Rains and Callia
[2010] FMCAfam 512
•25 May 2010
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| RAINS & CALLIA | [2010] FMCAfam 512 |
| FAMILY LAW – Property – whether terms of settlement announced to court by counsel are binding on the parties. |
| Family Law Act 1975 (Cth), ss.75, 79, 86, 87 Matrimonial Causes Act 1971 (repealed) |
| Woodcock & Woodcock (1997) FLC 92-739 Woodland & Todd (2005) FLC 93-217 Z & Z [2006] FamCA 920 Naughton & Naughton (1983) FLC 91-327 Harvey v Phillips (1956) 95 CLR 235 Berriman v Pipeline Engineering Pty Ltd (1989) 52 SASR 324 Rex v Municipal Council of the Shire of Marong, Ex parte Filcock (1903) 29 VLR 355 Anderson v Anderson (1982) FLC 91-251 In the Marriage of Lonard (1976) 11 ALR 618 In the Marriage of M I and A Tynan (1992) 16 Fam LR 621 Robinson v Willis (1982) 8 Fam LR 131 In the Marriage of Langford and Coleman (1993) 16 Fam LR 228 Harris v Caladine (1991) FLC 92-217 Mallet v Mallet (1984) FLC 91-507 |
| Applicant: | MS RAINS |
| Respondent: | MR CALLIA |
| File Number: | MLC 10737 of 2008 |
| Judgment of: | Riley FM |
| Hearing date: | 5 May 2010 |
| Date of Last Submission: | 5 May 2010 |
| Delivered at: | Melbourne |
| Delivered on: | 25 May 2010 |
REPRESENTATION
| Counsel for the Applicant: | Ms Stoikovska |
| Solicitors for the Applicant: | Berger Kordos Lawyers |
| Counsel for the Respondent: | Mr Nicholson |
| Solicitors for the Respondent: | Marshalls & Dent |
ORDERS
Within 60 days from the date of these orders (“the date”) the wife pay to the husband the sum of $355,000 (“the payment”)
Contemporaneously with the payment:
(a)the husband do all such acts and things and sign all documents as may be required to relinquish any right, title and interest he may have in the real property situate at and known as Property S, Victoria, in the State of Victoria, being the whole of the land more particularly described in certificate of title volume [omitted] (“the Property S property”) to the wife; and
(b)the husband do all such acts and things and sign all documents as may be required to withdraw caveat number [omitted] registered against the Property S property’s certificate of title.
The wife forthwith do all such acts and things and sign all documents as may be required to transfer to the husband (“the transfer”), at the husband’s expense, all of her right, title and interest in the real property situate at and known as Property B, in the State of Queensland, being the whole of the land more particularly described in certificate of title number [omitted] (“the Queensland property”).
Contemporaneously with the transfer the husband procure a discharge of the wife’s liability for the Westpac Bank mortgage (registration number [omitted]) registered against the Queensland property (“the Queensland mortgage”) and discharge or refinance the total debt secured by the Queensland mortgage into his sole name.
The Husband arrange for the discharge and/or refinance of the Queensland mortgage in accordance with order 4 hereof by no later than 3 December 2010.
Pending the wife’s compliance with orders 1 and 2 herein:
(a)the wife have the sole right to occupy the Property S property and that during such right of occupation the wife shall pay all rates and taxes and like apportionable outgoings of the Property S property as and when they fall due;
(b)the parties hold their respective interests in the Property S property upon trust pursuant to these orders; and
(c)neither party otherwise encumber the Property S property without the prior written consent of the other party save to give effect to these orders.
Pending the husband’s compliance with order 4 herein;
(a)the husband shall indemnify, and keep the wife indemnified;
(i)in respect of all liability she may have for the Queensland mortgage; and
(ii)in respect of all rates, taxes and other outgoings of or with respect to the Queensland property of whatsoever nature and kind;
(b)the husband shall be solely responsible for paying all installments pursuant to the Queensland mortgage and all rates and taxes and like apportionable outgoings of the Queensland property as and when they fall due;
(c)the husband shall have the sole right to receive any rental income received from the Queensland property as and from 3 December 2009;
(d)the parties shall hold their respective interests in the Queensland property upon trust pursuant to these orders; and
(e)neither party shall otherwise encumber the Queensland property without the prior written consent of the other party save to give effect to these orders.
For the purposes of the completion of the parties personal income tax returns for the financial years up to and including the financial year ended 30 June 2010;
(a)all rental income received from the Queensland property up to
3 December 2009 is to be divided equally between the parties; and(b)all rental income received from the Queensland property as and from 4 December 2009 shall be deemed to be the sole income of the husband.
In the event that the whole of the payment has not been made by the date pursuant to order 1 herein, then the Property S property shall be forthwith sold (“the first sale”) and the proceeds of the first sale applied as follows:
(a)firstly, to pay all costs, commission and expenses of the first sale;
(b)secondly, to discharge any encumbrance affecting the Property S property;
(c)thirdly, so much of the payment as is then outstanding together with interest thereon at the rate prescribed by Rule 17.03 of the Family Law Rules 2004 adjusted monthly from the date to the husband; and
(d)fourthly, the balance to the wife.
In the event that the husband is unable to discharge or refinance the Queensland mortgage into his sole name pursuant to order 4 herein on or before 3 December 2010, then the Queensland property shall be forthwith sold (“the second sale”) and the proceeds of the second sale shall be applied as follows:
(a)firstly, to pay all costs, commission and expenses of the second sale;
(b)secondly, to discharge the Queensland mortgage and any encumbrance affecting the Queensland property; and
(c)thirdly, the balance then remaining to the husband.
The Husband shall forthwith do all such acts and things and sign all documents as may be required to relinquish and forgo any interest he has in the parties’ joint Westpac Bank life insurance policy (policy number [omitted]) and transfer that insurance policy into the wife’s sole name.
The parties shall forthwith do all such acts and things and sign all documents as may be required to close the joint Westpac Bank bonus saver account in the name of the husband and the wife as trustees for [X], [Y] and [Z] (account number [omitted]).
The wife shall forthwith do all such acts and things and sign all documents as may be required to relinquish and forego any interest she has in the parties’ joint Westpac Bank Term Deposit Account (account number [omitted]) and transfer that Term Deposit Account into the husband’s sole name.
The wife shall retain, to the exclusion of the husband, her interest in her [B] Investment (investor number [omitted]).
The wife shall retain, to the exclusion of the husband, the unencumbered 2004 Toyota Prado motor vehicle (registration number [omitted]) registered in her sole name.
The wife shall do all such acts and things and sign all such documents as may be required to transfer to the husband the unencumbered 1998 Saab 9000 motor vehicle (registration number [omitted]) registered in her sole name.
The husband be responsible for and indemnify the wife in relation to his Westpac Bank MasterCard credit card account and Westpac Bank Personal Loan.
The wife be responsible for and indemnify the husband in relation to her Westpac Bank Altitude Gold Visa Credit Card Account.
Unless otherwise specified in these orders and except for the purpose of enforcing the payment of any money due under these or subsequent orders:
(a)each party be solely entitled to the exclusion of the other to all property (including choses-in-action) in the possession of such party as at the date of these orders;
(b)money standing to the credit of the parties in any bank account is to become the property of the owner named in the bank account;
(c)all insurance policies and/or life insurance policies are to become the sole property of the owner of the policy named therein;
(d)each party retain for their sole use and benefit any superannuation benefits accrued in their sole names;
(e)each party be solely liable for and indemnify the other against any liability encumbering any item of property to which that party is entitled pursuant to these orders; and
(f)any joint tenancy of the parties in any real or personal estate is hereby expressly severed.
IT IS NOTED that publication of this judgment under the pseudonym Rains & Callia is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT MELBOURNE |
MLC 10737 of 2008
| MS RAINS |
Applicant
And
| MR CALLIA |
Respondent
REASONS FOR JUDGMENT
This matter involves a very narrow point, namely, whether the husband in an application under s.79 of the Family Law Act 1975 (“the Act”) and in the circumstances of this case is able to withdraw his consent to a property settlement the terms of which were stated to the court by counsel on 3 December 2010 but which have not yet been pronounced as orders.
The matter came before the court by way of an application in a case, filed by the wife on 10 March 2010, in which the wife sought orders in accordance with the terms of settlement. The essential facts of the case were contained in an affidavit sworn by the wife 10 March 2010 and an affidavit sworn by the husband on 25 March 2010. Neither party sought to cross examine the other. Accordingly, the facts were not in dispute, although there was some commentary upon them. The facts are as follows.
There was an application on foot for parenting orders and a property settlement. The husband filed an application in a case which came on for hearing on 3 December 2009. The parenting aspect of the case was resolved with interim consent orders in the morning. At 3.44 pm, counsel for the parties advised the court that, in the previous five minutes, the property aspect of the matter had been settled on a final basis.
Mr Strum, counsel for the husband, said that the terms of the settlement had not then been reduced to writing but said that it was anticipated that the solicitors would do so “in the next few days”. He said that the broad parameters of the terms of final settlement could be stated to the court and he did so.
Before doing that, however, Mr Strum told the court that the parties asked the court to make interim property orders that day by consent. He provided a minute of the proposed interim orders. The court pronounced those orders by consent on an interim basis. They required the wife, by midday on 14 December 2009, to make the parties’ Saab available for collection by the husband at the matrimonial home. The Saab was to be in a drivable condition with all keys and remotes. In the event that the wife did not make the Saab available for collection as ordered, the husband was to have the use and possession of the parties’ Toyota Prado Grande until further order.
The terms of the final settlement stated by Mr Strum, among other things, provided for:
a)the wife to retain the matrimonial home on the payment of a particular sum to the husband, and “subject to appropriate default mechanisms which will be the subject of discussion between the solicitors”[1]; and
b)the husband to retain an investment property in Queensland; and
c)the husband to retain the Saab and the wife to retain the Toyota, “upon compliance with the delivery of the Saab”[2] to the husband.
[1] Transcript page 7 line 1
[2] Transcript page 7 line 37
A little later, Mr Strum said, in connection with the matrimonial home, “default provisions will be drafted and inserted in the orders”.[3]
[3] Transcript page 7 line 40
Mr Strum and Ms Stoikovska, for the wife, both addressed the court on whether the orders were just and equitable. The court then said:
I will just make a note that I am satisfied that the proposal is just and equitable. When you have reduced the orders to writing, if you would send them through to my chambers.[4]
[4] Transcript page 9 line 43
There was further discussion and Mr Strum then said:
One hopes that the solicitors … will … have minutes to your Honour’s chambers as soon as possible. It is not a complicated settlement to document, your Honour.[5]
[5] Transcript page 10 lines 4 to 8
The court then said:
All right, well, if there is any problem, you both have liberty to apply, and we can bring it on and try and get it sorted out.[6]
[6] Transcript page 10 line 10
It was agreed by the parties that the husband’s solicitors would draft the minute of proposed orders. The wife did not make the Saab available for collection on 14 December 2009. The husband, in accordance with the interim consent orders, took possession of the Toyota Prado Grande on 14 December 2009.
By letter dated 18 December 2009, the solicitors for the husband sent a minute of proposed final orders to the wife’s solicitors. The husband’s minute contained a default clause in relation to the settlement of the matrimonial home and provided for him to retain the Toyota Prado Grande.
The wife’s solicitors by letter dated 22 December 2009 advised the husband’s solicitors that the wife would not sign the minute, on the basis that the husband’s solicitors had unilaterally varied the terms of the agreement.
On 11 January 2010, the wife took the Toyota Prado Grande without telling the husband while he was at a medical appointment with their son. The car had some of his work equipment in it. The husband reported the missing vehicle to the police. The police evidently contacted the wife, as the registered owner, and found that she had the car. The wife then sent a text to the husband saying he could collect the Saab. He did so some days later after some further difficulties with getting the keys and after involving the police.
The husband’s job, which involved contract work, was then terminated without notice. He has continued to be unemployed since then. He claims that, consequently, he does not have the financial capacity to refinance the parties’ Queensland investment property into his sole name. If the investment property is sold, the husband’s accountant said that there will be significant capital gains tax implications.
By letter dated 2 February 2010, the husband’s solicitors advised the wife that the husband would not proceed with the agreement that had been stated to the court due to a change in his financial circumstances. That letter was marked “without prejudice” and there was an objection by the husband’s counsel to reference being made to it. That objection was made some hours after the wife’s counsel indicated that the affidavit to which it was exhibited was to be relied upon. In any event, I have not read it.
By letter dated 24 February 2010, the wife’s solicitors required the husband to sign a minute of proposed orders that was identical to the minute furnished by the husband’s solicitors on 18 December 2010, except that it provided for the wife to keep the Toyota and the husband to keep the Saab. The husband refused to sign the wife’s minute.
On 10 March 2010, the wife filed an application in a case seeking orders that the court make orders in the terms of the settlement that had been stated to the court on 3 December 2010.
On 25 March 2010, the husband obtained an updated valuation of the matrimonial home. He said it disclosed a substantially greater value than was used in the negotiations on 3 December 2009.
The parties filed lengthy written submissions prepared by counsel, namely, Ms Stoikovska for the wife and Mr Nicholson for the husband. The matter came on for hearing on 5 May 2010.
The husband’s counsel did not argue that the terms of settlement announced to the court on 3 December 2010 were unclear or indefinite, notwithstanding that the precise terms of the default mechanism had not then been determined. As it happens, the default mechanism contained in the husband’s minute of 18 December 2009, and adopted in the wife’s minute of 24 February 2010, was fairly standard. It appears that the husband’s counsel did not consider that any uncertainty in connection with the default mechanism was sufficient to vitiate the whole agreement for uncertainty.
Additionally, the husband’s counsel did not argue that the agreement as to final orders reached in court on 3 December 2009 was conditional on the wife making the Saab available for collection on 14 December 2009 in accordance with the interim orders. The husband’s counsel did not argue that any of the parties’ dealings with the Saab and the Toyota Prado had any bearing on the question of whether the parties were bound by the terms of the settlement announced to the court.
Accordingly, I proceed on the basis that the terms of settlement announced to the court on 3 December 2010 were certain and definite, and that they provided for orders in the terms that the wife now seeks.
Although the husband put evidence before the court to the effect that that he had a good reason to renege on the agreement announced to the court, the husband’s principal argument was that the wife’s submissions about the inadequacy of the husband’s reasons for reneging on the agreement were irrelevant. The husband’s counsel argued that the husband did not need to have any reason at all to renege on the agreement. In the submission of counsel for the husband, the husband had an unfettered right to change his mind about the terms of the settlement announced to the court at any time prior to the court signing orders reflecting those terms of settlement.
However, counsel for the husband argued that the change of circumstances was relevant if the court was being asked to make the orders as at the date of the hearing on 5 May 2010. On the other hand, if the wife’s case was that the orders had already been made, the husband’s counsel submitted that the change of circumstances was not relevant. It is not entirely clear, but it seems that the wife was arguing both possibilities.
Counsel for the wife argued that, when the court said that it was satisfied the proposal was just and equitable, that constituted an order, or, in the alternative, a judgment. I do not accept either of those arguments. When the court said that it was satisfied that the proposed orders were just and equitable, the court made a finding. Such a finding was a necessary precursor to an order. It could also be regarded as a reason for judgment. However, it was neither an order nor a judgment.
Counsel for the wife also argued that the husband was estopped from resiling from his agreement embodied in the terms of settlement. In response, counsel for the husband relied on the decision of the Full Court of the Family Court in Woodcock & Woodcock (1997) FLC 92-739 to say that there was no place for the doctrine of estoppel in family law. In that case, the Full Court considered the following facts, which were assumed to be true:
a)the wife’s solicitor sent the husband’s solicitor an authority pursuant to which the corporate trustee of their family trust agreed to pay the wife a certain sum to buy a house;
b)the corporate trustee also appears to have agreed in that document that the sum would be adjusted between husband and wife so that she would receive 57.25% of their assets pursuant to minutes of proposed orders to be lodged in the Family Court;
c)the sum was paid by the corporate trustee;
d)the wife’s solicitors sent minutes of proposed orders to the husband’s solicitors;
e)no agreement was reached between husband and wife and no orders were made; and
f)the wife subsequently commenced proceedings for a division of property and spousal maintenance.
Frederico J stated a case for the Full Court as follows:
1. If there is an agreement between the parties to a marriage, other than an agreement either approved by or registered with or capable of being registered with the Family Court of Australia and other than embodied in consent orders and as a result of which agreement one party has acted to his detriment, can that party rely, by way of defence to an application for property settlement and spousal maintenance, upon the doctrinal principle of estoppel ….
2. Alternatively, should the Family Law Act be treated as a code to which the doctrine of estoppel has no relevance save when specifically imported by the Act.
The Full Court answered those questions as follows:
1. Not so as to oust the jurisdiction of the Court to make orders under ss. 74, 79 or 85A of the Family Law Act.
2. The doctrine of equitable estoppel does not operate to prevent the Court from exercising its jurisdiction to make orders in a particular case under ss 74, 79, and 85A of the Family Law Act 1975.
In the present case, no one is trying to oust the jurisdiction of the court under s.79 of the Act. On the contrary, the wife invoked the jurisdiction of the court under s.79 and is pressing the court to complete its exercise of that jurisdiction.
However, even if estoppel does apply in a s.79 proceeding, estoppel is an equitable remedy. As such, it is discretionary. It is also axiomatic that “he who comes to equity must come with clean hands”. I do not consider that the wife in this case has come to the court with clean hands. She failed to comply with the interim orders that were made on 3 December 2009 and that required her to have the Saab available for collection by the husband on 14 December 2009. Consequently, under the interim orders, the husband was entitled to the possession of the Toyota “until further order”. Without an order, the wife took the Toyota from the husband without notice to him. That conduct caused the husband a good deal of trouble. It was probably not theft, because the Toyota was registered in the wife’s name. However, the wife retaking possession of the Toyota without an order of the court was contrary to the interim orders made on 3 December 2009.
The wife has not offered any explanation for failing to have the Saab available for collection on 14 December 2009 or for retrieving the Toyota from the husband without notice on 11 January 2010. Her own counsel described the conduct of both parties, the wife included, as “antics” and as “immature”. If anything, those descriptions present the wife’s conduct in too rosy a light.
Moreover, if the wife had complied with the interim orders, the settlement may well have proceeded in the usual way, and the present application may well have not eventuated. Consequently, this is not a case where the court would be prepared to exercise any discretion it may have to find that the husband is estopped from resiling from the agreement reached on 3 December 2009.
The husband also relied on Woodland & Todd (2005) FLC 93-217. In that case, the Full Court of the Family Court considered what was described in paragraph 2 of the reasons for decision as “an informal agreement” between a husband and wife that had effected a division of their property in August 1997. Subsequently, the asset pool of the parties substantially increased as a result of legislative changes concerning superannuation. In 2002, the wife sought a property settlement under s.79 of the Act. She was given leave to proceed out of time by the Federal Magistrates Court. The wife contended that the informal agreement was only meant to be a partial property settlement. The husband contended that it was a final property settlement.
The trial judge considered that the correct approach in such cases was to determine whether the settlement was just and equitable at the time of the settlement. His Honour considered that the settlement was just and equitable as at the time it was reached and dismissed the wife’s application. The Full Court held that such an approach was wrong, and that the correct approach was to ascertain what orders would be just and equitable as at the time of the trial.
This case is distinguishable from Woodland. The terms of settlement in the present case were announced to the court by counsel in the context of the resolution of an application made to the court under s.79 of the Act whereas the informal agreement in Woodland was apparently reached without any legal proceedings being instituted at all. Indeed, the ratio of Woodland was stated at paragraph 38 as follows:
Where parties enter into an agreement concerning property, other than an agreement approved under the provisions of the Act or embodied in consent orders, and one party subsequently commences proceedings under s 79 for an alteration of property interests, the Court must determine the application on its merits having regard to the factors set out in s 79(4) as they exist at the time of the hearing of the application under s 79 and according to the law in force at that time and not, as to either of those two matters, at the time the agreement was made. (emphasis added)
This is not a case where one party commenced proceedings under s.79 subsequent to the agreement in question being reached. On the contrary, the settlement in this case was intended to resolve a s.79 application. Moreover, the court approved the agreement in the sense that the court said that it was satisfied that the terms of settlement were just and equitable. That approval was given on the basis of the summary of the salient features of the case described by counsel for the parties. In giving its approval, the court was exercising its jurisdiction under s.79 of the Act. That approval was akin to determining “the application on its merits having regard to the factors set out in s.79(4) as they exist[ed] at the time of the hearing of the application under s.79 and according to the law in force at that time”.
The court asked counsel during argument what “approved” meant in the present context, and, in particular, whether it had any connection with agreements reached under s.86 and s.87 of the Act. Counsel for the husband said the word “approved” had its usual meaning and did not concern the provisions of s.86 and s.87. I am not entirely sure that concession was properly made. However, for present purposes, I consider that Woodland is sufficiently distinguished by the fact that, in the present case, the terms of settlement were announced to the court by counsel in the context of the resolution of a s.79 application.
I also note that Woodland concerned an agreement that was described by the Full Court as an “informal agreement”. That description may have been intended to distinguish the agreement in that case from agreements under s.86 or s.87 of the Act or the current binding financial agreements under Part VIIIA of the Act. However, the Full Court in Woodland did not specifically say so, even though it referred to other cases that did.
In any event, counsel for the husband also relied on the decision of the Full Court of the Family Court in Z and Z [2006] FamCA 920 at [110] where the court said:
The status of an informal agreement, which has not been finalised by the making of consent orders, does not oust the jurisdiction of the Court under s.79….
In ordinary parlance, terms of settlement announced to a court by counsel would not be described as an informal agreement. People who spend every day of their working lives in court rooms may feel as comfortable there as they do in their own lounge rooms. However, court rooms are extraordinarily formal. People who enter court rooms must bow at designated times. They may not move freely about the room, but may only occupy certain areas. Some people must sit at certain times and stand at other times. Some people in court rooms are not permitted to speak audibly. Others may speak aloud but only at designated times and only in accordance with a large body of rules. Some people are forced to speak about matters that may be grossly humiliating for them or contrary to their most fundamental interests. If people fail to comply with the constraints upon what they may or must do or say in court, the power of the State may be brought to bear on them. They may be forcibly removed from the court and jailed for days or weeks or even longer. In this context, it is difficult to see how an agreement announced to the court by counsel could properly be described as anything other than formal, as that word is ordinarily understood.
Moreover, when counsel announced the terms of settlement in court in this case, it was the culmination of a long and expensive process. The parties had clearly spent a good deal of time with their solicitors, giving instructions for letters, applications, responses and affidavits. The parties had sworn on oath as to the truth of various affidavits and financial statements. The parties had no doubt been given a good deal of legal advice by their solicitors in the many months since the initiating application was first filed. The parties were no doubt given legal advice by their counsel during the course of the day on
3 December 2009. These circumstances also militate against the parties’ agreement on that day being described as informal.
In the course of its reasons in Woodcock, the Full Court referred to a good many cases, most of which concern agreements reached by parties before there had been any application to the court at all, much less an application for a division of property. However, there was one Australian case mentioned in Woodcock that concerned terms of settlement announced to a court, namely, Naughton & Naughton (1983) FLC 91-327. That case was not specifically drawn to the court’s attention during argument in the present case.
In any event, in Naughton, the parties were divorced in 1973 by the Supreme Court of New South Wales under the Matrimonial Causes Act 1971. The court order dealt with dissolution, custody, access and maintenance issues. The order included a notation in which the court noted certain terms of settlement which required the husband to connect a sewer and construct a driveway at a particular property which was to be occupied by the wife until her remarriage and then the property was to be sold and the proceeds divided equally.
In 1981, the husband was given leave to proceed out of time to bring an application for alteration of property interests. The wife argued that an order had been made by the Supreme Court which had the effect of depriving the Family Court of jurisdiction, or alternatively, if the Supreme Court had not made an order, the husband was estopped from contending there were no orders because of the terms of settlement.
The Full Court in Naughton held that it was clear that no order had been made altering property interests and held that an agreement between parties (other than one approved under s.87 or embodied in property orders) did not subsequently prevent a party from applying to the court under s.79 of the Act. It is clear also that, in Naughton, there had been no application, in the proceedings in which the terms of settlement had been noted, for a division of property. That is a distinguishing feature.
The Full Court in Woodcock at 83,967 referred to the English decision of Pounds and Pounds (1994) 4 All ER 777 in the following terms:
The most recent reported English decision in this area appears to be Pounds and Pounds (1994) 4 All ER 777. Under the relevant English procedure the parties put a draft consent order before a Registrar prior to a decree nisi becoming absolute. The usual practice was that the Registrar would approve the terms of the order and then upon the decree absolute an order would issue bearing the date of the decree absolute. In Pounds case, by accident the order, although it issued upon decree absolute, bore the date prior to the decree nisi being granted. At issue was whether the order was a nullity or whether it bound the parties. The wife had changed her mind about the agreement which led to the order and no longer sought to be bound by it. A Court of Appeal held that the wife was bound by the order and the clerical error ought to be fixed by the slip rule. In the course of his reasons for judgment Hoffman LJ made several pointed observations about the unsatisfactory nature of the area. His Lordship said at 792:
There is more than one lesson to be learned from this case. The first, as Waite LJ has pointed out, is the need for care in drawing up orders. The second concerns the grounds upon which the Court may refuse, as the Judge did in this case, to give effect to an agreement between the parties which has not yet been incorporated in a valid consent order. In view of our conclusion that there was a valid consent order, we have not had to express a view on this aspect of the matter and I shall not do so. But it does seem to me that the law is in an unsatisfactory state. There are in theory various possible answers to the problem. One might be that an agreement between the parties, at least where each has independent legal advice, is binding upon them subject only to the normal contractual remedies based on fraud, misrepresentation, undue influence etc. At present, the policy of the law as expressed in Hyman v Hyman [1929] AC 601, [1929] All ER 245 is against such a solution. The court retains its supervisory role and only its order gives finality. Another answer might be that when parties are negotiating with a view to an agreement which will be embodied in a consent order, everything should be treated as without prejudice negotiation until the order is actually made. In the latter case, the parties would know that until the court has given its imprimatur, nothing which they had negotiated was legally binding or even admissible. If one of them changed his or her mind, they would have either to go back to the negotiating table or litigate the matter de novo. This may be tiresome, as in the case of a house purchase where one party changes his or her mind before contracts are exchanged. But the parties would at least know where they stood. The result of the decision of this Court in Edgar v Edgar [1980] 3 All ER 887, [1980] 1 WLR 1410 and the cases which have followed it is that we have, as it seems to me, the worst of both worlds. The agreement may be held to be binding, but whether it will be can be determined only after litigation and may involve, as in this case, examining the quality of the advice which was given to the party who wishes to resile. It is then understandably a matter for surprise and resentment on the part of the other party that one should be able to repudiate an agreement on account of the inadequacy of one's own legal advisers, over whom the other party had no control and of whose advice he had no knowledge. The appellant's counsel, who has considerable experience in these matters, told us that he reckoned that in Northampton an agreement has an 80 percent chance of being upheld, but that attitudes varied from district judge to district judge. In our attempt to achieve finely ground justice by attributing weight but not too much weight to the agreement of the parties, we have created uncertainty and, in this case and no doubt others, added to the cost and pain of litigation.
Hoffman LJ, with respect, made some very insightful comments on the issue now under consideration, but did not actually decide it. His Honour’s decision would not be binding upon me in any event.
However, a material case that does seem to be binding upon me is the High Court’s unanimous decision in Harvey v Phillips (1956) 95 CLR 235 (Dixon CJ, McTiernan, Williams, Webb and Fullagar JJ). Harvey v Phillips came to light in the present proceeding during the course of the hearing. The court asked counsel whether there was any authority more directly on point than those that had been mentioned, even from outside the family law jurisdiction. The matter was stood down to enable research to be done.
When the matter returned to court, counsel for the wife announced that she had found Harvey v Phillips and had given a copy to the husband’s counsel. The court told the parties that the court had found that case and a number of others, copies of which were given to them. Those cases included Berriman v Pipeline Engineering Pty Ltd (1989) 52 SASR 324 and Rex v Municipal Council of the Shire of Marong (1903) 29 VLR 355. The matter was stood down to enable counsel to consider those cases. When the matter resumed, counsel for the husband assured the court that he had had sufficient time to consider them.
In Harvey v Phillips, a plaintiff in a personal injury action very reluctantly agreed to a settlement during a trial in the Supreme Court of New South Wales. At pages 240 and 241 of the report, the High Court described what happened then. Counsel for both parties took their seats at the bar table. Senior counsel on both sides signed a paper headed “Terms of Settlement”. It said, “By consent: 1. Jury to be discharged. 2 Verdict for Plaintiff of £4,000. 3. Terms not to be disclosed.” The High Court, at 241, then said:
The judge took his seat in court, the paper was handed up to him and his Honour congratulated the parties on reaching a settlement of the action and said that he considered that it was a satisfactory settlement for all concerned. The court then adjourned. … During this proceeding the plaintiff was seated in the body of the court with her daughter. She is, however, deaf, and in all probability she did not herself hear what took place.
… by next morning she was firm in disowning the compromise.
From the foregoing facts it seems clear enough that in spite of her determination not to settle the action she was temporarily overborne by the extreme pressure exerted upon her by her counsel supported by her solicitor and perhaps others … .
Before judgment was signed or entered, the plaintiff applied by motion to the Full Court of the Supreme Court of New South Wales to set aside the judgment. The Full Court dismissed the motion. The plaintiff then appealed to the High Court.
The High Court noted the line of authority which permits to be set aside a settlement entered into by counsel beyond the scope of his or her authority. However, the High Court considered that when counsel for the plaintiff in Harvey v Phillips signed the terms of settlement, he did so with authority. That being so, the High Court considered that it did not have any discretion “to set aside the compromise or to intercept the formal entry of judgment”: page 242.
At page 244, the High Court also noted that:
The issue is one which must be considered from the defendants’ point of view as well as from [the plaintiff’s]. When the defendants accepted the compromise … they believed that thereby they were putting an end to the litigation. … it can be nothing to the point to say afterwards to the defendants that it was the result of her real desires or her judgment being overborne by her advisers ….
The fact that there was a written document containing the terms of settlement in Harvey v Phillips, and an oral statement of the terms of settlement in the present case, does not constitute a material distinction. As discussed above, the terms of the settlement in this case were treated by counsel in the present proceeding as clear and unconditional.
Harvey v Phillips could be regarded as a hard case, in the sense that the plaintiff was a woman with a serious physical disability, who had been subjected to extreme pressure by her counsel and others, and who made known her change of mind within 24 hours of the settlement being reached. Nevertheless, the High Court was firm that it had no discretion to set aside the compromise or intercept the entry of judgement.
There is no mention in the High Court’s reasons of the trial judge actually pronouncing the orders. The critical facts were the conduct of the parties through their counsel in conveying to the court the settlement that they had reached, and the court accepting that settlement by congratulating the parties on having reached it.
In Berriman v Pipeline Engineering Pty Ltd (1989) 52 SASR 324, O’Loughlin J apparently considered that it was not even necessary for the court to indicate its approval of the proposed settlement. At 328, his Honour noted that:
In Harvey v Phillips the plaintiff, under substantial pressure from her legal advisers and friends and, in effect, contrary to her wishes, finally capitulated and agreed to a compromise, fully understanding the terms of the compromise. After counsel had announced the terms of settlement, the plaintiff then changed her mind, claiming that she had never given her consent to settle the matter. In those circumstances, the High Court concluded that the plaintiff must be considered to be bound by the settlement pursuant to her consent; it would have been wholly inappropriate to permit her to change her mind.
The Full Court of the Supreme Court of Victoria in Rex v Municipal Council of the Shire of Marong, Ex parte Filcock (1903) 29 VLR 355, expressed or implied both the view that the court had to assent to the proposal for it to be binding and the view that the court did not have to indicate its approval. In that case, counsel informed the court of a settlement. The judge recorded it as a judgment by consent but the order had not been drawn up and perfected in the ordinary way before a party filed a notice of motion seeking to prevent the entry of the order. At first instance, A’Beckett J acceded to the motion. On appeal, the Full Court of the Supreme Court of Victoria overturned that decision. Madden CJ said at 364:
If after a party has consented to a judgment he finds that he would have been better off if he had not consented, for all that he will be held to it.
Holroyd J said at 366 that:
The rule with respect to setting aside orders which have been made by consent, or by way of compromise, is very shortly laid down in the head-note to the case of Davis v Davis [13 Ch D 861] which reads:
A compromise agreed to by parties in Court, after discussion of the case, with the concurrence of their legal advisers, and with the assent of the Court, cannot afterwards be varied on the mere allegation that the consent was given inadvertently without evidence of mistake or misapprehension.
Hood J, being the third member of the court, said that he concurred but did not say who he concurred with. Whether the court needs to actually indicate its assent to the proposed consent orders may be a moot point, but the authorities clearly show that the court does not need to actually pronounce the proposed orders for the parties to be bound by the terms of settlement announced to the court.
In the present case, the court did indicate its assent by stating that it was satisfied that the proposed orders were just and equitable. It was then anticipated that it would be a simple matter for the parties to file appropriate minutes and for the orders to be made in the usual way.
Harvey v Phillips has been applied in the Family Court of Australia. In Anderson v Anderson (1982) FLC 91-251, the husband sought an extension of time in which to appeal against consent orders made in a property proceeding. The husband claimed that he had been overborne by his counsel and suffered other stresses which caused him to consent to the orders. Lindenmayer J refused the extension of time and said at 77,387:
The legal representative is the agent of the party, and the party is bound by the acts of his agent so long as they are within the agent’s actual or ostensible authority (Harvey v Phillips …).
In the Full Court of the Family Court’s decision of In the Marriage of Lonard (1976) 11 ALR 618, Evatt CJ, Asche and Pawley JJ noted at 627 that:
There is authority (not referred to in argument) for the proposition that the Court will not set aside a consent judgment where a settlement has been reached by counsel in accordance with the client’s authority (Harvey v Phillips …).
In Lonard, a custody trial began. Before the father’s evidence was heard, the judge stated his preliminary view and invited the parties to reach an agreement. They did so, and orders were made accordingly. The father then appealed saying that he was denied natural justice because the trial judge had prejudged the case. The Full Court said that it did not condone the trial judge’s approach, but said the appeal must fail, because the father had given unqualified consent to the orders.
Anderson and Lonard are clearly different from the present case because in those two cases, orders in accordance with the consent had actually been pronounced and signed. However, in both cases, the Family Court seems to have accepted that Harvey v Phillips, at least in general terms, enunciated a principle that applies in family law proceedings.
In the case of In the Marriage of M I and A Tynan (1992) 16 Fam LR 621, Moss J in the Family Court noted at 625 that:
In England, subject to a question of to what extent different principles obtain in the Family Division of the High Court, the general principle is that the legal force and effect of consent orders derives from the contract between the parties leading to or evidenced by, or incorporated in, the consent order — see Huddersfield Banking Co Ltd v Lister [1895] 2 Ch 273; Purcell v FC Trigell Ltd [1971] 1 QB 358, per Buckley LJ pp 366-367; see also the discussion of the cases in the White Practice (1991) Vol 2 4606-4622.
The same general principle applies in this country (see Harvey v Phillips (1956) 96 CLR 235) where the issue was whether a consent order based on a compromise agreement could be set aside. The court approved the following statement from Huddersfield (supra):
... to my mind, the only question is whether the agreement upon which the consent order was based can be invalidated or not. Of course, if that agreement cannot be invalidated, the consent order is good.
Moss J considered the various English and Australian family law authorities in great detail, particularly Robinson v Willis (1982) 8 Fam LR 131 and In the Marriage of Langford and Coleman (1993) 16 Fam LR 228, in relation to whether the binding nature of consent orders depends on the consent or the order. His Honour concluded that in the circumstances of Tynan, the distinction made no difference. However, his Honour said at 631, in reaching that conclusion that:
Finally, it is necessary to mention a recent decision of the Full Court of this court which referred to the earlier decision of the Full Court in Robinson (supra) as being authority for the proposition that the relevant distinction in respect of consent orders, held to be applicable in the Family Division of the English High Court, in the cases of De Lasala (supra) and Thwaite (supra), applies to consent orders made under the Family Law Act of this country. For the reasons I have attempted to explain above, in my opinion Robinson is no authority for such a proposition. The recent Full Court decision to which I refer, and which purported to follow what Robinson was said to have held, is that of In the Marriage of Langford and Coleman (1993) 16 Fam LR 228 ; [1993] FLC 92-346. That decision referred only to De Lasala and Thwaite and made no reference to the decision in Minton, nor to the Australian decisions distinguished in that case, to which I have referred above. No consideration appears to have been given to the law as stated by the High Court in Harvey v Phillips, and whether in the light of that binding decision it was open to the Full Court to take the course it purported to.
That is, Moss J appears to have been of the view that Harvey v Phillips is binding on all Australian courts, even in the family law context. For the reasons stated above, none of the family law cases cited by counsel for the husband, and none of the others that are mentioned above, result in the High Court’s decision in Harvey v Phillips not being binding upon this court in the circumstances of this case.
Counsel for the husband then argued that the court could not be satisfied that the terms of settlement announced to the court on
3 December 2009 were just and equitable, given that circumstances had changed since 3 December 2009. Counsel for the husband referred in his written submissions to the High Court’s decision in Harris v Caladine (1991) FLC 92-217 to say that, “A Judicial Officer is not simply a rubber stamp”. The husband’s counsel also said that in Harris v Caladine:
a)final property orders had been made by consent by a Deputy Registrar;
b)the Deputy Registrar did not have power to make such orders and they were accordingly set aside; and
c)there was no question that the wife was estopped from resiling from her consent.
Actually, the High Court held that the Deputy Registrar did have power to make the consent orders, provided that they were reviewable de novo by a judge of a court. The orders made by the Deputy Registrar were not set aside, at least at the time when the matter was before the High Court. What happened is that the wife filed an application for review of the Deputy Registrar’s orders and purported to withdraw her consent to those orders. Maxwell J, hearing the review application, held that the order made by the Deputy Registrar did not constitute an exercise of judicial power because it merely embodied the terms of a contract between the parties: (1991) FLC 92-217 at 78,479 to 78,480. Consequently, her Honour held that the action of the Deputy Registrar was not reviewable.
The wife appealed to the Full Court of the Family Court, which held, according to the summaries at (1991) FLC 92-217 at 78,480 and 78,485, that:
a)the power to make the consent orders was validly delegated to the Deputy Registrar, and Maxwell J did have power to review the Deputy Registrar’s orders;
b)the application for review did not set aside the consent;
c)on review, the court should reconsider whether, on the material before the Deputy Registrar and any other material admitted by leave, the Deputy Registrar should have made the order that he did;
d)on review, the court was confined to considering whether the parties did in fact consent to the orders and whether the terms agreed upon were in a form appropriate to the type of orders sought and were enforceable.
The wife then appealed to the High Court, which held that, if the review is by way of a rehearing de novo, the delegation to the Deputy Registrar is valid. The High Court considered that, on review, the court was entitled to look at the entire matter afresh. The High Court remitted the application to review the Registrar’s order to the Family Court for rehearing. At (1991) FLC 92-217 at 78,487, Dawson J said that the Registrar’s order continued in force and effect unless and until it was set aside by the court on review. It is not clear from the reports what happened on the rehearing of the review application.
Harris v Caladine obviously concerned a very different situation to the present. The essential issue in that case concerned the judicial power of the Commonwealth. The crux of the decision was that a Registrar could exercise such power pursuant to a delegation only if the Registrar’s decision could be reviewed de novo by a judge appointed under Chapter III of the Constitution. Federal Magistrates are appointed under Chapter III of the Constitution. Decisions of this court are not reviewable de novo, though they are subject to appeal.
Harris v Caladine also confirmed that the court can only make an order under s.79 of the Act if it is satisfied that, in all the circumstances, it is just and equitable to do so: (1991) FLC 92-217 at 78,485. However, that question may not be entirely straightforward. In Woodcock, the Full Court noted that Gibbs CJ in Mallet v Mallet (1984) FLC 91-507 had said that:
[Parliament] has conferred on the Court a very wide discretion to make such order as it thinks fit when it is satisfied that it is just and equitable that an order should be made.
The Full Court in Woodcock went on to note that, in Garrett and Garrett (1984) FLC 91-539, the Full Court of the Family Court said at 75,262:
This distinction between the dual phases in s 79 hearings needs to be borne in mind. Often it is said, in an elliptical way, that the section empowers the Court to make orders that are just and equitable. But to so say is to short-circuit the process of judicial determination required by s 79(1) and (2). As an example one could take the case of a husband who, on the criteria set out in s 79(4) would have a good claim to a substantial portion of the parties' property. He might for reasons quite outside the criteria, such as remorse for his conduct, wish to consent to an order for all or most of the property to vest in his wife. Such an order would not be one a judge would make properly taking the criteria into account. Prima facie it might appear unjust and inequitable to so order. But it is an order the Court can make if it thinks fit; and in all of the circumstances, including circumstances outside the criteria, the Court could be satisfied that the making of such an order would be just and equitable; perhaps even commendable.
The very wide discretion is, as we consider Gibbs CJ to have observed, contained in the phrase "such order as it thinks fit".
That is, in working out what order is just and equitable, the court is not confined to considering matters such as contributions and future needs. In the present case, the husband said that the court could not be satisfied that the terms agreed on 3 December 2009 were still just and equitable because:
a)
there was no current statement of financial circumstances filed on behalf of the wife, the most recent having been filed on
11 December 2008;
b)the current valuation of the matrimonial home was not agreed; and
c)the husband lost his job in January 2010 and will have to sell the Queensland investment property, which will result in a significant capital gains tax liability.
Counsel for the wife did not seek to cross examine the husband on his affidavit filed on 25 March 2010. However, she submitted :
a)the lack of a current financial statement did not stop the husband agreeing to orders in December 2009 and there was no reason to suppose her financial statement of December 2008 significantly misrepresented her current financial circumstances;
b)the husband did not provide an updated valuation of the Queensland investment property which could well have increased in value by much the same amount as the matrimonial home;
c)the husband had been unemployed for eight months in 2009 and managed to retain the Queensland investment property then so it was not necessarily the case that the husband would have to sell it now;
d)the husband had not explained what efforts he had made to find other employment and what the result of those efforts had been; and
e)the alleged capital gains tax liability was not quantified so as to enable the court to determine whether it was significant.
There is considerable force in those submissions. The husband’s claim about the wife’s financial statement being out of date is no more than assertion. Her last financial statement could well still be reasonably accurate. The husband’s failure to provide an updated valuation of the Queensland property is significant. It is conceivable that the Queensland property has increased by much the same value as the matrimonial home. It was for the husband to provide such a valuation as he is the one asserting the change of circumstances. The husband has failed to provide any evidence, by way of an analysis of his financial position, to show that he would have to sell the Queensland property. Even assuming he did have to sell the Queensland property, there is no evidence of how much any capital gains tax liability would be, and no proper evidence that the husband would, in the end, be worse off.
However, the fact that the husband is now unemployed, and has been unemployed since early January 2010, is in a different category. Becoming and remaining unemployed is quintessentially a change in financial circumstances.
The husband did not give evidence in this proceeding about the amount he now earns. However, he said he was on Centrelink benefits. I understand he is on Newstart allowance which, according to a Centrelink website, would be about $250 per week. I consider that, in the absence of evidence from the husband about his actual, current earnings, it is appropriate to take judicial notice of the Centrelink website. Although the husband may get a job tomorrow, as things stand, he is on Centrelink benefits.
The husband did not give evidence in this proceeding about the amount he previously earned. However, according to the husband’s financial statement sworn on 25 November 2009, he was then earning wages of $500 per week. As at 25 November 2009, the husband and the wife were also each receiving $175 per week in rent from the tenant of the Queensland property. Additionally, the husband was receiving $315 per week in family tax benefits, supplement and rent assistance.[7]
[7] Husband’s financial statement sworn on 25 November 2009.
If the settlement had gone ahead, and if the husband had kept his job, it appears, in the absence of specific evidence from the husband, that he would have had a weekly income of $1,165, being $500 from wages, plus $350 being the entirety of the rent from the Queensland property, plus $315 family tax benefit, supplement and rent assistance. As things stand, if the settlement goes ahead, he will have a weekly income of $915, being $250 Newstart allowance, $350 rent, and $315 family tax benefit, supplement and rent assistance. By my calculation, his income has dropped by about $250 per week or about 21.5 per cent. That is a substantial drop in income.
However, income is only one aspect of the matters to be taken into account under s75(2)(b) of the Act. That paragraph requires the court to consider:
the income, property and financial resources of each of the parties and the physical and mental capacity of each of them for appropriate gainful employment.
The husband did not suggest that his capacity for gainful employment has changed. As discussed above, there is no reliable evidence that the husband’s capacity to retain the Queensland property has changed. There was no suggestion that his financial resources have changed.
Moreover, there are a whole myriad of other factors to be taken into account under the other paragraphs of s.75(2) of the Act, not to mention s.79 of the Act. Additionally, the High Court made it very clear in Mallet v Mallet that the Parliament has given the court “a very wide discretion” under s.79 of the Act. Bearing in mind that very wide discretion, and bearing in mind that it was for the husband to demonstrate that the settlement reached on 3 December 2009 is no longer just and equitable, I do not consider that the drop in the husband’s income results in the terms of settlement being out of the range that is just and equitable.
In all the circumstances of this case, I consider that Harvey v Phillips applies to bind the husband to the terms of settlement that he reached on 3 December 2009. If the orders were made with effect from
3 December 2009, the wife would already be in default, as she has
60 days from the date of the orders to pay the husband the specified sum for the matrimonial home.
In all the circumstances, I consider that the proper course is to pronounce the orders today in terms of the settlement that was reached on 3 December 2009. The court was satisfied on that date that the terms of settlement were just and equitable. If it is necessary, I am also satisfied as at today that a settlement in the terms agreed on
3 December 2009 is within the range that is just and equitable, in view of the summary that was given to the court on 3 December 2009, and the update, such as it is, that has been provided more recently.
The husband did not dispute that the orders sought by the wife in the application in a case filed on 10 March 2010 accurately reflect the terms of the agreement reached on 3 December 2009. Accordingly, there will be orders in the terms of the application in a case filed on 10 March 2010.
I certify that the preceding eighty-nine (89) paragraphs are a true copy of the reasons for judgment of Riley FM
Deputy Associate: Rosanne Hopkins
Date: 25 May 2010
2
6
2