Pearson and Coli
[2018] FamCA 295
•8 May 2018
FAMILY COURT OF AUSTRALIA
| PEARSON & COLI | [2018] FamCA 295 |
| FAMILY LAW – PRACTICE AND PROCEDURE – Registrars – Review of decision – Delegation of power to Registrars – where the parties were unrepresented at the time the original orders were made – where the original orders are uncertain and incapable of being enforced – where the consent orders did not achieve the parties’ intention of a 50/50 division of assets – where the Registrar had not properly exercised the delegated judicial power – where it was found the original orders should not have been made – orders made granting an extension of time for the wife to file an application for review of the Registrar’s decision |
| Gallo v Dawson (1990) 93 ALR 479 Redman & Redman (2013) FamCAFC 183 |
| Family Law Act 1975 (Cth) Family Law Rules 2004 (Cth) |
| APPLICANT: | Ms Pearson |
| RESPONDENT: | Mr Coli |
| FILE NUMBER: | DGC | 1112 | of | 2014 |
| DATE DELIVERED: | 8 May 2018 |
| PLACE DELIVERED: | Melbourne |
| PLACE HEARD: | Melbourne |
| JUDGMENT OF: | Macmillan J |
| HEARING DATE: | 12 February 2018 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Glick QC Mr Dunlop |
| SOLICITOR FOR THE APPLICANT: | Mason Black Lawyers |
| COUNSEL FOR THE RESPONDENT: | Dr Ingleby |
| SOLICITOR FOR THE RESPONDENT: | Berger Kordos Lawyers |
Orders
The Applicant is granted leave out of time to apply to the Court for a review of the orders made by the Registrar pursuant to s 79 of the Family Law Act 1975 (Cth) on 26 May 2014.
The matter be listed for directions in the Registrar’s Duty List at 9.30 am on 4 July 2018.
Note: The form of the order is subject to the entry of the order in the Court’s records.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Pearson & Coli has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).
| FAMILY COURT OF AUSTRALIA AT MELBOURNE |
FILE NUMBER: DGC 1112 of 2014
| Ms Pearson |
Applicant
And
| Mr Coli |
Respondent
REASONS FOR JUDGMENT
The substantive application in this case is the wife’s Amended Initiating Application filed 8 June 2016, in which she seeks to set aside consent orders pursuant to s 79A of the Family Law Act 1975 (Cth) (“the Act”). These orders were purportedly made pursuant to s 79 of the Act by the Registrar on 26 May 2014. In the alternative, the wife seeks that she be given leave out of time to review the Registrar’s decision. Although the wife foreshadowed an application for an adjournment of her application to set aside the orders pursuant to s 79A of the Act, counsel for both parties ultimately agreed that the application for leave to review those orders could proceed. It was further agreed if that application were to be successful, that the application to set aside the orders pursuant to s 79A of the Act would be unnecessary.
Background
The parties in this case commenced their relationship in 1995, marrying in 2007 and separating in April 2014. They were divorced in June 2015. There are two children of their marriage.
On 14 April 2014 the wife co-signed an Application for Consent Orders and a minute of proposed orders the parties were seeking be made by consent. The parties annexed to that application a document described as “Appendix 1”, which purported to set out their asset position and how their property interests were to be adjusted pursuant to the proposed orders. This included the B Trust (“the Trust”) which was described in Appendix 1 as being “set aside” for the benefit of the children. Appendix 1 estimated the parties’ net worth, excluding superannuation, to be just under $10 million. Neither the real property nor the husband’s business interests were valued at that time and it is the wife’s evidence that she accepted the values attributed to their assets by the husband because she trusted him and did not want to be involved in lengthy litigation or for the children of the marriage to suffer because of any conflict.
The minute of proposed orders annexed to the application filed by the parties was as follows:
BY CONSENT IT IS ORDERED
[PARENTING ORDERS]
1. [C] and [D] (referred to as the children) will live fifty percent (50%) of their time with [Ms Pearson] (mother) and fifty percent (50%) of the time with [Mr Coli] (father).
2. The children will live one week (7 days) with [Ms Pearson] and then one week (7 days) with [Mr Coli] in the parents’ respective homes. Thus the children would live alternate weeks with [Ms Pearson] and alternate weeks with [Mr Coli].
3. The parental responsibility will be shared equally by [Ms Pearson] and [Mr Coli].
4. The arrangements in paragraph one to paragraph three above is beneficial with the children as they love spending time with both of the parents. Both parents live in close proximity (only 450 meters apart). Both parents contribute different but significant aspects to the childrens’ lives.
BY CONSENT IT IS ORDERED
[FINANCIAL ORDERS]
15. [B] Trust to be set aside for the benefit of the children as per point 12 above. The income from this trust will pay for the educational and medical expenses for the children. [Mr Coli] to service the bank debt for this Trust until the debt is cleared.
16. [Ms Pearson] to retain the following properties free of bank debt but including potential capital gains tax on unrealised capital gain. The bank debt on these properties are to be paid off by [Mr Coli]
- [E Street, Suburb F], Victoria
- [G Street, Suburb H], Victoria
17. [Ms Pearson] to retain [Suburb F] Property Trust with the following properties free of bank debt but including potential capital gains tax on unrealised capital gain. [Mr Coli] to service the bank debt for this Trust until the debt is cleared.
- [1 J Street, Suburb F], Victoria
- [2 J Street, Suburb F] , Victoria
18. [Mr Coli] to pay [Ms Pearson] three hundred and fifty thousand ($350,000) dollars in total in the following instalments
- One hundred thousand dollars ($100,000) by 30 June 2015
- One hundred thousand dollars ($100,000) by 30 June 2016
- One hundred thousand dollars ($100,000) by 30 June 2017
- Fifty thousand dollars ($50,000) by 30 June 2018
19. [Ms Pearson] is to retain ownership of the [motor vehicle]. This car is free of any loan.
20. [Ms Pearson] is to retain one pair of one carat diamond earrings (two carats in total).
21. [Mr Coli] is to retain the two carat diamond engagement ring.
22. The member balance for [Ms Pearson] and [Mr Coli] in the [K] Superfund are equal. Both are trustees of the Superfund. The member balance for [Ms Pearson] is to be transferred to a nominated complying superannuation fund when considered appropriate by the trustees.
23. [Ms Pearson] is to retain one hundred percent (100%) share of her [L] superannuation fund.
24. [Mr Coli] is to retain one hundred percent (100%) share of his M Super Fund.
25. [Ms Pearson] to transfer her 50% joint ownership interest in the following properties to [Mr Coli]. [Mr Coli] will be responsible for the bank debt and potential capital gains tax on unrealised capital gain.
- [N Street, Suburb O], Victoria
- [P Street, Suburb O], Victoria
26. [Mr Coli] to retain the following properties together with bank debt, taxation and other liabilities.
- [Q Street, Suburb F], Victoria
- [R Street, Suburb F], Victoria
- [S Street, Suburb T], Victoria
- [U Street, Suburb V], Victoria
27. [Mr Coli] to retain the following trusts together with properties, bank debt, taxation and other liabilities of the trusts.
- [Coli] Family Trust (1 and 2 W Street, Suburb X)
- [Coli] Family Trust No 2 ([Y Street, Suburb X])
- [Suburb Z] Trust ([AA Street], [BB Street], [Suburb X]) (with the handwritten annotation “[BB Street] sold”)
- CC Street Trust ([CC Street, Suburb DD)
- [Suburb EE] Trust ([FF Street, Suburb X])
- [Suburb GG] Trust (no properties)
- [Suburb HH] Trust ([II Street, Suburb HH])
- Suburb KK Trust (LL Street & MM Street, Suburb KK)
- [Q Street] Trust ([2 Q Street, Suburb F])
- [Health] Centre Trust (Business)
- [NN] Trust (Buisness) [sic]
28. Neither [Mr Coli] nor [Ms Pearson] will make claims against each other for maintenance as both have high incomes, are employable, of good health and age and have good property settlement to support a good standard of living.
29. This is the full and final financial settlement between [Ms Pearson] and [Mr Coli]. There is to be no further claims by either party on the assets of the other party.
End of Order
5. Both parents have future financial capacity to maintain the arrangements in paragraphs one and two above.
6. During school holidays the children will spend equal time with each parent.
7. The children will reside in Melbourne Victoria permanently. Should either parent relocate interstate or overseas the children will continue to reside in Melbourne with the parent living in Melbourne.
8. The children may only be taken interstate or overseas by either parent only with the written consent of the other parent.
9. In the event of the death of either parent the children will automatically live [sic] the surviving parent.
10. In the event of either parent being unable to care for the children due to illness or other causes, the children will automatically live with the other parent.
11. The children are to be educated at OO School unless both parents agree to send them to a different school.
12. The educational and medical expenses for the children are to be paid by The B Trust. This trust currently owns the following properties
- [PP Street, Suburb QQ] Victoria
- [RR Street, Suburb QQ] Victoria
The above properties currently generate an income of approximately $80,000 per annum. The properties will have no liabilities against them.
The above properties may be rolled into a Child Maintenance Trust or similar trust if taxation relief is available and will benefit the children.
13. The expenses related to activities of daily living for the children are to be shared equally by the parents.
14. Any dispute regarding the children is to be dealt with through a Family Law Mediator.
The orders were submitted out of page order and they have been replicated as they appear in the original on the Court file. I have indicated in bold the orders that do not appear in the revised version of the parties’ minute of consent orders dated 28 April 2014.
On 24 April 2014 the parties received a letter from Registrar Riddiford dated that same day in which he said as follows:
I refer to the above application and wish to inform you that orders have not been made in accordance with the signed minute of proposed orders (“the minute”) submitted by the parties.
The orders have not been made for the following reasons:
1. Paragraph 4 of the minute is set out in a way and deals with matters that cannot be made into a court order. This paragraph is simply a statement about an agreed fact;
2. Paragraphs 5-14 of the minute are missing;
3. Paragraph 22 of the minute provides for a “splitting order” in respect of your self-managed superannuation fund. It is not worded in a way that complies with the Family Law Act 1975;
4. Paragraphs 28 & 29 of the minute are ultra vires.
While there is nothing to suggest that you have not come to a perfectly reasonable agreement about the division of your matrimonial property and the care arrangements for your children I would respectfully suggest that you obtain the services of a lawyer to prepare a minute of proposed orders to set out with precision and in correct legal form the terms of your agreement.
Alternatively you will need to submit an amended minute that takes into account the matters raised in this letter. Upon receipt of the amended minute the application for consent orders will be considered further.
The wife deposes that the husband thereafter amended the proposed minute of orders by hand and that she typed a minute with those amendments. On 28 April 2014 she and the husband signed the amended minute and resubmitted it to the Registrar for his consideration. The amended minute of orders was as follows:
BY CONSENT IT IS ORDERED
[PARENTING ORDERS]
1. [C] and [D] (referred to as the children) will live fifty percent (50%) of their time with [Ms Pearson] (mother) and fifty percent (50%) of the time with [Mr Coli] (father).
2. The children will live one week (7 days) with [Ms Pearson] and then one week (7 days) with [Mr Coli] in the parents' respective homes. Thus the children would live alternate weeks with [Ms Pearson] and alternate weeks with [Mr Coli].
3. The parental responsibility will be shared equally by [Ms Pearson] and [Mr Coli].
4. During school holidays the children will spend equal time with each parent.
5. The children will reside in Melbourne Victoria permanently. Should either parent relocate interstate or overseas the children will continue to reside in Melbourne with the parent living in Melbourne.
6. The children may only be taken interstate or overseas by either parent only with the written consent of the other parent.
7. In the event of the death of either parent the children will automatically live the [sic] surviving parent.
8. In the event of either parent being unable to care for the children due to illness or other causes, the children will automatically live with the other parent.
9. The children are to be educated at [OO School] unless both parents agree to send them to a different school.
10. The educational and medical expenses for the children are to be paid by The B Trust. This trust currently owns the following properties
- [PP Street, Suburb QQ] Victoria
- [RR Street, Suburb QQ] Victoria
The above properties currently generate an income of approximately $80,000 per annum. The properties will have no liabilities against them.
The above properties may be rolled into a Child Maintenance Trust or similar trust if taxation relief is available and will benefit the children.
11.The expenses related to activities of daily living for the children are to be shared equally by the parents.
12.Any dispute regarding the children is to be dealt with through a Family Law Mediator.
[FINANCIAL ORDERS]
13. [B Trust] to be set aside for the benefit of the children as per point 12 above. The income from this trust will pay for the educational and medical expenses for the children. [Mr Coli] to service the bank debt for this Trust until the debt is cleared.
14. [Ms Pearson] to retain the following properties free of bank debt but including potential capital gains tax on unrealised capital gain. The bank debt on these properties are to be paid off by [Mr Coli]
- [E Street, Suburb F], Victoria
- [G Street, Suburb H] Victoria
15. [Ms Pearson] to retain [Suburb F] Trust with the following properties free of bank debt but including potential capital gains tax on unrealised capital gain. [Mr Coli] to service the bank debt for this Trust until the debt is cleared.
- [1 J Street, Suburb F], Victoria
- [2 J Street, Suburb F], Victoria
16. [Mr Coli] to pay [Ms Pearson] three hundred and fifty thousand ($350,000) dollars in total in the following instalments
- One hundred thousand dollars ($100,000) by 30 June 2015
- One hundred thousand dollars ($100,000) by 30 June 2016
- One hundred thousand dollars ($100,000) by 30 June 2017
- Fifty thousand dollars ($50,000) by 30 June 2018
17. [Ms Pearson] is to retain ownership of the [motor vehicle]. This car is free of any loan.
18. [Ms Pearson] is to retain one pair of one carat diamond earrings (two carats in total).
19. [Mr Coli] is to retain the two carat diamond engagement ring.
20. [Ms Pearson] is to retain one hundred percent (100%) share of her [L] superannuation fund.
21. [Mr Coli] is to retain one hundred percent (100%) share of his [M] Super Fund.
22. [Ms Pearson] to transfer her 50% joint ownership interest in the following properties to [Mr Coli]. [Mr Coli] will be responsible for the bank debt and potential capital gains tax on unrealised capital gain.
- [N Street, Suburb O], Victoria (with the handwritten annotation “1.5 m”)
- [P Street, Suburb O], Victoria
23. [Mr Coli] to retain the following properties together with bank debt, taxation and other liabilities.
- [Q Street, Suburb F], Victoria
- [R Street, Suburb F], Victoria
- [S Street, Suburb T], Victoria
- [U Street, Suburb V], Victoria
24. [Mr Coli] to retain the following trusts together with properties, bank debt, taxation and other liabilities of the trusts.
- [Coli] Family Trust ([1 & 2 W Street, Suburb X])
- [Coli Family] Trust No 2 ([Y Street, Suburb X])
- [CC Street] Trust ([CC Street, Suburb DD])
- [Suburb EE] Property Trust ([FF Street, Suburb X])
- [Suburb GG] Property Trust (no properties)
- [Suburb HH] Property Trust ([II Street, Suburb HH])
- [Suburb KK] Property Trust ([LL Street & MM Street, Suburb KK])
- [Q Street] Property Trust ([2 Q Street, Suburb F])
- [Health] Centre Trust (Business)
- NN Trust (Buisness) [sic]
As can be seen from the above minute of orders, the amended minute the parties submitted and the orders ultimately made by the Registrar, simply removed those paragraphs of the orders referred to by the Registrar in his letter dated 24 April 2014. The orders which were ultimately made by the Registrar were otherwise identical to the minute of orders annexed to the Application for Consent Orders.
On 16 May 2014 the parties received a further letter from the Registrar in which he advised as follows:
I refer to the above application and in particular your letter addressed to me dated 28th April 2014.
I note that you have declined my invitation / that set out in earlier correspondence to engage the services of a lawyer to assist you in preparing a further minute of proposed orders.
While I respectfully submit that your failure to consult a lawyer to assist you in preparing a further minute of orders is misguided I note that you are both educated successful members of the community and are entitled to make your own decisions about such matters.
On this basis I propose to make Orders in the terms of the amended minute of proposed orders that you have submitted. In doing so however I wish to make 2 comments:
1.Paragraph 12 of the minute can only be read as requiring you both to attend mediation in the first instant. It cannot be read as precluding either of your from issuing court proceedings if mediation fails.
2.There are recent taxation rulings that may result in the transfer of properties from the various trusts causing adverse taxation consequences that have not been anticipated by you. I therefore trust that you have received expert advice on this matter.
Accordingly, if I do not receive any written correspondence from you by May 23 2014 requesting that I do not make the orders I will make orders in the terms of the amended minute of proposed orders that has been prepared by you without further delay.
On 26 May 2014 the Registrar made orders in terms of the amended minute of proposed orders. The parties agree that although legal advice would have been available to them and the Registrar had recommended that they each seek legal advice, they had both chosen not to do so.
Legal Principles
The Registrar in this case was exercising the power delegated to him pursuant to s 37A(1)(g) of the Act, being the power to make orders in proceedings under the Act, the terms of which have been agreed upon by the parties to those proceedings.
Subsection 37A(9) of the Act provides that a party to proceedings in which a Registrar has exercised any of the powers delegated pursuant to this section, may within the time prescribed by, or within such further time as is allowed in accordance with the Rules of Court, apply to the Court to review the Registrar’s exercise of power.
It is this ability to review the exercise of the delegated power, as exercised by the Registrar in this case, whether on the application of one of the parties or the Court’s own motion, which lies at the heart of the validity of the Court’s delegation of its powers. In Harris v Caladine (1991) 99 ALR 193 (“Harris & Caladine”) the High Court upheld the constitutional validity of the delegation of this Court’s powers pursuant to s 37A of the Act. Mason CJ and Deane J said at 198 as follows:
…the delegation of some part of the jurisdiction, powers and functions of the Family Court…to its officers is permissible and consistent with the control and supervision of the Family Court's jurisdiction by its judges.
Their Honours identified two conditions that must be satisfied in order for there to be a valid delegation of power. The first condition is that the judges must still be said to constitute the Court, meaning that they bear major responsibility for the exercise of power and secondly, officers in the exercise of their delegated power must be subject to review by judges on questions of fact and law.
Extension of Time
Rule 18.08 of the Family Law Rules 2004 (Cth) (“the Rules”) makes provision for a party to apply for a review of an order made by a Judicial Registrar, Registrar or Deputy Registrar within specified times which are determined on the basis of the delegated power being exercised. The parties in this case had 28 days to seek a review and clearly that time has lapsed.
Rule 1.14 of the Rules provides for a party to apply to the Court for an extension of any time fixed under the Rules, in this case the time for the filing of an application to review the decision of the Registrar.
The wife in this case filed an affidavit in which she deposed to having been advised prior to 23 December 2015 as to her rights pursuant to s 79A of the Act to seek to set aside the orders, which formed the basis of her Initiating Application filed 23 December 2015. It was not until in or around May 2016 that the wife says she was advised by counsel acting on her behalf at that time of her right to file an application for a review of the Registrar’s decision and that she could apply to extend the time for the filing of that application. Having been so advised, on 8 June 2016, the wife filed an Amended Initiating Application. Counsel for the husband did not take issue with the wife’s evidence as to not having known of her rights and did not submit that she had not acted promptly upon becoming aware of those rights. I am satisfied that the wife acted promptly upon being advised of her rights.
The Rules do not prescribe the matters the Court should consider in determining whether or not the time should be extended. However the principles to be applied are well settled. In Gallo v Dawson (1990) 93 ALR 479 (“Gallo v Dawson”), a decision of the High Court in relation to the extension of time for the filing of an appeal, McHugh J said at 480-481:
The object of the rule is to ensure that those Rules which fix times for doing acts do not become instruments of injustice. The discretion to extend time is given for the sole purpose of enabling the court or justice to do justice between the parties: see Hughes v National Trustees Executors & Agency Co of Australasia Ltd [1978] VR 257 at 262. This means that the discretion can only be exercised in favour of an applicant upon proof that strict compliance with the rules will work an injustice upon the applicant. In order to determine whether the rules will work an injustice, it is necessary to have regard to the history of the proceedings, the conduct of the parties, the nature of the litigation, and the consequences for the parties of the grant or refusal of the application for extension of time: see Avery v No 2 Public Service Appeal Board [1973] 2 NZLR 86 at 92 ; Jess v Scott (1986) 12 FCR 187 at 194 5 ; 70 ALR 185 When the application is for an extension of time in which to file an appeal, it is always necessary to consider the prospects of the applicant succeeding in the appeal: see Burns v Grigg [1967] VR 871 at 872 ;Hughes, at 263 4 ; Mitchelson v Mitchelson (1979) 24 ALR 522 at 524 . It is also necessary to bear in mind in such an application that, upon the expiry of the time for appealing, the respondent has “a vested right to retain the judgment” unless the application is granted: Vilenius v Heinegar (1962) 36 ALJR 200 at 201 . It follows that, before the applicant can succeed in this application, there must be material upon which I can be satisfied that to refuse the application would constitute an injustice. As the Judicial Committee of the Privy Council pointed out in Ratnam v Cumarasamy [1965] 1 WLR 8 at 12; [1964] 3 All ER 933 at 935:
The rules of court must prima facie be obeyed, and in order to justify a court in extending the time during which some step in procedure requires to be taken there must be some material upon which the court can exercise its discretion.
The hearing of an application for review is a hearing de novo, the Court exercising its power afresh, making its decision based upon the circumstances as at the date of hearing of that review, rather than being based upon there being some error on the part of the Registrar exercising his or her delegated power. On that basis, it is not a question of whether or not the review is likely to succeed, as is the case with an appeal. However, in deciding whether to extend the time for the filing of that application, the Court must be satisfied that it is necessary to do so in order to do justice as between the parties, the converse being that strict compliance with the Rules would cause an injustice.
Delegated powers and the Court’s ability to review a Registrar’s exercise of power of its own motion
Subsection 37A(10) of the Act provides as follows:
The Court may, on an application under subsection (9) or of its own motion, review an exercise of power by a Registrar pursuant to a delegation under this section and may make such order or orders as it considers appropriate with respect to the matter with respect to which the power was exercised.
In Sommerville & Sommerville (2000) FLC 93-042 (“Sommerville & Sommerville”), Nicholson CJ while ultimately deciding not to do so in that case, considered the circumstances when the Court might of its own motion review an exercise of delegated power. He said at paragraphs 148 and 149
However, I do not believe that it would be doing justice between the parties to grant such an extension of time in the present circumstances where there was nothing wrong with the original order and no suggestion has been made before me that there were any circumstances that might vitiate it other than the failure of the registrar to exercise his discretion under s 79(2) and (4) which was a course in which the parties, by their legal representatives, concurred, at the time the order was made.
I think similar considerations apply to circumstances where the court would review an order or [sic] its own motion. I think that this would be confined to circumstances where in the exercise of its supervisory function, it considers that an order should not have been made and that it was necessary to intervene to set it aside. I am not satisfied that this is such a case.
Evidence
The matter proceeded by agreement by reference to the following evidence:
·The wife’s affidavit filed 7 February 2018;
·Deed of B Trust dated 2 May 2011;
·Application for Consent Orders dated 14 April 2014 including Appendix 1 thereto;
·Orders made by consent by Registrar Riddiford on 26 May 2014;
·Minute of proposed orders by consent dated 14 April 2014;
·Letter from Registrar Riddiford to the parties dated 16 May 2014;
·Letter from the wife to Registrar Riddiford dated 28 April 2014;
·Letter from Registrar Riddiford to the parties dated 24 April 2014.
Discussion
The basis of the wife’s case is, in essence, that justice requires that time be extended to allow her to proceed with her application for review or that the Court should of its own motion review the Registrar’s exercise of delegated power, it not being a proper exercise of that judicial power.
Counsel for the wife submitted in support of the wife’s case in summary as follows:
a)That paragraph 13 of the orders, described in those orders as a financial order, which provides for the B Trust to be “set aside” for the children is an order for the maintenance of the children and on that basis s 66E of the Act applies and the order is ultra vires;
b)That even if it is not ultra vires on that basis, it is an order which on its face appears to be directed to future income; it is not an order that adjusts existing interests in property;
c)That the terms of the purported order are meaningless and uncertain, and in those circumstances incapable of being either implemented or enforced;
d)That even if the orders were capable of being implemented or enforced, in circumstances where the husband retains control of the B Trust, they do not achieve what they set out to achieve and in those circumstances, the orders are not just and equitable.
Counsel for the wife further submitted that there is no objective evidence that the Registrar, in exercising his delegated power, had regard to the justice and equity of making the orders the parties sought to have made. In fact it was the wife’s case that the evidence that the Court does have suggests to the contrary, that the Registrar had not had regard to whether it was just and equitable to make the orders or the justice and equity of those orders. He submitted that on that basis, in order to do justice between the parties, the wife should be given leave out of time to seek a review of the orders made by the Registrar or the Court should of its own motion review those orders.
The uncertainty of the orders dealing with the Trust
Counsel for the husband submitted that when read with paragraph 10 of the orders, the intention of paragraph 13 of the orders is clear and that there is no problem with the implementation or enforcement of that order. Although counsel for the wife conceded that paragraph 13 should be read with paragraph 10, rather than paragraph 12 to which it refers, as submitted by counsel for the wife and in my view, reading paragraph 13 in conjunction with paragraph 10 does not remedy the deficiencies in paragraph 13. Whilst I agree that this Court can and does make orders directing the actions of trustees of a trust, that is not what this order does, nor in my view, even purports to do.
Counsel for the wife referred me to the summary to Annexure 1 of the Application for Consent Orders in which the B Trust was described as the Children B Trust. Although he submitted this description was significant, I accept as submitted by counsel for the husband that this could also be read as the assets of the B Trust being set aside for the children, rather than a description of it as the children’s trust.
There is some force in the submission that paragraph 13 of the orders, particularly when read in conjunction with paragraph 10 of those orders, is an order intended for the maintenance of the children. Not only does paragraph 13 reference paragraph 10 of the orders, it also refers to the Trust being “set aside” for the benefit of the children and the income of the Trust being used to pay for the children’s educational and medical expenses. Paragraph 10 also refers to the possibility of the assets of the Trust being rolled into a Child Maintenance Trust or similar trust if taxation relief is available. Lastly, as submitted by counsel for the wife, it also makes reference to future income.
Even if I were satisfied that paragraph 13 is not an order for the maintenance of the children and hence not ultra vires, that is not the only issue in this case. In my view, the order itself and what is intended by that order is unclear and uncertain and incapable of being enforced.
Counsel for the husband submitted that paragraph 13 of the orders could be read one of three ways. The first is as a declaration pursuant to s 78 of the Act. The second way in which the order might be read, he suggested, is as an order adjusting property interests in so far as the husband as trustee, appointor and member of a class of beneficiaries cannot exercise his rights as a trustee for his own benefit, only for the medical and educational expenses of the children. In the alternative he submitted that paragraph 13 works as an injunction on the husband’s exercise of powers as appointor and trustee and that if the husband were to apply the assets of the Trust for any other purpose, or as submitted by counsel for the wife, that he could accelerate the vesting date for the purposes of distributing the assets of the Trust to himself, he would be in breach of the orders made by consent on 26 May 2014.
Counsel for the husband further submitted that according to the principles of the law of trusts, there is no problem at all with the orders in circumstances where the husband is the appointor and a trustee of the Trust and the wife and the children are part of a class of eligible beneficiaries of the Trust. Counsel for the husband submitted that in those circumstances the wife is entitled to documents relating to the proper administration of the Trust and that if the husband were to exercise his power as a trustee, other than in accordance with the orders, the wife would find out and would be able to initiate proceedings to enforce the orders and to set aside any transaction made by the husband contrary to the order, restoring the funds to the Trust for the purposes of the orders.
Counsel for the husband likened counsel for the wife’s submissions to someone who had “set off on one horse and ridden home on another”. In my view, this is a more apt description of the husband’s case. The husband’s primary submission being that the orders are clear and capable of being implemented and enforced but that even if that were not the case, any dispute could be determined in accordance with the standard principles of the law of trusts. On that basis, he submitted that even if the orders were designed to deal only with the income of the Trust, any uncertainty as to either income beyond that required to meet the children’s educational and medical expenses or the corpus of the Trust could be dealt with in accordance with the terms of the Trust.
Counsel for the wife submitted that not only is it not clear from the orders, or for that matter the other evidence what was intended by the words “set aside”, the orders themselves do not compel the husband to do anything and are not capable of enforcement.
Although at paragraph 24 of the Application for Consent Orders the Trust is described as being set aside for the benefit of the children and that the income from this trust is to pay for education and medical expenses, there is no reference to the corpus of the Trust or how any surplus of income above and beyond what is required for the children’s education and medical expenses is to be applied or for whose benefit. Leaving aside the question of how that might be achieved even if it had been intended, and notwithstanding that in Appendix 1 the assets of the Trust are described as being allocated to the children, that is not the reality. The Trust remains in the control of the husband. I am satisfied that remains the case whatever the stated intention of the parties vis-a-vis the proposed equal division of their property referred to in the Application for Consent Orders.
The Registrar’s exercise of power and s 79(2) of the Act
Both counsel relied upon the letters sent by the Registrar to the parties in support of their respective cases, albeit for different reasons. Counsel for the husband submitted that the requisitions in the first letter supported the husband’s case that the Registrar had exercised the power delegated to him judicially. However as counsel for the wife submitted and I agree, the second of those requisitions in the letter the Registrar sent to the parties dated 24 April 2014 suggests that the Registrar had not, at least when he sent that letter, read the whole of the minute of orders submitted with the Application for Consent Orders. The Registrar indicated in his letter that orders 5-14 were missing. Although they were submitted out of page order and were at the back of the minute, they were not missing. The third requisition refers to paragraph 22 of the order, which provided for the roll out of the wife’s entitlements being a “splitting order”. This is similarly not consistent with a careful reading of the minute of orders nor does the Registrar refer to the fact that neither the Application for Consent Orders or Annexure 1 to the document disclose the amount of the parties’ respective superannuation entitlements, which is information one might have expected to be contained in those documents. It is also the case that although the Registrar alerted the parties to the possible tax consequences of the orders, he made those orders without knowing what they might be.
There is also no reference in either letter to the fact that although the parties in the Application for Consent Orders describe the proposed division as 50/50, that is not consistent with their description of the effect of the orders or Annexure 1.
Counsel for the wife further submitted that not only do the letters not support the husband’s case that the Registrar exercised the power delegated to him judicially, to the contrary, the second letter sent by the Registrar to the parties supports the wife’s case that the Registrar did not turn his mind to whether it was just and equitable to make orders adjusting the parties’ interests in property or whether the proposed orders the parties were asking him to make were likely to achieve a just and equitable result.
In Harris & Caladine the High Court discussed the approach the Court should take when making orders by consent. Dawson J said at 219 as follows
…sub-s [79](2) provides that a court shall not make an order under the section unless it is satisfied that in all the circumstances, it is just and equitable to do so. The fact that an order is sought by consent does not relieve a court, or a registrar, from compliance with the requirements of the section, but it may render compliance much less demanding. Provided that a court, or a registrar, is adequately informed, where the parties are at arms length and are properly represented little more than consent may be needed to establish that the requirements of the section have been met.
Brennan J in Harris & Caladine emphasised at 204-205 that the making of a consent order is “not automatic” and that a Court
may be satisfied that a provision is proper by reference not only to the material before the court relating to the factors mentioned in s 79(4) but by reference to the advice available to the respective parties and the consent which they respectively give to the making of the order.
In the more recent Full Court decision of Redman & Redman (2013) FamCAFC 183 (“Redman & Redman”), Bryant CJ, Finn and Watts JJ affirm the principles articulated in Harris & Caladine emphasising at paragraph 36 that
The court is not relieved from its obligation to consider whether the making of the order is just and equitable under s 79(2) simply because the order is said to be by consent. In particular, both Brennan and Dawson JJ [in Harris & Caladine] remark upon advice being available to the parties as one of the matters to which regard would be had in considering whether to make orders by consent.
Although as the High Court stated in Harris & Caladine, the requirement that the Court be satisfied that it is just and equitable to make orders may not require quite the same degree of consideration when the Court is being asked to make consent orders, the Court did qualify that statement on the basis of the Court, or as in this case, the Registrar being adequately informed and the parties being at arm’s length and properly represented. That is not the position in this case. Although the parties agreed that they could have obtained advice and chose not to do so, the fact of the matter is that they had not had the benefit of legal advice and the Registrar was aware that was the case. I am also not satisfied that the Registrar was adequately informed.
Although in his letter to the parties dated 16 May 2014, the Registrar said that the parties’ failure to consult a lawyer to assist them in preparing a further minute of proposed orders was misguided he also said “...you are both educated and successful members of the community and are entitled to make your own decision about such matters”, indicating that he was prepared to make the orders the parties sought. In my view, that suggests that he made the orders the parties wanted him to make, rather than considering or satisfying himself as to the justice and equity of the orders. Whilst I agree that parties are entitled to make their own decisions about how they wish to deal with their property following the breakdown of the marriage, if they seek orders giving effect to their agreement, the Court must be satisfied that it is just and equitable to make those orders. The letter sent by the Registrar suggests that he did not turn his mind to these questions.
Even if the Registrar had not said what he did to the parties in that letter before making the orders, there are, in my view, other issues with the orders and the justice and equity of those orders. It is not the case in this case, as it was in Sommerville & Sommerville, that there is “nothing wrong with the orders”. In my view, the uncertainty of the orders ultimately made by the Registrar should of itself have suggested on a proper exercise of the power delegated to the Registrar, that those orders were not capable of enforcement and should not be made in those terms. In addition, as previously referred to, leaving aside the question of the wording of the orders and whether the assets of the Trust have actually been “set aside”, the orders do not provide for an equal division notwithstanding that is what the parties in their application said was the intention of those orders. Lastly and again as referred to previously, the Registrar in the second letter, pointed out to the parties that the orders might lead to adverse taxation consequences which could also alter the parties’ entitlements and be relevant for the purposes of the justice and equity of the proposed orders.
Counsel for the husband submitted that even if the husband does (as in my view is the case) retain control of the Trust, the wife still received more than 50 per cent of the property available for division. He further submitted that the orders that were made have otherwise been implemented and that in those circumstances, even if the Court were satisfied that the Registrar should not have made the orders, it should not exercise its discretion to either extend the time for the wife to seek a review of the orders or of its own motion review those orders. I am not satisfied that these are reasons for not exercising my discretion in this case. Firstly, there is no evidence before me to suggest that the Court could not take into account any of the steps that have been taken to implement the orders, if those orders were to be reviewed. I am also satisfied that even if the parties have been applying income from the Trust to the payment of the children’s educational and medical expenses, that does not alter the position with respect to the meaning or effect of the orders, in particular paragraph 13 of those orders, or how those orders could be enforced, if it were necessary to do so.
I am satisfied that the orders made by the Registrar in this case were not a proper exercise of his delegated judicial power and should not have been made. I am also satisfied that in those circumstances strict compliance with the Rules would in this case “work an injustice” upon the wife and that time for the wife to seek a review of the orders of the Registrar should be extended.
At the conclusion of the hearing both counsel agreed that I should list the matter for mention in the Registrar’s Duty List for the purposes of making directions for the future conduct of the matter, whatever the outcome of this application. I propose to extend the time for the wife to file her application for review of the orders made 26 May 2014 and thereafter list the matter for a hearing in the Registrar’s Duty List.
I certify that the preceding forty-five (45) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Macmillan delivered on 8 May 2018.
Associate:
Date: 8 May 2018
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