Tallant & Tallant
[2017] FamCAFC 115
•5 July 2017
FAMILY COURT OF AUSTRALIA
| TALLANT & TALLANT | [2017] FamCAFC 115 |
| FAMILY LAW – APPEAL – PROPERTY – Where there were two sets of final property settlement orders made by consent between the parties – Where the first orders were by way of property settlement to transfer the husband’s interest in the home to a company and the husband remained liable for the mortgage by way of spousal maintenance – Where neither the husband nor the wife had a legal or beneficial interest in the company – Where the mortgage was refinanced and the first orders required variation – Where the second orders varied the first orders but were not expressed to be paid by way of spousal maintenance – Where the husband subsequently ceased paying the mortgage on the matrimonial home – Where the wife sought to enforce the second orders and the husband sought to have them discharged – Whether the relevant orders should be classified as property settlement or spousal maintenance orders – Whether the second orders are valid – Whether there was any property of the parties such that valid orders for property settlement could be made – Where there was no evidence of the wife retaining an equitable interest – Where the second orders could not be property settlement orders – Where the second orders were a continuation of the husband’s spousal maintenance obligations – Appeal dismissed. FAMILY LAW – APPEAL – APPLICATION TO ADDUCE FURTHER EVIDENCE – Where the wife sought to adduce further evidence of the husband’s involvement with the preparation of the second orders to support her argument that the second orders were property orders – Where there was a notation on the coversheet of the second orders which the wife contended supported her argument – Where a notation is not an order – Where the further evidence is not probative of the question whether the orders were property settlement or maintenance orders – Application dismissed. | ||
| Family Law Act 1975 (Cth) ss 4, 38(2), 79A, 117 Family Law Rules 2004 (Cth) | ||
| Ascot Investments Pty Ltd v Harper (1981) 148 CLR 337 | ||
| APPELLANT: | MS TALLANT | |
| RESPONDENT: | MR TALLANT |
| FILE NUMBER: | PAC | 2136 | of | 2009 |
| APPEAL NUMBER: | EA | 181 | of | 2015 |
| DATE DELIVERED: | 5 July 2017 |
| PLACE DELIVERED: | Brisbane |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Bryant CJ, May & McClelland JJ |
| HEARING DATE: | 26 October 2016 |
| LOWER COURT JURISDICTION: | Family Court of Australia |
| LOWER COURT JUDGMENT DATE: | 15 October 2015 |
| LOWER COURT MNC: | [2015] FamCA 864 |
REPRESENTATION
| COUNSEL FOR THE APPELLANT: | Ms Bridger |
| SOLICITOR FOR THE APPELLANT: | Jo-Anna FS Moy |
| COUNSEL FOR THE RESPONDENT: | Mr Givney |
| SOLICITOR FOR THE RESPONDENT: | B Lawyers |
Orders
The appeal is dismissed.
The application in an appeal filed 15 April 2016 to adduce further evidence is dismissed.
No order as to costs.
Note: The form of the order is subject to the entry of the order in the Court’s records.
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).
Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).
| THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT SYDNEY |
Appeal Number: EA 181 of 2015
File Number: PAC 2136 of 2009
| Ms TALLANT |
Appellant
And
| Mr TALLANT |
Respondent
REASONS FOR JUDGMENT
The proceedings before the primary judge commenced as an application by the wife to enforce obligations contained in orders made by consent on 12 December 2003 (“the Second Orders”), and an application by the husband to discharge the obligations.
This gave rise before the primary judge and on appeal to the proper interpretation of the Second Orders. The Second Orders succeeded orders made in 1997 (“the First Orders”), which were also made by consent to transfer to the wife (or her nominee) the husband’s interest in the parties’ home, subject to the mortgage and for the husband to meet the mortgage payments.
The Second Orders, purported to vary the First Orders. The point of contention before the primary judge was whether obligations on the husband were properly characterised as spouse maintenance (and could be discharged or varied), or, on the other hand, were property orders. If the latter they could only be varied by an application under s 79A of the Family Law Act 1975 (Cth) (“the Act”) and upon establishment of one of the elements of that section. As we will explain, another crucial question which emerged is whether there was jurisdiction to make the Second Orders.
On 15 October 2015, the primary judge found that the orders in dispute contained in the Second Orders were spousal maintenance orders. The primary judge varied the Second Orders and the husband was ordered to pay by way of spousal maintenance a lump sum of $30,000 and in addition $750.00 per month until 2 October 2016.
In a Notice of Appeal filed 11 November 2015, the wife appeals from those orders, seeking that the husband pay her further moneys by way of reimbursement of mortgage payments made by her. In essence, the grounds of appeal assert that the primary judge should have found that the relevant orders were property settlement orders not spousal maintenance.
Included in the husband’s submissions on appeal, filed on 10 June 2016, is a Notice of Contention as follows:
27.In the event that the Full Court forms a view that his Honour was wrong when finding that the Orders (sic) were made in 2003 were made pursuant to Section 79A(1A) then the Respondent seeks to rely upon the Notice of Contention.
28.The Respondent wished to contend that the decision of the Trial Judge should be affirmed but on the ground that the Trial Judge failed to decide some matter of fact or law.
History
After the parties separated in 1994, the wife and children remained in the home. The husband experienced financial difficulties and the parties’ jointly owned home at Suburb D was to be sold by the bank. To overcome this, a company, A Pty. Ltd, was established, as trustee of a discretionary trust with the parties’ adult son, as the sole shareholder and director. The beneficiaries were the other children of the marriage. The husband and wife were not beneficiaries.
A Pty Ltd purchased the home at the auction conducted by the bank. The husband provided $80,000 to A Pty Ltd for the deposit and the balance was borrowed from private investors.
Prior to settlement of the sale, the parties entered into consent orders at a Local Court on 15 January 1997 (the First Orders).
The relevant orders were as follows:
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.
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.
…
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%)
…
11That the husband maintain sufficient life Insurance to cover the amount of any outstanding Loan secured against the [D] property or any replacement thereof.
(Emphasis added)
The purchase of the D property was subsequently settled and conveyed to the company. Thus it could be said that in conformity with the First Orders, the husband transferred the home to A Pty Ltd, as nominated by the wife and he remained liable for the whole of the mortgage, characterised in the orders as spouse maintenance. However, as we have explained at [7], the wife did not retain a legal or beneficial interest in the house.
On 11 September 1997 the husband was declared bankrupt.
In 2000 it became necessary to re-finance the loan. It was agreed between the husband and wife that the First Orders should be varied. Again the orders were made at a Local Court, on 12 December 2003 (the Second Orders).
The relevant orders are as follows:
BY CONSENT:
That the Consent Orders made on 15 January 1997 at [a] Local Court under proceedings … be further varied 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.
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.
It can be seen that paragraph 2 is not expressed to be by way of spousal maintenance, as had paragraph 4 in the First Orders. In addition, it is not apparent how A Pty Ltd, a company not a party to the proceedings, could be validly ordered to transfer property to the wife.
Notwithstanding, the parties complied and the house was transferred into the wife’s name and the husband continued to make the mortgage repayments on the Westpac loan of $220,000.
It was also part of the Second Orders:
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 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.
The wife apparently failed to do this and, in response, on 12 June 2008 the husband ceased paying the mortgage.
On 28 April 2009 the wife was served with enforcement proceedings by the Westpac bank. The wife filed proceedings in the Family Court of Australia. That application was resolved with further consent orders being made on 16 September 2009. The husband resumed paying the mortgage liability.
In December 2010 the husband again ceased making the mortgage payments.
The wife initially filed an application for enforcement of the payment of the mortgage payments, on the basis they were property orders. The husband then filed a response, seeking discharge of the relevant orders (asserting they were spousal maintenance orders) or alternatively seeking orders pursuant to s 79A(1A) of the Act. The parties each then filed applications, including seeking summary dismissal of the others applications. Those summary dismissal applications were dismissed by Aldridge J on 2 May 2013.
Consequent on the summary dismissal applications being refused, in December 2014 the primary judge then heard the competing applications by the wife for enforcement and by the husband seeking a declaration that the payment obligation contained in Orders 2 and 3 of the Second Orders is pursuant to a spousal maintenance obligation and for the discharge of the Second Orders.
The Issues for Determination
The husband’s contention was that the obligation to meet the mortgage payments is a spousal maintenance order whereas the wife claimed it was a property order. The classification matters because, if it is a property order, the husband was obliged to make the mortgage payments until it was discharged (subject to the order being set aside under s 79A) and such an order would not be susceptible to variation as a spousal maintenance order.
Correctly, we think, the judge questioned the validity of the second order as neither of the parties owned the house at the time the Second Orders were made, it was owned by the company. Additionally, neither party had an interest in the company which, as noted, was not a party to the proceedings.
Validity of the Second Orders
This jurisdiction point needs to be considered first to determine whether the Second Orders were validly made as property orders.
There is no doubt that orders in relation to property, are limited to property in existence at the time the order is made and must be “property of the parties” (per s 79(1)). Property is defined in s 4(1) of the Act:
(a)in relation to the parties to a marriage or either of them — means property to which those parties are, or that party is, as the case may be, entitled, whether in possession or reversion; or
…
In Mullane v Mullane (1983) 158 CLR 436, the High Court said at 445:
In our opinion, therefore, s 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: Stow v Mineral Holdings (Aust.) Pty Ltd [1979] HCA 30; (1977) 51 ALJR 672 at p 679; Ex parte Meneling Station Pty Ltd. It does not exclude every interest which is not assignable or transferable (cf. per Mason J. in Meneling Station [at 343]). Thus an order under s 79 may give rise to an interest in property which is defeasible on assignment or transfer to a third party, or on the occurrence of some other event, or which the holder is enjoined from assigning or transferring.
It follows, then, that s 79 does not authorize a mere modification of a liberty to enjoy property. An order which merely excludes one spouse from the enjoyment of property, albeit for many years, in order to permit its better enjoyment by the other does not alter an interest in that property, though a spouse acquiring an interest in property under a s 79 order may be entitled, in virtue of that interest, to exclude the other from its enjoyment. Where the section refers to a settlement of property, it should be understood as using that expression in a sense which is closely related to the meaning which the expression bears in the law of real and personal property.
Save for orders made under s 79A, once an order is made that adjusts the parties’ interest in their matrimonial property, on a final basis, the Court cannot make a further order in respect to that property. As was said by Bryant CJ and Coleman J in Gabel & Yardley (2008) FLC 93-386:
57.The legislative framework, and the authorities to which we have been referred, suggest that the Court's power to make orders with respect to settlement of property is not necessarily exercisable at only one time, and can properly be exercised by a succession of orders until the power to make orders with respect to property is exhausted. Logic suggests that the power to make orders for settlement of property will be exhausted or “spent” when there remains no property of the parties to the marriage or either of them with respect to which orders by way of alteration of interests of property could be or have been made. In those circumstances there can be no matrimonial cause to enliven the jurisdiction to make orders for settlement of property.
Further, in that respect, Bryant CJ and Coleman J also made reference to the passage in Mullane, referred to in [27] of these Reasons:
75.In the passage to which we have earlier referred, the High Court considered the nature of an order under section 79 and said further in that regard:
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 s. 79A and exists only in special circumstances, namely, where 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: s. 79A, and cf. In the Marriage of Taylor [(1977) 30 FLR 17; 15 ALR 266)] and on appeal sub nom. Taylor v. Taylor [(1979) 143 CLR 1]; In the Marriage of Branchflower [(1979) 44 FLR 16]. It is common ground that s. 79A has no application in the present case.
The primary judge noted that the husband’s counsel submitted that the power under s 79 of the Act to make property orders was “spent” by the exercise of power by the Local Court in making the 1997 property orders. If correct that would have the effect that the Second Orders were made without jurisdiction, and susceptible to discharge, on an application to set aside. But absent an order to set aside, the “orders of a federal court which is established as a superior court of record are valid until set aside, even if the orders are made in excess of jurisdiction…” State of NSW v Kable (2013) 252 CLR 118 at 32.
Counsel for the wife submitted that the Second Orders were validly made, inferring an exercise of jurisdiction under s 79A(1A) which says:
A court may, on application by a person affected by an order made by a court under section 79 in property proceedings, and with the consent of all the parties to the proceedings in which the order was made, vary the order or set the order aside and, if it considers appropriate, make another order under section 79 in substitution for the order set aside.
His Honour, referring to the husband’s submission said “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 orders in 2003, 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”.
Neither party sought to impugn his Honour’s finding that the Second Orders were made pursuant to s 79A(1A). Indeed the respondent contended that in the event the Full Court formed a view that his Honour was wrong when finding the orders were made pursuant to s 79A(1A), the decision should nevertheless be affirmed on some other basis which was not entirely clear to us.
However his Honour remained concerned about the validity of the orders, pointing out that neither the husband nor wife had any interest in the property and that what was 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, his Honour went on to note that “…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.”
The Second Orders are expressed as a variation, not a setting aside, of the First Orders. They require the husband and wife to direct a third party, not a party to the proceedings, to transfer its property to the wife. Ascot Investments Pty Ltd v Harper (1981) 148 CLR 337 illuminates this well understood issue in relation to third parties. Specifically, a third party has a right to be heard before an order is made that affects the interests of that third party (see Official Trustee in Bankruptcy v Donovan and Donovan and Stevens (1996) FLC 92-703). We note in addition that lest it be thought that s 90AE may be called into aid, that section and Part V111AA did not come into effect until 17 December 2003, after the Second Orders were purportedly made.
There was no evidence that any kind of notice or procedural fairness attended the orders. The third party owner was not a party and the orders merely record that the parties were directed to require a third party to transfer its interest to the wife. The proprietor, as we have noted at [7] was the corporate trustee of a discretionary trust with the parties’ adult son, as the sole shareholder and director. The beneficiaries were the other children of the marriage. The husband and wife were not beneficiaries.
It is impossible to conceive of a remedy in the event that the third party did not transfer its interest in the property to the wife. The orders were not even directed to the company but rather to the husband and wife. They appear to assume erroneously that the husband and wife had some legal interest in the company susceptible to a direction by them.
Although not argued before the primary judge, counsel for the wife raised the issue, for the first time during argument in the appeal, that the wife may have had an equitable interest in the property and that there was property upon which the Second Orders could operate, being the wife’s equitable interest in the trust property. It was submitted that support for this argument is gained from the comments of the High Court in Mullane, contained at page 445 (to which we have already referred).
It is correct that equitable interests can be regarded as property. For example, in Kennon v Spry (2008) 238 CLR 366 the High Court treated a trust in which neither the husband or the wife were a beneficiary, as property of the parties. Further, in Ebner &Pappas and Anor the Full Court found that the wife acquired an equitable interest in the property, upon orders which required the husband to transfer his interest in the property to the wife once she paid a sufficient sum to the husband to discharge the mortgage.
Further, the right of a bankrupt to the excess of his assets over and above his debts are another form of equitable interest recognised as property (see Carvill and Carvill (1984) FLC 91-586).
The difficulty for the wife with this argument is that there was no evidence of an equitable interest. An equitable interest could, therefore, only be found by drawing inferences. There are inferences that might potentially support this proposition. For example:
a)The fact that the wife agreed to transfer her interest in the property to the company;
b)The fact that the wife and children lived in the property;
c)The fact that the husband made mortgage payments in respect of the property; and finally
d)The fact that the company transferred the property back to the wife.
These might all point to the wife having some continuing interest in the property in 2003. But it is not determinative of such an interest and, in the absence of evidence it is merely speculative. We could not therefore conclude that the wife had any beneficial interest in the company in 2003.
However, as his Honour notes, A did transfer its interest in the property to the wife after the making of the Second Orders, neither party sought to have paragraph 1 of the Second Orders set aside and both have acted generally in accordance with the orders. Further neither party seeks to impugn the Second Order including, of most relevance to this appeal, order 2 of the Second Orders. In those circumstances, despite our view that the order could not have been validly made in its present form, we turn to consider the argument regarding the construction of order 2, that is, whether it is a maintenance order or a property order.
Proper construction of the Orders
We turn now to a consideration of Grounds 1 and 2 being the question of the proper construction of the orders.
The primary judge found that orders 2 and 3 of the Second Orders were not property orders but should be characterised as spouse maintenance obligations. The orders relevantly said:
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 sum of Two hundred and twenty thousand dollars ($220,000.00) pursuant to the Westpac Premium Option Home Loan.
His Honour reached his conclusions on a number of grounds. First he examined the nature of order 2 and said at [61]:
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.
The primary judge found at [62] that was what in effect was being asserted. Section 80(1) of the Act gives wide powers to the Court “in exercising its powers under [Part V111]”. It may, inter alia “order payment of a weekly, monthly, yearly or other periodic sum” (s80(1)(b)). But s 80 is not itself a head of power: King and King (1977) FLC 90-299; Davidson and Davidson (No2) (1994) FLC 92-469.
The effect of the orders was that the third party, A Pty Ltd, transferred its interest in the property to the wife. The existing mortgage was discharged (order 8). The wife obtained a new mortgage (order 3) by borrowing from Westpac. The husband agreed to meet the mortgage payments and various other orders dealt with the husband’s obligation including the provision of a life insurance policy as security for the payments. But none of these obligations of themselves constitute a settlement of property rather than spouse maintenance. As his Honour correctly noted in our view, the husband’s obligations came about through a borrowing by the wife when the property was transferred to her. There was no “property” in the borrowing that founded an order under s 79.
The appellant contends that the obligation placed on the husband is merely the “mechanics of the financing to enable that transfer to take effect”. We disagree. The orders must find expression in the “property of the parties or either of them” (see s 4(1) definition of property settlement proceedings (a)(i)). A borrowing separate from the property transferred is not “property of the parties”. And as his Honour noted “a right of a proprietary nature, not a mere personal right…” Mullane v Mullane (1883)158 CLR 436.
His Honour then proceeded to further explain by reference to the earlier orders, and engaging with the wife’s arguments, why the husband’s obligations should be characterised as spouse maintenance and not property orders. The primary judge found that the Second Orders together with the First Orders had to be read together:
63.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. …
64.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.
Relying on the “history and context” (at [65]) it was found that the husband’s obligation contained in the second sentence of paragraph 2 and 3 of the Second Orders is a continuation of his obligation at paragraph 4 and 5 of the First Orders, being a spouse maintenance obligation.
It was argued on behalf of the wife that an application of general principles in relation to the construction of orders did not allow the primary judge to come to such a conclusion. Counsel referred to Kirkpatrick v Kotis [2004] NSWSC 1265. The paragraphs referred to, in our view, demonstrate that the trial judge was correct. In particular:
57.In the case of consent orders, where surrounding circumstances can be used as an aid to construction, those surrounding circumstances can have the effect that an order which is ambiguous, considered in isolation, is found to be not ambiguous when read in light of the surrounding circumstances. As the surrounding circumstances that are taken into account are facts known to all parties to the consent order, they are the very thing that a person trying to understand and obey the order would take into account. Hence it is appropriate that any question of whether the order is ambiguous should be answered only after such facts have been taken into account.
The approach and conclusion of the primary judge in relation to the construction of the Second Orders were correct.
Two other matters were raised by the appellant to support the contention that the obligations should be characterised as property orders.
A concession made at another hearing
The first is a matter, not argued before the primary judge, but sought to be contended in support of the appeal.
It was submitted on behalf of the wife that as the husband conceded before Aldridge J in the summary dismissal proceedings, that the orders were property settlement orders, he was in effect estopped from later asserting otherwise.
Aldridge J’s judgment of 2 May 2013 states, at [6], that: “It was agreed between the parties that Order 2 … was made pursuant to s79 of the Family Law Act and is not a spousal maintenance order.”
Counsel for the respondent in the appeal submitted that this concession was irrelevant because it was made in different proceedings, namely proceedings in relation to summary dismissal, and the husband could not be bound by that concession in the hearing before Johnston J. Counsel for the wife indicated that she would have raised this before the primary judge but failed to do so because she overlooked it.
In our view the husband cannot be held to a concession made for different purposes in different proceedings and, in any event, as a matter of law if his concession was wrongly made then it has no effect. The primary judge found that the orders were characterised as maintenance, not property, and had his Honour been aware of the concession it would not have bound the husband or his Honour. The matter was not raised before his Honour and there was no reliance on it by the wife.
We also accept the submission that the concession was made for the purposes of different proceedings. In particular there may be many reasons why a concession would be made in relation to an interim summary process and then a different position taken at trial in order to save costs in the interlocutory proceedings.
Moreover the concession could not expand the jurisdiction of the Court to make the second order, as an order under s 79 of the Act, in circumstances where, it could not otherwise have done so. In Macqueen v Frackelton (1909) 8 CLR 673) the High Court said:
Jurisdiction which the law gives to a public tribunal for the general welfare cannot be annulled at the will of the parties; and just as consent cannot create such a jurisdiction , neither can consent abolish it.
For these reasons, the concession made before Aldridge J cannot affect the outcome of the appeal.
Wife’s Application in an Appeal filed 15 April 2016
The second aspect of the wife’s argument before the primary judge was that reference to the Second Orders show words on the cover sheet that there are “no orders for maintenance contained herein”. The evidence revealed that the husband, who is professionally employed had the documents prepared in his office. The husband’s answer at trial to the suggestion that the words were of significance was that this was merely a cover sheet, used as a precedent for all orders made in the Local Court. The judge accepted this explanation. In addition, the primary judge rejected the wife’s argument on the basis that these words were not part of the order itself, merely a notation.
In respect of the latter, the primary judge is entirely correct; a notation is not an order. In Naughton and Naughton (1983) FLC 91-327, the wife instituted proceedings for dissolution of marriage under the Matrimonial Causes Act 1969 (Cth) in a Supreme Court. Terms of settlement, including orders about the matrimonial home, were contained in notations. The husband later applied to the Family Court for property settlement orders. The wife sought to dismiss the husband’s property application, and argued that property settlement orders had already been made in the form of the notations. The trial judge dismissed the wife’s application concluding no orders had been made by the Supreme Court. The notations simply recorded that the parties had agreed to the matters set out in the terms of settlement. That decision was upheld on appeal.
In this appeal, the wife by an application in the appeal, now seeks to adduce further evidence to demonstrate that the judge should not have accepted the husband’s evidence in relation to the notation. In support of this, reference was made to the judge’s findings of credit asserting that if this further evidence had been before the judge the result would have been different.
During the trial, the primary judge asked some questions of the husband about the Second Orders, which relevantly said:
UPON APPLICATION made to the Court this day IT IS ORDERED:-
1.That by Consent Orders, declaration and notations be made in terms of the document titled “Terms of Settlement” dated 11 December 2003 filed herein and attached hereto.
2.There are no Orders for maintenance contained herein.
…
The following exchange took place between the trial judge and the husband:
HIS HONOUR: Yesterday Ms Bridges took you to the 12 December 2003 order, and she asked you some questions about that. And, as you’re aware, there is an order which says: “There are no orders for maintenance contained herein”. And yesterday you said something like you had nothing to do with that. So I would like to know what you mean by that?---
THE HUSBAND: We were using a precedent package, and if you were putting orders through to the local court that front page was the cover sheet that was – that came with the software package. And you had to have that cover sheet on when you filed your application at the court. I think it was after the commencement of the Child Support Act, which took away the local courts rights insofar as maintenance was concerned, and I think that’s why that phrase is there. I was not the author of the front page.
HIS HONOUR: You say you weren’t the author of the front page, but it just happened to be attached to your order?---
THE HUSBAND: Attached to the order. The software, you see, inserted my name across the bottom of it as well.
HIS HONOUR: Yes. So what are you saying? It was just attached to the order?---
THE HUSBAND: It – it becomes part of the order. I have no direct recollection of why that was there, unless – why the local court insisted on it being there.
(Transcript 19 December 2014, p.30, l. 4 – 22)
The judge then explained his concern in relation to this evidence after some objection by counsel for the wife:
HIS HONOUR: I mean, yesterday, when it was raised, it certainly raised questions in my mind. And I think I’m now being told that, at the time that these orders were prepared, that became a part of the order, which is attached to the order?---Became a standard sort of – standard sort of order.
But you prepared the order?---Yes, I did. Certainly.
And that’s – I think what you’re saying is that’s a standard order, which, in your practice and experience, the local court system required to be a part of the order. Is that - - -?---That’s - - -
When you - - -?---The facility at the local court - - -
You told us you submitted these orders – there was a procedure under which you could go to the registry and you could hand in applications for the making of consent orders – and the orders that you put in were – I’m pretty sure – as they’ve been annexed to the affidavits?---Yes.
And they comprise the operative parts of the orders, which we’ve all been talking about, and this document headed Order, which is like a covering part of the order which is actually the order itself, I guess - - -?---It is. Yes.
And you say that had been used for some time and you just attached that to it?---Yes
In support of the wife’s application to adduce further evidence about this topic, an affidavit of Ms DD was also filed. Ms DD is a software developer and was previously employed by the business which developed the software used by the husband’s business to prepare the Second Orders.
Ms DD confirms in her affidavit that she knew that the husband was a client of the software and had purchased a software package which included the precedents.
The wife submits that the evidence of Ms DD demonstrates that, in order to produce the orders as they appeared, the user of the software would have deliberately selected an option which generated the words “There are no orders for maintenance contained herein.” It is thus submitted that the orders must have been by way of property settlement.
Counsel for the husband, in response, argues that there is nothing in the affidavit of Ms DD which challenges the husband’s assertion that he did not create the document; rather it was someone else in the office.
The basis for the exercise of discretion to admit further evidence on appeal was discussed in the well-known High Court decision of CDJ v VAJ (1998) 197 CLR 172:
104In the exercise of the discretion conferred by a power such as s 93A(2), the critical factor is the subject matter of the proceedings with which the appeal is concerned. This is because the purpose of the power to admit further evidence is to ensure that the proceedings do not miscarry. Tests such as those stated in Wollongong Corporation based on the need for finality in litigation are therefore not necessarily applicable to cases in which the interests of third parties, such as children, are at stake (86), although factors such as finality, discoverability of the evidence and its likely effect on the orders made are usually relevant to the exercise of the discretion. In an application at common law to admit further evidence, the court applies principles, bordering on fixed rules. In an application under s 93A(2) and similar provisions, the Full Court or Court of Appeal weighs factors, although it may of course develop guidelines for weighing those factors and exercising the discretion.
…
109One consideration in construing s 93A(2) is its remedial nature. Its principal purpose is to give to the Full Court a discretionary power to admit further evidence where that evidence, if accepted, would demonstrate that the order under appeal is erroneous. The power exists to facilitate the avoidance of errors which cannot be otherwise remedied by the application of the conventional appellate procedures. A further, but in practice subsidiary, purpose is to give the Full Court a discretion to admit further evidence to buttress the findings already made.
…
114No doubt the Full Court will readily admit further evidence which is not in dispute and which the Court is able to evaluate and take into account in considering the appeal without the necessity to have the proceedings re-heard. Further evidence of this kind is particularly likely to be admitted where the evidence relates to events occurring after trial. In the case of undisputed evidence which the Full Court can evaluate as part of the evidence in the appeal, the discretion to admit the evidence may even be properly exercised without the Full Court considering what effect it would have had on the trial judge's decision. In that context, the likely effect of the further evidence on the Full Court's view of the evidence before the trial judge is the important consideration. Where there is no need for a new trial or extensive taking of evidence, other discretionary factors such as the availability of the evidence at the trial and the need for finality of litigation are likely to be more relevant in the exercise of the discretion than the effect that the evidence would have had at the trial.
It was submitted by counsel for the wife that the basis for seeking the positive exercise of discretion to admit the evidence is as follows:
a)The evidence of Ms DD was not available at the trial because it was not an issue;
b)The evidence is credible and affects the husband’s evidence which was accepted by the judge; and
c)Had the evidence been before the trial judge it would most likely have persuaded the judge not to accept the evidence of the husband.
In our view this application that further evidence be admitted should not be allowed. It is not probative of the question whether the orders were property settlement or maintenance orders. Further, it does not call into question the evidence of the husband who said that the cover sheet was produced by another person in the office. It cannot be seen that there would have been a different outcome if such evidence had been before the primary judge.
The only other ground of appeal [3] is that there was a failure by the judge to “adequately reveal the reasoning process which led him to conclude that the husband’s obligation at sentence 2 of paragraph 2 and paragraph 3 of the [Second Orders] was a continuation of his obligation to pay spousal maintenance”.
We have set out the relevant paragraphs. In our view the judge’s reasons are clear and cogent.
The husband sought that the order should be discharged and that there was just cause for so doing (s 83(1)(c) of the Act). There is no doubt about the correct approach to such an application (Lutzke and Lutzke (1979) FLC 90-714). It is entirely a matter of judicial discretion by reference to notions of what is “right” and “proper”.
The judge recounted the parties’ respective positions at the time the two orders were made, including that there was no property to be divided, rather an overall deficiency, and that most likely if the wife had applied for spousal maintenance an order would have been made. The judge then referred to the parties’ current circumstances.
In making the orders it is clear that the primary judge was properly influenced by the provisions of s 81 which are 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.
At [114] his Honour said:
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.
It is not apparent that the wide discretion reposed in a judge in considering such matters was not properly exercised or that there is any error. In any event, there is no appeal from the discretion exercised by the judge in the sense that there was error in the variation orders.
Accordingly the appeal should be dismissed.
Notice of Contention
Although there is no provision in the Family Law Rules 2004 (Cth) for filing such a document, it is generally accepted that as s 38(2) of the Act provides for the application of the rules of the High Court where the Family Law Rules are insufficient. The High Court Rules 2004 (Cth) therefore apply to the filing of a Notice of Contention.
Rule 42.08.05 of the High Court Rules provides for the filing of a Notice of Contention, including the required form. In this case, the Notice of Contention was not filed, but rather formed part of the submissions of the husband.
It is not necessary for us to deal with the Notice of Contention because the appeal will be dismissed. However we would observe that a failure to comply with the High Court Rules may in other cases lead to difficulties in answering such a notice and it being considered by the court.
Costs
At the conclusion of the hearing of the appeal we asked counsel to make submissions in relation to costs. Counsel for the husband advised that in the event the appeal did not succeed, he would seek costs.
Although the submissions were not entirely clear, counsel for the wife ultimately said that the wife would resist an order for costs.
Section 117(1) of the Act provides, that subject to certain considerations, each party to proceedings shall bear their own costs.
In considering whether an order for costs should be made against the wife regard will be had to the relevant factors set out in s 117(2A) of the Act.
While the appeal did not succeed, complex issues of law were raised. The conduct of these proceedings has been expensive for both parties. As noted in the Reasons of the trial judge, the wife had already expended $50,000 in legal costs (at [121]) and the husbands financial circumstances at the time of the trial were strained (at [122]). The reasons of the primary judge contained considerable detail about their financial circumstances.
In light of the complex legal issues raised and the costs incurred by both of the parties, we are of the view that this is not a case where there are circumstances justifying a costs order against the wife.
There will therefore be no order as to costs.
I certify that the preceding ninety four (94) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court (Bryant CJ, May & McClelland JJ) delivered on 5 July 2017.
Associate:
Date: 5 July 2017
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