Thorpe & Stirling
[2021] FedCFamC1A 86
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1) APPELLATE JURISDICTION
Thorpe & Stirling [2021] FedCFamC1A 86
Appeal from: Stirling & Thorpe [2020] FCCA 3002 Appeal number(s): EAA 165 of 2020 File number(s): SYC 6078 of 2014 Judgment of: ALDRIDGE, MCEVOY & ALTOBELLI JJ Date of judgment: 15 December 2021 Catchwords: FAMILY LAW – APPEAL – PROPERTY – Appeal against enforcement orders requiring the appellant to make all payments due and owing under the relevant order – Where the respondent re-married – Whether that order is properly characterised as a property settlement order or a spousal maintenance order– Adequacy of reasons – Error established – Order was a spousal maintenance order – Appeal allowed and orders are set aside – Costs certificates granted to the parties for the appeal. Legislation: Family Law Act 1975 (Cth) ss 4(1), 39, 72, 77, 77A, 79, 80, 82(4), 83
Federal Proceedings (Costs) Act 1981 (Cth)
Cases cited: Beck and Beck (No. 2) (1983) FLC 91-318; [1983] FamCA 7
Bennett and Bennett (1991) FLC 92-191; [1990] FamCA 148
Best and Best (1993) FLC 92-418; [1993] FamCA 107
Collins and Collins (1977) FLC 90-286; [1977] FamCA 54
DL v The Queen (2018) 266 CLR 1; [2018] HCA 26
Jones v Skinner (1835) 5 LJ Ch 87
Landon & Landon [2021] FedCFamC1A 42
Metwally v University of Wollongong (1985) 60 ALR 68;
[1985] HCA 28
Mullane v Mullane (1983) 158 CLR 436; [1983] HCA 4
Murray v Director, Family Services, ACT (1993) FLC 92-416; [1993] FamCA 103
Poletti and Poletti (1990) 15 Fam LR 794; [1990] FamCA 79
Pollard v RRR Corporation Pty Ltd [2009] NSWCA 110
Schokker and Edwards (1986) FLC 91-723; [1986] FamCA 7
Stanford v Stanford (2012) 247 CLR 108; [2012] HCA 52
Suttor v Gundowda Pty Ltd (1950) 81 CLR 418; [1950] HCA 35
Taylor and Taylor (1977) FLC 90-226; [1977] FamCA 31
Walters and Walters (1986) FLC 91-733; [1986] FamCA 8
Weiss v Weiss (Unreported, Full Court of the Family Court of Australia, 30 June 1977)
Number of paragraphs: 57 Date of hearing: 12 October 2021 Place: Sydney (via video link) Counsel for the Appellant: Mr Longworth with Ms Reid Solicitor for the Appellant: Broun Abrahams Burreket Counsel for the Respondent: Mr Richardson SC Solicitor for the Respondent: VRT Lawyers ORDERS
EAA 165 of 2020
SYC 6078 of 2014FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
DIVISION 1 APPELLATE JURISDICTIONBETWEEN: MR THORPE
Appellant
AND: MS STIRLING
Respondent
ORDER MADE BY:
ALDRIDGE, MCEVOY & ALTOBELLI JJ
DATE OF ORDER:
15 DECEMBER 2021
THE COURT ORDERS THAT:
1.The Application in an Appeal filed on 14 September 2021 is dismissed.
2.The appeal is allowed and the orders made on 11 November 2020 are set aside.
3.The enforcement application filed on 20 March 2020 is dismissed.
4.The Court grants to the appellant a costs certificate pursuant to s 9 of the Federal Proceedings (Costs) Act 1981 (Cth) being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the appellant in respect of the costs incurred by the appellant in relation to the appeal.
5.The Court grants to the respondent a costs certificate pursuant to s 6 of the Federal Proceedings (Costs) Act 1981 (Cth) being a certificate that, in the opinion of the Court, it would be appropriate for the Attorney-General to authorise a payment under that Act to the respondent in respect of the costs incurred by the respondent in relation to the appeal.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
IT IS NOTED that publication of this judgment by this Court under the pseudonym Thorpe & Stirling has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
ALDRIDGE, MCEVOY & ALTOBELLI JJ:
INTRODUCTION
On 5 December 2014 a suite of property settlement orders were made by consent and subsequently varied on 15 February 2019 also by consent (together described as “the consent orders”) in proceedings between Ms Stirling (“the wife”) and Mr Thorpe (“the husband”). One of the orders, Order 36, required the husband to pay “periodic sums which represent 100% of the contributions to a mortgage loan amount not exceeding $500,000”. That arrangement was put in place.
The wife remarried in December 2019. The husband asserted that as Order 36 was properly to be characterised as a spousal maintenance order and not a property settlement order, it ceased to have effect because of the wife’s remarriage, pursuant to s 82(4) of the Family Law Act 1975 (Cth) (“the Act”).
The wife did not agree and commenced enforcement proceedings.
On 11 November 2020 a judge of the Federal Circuit Court of Australia (as it was then known) rejected the husband’s contentions and made a suite of enforcement orders. The husband has now appealed those orders.
Save for the ground that asserts that the primary judge’s reasons were inadequate, the grounds of appeal raise but one question, which is whether Order 36 is properly characterised as a property settlement order or a spousal maintenance order. Ground 12 was not pressed.
The wife filed an Application in an Appeal on 14 September 2021 seeking an extension of time in which to file a Notice of Contention. That application was not pursued and it will be dismissed.
THE APPEAL
Were the primary judge’s reasons adequate? (Ground 11)
As has frequently been observed, it is of fundamental importance that a judge’s findings and the ultimate conclusion reached are explained in a way that sufficiently exposes the path of reasoning. Failure to do so will constitute an error of law (see for example DL v The Queen (2018) 266 CLR 1 at [32]–[33] and [130]–[131]; Bennett and Bennett (1991) FLC 92-191; Landon & Landon [2021] FedCFamC1A 42; Pollard v RRR Corporation Pty Ltd [2009] NSWCA 110).
If the judge’s reasoning process is readily discernible, the reasons will be adequate.
In his Summary of Argument, the husband lists 12 matters which, according to the husband, demonstrate that the primary judge’s “logic is entirely unclear” and that the “logical linkages between the factual and legal issues” are not revealed (Husband’s Summary of Argument filed on 13 September 2021, paragraphs 76–77). That however, is an assertion of error and not of adequacy of reasons.
We consider that his Honour’s reasons reveal his reasoning process and are therefore adequate.
Is Order 36 a property order or a maintenance order?
In order to understand the submissions it is necessary to describe the relevant orders more fully and to place them in a factual matrix.
We will not, however, refer to the extensive evidence given by the parties of their subjective intention as to the characterisation of Order 36 or attempt to construe the orders to identify the objective intention of the parties, as revealed by the terms themselves. It is the nature of the order itself and the power that was exercised to make it that leads to it being identified as either a property order or a maintenance order.
The primary judge found that the net property of the parties, as disclosed to the registrar at the time the consent orders were made, was $880,367, which included $213,332 of superannuation. The major asset was a property at Suburb C (“the Suburb C property”), owned by the wife which was valued at $1.73 million and subject to a mortgage in the sum of $1,057,028.
In addition, the husband had a financial resource available to him in the form of anticipated bonuses of between $200,000 and $600,000.
Order 22 of the consent orders required the wife to sell the Suburb C property, on the terms set out in the order. The balance of the sale price, after paying the necessary expenses associated with the sale and the mortgage was dealt with by Order 23.7, which provided that:
23.7 The balance to be divided between the parties as follows:
(a) the sum of $430,000.00 to the Wife, conditional upon the Husband providing a continuing contribution to mortgage payments as envisaged below in Order 36.
(b)the balance remaining to the Husband.
(Emphasis added)
His Honour said that the effect of the orders was to distribute 63.18 per cent of the net property to the wife and 36.82 per cent to the husband. Thus the husband received a total of $324,141 (at [12(k)]).
Orders 27–35 provided for the payment of spousal maintenance by the husband to the wife up to 31 December 2020 (later amended to 31 December 2019 by consent orders made on 15 February 2019) with orders dealing with the effect of any rise or fall in the parties’ income on the amount to be paid.
Order 36 provided:
36.From the date of these Orders as and when the Wife purchases a new property, notwithstanding the income received by the Wife, the Husband shall do all things and sign all necessary documents to be listed as a guarantor for a mortgage held by the Wife in relation to the new property purchased in her sole name, and the Husband shall pay periodic sums which represent 100% of the contributions to a mortgage loan amount not exceeding $500,000 (which sum shall include stamp duty and the Wife’s moving costs) and which are to be no less than the minimum required by the relevant financial institution and shall be payable by the Husband until such time as the loan is paid out in full and the mortgage discharged. The Husband shall pay and is to be solely liable for and, shall indemnify the Wife as to strata levies, council rates and water rates and will pay these expenses as and when they fall due until such time as the loan is paid out in full and the mortgage discharged.
From this order it can be seen that it is said to stay in place regardless of any change in the needs of the wife or the wife’s and the husband’s capacity to earn income. That, to some extent, suggests that the order may not have been made pursuant to the power granted for orders for spousal maintenance.
It can also be seen that the husband’s liability under the mortgage remains until it is paid out. As was pointed out in submissions, that liability could well exceed what the husband otherwise received under the consent orders, essentially resulting in him paying more to the wife than he received under the remaining orders.
The jurisdiction of the Court to make property settlement orders arises from s 39 of the Act. The relevant matrimonial cause is “proceedings between the parties to a marriage with respect to the property of the parties to the marriage or either of them” (s 4(1) of the Act).
Property is a word of the widest import, as to which see the definition in s 4(1) of the Act and Jones v Skinner (1835) 5 LJ Ch 87 at 90 where, in an oft quoted sentence, Lord Langdale MR said “property” is the most comprehensive of all terms which can be used, inasmuch as it is indicative and descriptive of every possible interest which the party can have”.
Section 79 of the Act provides:
Alteration of property interests
(1)In property settlement proceedings, the court may make such order as it considers appropriate:
(a)in the case of proceedings with respect to the property of the parties to the marriage or either of them—altering the interests of the parties to the marriage in the property; or
(b)in the case of proceedings with respect to the vested bankruptcy property in relation to a bankrupt party to the marriage—altering the interests of the bankruptcy trustee in the vested bankruptcy property;
including:
(c)an order for a settlement of property in substitution for any interest in the property; and
(d) an order requiring:
(i) either or both of the parties to the marriage; or
(ii) the relevant bankruptcy trustee (if any);
to make, for the benefit of either or both of the parties to the marriage or a child of the marriage, such settlement or transfer of property as the court determines.
In Mullane v Mullane (1983) 158 CLR 436 (“Mullane”) at 445 the High Court said:
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.
For Order 36 to be an order under s 79 of the Act, it therefore requires the order work such an alteration.
It is plain that property, as defined, is limited to existing property, whatever it may be (Stanford v Stanford (2012) 247 CLR 108 at [37]), and does not extend to property that might be received in the future even where that interest could be described as a financial resource. Thus, whilst financial resources which might be available to a person, but which do not constitute property or future income, cannot be the subject of division under s 79 of the Act they may be taken into account when determining what division of the property is appropriate. Further, the section does not empower the Court to make an order against property which does not presently exist but could be brought into existence by the exercise of borrowing capacity (Walters and Walters (1986) FLC 91-733 at 75,344; Best and Best (1993) FLC 92-418 at 80,280).
In Taylor and Taylor (1977) FLC 90-226 (“Taylor”), the majority (Asche SJ and Dovey J) quoted with approval the following remarks in Weiss v Weiss (Unreported, Full Court of the Family Court of Australia, 30 June 1977) (“Weiss”) from Watson J at first instance at 76,196:
A property order on the other hand involves the transfer of property fixed in value, the payment of a fixed sum or the assumption of a fixed liability. It does not vary with the needs of the person receiving its benefit and its effects are intended to survive the death of either party. It is meant to be a permanent adjustment of the capital assets and liabilities of the parties, and of its essence it is based upon capital interests rather than on the income of the parties.
Whilst we do not necessarily agree that the only orders that may be made under s 79 of the Act are those described in the passage, the point to be drawn from it is that such orders, whatever they may be, are based on a division of the existing capital interests.
As part of the power to make orders under s 79 of the Act, the Court may make orders not merely adjusting the interests of the parties in property, but also may make orders “in any form” including orders for the payment of a lump sum, “that it considers will best meet the justice and equity of the case” and by “tak[ing] into account all the property of the parties” (Collins and Collins (1977) FLC 90-286 at 76,539). That lump sum cannot however exceed the value of the property of the parties (Poletti and Poletti (1990) 15 Fam LR 794 at 800).
In this case, the existing property to be divided consisted of a house, superannuation and chattels, all of which was divided between the parties. There was no further property to be divided.
The primary judge found that the wife acquired a new property on 27 September 2014, the existence of which was disclosed to the Court prior to the consent orders being made. The parties, however, effectively excluded it from the property and liabilities they identified to the Court as being divided by the orders and which were to be taken into account in determining whether the consent orders were just and equitable.
Notwithstanding that this new property was not otherwise the subject of the consent orders, the orders obliged the husband to undertake a financial burden in relation to that property. That obligation was not part of the orders dividing the remaining property between the parties. The division of the Suburb C property and superannuation did not require the payment of a further sum, whether by lump sum or instalments, to effect a just and equitable outcome, unless it is to be suggested, as it was not, that such an outcome was dependent on the mortgage payments being made.
The extent of the husband’s obligation under Order 36 was not and could not have been known at the time the orders were made. In that circumstance, it is difficult to see how the Court could come to a view that the orders were just and equitable because the final distribution of property was unknown, if the mortgage payments were indeed part of that consideration.
This is easily demonstrated. The primary judge found that at the hearing the husband had paid $155,000 pursuant to Order 36. As the husband points out, if that payment had been made from the property he otherwise received from the orders, which as we have seen is a permissible course, he would have received $169,141 or 19.21 per cent of the property available for division (Husband’s Summary of Argument filed on 13 September 2021, paragraph 61). The percentage would decrease as further payments were made and it can readily be seen, over the life of a mortgage for $500,000, that the husband was likely to end up paying more to the wife then he received under the orders in total.
In short, Order 36 had the effect of creating a liability of a greater value than the existing property which is a course that cannot be followed under s 79 of the Act.
Finally, as his Honour found at [74], the husband’s obligations under Order 36 “were likely to be paid out of the husband’s future income stream including his receipt of any anticipated bonus payments”. Each of those was a financial resource. Each could be taken into account to justify the wife receiving a greater share of the existing property (the Suburb C property and superannuation) but not, in effect, to enlarge the pool of property available for division. The continuing obligation to pay the mortgage (and to act as guarantor) is so akin to him being required to borrow funds to enlarge the property pool as to attract the same principle.
Order 36 does not work an alteration of the interests of the parties in their property but rather creates an obligation which is separate to the division of that property.
We consider, therefore, that Order 36 could not be an order made under s 79 of the Act because that section does not empower the making of such an order. On the binary choice put to the Court, the only remaining possibility is that it is a maintenance order (Ground 2 suggests that the order was not made pursuant to any valid power but that argument was not pursued in submissions).
The relevant matrimonial cause for spousal maintenance is “proceedings between the parties to a marriage with respect to the maintenance of one of the parties” (s 4(1) of the Act). Sections 72 and 77 set out the circumstances in which the Court may make an order for maintenance but do not specify what kind of order may be made. That work is left to s 80 of the Act, which also applies to property settlement orders. That section empowers the Court to make a wide range of orders including payment of a lump sum, whether in one amount or by instalments (s 80(1)(a)), payment of a periodic sum (s 80(1)(b)), transfer of specific property by way of maintenance (s 80(1)(ba)) and “any other order (whether or not of the same nature as those mentioned in the preceding paragraphs of this section), which it thinks it is necessary to make to do justice” (s 80(1)(k)).
Thus orders for property settlement and spousal maintenance may look very similar in form and regard must therefore be had to the substance of the matter before the Court.
Returning to Taylor, the Full Court again quoted Weiss with approval to refer to maintenance as follows at 76,195–76,196:
The meaning of maintenance order as distinct from property order has to be gathered from the definition of ‘matrimonial cause’ in sec. 4 and from sec. 44, 76, 79A, 80, 82 and 83. A maintenance order is simply an order for the payment of money, usually at regular intervals for the support of the person to be maintained. The essential feature of such an order is that, unless ordered to be paid in one lump sum, it rises and falls with the need of the person to be maintained, having regard also to the means of the person paying the maintenance. It terminates automatically on the death of either the payer or the payee.
Again we do not agree that the range of available orders pursuant to the maintenance provisions is limited to those described in the quotation (as an example of the breadth of the orders that may be made see Mullane). As their Honours in Taylor recognised at 76,195, the power is not limited to payment of money and the Court may settle property on a party for the purpose of spousal maintenance. The point to be made is that maintenance is not a final division of assets but the provision of support for one of the parties.
An order for maintenance, however, and unlike property orders, does “not necessarily involve a reference to some particular item of property” (Mullane at 445). As the High Court pointed out, orders for maintenance are open to variation in that they may be varied or discharged, whereas orders under s 79 are not subject to such review and may only be varied in the limited circumstances set out in s 79A of the Act (Mullane at 444). This, of course, is because the possibility of variation of maintenance orders is necessary to take into account the rise and fall in needs and income.
Finally, maintenance orders can be made taking into account all of the financial and personal resources of a party and in the expectation that a financial resource might be resorted to in order to comply with the order (Beck and Beck (No. 2) (1983) FLC 91-318; Schokker and Edwards (1986) FLC 91-723).
For these reasons, Order 36 can be seen as being made as a spousal maintenance order. It is an order for the payment of money for the support of the wife. Whether that power was correctly used to make the order is not a question raised by this appeal.
It follows that the inclusion of the words “notwithstanding the income received by the wife” are not decisive. The parties, by the use of these words in the order, cannot expand the Court’s powers under s 79 or oust the jurisdiction of the Court to vary a maintenance order pursuant to s 83 of the Act.
Reference was made to s 77A of the Act which provides that if the Court makes a maintenance order requiring payment of a lump sum, whether in one amount or by instalments, or by transfer or settlement of property, the Court is to express that the order be subject to the section and specify the portion of the payment or value of the property attributable to maintenance. Where the order does not so specify the payment, transfer or settlement it “shall be taken not to make provision for the maintenance of a party” (s 77A(2) of the Act).
Section 77A of the Act does not apply as Order 36 is neither an order for the payment of a lump sum nor a transfer or settlement of property.
The wife submitted that in this event, the Court would find that Order 36 should be taken to be an order under s 82(4) of the Act. That subsection provides:
Cessation of spousal maintenance orders
…
4.An order with respect to the maintenance of a party to a marriage ceases to have effect upon the re‑marriage of the party unless in special circumstances a court having jurisdiction under this Act otherwise orders.
We are quite unable to construe the order in this way. First, there was no identification of any relevant special circumstances in the evidence before the registrar. Secondly, there is no basis for thinking that Order 36, as framed, was intended to be an order under s 82(4) of the Act. Thirdly, such an order should be clear and obvious.
The fact that this issue was not raised before the primary judge further adds to its difficulty.
The wife submitted that if it was found that Order 36 was made beyond power, in that it was neither a property settlement order nor a spousal maintenance order, then the entire set of orders should be set aside. We accept that the Court has “a positive duty” to review the decision of a registrar which is incorrect, in the appropriate circumstances (Murray v Director, Family Services, ACT (1993) FLC 92-416 at 80,250).
This is not such a case. The Court is hearing an appeal against the determination by the primary judge on the issue the parties placed before the Court which was whether the obligations of the husband under Order 36 had ended due to the re-marriage of the wife. The evidence and submissions were confined to that point.
An appeal from that decision is not the appropriate vehicle to seek to review the registrar’s decision to make the consent orders, especially where there was no application for an extension of time or any formal application at all.
Further, it is now too late to raise the issue because it is quite likely that the course of that hearing would have been different as evidence relevant to that question would have been called (Metwally v University of Wollongong (1985) 60 ALR 68; Suttor v Gundowda Pty Ltd (1950) 81 CLR 418).
CONCLUSION
It follows that we are satisfied that his Honour erred in characterising Order 36 as a property settlement order and in making a series of enforcement orders. The appeal will be allowed and those orders set aside. The consequence is that the enforcement application must be dismissed.
COSTS
The husband did not seek an order for costs. As requested there will be costs certificates granted for both parties under the Federal Proceedings (Costs) Act1981 (Cth).
I certify that the preceding fifty-seven (57) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justices Aldridge, McEvoy and Altobelli. Associate:
Dated: 15 December 2021
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