Purcell and Fitch

[2013] FCCA 1152

FEDERAL CIRCUIT COURT OF AUSTRALIA

PURCELL & FITCH [2013] FCCA 1152

Catchwords:
FAMILY LAW – Alteration of final property orders sought – orders made by consent – s.79A(1)(b) of the Family Law Act 1975 (Cth) – not impracticable for the orders to be carried out – no attempt made by the husband to satisfy the orders – application dismissed.

Legislation:  

Family Law Act 1975 (Cth) s.79A(1)(b)

Rafter v Rafter [2012] FamCA 611

Applicant: MR PURCELL

Respondent: MS FITCH

File Number: MLC 1857 of 2011

Judgment of: Judge Hartnett

Hearing dates: 2 & 3 May 2013

Delivered at: Melbourne

Delivered on: 23 August 2013

REPRESENTATION

Counsel for the Applicant: Ms Colla

Solicitors for the Applicant: J Kotsifas & Associates

Counsel for the Respondent: Ms Treyvaud

Solicitors for the Respondent: Nicholes Family Lawyers

THE COURT ORDERS THAT:

1. The Applicant husband’s Application filed 18 May 2013 and amended by Amended Application filed 6 February 2013 under s.79A of the Family Law Act 1975 (Cth) is dismissed.

2. The husband forthwith sell his AMP Shares and being 163 in number, and pay to the Solicitors for the Respondent wife for payment out to the wife the entirety of the proceeds of sale.  In the event the husband fails to forthwith comply with this order, there is liberty to the wife to apply to the Court on short notice in respect of both enforcement and contravention of an order of this Court.

3. The husband forthwith deliver to the wife, at a time and to a place determined by her, possession of the 2005 [F] motor vehicle registered in his name for her sole use absolutely. Thereafter and within 30 days the husband transfer to the wife, at the expense of the husband, the ownership of the said vehicle.  In the event the husband fails to forthwith comply with this order, there is liberty to the wife to apply to the Court on short notice in respect of both enforcement and contravention of an order of this Court.

4. The wife is to obtain a Red Book valuation of the 2005 [F] motor vehicle or otherwise a valuation from a registered valuer within 30 days of the transfer of ownership from the husband to her.

5. The monies and assets received by the wife pursuant to orders 2 and 3 herein are to form part of the first payment required to be paid by the husband to the wife pursuant to the Orders made 25 August 2011 in this Court.

6. The husband pay to the wife the sums of $4,000 and $1,645.88 (a total of $5,645.88) by way of reimbursement to her of monies gained from the sale of the [J] bonnet and monies expended by her in relation to his non-compliance with order number 19 of the Orders made 25 August 2011 within 30 days hereof.

7. The wife’s costs of these proceedings are reserved and there is liberty to the parties to make written submissions with respect thereto in the next 28 days.

8. Otherwise the husband is to perform his obligations pursuant to the Orders made 25 August 2011.

IT IS NOTED that publication of this judgment under the pseudonym Purcell & Fitch is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

FEDERAL CIRCUIT COURT OF AUSTRALIA

AT MELBOURNE

MLC 1857 of 2011

MR PURCELL

Applicant

And

MS FITCH

Respondent

REASONS FOR JUDGMENT

1. The Applicant husband seeks property orders pursuant to s.79A(1)(b) of the Family Law Act 1975 (Cth) (‘the Act’) as set out in his Amended Initiating Application filed on 6 February 2013. Those orders sought are as follows:-

   “1. That the Final Financial orders made by Federal Magistrate Connolly in the Honourable Court on 25 August 2011 (being orders numbered 12 to 25) be set aside or varied pursuant to s79A(1)(b) of the Family Law Act 1975 on the basis that circumstances have arisen since the orders were made that make it impracticable for the orders to be carried out.

   2. Such further or other orders as this Honourable Court deems appropriate.”

2. The Respondent wife seeks dismissal of the husband’s application.  She also seeks orders by way of enforcement of the earlier final property orders made between the parties and on 25 August 2011 which were orders by consent. The orders sought by her as set out in her Amended Response filed 18 April 2013 relevantly are as follows:-

   “1. That the husband’s application filed 18 May 2012 be dismissed.

   2. That the husband forthwith do all such acts and things and sign all such documents as may be required to enable his compliance with the Orders dated 25 August 2011 (“the Final Orders”) and in particular:-

   (a) In compliance with paragraph 12 of the Final Orders, that the husband pay the wife the sum of $215,000 (“the payment”) within seven (7) days (“the date”) together with interest payable at the rate of 10% from 22 October 2011 until the payment is made in full.

   (b) In compliance with paragraph 14 of the Final Orders and pending the payment of the husband continue to be restrained by himself, his servants and agents from dealing with, selling, encumbering or otherwise disposing of his shareholder interest in [S] Ltd and its related entities.

   (c) In compliance with paragraph 17(b) of the Final Orders, that within 14 days from the date of an Order being made in accordance with the terms provided herein, the husband cause to be delivered to a motor vehicle restorer nominated by the wife all parts and accessories (fully disassembled) belonging to the “[J]” motor vehicle currently in the husband’s possession and thereafter such property be the property of the wife absolutely.

   (d) In compliance with paragraph 7 of the Final Orders, that within 14 days from the date of an Order being made in accordance with the terms provided herein, the husband cause to be delivered to the wife the following:

   (i) Her passport and any other papers or documents of the wife;

   (ii) Any personal papers of the wife;

   (iii) Any clothing belonging to the wife;

   (iv) Any ski clothing;

   (v) [omitted] Painting; and

   (vi) Photo Albums.

   …

   10. That upon the settlement of the sale of the property situate at and known as Property C in the State of Victoria (“the real property”), the proceeds of sale be applied as follows:-

   (a) To pay costs and commission of sale;

   (b) In discharge of the registered first mortgage encumbering the real property;

   (c) In discharge of the collateral mortgage security as Bank West may require.

   (d) To pay to the wife so much of the payment as may then be outstanding, together with interest at the rate of 10% p.a. calculated monthly from this date.

   (e) The balance (if any) to the husband.

   11. That in the event the Husband fails, neglects or refuses to comply with any of his obligations pursuant to these Orders, a Registrar of this Honourable Court be appointed and authorised pursuant to s.106A of the Family Law Act 1975 to execute on behalf of the Husband any such documents required to ensure the Husband’s compliance with his obligations pursuant to these Orders.

   12. There be a third party debt notice against the Husband’s employer [S] (“the employer”) of Property L in the State of Victoria attaching the earnings of the Husband, and the Wife be excused from particularising the specifics of the deduction rate pending full disclosure from the Husband.

   13. That pursuant to paragraph 12 herein,

   (a) The amount deducted from the Husband’s pay is to be paid to the Wife;

   (b) the payments will commence on the first pay day after the date on which a sealed copy of these Orders is served upon the said employer and weekly thereafter.

   14. That the husband pay to the wife the sum of $1,645.88 by way of reimbursement for the monies paid by the wife to [J] Pty Ltd.

   15. That the husband pay the wife’s costs of and incidental to these proceedings on an indemnity basis.

   16. Such further and other Orders as this Honourable Court deems appropriate.”

3. Each of the parties gave evidence in the proceedings and cross-examined the other. Ms D and Mr P also gave evidence on behalf of the husband and were subject to cross-examination. The wife relied upon the evidence as contained in Affidavits sworn by her on 12 November 2012 and 18 April 2013. She relied upon a Financial Statement sworn by her on 18 April 2013. The husband relied upon the evidence as contained in Affidavits sworn by him on 18 May 2012; 18 April 2013; and 29 April 2013. He relied upon Financial Statements sworn by him on 23 July 2012; 20 February 2013; and 29 April 2013. He also tendered in evidence a business valuation report from [D] dated 1 May 2013 to which I shall refer later in these reasons.

4. Statements of fact in these reasons should be taken as findings of fact on the balance of probabilities.

The Law

1. Section 79A of the Family Law Act 1975 (Cth) (‘the Act) is as follows:-

   “79A  Setting aside of orders altering property interests

   (1)  Where, on application by a person affected by an order made by a court under section 79 in property settlement proceedings, the court is satisfied that:

   (a)  there has been a miscarriage of justice by reason of fraud, duress, suppression of evidence (including failure to disclose relevant information), the giving of false evidence or any other circumstance; or

   (b)  in the circumstances that have arisen since the order was made it is impracticable for the order to be carried out or impracticable for a part of the order to be carried out; or

   (c)  a person has defaulted in carrying out an obligation imposed on the person by the order and, in the circumstances that have arisen as a result of that default, it is just and equitable to vary the order or to set the order aside and make another order in substitution for the order; or

   (d)  in the circumstances that have arisen since the making of the order, being circumstances of an exceptional nature relating to the care, welfare and development of a child of the marriage, the child or, where the applicant has caring responsibility for the child (as defined in subsection (1AA)), the applicant, will suffer hardship if the court does not vary the order or set the order aside and make another order in substitution for the order; or

   (e)  a proceeds of crime order has been made covering property of the parties to the marriage or either of them, or a proceeds of crime order has been made against a party to the marriage;

   the court may, in its discretion, vary the order or set the order aside and, if it considers appropriate, make another order under section 79 in substitution for the order so set aside.

   (1A)  A court may, on application by a person affected by an order made by a court under section 79 in property settlement proceedings, and with the consent of all the parties to the proceedings in which the order was made, vary the order or set the order aside and, if it considers appropriate, make another order under section 79 in substitution for the order so set aside.

   (1AA)  For the purposes of paragraph (1)(d), a person has caring responsibility for a child if:

   (a)  the person is a parent of the child with whom the child lives; or

   (b)  a parenting order provides that:

   (i)  the child is to live with the person; or

   (ii)  the person has parental responsibility for the child.

   (1B)  An order varied or made under subsection (1) or (1A) may, after the death of a party to the marriage in which the order was so varied or made, be enforced on behalf of, or against, as the case may be, the estate of the deceased party.

   (1C)  Where, before proceedings under this section in relation to an order made under section 79 are completed, a party to the marriage dies:

   (a)  the proceedings may be continued by or against, as the case may be, the legal personal representative of the deceased party and the applicable Rules of Court may make provision in relation to the substitution of the legal personal representative as a party to the proceedings;

   (b)  if the court is of the opinion:

   (i)  that it would have exercised its powers under subsection (1) or (1A) in relation to the order if the deceased party had not died; and

   (ii)  that it is still appropriate to exercise its powers under subsection (1) or (1A) in relation to the order;

   the court may vary the order, set the order aside, or set the order aside and make another order under section 79 in substitution for the order so set aside; and

   (c)  an order varied or made by the court pursuant to paragraph (b) may be enforced on behalf of, or against, as the case may be, the estate of the deceased party.

   (2)  In the exercise of its powers under subsection (1), (1A) or (1C), a court shall have regard to the interests of, and shall make any order proper for the protection of, a bona fide purchaser or other person interested.

   (3)  In this section, a reference to an order made by a court under section 79 includes a reference to an order made by a court under section 86 of the repealed Act.

   (4)  For the purposes of this section, a creditor of a party to the proceedings in which the order under section 79 was made is taken to be a person whose interests are affected by the order if the creditor may not be able to recover his or her debt because the order has been made.

   (5)  For the purposes of this section, if:

   (a)  an order is made by a court under section 79 in proceedings with respect to the property of the parties to a marriage or either of them; and

   (b)  either of the following subparagraphs apply to a party to the marriage:

   (i)  when the order was made, the party was a bankrupt;

   (ii)  after the order was made, the party became a bankrupt;

   the bankruptcy trustee is taken to be a person whose interests are affected by the order.

   (6)  For the purposes of this section, if:

   (a)  a party to a marriage is a bankrupt; and

   (b)  an order is made by a court under section 79 in proceedings with respect to the vested bankruptcy property in relation to the bankrupt party;

   the bankruptcy trustee is taken to be a person whose interests are affected by the order.

   (7)  For the purposes of this section, if:

   a)  an order is made by a court under section 79 in proceedings with respect to the property of the parties to a marriage or either of them; and

   (b)  either of the following subparagraphs apply to a party to the marriage:

   (i)  when the order was made, the party was a debtor subject to a personal insolvency agreement;

   (ii)  after the order was made, the party became a debtor subject to a personal insolvency agreement;

   the trustee of the agreement is taken to be a person whose interests are affected by the order.”

History

1. The husband was born in [omitted] and is aged 48 years. The wife was born in [omitted] and is aged 41 years. Both are Australian citizens. The parties commenced their cohabitation in or around 2001 and married [in] 2003. In January 2011 – nearly 10 years after commencing to reside together – they separated.  They have one child of the marriage, [X], born [in] 2006.  He is now aged six years and lives with the wife. He spends time, as set out in the final orders of 23 August 2011, with his father. It includes each second weekend from Friday until Monday and each Wednesday. The husband had been previously married. He has three children from that marriage, two of whom are adults and a third, [name omitted] born [in] 1996 who is now 17 years of age. Since separation, the husband has formed another relationship and has a child of that relationship, [Z], who is approximately one year of age. The husband claims not to live with the mother of [Z] and nor with [Z]. He continues to reside in the former matrimonial home, although he no longer owns it, as do his three children from his first marriage.  His son [Mr C] earns an income of $40,000 per annum in the business in which his father works and in which his father has a shareholding. His daughter [name omitted] is in receipt of a student allowance. The wife in these proceedings has not repartnered.

2. Upon physical separation between the parties in April 2011 (following a short period of separation under the one roof), the wife and [X] left the former matrimonial home at Property C (‘the former matrimonial home’) and took up rental accommodation in inner Melbourne ([omitted]).

3. The husband is a consultant to the company he previously was a Director of. He remains a shareholder. That company is [S] Pty Ltd. The company is an [omitted]. Its clients are [omitted]. The business premises of that company are at Property L in the State of Victoria. That is property owned by [N] Pty Ltd, a company of which the husband and his brother Mr P are directors and equal shareholders. [N] Pty Ltd also owns two industrial lots with a combined value of $440,000, being marginally more than their value at trial ($420,000). The wife is a [occupation omitted] who works on a casual basis for a few hours each week.  The wife’s income is $180 per week from part-time employment ($9,360 per annum), together with $360 per week by way of Centrelink benefits. She continues to have the primary care of the parties’ young son and borrowed from her elderly mother the sum of approximately $145,000 to help fund the initial proceedings. She has yet to repay any of those monies. Her mother has further subsidized some of her living expenses.

4. At the time of trial in August 2011, Mr N, a certified practicing valuer had prepared a sworn valuation of the former matrimonial home; the husband and his brother’s business property in [L]; and the industrial lots situate at Property E in the State of Victoria. The wife had placed before the Court evidence from Mr H, Forensic Accountant and the husband had placed before the Court evidence from Mr M, Forensic Accountant. Both reports were as to the value of the husband’s family trust. Each of the husband and wife had calculated a differing total value as to the assets available to them for distribution between them.  Their respective asset pool quantification was approximately $600,000 to $700,000 apart. The wife alleged a lack of discovery by the husband. They compromised the matter nevertheless. They had previously attended a mediation between them in an attempt to resolve their financial dispute. The wife calculated that she received 21 per cent of the asset pool including superannuation entitlements, and the husband calculated that he received 42 per cent of the asset pool including superannuation entitlements.  The consent orders as to property interests put to the Court by the parties satisfied the Court that in all the circumstances it was just and equitable to make the orders sought. The Orders were made on 25 August 2011. Those Orders which included parenting orders, are relevantly as follows:-

   “…

   Financial Orders

   12.  That the Husband pay to the Wife the sum of $215,000 (“the first payment”) with the first payment to be made in the sum of $100,000 by the 22^nd October 2011 and the second payment to be made in the sum of a further $115,000 (“the second payment”) by the 19^th November 2011.

   13. This is an Order to which Section 77 (A) of the Family Law Act applies the amount of $25,000 of the payment referred to in Order 12 hereof is attributable to the maintenance of the Wife.

   14. That pending the Husband’s compliance in full with Order 12 hereof he, by himself, his servants and agents be restrained from dealing with, selling, encumbering or otherwise disposing of his shareholder interest in [S] Ltd and its related entities.

   15. That in the event the Husband fails to make the first payment by the date and such default continuing for a further 30 days then the real property situated at and known as 12 Property C in the State of Victoria be sold on terms and conditions to be agreed and in default of agreement on terms and conditions fixed by a value appointed by the President for the time being of the Real Estate Institute of Victoria; and the proceeds of sale be applied:-

   a) To pay costs and commission of sale.

   b) In discharge of the registered Mortgage encumbering the real property.

   c) In discharge of the collateral mortgage security as Bank West may require.

   d) To pay to the Wife so much of payments as may then be outstanding, together with interest at the rate of 10% p.a. calculated monthly from the date.

   e) The balance (if any) to the Husband.

   16. That contemporaneously with the Husband’s compliance with Order 12 hereof the Wife cause any caveat to be lodged over any property in which the Husband has an interest to be removed at her expense.

   17. That the husband forthwith do all acts and things to:-

   a) Transfer to the Wife’s frequent flyer account 100,000 frequent flyer points.

   b) Transfer to the Wife’s mother, at the expense of the Wife motor vehicle registration number [omitted]

   18. That the Husband be responsible for and forthwith pay any and all Citylink fines and penalties incurred arising from the Wife’s use of [M] Motor Vehicle registration number [omitted].

   19. That within 14 days from this day the Husband cause to be delivered to a motor vehicle restorer nominated by the Wife all parts and accessories (fully disassembled) belonging to the “[J]” Motor Vehicle currently in the Husband’s possession and thereafter such property be the property of the Wife absolutely.

   20. The Husband indemnify the Wife in respect of any liability arising from the Wife’s involvement in any Trust, Company or other entity in which the Husband has or has had an interest.

   21. That the Wife does abandon any claim she may have at law or in equity or pursuant to the provisions of the Family Law Act in relation to any legal entity in which the Husband has or has had an interest.

   22. That within 7 days the Husband cause to be delivered to the Wife:

   ·     Her passport and any other papers or documents of the Wife

   ·    Any personal papers of the Wife

   ·    Any clothing belonging to the Wife

   ·    Any ski clothing

   ·    [omitted] Painting

   ·    Photo Albums

   23. That otherwise each party be entitled to all other property in their possession as at the date of these Orders and be solely responsible for any loan in respect of any such item of property retained by them save and except for the items the Wife is entitled to collect pursuant to the Orders of this Court made the 20^th  April 2011 and the 5^th May 2011, which the Husband shall deliver by agreement.

   24. That each party is to retain their superannuation.

   25. That otherwise all extant applications be otherwise dismissed.

   THE COURT NOTES

   A: That the parties intend that these financial Orders shall in so far as is practicable finalise their financial relationship and avoid further proceedings between them.

   B: That the parties consent to these Orders on the basis that they will enter into a binding child support agreement, inter-alia, providing for the Husband to pay for the ongoing child support of the parties child.

   ·    $800 per calendar month by way of periodic child support. Such sum to be C.P.I. indexed in the usual way.

   ·    All private health costs of the child. (Insurance and “gap” costs)

   ·    All books, uniforms and extra curricular expense of the child attending school.

   ·    Private school fees (at an agreed private school) commencing in year 7.”

These proceedings

1. The husband complied with the following, pursuant to the Final Orders:-

   a)the husband transferred to the wife 100,000 of his Frequent Flyer Points;

   b)the husband transferred to the wife her mother’s motor vehicle; and

   c)the husband otherwise paid all outstanding Citylink fines.

2. The husband has not complied with orders 12 and 13 of the Final Orders as follows:-

   a)order 12 provides for the first payment and second payment (the payments) to be made by the husband to the wife; and

   b)order 13 confirms that $25,000 of the payments be deemed capitalised spousal maintenance;

3. The wife claims, and the husband denies, that the husband has not complied with:-

   a)order 19 which provides that the husband cause to be delivered all parts and accessories belonging to the “[J]” motor vehicle to a restorer nominated by the wife; and

   b)order 22 which provides that the husband provide the wife with various chattels, including personal items from the former matrimonial home.

4. No binding child support agreement has been entered into. It was intended to be entered in between the parties on the making of the consent orders of 25 August 2011. The wife’s evidence is that its terms of periodic child support payment and the payment of [X]’s private school fees as set out in Notation B to the Orders “heavily contributed to [her] decision to enter into the Final Orders”.

5. Following the husband’s non-payment of the first payment due to the wife under the orders, the wife sent to the husband’s former solicitors numerous letters of demand for compliance, requesting both the money due under the orders and an interest component given the outstanding nature of the payment then owing. Further, the wife sought a partial payment of the monies owing to her in order to meet her urgent living expenses.  On 9 November 2011, the husband confirmed that he had listed the former matrimonial home for sale and claimed to be otherwise seeking early release of his superannuation entitlements to make the payments due to the wife. The husband listed the former matrimonial home for sale at a price of between $480,000 and $520,000 in circumstances where he had proceeded on the basis that the wife’s sworn valuation obtained for trial was an accurate assessment of the property’s value when making the consent orders of 25 August 2011. That value was $475,000. The husband did not sell the former matrimonial home in which he lived and it required an order of the Court after the institution of proceedings to effect a sale (the purchaser of the property was the husband’s current partner). The husband made no further communication with the wife’s solicitors and failed to respond to their correspondence until 23 April 2012 when, by letter from his solicitors, he indicated an inability to make the payments due to the wife under the orders.

6. On 18 May 2012, the husband commenced these proceedings to set aside the earlier final property orders. In lieu he had in writing, and in the preceding month, proposed a payment to the wife of just $10,000. Between issuing proceedings and the hearing of the matter in May 2013, orders were made for discovery by the husband; costs orders were made against the husband; and a sale of the former matrimonial home was ordered and obtained.

7. The Court accepts the wife’s evidence that the husband and the wife were both aware at the time of the making of the orders that there might not be enough equity in the former matrimonial home to fulfil the husband’s obligations pursuant to the orders. Indeed, the orders specifically referred to [order 15(c)] a discharge of the collateral mortgage security as required by Bankwest without provision of a sum certain. This was to be in addition to discharge of the registered mortgage which the parties had quantified. The wife did not consider the husband would sell the former matrimonial home in any event. It was only in the case of default by the husband that order 15 of the Orders made 25 August 2011 would commence to operate. The wife’s security for receipt from the husband of the payments was as contained in order 14 and 15. The husband now alleges however that he was not aware that the security in relation to the business loans of he and his brother was to the extent it was, in terms of the monies required to be repaid to the bank, upon the sale of the former matrimonial home.  The husband’s evidence was that at the time of the entering into of the consent orders he had a series of different bank managers. He was unable at the relevant time to communicate with his then bank manager, to ascertain what funds precisely would need to be repaid in respect of the business borrowings, additional to repayment of the mortgage sum of approximately $188,000. He anticipated an amount of $100,000 would be required to be repaid to Bankwest. Instead, that amount was $250,000 which related to business borrowings of himself and his brother. In addition, his evidence was that he had relied upon a bank valuation of $550,000 in respect of the former matrimonial home and thus agreed to the orders on the basis that any monies to be paid to the wife would be out of the sale proceeds of the home.  When he commenced these proceedings he sought in his Initiating Application filed 18 May 2012:-

   “1. That Paragraph 12 of the Orders be setaside (sic) accordingly as there is insufficient funds after the sale of the matrimonial home to comply with Paragraph 12.

   2. That Paragraph 12 of the Orders be set aside accordingly as a a sale of the matrimonial home will result in negative equity available to the Respondent.

   3. That Paragraph 12, 13, 14, 15 of the Orders be setaside (sic) as it cannot be complied with.

   4. Any other orders as the Court may deem fit.”

8. In the husband’s Affidavit sworn 11 May 2012, he claimed in contradictory evidence to have been unaware upon entering into the consent orders of 25 August 2011, that upon sale of the former matrimonial home all loans taken out by him where required to be repaid to the extent of funds available, and not just the mortgage loan with respect to the purchase of the former matrimonial home. He annexed correspondence between himself and Bankwest of 5 September 2011 contained in exhibit “AP2”. That correspondence is evidence of the husband having knowledge of the former matrimonial home being encumbered with a mortgage of approximately $188,000, together with providing security for other debt owed by he and his brother. The husband wanted advice from his bank as to how much was required by the bank to be paid out to, it to ensure the ongoing security of his then $1,580,000 business facility, held by he and his brother with the bank. The bank’s response was that a further $250,000 beyond the mortgage of $187,950.91 was required to be paid off the business facility, or alternatively $250,000 could be placed in a term deposit and used as security for the loan.

9. The former matrimonial home was sold by court order and public auction on 2 February 2013. Settlement of the sale occurred in May 2013. The sale price was $445,000. The former matrimonial home was encumbered by way of mortgage of approximately $188,000 and was also used as described above as security against a business loan for [N] Pty Ltd, a company of the husband and his brother. The total loan of [N] Pty Ltd was by then a business fixed rate loan of $1,602,192. All net proceeds of sale were applied to reduce the secured facilities owing to Bankwest leaving no amount from the sale of the former matrimonial home available to the parties.

10. The husband sold the former matrimonial home to his partner Ms D and to his brother Mr P, who hold the property as tenants in common in equal shares. This has enabled the husband and his children to continue in their occupation of it. Ms D is in receipt of a disability pension and lives in a property owned by her but in relation to which she services a $200,000 mortgage. She resides with her and the husband’s son. She had no funds to apply to the purchase and has no income sufficient to meet the loan repayments. Her borrowings and that of the husband’s brother are in the sum of $465,000 which amount exceeds the purchase price of the former matrimonial home. Both have had to provide their own real property in which they reside as further security to Bankwest in order to obtain the loan. The husband was evasive in answering questions put to him about this purchase. He attempted to mislead the Court as to how it was Ms D had been able to obtain the necessary finance. He also claimed his brother had guaranteed repayment of

    
    

    Ms D’s loan. It was not until Mr P and Ms D gave evidence that the true ownership of the property was made evident to the Court. Ms D considers the purchase an investment for her son, obtained at a good price. It is the husband who is paying a large share of the loan repayments, currently in the form of rental payments of approximately $2,400 a month. He clearly has income sufficient to meet this commitment even if assisted by his son [Mr C].

11. The [Mr Purcell] Family Trust is a discretionary trust, established on 15 March 1994. Its Trustee and Appointee is the husband. It was said to have a value of $128,000 in the report prepared by Mr M on 22 August 2011. That value excluded the liability of the husband in regard to a debt he had to [S] Pty Ltd estimated to be $120,000. That report was available to the parties before entering into the consent orders of 25 August 2011.

12. The [Purcell] Group as described by Mr H in his report prepared for the Court and available to the parties before entering into the consent orders of 25 August 2011 consisted of a number of trusts and companies including:-

    a)[Mr Purcell] Family Trust;

    b)[U] Pty Ltd;

    c)[U] Trust;

    d)[N] Pty Ltd;

    e)[S] Pty Ltd;

    f)[P] Pty Ltd;

    g)[H] Pty Ltd; and

    h)[A] Pty Ltd.

13. Mr H valued the parties’ interest in the [Purcell] Group in the sum of $817, 196.  The husband had, and continues to have, a 50 per cent interest in [N] Pty Ltd and a 26.67 per cent interest in [S] Pty Ltd. 

14. For the purpose of these proceedings the husband tendered in evidence a report by Mr D of [D]. Mr D is a qualified valuer who was appointed by the husband alone to assess the value of the [Mr Purcell] Family Trust at this point in time. That valuation determined that the [Mr Purcell] Family Trust has a nil value and a net asset deficit of $129,026. Further, it noted that the husband has a liability in respect of [U] Trust of $120,000 relating to a debt owing to [S] Pty Ltd and that further there is a potential capital gains tax liability of $129,026 in respect of Property L, a property held by [N] Pty Ltd.

15. The [N] Pty Ltd business loan was secured (at trial) over a number of properties being Property C; Property L; Property E; and by guarantee from the husband and his brother Mr P.  The husband’s evidence is that those properties in which he continues to have an interest or are held in his name, being the above properties excluding the former matrimonial home, do not have sufficient equity at this point in time (being when he swore his Affidavit on 18 April 2013) to pay out any of the loans secured. The three remaining properties owned by [N] Pty Ltd have increased in value since the making of the final orders. The [L] property in these proceedings continues to be leased out to [S] Pty Ltd for the sum of $120,000 a year. That lease was entered into in 2010 for a five year term. The monies owing to Bankwest have decreased as a result of the reduction of debt from the application of the proceeds of sale of the former matrimonial home.

16. The husband claimed in these proceedings that [S] Pty Ltd was insolvent. It continues to trade. This was an extraordinary claim made by a former director of the company. It was yet another highly implausible piece of evidence given by the husband.

17. Following Orders made 13 November 2012 in the Court and by way of enforcement, the husband delivered the parts of the [J] to ‘[J] Pty Ltd’ in [omitted] but various parts of the car were missing. Mr [omitted] of ‘[J] Pty Ltd’ charged the wife a total of $1,645.88 to review and provide an inventory to the wife of the parts of the car that were missing. A copy of the invoice dated 26 February 2013 is annexure “HEF-16” to the wife’s Affidavit sworn 18 April 2013. Whilst the husband denies withholding parts of the car, I prefer the evidence of the wife as to this matter. The husband conceded that he had failed to provide a car bonnet purchased by him in about 2007. He sold same for $4,000 and applied these funds toward payment of his legal costs. These monies should have been paid to the wife.

18. The consulting agreement entered into by the husband on 4 January 2013 between [S] Pty Ltd and himself provides for a monthly consultancy fee payment to him of $7,783.33. In his Financial Statement sworn 29 April 2013, the husband deposed to receive income of $1,230 each week in his capacity as a self employed consultant. This does not accord with his consultancy agreement. In July 2012, he had deposed to receive $1,643 each week in his capacity as Managing Director of [S] Pty Ltd. In each financial statement he relies upon he deposed to paying income tax of $444 each week and superannuation of $164 each week. He also in his earlier financial statements paid maintenance in the sum of $790 per month which by 29 April 2013 had reduced to $379.75 per month. He claimed his expenses exceeded his income by $824.94 each week. He claimed to have liabilities of $1,351,000 which exceeded his assets by a sum of $167,354 approximately. He has a modest car (a 2005 [F] valued at approximately $5,000), modest savings and some household contents. The husband has $51,000 in accumulate superannuation benefits held in two superannuation funds. He had deposed to this amount being $53,000 in February 2013. At trial, he had at least that sum in superannuation benefits available to him.

Consideration

1. The husband consented to the Orders made on 25 August 2011. Both he and the wife were represented by experienced solicitors and counsel. Valuation reports as to the real properties owned by the parties and a company in which the husband has a 50 per cent shareholding were provided to the Court by the parties, as were competing and widely divergent valuations of the [Mr Purcell] Family Trust. The husband agreed and the Court ordered for him to pay to the wife the total sum of $215,000. The proceedings concluded after the wife had expended in the vicinity of $145,000 in legal fees and the husband also a significant amount.

2. The husband has not made any payments to the wife and seeks to be absolved from any requirement that he do so. He has made no partial payments nor sought to enter into any form of repayment plan. His sale of the former matrimonial home has not disrupted his continued occupation of it and an enforcement order was required to be made to effect that sale. He continues to retain his shareholding, undiluted, in [S] Pty Ltd and also his shareholding in and directorship of [N] Pty Ltd. The business premises (factory) in [L] continues to be tenanted by [S] Pty Ltd for the same sum of $10,000 each month and the property has risen in value from $1,325,000 in July 2011 to $1,460,000 at present. The evidence before the Court as provided by the husband as to the position of the [Mr Purcell] Family Trust is that it now has a net deficit of assets. That position is not fixed and fluctuates as is evident from the net asset position of the Trust, on the wife’s evidence and that of the husband in 2011.

3. The husband continues to drive a [omitted] motor vehicle from Monday to Friday and not in a lesser manner as claimed by him. His brother’s evidence was that it is a company car made available to the husband and used by him during the week. [S] Pty Ltd continues to reimburse the husband for all his business expenses which include a number of trips to various overseas destinations, including Singapore, Indonesia and the United States. The company also pays some petrol and maintenance expenses for his [F] 2005 motor vehicle and some telephone and internet expenses. None of these things have changed. The husband has become a consultant to the company, rather than an employee, in receipt of income of approximately $94,000 per annum. His 2011 taxable income was in the sum of $125,737. In the following financial year, his income rose to $162,000. It has now reduced. He continues to make superannuation contributions out of his income in the sum of $164 each week voluntarily although says he has not done so in recent times. He swore to such an expense in each of his financial statements placed before the Court. His changed employment status has meant that child support arrears cannot be garnished from an employer’s payment to him. His child support assessed amount has decreased as a consequence of him advising the Child Support Agency that he anticipated income receipt of approximately $44,000 per annum. He is currently paying his child support arrears, which at trial were in the sum of $1,427.70, in instalments of $270 a month, in addition to a currently low assessed amount of approximately $33 each week. The husband has much the same debts he had at trial, albeit he has entered into a repayment plan of $700 per month with [school omitted] to whom he owes approximately $32,000. The husband had each of his three children attend schools in circumstances where he did not honour his obligation to pay their fees. A further sum is owed to [omitted] School of approximately $7,000. The husband has approximately $50,000 of credit card debt, and a debt to GE Finance in the sum of $7,000. There has been a reduction of his debt to Bankwest in the sum of $250,000, being the monies the bank was repaid on the sale of the former matrimonial home. The husband gave evidence, contradicted by his brother, that the bank, despite this reduction in the debt owing, now consider he and his brother to be high risk clients. This was not credible evidence.

4. The husband is not willing to sell the real properties owned by [N] Pty Ltd as the selling expenses and CGT liability, he estimates would incur a cost of approximately $300,000. In addition, he and his brother have a reliable tenant in [S] Pty Ltd. That company continues to employ his brother Mr P, his son [Mr C] with whom he lives, his partner Ms D when she is able to work which has been fairly regularly with the company over many years now, and himself in his changed status as a consultant. He maintains his 26.67 per cent interest in that company, as the Consent Orders of 25 August 2011 contemplated he would.

5. The onus is on the Applicant husband to establish to the reasonable satisfaction of this Court that in the circumstances that have arisen since the making of the orders it is impracticable for an order or part of an order to be carried out. He has failed to do so. Even if he had so satisfied the Court, which he has not, his application would fail in that the Court’s discretion would not be exercised in his favour due to the absence of any consideration shown by him to the wife. His conduct has been positively abhorrent toward her. He has made no attempt to satisfy the orders in any measure. Furthermore, despite the notation as to child support he is now in a position of being in arrears with regard to a child support assessed amount on an income considerably understated. It is important that there be a strict interpretation of s.79A(1)(b) of the Act, in particular to achieve finality of financial matters between the parties and to avoid the costs and stresses that go with further litigation. The legal costs expended to reach a resolution of outstanding property matters whether by consent or court order are a factor to consider. It is oppressive to a party to achieve an outcome only to be met by a further application instituted where essentially, as in this case, the husband does not wish to pay that which he agreed to pay.

1. There is some authority in relation to this application. It is supportive of the wife’s position that the application should be dismissed when considered in light of the particular facts of this case. In Rafter v Rafter[2012] FamCA 611 O’Reilly J referred to the decision in Cawthorn v Cawthorn (1998) FLC 92–805 and at paragraphs 29 to 31 of the reasons said as follows:-

   “[29] In Cawthorn v Cawthorn (1998) FLC 92-805 the Full court, Ellis, Lindenmayer and Joske JJ considered favourably the view of Kay J in La Rocca & La Rocca (1991) FLC 92-222, extracted at 85,058-9, in which his Honour first (extracted at 85,058) referred to the different treatment or "dichotomy" in the Act of property and maintenance orders; secondly (extracted at 85,058-9) compared each of the (then) 4 bases under s 79A(1) which enliven the discretion to set aside or vary an order; and thirdly (extracted at 85,059) determined that "the concept of impracticability" is akin to the doctrine of frustration in contract, but that potential insolvency of one of the parties in the future or the commercial failure of one of the parties post the making of the orders which will lead to them not being capable of being fully implemented are not bases to set aside an order. Thus Kay J said (extracted at 85,059):

   ... My own view is that the concept of impracticability, as referred to in this section, is akin to the application of the doctrine of frustration in contractual matters. What the Parliament is concerned with and what ought to be concerning the court is the happening of events which cannot be reasonably foreseen, which will have the effect of causing an injustice to one of the parties if the happening of such events is not given effect to.

   In standard contractual doctrine, I think that is as comfortably as anywhere described by Russell J in  Re Badische Co Ltd (1921) 2 Ch 331 at 379, where his Honour said:

   The doctrine of dissolution of a contract by the frustration of its commercial object rests on an implication arising from the presumed common intention of the parties. If the supervening events or circumstances are such that it is impossible to hold that reasonable men could have contemplated that event or those circumstances and yet have entered into the bargain expressed in the document, a term should be implied dissolving the contract upon the happening of the event or circumstances.

   Now, in my view, what the appropriate application of s 79A(1)(b) ought to be is that circumstances that have arisen in which it becomes impracticable to carry out the orders are circumstances that could not reasonably have been contemplated and that in such circumstances, whilst impossibility is not the test and impracticability is, it may then become just and equitable to change the orders.

   The potential insolvency of one of the parties in the future is not such a matter, in my view. In every case before the court property values may change, go up or down, business may flourish or not flourish, the vicissitudes of life may affect one of the parties.

   In an appropriate case, such as the extreme circumstances described in Barder and Barder (1987) 2 All ER 440 in the House of Lords, where the mother killed herself and the children after the making of the order, then appeal out of time and fresh evidence is the appropriate answer. However the commercial failure of one of the parties post the making of the orders which will lead to the orders not being capable of being fully implemented does not, in my view, amount to a basis on which to set the order aside.

   That situation leads to a problem with enforcement. It may be that the bankruptcy laws would have to take over, but it is not an appropriate basis for having orders set aside and fresh orders made at the behest of the party who has suffered the financial embarrassment. There is no provision in the legislation to have matters looked at a second time if one of the parties suddenly becomes wealthy and, in my view, I do not see that the legislation can be appropriately read as applying when one of the parties becomes suddenly poor, in normal business circumstances. (emphasis added)

   [30] Their Honours then referred to Kay J's approach as being "generally followed" by Moss J in Franklin and McLeod (1994) FLC 92-481 at 81,025.

   [31] Their Honours in Cawthorn then concluded, at 85,060:

   In our view, it is important to preserve the dichotomy between maintenance orders which are variable as provided for in the Act and orders for settlement of property which are basically permanent in their nature. This concept has underpinned the Family Law Act from its inception. For that reason, we agree with the approach adopted by Kay J that the provisions of s 79A should be construed strictly.

   On a case by case basis, reliance upon authority relating to the contractual doctrine of frustration in its various facets may at times prove to be of assistance. In so doing however, care must be taken and it must remain at all times in the forefront of the court's deliberations that the task before the court is to interpret and administer a section of the Act.

   We also agree with the views of both Kay and Moss JJ that the concept of impracticability contained in s 79A(1)(b) is quite different from problems of enforcement that may arise due to a party's insolvency. In such a case, the matter may well have to be dealt with pursuant to the provisions of the Bankruptcy Act 1966. This, however, merely reflects the vicissitudes of life and is in harmony with the clean break principle enshrined in the Act. An application for a further settlement of property is not available in circumstances where one party suddenly becomes immensely rich. It should also be noted that the words of Russell J quoted earlier from Re Badiche Co Ltd (above) should not be regarded as providing the appellant any solace in the circumstances of this case. Financial problems, such as have arisen in respect of the appellant, have never given rise to the successful invocation of the doctrine of frustration. (emphasis added)”

2. The fact that the husband claims to have had a recent drop in income and that he has still not attended to the repayment of his various debts, coupled with the present deficit position of the [Mr Purcell] Family Trust as stated in the report of [D] dated 1 May 2013, are not matters which satisfy the grounds set out in s.79A of the Act relied upon. It could reasonably have been contemplated by the parties that the husband’s business would both thrive and decline, real property values would rise and fall and the husband may have a variable income. There is no injustice to the husband in requiring performance of the orders. There is great hardship and prejudice to the wife in not doing so. The husband has not satisfied the Court of the necessary matters required under s.79A(1)(b) of the Act and nor will the Court exercise its discretion in his favour. His application must fail.

I certify that the preceding thirty-four (34) paragraphs are a true copy of the reasons for judgment of Judge Hartnett.

Associate: 

Date:  23 August 2013