TALLANT & TALLANT
[2015] FamCA 864
•15 October 2015
FAMILY COURT OF AUSTRALIA
| TALLANT & TALLANT | [2015] FamCA 864 |
| FAMILY LAW – PROPERTY – Enforcement of Orders – Where property and spousal maintenance orders were previously made by consent by the Local Court at Suburb F – Where the wife seeks to have those orders enforced – Where the husband seeks to have his ongoing obligations under the orders discharged – Where the Court considered whether the relevant order was a property or spousal maintenance order – Where there was a notation to the original orders which was inconsistent with the order being a spousal maintenance order – Consideration of Naughton & Naughton (1983) FLC 91-327 – Where the court found the order was a spousal maintenance order capable of being varied or discharged under s 83 of the Family Law Act 1975 (Cth) – Consideration of the parties’ financial positions – Consideration of whether it would be “just” or “proper” to discharge the order – Orders made for the original orders to be discharged and for the husband to pay the wife a modest lump sum and spousal maintenance for a period of 12 months. |
| Bankruptcy Act 1966 (Cth) Part X Family Law Act 1975 (Cth) ss 72, 75(2), 79(1), 79A, 81, 83(1) Real Property Act 1900 (NSW) s 57(2)(b) |
| Hickey & Hickey (2003) FLC 93-143 Lutzke & Lutzke (1979) FLC 90-714 Mullane v Mullane (1983) 158 CLR 436 Naughton & Naughton (1983) FLC 91-327 Vakil &Vakil (1997) FLC 92-743 Walters & Walters (1986) FLC 91-733 Wreford & Caley (2010) 43 Fam LR 1 |
| APPLICANT: | Mr Tallant |
| RESPONDENT: | Ms Tallant |
| FILE NUMBER: | PAC | 2136 | of | 2009 |
| DATE DELIVERED: | 15 October 2015 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Johnston J |
| HEARING DATE: | 18 and 19 December 2014 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Givney |
| SOLICITOR FOR THE APPLICANT: | B Lawyers |
| COUNSEL FOR THE RESPONDENT: | Ms Bridger |
| SOLICITOR FOR THE RESPONDENT: | Jo-Anna F S Moy Solicitor |
Orders
That the orders at the second sentence of paragraph 2 and at paragraph 3 of the Terms of Settlement filed on 11 December 2003 made as orders by the Local Court, Suburb F on 12 December 2003, together with any arrears outstanding as at 15 October 2015 be discharged.
That not later than 30 November 2015 the husband pay to the wife by way of spousal maintenance the sum of $30 000.
That by way of spousal maintenance the husband pay to the wife or as directed by her in writing the sum of $750 per month, first payment on 2 November 2015 and payable on the second day of each month thereafter until the last payment which shall be paid on 2 October 2016 after which time his liability to pay spousal maintenance to the wife shall cease.
That all exhibits be released.
That both parties have leave to relist these proceedings by arrangement with the Associate to Johnston J in relation to implementation of these orders.
That these proceedings be removed from the Court’s list of active cases.
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 SYDNEY |
FILE NUMBER: PAC 2136 of 2009
| Mr Tallant |
Applicant
And
| Ms Tallant |
Respondent
REASONS FOR JUDGMENT
Introduction
Mr Tallant, to whom I shall refer as “the husband”, and Ms Tallant, to whom I shall refer as “the wife”, were married in 1973. They separated on 7 September 1994 and divorced in September 1998. On 15 January 1997 they had property and spousal maintenance orders made by consent by the Local Court at Suburb F. Those orders were varied on 12 December 2003 and also subsequently.
The wife is seeking to have orders in her favour enforced but the husband is seeking to have his ongoing obligations under the orders discharged.
The interpretation of the relevant orders and how the Court should determine the question of enforcement of the orders are the issues for determination.
Applications
The husband seeks the following orders:
1.Order 3 of the orders made by the Local Court [Suburb F] on [12] December 2003 and any arrears outstanding on the order as of the date of these orders be discharged.
2.The wife pay the costs of and incidental to this application.
On the other hand, the wife seeks the following orders:
1.That within 28 days of the date of the orders the husband pay, or cause to be paid, to the Westpac Banking Corporation all outstanding arrears and charges under the Premium Option Home [loan].
2.That within 28 days of the date of the orders the husband do, or cause to do, all acts and things and execute all documents and writings necessary to have the mortgage secured by the Westpac Banking Corporation over the property at [C Street, Suburb D] discharged.
3.That the husband pay the costs of the applicant and the costs of enforcing compliance by the husband with the orders on a lawyer/client basis.
Credit
The husband
The husband was forthright and responsive in his answers to questions. In some instances involving financial detail he indicated that he had left matters to his accountant. But overall, I thought the husband commanded a good knowledge of the relevant matters and was co-operative.
The wife
On the other hand the wife had a poor knowledge of relevant financial matters, including those relating to her own business. She said that she was not good at financial matters, that she was not interested in such matters and said that her accountant does what she feels is appropriate because she (the accountant) knows that the wife is not interested.
On occasions the wife appeared to be confused by the question being put to her. On several occasions she appeared to struggle to find an answer to the question even in areas which one would have thought would have been familiar to her. On occasions, instead of being responsive, the wife appeared to include in her answer information which she probably perceived would be likely to favour her case.
In all the circumstances I have some reservations about the reliability of some of the wife’s evidence. Where her evidence conflicts with that of the husband I would prefer that of the husband.
Background
The wife was born in 1952 and is 63 years of age.
The husband was born in 1952 and is also 63 years of age.
The parties married in 1973.
There are two children of the marriage, both now adults, Mr K Tallant born in 1976 and Mr F Tallant born in 1978.
At the time of their marriage neither the husband nor the wife owned any assets of significant value.
In 1981 the parties purchased the property at C Street, Suburb D (“the former matrimonial home”) for $92 000 financed by a mortgage to NSW Permanent Building Society for $50 000 and the balance from savings. This loan was later refinanced by the Commonwealth Bank of Australia (“the CBA”).
They subsequently demolished the home and had a swimming pool installed funded from an inheritance the wife received from her mother.
The husband is professionally employed and has operated his own Business since approximately 1979, initially in partnership with Mr L. The husband bought out Mr L’s 50 percent interest in their business in 1986 borrowing approximately $70 000 from the CBA to do so. Guarantees were provided by the wife and also by the husband’s parents. The guarantee by the husband’s parents was subsequently released.
In approximately 1990, the parties purchased a half share in a property at Town H, funded mostly by a loan from a private lender.
At the time of the parties’ separation in September 1994 the husband was heavily indebted. He operated his business through a service company called M Pty Limited. The business has always operated on a business overdraft account.
At separation the wife and the parties’ two sons remained living in the former matrimonial home. The husband moved into the Town H property. He subsequently commenced cohabiting with Ms N at her home in 1995.
Following separation the wife sought to withdraw her guarantee in relation to the husband’s loan obligations to the CBA and to restrict any further borrowings. By mid-1995 the husband had fallen behind in his loan repayments to the CBA concerning the business account.
In 1995 the CBA called in all money owing to them by the parties. This included the home loan, the business overdraft, the loan which the husband used to buy out his former business partner and an office fit out loan. The total demanded as at October 1995 was $505 225.31. The CBA issued a summons in the Supreme Court of New South Wales to enforce their rights under the mortgage.
On 3 May 1996 the CBA received judgment for $538 214. The CBA then moved to sell former matrimonial home. The CBA informed the husband that they would release the home as security upon payment of approximately $290 000 but the CBA was not prepared to release the wife from her liability under a guarantee she had given for the business loan.
The husband was very concerned to endeavour to find a way to keep the home for the wife and the children. The wife retained her own solicitor. It was decided that the wife would arrange for a company A Pty Limited (“A Pty Ltd”) to be established. The parties’ son Mr K was its sole shareholder and director. A Pty Ltd was trustee for a discretionary trust called the O Trust, the objects of the Trust being the parties’ sons Mr K and Mr F. The parties anticipated that purchasing the home in the name of a company would protect the wife against any claim by the CBA.
The CBA submitted the home to auction and A Pty Ltd purchased the home for $290 000. The husband provided approximately $80 000 to A Pty Ltd to fund the deposit, legal costs and stamp duty. The husband also arranged for private investors to loan $220 000 to A Pty Ltd on mortgage.
After the auction but before settlement the parties had consent orders made by the Local Court at Suburb F on 15 January 1997 (“the 1997 orders”). The orders made provision for property settlement and spousal maintenance and were as follows:
BY CONSENT
1That 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.
2That 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.
3For 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.
4That 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.
5That the Husband shall maintain all payments on the said Loan until the Debt is repaid in full.
6That 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
7In 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%)
8That the wife transfer all her right title and interest in the property known as [E Street, Town H] to the Husband.
9That 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.
10In 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 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%.
11That the husband maintain sufficient life Insurance to cover the amount of any outstanding Loan secured against the [Suburb D] property or any replacement thereof.
12That 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.
13That the Husband remove any of his personal belongings remaining in the premises at [C Street, Suburb D].
14That 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.
15That 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]”.
16That subject to the above provisions, each party be declared to be the owner of any other assets, accounts or shares presently in their possession.
After the sale of the home the CBA pursued the husband personally for approximately $260 000 which was the shortfall of what was owed. The husband endeavoured to enter a Deed of Arrangement under Part X of the Bankruptcy Act 1966 (Cth) with his creditors but the CBA rejected his proposal. The husband declared himself bankrupt on approximately 11 September 1997. His property at Town H was sold and the proceeds paid to creditors.
The husband, as a bankrupt, was not permitted by his professional association to operate a trust account. His firm Business B was amalgamated with the business of Mr P. The husband assumed the role of consultant.
At approximately this time, a commercial property at Q Street, Suburb F close to the offices of Business B was purchased by a company, R Pty Limited for approximately $370 000. The original shareholders were Ms N, and Ms T and the wife of Mr P. Mr P subsequently left the business and his wife’s share was acquired by the company U Pty Limited and held in trust for Ms N and Ms T.
In 2000 the husband was discharged from bankruptcy and he entered into partnership with Mr V who had been running the business. The husband later purchased Mr V’s interest in the business for $200 000.
In 2000 A Pty Ltd was required to pay land tax on the home. A Pty Ltd was de-registered as a consequence of not paying land tax. The private mortgagees who had offered the loan to purchase the home wanted their money back. So it became necessary to re-finance the home.
The husband and wife decided that they would endeavour to have the 1997 orders varied. They presented a form of consent orders again to the Local Court at Suburb F and these were made on 12 December 2003 (“the 2003 orders”).
The orders were as follows:
BY CONSENT:
That the Consent Orders made on 15 January 1997 at [Suburb F] Local Court under proceedings … be further varied as follows:-
1.That the Husband and Wife do all things necessary to direct [A Pty Ltd 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 ($220,000.00) 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.
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 Westpac 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 repayment 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 discharge the existing liability secured by way of mortgage to [J Pty. Limited] 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 necessary 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 or 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.
The orders had the effect of requiring the husband and the wife to endeavour to bring about the transfer of the home by A Pty Ltd to the wife. The orders also contained provisions for a new funding arrangement although the relevant order did not express the provision for the repayments of the required loan by the husband as being by way of spousal maintenance, unlike the previous orders.
A Pty Ltd transferred the home into the wife’s name, a new funding arrangement was established with Westpac Banking Corporation (“WBC”) providing a Premium Option Home loan in the wife’s name. Also an AMP life insurance policy was to be converted to an endowment policy to enable the funds to be applied to mortgage repayments. Otherwise the husband continued to make the mortgage repayments.
By 2008 the wife had not facilitated the conversion of the AMP life insurance policy despite the husband requesting her to do so. The husband stopped paying the mortgage on 12 June 2008.
In late 2008 the husband became entitled to an inheritance from the estates of his late parents. Over the years 2008 to 2013 he received a total of $241 640.
On 28 April 2009 the wife was served with a s 57(2)(b) Real Property Act 1900 (NSW) notice by WBC and s 80 Consumer Credit Code Notice claiming an amount of $303 647.83.
The wife filed an enforcement application. The parties resolved this issue by the making of further consent orders by this Court on 16 September 2009. The orders provided for termination of the AMP life insurance policy and for payment of the proceeds to the home loan. The husband resumed paying the mortgage payments from this time.
In 2009 the husband and Ms N purchased a farm at Town W as tenants in common in equal shares for approximately $439 000. The husband used approximately $30 000 of his inheritance for a deposit.
In 2009 the wife established her own business.
The husband decided that he wanted to sever his financial relationship with the wife. In December 2010 he again ceased making the mortgage repayments.
On 2 November 2011 the wife commenced making the mortgage payments.
On 15 February 2012 the wife filed an Application in a Case seeking orders directed to disclosure of the husband’s financial circumstances apparently in preparation for these enforcement proceedings.
On 6 June 2012 the husband filed a response seeking discharge of the relevant orders.
On 27 July 2012 the husband filed an Initiating Application seeking orders to discharge both the 1997 and 2003 orders which required him to pay the mortgage or alternatively orders pursuant to s 79A of the Family Law Act 1975 (Cth) (“the Act”).
On 29 August 2012 the wife filed a Response seeking summary dismissal of the husband’s Application.
On 11 March 2013 Justice Aldridge heard what became competing applications for summary dismissal. His Honour delivered judgment and dismissed the parties competing applications for summary dismissal on 2 May 2013.
Discussion
In my view, the first question to be determined is whether that part of paragraph 2 of the orders of the Local Court at Suburb F made on 12 December 2003 which imposes an obligation on the husband to “pay all Mortgage payments in respect of the Premium Option Home Loan until the said Premium Option Home Loan is discharged” together with paragraph 3 thereof is a spousal maintenance order or a property order.
It is submitted on behalf of the husband that this is a spousal maintenance order. On the other hand, it is submitted by learned counsel for the wife that this is a property order.
Because the submission on behalf of the wife was that this order was part of “a suite of [property] orders”, there was some focus on paragraph 1 of the 2003 orders. As indicated above, this is as follows:
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.
There was a submission by learned counsel for the husband, that neither paragraph 1 of the 2003 orders nor the orders which follow it including paragraphs 2 and 3 of those orders, could be property orders. It was submitted that this was because the power under s 79 of the Act to make property orders between these parties had been “spent” by the exercise of the power by the Local Court in making the 1997 property orders.
I must say I am far from persuaded by this submission. In my view, what has occurred is that at the time of the Local Court making the 2003 orders which deal with property, implicitly, the husband and the wife as persons “affected by an order made by a court under s 79 in property settlement proceedings (the 1997 orders)” have consented to a variation of the 1997 orders and the Local Court has made the 2003 orders pursuant to s 79A(1A) and s 79 so far as they relate to property.
Having said this, in my view, there must be doubt about the validity of this order. Neither the husband nor the wife owned any interest in the property which they were seeking to have transferred. It was owned by A Pty Ltd, the corporate trustee for the O Trust, the beneficiaries of which were the parties’ two sons. And neither the husband nor the wife were directors of A Pty Ltd, but rather their son Mr K was. In addition to these difficulties, A Pty Ltd was not a party to the proceedings. So what paragraph 1 of the 2003 orders required was for the husband and wife as non-owners of the property to somehow direct a non-party to the proceedings (A Pty Ltd) to transfer its property to the wife.
But the reality is that A Pty Ltd did transfer its interest in the property to the wife and she has become the registered owner of it. Neither of the parties has sought to have paragraph 1 of the 2003 orders set aside and they have acted generally in accordance with the orders.
It is certainly the intention of the husband and the wife, and the intention of their sons, that the wife remain the registered proprietor of the home.
Learned counsel for the wife submitted that paragraph 1 of the 2003 orders required the transfer of the property to the wife and that paragraphs 2 and 3 were facilitative of this property order. It was submitted that this was because paragraphs 2 and 3 provided for the funding necessary for the wife to receive title to the property, it being necessary for the private financiers to be paid out and the mortgage discharged to enable title to be transferred to the wife.
As indicated above, paragraph 2 of the 2003 orders is as follows:
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 ($220,000.00) 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.
I can accept that the first sentence of paragraph 2 is facilitative of paragraph 1, and as such, is a component of the property order. As learned counsel for the wife submitted the Full Court said in the case of Hickey & Hickey (2003) FLC 93-143 as follows at page 78,387:
... an order for property settlement made pursuant to the provisions of s. 79 cannot legally constitute “orders” in the plural sense, but rather is a single order made up of various paragraphs or clauses and …
… ultimately there is only one exercise of power under s. 79 in respect of the property of the parties, even though that single exercise of power may be reflected in a complex order of many paragraphs or clauses, each dealing with a different item of property and some dealing with questions of implementation.
But in my view, the second sentence of paragraph 2 cannot be a property order in the context of these proceedings. Nor in my view is paragraph 3 thereof. This is as follows:
3The 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 Westpac Premium Option Home Loan.
It has been clear, certainly at least since the decisions of the Full Court in Walters & Walters (1986) FLC 91-733 that the application of the power given by s 79(1) of the Act to alter interests in property is limited to property which existed at the time of the hearing. At page 75,344 Lindenmayer J said as follows:
In my opinion, [s 79(1)] does not give the Court a power to order a settlement of property which does not exist and could only be brought into existence by the exercise of an alleged borrowing capacity.
In my view, in the present case, this is in effect what counsel for the wife is seeking to assert.
In my view, these orders together constitute a continuation by way of a new spousal maintenance order of the husband’s obligation to pay the wife spousal maintenance which was established at paragraphs 4 and 5 of the 1997 orders. As indicated above, these were as follows:
4That 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.
5That the Husband shall maintain all payments on the said Loan until the Debt is repaid in full.
In my view, the reason why the husband’s obligation to pay the mortgage repayments was by way of spousal maintenance emerges from the facts. At the time these 1997 orders were made the parties had very little property to divide between them and the husband was anxious to try and find a way for the wife and the children to be able to remain in the former matrimonial home. It would have been impossible for the wife to fund the acquisition of the home at the time and the only source of repaying the necessary mortgage was the husband.
So in my view, when one looks at the history and context in which the husband assumed the obligation to pay the mortgage repayments, it becomes clear that the husband’s obligation at the second sentence of paragraph 2 and paragraph 3 of the 2003 orders is a continuation of his obligation at paragraphs 4 and 5 of the 1997 orders.
In any event, in my view, it is not a property order. Both learned counsel referred to the decision of the High Court in Mullane v Mullane (1983) 158 CLR 436. At page 445 the High Court said as follows:
In our opinion, therefore, sec. 79 on its proper construction refers only to orders which work 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 …”.
But there is a further part to the submission by learned counsel for the wife that paragraphs 2 and 3 of the 2003 orders amount to a property order. This is that the actual order which was engrossed by the Local Court on 12 December 2003 referred to there being “no orders for maintenance contained herein”.
This order, as distinct from the “Terms of Settlement” which contained paragraph 2, is as follows (omitting formal parts):
UPON APPLICATION made to the Court this day IT IS ORDERED:
1.That by consent orders, declarations and notations be made in terms of the document titled “Terms of Settlement” dated 11/12/03 filed herein and attached hereto.
2.There are no orders for maintenance contained herein.
3.That these proceedings be removed from the Active Pending Cases List.
It was submitted that this notation, “There are no orders for maintenance contained herein” is quite inconsistent with interpreting paragraphs 2 and 3 as being a spousal maintenance order.
Furthermore, it was submitted that the husband acknowledged that he has had family law experience. It was submitted that given his family law experience he would not have included the notation if paragraphs 2 and 3 had been a spousal maintenance order.
The husband’s explanation was that although he prepared the final version of the Terms of Settlement which contained paragraphs 2 and 3, he was not the author of the engrossed order which contained the notation and had no input into it, including the notation.
Upon my seeking further clarification from the husband in re-examination about this matter, the husband said as follows. His firm was using a precedent (software) package of orders and “if you were putting orders through to the Local Court, the front page was the coversheet that come with the software package and you had to have that cover sheet on when you filed your application with the Court”.
Despite learned counsel for the wife describing this explanation by the husband as “fatuous”, because of the view that I have about the husband’s credit I accept what he said about the circumstances in which the words came to appear on the order.
I also accept, as was submitted by learned counsel for the husband, that paragraph 2 of the covering orders “There are no orders for maintenance herein” is not an order but rather it is a notation.
It is clear from the Full Court’s decision in Naughton & Naughton (1983) FLC 91-327 that a notation is not an order. This case involved the interpretation of an order made by the Supreme Court of New South Wales under the Matrimonial Causes Act 1959. The relevant parts of the orders and notation were as follows:
3.That by consent orders be made in terms of para. 4 and 9 of ‘Terms of Settlement’ marked as Exhibit ‘A’ and filed herein which read as follows:
‘4.The respondent to pay to the petitioner the sum of $500 within 1 month from the date of the decree nisi being pronounced.’
‘9.The respondent to pay mortgage payments, water and Municipal rates on the subject property.’
4.That the costs of the wife assessed by consent at the sum of $350 be paid by the husband to the wife or to the solicitor for the wife.
AND THE COURT NOTED the contents of para. 5 and 7 of the said ‘Terms of Settlement’.”
(Emphasis added)
Paragraph 5 of the Terms of Settlement was an undertaking by the husband to undertake certain work on the former matrimonial home. Paragraph 7 of the Terms of Settlement was a right for the wife to reside in the former matrimonial home until her re-marriage and upon her re-marriage the home would be sold and the proceeds equally divided.
The Full Court said at page 78,225 as follows:
… it seems clear to us both from [Allen J’s] judgment and from the decree formally recording it that no order was made in those terms: the agreement of the parties in relation to para. 7 was noted.
The Full Court said further at page 78,226 as follows:
… In relation to para. 7, the decree is no more than an order that the terms of settlement be noted; it is not an order in respect of property.
Returning to the present case, in my view, the expression “There are no orders for maintenance herein” is a notation and cannot change the substance of the orders at paragraphs 2 and 3 of the 2003 orders. In my view, they constitute a spousal maintenance order.
For the reason that this order is a spousal maintenance order, it is capable of being varied or discharged pursuant to s 83 of the Act in appropriate circumstances. Sub-section 83(1) of the Act provides as follows:
(1)If there is in force an order (whether made before or after the commencement of this Act) with respect to the maintenance of a party to a marriage:
(a) made by the court; or
(b)made by another court and registered in the first-mentioned court in accordance with the applicable Rules of Court;
the court may, subject to section 111AA:
(c) discharge the order if there is any just cause for so doing;
(d)suspend its operation wholly or in part and either until further order or until a fixed time or the happening of some future event;
(e)revive wholly or in part an order suspended under paragraph (d); or
(f)subject to subsection (2), vary the order so as to increase or decrease any amount ordered to be paid or in any other manner.
Sub-section 83(2) provides as follows:
(2)The court shall not make an order increasing or decreasing an amount ordered to be paid by an order unless it is satisfied:
(a)that, since the order was made or last varied:
(i)the circumstances of a person for whose benefit the order was made have so changed (including the person entering into a stable and continuing de facto relationship);
(ii)the circumstances of the person liable to make payments under the order have so changed; or
(iii)in the case of an order that operates in favour of, or is binding on, a legal personal representative--the circumstances of the estate are such;
as to justify its so doing;
(b)that, since the order was made, or last varied, the cost of living has changed to such an extent as to justify its so doing;
(ba)in a case where the order was made by consent--that the amount ordered to be paid is not proper or adequate;
(c)that material facts were withheld from the court that made the order or from a court that varied the order or material evidence previously given before such a court was false.
Just Cause
It was submitted on behalf of the husband that there is a just cause for discharging the orders.
How the Court is to go about its determination of whether there is a “just cause” for discharging a maintenance order was considered by the Full Court in Vakil &Vakil (1997) FLC 92-743 and also more recently in Wreford & Caley (2010) 43 Fam LR 1, as was submitted by learned counsel for the husband.
In both cases the Full Court confirmed the appropriateness of the following observations by Lindenmayer J in Lutzke & Lutzke (1979) FLC 90-714 at page 78,832:
Looking first at sec. 83(1)(a) and (c), it is clear that the question for the Magistrate upon the husband's application for discharge was whether there was ``any just cause'' for discharging the order made in 1969 requiring the husband to pay $4.00 per week for the maintenance of each of his three children, and in my opinion it is also quite clear, as submitted by the wife's counsel (point (1) of the summarized argument above) that the husband, as the applicant, bore the onus of establishing the existence of such ``just cause''. If any authority is needed for such a basic proposition, it is to be found in Astbury and Astbury (1978) FLC 90-494 at p. 77,562. However, the Act is silent as to what may constitute ``just cause'' for the discharge of an order. In my opinion, however, the words ``just cause'' are not used in any broad general sense, nor are they intended to import any abstract notions of justice, ``palm tree'' or otherwise, into the determination of applications for discharge. In my opinion those words must be interpreted in the context of the Act as a whole, and in particular with regard to the other specific provisions of the Act which relate to maintenance. Thus a ``cause'' for the discharge of an existing maintenance order will be a ``just cause'' only if, having regard to the other provisions of the Act, particularly those relating to maintenance, it can be said that it is ``right'' or ``proper'' that the order should be discharged. If there were any room for doubt that this is the correct approach, in my opinion that doubt is removed by sec. 83(7) which provides:
“(7) For the purposes of this section, the court shall have regard to the provisions of sections 72, 73, 75 and 76.”
In Wreford the Full Court also referred to the following passage from Vakil at page 14:
5.23 Having regard to all of that authority we think that the above-quoted dicta of Lindenmayer J in Lutzke (supra), which appear to have received no judicial criticism over the last eighteen years, probably define the concept with as much precision as it is possible to give it in this context. Thus we conclude that, having regard to the current wording of s 83(7) (supra), the question whether there is “just cause” for discharging an order … is to be determined as an exercise of judicial discretion by reference to notions of what would be regarded as “right” and “proper” in Australia, having regard (inter alia) to the provisions of ss 72 and 75 of the Act. However, we are of the view that the effects of ss 83(7) is not such as to preclude regard also being paid to provisions of the Act other than ss 72 and 75, to the extent that they may be considered relevant in the circumstances of a particular case, and that may include, for example, s 81 and s 43(a).
In the present case, it is clear that in both 1997 when the original spousal maintenance orders were made and again in 2003 when the later spousal maintenance orders were made the husband consented to the making of the orders. Accordingly, he has conceded that at these times the wife could establish the threshold matter in s 72 of the Act namely, that the wife was unable to support herself adequately and that he was reasonably able to maintain her.
At all times from 1997 until June 2008 when the husband first stopped making the mortgage repayments, and subsequently, from late 2009 when he resumed making the repayments until December 2010 when he finally ceased the repayments the husband was committed to paying the mortgage repayments so that initially the wife and their sons would be able to continue to live in the former matrimonial home, and after their sons left home, the wife would be able to continue to live in the home.
When one looks back to the situation which was confronting the family in 1997, there was very little property. In fact, the husband had approximately $80 000 in his business account, there was no equity in the home, there was a small amount of equity in the Town H property, there was the husband’s business and otherwise the parties only had their personal property. The husband was working but he had amassed significant indebtedness, judgment in respect of the CBA liabilities having been entered by the Supreme Court of New South Wales against the husband and the wife the previous year. So, in reality, taking account of all indebtedness, there was a deficiency.
At the time (1997) the wife was working in an administrative position but her income would have been modest. In all the circumstances prevailing at the time, if the wife had applied for a spousal maintenance order it is likely that some form of order would have been made. In fact, learned counsel for the husband conceded such. But it was submitted by counsel for the husband that it would have been unlikely for such an order to have been expressed to continue indefinitely, rather it would have been likely to have been limited to continue for no more than approximately five years which would have provided opportunity for the wife to rearrange her financial affairs and become independent of the husband.
Whether or not it would be just to discharge the orders must require consideration of the parties’ respective financial positions. Their income, property and financial resources and their financial commitments are amongst the matters specifically referred to in s 75(2) of the Act. These are as follows.
Husband’s Financial Circumstances
The husband earns income of $1758 per week. This comprises his income of $1150 from his business, a motor vehicle benefit of $450, interest on monies deposited from his inheritance of $153 and interest on accounts of $5.
His property consists of the following:
$
1. 50 percent interest in farm at X Street, Town W
250,000
2. Westpac account
800
3. ING account
2,628
4. 4WD motor vehicle
20,000
5. Business B
335,000
6. Household contents
5,000
7. Inheritance
140,000
___________
$753,428
The husband has a superannuation benefit in the Y Self-Managed Superannuation Fund with the value of $125 000.
The husband has a financial resource in the sense that his long time partner Ms N owns a 50 percent interest in the property at Q Street, Suburb F, the property having a value in excess of $1 000 000 and a mortgage of approximately $270 000. So that Ms N’s equity appears to be at least $365 000 ($1 000 000 - $270 000
:2 = $365 000), and possibly considerably more. Ms N also owns a 50 percent interest in the Town W farm as well as owning her home at Z Street, Suburb AA.He also has an interest in the G Trust with a value of $150 000.
The husband’s liabilities consist of the following:
$
1. 50 percent mortgage on Town W farm
172,220
2. National Australia Bank overdraft
40,000
3. National Australia Bank buyout loan
43,000
4. Mastercard
29,339
5. Personal loan from BB Pty Limited
19,000
6. Loan from Y Unit Trust
62,000
7. Loan from M Pty Limited (In Administration)
960,947
8. Sundry Business Creditors
30,000
____________
$1,356,506
The husband estimates his weekly personal expenditure as being a total of $1647. But this is on the basis that his partner Ms N pays all household expenses (including those of the husband which he estimates at $375 per week) in respect of their household and the husband pays all expenses for the Town W farm including $420 which he describes as being for Ms N’s 50 percent share of the mortgage repayments, rates and other farm expenses.
Wife’s Financial Circumstances
The wife works as a in her business earning weekly income of $821.
Her property consists of the following:
$
1. The former matrimonial home at C Street, Suburb D
900,0002. Westpac account
14
3. Shares in Atlantis Resources
111
4. Japanese motor vehicle
26,000
5. Business
0
6. Household contents
5,000
___________
$931,125
The wife has an interest in the CC superannuation fund with a value of $90 043.
The wife’s liabilities consist of the following:
$
1. Westpac mortgage
122,421
2. Outstanding income tax
50,000
3. Car loan
30,000
4. Credit cards
35,292
5. Personal loans
25,582
____________
$263,295
The wife estimates her weekly personal expenditure as being a total of $1532.
It is clear that with an income of $821 per week and weekly expenditure of $1532 the wife is living well beyond her means.
Both the husband and the wife are 63 years of age and they are in reasonable health.
As indicated above the husband continues to work in his business. As also indicated above he has become responsible to his former company M Pty Limited for indebtedness of $960 947. It is said on his behalf that the only way he will be able to repay the indebtedness is by selling his business. This is not entirely clear to me. In my view, given the husband’s reasonable state of health, he could be expected to have the capacity to continue to work for some years.
On the other hand, the wife works full time in her business. She has operated her business since 2009 and obviously with considerable success. Prior to establishing her own business the wife worked for many years. In my view, given her reasonable state of health she could be expected to be able to continue working in this capacity for quite some years.
As indicated above, each of the parties is substantially indebted. If I was to discharge the maintenance order, at least theoretically, the husband’s prospects of paying his liabilities should improve, whereas those of the wife would diminish. And vice versa.
As I have said, the husband is living with Ms N who owns her own home, accommodation which is clearly of significant assistance to the husband. I have referred to other financial aspects of their cohabitation.
Neither of the parties is entitled to any income tested pension, allowance or benefit.
In my view, another relevant matter in considering the exercise of the Court’s discretion is the fact that at all relevant times from the time of the original orders until December 2010, apart from the husband’s lapse in making payments in 2008/2009, the husband has assured the wife that he would continue to make the mortgage payments until the loans secured thereby were paid out. This assurance was also confirmed by the evidence of each of the parties’ two adult sons.
But as against this, the wife’s circumstances have changed since 1997. At that time she needed assistance particularly with accommodation and she still had the parties’ two young adult children living in the home with her. But they subsequently left home and the wife also improved her earning situation. She became qualified to work as a professional, and as I have said, has been able to establish her own business.
On the other hand, the husband’s financial circumstances also changed. He became bankrupt, he was able to re-establish his business and he paid out a professional partner. He inherited money from the estate of his parents. But much of this money appears to have been put into supporting the business, the amount remaining being approximately $140 000 as indicated above.
The other significant matter for consideration is s 81 of the Act. This provides as follows:
In proceedings under this Part, other than proceedings under section 78 or proceedings with respect to maintenance payable during the subsistence of a marriage, the court shall, as far as practicable, make such orders as will finally determine the financial relationships between the parties to the marriage and avoid further proceedings between them.
The effect of the continuing spousal maintenance order is quite inconsistent with this requirement because it continues the financial relationship between these parties who have now been separated for in excess of 20 years.
Conclusion
Ultimately the question which must be determined is whether in all the circumstances of this case it would be “just” or “proper” to discharge the order.
The relevant matters include the following:
·The husband has been paying the mortgage for more than 14 years which has provided the following benefits to the wife;
-She has had accommodation at a very comfortable level over this period; and
-She has been able to maintain real estate which has a value in excess of $900 000 and significant equity therein, for her own enjoyment;
·Both parties are approaching retirement;
·The husband promised the wife, and their children, that he would pay off the mortgage but this arrangement under the consent orders was not an arrangement which would have been likely ever to have been imposed on him by a court (other than by consent order);
·The husband enjoys a higher income than the wife although her asset position is considerably more valuable than that of the husband alone;
·The husband’s partner Ms N appears to own equity in real estate with a value considerably greater than that of the wife;
·Ms N otherwise is a valuable financial resource for the husband;
·The requirement of finality required by s 81.
In my view, it would not be “just” for the husband’s obligations under the maintenance order to continue for other than some limited period. In my view, the wife has not been able, for some years now, to establish a proper need for maintenance. She has developed professional skills which she has been able to use to establish and maintain her business. True it is that her income is modest by comparison with that of the husband. And the evidence demonstrates, in my view, that she has been living beyond her means, certainly since the husband stopped paying the mortgage.
But as was submitted by learned counsel for the husband, the wife is living in a large and valuable home which provides a level of accommodation which, while no doubt is very comfortable, could be said, bearing in mind her circumstances, to be somewhat larger than she really requires, especially given that the children left home many years ago, and bearing in mind the costs of maintaining it especially in terms of the mortgage repayments.
I appreciate that the wife does not wish to sell her home. She said it was acquired largely from her inheritance and no doubt it has a great deal of intrinsic value to her, it having been the family home. But if she was to sell it, this would remove most of her debt and still leave sufficient capital for her to acquire a modest home. Without the income required to service her considerable debt the wife would have sufficient income from her business to be able to enjoy a reasonable standard of living which in my view would be appropriate in all the relevant circumstances.
The exercise of discretion ultimately to discharge the maintenance order requires in my view application of what learned counsel for the husband very appropriately described as “balance”. He submitted that in all the circumstances, the appropriate balance would be for the husband to provide the wife with a modest lump sum, the amount suggested being $25 000, and for the husband to pay 12 months of mortgage payments at half the required rate of $1500 per month. This he submitted would provide the wife with a period over which she could determine whether she would be able to manage the mortgage payments without assistance, or perhaps undertake some re-financing, or inferentially at least, consider selling her home.
I accept the general thrust of the submission by learned counsel for the husband. But particularly bearing in mind that the wife has incurred an indebtedness of in excess of $50 000 legal costs in these proceedings, I propose to require the husband to pay her a sum of $30 000 and order that he pay spousal maintenance of $750 per month for 12 months. On this basis I would discharge the orders.
I accept that the husband’s financial circumstances are quite strained, in particular by his indebtedness to the company. But in all the circumstances, in my view, it will be reasonable to require him to adjust his financial affairs and find the money which he will be required to pay to the wife. One would have thought that the lump sum would be able to be sourced somehow from the remaining part of the husband’s inheritance.
I certify that the preceding one hundred and twenty-two (122) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Johnston delivered on 15 October 2015.
Associate:
Date: 15 October 2015
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