Re Stehbens, Brian Edwin v Ex parte Stehbens, Margaret Ann

[1982] FCA 67

Re: BRIAN EDWIN STEHBENS
Ex parte: MARGARET ANN STEHBENS
SQ No. 146 of 1982
Bankruptcy

COURT

IN THE FEDERAL COURT OF AUSTRALIA

QUEENSLAND DISTRICT REGISTRY
GENERAL DIVISION
BANKRUPTCY DISTRICT OF THE SOUTHERN DISTRICT OF THE STATE OF QUEENSLAND
Fitzgerald J.

CATCHWORDS

BANKRUPTCY - Bankruptcy notice founded on debt under Maintenance Agreement approved by the Family Court of Australia - whether such Agreement a "final judgment or final order".

Bankruptcy Act 1966, s.40(1)(g), s.40(3)(b)

Family Law Act 1975, s.87, s.88

Re Masterton (1978) 37 F.L.R. 75 applied

Ellinas v. Ellinas (1979) 1 N.S.W.L.R. 431 referred to

In the Marriage of Carew (1979) 37 F.L.R. 452 referred to

FAMILY LAW - jurisdiction of Federal Court in "matrimonial cause" - whether sequestration petition founded on debt under Maintenance Agreement is a "Matrimonial cause".

Family Law Act 1975, s.8, s.87, s.105

Ellinas v. Ellinas (1979) 1 N.S.W.L.R. 431 considered

In the Marriage of Carew (1979) 37 F.L.R. 452 referred to

Re Maddox; ex parte The Debtor (1976) 36 F.L.R. 392 referred to

HEARING

BRISBANE

#DATE 6:5:1982

ORDER

The sequestration petition is dismissed.

JUDGE1

The parties to these proceedings were formerly husband and wife. They were divorced in 1979.

On 25 July 1977 the debtor, the husband, consented to an order by the Family Court of Australia in the divorce proceedings that he pay for the maintenance of each of the 3 children of the marriage an amount of $12.50 per week. Various payments were made but arrears were owing prior to and at 8 February 1980.

On that day, the Family Court of Australia made an order "that the maintenance agreement between the parties being an agreement dated the 8th February, 1980 executed by the parties and filed herein be approved by this Court pursuant to the provisions of s.87 of the Family Law Act 1975." The agreement, which recited that orders as to, inter alia, the maintenance of the children were independent of the agreement, provided for the husband to pay to the wife on or before 31st August 1980 the sum of $1500 in full satisfaction of all her claims for any maintenance for herself or any alteration of property interest for her benefit. Clause 2 of the agreement provided as follows:

"The Husband and Wife acknowledge that the said sum of ONE THOUSAND FIVE HUNDRED DOLLARS ($1,500.00) is to be paid by the Husband and the Wife from the proceeds of the Husband's entitlements due to him under the Defence Force Retirement and Death Benefit Act consequential on his service in the Royal Australian Air Force . . . . "

The husband deposited the money he received under the Defence Force Retirement and Death Benefit Act, the sum of $6862.02, to the credit of his savings account with the Bank of New South Wales, Ipswich West City Branch, on 28 October 1980. He withdrew some of the money but left in the bank account more than sufficient to pay to the wife the sum of $1500.00 which had been agreed. However, he did not make the payment.

On 26 November 1980, on the application of the Acting Clerk of the Magistrates Court at Brisbane, a Stipendiary Magistrate constituting that Court ordered that a Garnishment Order issue forthwith to the bank requiring the deduction from the husband's account of a sum of $1500 for payment to the Clerk of the Court, Brisbane in respect of maintenance arrears payable to the children under the Family Court Order of 25 July 1977. It is unnecessary for me to comment upon the making of that order by the Magistrates Court. The bank complied with the order and on 4 December 1980 wrote to the husband requesting him to forward his passbook to enable the bank to record the withdrawal. He did so and the withdrawal is recorded as at 8 December 1980. On 9 December 1980, he withdrew the balance of the account, $777.26.

On 26 March 1981, an application by the husband for a declaration that he had complied with the terms of the agreement approved by the Family Court of Australia on 8 February 1980 was dismissed by that Court but, so far as I can see, no reasons were given.

On 25 June 1981, the wife made application to the Family Court of Australia for an order pursuant to Regulation 136 of the Family Law Regulations that the estate of the husband be sequestrated but the application was on 14 June 1982 adjourned at the instance of the wife when her solicitor formed the view that the order for sequestration which might be obtained would not benefit her.

On 16 February 1982 a bankruptcy notice claiming that the sum of $1500 was due by the husband to the wife "under a final order obtained by the judgment creditor against you in the Family Court of Australia (held at Brisbane) on the 8th day of February 1980 being an order the execution of which has not been stayed" was served on the husband. A petition was presented on 9 March 1982 founded upon the husband's failure to comply with that Bankruptcy Notice. The question which now falls for decision is whether or not this Court may make a sequestration order in respect of the estate of the husband in these proceedings which were initiated by that petition.

Unfortunately, the husband appeared without the benefit of legal representation but Miss O'Reilly, who appeared for the wife, drew my attention in her careful argument to matters both for and against the arguments supporting the making of the order.

Although full details did not emerge as to what the husband has done with the balance of the money he received under the Defence Force Retirement and Death Benefit Act apart from the $1500 which was garnished, there seems little doubt but that the money has now been expended. However, I have not found it necessary to consider whether, in such circumstances, the wife's rights against the husband found only in damages, or would do so apart from the provisions of the Family Law Act. I propose to assume, in favour of the wife, that the effect of the agreement approved by the Family Court is that the husband remains obliged to pay her the sum of $1500, notwithstanding that he no longer has the fund from which, under clause 2 of the agreement, the payment was to be made.

Section 87 of the Family Law Act empowers the making of such an agreement by the parties and its approval by the Family Court and provides, in effect, that the rights of the parties with respect to the matters dealt with in the agreement are thereafter as provided for in the agreement. The agreement is a "maintenance agreement" as defined in s.4(1) of that Act. The Family Court's approval of the agreement may only be revoked if fraud or undue influence is established or if the parties agree. However, an approved agreement ceases to be in force from the death of a party to the agreement unless the agreement otherwise provides (s.87(5)).

Where the Family Court has approved such an agreement, the agreement is by s.87(7) of the Family Law Act deemed to be registered in that Court, and by s.88 an agreement that has been registered or is deemed to have been registered in a Court may be enforced as if it were an order of the Court in which it is registered.

The enforcement of decrees made under the Family Law Act is dealt with in Part XIII of that Act. By s.4(1) "decree" includes an order. The effect of s.105, for present purposes, is that, subject to Part XIII and the Regulations, decrees may be enforced by any Court having jurisdiction under the Family Law Act in which the decree is registered. Section 106 empowers regulations to make provision for and in relation to the enforcement of decrees. Such regulations have been made and reference was made in argument to Regulations 134 to 136.

Section 8(1) (a) of the Family Law Act provides:

"8(1) After the commencement of this Act -

(a) proceedings by way of matrimonial cause shall not be instituted except under this Act; . . . "

By s.4(1) "matrimonial cause" means -

"(a) proceedings between the parties to a marriage for a decree of -

(i) dissolution of marriage; . . . . . .

(c) proceedings between the parties to a marriage with respect to -

(i) the maintenance of one of the parties to the marriage; . . .

(ca) proceedings between the parties to a marriage with respect to the property of the parties to the marriage or of either of them, being proceedings in relation to concurrent, pending, or completed proceedings for principal relief between those parties; . . .

(d) proceedings between the parties to a marriage for approval by a Court of a maintenance agreement or for the revocation of such approval or for the registration of a maintenance agreement; . . .

(f) any other proceedings (including proceedings with respect to the enforcement of a decree . . . ) in relation to concurrent, pending or completed proceedings of a kind referred to any of paragraphs (a) - (e) . . . ;"

Section 4(1) also defines "proceedings" and "court". Unless the contrary intention appears, " 'proceedings' means a proceeding in a court whether between parties or not, and includes any cross proceeding or incidental proceeding in the course of or in connection with a proceeding;" and "'court', in relation to any proceeding, means the court exercising jurisdiction in those proceedings by virtue of this Act".

In Ellinas v. Ellinas (1979) 1 N.S.W.L.R. 431, the Court of Appeal Division of the Supreme Court of New South Wales held that that Court had jurisdiction to entertain an action in which a former wife sought judgment for an amount which her former husband had agreed to pay by a maintenance agreement which had been approved by the Family Court of Australia under s.87 of the Family Law Act in proceedings for dissolution of marriage between the parties. The Court did not state that proceedings to enforce such an agreement were not also within the jurisdiction of the Family Court. Further, it was not questioned that the Supreme Court of New South Wales has no jurisdiction in respect of matrimonial causes as defined in s.4(1) of the Family Law Act. However, it was held that proceedings to enforce an agreement approved by the Family Court under s.87 of the Family Law Act were not within that definition. See also McLean v. McLean (1979) 1 N.S.W.L.R. 620.

The decision of the New South Wales Court of Appeal in Ellinas v. Ellinas (supra) was expressly disapproved in In the Marriage of Carew (1979) 37 F.L.R. 452 in which the Full Court of the Family Court held that the Family Court had the power to enforce a maintenance agreement approved pursuant to s.87 of the Family Law Act, holding that such proceedings were a "matrimonial cause" as defined.

In both Courts it was accepted that the critical paragraph in the definition of "matrimonial cause" in s.4(1) of the Family Law Act is paragraph (f) and that the two questions for determination are: (1) whether proceedings for the enforcement of a maintenance agreement which has been approved by the Family Court under s.87 of the Family Law Act are proceedings with respect to the enforcement of a decree and, (2) whether they are proceedings in relation to completed proceedings. The New South Wales Court of Appeal answered both questions in the negative and the Full Court of the Family Court answered both in the affirmative.

In Re Maddox; ex parte The Debtor (1976) 36 F.L.R. 392, this Court dismissed an application to set aside a bankruptcy notice in respect of a judgment for costs in divorce proceedings. The judgment was a judgment of the Supreme Court of New South Wales in its Family Law Division, not a judgment of the Family Court of Australia, but nothing turns on that fact for present purposes. It was held that the issue of the bankruptcy notice pursuant to the Bankruptcy Act 1966 (Cwlth) is not affected by s.8(1) (a) of the Family Law Act on the narrow ground that the issue of a bankruptcy notice is a ministerial or administrative act and not part of the judicial process.

No authority to date, of which I am aware, decides whether a sequestration order under the Bankruptcy Act may be made by this Court upon a petition founded on a bankruptcy notice based upon a judgment or order of the Family Court, or upon an agreement approved by that Court under s.87 of the Family Law Act. Only the latter question arises in these proceedings, and it can, I think, be decided upon a narrow ground. I have not found it necessary to decide whether proceedings under the Bankruptcy Act initiated by such a petition for a sequestration order are proceedings with respect to "the enforcement of a decree" or are otherwise a "matrimonial cause" within the meaning of the Family Law Act. Nor have I found it necessary to decide whether if such proceedings under the Bankruptcy Act are a "matrimonial cause" for the purposes of the Family Law Act, it follows that this Court has no jurisdiction to entertain the petition. It would no doubt be necessary to seek to construe the Bankruptcy Act and the Family Law Act harmoniously, and special consideration might have to be given to the real meaning of s.8(1)(a) of the Family Law Act, having regard to the definitions in s.4(1) of that Act of "court" and "proceeding". The absence of jurisdiction in the Supreme Courts of the States to deal with matrimonial causes generally arises, as I understand it, not only from s.8(1)(a) of the Family Law Act but also from Part V of that Act, and a proclamation thereunder of 27 May 1976. I mention, without comment, Milland v. Milland (1981) F.L.C. 91-065 in which the Full Family Court held that the Family Court had jurisdiction under s.85 of the Family Law Act to set aside a deed of arrangement under Part X of the Bankruptcy Act, notwithstanding this Court's powers with respect to such matters under the Bankruptcy Act. Since, as I have said, I am of opinion that this matter can be decided upon a narrow ground, I propose to deal only with that ground.

The relevant act of bankruptcy for present purposes is that prescribed by s.40(1)(g) of the Bankruptcy Act, and is dependent upon a creditor having obtained against a debtor a final judgment or final order the execution of which has not been stayed. Section 40(3)(b) provides that, for the purposes of s.40(1)(g) -

"(b) A judgment or order that is enforceable as, or in the same manner as, a final judgment obtained in an action shall be deemed to be a final judgment so obtained and the proceedings in which, or in consequence of which, the judgment or order was obtained shall be deemed to be the action in which it was obtained;"

Section 40(3) is presumably intended to meet some of the difficulties which have from time to time arisen in respect of s.40(1)(g) and its analogues: see e.g. Re Pannowitz; ex parte Wilson (1975) 6 A.L.R. 287 and Re Doenitz; ex parte S.G.I.O. (Qld) (1978) 45 F.L.R. 198, in which some divergence of opinion is apparent. I do not propose to dwell upon these matters as I do not think it is necessary to do so for present purposes.

In my opinion, when s.88 of the Family Law Act speaks of enforcement of a maintenance agreement that has been registered or is deemed to have been registered, it does no more than empower enforcement of the agreement by a court exercising jurisdiction under that Act. It does not speak of the enforcement of the agreement as an order of the Family Court by any other Court or under any other Act.

I respectfully agree with the statement of Connolly J. in Re Masterton (1978) 37 F.L.R. 75, 76, 77; a maintenance agreement may, by virtue of s.88 of the Family Law Act, be able to be enforced as if it were an order of the Family Court in which it has been registered or is deemed to have been registered, but there is nothing which converts it or deems it to be a judgment or order of such a court. There is a passage to precisely the same effect in Ellinas v. Ellinas (supra) at page 433F per Hutley JA, with whom Hope and Reynolds JJA agreed I also respectfully agree with Hutley JA (see page 434) that no question arises of the enforcement of the approval of the agreement, as distinct from the enforcement of the agreement approved. Irrespective of whether the approval is a "decree" within the meaning of the Family Law Act, s.88 of that Act itself makes it clear that if anything is to be enforced it is the agreement. In In the Marriage of Carew (supra) the Full Court of the Family Court said at p.455:

"Unless there is some inconsistency with any other provision or principle of the Act (the Family Law Act), the words in par. (f) of the definition of matrimonial cause - 'proceedings with respect to the enforcement of a decree' ought to be read as including the enforcement of a maintenance agreement. No such inconsistency is apparent."

The Family Court did not elaborate upon the reasons why, in its view, the phrase "proceedings with respect to the enforcement of a decree" was to be construed as encompassing proceedings with respect to the enforcement of an agreement which is not a decree although enforceable as if it were. However, it is unnecessary for me in these proceedings to express a concluded opinion as to whether or not the Family Court was correct with respect to that matter or otherwise in its decision in In the Marriage of Carew (supra). Its reasoning with respect to the second question which arose in that case and in Ellinas v. Ellinas (supra) seems to me to be more formidable, although its implicit assumption that, unless proceedings to enforce a maintenance agreement approved under s.87 of the Family Law Act are a "matrimonial cause" the Family Court has no jurisdiction, seems to me possibly incorrect in view of ss. 31(1)(d) and 88 of the Family Law Act.

However such matters may be, I have concluded that a maintenance agreement approved by the Family Court is not a final judgment or final order which will support a bankruptcy notice under the Bankruptcy Act. Non-compliance with the bankruptcy notice based on such an agreement is not an act of bankruptcy. A petition founded solely on such a bankruptcy notice cannot result in a sequestration order.

The petition is dismissed.