Truscott, I.G. and Truscott, P.M.

[1986] FamCA 19

In the marriage of TRUSCOTT, I.G. and TRUSCOTT, P.M.

(1986) FLC ¶91-761

Full Court of the Family Court of Australia at Brisbane.

Judgment delivered 12 August 1986.

Before: Murray, Strauss and Elliott JJ.

Murray J.: I have had the advantage of reading the reasons for judgment of Strauss and Elliott JJ. and I agree with the orders proposed and with their reasons. I would add some comments of my own however, as regards the so-called ``twelve months rule'' pertaining to the collection of arrears of maintenance.

The ``twelve months rule'' can at best be described as a guideline. Enforcement of a maintenance order is at all times a matter of discretion, and there is no legislative restriction on the exercise of this discretion. In view of the High Court decision in Norbis v. Norbis (1986) FLC ¶91-712, it seems to me that there is even less room for the exercise of a guideline which appears to have been entrenched in some States (e.g. Victoria) and not in others (e.g. South Australia).

I am not even sure that it is a useful guide for the exercise of discretion in the matter of enforcement. I cannot see what rationale justifies taking twelve months' accumulation of arrears as either the usual or appropriate maximum quantum for enforcement, as each case must be judged on its merits. True it is that maintenance enforcement is not intended as a means of collecting capital; but the more important criterion is whether justice and equity are done in a particular case. In my opinion, in this case justice and equity demand that the husband should pay the arrears of maintenance.

Strauss and Elliott JJ.: This is an appeal by the husband and a cross-appeal by the wife against certain orders of Buckley J. made 12 December 1985.

Material facts are that the husband, now 37, and the wife, now 35, had married in August 1968. They had three children, now aged 16, 14 and 13. The parties separated on 27 November 1982. The wife had brought child maintenance proceedings before a magistrate resulting in an order on 17 February 1983 for payment by the husband of $5 per week for each of the children. The parties resumed cohabitation in May 1983 and finally separated in July 1983. A decree nisi was pronounced in February 1985.

Following the final separation the wife took further maintenance proceedings before a magistrate which were transferred to this Court. An interim order for payment by the husband of $20 per week for each of the three children was made in April 1985 and on the hearing of the substantive application a month later the order was varied to $35 per week for each child. There were subsequent enforcement proceedings. At the hearing before his Honour there was an original property application by the husband and an answering application by the wife together with a claim for arrears of maintenance under the very first order made by the magistrate on 17 February 1983 amounting to $1,260.

The findings of his Honour as to assets of the parties have not been challenged in the appeal. These were:

Equity in home  $23,500
     Furniture  $4,000
     Equity in land at Turkey Beach      $8,000
     Falcon motor vehicle                  $200
     Holden motor vehicle disposed             
       of by wife  $1,200
  --------
  6,900
  --------

The gravamen of the husband's appeal is that the liabilities of the parties at separation and at trial exceeded the value of their assets and should have resulted in a finding that there remained in the balancing no property available for an order under sec. 79.

This argument arose from his Honour's findings that the husband was indebted to his mother to the extent of $35,000 and that the parties were indebted to her in respect of a separate loan to the extent of $10,000.

Although having some superficial arithmetical substance in that liabilities of $45,000 clearly exceed assets of $36,900, the argument misconceives the nature of proceedings in this Court under sec. 79 of the Act.

His Honour was here not dealing with a bankrupt estate where both assets and liabilities are totalled to ascertain if anything remains. His Honour had before him an application by the husband seeking by way of property settlement that the wife be ordered to transfer to him her joint interest in the matrimonial home and any interest in their family trust and that she should be further ordered to indemnify him against any claim by his mother over the joint debt of $10,000, and the mortgage debt on the home.

In the event, his Honour's orders provided that the wife do transfer her interest in the home to the husband, but conditional on his paying to her the sum of $10,500.

It must be remembered that the wife came to this Court as a joint owner at law of the matrimonial home. On his Honour's findings she would have been entitled under the general law to one-half of its net value of $23,500. Neither the husband's debt to his mother of $35,000 nor the parties' joint debt of $10,000 were secured against the home. At most, the wife would have been liable to repay one-half of the joint debt.

His Honour considered the contributions of the parties towards the acquisition of property and in that regard specifically found the sum of $35,000 borrowed by the husband from his mother to have been a contribution by the husband for the purposes of sec. 79.

Grounds of appeal 5(3) and 5(4) assert that his Honour paid no or insufficient regard to the husband's contributions towards the reduction in the liabilities of the parties and his continuing obligation to meet such liabilities.

These grounds appear unsustainable. His Honour specifically found that since the separation the husband had borne the responsibility for the payment of all outgoings in respect of the properties in issue, though receiving rental for the home since the wife vacated it in March of 1984. These rents contributed towards mortgage payments.

As to the loans by the husband's mother, his Honour found them to have been made in September 1980; he continued:

``The parties agree that the loans by the husband's mother have not been repaid. No evidence was adduced before me as to whether she has taken or intends to take any steps to recover the moneys owing.''

His Honour went on to examine the situation of the parties at the time of the hearing. The husband was comfortably situated with assets acquired after separation of some $32,000, living in a stable relationship with a woman who was herself employed. His business had generated a gross income of some $44,000 in the year before the hearing.

The wife was in employment as a clerk earning a salary net after tax of $237 per week. She had a motor vehicle worth $4,000, furniture worth $750 and a little cash. She had the three children to rear and care for and the past history had been one of some difficulty in obtaining maintenance for them from the husband.

In our view it was in no way unreasonable for his Honour to order that the wife's relinquishing of her interest in the home should be conditional upon her receiving from the husband $10,500. There was a great disparity between the financial position of the parties, after a marriage of some 16 years and the wife had the task ahead of her of rearing three children, the youngest of whom was 13. Although by the letter of the law there existed a liability in the husband to repay his mother $35,000 and in the parties to repay to the mother $10,000, there was no evidence that the mother had taken any steps to recover the money; indeed there was some evidence that the husband regarded the loans as being in the nature of his inheritance. In any event, as between the parties, his Honour took the sums into account as a contribution emanating from the husband (less the half of the second loan which he credited to the wife).

His Honour went on to order that the husband indemnify the wife against any claim by Mrs Truscott Snr in respect of the loan to the husband of $35,000. His order did not include any indemnity as to the loan of $10,000, which in law is the only loan as to which any liability of the wife could arise and therefore any indemnity ever be likely to be applicable. Ground 2 of the wife's cross-appeal has sought an order that the indemnity by the husband cover this sum as well. In our view the circumstances suggest that his Honour did not include an indemnity as to this second loan due to oversight. He clearly intended the wife to be indemnified, and this was the only sum as to which the question of indemnity could possibly arise.

Much was made during hearing of both the appeal and cross-appeal as to his Honour's finding as to the husband's gambling during the marriage and its effect on the family fortunes. This finding was in the following terms:

``The parties also agree that for substantial periods of time between 1971 and 1981 the husband expended large sums on his gambling activities and that as a result thereof the parties' resources were diminished.''

It was the appellant husband's case that the finding was wrong. In the wife's cross-appeal it was asserted that his Honour gave the factor of this gambling being a drain on the parties' financial resources too little weight.

As to the case for the appellant, we consider that the record contains a number of admissions by the husband as to his losses on gambling over many years, albeit perhaps not amounting to a clear agreement by him that they extended over the period found by his Honour. There were clear admissions, however, as to his losses, including the following excerpt during his cross-examination:

``And you would agree, would you not, that although you had a winning day here and there, you definitely lost money on this? — Yes, I did lose.

And you would shudder to think how much, if you could work it out, would you not? — In retrospect, I guess I would.''

As to the case argued in the cross-appeal on this issue, his Honour clearly gave regard to the question; but in so far as it was submitted that he gave the effect on the parties' financial resources of this gambling insufficient weight, it is only necessary to refer to a much quoted passage from Lovell v. Lovell (1950) 81 C.L.R. 513 at p. 519 where Latham C.J. said:

``... when the appellate tribunal is considering questions of weight it should not regard itself as being in the same position as the learned trial judge. In the absence of exclusion of relevant considerations or the admission of irrelevant considerations an appellate tribunal should not set aside an order made in the exercise of a judicial discretion (as to which see Sharp v. Wakefield (1891) A.C. 173 at p. 179) unless the failure to give adequate weight to relevant considerations really amounts to a failure to exercise the discretion actually entrusted to the Court.''

In the light of the clear reference in the judgment to the husband's gambling and its resulting diminution of the parties' resources, we do not consider the cross-appeal as to the weight given to this factor in the ultimate decision can be sustained.

The other grounds set out in para. (b) to (h) inclusive of ground 1 of the wife's cross-appeal as to the adequacy of the property settlement awarded to the wife also turned solely on the questions of weight and similarly fail the test expounded above by Latham C.J. Ground 2 merely claims the wife's award to have been manifestly inadequate.

The clearly established principles governing appeals from the exercise of a judicial discretion have been enunciated in a number of cases including Lovell v. Lovell (supra).House v. The King (1936) 55 C.L.R. 499. Storie v. Storie (1949) 80 C.L.R. 597 and Gronow v. Gronow (1979) FLC ¶90-716. They need not be restated.

In our view and applying those principles, his Honour's discretion in no way miscarried. It does not appear that he made any error or mistook the facts, that he acted upon any wrong principle, took into account irrelevant matters or failed to take into account matters which were material. As a consequence the wife's cross-appeal as to the amount awarded her by way of property settlement must fail.

For reasons already given, however, we consider that the cross-appeal should be allowed in part in that his Honour's order should be amended to include in the indemnity provision of order 1(f) the loan to the husband and wife in the sum of $10,000.

The wife further cross-appealed against his Honour's dismissal of her application for payment of arrears of maintenance of $1,260, under the order of the Magistrate's Court at Caloundra on 17 February 1983.

His Honour had held that the order of the Magistrate's Court had ceased to have effect as and from the commencement of the period of the parties' subsequent resumption of cohabitation on or about 7 May 1983. In so doing, he followed a decision of Treyvaud J. in Pietkowski and Pietkowski (1981) FLC ¶91-032. The grounds of appeal were that his Honour erred (a) in failing on the facts of the instant case to distinguish the decision in Pietkowski's case (which had been based on a different factual situation) and (b) following the decision in Pietkowski's case in any event.

In our view the appeal on this point succeeds. In Pietkowski's case Treyvaud J. engaged in a comprehensive examination of United Kingdom and Australian authorities of other years as to the effect of the resumption of cohabitation on the continuance of orders for maintenance. He also examined the now superseded statutory provisions of various State Parliaments. In the event he found the decisions of the Full Courts of Victoria and New South Wales to have been at variance. It is of sufficient significance to remark that none of the reported cases referred to in his judgment were decided more recently than forty years ago, and his Honour's ultimate choice of the view espoused in the past by the Full Court of Victoria was based primarily on the reasoning in Graham v. Graham (1899) 25 V.L.R. 101, cited in Stokes v. Stokes (1928) V.L.R. 479.

Perhaps ironically in light of the view we have come to, Treyvaud J. found support for his decision in the clearly discernible thrust of the Family Law Act in encouraging ``reconciliation, or at least conciliation between spouses, in preference to the litigation of their disputes and problems''. He saw it as undesirable in the public interest, and likely to be injurious to parties attempting reconciliation, if it were known to be the case that a maintenance order should automatically be revived upon a subsequent separation of the spouses.

But as the facts in the present case have demonstrated, the self-same principles of encouraging reconciliation of parties and conciliation of their disputes support quite contrary arguments. The wife in this case incurred considerable cost and expense in obtaining a maintenance order for her children in February 1983. The parties resumed cohabitation in May 1983 for two months before finally separating in July of that year. Thereafter the husband would not pay any maintenance for the three children under that order (even though the order was for a modest $5 per week for each of them) and her efforts to have the order enforced through the Court at Whyalla ran into difficulties because the Clerk of the Court there knew of the decision in Pietkowski's case and considered apparently that the wife's order no longer continued in force.

It could further equally be said that the automatic annulment or cessation of effect of a maintenance order by recommencement of a period of cohabitation could be a positive hindrance to any likely reconciliation of parties, which the Family Law Act otherwise encourages; and that it is undesirable in the public interest that maintenance orders obtained at some cost and expense (often at a charge to the public purse through provision of legal assistance to needy applicants) should be so annulled by an attempted reconciliation of parties, no matter how brief its duration.

In this regard it is not without significance that the Family Law Act by sec. 50(1) provides that separation periods to establish the ground for dissolution of marriage may be aggregated although broken by a resumption of cohabitation of up to three months.

But our view of the matter, which is contrary to that reflected in the decision in Pietkowski's case, is not based on diverging views of public policy or differences of opinion as to how best reconciliation of parties might be achieved or their disputes conciliated.

We consider that the Family Law Act contains its own provisions as to the discharge, suspension or variation of maintenance orders. In the light of the wide discretion, which the court has in enforcement proceedings, there is no need to draw on cases decided under different legislation.

It may be assumed with confidence that the previous provisions of State legislation and the English and Australian authorities as to the effect of resumption of cohabitation on maintenance orders were known to those responsible for the drawing and enactment of the provisions of Pt VIII of the Act, and in particular sec. 83.

Any periods of resumption of cohabitation may be taken into account, along with other circumstances, by the Court in exercising its discretion in enforcement proceedings.

In so far as the decision in Pietkowski's case decides that a resumption of cohabitation by parties ipso facto annuls or terminates a maintenance order then it was, in our view, wrongly decided.

Even if the Victorian authorities cited by Treyvaud J. represented the correct position prior to the Family Law Act 1975, his Honour held that the maintenance order in question ceased to have effect in respect to both the wife and children. However the Victorian cases themselves demonstrate that a resumption of cohabitation did not discharge a maintenance order for a child; see Lobley v. Lobley (1909) V.L.R. 383 where Roberts v. Roberts (1903) 29 V.L.R. 158, was specifically distinguished.

As Pietkowski's case was followed by his Honour in the instant case, in holding that the resumption of cohabitation caused the child maintenance order to be of no effect, then his Honour's decision was in error and the cross-appeal on this issue should be allowed.

The further question arises as to whether this Full Court, substituting its discretion for his Honour's, should enforce payment of arrears which accrued between the making of the order in February 1983 and 1 July 1984. Counsel for the husband argued against such a course, relying on the limitation of the ``twelve months rule''.

Although the recognition accorded it in the past varied from State to State (see Letizia and Swinhoe (1979) FLC ¶90-666), the ``twelve months rule'' is a useful practice approach in maintenance enforcement proceedings which has been expounded on in a number of reported cases over the years, both here and in England. These authorities are conveniently summarised in Spry and Roet (1977) FLC ¶90-301 per Frederico J. and in Ross v. Pearson (1976) 1 W.L.R. 224 at 229, per Sir George Baker P., with whom Latey J. agreed. Its operation has been commended by a Full Court of this Court in Reid and Reid (1978) FLC ¶90-529 in the judgment of Fogarty J., with whom Pawley and Dovey JJ. agreed. However it is not a ``rule'' in any strict sense and must give way to the circumstances of each case when those circumstances warrant it.

In the instant case the wife has always pressed and pursued her rights under the order; the disinclination of the clerk of the collecting court to pursue enforcement of the order due to the views expressed in Pietkowski (supra) contributed to her not succeeding.

We consider that payment of the arrears of maintenance by the husband should be ordered. We do not consider that there should be any order for payment of interest on those arrears.

Finally there is the question of his Honour's orders as to costs. His Honour made orders that the husband should pay the wife's costs of certain interlocutory applications amounting to $417 and $367 — a total of $784. The husband appealed against these orders, but the question was not strenuously argued by counsel. In the cross-appeal the wife asserted error by his Honour in failing to grant her costs of three other court appearances, but again the question was not pressed by her counsel. In our view his Honour's orders to grant or refuse costs were within his discretion, and consequently both the appeal and cross-appeal on these issues should be dismissed.

There remains the question of the costs of the appeal.

The husband's appeal has failed in its entirety. The wife's cross-appeal has succeeded as to her claim for a further indemnity from the husband and as to arrears of maintenance.

We consider the husband should pay the wife's costs of this appeal set in the amount of $1,474.

Orders:

1. The appeal of the husband is dismissed.

2. The cross-appeal of the wife is allowed in part, namely:

(i) that there be added to Order 1(f) of the orders of Buckley J. of 12 December 1985 after the words ``the sum of $35,000.00'' the following: ``and the loan to the husband and wife in the sum of $10,000.00''.
(ii) that in lieu of Order (3) thereof, it be ordered: ``That the husband pay to the wife forthwith the sum of $1,260 being arrears of maintenance pursuant to the order of Mr Murrell, Stipendiary Magistrate, made in the Magistrate's Court, Caloundra, on 17 February 1983.''

3. That the husband pay to the wife within 30 days of the date hereof her costs of this appeal in the amount of $1,474.