Sommerville & Sommerville - [1999] FamCA 958

FAMILY LAW ACT 1975

IN THE FAMILY COURT OF AUSTRALIA

ML 7628 OF 1991

AT MELBOURNE (HAMILTON)

IN THE MARRIAGE OF

Julie Anne SOMMERVILLE
Applicant/ Wife

and

Leslie John SOMMERVILLE
Respondent/ Husband

JUDGMENT OF THE COURT

Coram :  The Hon Chief Justice Nicholson
Date of Hearing :              9 July 1999
Date of Judgment :           4 August 1999

Appearances :

Mr Sweeney of Counsel instructed by Fogarty & Bacchetti Solicitors, 198 Timor Street, Warrnambool, 3280 appeared for the Applicant Wife

Mr O’Shannassy of Counsel instructed by Harwood Andrews Lawyers, 70 Gheringhap Street, Geelong, 3220 appeared for the Respondent Husband

Family Law - Property - Separation - Consent Orders implemented - Reconciliation - Change in financial circumstances - Separation - Application by Wife for consent orders to be set aside pursuant to Family Law Act Section 79A (1A) - Application by Wife for consent orders to be set aside pursuant to Section 79A(1)(a) - Oral application by Wife for review of Registrar's decision granting consent orders pursuant to Section 37A(10) - Application by Husband for dismissal of Wife's applications.

The Applicant Husband and Respondent Wife were married on 27^th March 1983. The parties first separated on 10^th May 1991. The Husband made a Form 7 application seeking property orders on 26^th July 1991. Despite several attempts at reconciliation, final orders for property settlement were made by consent by Registrar Edney on 17^th December 1991. Both parties were represented by Solicitors and had some additional financial advice at the time of settlement negotiations. The material before the Registrar contained scant information as to the true financial position of the parties. The parties agreed that the general intention of the consent orders was to effect an equal division of the matrimonial property. The Wife received the former matrimonial home at Manuka Drive, together with a motor car, furniture, chattels and some superannuation. The Wife also received the business 'Guys Only', subject to an existing overdraft. The Wife was required to pay to the Husband the sum of $45,000. The Husband retained land at Raglan Parade, subject to a mortgage. The orders were effected and the matrimonial property distributed between the parties in accordance with the terms of the order. On December 1991 the Husband moved out of the former matrimonial home and purchased a property at Donald Court.

By June 1992 the parties had reconciled and remained together until final separation in October 1996. Following their reconciliation, the parties agreed to sell their respective properties and purchased a vacant land lot in Allansford in their joint names, funded in part by a joint mortgage. The Husband sold Donald Court and moved back into the former matrimonial home in October 1992. In September 1994, the former matrimonial home at Manuka Drive was sold and the parties lived in rented accommodation before moving into a property built on the Allansford lot in February 1995. The proceeds of sale from Donald Court were applied to reducing the bank bill obtained to assist in the purchase of Allansford. The proceeds of sale of the former matrimonial home were applied entirely to discharging the mortgage thereon and reducing further outstanding debts.

From 1992 onwards, 'Guys Only' experienced a significant downturn in business. In June 1993 the Wife transferred her interest in the Allansford property to the Husband to avoid it being vulnerable to creditors. In June 1994, the Husband transferred the Allansford property into the proprietorship of LJS Nominees Pty Ltd, a trust set up on legal advice to insulate the property from creditors and avoid the effects of the distribution of capital profits in a company controlled by the Husband - Rustic Close Pty Ltd.

In March 1994 the Husband sold Raglan Parade through his company Rustic Close Pty Ltd. The proceeds of sale were lent to LJS Nominees Pty Ltd and applied to the construction of the Allansford property; intended as a matrimonial home. Both parties claimed to have undertaken considerable work developing the property and gardens.

In October 1995, 'Guys Only' was shut down and the Wife voluntarily declared herself bankrupt with debts of $55,831.

At the time of final separation in October 1996, the only significant asset of the parties was the Allansford property, valued at approximately $200,000.

Before the Court, the Wife claimed that the effect of the reconciliation between the parties in 1992 and subsequent events gave rise to an inference that there was implied consent by the parties that the orders of December 1991 should be discharged or varied within the meaning of Section 79A (1A) of the Family Law Act. In the alternative, she argued that the orders of Registrar Edney should be set aside on the basis that there was insufficient evidence before the Registrar to enable him to determine whether the consent orders were just and equitable and that there had thus been a miscarriage of justice within the meaning of Section 79A (1)(a) of the Act. In the further alternative, the Wife argued that events since the making of the order rendered it unjust that the same should stand. Finally it was argued by the Wife that despite the passage of time, the Court should review the order of the Registrar pursuant to the powers conferred by Section 37A(10) of the Act.

The Husband claimed that the consent orders of December 1991 finally determined all claims in respect of matrimonial property as between the parties and that the Court had no jurisdiction to re-open the same. In the event the Court did not take this view, the Husband argued that the Wife's contribution since reconciliation should be regarded as short marriage contribution of no more than 15% and that there were no Section 75(2) factors favouring further adjustment to the Wife. The Husband claimed that the Wife should not be permitted to pursue argument that the Court set aside the orders of the Registrar, on the ground of insufficient evidence, or alternately review the Registrar's decision, because the same were not appropriately particularised in her application.

Held:

It was quite apparent that the intention of the legislation was to bring financial proceedings between parties to an end with the making of an order under Section 79 and the circumstances set out in Section 79A are of a limited nature and intended to cover particular circumstances.

In determining whether or not there had been a miscarriage of justice associated with the making of the 1991 order, pursuant to Section 79A(1)(a), it was well established that it was necessary to show that events before or at the time the same were made by the Court gave rise to such a miscarriage. The Wife's contention that events subsequent to the grant of orders gave rise to a miscarriage of justice could not succeed.

Section 79A(1)(a) confers a discretion to make a fresh order and the fact that there has been a miscarriage of justice established does not mean a Court must vary or discharge an order, Prowse and Prowse (1995) FLC 92-557. Whilst the Registrar may have failed to approach the grant of the 1991 orders upon the required basis, most particularly with reference to Sections 79(2) and (4) of the Act, and whilst such error may have constituted a miscarriage of justice, the Wife had not advanced any satisfactory ground for the exercise of discretion to set the orders aside. Both parties were represented by competent lawyers in 1991 and there was no suggestion of pressure or undue influence. Both parties obtained precisely what they had sought by the 1991 orders.

There were no circumstances in the present case to warrant an extension of time to review the decision of Registrar Edney's either on application pursuant to Section 37A(9) of the Act, or of the Court's own motion, in the exercise of its supervisory functions, pursuant to Section 37A(10).

The principles to be applied in considering the Wife's application pursuant to Section 79A(1A) are set out in the Full Court decision of McCabe and McCabe (1995) FLC 92-634. Of further assistance are the decisions of Fogarty J in Drew and Drew (1985) FLC 91-601 and the Full Court in Banhidy and Banhidy (1983) FLC 91-302. When applied to the current case, there were strong grounds for finding that the parties, by their conduct, consented to the setting aside of the original orders.

Since the original order had been executed and none of the subject property remained in the possession of the parties in its then form, it was appropriate to make a further order for property settlement. Having regard to the terms of the original order and the disposition of the property thereunder, the parties should share equally the net assets, as determined by the Court.

Reportable

INTRODUCTION

In this matter, the parties commenced living together in a defacto relationship in 1979 and married on the 27^th March 1983. The wife was born on 31^st December 1954 and is now aged 44 and the husband was born on the 18^th September 1946 and is now aged 52. The wife has three children by a previous marriage who are now adult, but were aged 7, 5 and 4 respectively at the commencement of the relationship with the husband and these children resided with the wife throughout. She received $10 per week for child maintenance from her first husband until each of the children became 18, but the children were in fact treated as children of her marriage to the husband and were financially supported by both the husband and wife.

The husband has two children of a former marriage, now adult, who did not reside with the parties throughout their relationship but with the husband’s former wife.

The parties first separated on the 10^th May 1991 and despite several attempts at reconciliation., orders for property settlement were made by consent by Registrar Edney on the 17^th December 1991. These orders were effected in the sense that the property of the subject matter of the orders was distributed between the parties in accordance with the terms of the orders.

The matter comes before the Court again, because as hereafter appears, the parties reconciled, on one view, within weeks of the property order being made and certainly within seven months of it having been made. They then resumed their relationship and did not separate again until October 1996.

A decree nisi of dissolution of marriage was granted on 5 February 1998 which became absolute on 6 March 1998

THE PARTIES' CLAIMS

The case for the wife in substance is, firstly, that the effect of the reconciliation and the events associated with it and subsequent to it, lead to the inference that there was an implied consent by the parties that the orders of December 1991 should be discharged or varied within the meaning of s79A(1A) of the Family Law Act ("the Act").

Secondly and in the alternative, it was argued that the order made by Registrar Edney should be set aside upon the basis that there was insufficient material before the Registrar to enable him to determine whether the order was a just and equitable order at the time that it was made, and that there had therefore been a miscarriage of justice within the meaning of s79A(1)(a) of the Act.

In the further alternative, it was argued that even if it could not be established that the order constituted a miscarriage of justice at the time, that the events that have occurred since the making the order have rendered it unjust that it should stand.

Finally, it was put that despite the passage of time, the Court should review the order of the registrar pursuant to the power contained in s37A(10) which provides :

“the Court may, on application under sub-section 9 or of its own motion, review an exercise of power by a registrar pursuant to a delegation under this section and may make such order or orders as it considers appropriate with respect to which the power was exercised.”

10. The husband’s case put quite simply was that the orders of December 1991 finally determined the relationships between the parties and that there was no jurisdiction to re-open them. Mr O’Shannassy for the husband objected to the attempt by Mr Sweeney for the wife to rely upon the alleged insufficiency of material before the Registrar or his suggestion that the Court review the decision because he said that the application contained insufficient material to enable the wife to rely upon these grounds. In the event, I took the view that the application was couched in wide enough terms to cover these matters, albeit with a significant lack of detail but that in any event there was no injustice to the husband in permitting these grounds to be argued.

BACKGROUND

THE POSITION OF THE PARTIES AT THE TIME OF THE COMMENCEMENT OF THE RELATIONSHIP.

11. The wife had no significant assets at that time. The wife says that the husband had about $10,000 and two motor cars which she said were worth a further $10,000. The husband says that he had cash of $15,000 and that his motor cars were worth an additional $30,000 and also said that he paid $2,000 worth of debts of the wife.

12. I do not find it necessary to make any finding about this issue. The relationship has been a long one and I do not think that anything turns upon it. It is significant in this regard that at the time of the making of the order in December 1991, the parties agreed upon an equal division of assets.

13. In November 1979, the husband bought Dino’s Pizza Parlour in Warrnambool in his own name. The wife asserted that he did so with fully borrowed funds, whereas the husband says that he put in $16,500 towards the purchase price of $31,025 inclusive of stock. He said that he borrowed $10,000 from the bank and a further $2,000 from his brother. Again for the same reasons I do not think that this is an issue that I must determine.

14. The husband in his affidavit said that he “offered the wife a job” and said that there was a flat above the shop where they could live and they “started tentatively living in the unit”. The husband said that there was no financial contribution from the wife and it was never intended that she should have any interest in the business.

15. The wife on the other hand says that it was very much a joint exercise and that she not infrequently worked seven days a week and sometimes 14 – 16 hours per day without wages. She said that prior to the commencement of the business, she had lived with the husband in rented accommodation and had worked for wages at a Warrnambool hotel.

16. According to the husband, the wife received an income of $215 per week. However, it is of interest to note that the books showing this payment also show two other persons who were in receipt of wages, a Mr and Mrs Rendell. It was common ground that Mrs Rendell did not work in the business and that the wages paid to her were in fact paid to Mr Rendell. The wife said that she never received any regular payment of wages but did receive monies for housekeeping.

17. The husband also attempted to minimise the wife’s contribution at Dino’s, asserting that she only worked there every second Friday and Sunday as it became more successful. In a sense these matters are purely of historical interest, but having regard to subsequent developments, I should indicate that I find that the wife’s account of her work in the business and her remuneration is more probable than that of the husband.

18. In June 1982, the husband bought the freehold of Dino’s for $90,000. In his affidavit he said, “at this time we were just commencing our relationship”, and he again asserted that there was no involvement by the wife or commitment by him that she should have any interest in the business. It is obvious that by this time the relationship between the parties had been in place for some years and indeed it was not very long after this that they got married. I do not accept the husband’s evidence in this regard.

19. In 1982, the husband bought 10 Livingstone Court, Warrnambool in his own name. He said that he borrowed the majority of the money and obtained the balance from the pizza business. The wife says that together they spent many hours establishing the house, garden and garage. It is quite clear that the parties intended this house as a matrimonial home. I find that the fact that the husband placed the house in his own name is reflective of a pattern that he developed whereby he placed property in his own name and sought to negate any contribution made by the wife. This was further borne out by the events that followed the sale of Livingstone Court in February 1985 when he said that he purchased the next matrimonial home at 15 Manuka Drive for $125,000 having previously sold Livingstone Court in the same year for $79,000.

20. The parties continued to work in the pizza business until 1987 when it, together with the freehold was sold for $325,000. They then set up a menswear business called Guys Only on a site which had been a Telecom business office site. $12,000 was paid to Telecom and the parties entered into a lease of premises in Warrnambool. Apparently they received a considerable amount of help from the husband’s brother in connection with the setting up of this business and spent approximately $155,000 prior to the opening. Also at this time, it appears that the husband purchased land with certain sheds erected on it at Raglan Parade, Warrnambool.

21. As I have mentioned, the first separation between the parties occurred in May 1991 and despite several attempts at reconciliation, led to orders for a property settlement being made by Registrar Edney on 17^th December 1991. Until this time the husband continued to live in the property at Manuka Drive, but as part of the settlement, was obliged to relinquish it to the wife.

22. In relation to the property proceedings, the parties were both represented by solicitors and apparently had some additional financial advice. The application was made by the husband by a Form 7 on the 26^th July 1991 returnable on the 21^st October 1991 and a Form 17 setting out the husband’s then financial circumstances was filed on the 30^th July 1991.

23. A document headed “Draft Orders” appears on the file and records that on 24^th October 1991, the matter was adjourned by Joske J to the next sittings at Warrnambool. Mr Carroll of Maddens, solicitors, is recorded as representing the husband, and Mr Ezzy of Tait's solicitors as representing the wife. Tait's filed an Address for Service on behalf of the wife on 13^th December 1991 and the next Order that appears on the file is the Consent Order for a property settlement made by Registrar Edney on 17 December 1991.

THE EFFECT OF THE ORDERS

The Wife

24. The wife received the business Guys Only, subject to an existing overdraft of $80,246.95. She also received the former matrimonial home at Manuka Drive together with a motor car, furniture and chattels and retained some superannuation. She was also required to pay the sum of $45,000 to the husband, which it appears that she obtained by further increasing the borrowing’s associated with Guys Only.

The Husband

25. The husband retained the land at Raglan Parade which was apparently then valued by the parties at $610,000 and which was subject to a mortgage of $400,000. He also received a cash payment of $45,000 from the wife.

26. The consent orders were signed by the parties and their solicitors and it appears that on the 20^th December 1991 the wife paid the husband $45,000 and at or about that time, the relevant transfers of property took place. The husband then purchased the property at 5 Donald Court Warrnambool on 21^st December 1991 and left the former matrimonial home at Manuka Drive and moved into the Donald Court property in either December 1991 or January 1992.

27. It was common ground that the general intention of the parties was to effect an equal division of matrimonial property. A feature of the material that was before the Registrar was the singular lack of information that it contained as to the true financial position of the parties at the time. There was no evidence as to the value of Guys Only. The profit and loss account of the LJ Sommerville Family Trust, which appeared to relate to Guys Only, shows no more than it had made a net profit to 30^th June 1990 of $22,483.87 after paying wages and director’s salaries. There was no material before the Court as to the situation of the business as at 30^th June 1991. However, the husband asserted in his application filed in 1991 that “a recent review of the books of the business has disclosed that the expenditure of the parties from the business exceeds the income being derived from the same substantially.”

28. Despite these expressed doubts by the husband as to the position of the business, the evidence before me was to the effect that both parties wished to obtain the business as part of the settlement and that this had been one of the difficulties in relation to the negotiations between them. Accounts in evidence before me indicated that by 30^th June 1992 the business was showing a small loss and by 30^th June 1993 was showing a loss exceeding $18,000.

RECONCILIATION

29. The wife says unequivocally that she and the husband reconciled in February 1992 and that for a period thereafter she either stayed regularly with the husband at Donald Court or he with her at Manuka Drive before they resumed living together at Manuka Drive in October 1992.

30. The husband says that it was not until June 1992 that they attempted reconciliation. However this may be, it is common ground that by June 1992 they had agreed upon a reconciliation and it appears that they then agreed to sell her property at Manuka Drive and his at Donald Court, because on 22^nd June 1992 she gave instructions to agents to sell both properties and the husband does not dispute that he gave her authority to do so.

31. Further, in August 1992 the parties purchased vacant land at Lot 4 Princess Highway Allansford for $215,000. This land was purchased in joint names and funded by a bank bill and a joint mortgage. The Donald Court property was sold for $135,000 and the husband said that he used the proceeds to reduce the bank bill to $125,000. He moved back into Manuka Drive on a permanent basis in October 1992.

32. The wife’s evidence was that the agreement between the parties in June 1992 was that the proceeds of sale of both Donald Court and Manuka Drive were to be used to fund the Allansford purchase. Manuka Drive was encumbered by the Guys Only debt, which was about $125,000 at the time of the agreement for the property settlement and was probably substantially greater by that time. However the husband claimed that the business, if sold, would have discharged that debt, leaving the proceeds of Manuka Drive available to put towards the Allansford property.

33. The husband says that the agreement was for an equal contribution by the parties. The wife says that this was not the case and that the intention was to sell the relevant properties for whatever they brought and apply the proceeds to the purchase of a new matrimonial home and make a fresh start with their relationship upon an equal basis.

34. The parties experienced difficulties in selling Manuka Drive and continued to live in it until it was sold in September 1994 for $178,000. However, by that time the debts of Guys Only were such that the proceeds of sale were entirely used for the payment of mortgage and outstanding debts. The parties moved out of Manuka Drive in September 1994 and they lived in rented accommodation until February 1995 when they moved into the Allansford home which had been constructed on the land previously purchased by them.

35. The wife says, and I accept, that she paid the rent and outgoings at the rented premises from the funds of Guys Only.

36. Also in June 1992 the wife attempted to sell the business of Guys Only for $125,000, which was less than the amount owing in respect of that business.

37. The wife said that the attempt to sell the business of Guys Only was unsuccessful and that there was significant downturn in its business, which had begun to manifest itself in about 1992 and that it deteriorated thereafter. She says that she discussed her concerns with the husband on numerous occasions and that he himself expressed concerns about the possibility of losing the Allansford land as a result of the business downturn of Guys Only. According to the wife, the husband said, that he had received advice from his solicitors Maddens, that the Allansford land should be registered in his name alone in order to avoid it being vulnerable to creditors. The wife says that as a result of being informed of this by the husband she agreed to sign a transfer to him of her share in the Allansford land in about March 1993. That transfer was registered in June 1993.

38. In oral evidence the husband denied this version. He said that he had no knowledge of the wife’s difficulties in relation to Guys Only until much later in 1994.

39. It is clear enough that he received legal advice in June 1994 from Maddens that he should, by way of asset protection and for other reasons, declare that he held the Allansford property on trust, for a property trust to be set up and that he should enter into transactions designed to insulate that property from, inter alia, creditors of the wife or orders of this Court. Another object of the exercise was apparently to avoid the effects of the distribution of capital profits in a company controlled by him, Rustic Close Pty Ltd that I will mention subsequently in dealing with the parties' present assets.

40. The solicitor who advised the husband in 1994, Mr Robert Cole of the firm of Maddens, gave oral evidence in these proceedings. In her affidavit, the wife had said that the husband had told her that it was on Mr Cole’s advice that she should sign over her interest in Allansford to the husband. However, it appears that Mr Cole did not start with Maddens until April 1994, the husband’s previous transactions having been handled through Maddens by another partner, Mr Waters. Mr Cole had however practiced previously in the Warrnambool area with another firm of solicitors.

41. It appears that the transfer of the Allansford land from the husband and wife to the husband alone was handled by Mr Waters during the period March to June 1993. Mr Waters’ file is singularly uninformative as to the circumstances in which he received his instructions from the husband. It is clear enough however, that they came from the husband alone. The husband signed the relevant statutory declaration for the benefit of the Stamps Office, in which he said that the transfer was “in consideration of natural love and affection”.

42. In fact if the husband’s version is correct, the wife held the property in trust for him, but no mention was made of this in the statutory declaration. Mr Cole agreed with a suggestion from Counsel for the husband that this was probably because the Stamps Office was less likely to query the transaction if the declaration was expressed in the terms that it was.

43. Mr Waters was not called, although a belated attempt was made to do so by Mr O’Shannassy after I had permitted an overnight adjournment to enable Counsel to prepare final addresses. The application was in a somewhat vague form because Mr O’Shannassy indicated that Mr Waters was somewhere in Tasmania and that if he could be found it would be necessary to take his evidence either via telephone or video link.

44. Having regard to the stage of the trial and the circumstances in which the application was made, and its nature, I was not prepared to delay the proceedings to enable Mr Waters to be called. It must have been quite obvious to those advising the husband that his evidence might well be material and it is surprising that details were not obtained at an earlier stage, particularly since the file had been subpoenaed.

45. The husband’s version of the transaction in relation to the transfer to him of the Allansford land was that because of the failure to sell Manuka Drive, he and the wife then agreed to sell the Allansford property. He said that an early sale did not eventuate however, because the wife begged him not proceed with the sale. In his affidavit, he said that “a subsequent agreement was made for her name to be deleted as she had made no contribution to it and because all the borrowings and monetary contribution was by him alone”. This was in fact incorrect as the wife had a joint liability under the mortgage over the property, which remained undischarged despite the transfer.

46. Also in his Order 30 Affidavit, the husband swore that “about this time” he was in receipt of legal advice from his accountants and from his solicitors Madden and Co generally in relation to his present and future financial affairs. As a result he said that he accepted the transfer into his sole name and subsequently he transferred the property into the proprietorship of LJS Nominees Pty Ltd, the Trustee of the trust set up by the solicitors pursuant to the advice given in June 1994.

47. While the reference to the transfer to the trust was obviously a reference to the transactions following the June 1994 advice from Maddens, this passage of his affidavit suggests that the husband also received advice from Maddens in relation to the 1993 transaction and also received advice from his accountants and I consider that this supports the wife’s version as to what occurred in relation to the 1993 transfer.

LOT 4 PRINCES HIGHWAY ALLANSFORD

48. As has been mentioned, this land was transferred by the wife from joint names to that of the husband in 1993 and then by the husband to LJ S Nominees Pty Ltd in late 1994.

49. On 25^th March 1994, it appears that the husband, through his company Rustic Close Pty Ltd, sold the Raglan Parade land that he had received in the 1991 property settlement and obtained a net $150,000 from the sale (although his interest had been valued at $210,000 for the purposes of the property settlement). It appears that there was a difficulty with the company distributing these monies to the husband as it had undistributed profits of $135,000 that would have been immediately taxable in the hands of the husband if paid to him.

50. Accordingly, the scheme suggested by Mr Close in his June 1994 advice and later put into effect by the husband, involved those monies being held by Rustic Close Pty Ltd but lent to LJS Nominees Pty Ltd. A house was built on this land using those monies and monies borrowed by the Trustee, which apparently amounted to about $130,000. There is no doubt that this house was intended for and was used by the parties as a matrimonial home. Both parties assert that they carried out significant physical work on the development on the property and its gardens. Each claimed that they had done the bulk of the work. In addition, the wife said that she made a substantial financial contribution amounting to at least $22,000 to the garden and furnishings and that the source of these funds came from Guys Only. Her evidence was that from the time of reconciliation she paid the bulk if not all of living expenses, first from Guys Only and later from her earnings at Gourmet Galley as hereafter appears.

GOURMET GALLEY

51. This business was opened in mid-July 1995 and both parties worked in it. The husband said that the business was in his name, was all his, and that the wife merely worked for a wage. The wife says that it was a joint venture. Since its subsequent sale at the end of 1996 did not involve any significant profit, little turns on the ownership of this business from this point of view. The wife is shown in the books of the business as receiving earnings of $380.00 per week until she ceased working in the business in about July or August 1996. She says that she applied these monies to the household living expenses for herself and the husband.

THE WIFE’S BANKRUPTCY

52. Guys Only continued to deteriorate. In October 1995 it was shut down and the wife voluntarily declared herself bankrupt with debts of $55,831.

SEPARATION

53. The parties separated in October 1996 when the wife left the matrimonial home. It appears that she subsequently returned and removed furniture, fittings, and plants from the garden. The husband asserted that there was significant damage to the garden as a result of this but the damage was in no way quantified and the wife denied its extent.

CURRENT CIRCUMSTANCES

ASSETS AND LIABILITIES

54. In the course of the hearing, the following aide-memoire was handed up to me by Mr. Sweeney for the wife:

"Assets / Liabilities

Allansford (net of ANZ Borrowings) $200,000
Husband's Motor Vehicle
value $28,000
debt $ 9,000
net $ 19,000
Wife's Motor Vehicle
value $ 9,000
debt $11,000
net nil
Prepaid Legal Fees

(a) husband $ 13,500
(b) wife nil

Savings

(a)       wife  $    250
(b)       husband   nil
_______
$232,750
  Liabilities
      (a)  Credit Card of Husband  $ 5,250
      (b)  Debt of Husband for Legals  $ 4,500
  $223,000**

**Doesn't include Furniture and Superannuation"

I shall make findings as to the pool and its contents later in this judgment.

55. The only significant asset of the parties is the Allansford property, which has an agreed valued net of borrowings of $200,000. Although this asset is not in the husband’s name as a result of the trust structure that had been developed, Mr O’Shannassy conceded that if the husband was liable to satisfy order for a property settlement that it was appropriate to treat this property as belonging to the husband. There were proceedings before me seeking to set aside the various transactions that caused this property to go out of the husband’s name, but in view of the concession made by Mr O’Shannassy, I do not think that it is necessary for me to deal with this matter further at this stage.

56. There does however remain the issue of the husband’s liability for taxation if there is a distribution of the monies held by Rustic Close Pty Ltd in this property. It appears that apart from those monies, the husband has an individual equity in the property of approximately $85,000, which would be available to him to go towards any order that might be made in these proceedings. So far as the $135,000 is concerned, it could be distributed over a number of years and thus attract less taxation depending upon the husband’s income, and the security could be changed without effecting the loan. An accountant called on behalf of the husband, Mr Buzio, suggested that a change in security might attract unfavourable attention from the Taxation Commissioner, but it was far from clear why this should be so.

57. On any view, the tax liability is not a present liability of the husband and may never become a liability payable by him.

58. The husband has a motor car with the net value of $19,000 and a superannuation entitlement valued at about $18,000. The husband has prepaid legal fees of $13,500 and has a credit card debt of $5,250. The wife on the other hand has no significant assets. She has the use of a motor car purchased in the name of her present partner Mr Rendell, which has a negative equity. She has a liability to pay legal fees but has not prepaid any. She also has small superannuation entitlement valued at $2,967.

EMPLOYMENT AND EARNING CAPACITY

59. The husband is currently employed as a truck driver from which he says that he earns an average of $681 per week. However, it would appear that he is capable of earning approximately $1,000 per week by working overtime and did so for the first six months of 1997 following the closure of Gourmet Galley. He also receives $150 per week for rental for the use of part of the Allansford property for agricultural purposes. He has received rental for this property since the date of its purchase and it appears that until comparatively recently, the rent payable was $200 per week, before it was reduced to the present figure.

60. The wife is employed as a part time chef at a local cafe for about ten hours per week and also teaches cooking on a sessional basis at the Warrnambool TAFE. While her precise earnings vary and she does not have full time employment on a secure basis, I would expect, given her past history, that she would have an earning capacity of approximately $450 per week.

EVENTS SINCE SEPARATION

61. The husband has continued to work as a truck driver supporting himself and living in the former matrimonial home. He continues to receive the rental payments of $150 per week in relation to it. He sold the business of Gourmet Galley and ceased working in it at the end of 1996.

62. The wife lives with a Mr Rendell in premises owned by him with whom she shares expenses and is employed as described above.

63. She has lived with Mr Rendell for two years and while she would like it to be a permanent relationship she says that she is not sure that he has the same intention. However, Mr Rendell was not called, and in the circumstances I am unable to reach any conclusion as to the permanence of this relationship beyond noting the time that it has already lasted.

THE ARGUMENTS OF COUNSEL

SUBMISSIONS FOR THE HUSBAND

64. Mr O’Shannassy submitted that I should accept that the husband was a frank and open witness who had always made it clear that when he entered into transactions that he was buying the property in his name. He pointed to the fact that there had been no express consent by either party to merge the property in a final sense. He said that Guys Only was run by both parties up to the first separation but that since that time the wife had had the entire responsibility for it.

65. He said that the husband’s only subsequent contribution to Guys Only was to assist to partition the shop over one weekend in 1993, when it was decided to reduce the area rented and that he had made a payment over a short period for someone to be employed in Guys Only while the wife worked in Gourmet Galley.

66. Mr O’Shannassy suggested that the fact that final orders had been made in 1991 actually assisted the reconciliation and he pointed out that had the matter been reviewed at a reasonable time after the orders had been made, they would have been regarded as quite acceptable.

67. He pointed that the general policy of the Act of encouraging the finality of litigation and he pointed to the great detail associated with the making of the December 1991 orders, which included a restraint of trade clause so far as the husband was concerned and the assignment of leaseholds. He said that Guys Only was a business venture thereafter pursued by the wife and that if it had continued to prosper there could be no injustice at all in the current arrangements.

68. He said that the husband put all of his resources into the provision of a home for both of them. He said there were difficulties about conducting a review, which is a hearing de novo, where the Court would not be fettered in its discretion, but would be required to look at the whole of the relationship from the outset in 1979. He said that while Parliament intended that the Court should closely supervise Registrar’s decisions, there was nothing about this decision that would have attracted critical attention at the time that it was made.

69. He pointed out that at the time the order was made in December 1991, it was not long after the decision of the High Court in the case of Harris v Caladine (1991) FLC 92-217. That decision was in fact handed down by the High Court of Australia on the 17^th April 1991. He said that by the time that his order was made the full effects of the decision had not been appreciated and this no doubt accounted for some of the unsatisfactory nature of the material before the Registrar.

70. He said that for the Court to now make a new order would have the effect of varying or discharging the existing order and that any such new order would in effect turn the first order into an interim order. He relied very heavily upon the fact that the Court has jurisdiction to make only one order in property proceedings and in this regard he referred to the decision of the High Court of Australia in Mullane and Mullane [1983] 8 Fam LR 777. He also referred to the comments of Nygh J in Ramsey and Ramsey No. 2 (1983) FLC 91-323 at 78,205 where his Honour said:

“If the order (of 6 November 1972) is to be regarded as equivalent to a property order under sec. 79 and cannot be set aside it follows that “the power of the Family Court to make an order under s79 is … exhausted” per Mason ACJ, Wilson, Brennan, Deane and Dawson JJ in Mullane v. Mullane (1983) FLC 91-303 at 78,068, and see also Branchflower and Branchflower (1980) FLC 90-857”

71. He pointed out that in that case, Nygh J in reliance on the decision of the High Court in Mullane and Mullane, clearly operated upon the principle that the Court only has jurisdiction to make one order for a property settlement. Mr O’Shannassy said that if contrary to this submission, I was to find in favour of the wife’s argument, it was not possible to ignore the effect of the orders that had already been made. He said that while the orders were fair at the time, the wife’s assets had now been depreciated to zero. He pointed to the husband’s allegation that she took too much out of the business and that he had the belief that if he had run the business he would have done so successfully.

72. He said that the husband had clearly conserved the assets that he had received and that his direct financial contribution in relation to those assets should be regarded as overwhelming. He said that if one was to accept the wife’s assertion that she had spent $22,000 in relation to the Allansford property and that she had worked hard in relation to it, her contribution should be assessed at approximately 9%. He said that her contribution should be regarded as a short marriage contribution, dating from the date of the orders and he drew a parallel with the decision of this Court in Lee Steere and Lee Steere (1985) FLC 91-626 where, in the case of a four year marriage involving two children, a 20% contribution was arrived at. He said that the most that could be allotted to the wife in the present case was 15%.

73. He submitted that there were no s75(2) factors which favour a further adjustment to the wife. He said that she was partly supported by Mr Rendell and lived in a pleasant home with the use of a car. He said that while the husband earned more as a result of working long hours, if one examined his real base rate it was $420 per week and he said that the wife could earn in excess $500 per week if she wished to do so.

74. He said that the husband should be given credit for having prepaid legal fees. He conceded that liability for unpaid fees was not counted and that where a party has used up assets of the parties for the purpose of paying legal fees then that is properly added back. He submitted however, that I should find that the legal fees were paid from earnings since separation and an inheritance and therefore that they should be brought into account in favour of the husband.

75. He conceded that there was an element of uncertainty in relation to when the tax debt would be payable, but said that it should be taken into account upon the basis that some tax will be payable and he pointed out that the quantum of any order made would affect the issue of tax so that the greater amount that was ordered to be paid by the husband, the more likely it was that tax would be payable.

76. Mr O’Shannassy also raised an issue arising out of the decision of Chisholm J in Jordan and Jordan (1997) FLC 92-736, and also arising out of the decision of the Full Court in Elias and Elias (1977) FLC 90-267. The basis of this submission was the wife’s evidence that she had not been completely frank with the Official Receiver in saying that she had no interest in the property at Allansford.

77. Mr O’Shannassy submitted that if I was to accept this evidence then this would amount to a breach of the principle in Elias and Elias to the effect that in some circumstances, a party cannot be expected to believed if he or she puts a proposition inconsistent with a representation made to revenue or other authorities. However, he said that I should in fact accept the statement made by the wife to the Official Receiver that she did have no interest in the Allansford property and that if I were to do so then the application of this principle would not be relevant.

78. Generally, he invited me to disbelieve the wife as to her explanation for the transfer of the property out of joint names in 1993 and suggested that her evidence was false in this regard.

SUBMISSIONS FOR THE WIFE

79. Mr Sweeney, for the wife, said that it was necessary to look at the relationship over a period of 17 years, but he agreed that it was not possible to ignore the effect of the orders of 1991.

80. He said that the parties had very little at the start of the relationship and that they acquired assets, which they divided equally in December 1991. He invited me to look at the fact that almost every reference in the Order 30 Affidavit by the husband was to the effect that all businesses and other activities were in his name. He said that what I should find was that this did not represent the real situation between the parties and that on each occasion the reality was that they were engaged in a joint venture. He said that the husband masked the wife’s real contribution by paying her what was in effect housekeeping and showing it as a wage.

81. He pointed to what he said were significant deficiencies in the Orders of December 1991 and pointed to the fact that although the minutes were filed after the decision in Harris v Caladine, there was no Form 17 statement of financial circumstances filed by the wife and that the husband’s document had no resemblance to the true position of the parties.

82. He conceded that the parties had divided the assets equally as they saw them in 1991 and referred to the modest profit of Guys Only for the financial year ending 30^th June 1990. He said that the reality was that the parties only separated for a very short time following those Orders and, in effect, they were put on hold by the reconciliation.

83. He said that the date of June 1992 was important. He said that what had happened on that date was that the parties had decided to make a fresh start with a joint intention to benefit each other with their existing properties.

84. He said that I should look at the reconciliation that occurred at a gradual process, and he pointed out that under no circumstances could the wife have agreed to contribute half of the cost of the Allansford property because her assets were heavily encumbered.

85. He said that I should find that the business was obviously in difficulty in June 1993 and that it was relevant that it was put on the market at that time. He said that thereafter the wife provided the matrimonial home until the Allansford house was built. He said it was clear that the reason for the transfer being registered in June 1993 was for asset protection because of problems that the wife might have with creditors. He referred to the inconsistency between the document prepared for the stamps office and its reference to “love and affection” as the consideration for the transfer rather than as a declaration of trust. He also referred to the fact that the wife had entered into a mortgage in relation to the Allansford land and had the liability under that mortgage, and that itself was a contribution. He referred to the fact that at or about the time of the transaction, between March and June 1993, the husband in his Order 30 Affidavit said that he had been receiving legal and accounting advice.

86. He also said that I should accept the wife’s evidence that between 1992 and 1994 she provided the household and other expenses out of the business in order to enable the husband to save his earnings. He pointed, as was the fact, that the husband had been asked to produce documents in relation to bank accounts over this period and that those documents were not produced. He said that I should find that the parties performed separate and distinct roles in the sense that she brought in the income during the period.

87. He said that I should refuse to accept the husband’s evidence of his lack of awareness and difficulties with the business and said that it was ludicrous for him to say that he only became aware of her difficulty just prior to the bankruptcy. He pointed to the fact that on the 11^th December 1993 the husband had assisted in relation to the division of the shop in order to reduce the rental liability of the wife. He also pointed to evidence given by the husband’s solicitor, Mr Cole, who said that it was general knowledge in 1993 that the business of Guys Only was in trouble. As I have mentioned, Mr Cole, although he only commenced working with Maddens in 1994, was a solicitor in practice in the area prior to that time. Mr Sweeney pointed to the correspondence from the bank to the wife and the fact that according to Mr Cole’s notes, the husband had gone to see him in May 1994 and told him that the wife was $160,000 plus in debt. He also pointed to the fact that the arrangement between the husband and Mr Cole was for his letter of advice of the 28^th of June to be collected by the husband rather than posted to the matrimonial home.

88. He said that I should find that the husband made a unilateral decision to keep his assets separate that he did not bring his wife into the picture as far as that was concerned. He relied upon evidence constituted by cheque butts from Guys Only, indicating expenditure from the home from the business, and he pointed to the fact that the parties’ relationship was such that there was no divorce until 6^th March 1998. He said that the fact that the business asset was lost was for reasons quite outside the wife’s control. He said, however, that it had contributed to the lifestyle of the parties.

89. He said that so far as Gourmet Galley was concerned, the husband was in the happy position of paying his wife as staff and then getting the benefit of her income. He said that the wife worked in the business for six days per week and that I should conclude that all of the money that she received was used for joint purposes. He referred to accounts produced by the husband, which indicated that he had received some income but it appeared that a very substantial portion of that income was referable to a loan, and that included in the figure was $5000 which largely came from the Allansford property.

90. He said that the fact that the wife had made a significant contribution to Gourmet Galley was apparent from the fact that when the business was sold three or four months after she left the business, losses had significantly increased.

91. He submitted that so far as the tax liability was concerned there was no immediate liability and that it may never be a liability to the husband. He said nothing had been produced in relation to evidence of the inheritance received by the husband or what his savings were at the date of separation and that I should not accept that legal costs paid by the husband had been paid out of post separation earnings.

92. He further submitted that I should take a global approach to the distribution of property and that a finding in the vicinity of 50 – 55% in favour of the wife would be appropriate. He said that I could not ignore the husband’s superannuation as a resource and the fact that the husband will continue to contribute to superannuation from a much greater income. He pointed to the secure employment of the husband and the fact that he had lived virtually rent-free since the date of separation. He said that as far as Mr Rendell was concerned, his position had been put in issue by the husband and that he had been subpoenaed but not called by the husband.

93. So far as the issue relating to the decision of Chisholm J in Jordan and Jordan was concerned, Mr Sweeney said that the reality was that the wife had no legal or equitable interest in the Allansford property at the time that she answered the questions of the Official Receiver and that the only way that she could have acquired such an interest, would be as a result of an order of this Court and no such order had then been made.

FACTUAL FINDINGS

94. In general, I accept the evidence of the wife where it conflicts with the husband and I do so because I regard most, if not all the evidence that she gave in relation to matters in issue as being more likely to be accurate than that of the husband.

95. I thought that the account that the husband gave of the relationship involved an attempt on his part to belittle the wife’s contribution and to assert that most if not all of the financial activities in which the parties engaged were due to the husband’s efforts when they were successful. On the other hand in relation to the unsuccessful enterprise, namely Guys Only, he was careful to distance himself from it.

96. His evidence was contradictory and evasive in relation to the commencement of the relationship, which I am satisfied, was well-established by the time that he bought Dino’s Pizza Parlour in November 1979. I have no doubt that it was bought for the purpose of setting up a joint business to be run by the husband and wife. I accept that he made the more substantial contribution toward its purchase, but I also accept that thereafter, the wife made a very significant contribution by providing her labour in circumstances where she received little more than housekeeping for doing so.

97. An example of the husband’s tendency to downgrade his relationship and to give contradictory evidence about it was his statement that at the time that he bought the freehold of Dino’s in June 1992, the relationship was just commencing and that there was no involvement by the wife or commitment by her to the business. As I have pointed out the couple married shortly after this purchase, and the relationship had been existence for nearly three years..

98. I also accept the wife’s evidence as to the contribution that she made establishing the house and garden at Livingstone Court. The wife is clearly an enthusiastic and creative gardener and I have no doubt that she did much to improve all of the properties in which she lived with the husband throughout the relationship.

99. I generally accept the wife’s evidence as to the time that the reconciliation commenced which was only a matter of two months after the orders were made in December 1991. The fact that a reconciliation occurred at this stage is not really surprising given that there had been attempts at reconciliation after the commencement of proceedings in 1991 and that the parties were clearly friendly towards each other throughout the period.

I also accept the evidence of the wife as to the circumstances in which the reconciliation occurred and the agreement between the parties as to property. I think that it is highly probable that they agreed to make a fresh start in June 1992 and this was clearly evidenced by the wife giving instructions for the sale of the properties of Donald Court and Manuka Drive at that time.

I do not accept that there was any agreement for an equal contribution. The husband was well aware of the debt that was associated with the business of Guys Only and indeed the payment to him of $45,000 pursuant to the property settlement had substantially contributed to it. I do not believe that he could seriously have expected the wife to make an equal contribution at that time. I think the probability is that the parties agreed to mingle their finances in order to build a new home and as the wife put it “to make a fresh start”, and as I have said, I do not believe that this was upon a basis of equality.

I think that despite the orders of December 1991, and having regard to the resumption of their relationship, they each regarded themselves in having an interest in all of the property. I think however, that the parties realised by early 1993 that Guys Only was not travelling as well as had been expected, despite the husband’s denial of such knowledge.

It is important to note that Guys Only was placed on the market in June 1993 for a sum of $125,000, which was probably less than the amount then owing in relation to it. I have no doubt that the husband was well aware of this and participated in the decision to place that property on the market at that time.

As I have said, I also accept the wife’s evidence that she used drawings from the business for household expenses throughout the period from reconciliation to the time of closure of the business and that the husband, who was then working as a truck driver, saved his monies to put towards the Allansford property.

I have also indicated that I accept the wife’s evidence that there was a significant downturn in the business of Guys Only, which manifested itself in or about 1992 and that the business deteriorated thereafter. This deterioration is clear and accords with the figures produced by the wife. For the reasons already given, I also accept that the wife did discuss her concerns with the husband in relation to Guys Only on numerous occasions and that this led him to take steps to ensure that the Allansford property was not dragged down if Guys Only failed, as it eventually did.

For the reasons already given I think that the probabilities suggest that this was the reason for him seeking and for her agreeing to sign a transfer of her interest in the Allansford property.

I should also mention that the very fact of the agreement to purchase that property in joint names in 1992 lends substantial weight to the proposition that the parties had agreed to put the past behind them at that stage and set about on a new course together.

I repeat that I am unable to accept the husband’s evidence that he had no knowledge of the wife’s difficulties with the business of Guys Only until shortly prior to the bankruptcy.

I regard it as inconceivable that the husband and wife would not have discussed her financial difficulties with Guys Only from the outset. It was a business that the husband knew intimately and with which he had been involved for a number of years. The husband also knew, because it arose from the orders, that there was a debt of at least $120,000 associated with the business and he would have been aware that that the wife had incurred legal expenses that would have had to have been paid from somewhere and the obvious place would have been out of the business. He also knew that the period since 1991 was a period of high interest rates on loan monies, which he must have been aware would make the wife’s position more difficult in relation to the business.

I may say that I was unimpressed with the husband’s evidence that the failure of the business was due to any alleged incapacity or misconduct on the part of the wife. No particulars were given and this was clearly an assertion that he was prepared to make without substance.

So far as the Allansford property is concerned, it is quite clear that this was intended for and was in fact used by the parties as their matrimonial home. I am satisfied that both carried out significant physical work on the development of the property and its gardens and I think that the probabilities are that they made an equal contribution in this regard. I accept the evidence of the wife that she made a substantial financial contribution to the gardens and furnishings to the extent of some $22,000 and that the source of these funds came from Guys Only.

LEGAL ISSUES

THE ELIAS PRINCIPLE

For the reasons advanced by Mr Sweeney set out in para 93 of this judgment, I do not consider that the principle of Elias and Elias as explained by Chisholm J in Jordan and Jordan is applicable to the wife in the present case.

SETTING ASIDE ORDERS MADE UNDER S79 OF THE FAMILY LAW ACT

In Mullane v Mullane [1983] 8 Fam LR 777 the High Court (Mason ACJ, Wilson, Brennan, Deane, and Dawson JJ) said at 779:

“The effect of treating the order as if it had been made under s 79 is that, subject to a limited jurisdiction to vary it or set it aside, the power of the Family Court to make an order under s 79 is treated as having been exercised and as exhausted by that notional exercise. The limited jurisdiction to set aside or vary such an order is that conferred by s79A and exists only in special circumstances, namely, where the court is satisfied that there has been a miscarriage of justice by reason on fraud, duress, suppression of evidence, the giving of false evidence or any other circumstance.”

That statement remains the law today subject to the qualification introduced by amendments made in 1983 to s79A and, in particular, in relation to the present case by the insertion of s79A(1A) permitting the setting aside or variation of an order with the consent of all of the parties to the original proceedings in which the order was made.

Further qualification of that principle might be said to arise if the order in question was made by a Registrar by reason of the decision of the High Court in Harris v Caladine in that such orders, even when made by consent, may be reviewed by a judge by way of hearing de novo, provided that the application is made within the time prescribed by the Rules of court or an extension of time has been granted. As I have pointed out earlier in these reasons for judgment a Court may also review a decision by a Registrar of its own motion, and this is not subject to any time limit.

THE APPLICATION UNDER S 79A(1A)

The principles to be applied in considering this question are conveniently set out in the decision of the Full Court in McCabe and McCabe (1995) FLC 92-634. That was a case where the parties married in 1982 and separated in early 1989. In July 1989 consent property orders were made, the effect of which the husband would transfer his interest in the former matrimonial home to the wife and the wife would pay to the husband $50,000. Unlike the present case, on the 9^th July 1989 the parties reconciled but did not carry out the orders in question. They notified the Court by letter of their reconciliation. They finally separated in September 1993 by which time they had intermingled their financial affairs. The Full Court commented at 82,369;

“The recent decision of the Full Court in Bourke v Bourke No. 2 (1994) FLC 92-479 establishes that the “consent” referred to in that provision is not confined to a consent given at the time of the hearing of the application in question; the consent may be established by evidence of the prior consent of the parties which remains binding upon them.”

The Full Court continued subsequently;

“In cases of this nature conclusions about intention which should be attributed to the parties will depend upon the particular circumstances of each case. That material would not necessarily be confined to the initial decision to reconcile or, as in this case, to write to the Court. Their intention may crystallize into a more precise form as time progresses and as the parties' reconciliation continues, and they conduct their lives together, including their financial affairs, so that it becomes inconsistent with any other conclusion.

----

There is no reason to doubt that parties can expressly or by their conduct consent to the discharge of prior orders, so as to enable the Court to make a fresh property order. Indeed, this would be a more likely conclusion in most cases of this type. The conclusion contended for by Mr Sofronoff would produce a situation where the previous orders were unenforceable but neither party could seek new orders (other than orders under s. 78) and would be inhibited from taking proceedings in another court because such proceedings would inevitably constitute a “matrimonial cause”."(at 82,369-70)

Also of assistance in considering this issue is the decision of Fogarty J in Drew and Drew (1985) FLC 91-601. That was a case involving an application to set aside an agreement made pursuant to s87 of the Act which had been put into effect. In that case, the parties separated in 1980 and in April 1980 an agreement as to a property settlement was approved pursuant to s87. The terms of the agreement were fully carried out by each party. However, in November 1980 the parties reconciled and lived together as husband and wife until they separated again in March 1984. During this period of reconciliation the parties engaged in a number of joint financial transactions and considerable changes took place in their financial situation. They acquired property in their joint names.

The wife subsequently instituted an action seeking orders under s 79 and the husband sought dismissal of the application on the basis that, having regard to the approval of the s 87 agreement in 1980, the Court had no jurisdiction to deal with any further application. His Honour held that although there was no express agreement between the parties, the course of conduct of the years from late 1980 to March 1984 amounted to an implied agreement by them to resume the contract in so far as it remained executory or to abandon it as a contract binding upon them. He concluded that the proper conclusion was that the agreement was no longer enforceable and ordered that it be revoked. In the course of his judgment, his Honour said:

“The question then is whether the events that happened since 1980 affect the validity or the enforceability of the agreement. I might add that if they do not the parties will find themselves in a most curious position. Whilst the approval remains the parties may not validly institute proceedings in this Court under Part VIII. However they may not institute property proceedings in any other court because such proceedings would constitute a "matrimonial cause" within the exclusive jurisdiction of the Family Court. Thus, although they have jointly owned property, namely the matrimonial home, and other assets which the wife says have been acquired jointly by them during the 2 1/2 years of their resumed and still existing marriage no court would have jurisdiction to determine their rights arising from those circumstances. This would apply equally to the husband’s application for an order under sec. 78.”(at page 79,862).

It is also to be noted that in Banhidy and Banhidy (1983) FLC 91-302 the then Chief Judge with whom the other members of the Court agreed said at 78,065;

“While there may be circumstances relating to a resumption of cohabitation which could amount to a mutual rescission or waiver or which could stop a party from denying consent to such rescission or waiver, the facts here alleged fall far short of this. His Honour determined correctly, in my view, that the Court could not make a property order or grant an injunction in support of proceedings for such an order.”

When these principles are applied to the present case I think that there are strong grounds for concluding that the parties, by their conduct, consented to the setting aside of the original order.

Apart from the fact that there was the agreement in July 1992 to sell two properties, one of which was the former matrimonial home transferred to the wife under the order and the other a property purchased by the husband with monies paid to him under the order by the wife and to apply the proceeds to the purchase of land for the construction of a new matrimonial home, shortly thereafter, they agreed to purchase the land at Allansford in joint names upon which a house was subsequently erected and used as the matrimonial home. The monies for this house in the event came from the husband’s share of the property as the result of business difficulty sustained in relation to the business Guys Only. Following the sale of the Donald Court property, the husband moved into what had been the matrimonial home transferred to the wife under the property settlement and lived there rent free for some three years.

I have also found that the wife applied money from the business Guys Only, transferred to her under the property settlement for joint purposes and towards the Allansford home.

I have also found that the parties commenced a business, Gourmet Galley in 1995 and conducted it jointly for 12 months and that the wife applied her monies from that business for the purposes of the marriage.

The only property, the subject to the original orders, which arguably could be said to have been retained separately and apart, appears to have been the monies held by the husband in Rustic Close Pty Ltd, and the business Guys Only. As to the former, there were good reasons relating to tax liability that led to it being held separately and in any event it was used for joint purposes by a way of loan towards the erection of the Allansford house.

As to the latter, I think that both parties concluded that it was in their interests that it appeared to be conducted separately once the business outlook worsened, as I have found that it did in 1992/3 and subsequently, and I have concluded that this was the real reason for the transfer of the Allansford property out of the joint names of husband and wife.

Against this background, the consequences of any other finding leave the wife as the victim of a considerable injustice for the reasons pointed out by Fogarty J in Drew’s case. The injustice of course is associated with her having applied the proceeds of the property settlement for joint purposes when the reconciliation occurred and being left without a remedy despite her contributions to the marriage following reconciliation. This is not an injustice associated with a making of the original order, but an injustice associated with what occurred thereafter.

I think that this is clearly a case that falls within the McCabe principle and I am satisfied that the parties, by their conduct, have consented to the discharge of the original order. Accordingly, I find the wife is entitled to succeed in her application as it relates to s79A(1A).

In the circumstances, it is not strictly necessary for me to deal with the alternative ways in which Mr Sweeney put the case for the wife. However, given the nature of the case and the possibility that opinion may differ about the views that I have expressed I propose to do so.

S79A(1) – MISCARRIAGE OF JUSTICE

The relevant portions of this subsection for the purposes of this case are as follows:

“Where, on application by a person affected by an order made by a court under section 79 in proceedings with respect to the property of the parties to a marriage or either of them, the court is satisfied that –

There has been a miscarriage of justice by reason of fraud, duress, suppression of evidence, the giving of false evidence or any other circumstance
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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.”

As I understand the wife’s case, it is sought to argue that there has been a miscarriage of justice on two bases. The first basis is that in the events that have occurred since the making of the order, the order constitutes a miscarriage of justice.

This contention may be disposed of shortly. In a series of cases commencing with Molier and Van Wyk (1980) FLC 90-911, Liu and Liu (1984) FLC 91-572, Clifton and Stuart (1991) FLC 92-194 and Public Trustee (As Executor of the Estate of Gilbert) v Gilbert (1991) FLC 92-211, it has been held that the concept of a miscarriage of justice applies only to circumstances existing at the time of the order. It would appear therefore that , in determining whether or not there has been a miscarriage of justice associated with the making of the 1991 order, it would be necessary to show events existing either before or at that time which constituted such a miscarriage.

The alternative way, however, in which the case is presented, gives rise to more difficulty. First, it is said that there “was” a miscarriage of justice at the time that the order was made constituted by the failure of the Registrar to comply with the requirements of sub-ss79(2) and (4) of the Act in that he did not satisfy himself that the order was just and equitable.

As to this contention, I think it clear enough that there was a failure by the Registrar to approach the matter upon the required basis, because there was simply insufficient information before him to enable him to do so, as I have pointed out earlier in these reasons for judgment.

The situation therefore bears some similarity to that in Prowse and Prowse (1995) FLC 92-557 which was a decision of the Full Court given on an appeal from a decision of Strauss J.

In that case the wife, inter alia, sought to attack a consent order to which the parties had agreed before a Registrar upon the basis that insufficient material about the financial situation of the parties was provided to the Registrar at the time the orders were made and that, in any event, the Registrar did not exercise any independent discretion in making the orders, but merely acted upon the parties consent, which process produced orders which were not just and equitable.

In that case, the decision of the Registrar was taken prior to the decision of the High Court in Harris v Caladine, whereas in the present case that decision was given some eight months before the consent order was made. In that case Strauss J took the view that had all the evidence that was before him been before the Registrar, the wife would have received a substantially greater sum by way of property settlement than she received under the consent orders. However, his Honour took the view, with which the Full Court agreed, that although in retrospect the Registrar had erred, that failure was not of itself sufficient to vitiate the consent order. In order to achieve that end, it was still necessary for the wife to be successful either upon her application for an extension of time to apply for a review of the Registrar’s exercise of power, or upon her s79A application.

In the course of his judgment Strauss J said, and the Full Court agreed, that the section confers a discretion to make a fresh order and the fact that there has been a miscarriage of justice established does not mean that the Court must vary the order or set it aside. His Honour took the view that in the case before him, the fact that the wife got all that she sought before the Registrar, would militate against the exercise of the discretion in her favour. His Honour said:

“It might be said that even though the order was obtained irregularly there was no miscarriage of justice because each of the parties got what they asked for after receiving competent and independent advice with full knowledge of all relevant facts.

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It might also be said that even though the judicial process was defective and there was a miscarriage of justice in that sense, this was the process which the parties through their legal representatives chose to adopt, and that for this reason the discretion in s79A to vary or set aside the orders should not be exercised in favour of the wife, unless there were other grounds which would make it unjust to let the consent orders stand.” ( at 81,564).

In the course of its judgment, the Full Court appeared to be content to approach the matter upon the basis of his Honour’s second and alternative hypothesis and to examine the exercise of his Honour’s discretion in light of that hypothesis. In considering what other circumstances might exist, his Honour said:

“Such circumstances might include lack of any or any proper representation of advice, concealment by the husband or ignorance by the wife of relevant financial matters, pressure on or undue persuasion of her, or unequal bargaining power on her part, and no doubt there may be many other such circumstances. However, in my view, none of these circumstances exist in the present case so as to justify the exercise of the Court’s discretion in her favour. For these reasons the order made on 12.2.91 should not be varied or set aside.” (at 81,564).

In my view the present case should be viewed in a substantially similar light. Both parties were legally represented by competent lawyers and had engaged, according to the evidence, in protracted negotiation that brought about the consent order. There was no suggestion of any pressure or undue influence being brought by either party and there is little doubt that they got precisely what they wanted in relation to the orders made in December 1991. I therefore think that if it be correct that the order made by the Registrar constituted a miscarriage of justice, the wife has not advanced any satisfactory ground for me to exercise my discretion to set it aside.

I do not think that the events that occurred subsequent to the making of the order provide a sufficient basis for the exercise of such a discretion. It is quite apparent that the intent of the legislation is to bring financial arrangements between the parties to an end with the making of an order under s 79 and that the circumstances set out in s 79A are of a limited nature and are intended to cover particular circumstances. I turn now to the issue of review of the Registrar's decision.

REVIEW OF THE REGISTRAR'S DECISION

In this regard, it is notable that no mention of any question of the review is made in the application filed on 17 February 1997, over five years after the order was made. The orders sought are as follows :

“As against the first named respondent

That the orders made 17 December 1991 before Registrar Edney at the Family Court of Australia, Melbourne be set aside pursuant to s 79A (1A);
In the alternative that the orders made 17 December 1991 before Registrar Edney at the Family Court of Australia, Melbourne be set aside pursuant to s 79A(1)(a);
That this Honourable Court make such orders in respect to the alteration of property interest and spousal maintenance as it deems fit.”

The first time that the issue of a review arose was in the course of argument during trial. While I permitted Mr Sweeney to pursue arguments relating to the issue of review, he did not at any time specifically request an extension of time for reviewing the orders of Registrar Edney.

Sub-section 37A(9) of the Act, provides for an application to the Court to review within such time as is prescribed by the Rules of Court. Pursuant to Order 36A Rule 5 (2) of the Rules of Court, the exercise of power by a Registrar should be reviewed within a time seven days after the day on which the Registrar exercises the power. In fact following a comment from me during the course of argument, Mr Sweeney sought that I should agree to review the decision of the Registrar pursuant to the power contained in s 37A(10) of the Act, which provides that the Court may, on application under sub-s 9 or of its own motion, review an exercise of power by a Registrar pursuant to a delegation under this section ,and may make such orders as it considers appropriate with respect to the matter, with respect to which the power was exercised.

Curiously enough, the Full Court is Prowse and Prowse did not refer to the Court’s power to review a decision of a Registrar of its own motion and the matter does not seem to have been argued before Strauss J. In fact the only reference that I can find to the Court having exercised such a power of its own motion was in relation to a decision of a Judicial Registrar in the case of Murray v Director, Family Services, ACT (1993) FLC 92-416, which was a Hague Convention case.

In Tornsen and Tornsen (1993) FLC 92-392 at 80,017, the Full Court after referring to a submission by the appellant, that the Trial Judge had erred in treating the guidelines set out in McMahon and McMahon (1976) FLC 90-038 as rigid, said:

“That submission is clearly correct. The fundamental issue in an application for extension of periods of time prescribed by the Rules of Court is whether this will enable the court to do justice between the parties: Hughes v. National Trustee Executives and Agency Co. of Australasia Ltd [1978] VR 257 at 262 per McInerney J cited with approval in Gallow v Dawson (1990) 93 ALR 479 at 480 per McHugh J.”

In considering these principles in relation to the present case, it is also necessary to have regard to the purpose and objects of the Family Law Act. It is quite clear that the Act is intended to produce finality in relation to financial dealings between parties following the termination of their relationship. In the present case over eight years have now elapsed since the order in question was made and the parties have carried on with their lives, albeit for a substantial period together, following the making of the order. Had the original order been made by a judge, the only way in which it could have been challenged would be on appeal to the Full Court, subject to the Full Court granting an extension of time. Because it was made by a Registrar in this case, it can be reviewed by a single judge who can extend time for such a review.

However, I do not believe that it would be doing justice between the parties to grant such an extension of time in the present circumstances where there was nothing wrong with the original order and no suggestion has been made before me that there were any circumstances that might vitiate it other than the failure of the Registrar to exercise his discretion under sub-ss 79(2) and (4) which was a course in which the parties, by their legal representatives concurred, at the time the order was made.

I think similar considerations apply to circumstances where the Court would review an order or its own motion. I think that this would be confined to circumstances where in the exercise of its supervisory function, it considers that an order should not have been made and that it was necessary to intervene to set it aside. I am not satisfied that this is such a case.

CONCLUSIONS

I now turn to the results that flow from my finding that the wife is entitled to succeed under s79A(1A).

It is apparent that since the original order has been executed and none of the property the subject of it remains in possession of the parties in its then form, I should conclude that the parties effectively brought back into the marriage that which they received under the original order, or the proceeds of it. There would be little point therefore in seeking to specifically discharge the terms of the original order which have now been worked out. What is required is the making of a further order for a property settlement which has regard to the terms of the original order and the disposition of the properties the subject of it.

In the events that have occurred, the wife has been left with no assets through what I have found to be no fault of her own, and the husband has been left with a residual amount which represents the only remaining assets of the marriage.

As at 17 December 1991 the parties apparently agreed that an equal division of property was appropriate.

I think that it would be artificial, having regard to my findings, to treat the matter as suggested by Mr O’Shannassy, that is to look at the husband as having made the overwhelming financial contribution to the remaining assets dating from 1991.

It is true that the greater part of the funds for the purchase of the existing property came from monies that he received under the original order, but such an approach would have the effect of placing all the losses upon the wife despite the clear resumption of a full marital relationship and mingling of assets thereafter.

THE PROPERTY POOL

At an earlier point in this judgment I set out the aide-memoire handed up by Mr Sweeney as to the parties' assets and liabilities. The Allansford asset, the wife's savings, and the husband's credit card liability are agreed between the parties.

For the reasons set out at paras 56 and 57 of these reasons, I do not propose to take account of any tax liability the husband may have in the future if there is a distribution of the monies held by Rustic Close Pty Ltd in respect of the Allansford property.

So far as the issue of prepaid legal costs are concerned, I do not propose to bring these into account in favour of the husband. For the reasons advanced by Mr Sweeney, I am not satisfied that these monies were paid out of post-separation funds and there was insufficient material placed before the Court to enable me to come to that conclusion. Otherwise, the parties' legal fees lie where they fall, subject to any orders for costs that I may make.

I see no reason why the husband’s car should not be brought into account. The wife’s car has a negative equity and is not in her name so that I ascribe no value to it.

I therefore find the asset pool to be:

Real Property  $200,000
Husband's Motor Vehicle                    $ 19,000
Wife's Savings  $     250
$219,250
                     Less
           Credit Card of Husband  $   4,500
  Total  $214,750

CONTRIBUTIONS

Treating the parties as having made an equal financial contribution as at the time of the order and having bought those monies into account and having maintained a relationship thereafter, I see no reason for departing from equality of contribution at this time. Apart from this initial financial contribution, both parties used their income over the period for their mutual benefit and I do not see any significant disparity in this regard. Both parties similarly worked and contributed in a non-financial way to their joint welfare and I think that any variations that might be said to have favoured one party for one period or another are balanced by variations that might be said to favour the other for similar periods. I think that they should be treated as having assumed the business risks equally and should share the losses as well as the gains.

SECTION 75 (2) FACTORS

I do not propose to make any allowance in this case for s75(2) factors. The husband has a slightly greater earning capacity than the wife but is some years older than she is and in order to exercise this earning capacity must work considerable hours of overtime. He has a comparatively small superannuation entitlement which I do not regard as significantly great as to require any adjustment in favour of the wife in this regard.

The order that I propose will involve the parties sharing the net assets equally. However, if I had acceded to Mr O'Shannassy's submission as to contributions, it is obvious that there would be a different approach to s75(2) factors as the parties' asset position would have displayed an unequal balance to a considerable degree in favour of the husband.

PROPOSED ORDERS

I will hear Counsel as to the form that the orders should take and any issues as to costs.

I certify that the previous 164 paragraphs are a true copy
of the reasons for judgment delivered by The Honourable Chief Justice.

Danny Sandor
Senior Legal Associate to the Chief Justice