Tallant and Tallant
[2013] FamCA 403
FAMILY COURT OF AUSTRALIA
| TALLANT & TALLANT | [2013] FamCA 403 |
| FAMILY LAW – PROPERTY – Application for summary dismissal – Where wife sought an order that the husband’s Initiating Application be summarily dismissed – Where the husband also SOUGHT an order for summary dismissal of the wife’s Application in a Case – Consideration of the relevant law dealing with summary dismissal – Where the court could not be satisfied that the contentions of either party are manifestly groundless or so obviously untenable that they could not succeed – Where each of the applications for summary dismissal is refused. |
| Family Law Act 1975 (Cth) ss 79; 79A |
| Costello & Anor & Condi & Anor [2012] FamCA 355 Crapp & Crapp No.2 (1979) FLC 90-615 Duff & Duff (1977) FLC 90-217 General Steel Industries Inc v Commissioner for Railways (NSW) [1964] HCA 69 Friar & Friar [2011] FamCAFC 71 Jones v Skinner (1836) 5 LJ CH 87 Marchant & Marchant [2012] FamCAFC 181 Mullane & Mullane (1983) 158 CLR 436 Perrett & Perrett (1980) FLC 92-101 W & W (1980) FLC 90-872 |
| APPLICANT: | Ms Tallant |
| RESPONDENT: | Mr Tallant |
| FILE NUMBER: | PAC | 2136 | of | 2009 |
| DATE DELIVERED: | 2 May 2013 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Aldridge J |
| HEARING DATE: | 11 March 2013 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Ms Bridger |
| SOLICITOR FOR THE APPLICANT: | Jo-anna Moy, solicitor |
| COUNSEL FOR THE RESPONDENT: | Mr Stenhouse |
| SOLICITOR FOR THE RESPONDENT: | Collins & Thompson |
Orders
That Order 1 of the response to an Application in a Case filed by the husband on 6 June 2012 be dismissed.
That the response to the Initiating Application filed by the wife on 29 August 2012 be dismissed.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Tallant & Tallant has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| FAMILY COURT OF AUSTRALIA AT |
FILE NUMBER:
| Ms Tallant |
Applicant
And
| Mr Tallant |
Respondent
REASONS FOR JUDGMENT
Introduction
In these proceedings Ms Tallant (“the wife”) seeks an order that the Initiating Application filed on 27 July 2012 by Mr Tallant (“the husband) be summarily dismissed pursuant to Rule 10.12 of the Family Court Rules. The husband seeks an order, pursuant to the same rule, that the wife’s Application in a Case filed 15 February 2012 also be summarily dismissed.
Both applications have at their heart an order made by consent by the Local Court on 11 December 2003. Order 2 of those orders provided:
The wife shall do things necessary to arrange finance with Westpac Bank in such amounts as she may deem appropriate provided however that a component of that loan should be a Premium Option Home Loan in the amount of two hundred and twenty thousand dollars ($220,000.00) at the bank’s variable housing rate. That the Husband pay all Mortgage payments in respect of the Premium Option Home Loan until the said Premium Option Home Loan is discharged.
The husband ceased paying the mortgage in November 2010 leading, ultimately, to the Application in a Case of the wife filed on 15 February 2012 which seeks orders that the husband file and serve a financial statement and produce a number of documents relating to his finances, obviously with a view to enforcing the above order.
The husband contends that Order 2 made by the Local Court was made beyond the power of the Court, is ultra vires, and is accordingly void thus leading to the summary dismissal of the wife’s enforcement proceedings because there is, in effect, no order to enforce.
On the other hand the wife asserts that the husband’s initiating application seeking a declaration of invalidity or alternatively, orders under section 79A of the Act must fail and should also be summarily dismissed.
It was agreed between the parties that Order 2 set out above was made pursuant to s79 of the Family Law Act and is not a spousal maintenance order. Until that agreement had been reached the characterisation of Order 2 as a maintenance order or a spousal maintenance order was an issue in these proceedings. That agreement, which goes to a jurisdictional fact, does not bind the Court but I am prepared to deal with this application on that basis.
The effect of that agreement is that the only order pressed is the order that seeks to have Orders 2 and 3 Orders made in the Local Court set aside. The Counsel for the husband said that it was proposed to file an amended initiating application seeking a declaration that those two orders were void. The matter proceeded before me on the assumption that such an amendment would be made.
Background facts
The married parties in 1973 and separated in 1997.
The husband is professionally employed. He became bankrupt on 31 October 1997. Until that time he was the principal of Business B. Since the discharge of his bankruptcy in October 2000 he has again become the principal of this business.
After separation the parties resolved their property issues resulting from the separation. By consent a number of orders were in the Local Court on 16 January 1997. It is necessary to set out those Orders in full:
By Consent:
1. That the Husband do all things necessary to enable the transfer of all his right title and interest in the property at [C Street, Suburb D] by way of property settlement, to the Wife or to a Company nominated by her, subject to the payment to the Commonwealth bank of $290,000.00 and subject to the following orders.
2. That each party do all things necessary to cause such loan documents as are necessary to enable the securing of a borrowing by the Husband and secured by Mortgage granted by the wife or by any company nominated by her of a sum not exceeding $220,000.00 secured on the title to the said property.
3. For the purposes of Clause 1 hereof, the wife is authorised to bid at auction of the said property to the sum of $290,000.00 and the husband shall subject to the provisions of Clause 2 hereof, indemnify the wife or nominated Company in the sum of $70,000.00 plus Stamp Duty on the purchase price of $290,000.00 and for the purposes of this clause, the Husband shall on the signing hereof deliver to the wife a Cheque in the sum of $29,000.00 and shall pay the balance of the said sum, one week prior to the settlement of the Purchase.
4. That the husband pay by way of spouse maintenance all mortgage payments on the subject property until the said mortgage is discharged by payments made by the husband to reduce the principal of the said loan.
5. That the Husband shall maintain all payments on the said Loan until the Debt is repaid in full.
6. That in the event that the husband wishes to obtain alternate finance, then the wife shall cause to be executed such documents as may be required by the Husband to effect a change of loan and security provided however that the wife shall not be required to execute documents which increase any existing liability secured on the subject property.
7. In the event that the wife is not able to secure the purchase of the Property, then the Husband shall pay to the wife the sum of $70,000.00 together with any Stamp Duty payable on an alternate purchase to the value of $290,000.00 and the above loan provisions shall apply provided that the loan shall not exceed $220,000.00 or the Loan Value ratio shall not exceed Seventy Five per centum (75%).
8. That the wife transfer all her right title and interest in the property known as [E Street, Town H] to the Husband.
9. That the husband indemnify the wife against all liabilities under the existing mortgage on the [Town H] Property and use his best endeavours to obtain a release for the wife from the said Mortgage.
10. In the event that the wife elects to sell the [Suburb D] property whilst there remains a Mortgage secured thereon, then each party shall do all things necessary to effect a transfer of the said Mortgage or the obtaining of a suitable alternate finance. Provided however, that the Husband shall not be required to contribute or execute loan documentation in excess of the loan balance then due under any existing loan pursuant to these orders or provide finance exceeding a loan value ratio of 75%.
11. That the husband maintain sufficient life insurance to cover the amount of any outstanding loan secured against the [Suburb D] property or any replacement thereof.
12. That the husband be declared to have the sole right and title to the [business] known as “[Business B]” carried on at [I Street, Suburb F], including all fixtures and fittings therein and the Husband shall indemnify the wife against any claim arising therefrom save as to any claim made by the Commonwealth Bank.
13. That the Husband remove any of his personal belongings remaining in the premises at [C Street, Suburb D].
14. That the parties divide the furnishings and paintings equitably between themselves except for those items that the wife received from her late Parents estate which are declared to be her sole property.
15. That the Husband indemnify the Wife against any claim arising out of the ownership of the [Town H] property including any claim arising out of the Partnership styled “[Business G]”.
16. That subject to the above provisions, each party be declared the owner of any other assets, accounts or shares presently in their possession.
The property referred to in Order 1 of the orders made by consent in the Local Court on 16 January 1997 being the property situate at C Street, Suburb D (“the Suburb D property”) was then owned by a company called A Pty Limited. After the date of those orders it became a company controlled by the wife and the registered proprietor of the Suburb D property. The company was subsequently deregistered by ASIC. In 2003 the mortgagee on the Suburb D property wished to be repaid. This led to a refinancing of the property and a variation to the earlier orders was required.
On 12 December 2003, by consent, the Local Court made the following orders:
That by consent orders, declarations and notations be made in terms of the document entitled “Terms of Settlement” dated 11 December 2003 filed herein and attached hereto.
There are no orders for maintenance.
The terms of settlement provided:
By consent:
1. That the Husband and Wife do all things necessary to direct [A Pty Limited] to transfer all its right title and interest in the property at [C Street, Suburb D] by way of property settlement to the Wife.
2. The Wife shall do all things necessary to arrange finance with Westpac Bank in such amounts as she may deem appropriate provided however that a component of that loan shall be a Premium Option Home Loan in the sum of Two hundred and twenty thousand dollars ($220,000) at the bank’s variable housing rate. That the Husband pay all Mortgage payments in respect of the Premium Option Home Loan until the said Premium Option Home Loan is discharged.
3. The Husband shall complete all documents necessary to effect payment of all instalments due to repay the said sum of Two hundred and twenty thousand dollars ($220,000.00) pursuant to the Premium Option Home Loan.
4. The Wife shall provide to the Husband full particulars of the loan account numbers so that payments may be made direct to the bank for repayments of the said loan.
5. The Wife shall provide to the Husband copies of all loan statements issued by the bank relating to the repayment of the said Premium Option Home Loan within seven days of receipt by the Wife from the bank.
6. The Wife shall provide written authority to authorise the bank to disclose to the Husband at any time the particulars of the Premium Option Home Loan.
7. The Wife shall not during the currency of the Premium Option Home Loan do anything or make any arrangement with the bank to redraw any prepaid amount paid by the Husband.
8. That each party do all things necessary to discharged the existing liability secured by way of mortgage to [J Pty Ltd] under Mortgage No. … .
9. In the event that the Wife elects to sell the [Suburb D] property whilst there remains a mortgage secured thereon, then each party shall do all things necessary to effect a transfer of the said mortgage or the obtaining of suitable finance.
10. That the Husband maintain sufficient life insurance to cover the amount of the Mortgage in respect of the Premium Option Home Loan (as referred to in clause 2) and shall provide to the wife’s solicitor on a yearly basis a Certificate of Insurance.
11. That each party do all things and complete all required documentation sufficient to enable AMP Life Limited to convert the Whole of Life Plan Insurance Policy No. … to an endowment policy with a termination date at such time as may be elected by the Husband. The Wife shall complete such documentation within fourteen days of submission by the Husband.
12. That the Wife acknowledge that in the event that the Husband dies before the mortgage sum is discharged in full, then the whole of the proceeds of the abovementioned policy shall be allocated towards reduction of the Husband’s outstanding loan and should there be a surplus, the surplus funds shall be paid to the Husband’s estate.
13. In the event that the Husband discharges the said loan without recourse to the AMP Life Policy No. … then the Wife shall do all things necessary and shall execute such documents so as to transfer the said Policy to the Husband and shall complete all documentation to effect a transfer within Fourteen (14) days of submission of the Transfer documentation.
14. That in the event that either party refuses of neglects to execute any deed or instrument, the Registrar of the Court be appointed pursuant to Section 106A4, to execute such deed or instrument in the name of such party and to do all acts and things necessary to give validity to the operation to the deed or instrument.
As a result of the agreement noted earlier is that the parties agree Order 2 is an Order pursuant to s 79 of the Act thus removing the argument as to whether that Order is, or could be seen, to be an order for spousal maintenance pursuant to s 74 of the Act and subject to discharge under s 83.
Summary Dismissal
Rule 10.12 of the Family Law Rules provides that a party may apply for summary orders if the party claims that the Court has no jurisdiction or that there is no reasonable likelihood of success. Both parties approached the matter before me on the basis that the well known principle in General Steel Industries Inc v Commissioner for Railways (NSW) [1964] HCA 69 (1964 112 CLR 125 at 129) applies. There Barwick CJ pointed out that the jurisdiction summarily to determine an action is to be sparingly employed and not to be used except in a clear case. His Honour then set out a number of the various tests to be applied each of which emphasises the onerous nature cast upon the applicant for such an order. See also Costello & Anor & Condi & Anor [2012] FamCA 355 at [27] – [32]; Friar & Friar [2011] FamCAFC 71 [48-53]. I must accordingly only act to dismiss the proceedings if the case is “so obviously untenable that it cannot possibly succeed”, is “manifestly groundless”, or “so manifestly faulty that it does not permit of argument”.
The parties’ contentions
The husband contends that the last sentence of Order 2 and Order 3 made by the Local Court on 11 December 2003 are ultra vires and beyond the power contained in s 79 of the Act because they constitute a division or an attachment of income, as it was put in submissions, which is merely prospective or contingent property and therefore does not fall within the definition of property as defined by s 79 and the s 4(1) of the Act. The husband says that the orders are an order in relation to the income of the husband that he will receive in the future and not an alteration of property.
The wife submits that Orders 2 and 3 are merely orders in relation to an alteration of property interests which do not themselves involve the division of the husband’s income.
Discussion
There can be little doubt that most of the orders made in 1997 were orders made pursuant to s 79 of the Act. There was an alteration of property interests such that the wife was to receive the Suburb D property, the husband was to become the sole owner at E Street, Town H, the husband was to retain his business and there were orders relating to retention of other assets. Order 4 of the 1997 orders was specifically stated to be a spousal maintenance order. Order 5 of those same orders has a similar effect (namely the payment of all mortgage repayments until it is discharged) that is not said to be spousal maintenance.
Turning to the 2003 orders they state that no spousal maintenance orders are being made. The parties agreed this to be so.
Pursuant to those orders the wife was to receive from A Pty Limited the Suburb D property. The husband was to maintain sufficient life insurance to cover the amount of the mortgage as set out in Order 2, to convert it to an endowment policy and the wife to acknowledge that if the husband were to die before the mortgage was discharged in full then the whole of the proceeds be allocated to the reduction of the outstanding loan. In the event that there was to be a surplus, the surplus funds were to be paid to the husband’s estate (Order 12). If the mortgage was to be discharged without recourse to the life policy then the wife was obliged to transfer the life policy to the husband.
The effect of the 2003 orders was therefore the wife was to obtain the Suburb D property free from debt in due course but no more than that. The terms relating to the life policy were a mechanism to enable that to be done should misfortune befall the husband but were crafted in such a way to ensure that the wife was only entitled to retain sufficient funds from that policy to enable the mortgage to be discharged.
It is quite clear that s 79 only applies to property as defined by the Act. In Mullane & Mullane (1983) 158 CLR 436 the High Court said at 445.
In our opinion, therefore, s.79 on its proper construction refers to only to orders which were an alteration of the legal or equitable interests in the property of the parties or either of them. An interest in property is a right of a proprietary nature, not a mere personal right.
The term “property” is to be given a wide meaning. Jones v Skinner (1836) 5 LJ CH 87, at page 90; Duff & Duff (1977) FLC 90-217 at p 76,131. In Crapp & Crapp No.2 (1979) FLC 90-615 Fogarty J said at 78,176
An order can only be made…under s.79 where a party has a present or future interest in that particular item of property. Clearly where a party has a present interest no difficulties arise and by “future interest” in the above sense, I take it to mean a situation where a party has an established interest in an item of property but the date of receipt is postponed to some future time. That is different from the case where a party has become entitled to an interest in property in the future, provided that certain events occur and/or certain disqualifying events do not happen in the meantime…
That case and W & W (1980) FLC 90-872 have determined that an expectation of future income does not constitute property under the Act.
In Perrett & Perrett (1980) FLC 92-101 the husband’s entitlement to a defence force pension was found not to be “property” within the meaning of the Act but simply an entitlement to receive a fortnightly pension. It was held to be inappropriate to deal with the present value of that entitlement as property notwithstanding that once the husband receive a particular payment that sum was then property in his hands.
The husband says these principles apply to Order 2 and 3 of the 2003 Orders because they are orders in respect of the husband’s income or the division of his income because the payment obligation must refer to his income, a future contingent asset. The order was also said to be void because it did not relate to an underlying property interest and not to a property alteration of the parties.
In Marchant & Marchant [2012] FamCAFC 181 the Full Court had to deal with what was said to be an interim property order pursuant to s 79 of the Act in the following terms “that the Husband pay to the Wife the sum of $11,500 on or before the 30th day of each month being one (1) half of his personal income derived from joint assets and holdings”. In paragraphs [69-74] their Honours said:
69. By its terms, order (2) did not effect the transfer or assignment to the wife of any of the parties’ property from which they received investment income. That is, whilst in respect of any tenancy, the parties would have “property” in the form of the chose or the right under the contract or lease for tenancy which would be “property” within the meaning of s 79, order (2) is not directed to effect any alteration of such interests in favour of the wife.
70. In the form in which it operates, order (2) does not operate only upon such income as the husband actually receives but obliges the husband to make a set monthly payment to the wife in a fixed amount, irrespective of what income is actually received and without altering any underlying property interest.
71. Plainly enough, whilst there was no specific evidence as to the structure of the income streams from particular items of property as we have earlier referred to, receipt of such income, in whatever form, would be subject to a variety of contingencies. For example, so far as tenancies are concerned, those contingencies would include the continuing tenancy of the subject properties, as well as tenants meeting their obligations. Any “right” to income was contingent.
72. We also highlight that the opening words to the definitions in s 4, recorded above, are important. Section 79, by subsection (4)(e), cross-references subsection 75(2) of the Act. Section 75(2)(b) identifies, “the income, property and financial resources of each of the parties…” understood as meaning present and future income where, “…income…” is there referred to, it is difficult to see how, as a matter of statutory interpretation, prospective or contingent income could be capable of being treated as “property” for the purposes of s 79.
Their Honours therefore determined that the order before them as set out above was beyond power because the subject matter was not property within the meaning of s 79 and did not alter the interests of parties in property.
Pursuant to s 79 the Court may make “such order as it considers appropriate.” The Court in Marchant did not say that every individual order in a suite of orders made pursuant to s 79 must of itself be an order effecting an alteration of property interests or that orders cannot be made that affect, directly or indirectly, income. Plainly, orders pursuant to s 79 can be made for parties to retain property already owned by them or dividing income producing rights or income once received by a party but s 79 is not so limited. Provided the requirements of s 79 are met the Court may make such order as is appropriate. That enables a very broad range of orders to be made.
In my opinion the proposition that the second sentence of Order 2 is an impermissible division of the husband’s income is not compelling.
The order does not, on its face, deal with income. It creates an obligation with which the husband can comply in any manner he chooses. It is not a necessary inference that the payment must, or even will, come from his income. How the husband was to pay the mortgage payments was left as a matter entirely for him. He could meet the mortgage payments from his income. He could meet them from any other source he had available to him.
The husband’s response to this was that he had no other means to make these payments other than from his income as he had been bankrupt shortly before. These orders were, however, made some three years after his discharge. The evidence does not disclose what his financial position then was. That, however, seems to me to be a matter for a final hearing.
It is my view that it is arguable that the orders made in the Local Court were in relation to the alteration of underlying property interests, namely in the Suburb D property and that they did not constitute a division of the husband’s income but merely imposed an obligation on him to make payments as he saw fit. This is because they are part of a suite of orders the effect of which is, in due course, to provide the wife with the Suburb D property unencumbered by a mortgage. The orders arguably do not divide income and are therefore arguably valid.
Order 3 appears to be a mechanical order to give effect to the refinancing referred to in Order 2 and has no direct relationship to income.
Conclusion
The husband has not established to the standard required by General Steel that the orders are invalid and that the wife’s claims of enforcement must thereby fail.
This means that there is an arguable issue as to the true meaning of the 2003 orders and the facts surrounding them. For the same reasons the wife’s claim for summary dismissal of the initiating application must also fail there being an arguable case as to the validity of the 2003 orders. There is also the claim for relief under s 79A of the Act in any event.
Therefore, at this preliminary stage of the proceedings, I cannot be satisfied that the contentions of either party are manifestly groundless or so obviously untenable that they could not succeed.
Each of the applications for summary dismissal is refused.
Neither party has obtained the orders which they sought. In that case it seems to me that each party should meet their own costs. However, any application for costs may be made by notice to my associate within 28 days.
I certify that the preceding thirty eight (38) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Aldridge delivered on 2 May 2013
Associate:
Date:1 May 2013
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