PHILLIPS & PHILLIPS
[2012] FMCAfam 707
•20 July 2012
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| PHILLIPS & PHILLIPS | [2012] FMCAfam 707 |
| FAMILY LAW – Property – property orders – interim orders – consent orders – whether parties agreed to enter into consent orders. EVIDENCE – Whether evidence about settlement negotiations may be adduced – Evidence Act 1995 (Cth) s.131 applies even when litigation has not commenced. EVIDENCE – Whether evidence of settlement negotiations may be adduced – where the making of an agreement between the parties is an issue in the proceeding between the parties – evidence held admissible as an exception under Evidence Act 1995 (Cth) s.131(2)(f). |
| Evidence Act 1995 (Cth), s.131 Family Law Act 1975 (Cth), ss.79, 117C Family Law Amendment Act 2003 (Cth), s.3 & Sch. 7 Family Law Amendment Act 2005 (Cth), s.3 & Sch. 1 Family Law Rules 2004, rr.10.04, 10.18 Federal Magistrates Court Rules 2001, rr.105, 24.03, 24.04, 24.06 |
| Brown v Commissioner of Taxation (2001) 119 FCR 269; 187 ALR 714; [2001] FCA 596 Camilleri & Camilleri [2002] FamCA 1157 Harris v Caladine (1991) 172 CLR 84; 14 Fam LR 593; FLC 92-217 Korean Air Lines v Australian Competition and Consumer Commission (No.3) [2008] FCA 701; (2008) 247 ALR 781 In the Marriage of Suiker (1993) 17 Fam LR 236 |
| Applicant: | MS PHILLIPS |
| Respondent: | MR PHILLIPS |
| File Number: | SYC 224 of 2011 |
| Judgment of: | Scarlett FM |
| Hearing date: | 18 August 2011 |
| Date of Last Submission: | 18 August 2011 |
| Delivered at: | Sydney |
| Delivered on: | 20 July 2012 |
REPRESENTATION
| Solicitors for the Applicant: | Warren McKeon Dickson |
| Solicitors for the Respondent: | Moira Ryan Lawyers Pty Ltd |
ORDERS
The Application for Interim Orders filed on 17 January 2011 is dismissed.
The parties must each file and serve an Amended and updated Financial Statement within twenty-eight (28) days.
The parties are directed to attend a conciliation conference before a Registrar of the Court at a time and date to be appointed.
For the purposes of the conciliation conference the parties must each comply with the requirements of Rules 24.03 and 24.04 no later than fourteen (14) days prior to the conference4.
The Principal Registrar is requested to forward a copy of this decision to the Law Society of New South Wales with a request that consideration be given to undertaking an investigation of the actions of the solicitor formerly acting for the Respondent in this matter.
IT IS NOTED that publication of this judgment under the pseudonym Phillips & Phillips is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT SYDNEY |
SYC 224 of 2011
| MS PHILLIPS |
Applicant
And
| MR PHILLIPS |
Respondent
REASONS FOR JUDGMENT
Application
This is an Application by the wife for an interim property Order in the following terms:
That the parties do all things and acts necessary to execute and file an Application for Consent Orders and Draft Terms of Settlement in accordance with the agreement reached between the parties on 3 June 2010 and set out in the Final Orders above pursuant to r 10.04(3) of the Family Law Rules.
The wife also seeks an order for costs.
The Application is opposed by the husband, who seeks Orders dismissing the Application for Interim Orders, with costs.
Background
The parties were married [in] 1997 and separated on 30 September 2008.
There are four children of the marriage, all of whom are under the age of 18 years. On 20 April 2011 the parties entered into Consent Orders in this Court providing that the children would live with their mother and spend time with their father.
The wife commenced these proceedings by filing an Application on 17 January 2011, seeking interim and final property orders. The Application also sought parenting Orders, but these have now been resolved by the Consent Orders entered into on 20 April 2011.
The final property Orders sought in the Application provide that:
a)the wife would transfer her interest in the business known as [M] Pty Limited to the husband in return for an indemnity from the husband;
b)the husband would pay the sum of $70,000.00 to the wife within seven days;
c)the husband would pay a further sum of $10,000.00 to the wife within three months;
d)the husband would pay a further sum of $50,000.00 to the wife within five months;
e)the wife would be declared the sole owner of a Nissan Skyline motor car;
f)the husband would transfer to the wife all of his interest in a 1965 Ford Mustang convertible valued at $40,000.00; and
g)the parties would retain all other property in their possession, including superannuation and insurance policies.
Issue
The issue between the parties is whether or not they entered into an agreement to resolve the property matters between them which is capable of being enforced by the Court.
On first glance this would appear not to be an application for interim or procedural orders at all. The order that the wife seeks, if it were made, is a final order. The husband seeks a dismissal of the Interim Application. If he is to be successful, the Application for property orders would be set down for final hearing, although the parties have not yet attended a conciliation conference.
Evidence
The wife relies on the following documents:
a)her Application for interim orders;
b)her affidavit sworn 20 December 2010; and
c)her affidavit sworn 1 April 2011.
The husband relies on the following documents:
a)his Response filed on 4 April 2011;
b)his Financial Statement sworn 1 April 2011; and
c)his affidavit sworn 1 April 2011 at paragraphs 1 to 5, 9, 17, and 30 to 50.
In her affidavit of 20 December 2010, the wife deposed that she and the husband had a conversation on 17 May 2010 where the husband offered to settle the property issues between them. The husband’s solicitor has objected under the provisions of s.131 of the Evidence Act 1995, submitting that it is evidence of a communication between persons in dispute in connection with an attempt to negotiate a settlement of the dispute (see subsection 131 (1)).
However, paragraph 131(2)(f) contains an exception to the general rule, as it provides that:
Subsection (1) does not apply if:
(f) the proceeding in which it is sought to adduce the evidence is a proceeding to enforce an agreement between the persons in dispute to settle the dispute, or a proceeding in which the making of such agreement is in issue…
As the Application before the Court is an application to enforce an agreement said to have been made between the parties and it is an issue in the proceeding whether or not there was such an agreement, evidence of communications between the parties is admissible.
The wife deposes that the husband said to her:
“Let’s finalise this so we can stop everything with the lawyers. I will pay you $130,000.00 in three payments. You can put some of this money towards your credit card debts.”
The wife asked the husband:
“What about the cars? Can I keep the Skyline and 1965 Mustang Convertible?”
The husband replied:
“Yeah you can keep those.”
The wife then said:
“Okay I am happy with that but you also need to pay child support and I think we should formalise an agreement to avoid any further disputes.”
The husband then said:
“Maybe I can pay you $500 a week?”
The wife asked him:
“Can you get your solicitor to put all of this in writing and send it to my solicitor so that whatever needs to be can be done and we can finalise this as soon as possible.”
The husband replied:
“I will speak to him tomorrow. I agree the sooner we can finish this the better we are both just wasting money on solicitors fees if this continues.”[1]
[1] Affidavit of Ms Phillips 20.12.2010 at paragraph [4]
The husband’s then solicitor, Mr McGuiness, wrote to the wife’s solicitor on 3 June 2010, saying (relevantly):
Our client instructs on Monday 17 May he and your client came to the following agreement for full and final settlement of financial matters:
Under the proposed agreement your client would receive the following:
a. The car she is using being a Nissan Skyline 2002 valued at $20,000;
b. A fully restored 1965 Ford Mustang Convertible valued at $45,000.00;
c. A $70,000.00 payment into her credit cards upon signing of agreement;
d. A further $60,000.00 to be paid to her on 24 December 2010;
e. Direct debit child support via Child Support Agency.
Alternatively your client may wish to take over the business and debts by paying Mr Phillips $50,000.00…
Should your client wish to draft an agreement in the terms outlined above our client would be willing to sign same at the earliest convenience.[2]
[2] Affidavit of Ms Phillips 20.12.2010 Annexure “A”
The letter was an open letter and was not marked “Without Prejudice”.
That same day the wife’s solicitors wrote back, saying (relevantly):
We refer to your letter of today’s date and advise that our client accepts your client’s offer. We will now prepare the Application for Consent Orders and Terms of Settlement for your client’s consideration…
We are instructed that part of the agreement on 17 May 2010 was that your client will pay our client the sum of $500 a week by way of child support and that such sum will be paid through the Child Support Agency. We enclose a draft Binding Child Support Agreement for your client’s consideration…[3]
[3] Ibid Annexure “B”
On 12 July 2010 the husband’s solicitors sent by facsimile copies of the following documents:
a)Deed of Agreement;
b)Child Support Agreement;
c)Application for Consent Orders;
d)Consent Orders.[4]
[4] Affidavit of Ms Phillips 20.12.2010 Annexure “C”
The wife deposed that there were a number of factual errors with the documents about ancillary matters such as the wife’s date of birth.
On 19 July 2010 the husband handed directly to the wife signed copies of the four documents. Copies of those documents form Annexure “D” to the wife’s affidavit. The Consent Orders related specifically to parenting matters.
On 27 July 2010 the wife’s solicitor wrote to the husband’s solicitor, saying, relevantly:
We are instructed by our client that both the parties’ parenting and property disputes are to be dealt with through the filing of Consent Orders. Our client sees no need for an additional agreement when both matters can be finalised in this manner.
We have prepared the Terms of Settlement in accordance with our client’s instructions. However in order to finalise the documents we need the financial information for your client so that we may complete Part H of the Application for Consent Orders. We enclose a blank Part H for your convenience.
As soon as we receive your client’s financial information we can finalise the Application for Consent Orders and Terms of Settlement so that both parties can execute the documents and we can attend to filing them in the Family Court…[5]
[5] Ibid Annexure “E”
The wife’s solicitor sent a reminder letter to the husband’s solicitor on 11 August 2010.[6]
[6] Ibid Annexure “F”
On 18 August the firm of solicitors acting for the husband wrote to the wife’s solicitor in these terms:
Mr Merten the Solicitor/Director of this firm will be taking over carriage of this matter and can you please direct all correspondence to him.
It would seem in the first instance that if the parties are agreeing to both parenting and property disputes then both matters can be dealt with through the filing of consent orders in the Family Court. However Mr Merten would like to review this file. Please send by facsimile a copy of all correspondence between this firm and your firm in this matter.
We will be in touch with you when we speak with our client and obtain his financial information.[7]
[7] Affidavit of Ms Phillips 20.12.2010 Annexure “G”
However, the wife deposed as to her belief that the husband’s former solicitor would continue to act for him. On 27 August the wife’s solicitor, one Nicola Morgan, sent an email to a hotmail address, saying:
Dear [first name omitted],
Please contact me today to let me know how [Mr Phillips’] Part H is coming along.
I have not received any faxes directly from Mr Phillips as you indicated would be the case.
I look forward to hearing from you so that we can finalise the Application for Consent Orders and Terms of Settlement.[8]
[8] Ibid Annexure “H”
On 9 September 2010 the wife’s solicitors received an unsigned fax presumably from the husband from the address “[G]” attaching a Part “H” to an Application for Consent Orders with the answers completed by hand.[9]
[9] Ibid Annexure “I”
On 17 September 2010 the wife’s solicitors forwarded to the husband’s solicitor, Mr McGuiness, by email at the hotmail address previously referred to, a letter saying, relevantly:
Pleased find enclosed the following:
1. Application for Consent Orders;
2. Terms of Settlement; and
3. Binding Child Support Agreement.
Please have your client execute the documents and return to our office for filing at the Family Court and registration with the Child Support Agency respectively.
As we do not have a postal address for you we have been unable to forward this by mail. If you are unable to print out the documents and get them to your client please let us know a postal address that we can now send them to…[10]
[10] Affidavit of Ms Phillips 20.12.2010 Annexure “J”
The wife’s solicitor, Ms Morgan, sent an email to Mr McGuiness on 12 October 2010, saying:
I have just left a message on your mobile. As per our conversation last week please confirm whether you have now met with your client to finalise the Application for Consent Orders, Draft Terms of Settlement and Binding Child Support Agreement. I understand that you were to do this on Thursday.
Please contact me as soon as possible to discuss.[11]
[11] Ibid Annexure “K”
The wife went on to depose that at the time of swearing of her affidavit the documents had not been received.
In her affidavit sworn 1 April 2011 the wife deposed that on 17 May 2010 the husband commenced making child support payments to her in the sum of $500 per week. He generally paid this amount in cash but on some occasions he transferred the payments directly into her bank account.
The wife went on to state:
8. When the Respondent was served with my Initiating Application on or about 1 February 2011 he immediately stopped paying the child support payments. On or about 3 February 2011 the Respondent said to me words (to) the effect: “You commenced Court proceedings, I am going to make sure that you never get any money from me. I am going to drag out these proceedings for as long as it takes so that you don’t have any money to continue them. I am not paying you any more child support until you stop this.”
9. The Respondent has not paid any child support payments since the end of January 2011.[12]
[12] Affidavit of Ms Phillips 1.4.2011 at paragraphs [8]-[9]
The wife deposed that on or about 16 June 2011 the husband handed to her a cheque in the amount of $40,000.00, which she applied towards payment of her credit card debts and household expenses for herself and the children.
The husband relies on paragraphs 1 to 5, 9, 17 and 30 to 50 of his affidavit of 1 April 2011.
It is the husband’s evidence that during the marriage and since the parties’ separation he has been concerned about the wife’s spending habits, saying:
I have also been concerned as to providing money to Ms Phillips, since separation, as she has been spending money to excess and has not been able to manage her finances.[13]
[13] Affidavit of Mr Phillips 1.4.2011 at paragraph [9]
The husband also deposed that he was concerned about the children’s welfare so he caused his solicitors to write to her solicitors on 26 October 2010. By this time, the husband had engaged his present solicitors to act for him. Their letter of 26 October and the wife’s solicitors’ reply of 2 November 2010 are annexed to his affidavit at “A” and “B”.
The husband’s solicitors’ letter of 26 October 2010 says in part:
Our client has shown us a copy of documents which have been emailed to his former Solicitor, Mr McGuiness.
We note that the Consent Orders that you have prepared deal with both the issues of division of matrimonial property and parenting.
Our client is currently considering his position with respect to both issues.[14]
[14] Ibid Annexure “A”
The balance of the letter deals with parenting issues.
The letter from the wife’s solicitors of 2 November 2010 is quite lengthy and deals mainly with parenting issues, however it has this to say about the property aspects:
We refer to your letter of 26 October 2010 and note that the Consent orders we prepared were a reflection of an agreement put forward by your client in June this year and accepted by our client in an attempt to finalise both the parenting and property dispute between the parties.
Your client’s previous solicitor sought to finalise the agreement by way of a Binding Financial Agreement, Application for Consent Orders for the parenting matters and a Binding Child Support Agreement. These documents were all signed by your client.
Upon inspection of the documents, however, it was noted that there were a number of drafting errors and the certificate of advice for the Binding Financial Agreement was also not in accordance with the legislation. For this reason we proposed that both parenting and property matters be dealt with by way of consent orders and drafted the above documents. Your client’s former solicitor indicated that there was no issue in proceeding this way and the documents were forwarded, by email because no address was available for Mr McGuiness, to your client.
We have been chasing the signing of the terms since September 20. Your client’s previous solicitor indicated that there were no problems with the documents themselves and he was expecting them to be signed and returned…
…Please confirm your client’s current position with regard to the agreement reached regarding the property settlement. We note that your client has provided very few details of his financial position in the Application for Consent Orders and that even with the minimal detail provided the agreement is heavily in your client’s favour. We have advised our client that she should seek proper disclosure from your client and a property settlement more in line with her entitlements under the Family Law Act. Her instructions at the time of your client’s earlier offer were aimed at reaching an amicable settlement between the parties without the Court’s intervention.
Unnecessary delay is only costing both parties money and serving only to erode the relationship between the parties. If we do not hear from you with regards to property settlement within 14 days we will be instructing our client to commence proceedings.[15]
[15] Affidavit of Mr Phillips 1.4.2011 Annexure “B”
The husband relies on paragraphs 30 to 50 of his affidavit, but only paragraphs 45, 46, 47 and 49 relate to the issue being considered in the Application presently before the Court. The husband deposes at paragraphs 45 to 47 that:
a)The wife retains the Nissan Skyline motor car which he values at approximately $16,000.00;
b)Since separation and until 25 March 2011 he had been paying approximately $5,500.00 per month in reduction of the wife’s credit card debt, and:
I have also paid Ms Phillips the sum of $500 per week, representing child support.[16]
[16] Ibid at [46]
The husband deposes also:
In October 2010, I gave Ms Phillips $40,000.00 to assist her financially and to reduce her debts.[17]
[17] Ibid at [47]
As to the settlement negotiations, the husband deposes:
I note that Ms Phillips has made an Interim application seeking that I be bound to enter into Orders that I had earlier proposed when a Mr McGuiness, Solicitor, acted for me. Mr McGuiness is a personal friend and worked for a firm of Solicitors called Mertons (sic) & Co in Narrabri. He has since left that firm of Solicitors and now works for a Government Department and was unable to continue to act for me. I am not prepared to consent to the previously prepared orders on the basis that I am most concerned as to the arrangements for the children and in particular, those matters which I referred to earlier in my Affidavit regarding Ms Phillips’s conduct. Further the financial arrangements suggested in the earlier prepared documents are no longer applicable, as I have been providing money to Ms Phillips, since these documents were prepared and it would seem she is not prepared to acknowledge that she has received the payment, in accordance with the Orders. The effect of the Orders which she now wishes to be made would require me to effectively pay her more than twice. Any offer made by me to resolve disputes between Ms Phillips and I were made by me prior to the existence of any court proceedings.[18]
[18] Affidavit of Mr Phillips 1.4.2011 at [49]
Submissions
The wife’s solicitor, Ms Doring, submitted that in this case the Court should adopt the relevant Family Law Rules, as the fact situation is not covered by the Rules of this Court. Rule 1.05 permits the application of the Family Law Rules 2004 or the Family Law Rules 1984 if the Federal Magistrates Court Rules are insufficient or inappropriate. It was the intention of the parties that an Application would be made to the Family Court for Consent Orders to be made by that Court.
It was submitted that the Court should enforce Rule 10.04 of the Family Court Rules 2004. That Rule provides:
10.04(1) A party may accept an offer to settle by notice, in writing, to the party making the offer.
10.04(2) A party may accept an offer to settle at any time before:
(a) the offer is withdrawn; or
(b) the court makes an order disposing of the application or appeal.
10.04(3) If an offer to settle is accepted, the parties must lodge a draft consent order.
Ms Doring submitted that there were clearly an offer to settle and an acceptance of that offer and the wife had acted to her detriment. It was conceded that although a draft of a Binding Financial Agreement had been prepared, the parties had not entered into a Binding Financial Agreement.
It was also submitted that the wife had started receiving child support payments through the Child Support Agency. Both parties have filed Financial Statements so the Court does have evidence of their financial circumstances.
The wife conceded that she had received a payment of $40,000.00 from the husband.
For the husband, Mr Crawford agreed that the Court should follow the Family Law Rules.
He submitted that the letter from the husband’s then solicitors, Merten & Co, of 3 June 2010 made an offer of settlement and an offer in the alternative and the reply from the wife’s solicitors of that same date did not specify which offer of settlement was accepted.
Further, the letter from Merten & Co did not specify that sum of $500.00 per week was the agreed figure for child support payments. It was only in the wife’s solicitors’ letter in reply that this figure was mentioned.
Mr Crawford submitted that the parties had not gone about the settlement negotiations the right way. There had been no financial disclosure. Full and frank disclosure of financial matters is one of the essential elements of the Family Law Act (Harris & Caladine[19]; In the Marriage of Suiker[20]).
[19] (1991) 172 CLR 84; 14 Fam LR 593; FLC 92-217
[20] (1993) 17 Fam LR 236
Mr Crawford also referred to the decision of Monteith J in Camilleri & Camilleri[21] on the relevance of offers of settlement under s.117C of the Family Law Act.
[21] [2002] Fam CA 1157
Essentially, it was submitted that the settlement discussions took place before there was a current case before the Court, which means that Rule 10.4 does not apply. In any event, under Rule 10.18, consent lapses after 90 days.
Conclusions
This Application has been conducted as an interim application and suffers from the difficulty inherent in interim applications that it is often difficult for the Court to make factual findings where the parties’ accounts differ, as their evidence has not been tested by cross-examination.
However, the parties agree on most matters, as can be seen by their affidavits, which the Court must take at their face value. Clearly, the Court is unable to make findings as to the parties’ credibility without the opportunity to hear and observe them in the witness box, and it may well be that a party’s oral evidence may throw an entirely different light on the circumstances that appear. The Court would be most reluctant to make definitive factual findings without clear evidence that leads to no other reasonable conclusion.
Where the parties are at issue is not on the facts, but on the interpretation of the facts and the conclusions that can be drawn.
The issue in this case is whether on the facts the parties entered into an agreement to settle the financial issues between them which should be enforced by the Court.
It is not a case to which s.131 of the Evidence Act applies to exclude evidence of settlement negotiations between the parties. Subsection (1) of s.131 provides that:
Evidence is not to be adduced of:
(a) a communication that is made between persons in dispute, or between one or more persons in dispute and a third party, in connection with an attempt to negotiate a settlement of the dispute; or
(b) a document (whether delivered or not) that has been prepared in connection with an attempt to negotiate a settlement of a dispute.
It does not matter whether or not litigation has commenced for subsection 131(1) to apply. Paragraph 131(5)(a) provides that:
(5) In this section:
(a) a reference to a dispute is a reference to a dispute of a kind in respect of which relief may be given in an Australian or overseas proceeding;
It is not necessary that relief should be available at the time of the communication or the creation of the document, only that there is a dispute of a kind for which relief may be given in due course (Brown v Commissioner of Taxation[22] per Emmett J at [170]-[172]). In that decision, his Honour said at [170]:
The object of s. 131 is to evidence of communications undertaken in an attempt to settle a dispute, whether or not those attempts are successful. Indeed, the assumption is that they have not been successful, otherwise there would be no proceeding with respect to which the question of admissibility would arise.[23]
[22] (2001) 119 FCR 269; 187 ALR 714; [2001] FCA 596
[23] [2001] FCA 596 at [170]
The section applies even when litigation has not yet commenced. In Korean Air Lines v Australian Competition and Consumer Commission (No 3)[24], Jacobson J followed the decision of Emmett J in Brown v Commissioner of Taxation, saying at [68]-[69]:
[68] The position at common law was that the privilege operated even where litigation had not yet commenced and extended to a dispute which would become the subject of litigation if it were not resolved: Rodgers v Rodgers [1964] HCA 25; (1964) 114 CLR 68 at 614; Harrington v Lowe (1996) 190 CLR 311; Glengallen[25] at [28]-[29].
[69] It is implicit in the remarks of Emmett J in Brown v Commissioner of Taxation (2001) 187 ALR 714 at [172]-[174] that the same position applies under s. 131 of the Evidence Act.[26]
[24] (2008) 247 ALR 781; [2008] FCA 701
[25] Glengallen Investments Pty Ltd v Arthur Anderson [2002] 1 Qd R 233
[26] [2008] FCA 701 at [68]-[69]
There are several exceptions to the operation of subsection 131(1) contained in subsection (2). Two of them are relevant:
(2) Subsection (1) does not apply if:
(c) the substance of the evidence has been partly disclosed with the express or implied consent of the persons in dispute, and full disclosure of the evidence is reasonably necessary to enable a proper understanding of the other evidence that has already been adduced; or…
(f) the proceeding in which it is sought to adduce the evidence is a proceeding to enforce an agreement between the persons in dispute to settle the dispute, or a proceeding in which the making of such an agreement is in issue;
I have stated above at paragraph [14] above that this is an application to enforce an agreement said to have been made between the parties, and it is an issue between the parties whether or not there was such an agreement. Consequently, the exception in paragraph 131(2)(f) applies.
It is also the case that there were open letters between the parties’ then solicitors about what had been agreed between the parties and the procedural steps needed to be taken to put that agreement before the Family Court so that consent orders could be made. It follows that evidence of the conversation between the parties in paragraph 4 of the wife’s affidavit of is admissible. It is not excluded by s.131(1) because it falls within the exception in paragraph 131(2)(c).
Reference was made to the decision of Monteith J in Camilleri and Camilleri[27], which dealt with the relevance of s.117C of the Family Law Act beyond the question of costs. In my view, this decision should be distinguished because s.117C of the Act was significantly varied by the Family Law Amendment Acts 2003 and 2005. Section 117C as it now stands is very different. Subsection 117(2A) was repealed, as was subsection 117(4). Subsection (3) is in a different form from that which applied when the section was under consideration in Camilleri.
[27] [2002] FamCA 1157
Section 117C of the Act in its present form is of no assistance in the resolution of the matter currently before the Court.
The evidence shows that the parties had a discussion on 17 May 2010 in which they agreed to settle the financial matters between them. The husband’s then solicitor’s letter of 3 June 2010 set out the substance of the agreement, except for the amount of child support which was to be paid, namely $500.00 per week.
The husband’s solicitor included an alternative offer, almost as an afterthought, to the effect that the wife could take over the business, including debts, on payment of $50,000.00. This alternative offer was no more than a “throwaway line”, and it was never mentioned in correspondence between the parties again.
The wife’s solicitors replied that same day, advising that she accepted the offer. It is clear which offer she was accepting, which was the offer that the parties had discussed on 17 May. The wife’s solicitors referred in their letter of 3 June to the actual amount of child support which was to be paid by the husband, namely $500.00. I am satisfied that this amount was always in the contemplation of the parties. It is common ground that the husband commenced paying that amount immediately.
The wife’s solicitors prepared a draft binding child support agreement and forwarded it to the husband’s solicitors on 3 June.
The husband’s solicitors forwarded draft consent orders, application for consent orders and other documents to the wife’s solicitors on 12 July. The husband, inexplicably, handed signed copies of those documents directly to the wife on 19 July 2010. However, the progress bogged down after that, and there followed correspondence from 27 July 2010 to 2 November 2010, which did not lead to an application for Consent Orders being filed at the Family Court, or any Court.
The situation was complicated by the departure of the husband’s then solicitor, Mr McGuiness, from the firm where he had previously been employed in what appears to early August 2010. The letter from Merten & Co to the wife’s solicitors of 18 August 2010 shows that they did not have any idea of what had transpired to date. The fact that
Mr Merten said in his letter that he wished to review the file and asked the wife’s solicitors to provide copies of all correspondence leads to an inference that he did not have a complete file, if indeed he had a file at all.
By 27 August, the wife’s solicitors has apparently become aware that Mr McGuiness was still acting for the husband, although he appeared to be operating from no premises other than a hotmail address and a mobile telephone number. This situation continued with Mr McGuiness acting for the husband in this rather informal manner until at least 12 October 2010, to judge from the email from the wife’s solicitor to Mr McGuiness of that date.
At some stage between 12 October and 26 October 2010 the husband instructed his current solicitors to act for him. There letter of 26 October said that their client was “currently considering his position”. It appears that the settlement negotiated between the parties was doomed by that stage. The letter from the wife’s solicitors of 2 November 2010, where they said they had been “chasing the signing of the terms since September 20” appears to be a last despairing effort to finalise an agreement made by the parties on 17 May.
No application was made to the Family Court for Consent Orders. The wife’s solicitors, accepting that the settlement was off, filed her Application on 17 January 2011. In his affidavit of 1 April 2011 the husband made no secret of the fact that he had no intention of going on with the agreement:
I am not prepared to consent to the previously prepared orders on the basis that I am most concerned as to the arrangements for the children and in particular those maters which I referred to earlier in my affidavit regarding Ms Phillips’s conduct.[28]
[28] Affidavit of Mr Phillips 1.4.2011 at [49]
The husband’s concerns as to the arrangements for the children appear to have been speedily resolved, however, because on 20 April 2011 he entered into consent orders finalising all parenting issues between the parties.
In my view, there is clear evidence that the husband’s consent to the agreement lapsed.
The wife seeks to rely on the Family Law Rules 2004 to enforce the agreement reached between the parties on 17 May 2010 but those Rules do not assist. Rule 10.18 provides:
10.18 A respondent’s consent to an application that an order be made in the same terms as the draft consent order attached to an Application for Consent Orders lapses if:
(a) 90 days have passed since the date of the first affidavit in the Application for Consent Orders; and
(b) the Application for Consent Orders has not been filed.
The agreement between these parties never even got to the stage of any affidavits ever being signed. There were several draft documents but no Application for Consent Orders was ever been filed. The process of negotiation took place between 17 May 2010, when the parties negotiated their agreement, until it was clear by December 2010 that the husband was not going to go through with the agreement and the wife swore her affidavit in support of an Application for property orders.
The actions of the husband’s former solicitor are a cause of some concern. Notwithstanding that he eventually decided that he was not going to go through with the agreement, it appears that the husband was not well served by his former solicitor. Clearly, the solicitor had been working for a firm of solicitors but, as the husband deposed:
He has since left that firm of solicitors and now works for a Government Department and was unable to continue to act for me.[29]
[29] Affidavit of Mr Phillips 1.4.2011 at [49]
However, the solicitor appears to have left the firm for which he was working early in August 2010 but purported to act by way of a mobile telephone and a private email address until about 12 October 2010. Clearly, the husband had obtained other legal advice by 26 October.
The husband’s present solicitors appear to have acted for him an entirely satisfactory manner and no criticism attaches to them for their role in this unfortunate matter.
One can only speculate whether the parties may have come to a binding agreement about property and child support matters along the lines of their agreement of 17 May 2010 if the solicitor then acting for the husband had performed his task in a more satisfactory manner. As it is, the wife was put to a deal of expense in having her solicitors pursue the husband’s former solicitor for the appropriate documentation to obtain the Consent Orders which both parties then wanted.
I intend to ask the Principal Registrar to forward a copy of this decision to the Law Society of New South Wales so that consideration may be given to an investigation of the solicitor’s conduct.
The Interim Application to enforce the agreement between the parties of 3 June 2010 under Rule 10.04(3) of the Family Law Rules is misconceived. It will be dismissed.
The wife has applied for final Orders for property settlement under section 79 of the Family Law Act. That Application should proceed by way of a referral of the parties to a conciliation conference before a Registrar of the Court. In view of the time that has elapsed and the financial transactions between the parties deposed to by the husband in his affidavit of 1 April 2011, the parties should file and serve Amended Financial Statements before the conciliation conference takes place in accordance with Rule 24.06 of the Federal Magistrates Court Rules 2001.
I certify that the preceding ninety-one (91) paragraphs are a true copy of the reasons for judgment of Scarlett FM
Date: 20 July 2012
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