Wigmore & Wigmore
[2022] FedCFamC1F 382
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Wigmore & Wigmore [2022] FedCFamC1F 382
File number(s): SYC 1155 of 2021 Judgment of: CHRISTIE J Date of judgment: 30 May 2022 Catchwords: FAMILY LAW – PROPERTY – where final consent orders were entered into by the parties – where the husband now asserts those orders were interim property orders – nature of interim or partial orders – nature of final orders – role of declarations – where orders do not create clean financial break – where parties have ongoing commercial dealings – commercial dispute not a matrimonial cause. Legislation: Family Law Act 1975 (Cth) ss 4, 78, 79, 79A, 81, 114. Cases cited: Eracken & Eracken (No 2) [2019] FamCA 942.
Gabel & Yardley (2008) FLC 93-386.
Hickey & Hickey & Attorney-General for the Commonwealth of Australia (2003) FLC 93-143.
Strahan & Strahan (Interim Property Orders) (2011) FLC 93-466.
Division: Division 1 First Instance Number of paragraphs: 40 Date of hearing: 12 May 2022 Place: Sydney Counsel for the Applicant: Ms Bridger Solicitor for the Applicant: Friedlieb Fox McLeod Solicitors Counsel for the Respondent: Ms Mahony Solicitor for the Respondent: Campbell Paton & Taylor ORDERS
SYC 1155 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MR WIGMORE
Applicant
AND: MS WIGMORE
Respondent
ORDER MADE BY:
CHRISTIE J
DATE OF ORDER:
30 MAY 2022
THE COURT MAKES ORDERS AND DECLARATIONS:
1.It is ordered that Order 5 of the Orders of 26 October 2017 is set aside.
2.It is declared that the orders of 26 October 2017 are final orders.
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).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Wigmore & Wigmore has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
CHRISTIE J:
Mr Wigmore (“the husband”) has brought an application for relief under s 79 of the Family Law Act 1975 (Cth) (“the Act”).
Ms Wigmore (“the wife”) says that application is not validly brought because the parties entered into consent orders dealing with financial matters on 26 October 2017 (“the consent orders”) which she understood were final in nature.
Originally it appeared as though the husband sought to invoke the provisions of s 79A of the Act to set aside the consent orders. When the matter was before the Federal Circuit and Family Court of Australia (Division 1) (“the Court”) on 12 May 2022, counsel who appeared for the husband clarified that her client sought to proceed with the s 79 application in the first instance, as the consent orders were interim or partial, and not final orders. Further she indicated that if the Court were to find otherwise and conclude the consent orders were in fact final orders, her client would then pursue relief under s 79A of the Act. Counsel foreshadowed that the husband would seek to have his s 79A application heard at the same time as his application under s 79 of the Act.
Effectively the only matter before the Court then was to determine whether, as a matter of law and construction of the consent orders, the consent orders were properly characterised as interim or final orders.
Both the husband and wife (“the parties”) were represented at the hearing by counsel.
The husband relied on the following material:
(a)An Outline of Case Document provided to the Court on 12 May 2022;
(b)A Further Amended Initiating Application provided to the Court on 12 May 2022;
(c)An affidavit of Mr Wigmore filed 20 May 2021; and
(d)The consent orders made 26 October 2017.
The wife relied on the following material:
(a)An Outline of Case document filed 12 May 2022;
(b)An Amended Response to an Initiating Application filed 30 March 2021;
(c)An affidavit of Ms Wigmore filed 25 June 2021; and
(d)An affidavit of Ms Wigmore filed 19 August 2021.
BACKGROUND
The parties separated in September 2015 and continued to live separately and apart until the wife left the former matrimonial home in May 2016. At that time, the parties sold the former matrimonial home. The parties had both engaged solicitors to act on their respective behalves to effect a property settlement as between them. The husband’s solicitors prepared the documentation and forwarded it to the solicitors who acted on behalf of the wife. Those documents were executed by the parties together with an application for consent orders. That application was approved by the Court and a document entitled “Consent Orders” and marked “by consent it is ordered on a final basis” was made formal orders of the Court.
Those orders contained this notation:
The parties intend on carrying on with their businesses with one another as business partners. As such, the financial ties between the parties as they relate to the business entities have not been severed. However the parties agree they will not reagitate any dispute in relation to the business entities under Family Law provisions and any such dispute will be resolved in accordance with the appropriate commercial channels and legislation as would ordinarily be expected of business partners.
The entities in which each of the parties had an interest were as follows:
(a)C Pty Ltd;
(b)D Pty Ltd;
(c)E Trust; and
(d)Wigmore Company.
At the time the consent orders were made, the parties were the registered proprietors of a property at F Street, B City, NSW (“the B City property”). That property was utilised by the Wigmore Company as boutique accommodation. Order 1 provided as follows:
That the parties shall do all acts and things and sign all documents to cause the severance of the tenancies of the property at [F Street] [B City], being the property contained in Certificate of Title Folio Identifier … (‘the [B City] property’) (collectively, ‘the properties’) such that the parties’ interests in each of the properties is held as tenants in common and that the cost shall be shared equally between the parties.
The parties did not implement Order 1. They continued to hold the B City property as joint tenants.
The B City property has subsequently been sold and the proceeds of sale of that property are held in a controlled monies account.
The parties continued to engage in their business activities together. A dispute developed between the parties about monies which the husband purported had been provided to the business account of the partnership by his mother. The wife says she has had these circumstances brought to her attention by the husband recently. It is not immediately apparent whether there is a dispute between the parties about the significance of these deposits which post-date the parties’ consent orders.
THE LAW
It is necessary to understand the operation of ss 78, 79 and 81 of the Act as they apply to the facts of this case.
The Full Court of the Family Court of Australia (as it was then known) considered the question of the exercise of s 79 of the Act on an interim basis in Strahan & Strahan (Interim Property Orders) (2011) FLC 93-466 at [113], where, citing Gabel & Yardley (2008) FLC 93-386, they said that the power conferred under s 79 of the Act may be exercised by:
A succession of orders until the power is exhausted and the power is exhausted where there is no property with respect to which orders by way of alteration of interest in property could be or have been made.
It is necessary to consider the exercise of the power conferred by s 78 of the Act. Section 78 provides:
(1) In proceedings between the parties to a marriage with respect to existing title or rights in respect of property, the court may declare the title or rights, if any, that a party has in respect of the property.
(2) Where a court makes a declaration under subsection (1), it may make consequential orders to give effect to the declaration, including orders as to sale or partition and interim or permanent orders as to possession.
Section 78 of the Act:
…empowers the courts to declare existing interests in property according to the general principals of law and equity and to make consequential orders to give effect to the declaration…the section empower the court to make a declaration only with respect to existing title or rights in respect of property and to make any necessary consequential orders. The section does not allow the court to alter existing rights; such a power is contained in s 79.
(Hickey & Hickey & Attorney-General for the Commonwealth of Australia (2003) FLC 93-143 at [38])
Section 81 of the Act reads as follows:
In proceedings under this Part, other than proceedings under section 78 or proceedings with respect to maintenance payable during the subsistence of a marriage, the court shall, as far as practicable, make such orders as will finally determine the financial relationships between the parties to the marriage and avoid further proceedings between them.
It is plain from a reading of s 81 of the Act that it explicitly excludes those cases in which the Court is evoking the power of s 78 of the Act.
In Eracken & Eracken (No 2) [2019] FamCA 942 Gill J observed at [137]:
While it may be preferable to enter into orders that deal [with] the exit of parties from various entities, particularly to end the financial relations of the parties, the failure to do so does not necessarily render orders unjust or inequitable.
CONSIDERATION
On behalf of the husband it was contended that the consent orders were properly characterised as an interim or interlocutory order because they did not “deal dispositively with all of the assets of the parties”. In context, this submission appeared to be based on the fact that the parties, by virtue of Order 1, continued to own property together and by reason of Order 3, continued to operate businesses, partnerships and companies together.
The consent orders did deal with the assets (real property, shares, business and partnership, assets). Those orders did so by the terms of Orders 1 and 3 (and other orders which were not the subject of submissions). Order 1 compelled the parties to change the manner in which they held their interests in the B City property. The fact that they failed to do so is not an issue which speaks to whether the orders were interim or final in nature. Order 3 was a declaration of the parties’ existing interests.
It was suggested that the consent orders – in particular Order 3 did not alter the parties’ interests in assets. That may be so. However, as Stanford & Stanford (2012) 247 CLR 108 made plain, the provisions of s 79(2) of the Act require an assessment as to whether it is appropriate to alter existing interests. It does not follow that existing interests will be adjusted since the power to do so is exercised only where it is “just and equitable”. The fact that the existing interests in property are unaltered does not (without more) speak to whether the Court has made interim or final orders.
The consent orders exhausted the power of the Court to adjust the parties’ interests in their assets, liabilities and superannuation because the orders themselves dealt with all of the parties’ assets, liabilities and superannuation.
Counsel for the husband submitted that a plain reading of Order 2 of the consent orders restrained the parties from dealing with or encumbering properties (plural) without the consent in writing of the other party. In so far as the order referred to “properties” it was submitted that this would apply to properties acquired by the parties or either of them after separation. However, the reference to “the properties” is a direct reference to the expression as it appears in the order immediately prior. Order 1 reads:
That the parties shall do all acts and things and sign all documents to cause the severance of the tenancies of the property at [F Street] [B City], being the property contained in Certificate of Title Folio Identifier … (‘the [B City] property’) (collectively, ‘the properties’) such that the parties’ interests in each of the properties is held as tenants in common and that the cost shall be shared equally between the parties.
(Emphasis added)
In that context the reference to “the properties” in Order 2 is a reference to the B City property.
The Court cannot (and here did not) exercise power in respect of assets which are not or were not (at the time of order) assets of the husband or wife or either of them.
The second argument advanced on behalf of the husband about the construction of Order 2 was that, to the extent that the parties were injuncted from dealing with “the properties”, save with consent, or “an order of the Court”, it was submitted that absent consent, an application to a court exercising family law jurisdiction would be required. This, it was said, was indicative of the fact that the orders themselves were not final. It foreshadowed further litigation other than of an enforcement character.
The order needs to be seen in the context of the other orders. The orders contemplated continuation of the partnership. The B City property was a partnership asset. The partnership received rent from the hotel operations based there. Order 2 required the parties to agree to one another dealing with or encumbering a partnership asset or in the absence of agreement obtain a court order. That order was an exercise of the Court’s power not under s 79 of the Act but under s 114 of the Act.
The parties did not contemplate return to a court exercising family law jurisdiction. That much is plain from the terms of Order 5 of their consent orders. They both agreed through the vehicle of Order 5 that any dispute between them “will be governed by the provisions of the Corporations Act 2001, Partnership Act 1892 and/or the Real Property Act 1900 or any other legislation as may apply from time to time”.
The parties sought through Order 5 to preclude any application to a court exercising family law jurisdiction. If a dispute arose in the future in relation to their “joint business entities, the parties agree that they shall be precluded from any relief under the provisions of the Family Law Act 1975, including but not limited to section 79A…”
As drafted, Order 5 seeks to oust the jurisdiction of the Court to hear and consider for example: enforcement, appeals and applications to set aside orders. While an order which is not set aside on appeal is presumed to be valid and operative, there does seem to be some force in the submission that Order 5 – to the extent that it purports to oust the jurisdiction of the Court – is an order made without power. I accept the submission that a party cannot have his or her rights curtailed except by explicit statutory provision. Counsel for the wife quite properly conceded that Order 5 would appear to have been outside the power of the Court.
It does not follow that I accept that courts exercising family law jurisdiction are the appropriate place for resolution of disputes between these parties (other than hypothetically enforcement of the consent orders) and, without in any way commenting on the merits of the husband’s foreshadowed application under s 79A of the Act, if he believes, properly advised, that he has an arguable claim under the section, he would not be precluded from filing such an application.
I would be content (consistent with the position of both counsel) to discharge Order 5. Its intent is preserved in notation B of the consent orders. The existence of notation B makes plain the parties’ intentions to approach any future dispute between them as a commercial dispute as opposed to a matrimonial cause. That is consistent with the parties’ physical separation, the making of final orders for property adjustment and the ongoing commercial relationship between them.
Somewhat curiously a submission was made on behalf of the husband that there is no mention of the “business” operated at F Street B City in the consent orders. From context, I infer that submission was made in support of the proposition that the orders do not deal “dispositively” with all of the assets of the parties. However, the submission is factually incorrect as I understand the evidence, since the “business” to which counsel referred is the Wigmore Company and was the subject of Order 3.
The husband’s counsel submitted that the parties made continuing financial and non-financial contributions post-dating the consent orders. That may be the case. It would almost certainly be the case in respect of parenting contributions. It was said that these contributions were relevant to the determination of the status of the orders. However, the parties’ conduct post order cannot change the character of the orders.
In support of the submission that the consent orders were interim counsel for the husband pointed to the fact that the consent orders did not bring an end to the financial relationship between the parties. Section 81 of the Act is not a separate head of power requiring a “clean financial break” but an exhortation to the Court, to finally determine financial relationships between separated persons where possible and subject to the caveats in the section itself.
The wife’s counsel submitted that once the parties are separated and have had final orders made by the Court, then their dispute is commercial and not matrimonial. I accept that submission. Here the dispute between the parties does not “arise out of the marital relationship”: s 4 of the Act, but out of the business relationship which the parties continued after the making of the consent orders.
I have found that the consent orders stated they were final; that the consent orders were accompanied by an application which outlined the parties’ interests in property; that the court orders exhausted the s 79 power of the Act in so far as the orders dealt with all of the assets of the parties or either of them. I have rejected the argument that where orders do not effect a clean financial break, they should be regarded as interim. It follows that the husband’s application under s 79 cannot proceed as a consequence of the existing final orders.
I certify that the preceding forty (40) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Christie. Associate:
Dated: 30 May 2022
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