Turner, B.M. and Turner, J.C.

[1987] FamCA 6

In the marriage of TURNER, B.M. and TURNER, J.C.

(1987) FLC ¶91-820

Other publishers' citations: (1987) 11 FamLR 674

Full Court of the Family Court of Australia at Brisbane.

Judgment delivered 10 April 1987.

Before: Strauss, Baker and Lawrie JJ.

Strauss, Baker and Lawrie JJ.: This is an appeal against the declaration and order made by Bulley J. on 24 June 1986 which were in the following terms:

``It is declared:

(1) That the Agreement dated 13th May 1985 approved pursuant to Section 87 of the Family Law Act 1975 as amended on the 28th June 1985 be and is hereby unenforceable either in law or in equity and pursuant to the provisions of the said Act.

It is ordered:

(2) That the said approval of the said agreement is hereby revoked.''

This declaration and order were made upon an application filed by the husband on 6 June 1986 in which the husband in effect sought the revocation of the approval of the maintenance agreement in question.

The parties married on 11 July 1959. They had four children of the marriage, now aged approximately 26, 18, 14 and 8 years respectively. The two youngest children are in the care of the wife and the 18 year old was also living with her at the time when the proceedings were heard before his Honour.

The parties separated on about 6 November 1984 when the husband left the former matrimonial home. The wife then remained in the home at Paradise Point in Queensland and she is still resident there at the present time. At all material times the wife was engaged in domestic duties. The husband was an administrative manager at the time of the hearing before Bulley J. and had a net salary of about $1660 per month. The marriage between the parties was dissolved by a decree which became absolute on 23 February 1987. Consequently, at the time of the hearing before Bulley J. on 24 June 1986 the parties were still husband and wife.

On 13 May 1985 the parties entered into a maintenance agreement pursuant to sec. 87 of the Family Law Act 1975. This agreement was approved by the Family Court at Brisbane on 28 June 1985. In his affidavit in support of the application for the revocation of the approval which was sworn on 6 June 1986 the husband deposed:

``I did not seek legal advice in relation to either the deed or its approval, and I was unrepresented in the Family Court. I did not file any material.''

A perusal of the file demonstrated that the husband had not filed any Statement of Financial Circumstances or any other material. He was however present in court at the hearing when the agreement was approved.

By the maintenance agreement of 13 May 1985 the parties agreed as follows:

``The jointly owned matrimonial home at Paradise Point shall be placed in the hands of Real Estate Agents for sale at a price of $85,000, or such lower figure as both parties may agree to accept, and both parties will do everything reasonable in their power to facilitate a sale as early as convenient.

2. Pending a sale being arranged and settlement thereof:

(a) the Wife shall be entitled to reside in the home together with the three children of the marriage A born 10th December 1968, J born 17th April 1963 and N born 21st September 1978;
(b) the Husband shall pay all rates, insurance premiums, telephone accounts and other outgoings in respect of the property and all instalments payable under the two mortgages on the property in favour of Westpac Banking Corporation and Custom Credit Corporation;
(c) the Husband will pay to the Wife for the maintenance of the two dependent children of the marriage the sum of $50 per week.

3. Upon settlement of the sale the mortgages shall be repaid and the net proceeds shall be divided —

(a) To the Wife to enable her to purchase in her own name a new home for herself and the children: $50,000 (b) To the Husband: the balance.

4. At the time of settlement of the sale the Wife shall have the first choice of all of the furniture and the contents in the property, and the Husband may have the residue which will thereafter be deemed to be his own separate property.

5. As and from the date of settlement of such sale the Husband shall pay to the Wife for the maintenance of the two youngest children of the marriage the weekly sum of $100.

6. Subject to due completion as above all other property which at present stands in the sole name of either party such as their own separate Bank or Building Society accounts (and in the case of the Wife the Mitsubishi motor vehicle registration No. 946-OWG) shall be confirmed as the separate property of the holders respectively.

7. This agreement is entered into subject to the approval of the Family Court under sec. 87 of the Family Law Act and both parties will file all papers and do all things necessary to obtain such approval and give effect to this Agreement.

8. This Agreement shall operate as a final financial settlement and in substitution for any rights the parties may have under Pt VIII of the Act (and the parties hereby expressly waive any rights they may otherwise have against the other for periodic or lump sum maintenance or property settlement) and shall further be binding upon the executors, administrators, and heirs and assigns of both of them.

9. Each party will pay their own costs.''

As the husband deposed in his affidavit sworn on 14 June 1986:

``7. The terms of the Deed were not carried out save that I made all payments in relation to the outgoings on the property and the two mortgages. The house was listed with a Real Estate Agent at $90,000 on a sole agency basis. However after 3 months it had not sold. At the time the wife admitted that she did not wish to sell the home. This of course meant that I would not receive any funds by way of a settlement. I desperately needed a motor vehicle, and accordingly the wife and I decided to take out a single mortgage over the property and to pay out the two existing mortgages. The surplus was to be used to purchase a motor vehicle for myself.

8. On the 12th August 1985 the Wife and I signed a Variation of Maintenance Agreement which had been prepared by the wife's Solicitor. To my knowledge this variation was never approved by the Family Court. I certainly did not appear at Court on a second occasion. Now produced and shown to me and marked with the letter `B' is a true copy of that Variation of Maintenance Agreement.''

The terms of the second agreement of 12 August 1985 are as follows:

``AGREEMENT made this 12th day of August 1985 BETWEEN TURNER of West End in the State of Queensland (Husband) AND TURNER of Paradise Point in the State of Queensland (Wife) WHEREBY the Maintenance Agreement between them dated the 13th May 1985 and approved by the Family Court at Brisbane on the 28th June 1985 is HEREBY VARIED as follows:

1. Instead of selling the former matrimonial home at Paradise Point

(a) the home shall instead be transferred into the Wife's name as sole owner and thereafter be her absolute sole property, and the parties will sign all the usual documents accordingly;
(b) the parties having mortgaged the property to the Westpac Banking Corporation Limited for $25,000 and such sum having been taken by the Husband alone, such receipt shall be taken by the Husband in full settlement of his anticipated entitlement to the surplus proceeds of sale under clause 3(b) of the Agreement;
(c) in return for being partially relieved from liability for maintenance as set out below, the Husband will pay to the Bank the sixty monthly instalments of $647.62 principal and interest payable under the mortgage by way of repayment thereof as and when the same are due and will indemnify the Wife against all default in payment thereof;
(d) the Wife will for each month in which the Husband shall duly pay to the Bank such instalment of $647.62 waive payment of the maintenance otherwise payable to her by the Husband in respect of each such month for the two youngest children of the marriage pursuant to clause 5 of the Agreement, and so that so long as the Husband pays the Bank he shall be acquitted from paying for the children as well, and the Wife for her part undertakes during this period to wholly maintain the children on her own without seeking any contribution from the Husband. On repayment of the loan however the Husband's maintenance obligation under clause 5 shall revive and begin again.

2. The Wife shall pay the stamp duty and registration fees on the transfer of the house to her but otherwise each party will pay their own costs hereon.

3. In all other respects the Agreement is confirmed.''

The former matrimonial home was transferred to the wife and two existing mortgages for $8,000 each were paid out. A single mortgage for $25,000 was substituted for which the husband assumed liability. There was a surplus of approximately $9,000 which according to the husband was used as to $7,000 to buy a motor car for him and as to $2,000 to meet joint debts of the husband and wife. The wife claims that the husband received the sum of $2,000 for his own use. About a month after the execution of the second agreement the parties attempted a reconciliation which commenced on 12 September 1985 and which terminated on 12 December 1985. During this period of three months the husband lived with the wife in the former matrimonial home. In April 1986 the husband ceased making the payments of $647.62 per month and in June he filed the application already referred to. He claimed that he was unable to meet the large commitment which he had undertaken.

At the hearing before his Honour counsel for the wife conceded that the changes made by the second agreement were substantial. The result of the second agreement was that the wife received the house worth close to $85,000 instead of $50,000 cash out of the proceeds of the sale of the house. The husband received a motor car worth $7,000 and possibly $2,000 cash and was liable to pay $25,000 plus interest by sixty instalments of $647.62 per month, a total of $39,192. The second deed purported to relieve the husband of his liability to pay maintenance at the rate of $100 per week for five years, a total of $26,000. It is to be noted that the agreement relieving the husband of liability to support the children did not necessarily protect the husband from claims for child maintenance either at the suit of the wife or in proceedings which might be instituted by or on behalf of the children. Furthermore having regard to the age of the second youngest child, she might have been self-supporting before five years had elapsed. The result of the second agreement, if effective, would be that the wife was considerably better off and the husband's financial situation had been considerably reduced.

In the course of his reasons for his decision his Honour said:

``The variation agreement was not approved by the court, nor was any application made for such approval, nor does it appear that it is proposed that such an application be made. It is submitted on behalf of the husband by his counsel that, by reason of the substantial changes brought about to the maintenance agreement by the second agreement not having been approved by the court means that in law the maintenance agreement should be declared unenforceable.

As I have already mentioned, the changes brought about by the second agreement were substantial. They are admitted to be substantial, so much so, in my view, that the terms thereof brought an end in law to the agreement that had been approved by the parties.''

Counsel for the wife submitted that his Honour was in error for three principal reasons, namely:

(i) that the court should not have held that the second agreement amounted to a new contract which discharged the earlier maintenance agreement,
(ii) that the court should not have held that the effect of the second agreement rendered the approved maintenance agreement unenforceable,
(iii) that the court should have exercised its discretion not to revoke the approval of the first maintenance agreement.

Counsel for the wife stressed that at common law the parties were entitled to vary or modify any agreement and that sec. 87 should not be so construed as to take away that right. The difficulty about this submission is that by entering into an agreement referred to in sec. 87(1) and by seeking and obtaining the approval of the court to the agreement, the parties contract to make arrangements which remain final and unalterable with respect to the relevant financial matters so long as the approval of the agreement remains in force. However, the section makes specific provision for the revocation of the approval if both parties desire such revocation. Once the approval has been revoked they are free to enter into any other contractual arrangement either under sec. 87 or otherwise and they may also have recourse to the court with respect to financial matters.

An agreement approved under sec. 87 has a number of special features. To come within sec. 87 the maintenance agreement must make provision to the effect that the agreement shall operate in relation to the financial matters dealt with in it in substitution for any rights of the parties to the agreement under Pt VIII (sec. 87(1)). If the provisions of a maintenance agreement are to be in substitution for rights under Pt VIII, the agreement is not enforceable until it is approved by the court (sec. 87(2)). If the court is satisfied that the provisions of the agreement with respect to financial matters are proper, it shall by order approve the agreement but if it is not so satisfied it shall by order refuse to approve the agreement (sec. 87(3)). By sec. 87(4) it is provided:

``Where a maintenance agreement that makes provision as mentioned in subsection (1) is approved by the court —

(a) any order having effect under this Part or any order made under Part VIII of the repealed Act and continued in effect by virtue of paragraph 3(2)(c) ceases to have effect in so far as it relates to the financial matters dealt with in the agreement and, whether or not the approval of the agreement is revoked, has no further effect; and
(b) subject to sub-sections (13) and (14), no court having jurisdiction under this Act may make an order (other than an order under this section or an order in connection with the enforcement of the agreement) with respect to those financial matters unless the approval of the agreement is revoked.''

Subsection (8) of sec. 87 is in the following terms:

``A court may, by order, revoke the approval of a maintenance agreement under this section if, and only if, the agreement is registered or deemed to be registered in that court and the court is satisfied that —

(a) the approval was obtained by fraud;
(b) the parties to the agreement desire the revocation of the approval;
(c) the agreement is void, voidable or unenforceable; or
(d) in the circumstances that have arisen since the agreement was approved it is impracticable for the agreement to be carried out or impracticable for a part of the agreement to be carried out.''

The effect of these statutory provisions was discussed in some detail by Fogarty J. in Drew and Drew (1985) FLC ¶91-601. The parties in that case were not divorced. Shortly after their separation they entered into an agreement which was approved in April 1980 pursuant to sec. 87. The terms of the agreement dealing with the property of the parties were carried out fully by them. Subsequently in November 1980 the parties resumed cohabitation. They separated again in March 1984. During this period of cohabitation from 1980 to 1984 the parties conducted a number of joint financial transactions and acquired property in their joint names. Subsequently, the wife instituted proceedings under sec. 79 which the husband resisted. He relied on sec. 87(1) and 87(4)(b) and claimed that whilst the approval of the agreement remained in force the court had no power or jurisdiction to deal with the wife's claim. His Honour upheld this submission. However, his Honour also held that by their conduct the parties had rescinded or abandoned the approved agreement and that for this reason the agreement was no longer enforceable. Accordingly, his Honour held that the approval of the agreement should be revoked so as to put the parties into a position to litigate proceedings under sec. 79.

In the present case the parties agreed to substitute a number of terms which differed materially from those contained in the approved agreement and they executed several of these different terms. They demonstrated that they did no longer consider themselves bound by the first agreement alone but that they intended that their rights and obligations should be governed by the varied contract embodied in the first and second agreement. In the result, the parties must be taken to have agreed that the approved agreement standing on its own should no longer be enforceable. It may well be that the parties intended cl. 8 of the first agreement should apply to their varied arrangements. This is the likely interpretation given that the second agreement provided in cl. 3 ``in all other respects the agreement is confirmed''. However, the arrangements with respect to financial matters contained in the second agreement have not been submitted to the court for its approval and the court has had no opportunity to satisfy itself that the substituted financial arrangements were proper. In the result the varied agreement is not the agreement which has been approved by the court. Whilst the approval of the original unaltered agreement stands the varied agreement constituted by the first and second agreement cannot be enforced because of the provisions of sec. 87(4)(b).

It should also be pointed out by acting on the varied agreement the parties had brought about circumstances in which it has become ``impracticable'' to carry out the approved agreement.

The present case should be compared with the case of Knowles and Knowles (1987) FLC ¶91-811. In that case a maintenance agreement had been approved by the Court in 1980. In 1982 the parties entered into a further deed which was registered pursuant to sec. 86 of the Act. The second deed did not alter the substantive rights and obligations brought into existence by the approved deed. The second deed merely recorded arrangements which regulated the manner in which the obligations undertaken in the sec. 87 deed were to be brought into existence by the approved deed. Accordingly, in that case the execution of the second deed did not affect the enforceability or validity of the approved deed.

By contrast, in the present case the arrangements resulting from the second deed differed materially from the approved arrangements.

The foregoing sufficiently disposes of the main submissions advanced on behalf of the wife. There remains the submission that his Honour should not have revoked the approval of the first agreement. His Honour had a discretion whether to revoke or not to revoke the approval. It has not been shown that his Honour erred when he ordered the revocation of the approval. On the contrary if the approval is not revoked the parties will find themselves in a most unsatisfactory position. The executory provisions of the varied agreement could not be enforced by the wife nor could the husband obtain any relief in respect of them and the approved agreement was not capable of enforcement. The proper exercise of his Honour's discretion was to order the revocation of the approval of the first agreement.

Accordingly, the appeal should be dismissed.