of 2020 had been compromised and arguably it was spent. A new proceeding needed to be commenced so as to compel the husband to resign as a director. To the extent that X Pty Ltd Investments Pty Ltd was required to execute and lodge documents with regulatory bodies (with Australian Securities and Investments Commissions (“ASIC”) in particular) then, to “give effect to these orders”, X Pty Ltd Investments Pty Ltd needed to be joined as a party against which the appropriate order could be made.
The husband did not put forward any submissions about the way paragraph 24 of the consent orders interacted with paragraph 19 of the consent orders, whether by way of example or otherwise.
The husband took the point on this application that paragraph 24 of the consent orders speaks of the parties being entitled to “join various entities within the [H] Group…” Mr Magowan argued that the words “[H] Group” were not defined so it was not possible to say whether the joinder sought by the wife was within the entitlement conferred by paragraph 24 or not. To my mind, the more relevant phrase is “the parties may join various entities within the [H] Group as required to give effect to these orders”.
Accepting for present purposes that the phrase most immediately quoted in the preceding paragraph is the operative phrase, then that phrase falls to be construed. It seems to me that the most appropriate construction is as follows –
(a)if either party is of opinion that he or she seeks to give effect to the consent orders; then
(b)the husband or the wife (being the “parties” to proceeding MLC2954 of 2020) may join (the paragraph does not say “may apply for leave of the court to join”) “various entities” (none is identified) “within the [H] Group” (not being a defined term) and so a colloquial construct of that phrase will suffice.
During his address Mr Coleman SC relied on an extract of a document (he did not say the source of the document but it seemed not to be an ASIC document) headed “[H] Group”. It is likely that the document was produced by or at the direction of the husband’s solicitors because in respect of the companies Saltzer Pty Ltd, C Pty Ltd and AE Pty Ltd the words “we do not act on behalf of” appears, indicating to me that the husband’s solicitors do not act for those companies. That may or may not be correct because on 30 September 2024 I directed Mr Magowan to announce the interests and companies for which he appeared. He announced that he appeared for the husband and for “the [H] parties”. I told him to be more specific in response to which he said he appeared for H Pty Ltd, Q Pty Ltd, W Pty Ltd, V Pty Ltd, E Pty Ltd and Saltzer Pty Ltd. He said he appeared for the proposed respondents to the joinder application.
Returning to the document headed “[H] Group”, other entities were said to be members of that group including AF Pty Ltd, X Pty Ltd, C4 Pty Ltd and AG Pty Ltd. Six of those companies were recorded as not trading. Those were C3 Pty Ltd, C4 Pty Ltd, C2 Pty Ltd, AF Pty Ltd, AG Pty Ltd and Saltzer Pty Ltd. It will be recalled that Mr Magowan announced his appearance on behalf of Saltzer Pty Ltd, a company allegedly not trading on one version of the evidence.
In proceeding MLC2954 of 2020 the parties relied on a statement of agreed facts, signed by their respective solicitors on 13 April 2022. That document was among the documents propounded as demonstrating that the heads of agreement executed by the parties and exchanged by the parties on 1 April 2022 represented a just and equitable proposal for the resolution of proceeding MLC 2954 of 2020. Importantly, the statement of agreed facts identified assets and liabilities including assets owned by not only the wife in her personal capacity or the husband in his personal capacity but also by Q Pty Ltd, V Pty Ltd and H Pty Ltd. Total net assets were said to be $10,778,672. The statement of agreed facts contained the following –
Assets
Ownership
Value
AH Street, City AI EUR198,000
Exchange Rate 1.48
wife
$293,040
Funds in Country HH bank – EUR93475
wife
$138,343
1 AJ Street, Suburb AK
husband and wife
$60,000
2 AJ Street, Suburb AK
husband
$60,000
AL Street, Suburb AK
Q Pty Ltd
$60,000
AM Street, Suburb AK
Q Pty Ltd
$60,000
K Street, Suburb L
V Pty Ltd
$800,000
2 K Street, Suburb L
H Pty Ltd
· vehicles and business valuation
· Receivables
· Cash at bank
V Pty Ltd
H Pty Ltd
$2,100,000
$1,565,700
$802,701
$698,000
Controlled Money Account No#...26 with ANZ Bank Account Name AN Pty Ltd ITF Ms Pacek and Mr Saltzer
Part Property settlement
husband and wife
husband and wife
$1,607,023
$2,440,000
Total Assets
$10,684,807
Liabilities
Personal Tax Liabilities for 2021
husband
wife
$100,000
$100,000
H Pty Ltd Accounts payable
H Pty Ltd
$150,825
TOTAL LIABILITIES
$350,825
Superannuation
X Pty Ltd Pty Ltd ATF Pacek Saltzer Superfund
husband
wife
$198,808
$248,882
TOTAL SUPERANNUATION
$444,90
TOTAL NET ASSETS
(Including superannuation and part property settlement)
10,778,672
The fact that the parties were represented by experienced solicitors and barristers may have indicated to the court on 14 April 2022 that the agreement reached was more likely to be in fact and in law just and equitable in accordance with Harris v Caladine.[46] Nevertheless, the court was required to independently satisfy itself that the agreement was just and equitable. That question was wholly separate from issues concerning the proper construction of the consent orders.
[46] (1991) 172 CLR 84.
As to the question of the composition of the entities in the H Group, in my view, as the term is not defined in the consent orders, a construction of the term that accords with common sense is to be preferred. The chart headed “[H] Group” provided a useful starting point in the analysis. Each company had the common link of a current or past shareholding involving the husband or the wife or a current or past directorship involving the husband and wife. Neither party submitted that the use in paragraph 24 of the consent orders of the phrase “[H] Group” somehow enlivened a construction of that phrase consistent with the definition “Group” in the Corporations Act. It seemed that the parties did not intend the phrase to bear a defined meaning or one necessarily tied to company law principles. It was a simple enough task to define the H Group and its constituent members as readily as it had been to define “the Agreed [Saltzer] Entities”. In the absence of any such comparable defined expression, and having regard to the expertise of the legal representatives who prepared the heads of agreement and consent orders, I take the view that the phrase “[H] Group” was not intended to have a formal definition but rather, it was to be understood by custom and usage. On that analysis, the parties proposed to be joined are among the constituent members of the H Group.
The related question for the purposes of paragraph 24 of the consent order was joinder “as required to give effect to these orders”. The wife argued that she had done all she was required to do under the consent orders and therefore she was entitled to the release contemplated by paragraph 10 of the consent orders. The husband adopted the opposite position. It seemed to me that one purpose of the wife’s pursuit of paragraph 10 was her obtaining releases and so such a purpose was “to give effect to these orders”.
By written submissions prepared by Mr Newland dated 1 November 2023 and filed in the two Supreme Court proceedings, at paragraph 76 he contended that the phrase “[H] Group” meant “the Agreed [Saltzer] Entities.” He submitted that the evidence revealed that the parties understood the phrase “[H] Group” to encompass at least the companies that made up the defined term “the Agreed [Saltzer] Entities”. That seemed consistent with the orders by a registrar of the Supreme Court in March 2022 when the words “[H] Group” comprised each of the companies called “the plaintiff entities”.
In my view there is no merit in the contention that the proposed parties to be joined as part of the enforcement application cannot be so joined because they are not part of the H Group.
THE JURISDICTIONAL ARGUMENT – FUNCTUS OFFICIO
The husband contended that this court had no jurisdiction to hear and determine the wife’s enforcement application because, so he asserted, upon proceeding MLC 2954 of 2020 being comprised by the consent orders pronounced on 14 April 2022, the court was functus officio having no power in respect of any aspect of the s 79 application thereafter.
In Verdon v Verdon[47] I surveyed the learning on the exercise of the court’s power to make interim property orders. It is beyond argument that this court possesses power to make successive property orders until no further property is left at which time the court’s power under s 79 of the Family Law Act is exhausted. In this case the husband asserted that the consent orders finally disposed of the parties’ interests in property with the consequence that the wife’s enforcement application is incompetent because the court is functus officio.
[47] (2020) 62 FamLR 573.
The wife asserted that such an outcome would produce an absurd result[48] having regard to express provisions in the Family Law Act governing enforcement. As has already been narrated, the wife relied on –
(a)mandatory relief in aid of enforcement, the power to grant being reposed in s 114(3) of the Family Law Act; and
(b)the provisions in respect of parties that are not parties to the marriage called “third parties” in s 90AF(2) and the power under that section to alter property interests where a s 114 application is on foot.
[48] Mr Coleman SC submitted that if this court had power to make orders yet no power to enforce any such orders, an absurd result would follow – T71 L27.
In other words, the husband’s contentions about functus officio were set against various statutory provisions conferring expressly the power of enforcement of orders previously made. If the husband’s contentions were correct, a s 79 proceeding that was comprised by settlement but in respect of which the settlement terms were unperformed, a remedy by way of enforcement would not be available. To that Mr Coleman SC submitted as follows –
“Your Honour, I’m going to conclude, unless your Honour wishes to hear more, by reiterating what I said at the commencement: for this court to decline to grant the relief sought in the prayers would be, with great respect, in view of the matters to which we’ve referred, to send a very undesirable message to the husband and these corporations and the public at large in terms of the integrity of the court’s processes. This is your Honour – it’s not even thinly veiled.”
On the husband’s behalf it was argued that once final orders are made as between the husband and wife, there is finality and the proceeding is at an end.[49]
[49] T 95 L 20.
It was only after this case was into the afternoon of 30 September 2024 that Mr Magowan for the husband conceded that no issue about this court’s jurisdiction existed in respect of any enforcement application as between the husband and the wife.[50]
[50] T 107 L 40.
That left the husband’s main contention which related to the parties the wife proposed to join in pursuance of the enforcement application. It was put on behalf of the husband that if the rights of those parties were to be affected, in accordance with John Alexander’s Clubs Pty Ltd v White City Tennis Club Ltd[51] those parties needed to be first joined before any orders could be sought against them.
[51] (2010) 241 CLR 1.
The actual holding of John Alexander’s Clubs[52] was not quite so perfunctory as Mr Magowan put it. In John Alexander’s Clubs the court held[53] that the ratio decidendi in Victoria v Sutton[54] was correct namely that a non-party is a necessary party which ought to be joined where a court is invited to make or proposes to make orders directly affecting the rights and liabilities of a non-party. The court held further, in reliance upon Wong v Silkfield Pty Ltd[55] that all persons materially interested in the subject matter of a suit generally ought to be made a party so as to settle the controversy by binding those interested in the final decree. Mr Magowan contended that the companies mentioned in the wife’s joinder application were non-parties to proceeding MLC 2954 of 2020 (the only two parties to that proceeding being the husband and wife) and so the full reach of the observations in John Alexander’s Clubs[56] applied in relation to joining those parties where relief is sought against them. However, Mr Magowan submitted that as no orders were made by the consent orders against those parties on 14 April 2022, then no enforcement application may be commenced because there is no order to enforce against those companies.
[52] Ibid.
[53] (2010) 241 CLR 1, 46 (at [131]).
[54] (1998) 195 CLR 211, 316-318.
[55] (1999) 199 CLR 255, 261.
[56] (2010) 241 CLR 1.
In his reply submissions, Mr Coleman SC argued that the companies named in the orders are the ones named in the prayer for relief.[57] To my mind that amounted to a submission that the parties against which relief is sought in the amended application in the enforcement proceeding are those named in the consent orders. They are not “non-parties” within the contemplation of John Alexander’s Clubs v White City.[58]
[57] T117.
[58] (2010) 241 CLR 1.
In paragraph 1 of the wife’s amended enforcement application in a proceeding MLC 2954 of 2020, she seeks orders for the joinder of each of the parties identified in paragraph 3(ii)(a) of the consent orders. For reasons already addressed, each had been or is presently owned or controlled by the husband and they are not “non-parties” as canvassed in John Alexander’s Clubs v White City.[59]
[59] (2010) 241 CLR 1.
It was asserted that proceeding MLC 2954 of 2020 has been spent by the pronouncement of consent orders on 14 April 2022. That submission brought to the fore the similarity between the relief claimed by way of enforcement proceeding MLC 2954 of 2020 on the one hand and the relief claimed in the amended initiating application in proceeding MLC 7293 of 2024 on the other. When a manual comparison is made between the two cases –
(a)the joinder of seven parties proposed in paragraph 1 of the amended enforcement application is a standalone application;
(b)paragraph 2 of the amended enforcement application corresponded to paragraph 3 of proceeding MLC 7293 of 2024;
(c)paragraph 1 of the amended initiating application in proceeding MLC 7293 of 2024 largely although not wholly corresponded to paragraph 4 of the amended enforcement application;
(d)paragraph 4A of the amended enforcement application corresponded largely with paragraph 2A of the amended initiating application in proceeding MLC 7293 of 2024;
(e)the application for costs in paragraph 5 of the amended enforcement application corresponded with paragraph 4 of the amended initiating application in proceeding MLC 2793 of 2024; and
(f)paragraph 5A of the amended initiating application corresponded with paragraph 5 of the amended initiating application in proceeding MLC 2793 of 2024.
That review of the applications in the enforcement proceeding and in proceeding MLC 2793 of 2024 reveals several things about the two proceedings. They are –
(a)whereas proceeding MLC 2954 of 2020 was commenced as litigation involving the husband and wife, their matrimonial cause being a s 79 application; and
(b)by the consent orders in proceeding MLC 2954 of 2020, the parties introduced a reference to 10 companies recorded in paragraph 3(ii)(a) to (j), six of which are proposed to be joined as parties to the amended enforcement application, being the same six companies which are existing respondents in proceeding MLC 2793 of 2024.
It is significant that in their response to the initiating application in proceeding MLC 2793 of 2024 the respondents sought orders that the second to seventh respondents (the husband’s companies) “not be joined as respondents”. They already were respondents. No question existed about the second to seventh respondents being “joined”. For that matter, those second to seventh respondents were existing respondents when Alstergren CJ made orders on 7 August 2023 referring various issues to me for determination, paragraph 1(a) of which was the application made by the respondents in their response in proceeding MLC 7293 of 2024 which was –
(a)their application for the dismissal of proceeding MLC 7293 of 2024; and
(b)their application to restrain the wife from bringing any further proceeding relating to the subject matter of the litigation in the two transferred Supreme Court proceedings.
It is necessary to address the husband’s assertion that this court was functus officio and therefore bereft of jurisdiction to deal with the enforcement application. I reject that contention for the following several reasons –
(a)specific express jurisdiction is conferred by the provisions of the Family Law Act, especially in the definitions of “matrimonial cause” to an application to enforce orders already made;
(b)while some superficial attraction may exist to the proposition that upon a s 79 proceeding being compromised, the whole of the court’s power under the s 79 application is spent, in my view the mere entry into terms of settlement or even consent orders for the alteration of property interests does not have the effect of exhausting the court’s s 79 power;
(c)the entry into terms of settlement for the compromise of a s 79 proceeding effects an executory accord and satisfaction but not an executed accord and satisfaction;[60]
(d)only upon parties actually performing au pied de la lettre their obligations under the accord and satisfaction will they be regarded as having compromised their s 79 application; and
(e)when the parties actually fully and exhaustively perform their obligations in accordance with their executory accord and satisfaction will they be regarded in law as having exhausted the court’s power under s 79 of the Family Law Act.
[60] That is for the simple reason that the obligations assumed in an executory accord and satisfaction have not yet been performed.
In this litigation the parties remain in dispute about whether each has complied with the terms of the consent orders. The wife has brought an enforcement application in a proceeding (MLC 2954 of 2020) which the husband says is the subject of the doctrine functus officio. In a related proceeding (MLC 7293 of 2024) the wife seeks similar relief. The husband wants orders dismissing that other proceeding. He wants any application by the wife to compel performance of the consent orders stopped yet he wants continuation of a damages claim against the wife for her allegedly breaching fiduciary duties to various companies. He wants leave to pursue that damages claim against the wife despite his application to halt the wife’s enforcement application.
To my way of thinking, the husband’s approach to this litigation as recorded in the immediate preceding paragraph is wrongheaded and misguided. I refuse to dismiss proceeding MLC 7293 of 2024.
Both parties agreed that in respect of the two Supreme Court cases that were referred to me by Delany J –
(a)the case concerning the return of books and records had become no more than a costs dispute; and
(b)the case concerning the alleged breach of fiduciary duties was nowhere near ready for trial and it was not before me on 30 September 2024.
That left paragraphs 1(a), 1(b) and 1(c) of the orders of Alstergren CJ for me to address on this application.
As has already been recorded, I reject the husband’s contentions that –
(c)proceeding MLC 2954 of 2020 is the subject to a valid claim of functus officio; and
(d)in proceeding MLC 2954 of 2020 any proposed joinder of the parties the wife wishes to join is properly resisted by application of principles adumbrated in John Alexander’s Clubs v White City[61] for the reason that the parties proposed to be joined are not in fact and in law non-parties within the contemplation of the statements of principle in John Alexander’s Clubs v White City.[62]
[61] (2010) 241 CLR 1.
[62] Ibid.
THE HUSBAND’S EVIDENCE
In Pacek & Saltzer (No 1)[63] I recorded in some little detail how the husband and his legal representatives had comprehensively failed to comply with orders made by Alstergren CJ on 7 August 2024. Notwithstanding such non-compliance, the husband (without leave) purported to rely on affidavit material for the hearing of the various application on 30 September 2024. At no stage between 17 September 2024 (when I first heard debate about the cases in this application), 20 September 2024 (when I handed down reasons) and 30 September 2024 when the fully contested interlocutory skirmish was heard in this litigation did the husband bring before me an application for leave to rely on material that he failed to prepare to comply with the Chief Justice’s orders of 7 August 2024. Nevertheless, on the husband’s behalf various affidavits were put forward as if leave to do so had been given. No such leave had been given. It was presumptuous for the husband to have proceeded as if leave was in fact given when it was not. The wife’s counsel made a formal protest about the husband’s course of conduct in purporting to rely on affidavit material in respect of which leave had not been given. However, in debate with Mr Coleman SC it became apparent that the wife’s position amounted to her objection to various aspects of the evidence on which the husband wanted to rely as revealed in affidavits he had no leave to adduce. The affidavit was made by Ms Packer, the husband’s solicitor on 26 September 2024. Mr Magowan told me[64] that he relied on that affidavit to offer an explanation why the husband did not comply with orders made by the Chief Justice on 7 August 2024. In debate before me on 30 September 2024, Mr Magowan told me his clients had not anticipated the transfer of the two Supreme Court proceedings. As it happened, the Supreme Court proceeding that involved document production had been addressed because all documents had been returned to the husband’s companies and the question then became one of costs. The other Supreme Court proceeding, involving the breach of fiduciary duties claim, was embryonic and nowhere near being ready to be dealt with by me. In any event, a trial was likely in the breach of fiduciary litigation. Mr Magowan then raised the peculiar submission that he expected the one day allocated to deal with issues ordered by the Chief Justice to take the form of a trial with witnesses being cross-examined.[65]
[63] [2024] FedCFamC1F 650.
[64] T 32.
[65] T 40.
That submission was erroneous. This was not a trial. It was also not the hearing of a preliminary point of the sort explained in Tepko Pty Ltd v Water Board[66] and in Bass.[67]
[66] (2001) 206 CLR 1.
[67] Bass v Permanent Trustee Co Ltd (1999) 198 CLR 334.
THE PACKER AFFIDAVIT
Despite there being no leave granted to rely on the affidavit of Kim Louise Packer made 26 September 2024, Mr Magowan took me to a collection of passages of Ms Packer’s affidavit with a view to establishing various propositions. Having regard to Mr Coleman’s SC concession that the wife raised objections to matters asserted, as opposed to her raising a blanket objection to my receiving the affidavit in totality, it is more purposeful to address the probative matters said to have arisen from the Packer affidavit. She deposed to the following in her affidavit filed in both proceedings in this court –
(a)she is the solicitor for the respondent in proceeding MLC 7293 of 2024;
(b)she is the solicitor for the proposed respondents in proceeding MLC 2954 of 2020;
(c)she is the solicitor in both proceedings transferred by order of Delany J;
(d)she called her clients “the [H] parties”;
(e)she said she made her affidavit in support of an application by her clients to extend the date ordered by Alstergren CJ for the filing of affidavit material by her clients;[68]
[68] Her clients did not file an application in a proceeding to support any such application to extend the date for filing affidavit material.
(f)she said she made her affidavit to explain why no s 79A application is currently before the court;
(g)she said the plaintiff companies (being the plaintiffs in one of the two Supreme Court cases cross-vested to this court) retained[69] Mr Magowan in relation to the litigation in the Supreme Court and that Mr Magowan has no experience in family law matters requiring the plaintiff companies to endeavour to find and retain a specialist family law barrister to provide advice on s 79A issues;
[69] This was incorrect. She as the solicitor for her clients retained counsel.
(h)those endeavours proved mostly unsuccessful although Mr Kaufman of counsel was retained;
(i)the two proceedings transferred to this court by Delany J were transferred on the court’s own motion;
(j)the “landscape” (her word) of the matters before this court had “fundamentally changed” (her words) by the transfer of the two Supreme Court cases by Delany J and now “interlinked issues between four different proceedings” (her words) were before this court “all dealing with overlapping yet differing subject matter” (sic) (her words);[70]
(k)she said she formed the view “rightly or wrongly” (her words) that “it was not appropriate to comply with the procedural orders of Alstergren CJ;[71]
(l)she said she wrote to my associate asking for an urgent mention and she gave six days when she said her counsel was available in response to which I listed her clients’ request for a mention in the week I returned from leave, on 17 September 2024;
(m)the deponent apologised for not filing an affidavit earlier, although the last four sentences of paragraph 23 of her affidavit contained argument or otherwise inadmissible material;
(n)the deponent purported to depose to assertions she characterised as commercial fraud, which characterisation was a submission, not a statement of fact required by the rules;
(o)she asserted that “it is likely that (the husband) will rely on 79A of the Family Law Act in response to the wife’s reliance upon the final orders;[72]
(p)she said the husband had not filed a s 79A application because such a claim is complex, such an application may be unnecessary if the wife’s applications fail and the deponent has not accessed certain material; and
(q)she is not prepared to rush any s 79A application.
[70] No elaboration was offered by the deponent about how and in what respect the “landscape” had allegedly “fundamentally changed”, nor did she say how the four proceedings involved “interlinked issues”, “all dealing with overlapping yet differing subject matter”. This was a legal submission, not a statement of fact as the rules of court require affidavits to contain. For that matter, the document production case was all but at an end, with only a costs issue remaining.
[71] There was no question of that decision being made “rightly or wrongly”. She made a deliberate decision to not comply with orders of the Chief Justice of this court. Aside from the highhanded disobedience for a court order that such conduct revealed, this was a rule of law issue. It must not be overlooked that the deponent was an officer of the court.
[72] Since I have been seized of these cases (17 September 2024) the husband made no attempt whatsoever to invoke s 79 of the Family Law Act.
On behalf of the wife objection was taken to a collection of paragraphs of Ms Packer’s affidavit. The husband and the companies he controlled relied on Ms Packer’s affidavit to explain a number of chronologically relevant issues as well as to explain why the husband, to this day has failed, refused or neglected to file a s 79A application. I found the reason why the husband has failed, refused or neglected to file a s 79A application unpersuasive. Such an application is not unduly complicated, as she asserts. The fact that Ms Packer had not retailed silk is itself an unpersuasive reason. In the breach of fiduciary duty case transferred from the Supreme Court, complicated issues of equity and of company law are asserted. I am unable to see why an application to invoke one of the concepts in s 79A could not have been enlivened earlier than now nor why such an application could not be filed before now. It is unsatisfactory for Ms Packer to depose to the alleged complexity of such an application as a reason for not filing a s 79A application. In Jess & Jess (No 4)[73] I wrote in great detail about the elements of such an application. If she found the area complex Ms Packer should have familiarised herself with the learning on s 79A or retained competent senior or junior counsel.
[73] [2022] FedCFamC1F 530
I have proceeded on the basis that the husband, companies controlled by him and his solicitor may have their own reason why no s 79A application has been commenced to date, yet the position remains that no such application has been filed, despite Ms Packer asserting in her affidavit that the filing of such an application is likely. The inference open[74] is that the husband does not intent to file such an application.
[74] Holloway v McFeeters (1956) 94 CLR 470 and Girlock (Sales) Pty Ltd v Hurrell (1982) 149 CLR 155.
Without leave, the husband and his interests prepared submissions dated 25 September 2024. The husband purported to rely on those submissions on 30 September 2024. The points made in those submissions have already been addressed above. No useful purpose is served narrating them here.
THE WIFE’S EVIDENCE ON HER ENFORCEMENT APPLICATION
By written submissions dated 2 September 2024 prepared by Mr Ian Coleman SC, Mr Graeme Thompson and Mr William Newland of counsel, they contended that in support of the wife’s enforcement application she relied on five affidavits. They were –
(a)her affidavit filed 29 April 2024 in proceeding MLC 2954 of 2020;
(b)her affidavit filed 17 June 2024 in proceeding MLC 7293 of 2024;
(c)her supplementary affidavit dated 5 August 2024 in proceeding MLC 7293 of 2024;
(d)the affidavit of Mr Isakow dated 2 September 2024; and
(e)the affidavit of Mr G dated 29 August 2024.
It is utile to extract from each of those affidavits the evidence supportive of the wife’s enforcement application.
THE WIFE’S AFFIDAVIT FILED 29 APRIL 2024
The contents of the wife’s affidavit filed 29 April 2024 is almost identical to the contents of her affidavit filed 17 June 2024 in proceeding MLC 7293 of 2024. I have addressed that affidavit below.
THE WIFE’S AFFIDAVIT FILED 17 JUNE 2024
The wife deposed to the substance of paragraphs 10, three to nine, 20, 21 and 24 of the consent orders made 14 April 2022.
The major issues for the wife having regard to the husband’s challenges, were paragraphs three to nine of the consent orders and whether the wife had in fact complied with each paragraph as she asserted with the consequence that she became entitled to various releases and indemnities in her favour.
The wife addressed her compliance with each provision of the consent orders recorded in paragraph 3. Specifically –
(a)in respect of paragraph 3(i) of the consent orders, she deposed to Motor Vehicle 1 having been transferred to her;
(b)in respect of paragraph 3(ii) of the consent orders the wife deposed to executing and handing over at settlement the documents specified in paragraph 3(ii) of the consent orders concerning –
i.H Pty Ltd;
ii.Q Pty Ltd;
iii.W Pty Ltd;
iv.V Pty Ltd;
v.E Pty Ltd;
vi.X Pty Ltd ;
(c)she deposed to no action being required in relation to C Pty Ltd, C2 Pty Ltd, C3 Pty Ltd, AE Pty Ltd and Saltzer Pty Ltd;
(d)in respect of paragraph 3(iii) of the consent orders, the wife deposed to her executing and handing over at settlement a deed of variation adding the husband as a general beneficiary of the BB Family Trust;
(e)in respect of paragraph 3(iv) of the consent orders, the wife deposed to executing and handing over at settlement –
i.a unit transfer in respect of her units in the Q Pty Ltd Unit Trust;
ii.various instruments concerning the BB Family Trust;
iii.various instruments concerning the Q Family Trust;
the effect of all which was to resign her position as guardian, appointor, trustee or similar and she renounced her right to be a beneficiary;
(f)in respect of paragraph 3(v) of the consent orders the wife has deposed to not having called for the payment of any amounts owed to her by the trusts and that she had not made any claims against the trusts; and
(g)in respect of paragraph 3(vi) of the consent orders, the wife deposed to having assigned and transferred all amounts due and payable to her from the trusts to the husband leaving nothing further for her to do.
So far as paragraph 4 of the consent orders were concerned, she deposed to not having caused any of the Agreed Saltzer Entities or trusts to distribute income or a dividend and she deposed that pursuant to paragraph 4 of the consent orders she indemnified the husband against any such claim in consequence of which nothing was left to be done in relation to paragraph 4 of the consent orders.
For the purposes of paragraph 5 of the consent orders, the wife deposed to her resigning as a director of the Agreed Saltzer Entities and authorising her removal as a signatory of various companies. Those companies were –
(a)H Pty Ltd;
(b)Q Pty Ltd;
(c)W Pty Ltd;
(d)V Pty Ltd;
(e)E Pty Ltd; and
(f)X Pty Ltd .
For the purposes of paragraph 6 of the consent orders, the return of the books and records of the Agreed Saltzer Entities was said to be a contentious issue yet in reality there was no contest about the matter. The wife deposed to handing Ms AC on 13 June 2022 various documents described by the wife. The husband asserted that not all documents were returned. Mr Magowan told me on 17 September and again on 30 September 2024 that the wife was bound by a personal obligation to personally return each and every company book and record to which paragraph 6 of the consent orders applied, that she failed to do so and that various relevant books and records were sourced by the Agreed Saltzer Entities from third persons with the consequence that –
(a)the wife failed to comply with paragraph 6 of the consent orders; and
(b)she was not entitled to the release and indemnities she wanted.
Counsel for the wife disputed that the wife was required to personally hand over each and every book and record so as to comply with paragraph 6 and that provision by her of those books and records to a servant or agent was sufficient compliance with paragraph 6 as was receipt by a servant or agent of the husband or one of the Agreed Saltzer Entities.
After extensive debate Mr Magowan eventually conceded that howsoever returned, no book or record with respect to the husband or any of the Agreed Saltzer Entities remained unreturned. Mr Magowan conceded the issue now was a matter of costs allegedly incurred by his clients in procuring the return of documents he said the wife should have but failed to personally return in accordance with paragraph 6 of the consent orders. That debate was relevant to one of the two Supreme Court proceedings cross-vested to this court, in respect of which Mr Magowan eventually conceded had become little more than a debate as to costs.
It seemed to me that the proper forum for the debate about costs associated with paragraph 6 of the consent orders was before a registrar of this court.
As to paragraph 7 of the consent orders, the wife deposed to destroying or deleting information stored on her personal computer with respect to the husband and the Agreed Saltzer Entities.
With respect to paragraph 8 of the consent orders, the wife deposed to not having been requested by the husband to provide any assistance within the contemplation of paragraph 8 of the consent orders.
So far as paragraph 9 of the consent orders was concerned, the wife deposed to having provided to the husband or to his representative all keys and passwords.
THE WIFE’S AFFIDAVIT 5 AUGUST 2024 IN MLC 7293 OF 2024
That affidavit was largely formal in which, in the main, the wife deposed to the progress of the two cases in the Supreme Court and the wife exhibited (although her affidavit was not marked with the proceeding in which it was filed) various documents from the Supreme Court litigation.
THE AFFIDAVIT OF DANIEL ISAKOW MADE 2 SEPTEMBER 2024
Mr Isakow deposed to being the wife’s solicitor in the two proceedings involving the wife in this court and in the two proceedings cross-vested by Delany J of the Supreme Court to this court. In that affidavit Mr Isakow deposed to the conduct of aspects of the two Supreme Court proceedings during August 2024.
THE AFFIDAVIT OF MR G MADE 29 AUGUST 2024
Mr G deposed to being a finance professional with UU Accountants. He deposed to withdrawing the services of UU Accountants on 14 June 2024. He said the Agreed Saltzer Entities were represented in accountancy and tax matters from 24 June 2022 by Mr AO of AP Accounting. On the issue relevant to the return of books and records, Mr G deposed to Mr AO confirming on 5 July 2022 that Mr AO had received 39 folders in eight boxes containing books and records of the husband and of the Agreed Saltzer Entities.
The totality of the wife’s evidence on her enforcement application was reposed in the affidavits described in paragraph 83 above.
By way of submissions in relation to the enforcement application, counsel for the wife contended that in April 2024, Barrett As J of the Supreme Court dismissed the wife’s application for permanent stays of the two Supreme Court proceedings, the wife was ordered in May 2024 to file defences to the Supreme Court proceedings and the wife was ordered to pay costs.
Counsel for the wife submitted that on 18 June 2024 the wife filed proceeding MLC 7293 of 2024 in order to seek relief connected to the final settlement orders. On 19 June 2024 a registrar of this court orders the wife’s enforcement application and proceeding MLC 7293 of 2024 to be heard together. On 21 June 2024 proceeding MLC 7293 of 2024 was transferred to Division 1 of this court and on 7 August 2024 the enforcement application along with proceeding MLC 7293 of 2024 came before Alstergren CJ for directions.
THE WIFE’S SUBMISSIONS ON HER ENFORCEMENT APPLICATION
In their written submissions in proceeding MLC 2954 of 2020, counsel for the wife argued that the relief she sought in the enforcement application did no more than put the wife in the position in which she would have been had the husband and the companies he controls duly and punctually performed their obligations under the consent orders. Specifically, her counsel contended that the wife sought –
(a)a declaration that the wife has complied with her obligations under orders three to nine of the final settlement orders;
(b)a restraint to prevent the husband or the plaintiff entities from bringing any further proceedings in any court against the wife (the previous order sought was directed at the Supreme Court proceedings which specifically is no longer required);
(c)an order requiring the husband (personally and through the plaintiff entities which he controls), and the plaintiff entities themselves, to do all things necessary to release and discharge the wife from any and all claims that any of them may have against her and to pay and indemnify her in respect of all liability therefor;
(d)an order that pursuant to the indemnity given by the husband and the plaintiff entities, and contained in paragraph 21 of the final settlement orders cover the wife’s actual costs of defending the Supreme Court proceedings and her actual costs in bringing the applications before this court;
(e)the dismissal of the former Supreme Court proceedings, which are now in this court, on the grounds that they are inconsistent with the releases that were freely given in the final settlement orders, or an abuse of process, or both; and
(f)in the alternative, an order pursuant to the contractual indemnity contained in paragraph 21 of the final settlement orders, requiring the husband and the plaintiff entities to pay the costs of the former Supreme Court proceedings and these applications pursuant to s 117 of the Family Law Act.
The wife’s counsel relied on a decision of a judge in Division 2 of this court in paragraph 47 of their submissions. No particularly novel expression of jurisprudence is contained in the extract of the case quoted. In any event, in accordance with statements of the High Court in Trident General Insurance Co Ltd v McNiece Bros Pty Ltd[75] and Hill v Zuda Pty Ltd[76] in relation to the doctrine of precedent and stare decisis, the Division 2 decision on which the wife relied does not bind me. I decline to adopt it or to apply it. To the extent that it invites a consideration of Chapter 11 of the Federal Circuit and Family Court of Australia (Family Law) Rules2021, those rules apply to this enforcement application, whether or not a Division 2 judge mentions that. As has already been stated, s 105 of the Family Law Act confers power in respect of the enforcement of all decrees on a court having jurisdiction under the Family Law Act, relevantly here, Division 1 of this court.
[75] (1988) 165 CLR 107.
[76] (2022) 275 CLR 24.
Counsel for the wife contended that the orders sought by the wife do not amount to a substantial variation of the orders previously made, not is it a deviation from the principle espoused in Taylor v Taylor.[77] At all events, it is relevant to observe that the 14 April 2022 orders by Bennett J were made by consent.
[77] (1979) 143 CLR 1.
Various authorities at Full Court level of this court have differentiated between an impermissible substantive variation of orders previously made on the one hand and what are somewhat infelicitously called “machinery” provisions on the other hand, the latter being permissible. A machinery provision is said to be a consequential order (that is to say, one following the final order) which is required so as to five effect to the orders previously made. An early exposition of the concept was provided in the Marriage of Ravasini[78] where the Full Court[79] referred to the submissions of counsel then appearing for the wife (Mr Coleman SC, as it happened) to the effect that the orders made subsequent to final orders were no more than machinery orders which gave the earlier orders some prospect of achieving what they were designed to do. The court held that a consequential order (now known by the appellation “machinery order”) includes an order following logically or of necessity from a prior substantive order. The court held as follows –
“Whether what is to be done is termed a consequential order or a machinery order the result is the same. The court has no power to vary the original order. It has power to enforce the order and to modify the machinery provisions of the order to effect enforcement provided that by so doing it does not affect the substantive rights of the parties. That power can also be used to spell out the effect of the order where that is not clear.”[80]
[78] (1982) 8 Fam LR 903.
[79] Ellis and Emery SJJ and McGovern J.
[80] In the Marriage of Ravasini (1982) 8 Fam LR 903, 906.
The term “machinery order” is also used to describe orders providing for the machinery by which a substantive order is to be carried out. In Ravasini,[81] the court held that its view on the operation of a machinery order was wholly consistent with the received wisdom of the chancery practice as revealed by the decision of Chitty J in Penrice v Williams.[82]
[81] Ibid.
[82] (1883) 23 Ch D 353.
Further, in the Marriage of Molier and Van Wyk[83] the court held that this court has no power to vary an order for property settlement but the court does have power to enforce such an order and to modify the machinery provisions of such an order so as to effect enforcement.
[83] (1980) 7 Fam LR 18, 21
Counsel for the wife submitted that it could not be sensibly suggested that the orders sought by the wife in the enforcement application were substantive variations of the orders made on 14 April 2022. It was put that paragraphs 10, 21 and 24 of the consent orders specifically contemplated other orders so as to give effect to the consent orders. They further argued that no merit existed in the husband’s propositions founded on the separation of legal personalities (Solomon v A Solomon & Co)[84] because the successful engagement of that concept would operate in such manner as to circumvent the function of the consent orders.
[84] [1897] AC 22.
The wife’s counsel further submitted that notwithstanding the seeming overlap in the relief sought in proceeding MLC 2954 of 2020 with proceeding MLC 7293 of 2024, they were standalone proceedings grounded in different legislative sources. Thus, so counsel argued, the enforcement application had its genesis in Chapter 11 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 whereas proceeding MLC 7293 of 2024 had its statutory source grounded in s 105 of the Family Law Act which provision does not constrain the relief that can be ordered as compared with chapter 11 of the rules which specifies the relief that a court may order.
In their written submissions, counsel for the wife argued that final orders are binding and conclusive from the moment they are made.[85] They contended that pursuant to the consent orders the husband and his companies gave the wife full releases in respect of claims they may have had against her. However, they submitted that the proviso appearing at the commencement of paragraph 10 of the consent orders had the effect of qualifying the release conferred by paragraph 10 in such manner that the obligation to provide the books and records applied notwithstanding the release otherwise conferred. They argued that such a construction obviated the need to assess whether the wife duly complied with each obligation in paragraphs three to nine of the consent orders. They argued that it was only necessary to embark on a consideration of the elements and obligations of paragraphs three to nine if clause 10 were to be construed in such manner that the release in paragraph 10 was conditional upon the wife’s performance of the obligations in clauses three to nine. Alternatively, the wife’s counsel submitted that on the evidence before the court, a finding should be made that the wife did in fact comply with the obligations imposed upon her in paragraphs three to nine of the consent orders. They argued that it was only necessary to embark upon a consideration of the elements and obligations of paragraphs three to nine if paragraph 10 of the consent orders were to be construed in such manner that the release in the paragraph was conditional upon the wife’s performance of her obligations in paragraphs three to nine.
[85] That unqualified assertion must be understood in the context that the construction of the relevant provision is the important matter.
For the reasons already addressed, as a matter of construction I take the view that the releases in paragraph 10 are conditional upon a finding that the wife complied with her obligations in paragraphs three to nine of the consent orders. Of those the most contested was paragraph six, involving the return of books and records. The husband conceded that all books and records had been returned with the consequence that the proceeding in the Supreme Court for the recovery of books and records had been compromised leading to Mr Magowan’s concession that only a costs application remained. It must not be overlooked that paragraph 6 of the consent orders did not require the wife to personally return the relevant books and records – it was sufficient for the books and records to be returned by a servant or agent of the wife to a person who delivered them to the intended recipient.
Counsel for the wife submitted that by paragraph 6 of the consent orders the wife was required to deliver up and to cause the accountant to deliver up such books and records as were in their possession or control. That construction corresponded with the wording of paragraph 6 of the consent orders. It made sense that the wife was obliged to return documents in her possession as opposed to her being somehow required to return documents not in her possession.
The wife’s counsel submitted that the releases in paragraph 10 of the consent orders became effective prior to the commencement of the Supreme Court proceedings and that, by reason of the releases in favour of the wife, the two Supreme Court proceedings should never have been commenced because all causes of action as between the wife, the husband and the companies controlled by the husband had been settled and each released the other therefrom.
The significance to the wife of the release was readily apparent. If her contentions about the release are correct, then the plaintiffs in the breach of fiduciary duty case were not entitled to bring that case against the wife and have not thereafter been entitled to prosecute or to maintain that litigation.
CONSIDERATION – THE ENFORCEMENT APPLICATION
In my view, the wife’s enforcement application was validly commenced in proceeding MLC 2954 of 2020. I reject the contention advanced by the husband and the companies controlled by him that the making of the consent orders brought to an immediate halt proceeding MLC 2954 of 2020. On its proper construction, Part 11 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 confirms that proposition. Several provisions of part 11 of the rules that support that conclusion. None of the provisions of rule 11 require the commencement of a separate proceeding or a new proceeding. To the contrary – part 11 includes several references to applications in a proceeding, that is to say in an existing proceeding. The rules in chapter 11 include reference to “the primary order” or “any order, bond, agreement or undertaking that the court is asked to enforce”. Table 11.1 to chapter 11 does not refer to the commencement of a further proceeding and instead speaks of an enforcement application.
The fact that chapter 11 contemplates an enforcement application in an existing proceeding tends against the validity of the argument advanced by the husband that the moment Bennett J pronounced the consent orders on 14 April 2022 in proceeding MLC 2954 of 2020, the court thereupon became functus officio. To my mind, the husband’s contention in that regard was illogical by reason of the express preservation of the ability of all parties in proceeding MLC 2954 of 2020 to bring an enforcement application. It would produce an absurd result if terms of settlement that became consent orders caused the court in which the consent orders were made to become functus officio, if, for example, one party entirely ignored all of his obligations under the consent orders including payment. If the husband’s contentions about the court becoming functus officio were correct (and in my judgment they are wrong) the court could pronounce upon the resolution of the dispute but it otherwise became powerless to compel performance of the obligations recorded in the resolution. That cannot possibly be the intendment of chapter 11 of the rules. In fact, chapter 11 contains exquisite details enabling a party to enforce orders (called “the primary orders” in one place in chapter 11).
On the facts of this litigation, the wife (on advice) elected to apply to enforce the consent orders in two ways. First, she sought enforcement of the provisions of the consent orders making application under chapter 11 of the rules in proceeding MLC 2954 of 2020, that is to say, in the proceeding in which the orders sought to be enforced were made. To my mind, in doing that the wife did no more than was authorised by chapter 11 of the rules. Had the husband failed to pay the sum he was required to pay under the consent orders, on his erroneous agreement about the court being functus officio, the wife had no remedy. That was an absurd proposition.
A more interesting question (although one not raised by the husband) was whether the relief sought in proceeding MLC 7293 of 2024 represented a duplication of the relief sought in proceeding MLC 2954 of 2020. It was true that in both, the wife sought enforcement of the consent orders made on 14 April 2020. As Mr Coleman SC explained in the wife’s written submissions, the wife sought enforcement orders in proceeding MLC 2954 of 2020 in pursuance of rights conferred on the wife under the rules yet the wife sought enforcement orders in reliance upon the jurisdictional basis of s 105 of the Family Law Act in her application in proceeding MLC 7293 of 2024. There was no error in so doing, one jurisprudential basis existing for relief in one case and another jurisprudential basis existing for relief in the other case. By parity of reasoning, were it not for my conclusions about the efficacy of the release conferred by paragraph 10 of the consent orders, in pursuing his assertions in the second Supreme Court proceeding engaging equitable compensation for breach of fiduciary duties, the husband could have commenced a proceeding by writ while concurrently pursuing a motion under the Corporations Act in reliance upon a statutory cause of motion for the same relief.
In short, I detected nothing improper or even inappropriate in the wife having on foot at the same time two separate proceedings in this court in which she pursued aspects of the enforcement of the consent orders. Her jurisdictional basis for seeking enforcement of the consent orders was reposed in chapter 11 of the rules, as was sought in proceeding MLC 2954 of 2020 as well as s 105 of the Family Law Act as was sought in proceeding MLC 7923 of 2024. It must not be overlooked that the husband and the companies he controlled at no stage filed court process in either proceeding MLC 2954 of 2020 or in proceeding 7293 of 2024 contending that one of those proceedings should be stayed pending the hearing and determination of the application in the other proceeding by reason of an alleged duplication of the subject matter falling for determination in each proceeding.
PARAGRAPH 1 OF THE ENFORCEMENT APPLICATION – JOINDER
Pursuant to paragraph 1 of the amended application (enforcement in proceeding MLC 2954 of 2020 dated 29 April 2024) the wife sought orders for the joinder of the six companies defined as “the companies”. Those companies were –
(a)H Pty Ltd;
(b)Q Pty Ltd;
(c)W Pty Ltd;
(d)V Pty Ltd;
(e)E Pty Ltd; and
(f)Saltzer Pty Ltd.
The joinder of those companies was said to be necessary so as to give effect to the orders in the consent orders dated 14 April 2022. I construe that the mean the consent orders could not be given effect without the joinder of the parties referred to in the immediately preceding paragraph. That was for the simple reason that the parties to the breach of fiduciary duty claim case should have but failed to execute a release and if those companies had executed such a release, then the fiduciary duty case would not have come into existence.
As a matter of practice and procedure, the joinder of one or more of the parties sought to be joined must meet the criteria set out in rule 3.01 of the rules. That rule provides as follows –
“A person whose rights may be directly affected by an issue in a proceeding, and whose participation as a party is necessary for the court to determine all issues in dispute in the proceeding, must be included as a party to the proceeding”.[86]
[86] Federal Circuit and Family Court of Australia (Family Law) Rules 2021, rule 3.01.
The parties proposed to be joined possess rights that may be directly affected by an issue in the enforcement application, namely the release of their claims against the wife. They are necessary to enable issues to be determined. The application of rule 3 was not argued on behalf of the husband or the companies controlled by him. The resistance to the joinder of those parties was mainly based in arguments about functus officio. Having determined that this court is not functus officio and that –
(a)the enforcement rules still operate despite the court making final orders; and
(b)s 105 of the Family Law Act more than amply provides a jurisdictional basis for the enforcement application,
I take the view that it became necessary to examine all aspects of the enforcement application, commencing first with the proposed joinder. Such an order must be made. I grant the relief sought in paragraph 1 of the enforcement application. For reasons already canvassed, I do not agree that the parties to be joined were not parties to the consent orders and therefore they are not amenable to joinder. In my view, they are not “non-parties” within the contemplation of the High Court’s decision in John Alexander’s Clubs.[87]
[87] (2010) 241 CLR 1.
PARAGRAPH TWO OF THE ENFORCEMENT APPLICATION – DECLARATIONS
In paragraph 2 the wife seeks a declaration that the wife complied with orders three to nine of the consent orders. The only paragraph prompting contest by the husband and his companies was paragraph 6 in relation to the return of books and records. In the passages set out above I have addressed my observations and findings about aspects of paragraph six. That paragraph was premised on the wife and UU Accountants having possession of books and records. Insofar as the wife and UU Accountants possessed any books and records of the husband’s companies after 14 April 2022, the wife’s evidence persuaded me on the balance of probabilities that she did in fact return those books and records as contemplated by paragraph six of the consent orders. I reject the husband’s contention that on the proper construction of clause six the wife was required to personally return to the husband all books and records, including those not held by the wife as at the date of the consent orders. I also reject the husband’s contention that the wife was required by paragraph six to personally deliver such books and records as she possessed to the husband. In my view, delivery of such books and records as she possessed to a servant or agent of the husband and his companies was sufficient compliance with the obligations that fell to the wife to perform under paragraph six of the consent orders. In any event, after a degree of vacillation on the issue by Mr Magowan, he eventually conceded that no books and records remained to be returned to the husband so the issue became one of the costs.
Counsel for the wife informed me on 30 September 2024 that the declaration sought in paragraph two of the enforcement application was a necessary precursor to the release she sought in paragraph four of the enforcement application. Whether it was necessary for me to formally declare compliance with the wife’s obligations in paragraphs three to nine of the consent orders, or whether it was sufficient for me to find on the balance of probabilities that the obligations in those paragraphs had been duly performed by the wife was not the subject of debate. However, in the course of debate with Mr Magowan I canvassed with him how the grant of declaratory relief is ordinarily premised on there being both an applicant for the declaration as well as a contradictor and that a declaration ought not be granted in respect of a purely hypothetical question.[88] In this case, the husband and his companies were contradictors yet the issue in respect of the return of books and records may have attained the status of being hypothetical because the husband himself conceded the only question left on that point was costs. Nevertheless, the wife cast her case on the basis that proof of the discharge by her of all obligations under paragraphs three to nine of the consent orders was a precursor to her obtaining the releases she sought. In those circumstances I find on the balance of probabilities that the wife in fact complied with her obligations in paragraphs three to nine inclusive of the consent orders. She sought a declaration to that effect, no doubt with a view to completely and finally determining matters in controversy in the litigation between her, the former husband and the companies he now controls. In Neeta (Epping) Pty Ltd v Phillips[89] the High Court held that declaratory relief was appropriately ordered in those circumstances.
[88] Windsor Refrigeration Co Ltd v Branch Nominees Ltd [1961] Ch 375 (Harman LJ).
[89] (1974) 131 CLR 286, 307.
For the purpose of paragraph two of the enforcement application, I declare that the wife has complied with paragraphs three to nine of the consent orders made by Bennett J on 14 April 2022 in proceeding MLC 2954 of 2020.
Upon such declaratory relief being granted the wife became entitled to the releases and indemnities referred to in paragraph 10 of the consent orders.
Paragraph four of the orders sought in the enforcement application came next chronologically ahead of the application in paragraph three of the enforcement application. However, it is easier to address paragraph three sequentially.
PARAGRAPH THREE OF THE ENFORCEMENT APPLICATION – RESTRAINT
Once it is recognised, as it must be, that the husband and the companies he controls are required to execute the releases contemplated by paragraph 10 of the consent orders, it follows axiomatically that any further proceeding at the suit of the husband and the companies he controls is forbidden. That would include new proceedings. The wording of paragraph three incorporates a restraint “from commencing a further proceeding in any court” against the wife. That restraint is not limited by a reference to any such new proceeding being in relation to or arising out of the subject matter of the litigation before me or before Bennett J. As paragraph three presently reads, hypothetically it would be wide enough to prevent, for example, the husband issuing a proceeding in the County Court of Victoria against the wife for defamation within the relevant limitations period. In my view, the consent orders did not operate in such manner as to compromise any such cause of action. Accordingly, to the existing paragraph three of the enforcement application the following words need to be added –
“arising out of the subject matter of proceeding MLC 2954 of 2020 or arising out of the subject matter of proceeding MLC 7293 of 2024.”
In their submissions dated 2 September 2024, the wife’s counsel submitted that the Supreme Court litigation should never have been commenced and would not have been if the husband and the companies he controlled executed the release and the indemnity he (and they) agreed to give.
This issue was not argued before me, whether in the depth now appearing or for that matter, at all. Important consequences follow from the orders herein compelling the husband and the companies he controls to execute the release contemplated by paragraph 10 of the consent orders and the indemnity. While the release relates to future litigation, the effect of the release means –
(a)both proceeding MLC 2954 of 2020 and proceeding MLC 7293 of 2024 in this court are brought to an end;
(b)the books and record litigation commenced in the Supreme Court and cross-vested to this court was exhausted save for a cost’s argument, as Mr Magowan conceded; and
(c)that left as a stand along piece of litigation in this court the breach of fiduciary duty case.
In paragraph 2 of the enforcement application the wife sought orders for the dismissal of both pieces of litigation transferred to this court by Delany J.
It must not be overlooked that the two pieces of litigation in the Supreme Court were commenced some little time ago. Equally, Barrett As J refused to summarily dismiss the two pieces of Supreme Court litigation. Yet Barrett As J was not then concerned with the consequences of the wife’s successful enforcement application. In other words, the two proceedings in this court that had been the subject of careful debate in respect of the wife’s enforcement application were not before the Supreme Court when Barrett As J decided the dismissal application.
That was relevant to the circumstances that presently confront me. When Barrett As J refused to dismiss the Supreme Court litigation, his Honour was not appraised of the fact that the entire matrimonial cause between the husband and the wife had been fully and exhaustively compromised including by a determination of the wife’s enforcement application.
In view of the orders I have made on this enforcement application, the breach of fiduciary duty case cross-vested to this court by Delany J remains yet the substratum of fact in the matrimonial cause in this court (whether in proceeding MLC 2954 of 2020 or in proceeding MLC 7293 of 2024) has been compromised and enforcement orders made. A standalone claim transferred from the Supreme Court concerning breach of fiduciary duties is all that is left. This court has power to hear such a claim yet it is a peculiar state of affairs that such a case, unattached to a matrimonial cause, would continue in this court in the absence of any family law component to such a case. The breach of fiduciary duty claim in the case cross-vested to this court retains a federal component but only insofar as it relies on relief under the Commonwealth Corporations Act. In that litigation in this court no subsisting matrimonial cause is extant. It should not remain in this court when no relief under the Family Law Act is sought. In the exercise of my discretion, there is merit in the notion of my transferring that proceeding back to the Supreme Court. I will hear the parties on the issue.
PARAGRAPH FOUR OF THE ENFORCEMENT APPLICATION – A MANDATORY INJUNCTION
In that paragraph the wife sought, in effect, a mandatory injunction compelling the husband and the companies he controls to execute all relevant and necessary documents to release and discharge the wife from all and any claim and to indemnify her in respect of all liability. There is no doubt whatever that this court is seized of jurisdiction to grant a mandatory injunction.[90] The consent orders did not specify the documents or acts that were involved in giving effect to the release contemplated by paragraph 10 of the consent orders. The proposed mandatory injunction in paragraph four of the enforcement application sets out the machinery involved in achieving the obligations recorded in the broader concept of paragraph 10 of the consent orders.
[90] Arkin & Blasberg [2019] FamCA 476 (at [61]), Kain & Kain and Ors [2020] FamCA 650.
In my view paragraph four of the enforcement application is properly made. The wording of the order I now make follows precisely the wording of paragraph four.
PARAGRAPH 5A OF THE ENFORCEMENT APPLICATION
In that paragraph the wife sought orders for dismissal of the two Supreme Court proceedings transferred to this court and for costs.
Taking first the litigation involving the production of books and records, as these reasons reveal, three issues emerged. First, the relevant paragraph of the consent orders only required the wife and UU Accountants to produce documents in their possession. She was not required to hunt for and obtain documents in order to hand them to the husband. Second, she was not required to personally hand the documents to the husband personally and sufficient compliance with the relevant paragraph was demonstrated by the provision of those books and records to the husband’s servants or agents. Third, all documents sought in that litigation have been produced (even though the wife was required to provide only those in her possession), a matter acknowledged by Mr Magowan on both 17 and 30 September 2024. In view of my conclusions that the wife complied with the obligations imposed on her between paragraphs three and nine of the consent orders, the Supreme Court proceeding for the recovery of books and records may well be nugatory henceforth.
Similarly, Mr Magowan’s contention that only a costs application remained in the Supreme Court proceeding for the recovery of books and records may be erroneous because that proceeding should not have been commenced in the first place, had the husband and the companies controlled by him executed the release contemplated by paragraph 10 of the consent orders. Precisely how he can assert an entitlement to costs in those circumstances was not articulated.
In debate on 30 September 2024, Mr Coleman SC himself contended that the two Supreme Court proceedings cross-vested to this court were not properly the subject of agitation before me. In those circumstances it would be erroneous for me to make orders in respect of the two Supreme Court proceedings beyond making the observations that are set out above.
Similarly, in respect of the breach of fiduciary duty case, it may well be arguable that the breach of fiduciary duty case would not have come into existence at all if the husband and the companies he controlled did as the consent orders required them to do by executing releases. The husband and his companies failed to execute the release and instead commenced the breach of fiduciary duty case. The release was intended to procure the result that both parties and their privies were not to commence litigation after 14 April 2022 when the consent orders were made. Instead, the companies the husband controlled issued a proceeding in the Supreme Court of Victoria for breach of fiduciary duty. They could not have done that had they executed the release provided for in paragraph 10 of the consent orders.
The consent orders were made subsequent to the parties settling their differences upon entering into heads of agreement (equating to terms of settlement). In debate with Mr Magowan I canvassed the implied duty of cooperation espoused by the High Court in Secured Income Real Estate Australia Ltd v St Martins Investments Pty Ltd[91] and in particular the obligation on all parties to an agreement to give the other the benefit of the agreement. In the context of this case I put to Mr Magowan that the implied duty to cooperate operated in such a manner that his clients were required to cooperate so as to give the releases set out in paragraph 10 of the consent orders rather than launching yet further litigation in the war between the husband and wife. Mr Magowan accepted that his clients were bound by the implied duty to cooperate.
[91] (1979) 144 CLR 596.
To my mind, the implied duty to cooperate required the husband and the companies he controlled to expeditiously and promptly do what the consent orders required them to do. In respect of the releases, that obligation required the husband and the companies he controlled to promptly and punctually give those releases, rather than launching satellite litigation in the Supreme Court of Victoria.
The wife seeks orders for the dismissal of both Supreme Court proceedings. Were it not for the contention advanced by all parties before me that the two Supreme Court proceedings were not before me on 30 September 2024, I may have been attracted to the concept of orders being made dismissing both Supreme Court proceedings on the basis that an estoppel may well have operated forbidding the husband and the companies he controlled from bringing and prosecuting those cases. However, the point was not argued. Before orders can be made on this point it will be necessary to hear the parties. To that end any written submissions and affidavits on this issue must be filed and served as provided in the early pages of these orders.
PARAGRAPH 4A OF THE ENFORCEMENT APPLICATION – COSTS
Paragraph 21 of the consent orders provided for the husband and the Agreed Saltzer Entities releasing, indemnifying and discharging the wife in respect of “any claims made against the wife…”. By paragraph 4A of the enforcement application the wife sought orders compelling compliance with that paragraph of the consent orders in respect of costs incurred by the wife in the two Supreme Court proceedings.
Next to no submissions were devoted to the application made in paragraph 4A of the enforcement application. Costs were not debated before me. The costs application in paragraph 4A also enlivened a consideration of the costs application in paragraph five of the enforcement application.
Costs were not addressed before me. It seemed to me that certain anterior issues needed consideration and determination before costs could be properly addressed, especially in respect of the discrete issues to which attention must be directed in s 117(2A) of the Family Law Act.
In view of my observations above, it is appropriate to invite any costs application in a proceeding in proceeding MLC 2953 of 2020 within the time mentioned in the orders pages of these reasons. Any such application must be supported by affidavit material and written submissions. If the application is opposed, any responding evidence and submissions must be filed and served as provided.
In case it might be thought from the foregoing consideration about the finality of the enforcement application, this court being a court of limited statutory jurisdiction nevertheless possesses an inherent jurisdiction to control its own process which includes the power to order costs. Accordingly, all issues in this proceeding MLC 2954 of 2020 are not exhaustively determined until the hearing and determination of all issues for which leave has been given to progress.
I certify that the preceding one hundred and fifty-two (152) numbered paragraphs are a true copy of the reasons for judgment of the Honourable Justice Wilson. Associate:
Dated: 17 October 2024
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