Virgona and Virgona

[2018] FamCA 976

FAMILY COURT OF AUSTRALIA

VIRGONA & VIRGONA [2018] FamCA 976

FAMILY LAW – PROPERTY – Interim application – Where the wife seeks orders for the enforcement of previous consent orders – Where the wife seeks a variation of previous consent orders on the basis of non-compliance – Where the wife seeks injunctions – Court makes orders for enforcement of previous consent orders – Court declines to make orders for the variation of previous consent orders on the basis that the asserted changed circumstances do not require such a variation – Court declines to make injunctive orders on the basis that the wife’s application goes further than is necessary to protect her interests – Court makes injunctive orders for the provision of certain banking documents to the wife on the basis of the husband’s duty of disclosure.

Family Law Act 1975 (Cth) s. 114
Family Law Rules 2004, rr. 13.01, 13.04

Acton & Burton [2015] FamCA 469
Adam P Brown Male Fashions Pty Limited v Philip Morris Incorporated (1981) 148 CLR 170
Blue Seas Investments Pty Ltd v Mitchell and McGillivray (1999) FLC 92-856
Briese and Briese (1986) FLC 91-713
Cutler v Wandsworth Stadium Limited (1945) 1 All ER 103
Iphostrou & Iphostrou and Ors [2011] FamCA 20
In the Marriage of Farr (1976) FLC 90-133
Jeeves & Jeeves (No 2) [2008] FamCA 1148
Livesey and Jenkins (1985) 1 All ER 106
Mertens & Mertens [2016] FamCAFC 136
Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia(No 3) (1998) 195 CLR 1
Sieling and Sieling (1979) FLC 90-627
Tripp & Tripp [2013] FamCA 1107

APPLICANT: Ms Virgona

RESPONDENT: Mr Virgona

FILE NUMBER: SYC 7257 of 2016

DATE DELIVERED: 23 November 2018

PLACE DELIVERED: Sydney

PLACE HEARD:	Sydney
JUDGMENT OF:	McClelland J

HEARING DATE: 29 October 2018

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Maurice

SOLICITOR FOR THE APPLICANT: Strong Law Pty Ltd

SOLICITOR FOR THE RESPONDENT: Manning Lawyers

Orders

THE COURT ORDERS, PENDING FURTHER ORDER, THAT:

1. The husband comply with Consent Orders 9 and 10 of the Orders of the Family Court of 13 June 2018.

2. Within seven (7) days, the husband do all things necessary to provide a signed irrevocable written authority to B Bank authorising it and its employees to provide copies of bank statements, account balances and any payment plans to Ms Virgona, upon her request, in relation to the husband’s interests in mortgages secured over:

   (a)C Street, Suburb D NSW … (Folio Identifier …); and

   (b)E Street, Suburb F NSW … (Folio Identifier …).

3. The wife be permitted to provide a copy of these orders and the orders of 13 June 2018 to B Bank and its staff, for the purpose of making requests pursuant to order 2 herein.

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 Virgona & Virgona 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).

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYC 7257 of 2016

Ms Virgona

Applicant

And

Mr Virgona

Respondent

REASONS FOR JUDGMENT

Introduction

1. By way of an Application in a Case filed on 17 September 2018, Ms Virgona (“the wife”) has sought various property orders in respect to the enforcement of previous consent orders, the variation of previous consent orders and injunctions.

2. Mr Virgona (“the husband”) seeks that the wife’s application, in that regard, be dismissed.

3. The husband was born in 1969 and is currently aged 49 years.  He is employed as a manager by G Pty Ltd (“GPL”) and is one of two directors of that company.

4. The wife was born in 1970 and is currently aged 48 years.  She is employed as an Administration Assistant.

5. The parties were married in 1997 and there are two children of their relationship, who are aged 17 and 15 years.

6. The parties separated in November 2015.  The children continue to reside with the wife.

7. On 4 November 2016, the husband commenced the substantive proceedings in this Court.

8. In April 2018, the husband ceased making repayments in respect to the mortgages secured over the Suburb F and Suburb D properties. 

9. On 13 June 2018, the following orders were made by Le Poer Trench J, with the consent of the parties (“the consent orders”):

   1. That within fourteen (14) days of the date of these Orders the Husband and Wife do all things and sign all documents necessary to sell the property known as and situated at [E Street, Suburb F] in the State of New South Wales, Folio Identifier … (“[Suburb F] property”).

   2. That within seven (7) days the parties jointly appoint [Mr H] of [J Real Estate] (“the agent”) to be the sole agent to act on behalf of the parties for the sale of the [Suburb F] property and it be listed for sale at a listing price as agreed and failing agreement in accordance with the valuation dated 22 August 2017.

   3. That the Husband and Wife each shall co-operate in every way with the agent including (without limiting generally the foregoing):

   3.1. making the key/s available to the agent;

   3.2. allowing inspection of the [Suburb F] property at all reasonable times as requested by the agent;

   3.3. ensuring the [Suburb F] property including the grounds are in a neat and clean condition at the time of inspection by the agent and prospective purchasers;

   3.4. signing all documents as requested by the agent in relation to the listing of the sale of [Suburb F] property home except a Contract or Agreement of Sale which has not been authorised by the parties’ solicitors.

   4. That within seven (7) days, the Husband and Wife appoint [K] Solicitors (“solicitor/conveyancer”) to act on the sale of the [Suburb F] property and the Husband and Wife shall give all instructions to the solicitor/conveyancer for the preparation of the Contract for Sale.

   5. That the Husband and Wife shall execute the Contract for Sale in the form prepared by the solicitor/conveyancer at a price agreed between the parties or at a price obtained at any auction.

   6. That the Husband and Wife shall jointly instruct the solicitor/conveyancer and such instructions shall be in writing. No verbal instructions shall be accepted by the solicitor/conveyance and/or the agent from the parties and/or any third parties.

   7. That in the event the [Suburb F] property is not sold by private treaty within a period of twelve (12) weeks from the date of listing, then:

   7.1. The parties shall list the [Suburb F] property for sale by public auction with the agent, with an auctioneer as agreed and failing agreement with an auctioneer recommended by the President for the time being of the Real Estate Institute of NSW, and the cost of obtaining that recommendation shall be equally shared;

   7.2. The reserve price for the purpose of the auction shall be as recommended by the agent.

   7.3. In the event that the bidding at the auction does not reach the reserve price, the parties may negotiate with the highest bidder and any other interested person and effect the sale of the [Suburb F] property at a price which is not more than two percent (2%) below the reserve price.

   7.4. If the [Suburb F] property remains unsold, the parties shall do all acts and things and sign all documents necessary to immediately re-list the [Suburb F] property for sale by auction again on a date nominated by the agent.

   7.5. The reserve price for the auction referred to in 7.2 above is to be agreed by the parties, failing agreement the parties shall appoint the President of the Property Institute of New South Wales or his/her nominee to determine the reserve price of the [Suburb F] property and the parties shall be bound by the determination. The parties shall share equally the cost of any such valuation and shall be paid from the proceeds of sale of the [Suburb F] property.

   7.6. That each party has liberty to cause this matter to be relisted as to the terms and conditions of selling the [Suburb F] property upon provision of seven (7) days’ written notice to the other party.

   8. That upon completion of the sale of the [Suburb F] property pursuant to these Orders or otherwise, the parties agree to do all acts and things necessary to cause the proceeds of the sale to be paid and distributed in the following manner and priority:

   8.1. In payment of fees due for the nomination of real estate agent, real estate agent’s commission and legal costs and disbursements incurred in relation to the said sale;

   8.2. In payment of fees due to the nomination of valuer and valuation fees if necessary;

   8.3. Adjustment of rates if any;

   8.4. Payment of all monies owing to any mortgage in relation to any loans secured by the mortgagee registered on the title of the [Suburb F] property;

   8.5. Then the balance to be distributed as follows:

   8.5.1. $50,000 to the Husband by way of partial property payable to Manning Lawyers Pty Ltd or its nominee;

   8.5.2. $50,000 to the Wife by way of partial property; and

   8.5.3. The balance to be paid in reduction to any mortgagee in relation to any loans secured by the mortgage registered on the title of [C Street, Suburb D], Folio Identifier … (“the [Suburb D] property”).

   9. That the Husband to continue to pay the mortgage repayments for the [Suburb D] property as and when they fall due.

   10. That pending the sale of the [Suburb F] property, the Husband continue to pay the mortgage secured over the [Suburb F] property and is at liberty to utilise all rent received from the [Suburb F] property for that purpose.

   11. That the parties shall not redraw on any mortgage pending further Order.

   12. That in the event that either party refuses or neglects to execute a Deed and/or Instrument in compliance with the provision of these Orders, the Registrar of the Family Court of Australia at Sydney is hereby appointed pursuant to Section 106A of the Family Law Act 1975 to execute all Deeds and/or Instruments in the name of the defaulting party and do all acts and/or things necessary to give validity and operation to the Deed and/or Instruments.

10. The “Suburb D property” referred to in the consent orders is the former matrimonial home of the parties and is owned by them jointly.  The wife and the parties’ children have remained living at the Suburb D property since the parties’ separation.

11. The Suburb D property was purchased by the parties from the husband’s parents in about 2000 and was valued at $1,650,000 on 17 August 2017.  A mortgage from B Bank is secured over the Suburb D property in the husband’s name (no. …81) (“the Suburb D mortgage”).  The wife is the guarantor of that mortgage.

12. The “Suburb F property” referred to in the consent orders was purchased by the parties jointly as an investment in December 2006 and was valued at $640,000.00 on 22 August 2017.  Two mortgages from B bank are secured over the Suburb F property in the husband’s name.  It did not appear to be disputed that the wife is a guarantor of those mortgages.  The Suburb F property is currently in the process of being listed for sale by auction, pursuant to the consent orders. 

Applications

1. In her Application in a Case filed on 17 September 2018, the wife seeks the following orders:

   1. That the husband comply with Consent Orders 9 and 10 of the Orders of the Family Court of 13 June 2018.

   2. That the husband do all things necessary to discharge the payment plans entered into with [B Bank] in respect of any and all mortgages owing on the properties at:-

   2.1 [E Street, Suburb F] in the State of New South Wales, Folio Identifier … ("[Suburb F] property"), and

   2.2 [C Street, Suburb D], Folio Identifier … ("the [Suburb D] property");

   3. That Consent Order 8.5.1 of the Orders of the Family Court of 13 June 2018 be discharged and in lieu thereof an Order be substituted as follows:-

   8.1 The sum of $50,000.00 be paid into the trust account of [L] Pty Ltd for the purposes of the following suborders:-

   8.1.1 An amount equal to the difference between payments made and payments owing on the Suburb F mortgages prior to discharge is to be paid from that sum in reduction to any mortgagee in relation to any loans secured by the mortgages registered on the title of [C Street, Suburb D], Folio Identifier … ("the [Suburb D] property”)

   8.1.2 An amount equal to the difference between payments made and payments owing on the [Suburb D] mortgage is to be paid into [incomplete]

   8.1.3 The balance be held in the trust account of [L] Ply Ltd to be applied to periodic repayment of the [Suburb D] mortgage in the event that the husband is unable to make those repayments according to Order 9 of the Orders of 13 June 2018.

   4. That within 7 days the Husband do all things necessary to provide a signed irrevocable written authority to B Bank authorising it and its employees to provide copies of bank statements, account balances and any payment plans to [Ms Virgona] upon her request in relation to his interests in mortgages secured over:-

   4.1 [C Street, Suburb D], Folio Identifier … ("the [Suburb D] property"); and

   4.2 [E Street, Suburb F] in the State of New South Wales, Folio Identifier … ("[Suburb F] property").

   5. That the wife be permitted to provide a copy of these Orders and the Orders of 13 June 2018 to [B Bank] and its staff for the purpose of making requests pursuant to Order 4.

   6. That in the event that a party refuses or neglects to execute a Deed and/or Instrument in compliance with the provision of these Orders, the Registrar of the Family Court of Australia at Sydney is hereby appointed pursuant to Section 106A of the Family Law Act 1975 to execute all Deeds and/or Instruments in the name of the defaulting party and do all acts and/or things necessary to give validity and operation to the Deed and/or Instruments.

   7. That the husband pay the wife's costs of and incidental to this Application.

2. In his Response to an Application in a Case filed on 26 October 2018, the husband sought that the wife’s application be dismissed. 

Revised mortgage payment plans

1. In June 2018, the husband approached B Bank to secure a modified repayment plan in relation to the mortgages secured over the Suburb F property. 

2. The husband contends that the loans currently owing to B Bank are:

   Two loans over the Suburb F property                   $280,000.00

   Loan over the Suburb D property  $45,000.00

   Line of credit  $890,000.00

3. Pursuant to the consent orders, the balance of the net proceeds of the sale of the Suburb F property are required to be paid to reduce the Suburb D mortgage.  This will reduce the future monthly repayments due in respect to that mortgage.

4. On 2 July 2018, the wife received a letter from B Bank, which appeared to be a copy of a letter sent by B Bank to the husband, advising that the “past due” balance of the Suburb D mortgage at that time was $11,927.17 (Exhibit “C”).  That letter continues, as follows:

   Thank you for contacting us to discuss your financial situation and the sale of your property situated at [E STREET SUBURB F] NSW ...

   We are pleased to be able to support you during this time and confirm the details of the arrangement we discussed as set out below (the Arrangement)

   ...

   The Arrangement

   You have agreed to:

   •    Make set repayments to your Loan Account as follows:-

   $50.00  30 June 2018

   $50.00  30 July 2018

   $50.00  30 August 2018

   $50.00  30 September 2018

   Other important points to note:

   •    ... the relief we have agreed to provide under the Arrangement will cause residual interest and fees to accrue on the difference between the repayment amounts under the Arrangement and your usual, contractual monthly repayment amounts under your home loan. The balance of the Loan Account will therefore increase as potentially will the interest you pay over the life of your home loan …

5. On 16 July 2018, the wife received a further letter from B Bank, which also appeared to be a copy of a letter sent by B Bank to the husband, in relation to a second loan secured over the Suburb D property (no. #00) (Exhibit “C”).  That letter advises that the balance on that loan at that time was $45,300.47 and the amount “past due” was $789.03.  The wife contends that that letter continues, as follows:

   Thank you for contacting us to discuss your financial situation and the sale of your property situated at [E STREET SUBURB F] NSW ...

   We are pleased to be able to support you during this time and confirm the details of the arrangement we discussed as set out below (the Arrangement) …

   …

   The Arrangement

   You have agreed to:

   •    Make set repayments to your Loan Account as follows:-

   $50.00  25 July 2018

   $50.00  25 August 2018

   $50.00  25 September 2018

   $50.00  25 October 2018

6. That letter continues on to state similar “important points to note” as were included in the letter from B Bank dated 2 July 2018, as set out above.

7. On 27 July 2018, the wife received a further letter from B Bank, which, again, appeared to be a copy of a letter sent to the husband (Exhibit “C”).  That letter relates to the mortgage secured over the Suburb F property (no. #00) and advises that the balance on the mortgage at that time was $133,088.98 and the amount “past due” was $3,387.00.  Included in that letter is the same information and payment plan contained in the letter dated 16 July 2018 and set out above.

8. While the wife has not received correspondence from B Bank in relation to the second mortgage secured over the Suburb F property (no. #01), she contends that the husband may have entered into a similar payment plan in relation to that mortgage.  This did not appear to be disputed in the proceedings.

9. The wife does not consent to the revised payment plans set out in the above extracts and seeks an order that the husband have them set aside, on the basis that their function would see the principal figures of the relevant mortgages, and potentially the interest payable, increased.  Counsel for the wife was critical of the fact that the husband did not set out the particulars of those payment plans in his Affidavit filed on 16 October 2018.

10. The wife has further sought an order that the husband require B Bank to provide to her copies of bank statements, account balances and payment plans in respect to the mortgages secured over the Suburb D and Suburb F properties.  The wife contends that her previous requests for that information made to B Bank have been denied on the basis that she is not the mortgagor.

Evidence

1. At the hearing, the wife relied upon her Affidavit filed on 17 September 2018.

2. The husband relied upon the following documents:

   a)Financial Statement filed on 9 April 2018;

   b)His Affidavit filed on 6 June 2018; and

   c)His Affidavit filed on 26 October 2018; 

Enforcement

1. As stated, the wife has sought orders that the husband comply with orders 9 and 10 of the consent orders, as follows:

   9. That the Husband to continue to pay the mortgage repayments for the [Suburb D] property as and when they fall due.

   10. That pending the sale of the [Suburb F] property, the Husband continue to pay the mortgage secured over the [Suburb F] property and is at liberty to utilise all rent received from the [Suburb F] property for that purpose.

2. The husband contends that he is currently experiencing financial hardship.  I will set out the husband’s contentions, in that respect, below.  Nevertheless, the consent orders were made only a matter of months ago and, it would appear, only weeks prior to the husband negotiating revised payment plans in relation to the relevant mortgages with B Bank on the basis of that financial hardship. 

3. The husband has made no application for the consent orders to be varied and they should be complied with.  Accordingly, I will make an order in accordance with the wife’s proposed order 1.

Injunctive relief

1. The wife has sought injunctive orders for the discharge of the revised payment plans in respect to the relevant mortgages, to which I have referred, and her access to information regarding those mortgages. 

1. Section 114(3) of the Family Law Act 1975 (Cth) (“the Act”) provides:

   A court exercising jurisdiction under this Act in proceedings other than proceedings to which subsection (1) applies may grant an injunction, by interlocutory order or otherwise (including an injunction in aid of the enforcement of a decree), in any case in which it appears to the court to be just or convenient to do so and either unconditionally or upon such terms and conditions as the court considers appropriate.

2. It is clear, on the face of the correspondence from the B Bank to which I have earlier referred, that the payment plans entered into by the husband are a short term indulgence granted by that bank, pending the sale of the Suburb F property.  In that respect, for instance, the letter from the B dated 16 July 2018 notes that the bank has agreed to enter into an arrangement to “support” the husband pending him actively marketing the Suburb F property.  That letter makes it clear that the payment plan will operate for a limited period of four months and is conditional upon the husband making repayments of $50 per month in each of the months July, August, September and October 2018.

3. The applicant for an injunction bears the onus of satisfying the Court that the circumstances justify the making of the order: Sieling and Sieling (1979) FLC 90-627 (“Sieling and Sieling”) at 78,262.

4. In her Affidavit filed on 17 September 2018, the wife sets out her evidence in relation to the husband’s financial circumstances.  The wife contends that the husband holds 30 per cent of the Z class shares in GPL, which attract dividends at the discretion of the directors, as well as 60 out of 200 of the ordinary shares in that company, which attract voting rights.  The wife further contends that, based on the husband’s disclosure and the report of Mr M (“Mr M”) dated 25 January 2018 (Exhibit “C”), the manner in which the husband is paid a salary and dividends varies from year to year based on the directors’ discretion. 

5. Mr M's report found that the husband’s salary (including director's fees, wages and allowances) totalled $201,037.00 in 2017, $128,736.00 in 2016, $186,182.00 in 2015 and $308,676.00 in 2014.  The wife contends that those figures do not include the dividends received by the husband from GPL, which she says totalled $136,842.00 in 2017, $80,110.00 in 2016 and $108,989.00 in 2015. 

6. The wife contends that the husband’s salary, director’s fees and dividends are paid to N Pty Ltd (“NPL”), of which he is a director.  NPL then pays yearly dividends to the husband.  The wife contends that the husband received a salary from GPL, together with NPL dividends, of $161,923.00 in 2016 (plus the benefit of a franking credit) and $255,000.00 in 2015 (plus the benefit of a franking credit).

7. The wife contends that, if the husband’s income is in accordance with his  Financial Statement filed on 6 April 2018, being $1,538.00 per week ($79,976 annually), then he is not currently exercising his full earning capacity.  In that respect, Mr M's report assessed the fair remuneration for the work carried out by the husband for GPL (not including dividends) as $200,000.00 for 2017, $194,175.00 for 2016 and $188,519.00 for 2015.  Further, the husband’s Financial Statement does not declare any income received from his share ownership.  However, Mr M’s report calculates the husband’s yearly dividend income as totalling some $109,101.

8. The wife contends that the husband has travelled overseas at least four times this year.  It was unclear whether certain of those overseas trips were for leisure or business.  At the hearing, the wife tendered various images of photographs posted to Facebook by the husband’s current partner, which show the husband and herself travelling throughout Asia and Europe.  Counsel for the wife was critical of the fact that the husband did not address the wife’s evidence, in that regard, in his Affidavit filed on 16 October 2018.

9. In his Affidavit filed on 26 October 2018, the husband contends that the wife is aware that his financial circumstances have changed significantly since the parties’ separation.  In his Affidavit filed on 6 June 2018, being a week prior to the making of the consent orders, the husband refers to his financial difficulties and issues with meeting the mortgage repayments.  Irrespective of that position, the husband entered into the consent orders, requiring him to make all repayments.  Just a fortnight later, he entered into a financial arrangement with B, which saw him make significantly reduced mortgage repayments.

10. From the husband’s perspective, he contends that, for approximately five months prior to the filing of his Affidavit on 6 June 2018, he and Mr G, the other director of GPL, had not been drawing a salary from that company, as a downturn in the company’s work has resulted in all of its income being reinvested.  The husband anticipates being repaid that salary at some point in the coming months.  The husband further contends that, for the last 18 months, he has been living beyond his financial means. 

11. Further, in his Financial Statement filed on 9 April 2018, the husband contends that he is in receipt of $450.00 per week in rental returns from the Suburb F property.  However, the tenants who were previously resident in that property have since vacated.

12. In these interim proceedings, I am unable to adjudicate in respect to disputed issues of fact.  In that respect, in Iphostrou & Iphostrou and Ors [2011] FamCA 20 at [44], Cronin J said:

    In any situation of an interlocutory nature where the facts are controversial and in dispute, a court cannot make findings of fact. Findings of fact form the basis upon which orders are made within jurisdiction.

13. Similarly, in Acton & Burton [2015] FamCA 469 at [47], Hogan J said:

    The nature of the interim hearing process is such that parties are afforded a truncated process in which it is not possible to make findings about matters that are significantly in contest between them.

14. I am, therefore, unable to determine the extent to which the husband is facing financial difficulties and the extent to which those difficulties are genuine, as opposed to, as the wife contends, contrived in the context of this family law litigation.

15. I note that a precondition to the exercise of the Court’s power pursuant to s 114(3) of the Act is that the Court must be satisfied that, in the circumstances of the case, it would appear just or convenient for the Court to do so. As such, I am required to have regard to the balance of convenience, in terms of its impact upon the respective parties: Blue Seas Investments Pty Ltd v Mitchell and McGillivray (1999) FLC 92-856 at 86,128.

16. The task of balancing the potential hardship to each party by the making of such orders was also referred to by the full Court in Sieling and Sieling at 78,264, where the Full Court said:

    The power to grant injunctions is, of course, a discretionary power, not to be exercised lightly. The Court must balance the hardship to each party of granting or refusing an order and frame its order in such a way to impose no further restriction than is necessary to achieve the protection of the applicant’s interest.

17. In the letter dated 16 July 2018, as referred to above, B has given notice of potential recovery action if the terms of the payment plan entered into by the husband are not complied with.  That outcome would clearly be detrimental to the husband’s, and for that matter, potentially the wife’s, interests. 

18. Comparatively, it is clear that the payment plans will function for a limited time.  The letter dated 16 July 2018 refers to that arrangement being in existence for a period of four months.  In other words, the payment plans will expire irrespective of an order of the Court. 

19. The potential detriment that will be suffered by the wife as result of the husband entering into the payment plans is that the respective loans will not be paid out as quickly as they otherwise would have been and this will result in additional interest being accrued. At this stage it is not possible to quantify that additional interest burden. Ultimately, however, the wife can be compensated in respect to any loss she suffers as result of that additional interest burden when final orders are made adjusting the parties’ interests in accordance with the provisions of s 79 of the Act.

20. Accordingly, I am satisfied that the wife’s interests can be protected without the necessity of granting the injunctive relief sought by the wife.  I will, therefore, not make orders in terms of order 2 sought by the wife.

Variation of consent orders

1. As stated, the consent orders require that $50,000 from the proceeds of sale of the Suburb F property be paid to Manning Lawyers Pty Ltd or its nominee on behalf of the husband, as a partial property settlement.  The wife has sought that that order be substituted for the following:

   8.1 The sum of $50,000.00 be paid into the trust account of Strong Law for the purposes of the following suborders:-

   8.1.1 An amount equal to the difference between payments made and payments owing on the [Suburb F] mortgages prior to discharge is to be paid from that sum in reduction to any mortgagee in relation to any loans secured by the mortgages registered on the title of [C Street, Suburb D], Folio Identifier … ("the [Suburb D] property”)

   8.1.2 An amount equal to the difference between payments made and payments owing on the [Suburb D] mortgage is to be paid into

   8.1.3 The balance be held in the trust account of [L Ply Ltd] to be applied to periodic repayment of the [Suburb D] mortgage in the event that the husband is unable to make those repayments according to Order 9 of the Orders of 13 June 2018.

2. As previously noted, proposed order 8.1.2 of that application appears incomplete.

3. The wife seeks that order so as to compensate for what she describes as “the effects of the payment plan and reduced or non-payment of the [Suburb F] mortgages and [Suburb D] mortgages”.  The wife contends that, at the time the consent orders were made, the minimum repayments due in respect to the mortgages secured over the Suburb D and Suburb F properties totalled $5,941 per month, or $1,267 per week.  As stated, the husband is currently paying $50 per month in respect to each of the Suburb D mortgages and one, or potentially both, of the Suburb F mortgages.  The wife contends that this is a contravention of the consent orders.

4. The husband contends that the wife’s application, in that regard, should be dismissed on the basis that he has complied with the consent orders in relation to the sale of the Suburb F property and requires the partial property distribution referred to in those orders, as he currently has tax invoices totalling $60,777.93 outstanding to his solicitors and $6,167.70 in work in progress.  The husband says that no prejudice is occasioned to the wife in the exercise of that order and that there are sufficient assets held by the parties to account for that distribution on a final basis.

5. In his case outline document (Exhibit “B”), the husband contends that the arrears owing in respect to the mortgages are less than $20,000 and that they will be met by the proceeds of sale of the Suburb F property.  The wife also calculates those arrears as being less than $20,000.  The husband further contends that any accounting in relation to the same would be more appropriately dealt with upon final hearing of the matter.

6. As stated above, I note that the letter received by the wife from the B Bank dated 16 July 2018 makes it clear that the payment plan entered into between the husband and B is one of forbearance.  That is, B has agreed to refrain from commencing recovery action against the husband for monies due pursuant to the relevant mortgages, on the condition that the husband make monthly contributions of $50 in respect to the relevant mortgages.  Those payment plans are not a variation of the mortgages.

7. I am, therefore, satisfied that the husband’s failure to make full mortgage repayments in respect to both the Suburb F and Suburb D properties is a breach of orders 9 and 10 of the consent orders. 

8. The question becomes, however, whether, in those circumstances, is it appropriate for the Court to make the variation, as sought by the wife.

9. Relevantly, in Adam P Brown Male Fashions Pty Limited v Philip Morris Incorporated (1981) 148 CLR 170 at 178, the majority said:

   … But in our opinion, a court undoubtedly has such a power [to amend or vary an interlocutory order or undertaking accepted in respect to an interlocutory order].  Just as an interlocutory injunction continues “until further order”, so must an interlocutory order based on an undertaking.  A court must remain in control of its interlocutory orders. A further order will be appropriate whenever, inter alia, new facts come into existence or are discovered which render its enforcement unjust. Of course, the changed circumstances must be established by evidence.  [Emphasis added, references omitted].

10. In that decision, the High Court applied Cutler v Wandsworth Stadium Limited (1945) 1 All ER 103 in confirming that the onus rests upon the person seeking to vary the consent or interim order to establish those changed circumstances.

11. The changed circumstances relied upon by the wife is the fact that the husband is failing to make mortgage payments in accordance with orders 9 and 10 of the consent orders.  In place of the order for a $50,000 distribution to the husband, the wife seeks orders that she be permitted to deduct from that figure an amount equivalent to both the capital and interest that would have been paid to B Bank by the husband pursuant to the consent orders, had the husband not entered into the payment plans to which I had earlier referred.

12. In addition, the wife seeks orders permitting her to deduct from that $50,000 sum additional amounts in the event that the husband fails to comply with order 9 of the consent orders.  That order requires the husband to continue to make repayments in respect to the Suburb D mortgage, albeit at a reduced rate, as the balance of the net proceeds of the sale of the Suburb F property will be applied to reduce that mortgage.

13. With respect, the wife’s application, in that regard, is a dramatic overreach.  As stated, it is accepted that the wife will potentially be detrimentally affected by the fact that there will be additional interest accrued as a result of the husband entering into the payment plans with B bank.  While that additional interest is yet to be quantified, it cannot be said to be remotely equivalent to the sum of $50,000.  Moreover, it cannot be determined, at this point in time, that the husband will, in the future, fail to comply with his obligation to continue to make repayments in respect to the reduced mortgage secured over the Suburb D property, after the Suburb F property is sold.

14. A more appropriate variation may have been, for instance, an application to vary order 8.5.1 of the consent orders to permit a deduction for the additional interest burden suffered by the wife, as a result of the husband entering into the payment plans with B Bank.  It is not, however, for the Court to redraft the wife’s application.

15. The wife sought to characterise her proposed order 3 as an order in aid of enforcement of the consent orders, pursuant to Part 20 of the Family Law Rules 2004 (“the Rules”). The solicitor for the husband objected to the Court considering such an application on the part of the wife, as he had not been given notice of any such application. Accordingly, I do not further consider that aspect of the wife’s claim as characterised as an aid to an enforcement application. I note, however, that such an application on behalf of the wife would appear to have the same issue of overreach, to which I have earlier referred.

Disclosure

1. The wife’s proposed orders 4 and 5 require the husband to provide a signed irrevocable written authority to B bank, authorising the provision of relevant financial information to the wife concerning the mortgages secured over the Suburb D and Suburb F properties.

2. Such an order is in the nature of a mandatory injunction. It is clear that s 114 of the Act empowers the Court to make orders in positive, as well as negative, terms, as in the case with mandatory injunctions: Mertens & Mertens [2016] FamCAFC 136 at [56].  Such an order is discretionary and must be considered proper: Jeeves & Jeeves (No 2) [2008] FamCA 1148 at [29]; Tripp & Tripp [2013] FamCA 1107 at [53].  The term “proper” means “reasonable and just in [the] circumstances”: In the Marriage of Farr (1976) FLC 90-133.

3. Relevantly, the joint judgment of Brennan CJ, McHugh, Gummow, Kirby and Hayne JJ in Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia(No 3) (1998) 195 CLR 1 at [35] reads, as follows:

   The general principle which informs the exercise of the power to grant interlocutory relief is that the court may make such orders, at least against the parties to the proceeding against whom final relief might be granted, as are needed to ensure the effective exercise of the jurisdiction invoked. The … Court had jurisdiction to make interlocutory orders to prevent frustration of its process in the present proceeding.  [References omitted].

4. Disclosure is an important obligation in family law proceedings. It is an obligation that exists both at common law and pursuant to Part 13 of the Rules. In terms of the common law, in Briese and Briese (1986) FLC 91-713 at 75,182, Smithers J applied the House of Lords decision in Livesey and Jenkins (1985) 1 All ER 106 in determining that:

   … in financial proceedings between spouses each party must make a full and frank disclosure of all material facts.

5. In terms of the parties’ statutory obligation of disclosure, Rule 13.01(1) of the Rules relevantly provides that:

   Subject to subrule (3), each party to a case has a duty to the court and to each other party to give full and frank disclosure of all information relevant to the case, in a timely manner.  [Emphasis added].

6. Further, Rule 13.04(1)(a) provides that:

   (1) A party to a financial case must make full and frank disclosure of the party's financial circumstances, including:

   (a) the party's earnings, including income that is paid or assigned to another party, person or legal entity; …

7. Clause 6 of Part 1 of Schedule 1 of the Rules relevantly provides that:

   (6)  At all stages during the pre-action negotiations and, if a case is started, during the conduct of the case itself, the parties must have regard to: …

   (i) the duty to make full and frank disclosure of all material facts, documents and other information relevant to the dispute. 

   Note: The duty of disclosure extends to the requirement to disclose any significant changes (see clause 4 of this Part).  [Emphasis added].

8. The fact that the obligation of disclosure exists as a duty to the Court, as well as the other party, is significant.  It is also significant that the obligation is in respect to the disclosure of “information relevant to the dispute” and includes “any significant changes”.

9. In this matter, I am not satisfied that the husband has diligently complied with his obligations of disclosure in a timely manner.  Clearly, details of the arrangements entered into between the husband and B bank, which concern the major assets of the matrimonial pool, are relevant in these proceedings.  In those circumstances, it is appropriate for the wife to be given access to any information received by the husband in respect to banking arrangements and decisions concerning those properties. 

10. I will, therefore, make orders in accordance with the wife’s proposed orders 4 and 5.

Execution of documents

1. As a result of the orders I have made, the wife’s proposed order 6 will only become relevant in the event of the husband failing to sign the irrevocable written authority referred to in proposed order 4.  There is no evidence before the Court to suggest that the husband will not comply with that obligation and, accordingly, proposed order 6 is premature.  I will not make an order in those terms, at this point.

Costs

1. The wife has been only partially successful in her application and, accordingly, I do not make an order in respect to costs.

I certify that the preceding seventy-seven (77) paragraphs are a true copy of the reasons for judgment of the Honourable Justice McClelland delivered on 23 November 2018.

Associate: 

Date:              23 November 2018