Wolter and Wolter
[2014] FamCA 307
FAMILY COURT OF AUSTRALIA
| WOLTER & WOLTER | [2014] FamCA 307 |
| FAMILY LAW – PRACTICE AND PROCEDURE – Where wife made an application to correct a typographical error in property settlement orders – Where the order in relation to which it is said the slip rule should operate, is an order upon which the parties agreed – Where the parties mistakenly discharged a certain order – Whether application falls within the ambit of Rule 17.02 of the Family Law Rules 2004 (Cth) – Where reference to the context and reasons of the property orders, reveals that the order was a mutual mistake – Where it is necessary to make an additional order to give proper effect to the property settlement orders – HELD – relief pursuant to r 17.02 should be given |
| Family Law Rules 2004 (Cth): r 17.02 |
| Flint v Richard Busuttil & Co Pty Ltd [2013] FCAFC 131 |
| APPLICANT: | Ms Wolter |
| RESPONDENT: | Mr Wolter |
| FILE NUMBER: | SYC | 5747 | of | 2009 |
| DATE DELIVERED: | 13 May 2014 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Ryan J |
| HEARING DATE: | 7 May 2014 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Watkins |
| SOLICITOR FOR THE APPLICANT: | Shipton & Associates |
| FOR THE RESPONDENT: | Mr Wolter in Person |
Orders
That order 7 of the final orders made on 21 December 2012 be amended pursuant to rule 17.02 of the Family Law Rules 2004 by replacing number “13(f)” with “13(e)”.
That should the husband fail, within 14 days of a written request, to sign the documents necessary to provide additional security over the N and L properties pursuant to order 13(e) of the orders dated 12 May 2012 or if the Commonwealth Bank should refuse to accept the L or N property as replacement security, then, in addition to the remedies available under these orders, the outstanding balance payable in respect of the C property mortgage shall be paid from the proceeds of sale of whichever of the following properties is the first to sell:
(1) U Street, L;
(2) V Street, N.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Wolter & Wolter has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| FAMILY COURT OF AUSTRALIA AT SYDNEY |
FILE NUMBER: SYC 5747 of 2009
| Ms Wolter |
Applicant
And
| Mr Wolter |
Respondent
REASONS FOR JUDGMENT
This is an application by Ms Wolter (“the wife”) to correct what is said to be a typographical error in property settlement orders I made on 21 December 2012. In addition, whether, as an omission or a machinery order or by way of enforcement, for an order in relation to the shortfall on a loan secured on a property at D which has been sold.
Mr Wolter (“the husband”) opposes the wife’s application. He made lengthy submissions in relation to the overall effect of the property settlement orders and why those orders should be reconsidered, almost in their entirety. Notwithstanding the length and breadth of the husband’s submissions, he did not engage with the central question, which was whether there was an error in the orders amenable to correction pursuant to r 17.02 of the Family Law Rules 2004 (Cth) (“the rules”).
Rule 17.02 and its application
Rule 17.02 is set out below:
(1) If a party claims that there is an error in an order issued by the court, the party must give written notice of the error to the Registry Manager and all parties.
(2) A Registrar may rectify an error that appears obvious on reading the order.
Example: A kind of amendment that a Registrar may make under subrule (2) is the correction of a typographical error.
(3) If the Registrar:
(a) is in doubt about whether there is an error in an order; or
(b) believes that an error in an order has, or may have, arisen from an accidental slip or omission;
the Registrar may take action under subrule (4).
(4) If subrule (1) or (3) applies, the party or Registrar may, after giving reasonable notice to each party, refer the order to the judicial officer who made it.
Note: If the judicial officer who made the order is unavailable, it may be referred to another judicial officer (see rule 1.13).
(5) A judicial officer may, after giving each party a reasonable opportunity to be heard, rectify a suspected error referred to the judicial officer.
Note: An amendment of an order may be made under this rule only if it is an error obvious when reading the order. Any other amendment must be remedied by appeal or consent.
As the rule demonstrates, it is well accepted that courts have the power to correct clerical mistakes and accidental slips or omissions. The purpose of what is often referred to as “the slip rule”, of which r 17.02 is an example, is to avoid injustice to litigants by ensuring that the court’s judgment or order reflects its intention at the time the order was made or the judgment was published, or reflects the intention that the court would have had but for the failure that caused the accidental slip or omission: Gould v Vaggelas (1985) 157 CLR 215; Symes v Commonwealth (1987) 89 FLR 356. The rule may be invoked to address unintended consequences of an order so as to give effect to the court’s intentions: Newmont Yandal Operations Pty Ltd v The J Aron Corporation and the Goldman Sachs Group Inc (2007) 70 NSWLR 411. It is well settled that the slip rule is not confined to errors or omissions by the court and extends to errors or omissions resulting from the inadvertence of a party’s legal representative: L Shaddock & Associates Pty Ltd v Parramatta City Council[No 2] (1982) 151 CLR 590.
As to what might constitute an accidental slip or omission, in Storey & Keers Pty Ltd v Johnstone (1987) 9 NSWLR 446, McHugh JA said at 453:
The rationale of the slip rule … requires that an omission or mistake should not be treated as accidental if the proposed amendment requires the exercise of an independent discretion or is a matter upon which a real difference of opinion might exist … (references omitted)
(see also Flint v Richard Busuttil & Co Pty Ltd [2013] FCAFC 131)
Discussion
Was there an accidental slip or omission?
On 21 December 2012, I made final parenting and property settlement orders in proceedings between the parties, the reasons for which were published the same day.
Proposed orders were set out at the end of my reasons which the parties were invited to consider in the context of those reasons. Both parties were represented and negotiations took place as to the final form of order. The point being, that the order in relation to which it is said the slip rule should operate, is an order upon which the parties agreed and is not contained in the orders proposed in the reasons. The significance of this is merely that the wife is incorrect when she asserts there is a typographical or clerical error made in the orders. As will be discussed in a complex array of orders, the parties mistakenly agreed order 13(f) made on 10 May 2012 should continue rather than order 13(e) and mistakenly discharged order 13(e).
These orders concern the sale of a property at D. For the hearing, the D property had an agreed value of $555,000. It was agreed in relation to the Commonwealth Bank advance used to acquire the D property, the amount outstanding at the hearing was $782,000. In relation to the mortgage, at [27], I found:
…Together, they borrowed about $703,000.00 from the Commonwealth Bank with that advance secured over [D property] and [F property]. The mortgage comprises seven fixed interest loans each for $100,000.00. Until recently [D property] has always been tenanted and at all times its expenses exceeded it income…
At [28], I said:
…[D property] is listed for sale and will sell at a loss. From the sale proceeds the mortgage, which may include break fees, will not be fully repaid. Because it is agreed that the mother will retain [F property] care is required to ensure that the [D property] shortfall is paid from other realised assets...
At [84], reference is made to the parties’ agreement in April 2011 to sell D property. The agreement was reflected in orders dated 9 June 2011, the orders being set out at [84] as follows:
1.The Court notes that the [D] property is to be placed on the market for sale by the parties within 14 days and in the event the property has not been sold by 1 November 2011 then the parties will appoint [J] Valuers to value the property forthwith.
2.That both parties forthwith do all things necessary and sign all documents to list the property at [D] for sale on the following terms:-
a.The Real Estate Agent is to be selected by the husband within 14 days
b.The Solicitor appointed to act on the conveyance is Ken Heasman.
c.The listing price is $700,000
3.That upon the sale of the property the parties are to cause the proceeds of sale to be disbursed as follows:-
a.The reasonable costs of sale including real estate costs and legal costs
b.Any rate adjustments
c.Any land tax as assessed
d.Any other necessary adjustments
e.The balance to be paid into the mortgage account at the Commonwealth Bank registered on the [D] and [F] properties.
f.In the event that there are any monies remaining after the discharge of the mortgage they are to be paid into a controlled monies account in joint names
g.In the event that there are insufficient funds to discharge the mortgage referred to in 12(e) then the husband is to do all things necessary to effect the discharge of the said mortgage.
At [94], I address the consent orders dated 10 May 2012 which reflected:
… agreement … to appoint a new agent to manage its sale and to provide further security to the mortgagee and thus take some of the pressure off [F property]…
The 10 May 2012 consent orders are set out at [97]. Paragraph 97 is set out below:
1.That Orders 3, 11 and 12 made 9 June 2011 be discharged and in lieu thereof the following orders be made.
2.That the parties do all acts and things and sign all documents necessary to appoint [BB Agents] as the real estate agents to conduct the sale of the property situate at and known as [D property] and in relation to same the following shall apply:
(a)Within fourteen days the parties shall do all acts and things and sign all necessary documents requested of them by the agent including an exclusive agency agreement;
(b)Instruct the agent to commence listing the property for sale with the first open for inspection to be held on 2 June 2012.
(c)That the listing price for the property shall be the price recommended by the agent between $590,000 and $639,000, however, in the event that the agent strongly recommends a listing price higher or lower than the price referred to herein then the parties are to request the agent provide written reason for the price recommendation and the parties are to have leave to apply to the court on 48 hours’ notice.
(d)Do all acts and things and instruct the agent to advertise the property in a manner to maximise the potential sale of the property including advertising the property in the Sydney market, with the Wife to pay the costs of the advertising in the first instance up to a limit of $7,000 to be reimbursed upon completion of the sale of the [D] property as part of the necessary selling expenses of the property;
(e)In the event that the property is to be listed for sale by public auction as provided for in these orders then the parties agree that the reserve price shall be $555,000.
(f)That neither of the parties’ solicitors are to communicate with the agent.
(g)That all communications between the parties and the agent are to be copied to the other party. In the event that any communications are by telephone or in person the parties are to instruct the agent and request that he confirm all discussions and advices given in writing as soon as practicable to all parties.
3.That the parties forthwith do all acts and things and instruct [LL] Real Estate Agent to forthwith remove the [D] property from marketing for sale, including but not limited to removing the sign affixed outside the home, removing all website and internet advertising that the agent has arranged for the said property.
4.That the [D] property is to be listed for sale by private treaty in the first instance, however, if contracts for the sale of the property are not exchanged by 8 October 2012 then the property is to be immediately listed by the same agent for auction with a six-week marketing campaign commencing 13 October 2012, with the auction to take place on 24 November 2012 or such other date close to that date as the agent recommends.
5.The Husband and Wife will co-operate in every way with the agent, including (without limiting the generality of the foregoing):
(a)making a key available to the agent;
(b)allowing inspection at all reasonable times requested by the agent;
(c)doing or saying nothing to hinder or prevent a sale being effected;
(d)ensuring that the [D] property grounds are in a neat and clean condition at the time of inspection by the agent and prospective purchasers; and
(e)signing all documents requested by the agent in relation to the listing for sale of the [D] property except a contract or agreement for sale which has not been authorised by the Parties’ solicitors;
(f)the Husband and the Wife will execute a contract for sale in the form prepared by the solicitors having the conduct of the sale;
(g)neither party may confer on any other agent without the consent of the other party any right to any sole or exclusive agency in respect of the [D] property or to any commission.
6.In the event that the property is listed for auction and the bidding at the auction does not reach the reserve price, then the parties may negotiate with the highest bidder(s) or any other interested person to effect a sale of the [D] property for a price which is not more than 5% below the reserve price unless the parties agree otherwise in writing.
7.That the husband and the wife’s solicitors draft a joint letter of instruction to Mr [DD] and forward the same to him within seven days requesting that he amend the first page of the contract to reflect the change of agent and to remove the reference to the contract for sale to the existing tenancy.
8.That the parties forthwith jointly instruct the agent to market the [D] property for rent at such market rent as the agent recommends and do all acts and things and sign all documents necessary to enter into a Residential Tenancy Agreement with any prospective tenant for a period not longer than six months.
9.That forthwith the parties are to do all acts and things and sign all necessary documents and instruct the Commonwealth Bank manager....to establish a joint account in the names of the parties which account is to be solely utilised to pay or part pay mortgage repayments in respect of the seven home loans that comprise the mortgage secured over the [D] property, being loan numbers [#01, #09, #18, #04, #01, #03 and #07] and the parties are restrained from dealing with the new account to be established other than for the reason of meeting the mortgage repayments unless agreed in writing by the parties and any activity on the account is to be with the parties’ joint signatures (“the new CBA joint account”). The intention of this order, which will be served on the Commonwealth Bank is to cause an automatic transfer each month of the credit balance in the new account against the balance outstanding in respect of the loan numbers set out in this Order.
10.That the parties jointly instruct the agent that the rental monies received from the agent after payment of outgoings and property management fees are to be paid into the new CBA joint account.
11.That the husband do all acts and things and sign all documents necessary to assign the conduct of the litigation commenced by him in … Local Court against the former tenants of the [D] property to the wife as plaintiff. However, the Wife shall keep the husband’s solicitors informed as to the progress of the litigation and the Wife shall not accept any settlement unless and until the husband has approved same.
12.In the event that any monies are recovered from the former tenants pursuant to the litigation referred to in Order 11, those monies be applied in the following order and priority:
(a)In payment of the wife’s solicitors reasonable costs and disbursements in respect of that litigation;
(b)In payment of all outstanding Council and Water rates in respect of the [D] property; and
(c)Any balance thereafter remaining be paid into the new CBA joint account to be applied towards mortgage repayments in respect of the [D property] mortgage.
13.That, on completion of the sale of the [D] property pursuant to these orders, the parties shall divide the proceeds in the following manner and priority as follows:
(a)In payment of Agent’s commission, advertising, marketing and auction expenses on the sale.
(b)In payment of legal costs and disbursements on the sale to Mr [DD].
(c)In payment and discharge of all mortgages, charges and encumbrances in respect of the [D] property.
(d)In payment and discharge of all mortgages, charges and encumbrances in respect of the property situate at and known as [F property].
(e)In the event of any shortfall between the proceeds of sale of the [D] Property and the amount required to discharge the mortgage presently registered on the titles to the [D] property and the [F] property, the parties shall do all acts and things and sign all documents necessary to provide additional security over the property situate at and known as [N property] and [L property]. However, in the event that the Commonwealth Bank refuses to accept additional security over the [N] and [L] properties to secure the shortfall, then the husband is to do all acts and things to provide the property situate at and known as [Y property] to the Commonwealth Bank by way of additional security.
(f)In the event that there is a surplus following payment of the expenses set out in Order 13(a) – (d) above, then any such surplus shall be deposited into the new CBA joint account.
The effect of the orders and agreement is contained in [98], which is set out below:
It can be seen that the parties agree that in the event there is a shortfall from the [D property] sale, the father will offer [L property] and [N property] as security for the [D property] mortgage. If the mortgagee refuses [Y property] will be offered.
It can thus be seen that in relation to D property, the judgment proceeds on the basis that:
·D property is to be sold;
·on a sale there will be an insufficiency of funds realised to discharge the seven loans secured on it and F property; and
·the D property shortfall is to be paid from the sale of other properties and not F property.
The orders proposed in the judgment are set out at [307]. Relevantly, orders concerning the conditions for sale of three other properties were presented but not in relation to D property. The point being, the 10 May 2012 orders addressed the conditions for sale, payment of transaction costs and liabilities attached to the property and steps to be taken in relation to the mortgage shortfall. Orders were proposed in relation to the D property sale proceeds or surplus which are set out below:
(5)In the event the [D] property sold in accordance with the orders dated 10 May 2012 and there is a surplus, the surplus shall be distributed 61 per cent to the father and 39 per cent to the mother.
(6)In the event the [D] property sold in accordance with the orders dated 10 May 2012 and there is a shortfall, that shortfall is to be paid from whichever of the abovenamed properties sells first (prior to distribution of the relevant net sale proceeds).
(7)In the event the [D] property has not sold Order 13(f) of the orders dated 10 May 2012 is discharged and in lieu thereof, the sale proceeds shall be distributed in accordance with Order 3 of these orders.
Reference to order 13(f) can be seen in proposed order 7 which demonstrates that judgment proceeds on the basis that order 13 of the orders dated 10 May 2012 continued to operate in relation to the sale of D property.
However, following negotiations between the parties and at the husband’s request, an order was made that the wife transfer her interest in D property to him. Order 2 required that he forthwith sell D property and three other properties. By order 3 conditions for sale in relation to four properties were made. The effect of this is that the conditions for sale in relation to D property contained in the 10 May 2012 orders were superseded. A new order 4 was settled, relevantly, the effect of which was to supersede orders 13(a) – (d) of the 10 May 2012 orders. At order 7 the parties proposed and it was ordered as follows:
(7)Excluding Orders 1, 8, 9, 10, 11, 12 and 13(f) of the orders dated 10 May 2012 are discharged.
By then, as has already been mentioned, it was common ground there would be no surplus on the sale of D property and order 13(f) had no work to do and was otiose. This point is reinforced by order 4, the effect of which would be in relation to D property, that had there been a surplus, subject to adjustments identified in the order, the husband would receive 61 per cent and the wife 39 per cent. On the other hand, the shortfall issue addressed in 13(e) is nowhere referred to in the revised orders yet the parties’ agreement and the judgment clearly demonstrates that that order remained relevant and would continue to operate.
Conclusion
It is abundantly clear that when the parties proposed order 7, the reference to order 13(f) was a mutual mistake and it was intended that the order refer to order 13(e). On this basis, relief pursuant to r 17.02 should be given. For an abundance of caution, had it been established that the orders as made had the unintended consequence of leaving the D property shortfall secured against F property and not paid from the sale proceeds of the other three properties, on this basis, the amendments sought pursuant to r 17.02 would have been given.
Additional order
In addition to her slip rule application, the wife proposed an order which would make it clear that the D property shortfall would be paid from the sale proceeds of the next property to sell. The proposed order is set out below:
That should the husband fail, within 14 days of a written request, to sign the documents necessary to provide additional security over the [N] and [L] properties pursuant to order 13(e) of orders dated 12 May 2012 or if the Commonwealth Bank should refuse to accept the [L] or [N] property as replacement security, then, in addition to the remedies available under these orders, the outstanding balance payable in respect of the [D property] mortgage shall be paid from the proceeds of sale of whichever of the following properties is the first to sell:
(1) [U Street, L];
(2) [V Street, N].
(exhibit 1)
In support of this application, evidence was provided of the very great difficulties which have arisen in relation to the husband meeting his obligation to forthwith sell the four properties albeit, it was agreed that N property and L property would only be sold after an unconditional exchange contract for D property was in place.
On a number of occasions it has been necessary for the wife to obtain orders from a registrar to execute necessary documents the husband refused to sign.
Although he presented evidence of a considerable number of written requests for information he sent to the wife and her solicitors, to which no response was given, the matters the husband raised have, at best, passing relevance to the issue at hand. Whether it be by desire, out of anxiety or for some other reason, the correspondence to which the husband made reference failed to engage with his obligations pursuant to the orders and appears to be designed to recast or delay implementation of the orders as long as possible.
For example, notwithstanding that the husband ran his case on the basis that the parties borrowed the entire D property purchase price and that the seven loans used to document that advance must be repaid, he now suggests that the loan documents are concoctions, by which I understood him to mean forgeries, and that he has a credible claim to avoid repayment. In short, the husband made it as clear as one possibly could, that he has no intention of co-operating with the wife to pay out the D property shortfall.
The case for the order proposed is compelling and necessary to give effect to the property settlement orders without further delay or expense. Whether the order be categorised as a machinery order or an order in the nature of enforcement is irrelevant, the point being there is ample power to grant the relief sought.
For these reasons, orders are made as set out at the commencement of these reasons.
I certify that the preceding twenty six (26) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Ryan delivered on 13 May 2014.
Associate:
Date: 13 May 2014
Key Legal Topics
Areas of Law
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Family Law
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Civil Procedure
Legal Concepts
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Remedies
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Procedural Fairness
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Appeal
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Res Judicata
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Jurisdiction
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