Pera & Pera [2008]

FAMILY LAW - APPEAL – CONSENT ORDERS – CONSEQUENTIAL ORDERS - JURISDICTION - Where parties consented to orders – Where parties subsequently in dispute about the interpretation and implementation of the orders – Whether the trial Judge had jurisdiction to make further orders – Whether it is necessary for the trustee of a superannuation fund to become a party to the proceedings when orders are made in resect of assets of self managed superannuation fund – Where no superannuation splitting order was made or sought – Where trustee was not affected by the original consent orders or the consequential orders - The trustee of the superannuation fund did not need to be joined as a party – Where appellant asserts superannuation fund issues should have been instituted by civil action by trustee seeking a declaration and transfer of ownership of property – Proceedings concerning assets of the superannuation fund not required to be instituted as civil proceedings in a State court - Whether a superannuation fund is “property” for the purpose of s 4(1) and capable of enforcement under s 105 of the Family Law Act 1975 (Cth) –Discussion of Coghlan & Coghlan [2005] FamCA 429; (2005) FLC 93-220 and Hickey & Hickey [2003] FamCA 395; (2003) FLC 93-143 – Where the parties intended by implication the superannuation fund be treated as property in their consent orders – Trial Judge had jurisdiction to make orders.

FAMILY COURT OF AUSTRALIA

REPRESENTATION

ORDERS

(1) That Appeal No SA 76 of 2007 is dismissed.
(2) That Appeal No SA 97 of 2007 is dismissed.
(3) That the wife pay the husband’s costs of Appeal No SA 76 of 2007 and SA 97 of 2007 as agreed, and failing agreement as assessed under Chapter 19 of the Family Law Rules 2004.

IT IS NOTED that publication of this judgment under the pseudonym Pera & Pera is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

Appeal Number: SA 76 of 2007; SA 97 of 2007
File Number: MLF 6059 of 2003

Appellant

And

Respondent

REASONS FOR JUDGMENT

INTRODUCTION

1. On 4 April 2007, Ms Pera (“the wife”) and Mr Pera (“the husband”), after several days of the hearing of their competing property settlement claims under s 79 of the Family Law Act 1975 (Cth) (“the Act”) reached agreement and Cronin J made orders adjusting their property interests.
2. Among the orders made, the husband agreed, on payment of $215,000.00 by the wife, he would transfer to her his interest in the former matrimonial home in South-Eastern Melbourne. The orders provided that the husband was to assume responsibility for payment of any liability in respect of the mortgage secured over the matrimonial home in excess of $150,000.00, and indemnify the wife in respect of such excess liability. The orders also provided that the husband would retain for his “sole use and benefit” a self managed superannuation fund (“the superannuation fund”), and the wife would retain for her own use the “property distribution” under the orders.
3. A dispute arose between the parties about the interpretation of and implementation of the orders. The disputes relevant to this appeal arose from the following actions or assertions of the parties:
   • (a) From the date of the orders, for about three months, no instalments were made on the mortgage secured over the matrimonial home. The husband asserted the mortgage balance was under $150,000.00 as at the date of the orders, and that he had no liability in respect of it. The mortgagee deducted instalments from a bank account operated by the husband, and the husband sought and obtained reimbursement from the wife of the sums taken from his account.
   • (b) The wife then sought to discharge the mortgage secured over the matrimonial home, and the mortgagee imposed various fees, including an “establishment fee”, early discharge fee and other charges (“the mortgagee’s fees”) totalling approximately $17,000.00 bringing the liability due to the mortgagee on discharge of the mortgage to approximately $167,000.00. The wife asserted that the husband was required to assume liability for the amount over $150,000.00. (Before the trial Judge the husband conceded he was prepared to pay one half of the mortgagee’s fees.)
   • (c) The wife refused to deliver to the husband paintings, including a painting which she had owned prior to the marriage, known to her as “V”, and to transfer shares registered in her name to the superannuation fund. (The husband asserted that Telstra shares registered in the wife’s name, exceeding 1,000 shares the wife was obliged to transfer to the superannuation fund under Order 11 of the orders, and the paintings, were property of the superannuation fund, and that he was entitled to them, under Order 4(b) for his use and benefit).
4. It was asserted before Cronin J, on the wife’s behalf, that the husband was in breach of interim orders made by Bell J on 22 June 2006, as modified by Mushin J on 26 November 2006. The wife asserted the orders restrained the husband, pending further order, further borrowing against the security of the matrimonial home.
5. The parties’ dispute about interpretation and enforcement of the orders was heard by the trial Judge who delivered reasons and pronounced orders on 3 August 2007. His Honour’s orders required, inter alia, that the wife deliver to the husband the paintings, and that each party pay one half of the mortgagee’s fees (the husband, as we have already explained, having consented to assume responsibility for one half of such fees). His Honour also made a costs order requiring the wife to pay the costs thrown away in respect of an earlier adjourned hearing day, and permitted the parties to make written submissions in respect of costs of their competing applications. On 28 September 2007 his Honour delivered reasons and made an order requiring the wife to pay part of the husband’s costs in the sum of $6,632.00.
6. By Notices of Appeal filed on 30 August 2007 and 25 October 2007 the wife seeks to appeal the orders of 3 August 2007 (“the substantive appeal”) and the orders made 28 September 2007 (“the costs appeal”).
7. Although the wife’s Notice of Appeal contains, in respect of the substantive appeal, 20 grounds of appeal, the appellant’s written and oral submissions were argued on the basis that:
   • his Honour lacked jurisdiction to make enforcement orders;
   • it was necessary for the trustee of the superannuation fund to have been made a party to the proceedings;
   • the relief sought by the husband at the hearing was different to that sought in his application;
   • his Honour made substantive orders rather than machinery orders when he was functus officio in respect of the orders made under s 79; and
   • the issues in dispute should not have been resolved summarily, but required a trial.

GROUNDS OF APPEAL

1. The wife’s written submissions do not refer to the particular grounds of appeal in the substantive appeal. As we have already explained, the attack upon his Honour’s reasons was argued on essentially the issues we have just identified.
2. We propose to consider the appeal grounds under the topics we have identified above. We will first consider the jurisdiction argument, then if necessary, consider the arguments directed to the challenge to his Honour’s orders relevant to the superannuation fund. In so doing we will consider whether or not the orders made were substantive or machinery orders. We will finally consider the natural justice arguments advanced on behalf of the wife in which she criticised the approach of the trial Judge in determining the hearing on the papers.

THE CONSENT ORDERS

1. The starting point for considering the matters raised by the wife in the substantive appeal is the consent orders. The relevant orders are:
   1. The Wife retain for her own use and benefit absolutely:

(a) motor vehicle, registration number [...];

(b) monies held on deposit by her;

(c) her superannuation benefits and entitlements;

(d) all of her interest in real estate in [Eastern Europe]; and

(e) property distribution pursuant to Orders of this Honourable Court.

1. (a) That the Wife pay to the Husband within 90 days the sum of Two Hundred and Fifteen Thousand Dollars ($215,000.00) and contemporaneously the Wife transfer to the Husband at the expense of the Husband all of her right, title and interest in the real estate situate at and known as [the Mornington Peninsula property]

(b) The Husband shall be liable to discharge all encumbrances and mortgage to the National Australia Banking Group Ltd and any capital gains tax liability of the Wife present or future attaching to the said property (“the liabilities”) and the Husband indemnifies the Wife and at all times keeps indemnified the Wife in respect of all of the liabilities.

1. That each party shall be solely liable for and indemnify the other against all liability encumbering any item of property to which that party is entitled pursuant to these Orders, save as to the provisions as to the [former matrimonial home].
2. The Husband shall retain for his own use and benefit absolutely:

(a) motor vehicles in his possession;

(b) [Pera] Executive Benefits Superannuation Fund;

(c) [S] Funds Management Pty Ltd;

(d) property distributions pursuant to Orders of this Honourable Court; and

(e) all of the corporate entities and businesses set out in the documents and reports in these proceedings (“the entities”).

...

1. The Husband shall be responsible to pay all sums in excess of the liabilities above the sum of $150,000.00 liability as at the date of these Orders in respect of the Australian Securities Ltd mortgage secured against the title to the former matrimonial home situate [in South-Eastern Melbourne] and the Husband indemnify and at all times keep indemnified the Wife in respect of such excess of liability.

...

1. That contemporaneously with:

(a) the transfer and payment as provided in paragraph 2 (a) hereof of the Wife’s interest in the [Mornington Peninsula] property to the Husband;

(b) the removal at the Husband’s expense of caveat [...] and discharge of the mortgage supported by the caveat lodged against the title to the former matrimonial home situate [in South-Eastern Melbourne] being the whole of the land contained in Certificate of Title [...], the Husband transfer to the Wife at the Wife’s expense all of his right title and interest in the said former matrimonial home upon the payment to the Husband of the sum of Two Hundred and Fifteen Thousand dollars ($215,000.00) such payment to be made within 90 days.

1. That the Husband, his servants or agents be and are hereby restrained from further encumbering, apply to borrow or borrowing any sums of money from Australian Securities Ltd and or mortgage [...] secured against the title to the [former matrimonial home] beyond the existing sum of One Hundred and Fifty Thousand Dollars ($150,000.00) permitted pursuant to Orders of this Honourable Court.

...

1. The Wife shall retain for her own use the paintings, [Z] and [A] by Rosemary Ryan.
2. That the wife forthwith pay to the Husband dividends received by her since 6 March 2003 to the date hereof in respect of One Thousand Telstra shares and the Wife transfer 1000 (One Thousand) Telstra shares to the [Pera] Executive Superannuation Fund.

...

1. That save as to the excess referred to in paragraph 6 hereof the Wife shall be responsible for and indemnify the Husband in respect of the Australian Securities Ltd mortgage which was permitted by Orders of this Honourable Court to encumber the [former matrimonial home] to a limit of $150,000.00.

...

1. That unless otherwise specified in these Orders and save for the purposes of enforcing any monies due under these or any subsequent Orders:

(a) each party be solely entitled to the exclusion of the other to all other property (including choses-in-action) in the possession of such party as at the date of these Orders. The furniture, personal possessions and like chattels respectively in the [former matrimonial home] being deemed to be in the possession of the Wife and in the [Mornington Peninsula] property currently in storage at [D] Storage facility be deemed to be in the possession of the Husband (with the Wife to deliver the key to the storage unit to the Husband’s solicitors office by 5.00 pm on 5 April 2007 and otherwise be restrained by removing any items there from).

(b) Monies standing to the credit of the parties in any joint bank account are to become the property of the Wife.

(c) Each party forgo any claims they may have to any superannuation benefits belonging to or earned by the other.

(d) Insurance policies remain the sole property of the owner named thereon.

(e) Each party be solely liable for and indemnify the other against any liability arising by the use of that party of a credit card or credit line facility post 6 March 2003.

(f) Any joint tenancy of the parties in any real or personal estate is hereby expressly severed.

...

1. The orders made by Bell J to which we have already referred, were not included in the appeal book, but were provided to us during the hearing of the appeal. Order 4 of the interim orders provided that the husband could borrow $100,000.00 on the security of the matrimonial home and a property on the Mornington Peninsula and that he was “solely responsible for payment of all principal, interest, costs and/or expenses relating to or arising out of such borrowings”. Order 6 provided that the borrowings “be taken into account” at the final property settlement. On 27 November 2006 Mushin J, inter alia, permitted the husband to extend the borrowings on the same terms and conditions as the earlier orders by a further $50,000.00, but subject to a further condition, namely that from such borrowings the husband paid:

...[f]irstly all arrears and periodic payments in advance to the end of April 2007 in respect of the A.S.L. mortgage...

1. We are satisfied that nothing arising from these orders is relevant to either appeal.
2. We will return to discuss certain of the consent orders when considering the arguments advanced by each party’s counsel in the substantive appeal.

THE APPLICATIONS BEFORE THE TRIAL JUDGE

1. On 14 June 2007 the husband filed an application which, for convenience, we will refer to as the husband’s enforcement application. In that application he sought orders that:
   1. That the wife forthwith comply with the orders made on 4 April 2007 and in particular as follows:

(a) Paragraphs 6, 9, 14 and 17 in relation to the ASL loan.

...

(c) Paragraph 11 in relation to the paintings.

1. That the wife transfer 1,000 Telstra shares to the [Pera] Executive Benefits Plan.

...

1. On the first return day of the husband’s enforcement application, 18 June 2007, the wife did not attend Court because of work commitments. His Honour adjourned the application to the following morning. On 19 June 2007 as the wife had not filed any material, his Honour made directions for filing material, and adjourned the matter for hearing on 5 July 2007. He also made an order for the production and inspection of the paintings. The wife was late in filing her material, causing delay in the production of the husband’s material in reply. This necessitated further adjournment of the matter. The matter was then listed for hearing on 31 July 2007.
2. On 28 June 2007 the wife filed a response in which she sought the husband’s enforcement application be dismissed. The wife also sought other orders, including so far as is relevant to this appeal, the following orders:
   1. That the wife objects to those parts of the husband’s Application that relate to:

(a) the painting “[R]”; and

(b) the transfer of any Telstra shares held by the wife as being beyond the jurisdiction of the Court and or to be subject of any decision without the benefit of evidence in chief and cross examination.

1. That the Orders made on 4 April 2007 be amended by adding in a new paragraph that the wife retains all paintings and Telstra shares in her possession or control.

...

1. That the husband be accountable to this Honourable Court for breaching the Court Orders made by Justice Bell on 22 June 2006 and the Orders made by Justice Mushin on 27 November 2006 that no further monies were to be borrowed against the title to the [former matrimonial home].
2. That pursuant to paragraphs 6 and 14 of the Orders made on 4 April 2007 that there be a declaration that all sums of money in excess of $150,000.00 to be paid by the wife to the Australian Securities Limited be deducted from the $215,000.00 to be paid to the husband.

...

THE “JURISDICTION” ISSUE

1. Counsel for the wife argued the “jurisdiction” issue on two bases. First, he submitted that the Court lacked jurisdiction to make orders about the superannuation fund’s assets without the trustee of the fund being joined as a party to the proceedings. Secondly, he argued that the proper forum to deal with issues relating to the superannuation fund was by “a civil action at law seeking a declaration of ownership of property, and a transfer and/or delivery of that property”. Hence, he submitted the husband’s application was “beyond the jurisdiction of the Court and...was incompetent” (wife’s submissions, p 6, paragraph 13).
2. The jurisdiction issue was a live issue before the trial Judge. At the commencement of his reasons his Honour noted the issues in the case (paragraph 3) which he explained were:

(a) whether two paintings in the possession of the wife belong to the superannuation fund that was retained by the husband in the property settlement;

(b) whether a further 1000 Telstra shares which are registered in the name of the wife actually belong to the same superannuation fund;

(c) whether the wife complied with the order made on 4 April 2007 and notified a real estate agent that the husband was thereafter entitled to the rent from a property;

(d) what responsibility each party has for costs and expenses associated with a mortgage that encumbered the matrimonial home;

(e) various costs incurred as a result of the adjournment of the proceedings before me;

(f) whether the husband had complied with the same orders and provided documents to enable taxation issues to be calculated;

(g) whether the husband had breached prior orders in relation to extensive borrowings against the matrimonial home.

1. Thereafter, his Honour went on to explain the nature of the jurisdiction argument at paragraph 4 of his reasons as follows:

Underlying at least two of these issues was the wife’s argument that there was no jurisdiction to deal with the superannuation issue because the trustee of the fund had never been joined as a party and any enforcement of rights of collection of assets relating to the superannuation fund was a matter for the trustee. By inference, I took the wife’s argument to mean that it was a matter in which proceedings should be issued in the civil courts in detinue.

1. After recording the applications before him, and summarising the relief sought, his Honour referred to the assertions of the wife’s counsel explaining as follows:

...[h]er counsel said that this was not an enforcement action and that even if it was, the husband was not the trustee of the fund and that effectively what he was seeking was a determination of what the fund owned. (paragraph 10)

1. His Honour referred to s 105 of the Act which he described as “[t]he enforcement provisions” and then explained it was necessary to look at the jurisdictional provisions (s 39(1)) and the term “matrimonial cause” as defined in s 4(1) of the Act. His Honour then set out s 4(f) which provides as follows:

(f) any other proceedings (including proceedings with respect to the enforcement of a decree or the service of process) in relation to concurrent, pending or completed proceedings of a kind referred to in any of paragraphs (a) to (eb), including proceedings of such a kind pending at, or completed before, the commencement of this Act. (paragraph 11)

and noted that, in his view, the application fell within that definition.

1. In paragraph 13, his Honour cited a portion of Gibbs CJ’s judgment in Fountain v Alexander [1982] HCA 16; (1982) 150 CLR 615; (1982) FLC 91-218 as follows:

Paragraph (f) does not require that the proceedings to which it refers should be proceedings between the parties to a marriage...All that is necessary is that the proceedings should be in relation to, inter alia, completed proceedings of a kind referred to in paragraph (c)...

1. His Honour then set out his conclusions on the jurisdiction issue as follows:
   1. As I pointed out, that was a case involving a child and the same argument can be applied to a property matter. The joining of the superannuation fund trustee in my view is therefore unnecessary.
   2. Sections 90MC and 90MD of the Act refer to superannuation interests and specifically that superannuation interest is to be treated as property for the purposes of the definition of matrimonial cause in s 4.
   3. Paragraph 4(b) of the order made on 4 April 2007 reads:

The husband shall retain for his own use and benefit absolutely:

(a) ...

(b) [Pera] Executive Benefits Superannuation Fund;

(c) ...

(d) ...

(e) ...

1. Although paragraph 4 is rather inelegantly put, my view is that the intention is clear namely that the husband is entitled to the benefits of that superannuation fund.
2. Accordingly, regardless of who the trustee is, I accept that the husband has a right to protect and enforce vis a vis the wife, his right to the interest in the fund and accordingly, I have jurisdiction to deal with the application to force compliance with the order made on 4 April 2007 in so far as the husband requires the wife do all things necessary to ensure that the assets that she holds belonging to the fund are put back into the fund.

Relevant law – jurisdiction

1. We find it useful, prior to discussing the grounds asserting a lack of standing of the husband to bring an application in respect of the assets of the superannuation fund and jurisdiction in the Court to grant relief, to set out the potentially relevant statutory provisions.
2. Section 105(1) of the Act provides as follows:

(1)  Subject to this Part, to the regulations and to the applicable Rules of Court, all decrees made under this Act may be enforced by any court having jurisdiction under this Act.

1. As his Honour noted, the Court, pursuant to s 39(1), has jurisdiction in respect of “a matrimonial cause”. Section 39(1) is in the following terms:

(1)  Subject to this Part, a matrimonial cause may be instituted under this Act:

(a)  in the Family Court; or

(b)  in the Supreme Court of a State or a Territory.

1. “Matrimonial cause” is defined in s 4(1) of the Act. Section 4(1) defines as a “matrimonial cause” various proceedings including:

(ca)  proceedings between the parties to a marriage with respect to the property of the parties to the marriage or either of them, being proceedings:

(i)  arising out of the marital relationship;

(ii)  in relation to concurrent, pending or completed divorce or validity of marriage proceedings between those parties; or

(iii)  in relation to the divorce of the parties to that marriage, the annulment of that marriage or the legal separation of the parties to that marriage, being a divorce, annulment or legal separation effected in accordance with the law of an overseas jurisdiction, where that divorce, annulment or legal separation is recognised as valid in Australia under section 104...

1. Section 4(1)(f), which for ease of understanding we now set out again, provides as follows:

“matrimonial cause” means

...

(f) any other proceedings (including proceedings with respect to the enforcement of a decree or the service of process) in relation to concurrent, pending or completed proceedings of a kind referred to in any of paragraphs (a) to (eb), including proceedings of such a kind pending at, or completed before, the commencement of this Act.

1. “Property” is defined in s 4(1) as:

“property” in relation to the parties to a marriage or either of them, means property to which those parties are, or that party is, as the case may be, entitled, whether in possession or reversion.

1. Section 8(1)(a) requires proceedings by way of a matrimonial cause to be commenced under the Act. It is in the following terms:

(1)  After the commencement of this Act:

(a)  proceedings by way of a matrimonial cause shall not be instituted except under this Act; and

...

1. Section 90MC, which is found in Part VIIB of the Act, was introduced in 2001 and came into force in 2002. It provides as follows:

A superannuation interest is to be treated as property for the purposes of paragraph (ca) of the definition of matrimonial cause in section 4.

1. Section 78 of the Act is in the following terms:

(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.

Discussion

1. We perceive the arguments raised by counsel for the wife require us to consider:
   • whether the Court had jurisdiction in respect of the superannuation interests of the parties when no splitting order was sought or made in the s 79 proceedings;
   • whether it was necessary to join the trustee for the orders to be valid and enforceable; and
   • whether the superannuation fund was “property” for the purpose of s 4(1) and capable of enforcement under s 105.
2. The majority (Bryant CJ, Finn and Coleman JJ) in Coghlan & Coghlan [2005] FamCA 429; (2005) FLC 93-220 at paragraph 30, and also at paragraph 38, explained that to enable courts to have jurisdiction to make splitting or flagging orders in respect of superannuation under Part VIII, s 90MC was introduced. That section broadened the definition of “matrimonial cause” “by extending the jurisdiction, which the various courts which exercise the jurisdiction under the Act, have in proceedings between parties to a marriage with respect to their property”.
3. Later in their reasons, the majority considered the interpretation of s 90MS. That section provides as follows:

(1)  In proceedings under section 79 with respect to the property of spouses, the court may, in accordance with this Division, also make orders in relation to superannuation interests of the spouses.

Note 1:       Although the orders are made in accordance with this Division, they will be made under section 79. Therefore they will be generally subject to all the same provisions as other section 79 orders.

Note 2:       Sections 71A and 90MO limit the scope of section 79.

(2)  A court cannot make an order under section 79 in relation to a superannuation interest except in accordance with this Part.

1. Their Honours went on to explain at paragraph 40:

...[w]e interpret the use of the word “also” in s 90MS(1) to mean that superannuation interests are another species of asset which is different from property as defined in s 4(1), and in relation to which orders can also be made in proceedings for property settlement under s 79...

1. The Full Court concluded at paragraph 43:

Thus, the way in which s 90MS is drafted leads us to the view that superannuation interests are another species of asset which is different from property as defined in s 4(1), and in relation to which orders also can be made in proceedings under s 79.

1. Later, their Honours considered the circumstance in which no splitting order or flagging order was sought by either party in respect of superannuation interests, and at paragraph 54 concluded the legislation was silent in these circumstances, and this was “a significant omission in the legislation”.
2. The majority in Coghlan did not, as it was not relevant to the appeal there argued, directly consider whether superannuation was property for the purposes of s 4(1) and/or whether an order declaring a parties’ interest in superannuation could be made under s 78. We will return shortly to consider how the majority dealt with arguments about the definition of property in s 4(1), and whether superannuation is “property” for the purposes of that section shortly.
3. In Hickey & Hickey [2003] FamCA 395; (2003) FLC 93-143, in a case stated (and decided prior to the Full Court decision in Coghlan), the Full Court determined at paragraphs 50-55 that it was a proper exercise of power under s 79 to make an order which, although expressed as declaratory, did not have the effect of altering property interests of the parties. Question 10 in the case stated was posed and answered in the following terms:

Question 10

If s.79 and/or s.90MS does grant the Court power to make the declaration in relation to superannuation, should the Court make it?

Answer

Yes, in so far as it is desirable in the circumstances of the particular case. However, as a matter of law it is not necessary in so far as it does not purport to alter an interest.

1. We did not have the benefit of argument before us as to the impact of the majority’s decision in Coghlan on the conclusions set out in question 10 of Hickey, and the issue of whether a declaration could be made under s 78 in respect of superannuation, although posed, was not answered in the case stated.
2. In Hickey at paragraphs 68-70 the Full Court set out the submissions of senior counsel for the husband and the Solicitor-General which included the assertion that the right of a member under a superannuation trust deed (or legislation) was a chose in action and thus property.
3. Later in their discussion in Hickey the Full Court considered and rejected the proposition that if one party is to keep a superannuation entitlement as part of s 79 proceedings that it is necessary to make a “zero” splitting order, such an order being one without practical effect and involving the parties and trustee in unnecessary expense. In considering whether, when an order is made that one party keep their superannuation interest, it is necessary to notify the trustee of the orders proposed to be made, their Honours said, at paragraph 90, “a provision such as paragraph 5 of the Terms of Settlement does not affect the trustee in any way, it is not expressed to be binding on the trustee and thus there is no need for the trustee to be bound”. It appears to us that nothing in the majority’s decision in Coghlan derogates from the conclusions in paragraph 90 in Hickey, and if orders do no more than record a party’s retention of a superannuation entitlement, then notification to or joinder of a trustee to the proceedings, or concluded proceedings as in this case, is unnecessary.
4. In Coghlan the majority (at paragraph 26), having noted that the Full Court in Hickey also considered the submissions recorded paragraphs 68-70 of that case and declined to determine whether superannuation came within the definition of property in s 4(1), also found it was unnecessary for them to resolve that issue. Their Honours further discussed the issue at paragraph 53 noting:

Importantly, the conclusion, that by virtue of s 90MS superannuation interests are to be regarded as another species of asset in relation to which orders can be made, will mean that the Court will be relieved from having to determine in any particular case the question of whether “a superannuation interest”, which comes within the definition of that term contained in s 90MD, may in fact also come within the definition of “property” in s 4(1) (as was suggested in the submissions made in Hickey to which we earlier referred in paragraphs 24 to 26), or whether it is only a financial resource. It is interesting to note in this regard that, from its inception, s 75(2) has contained reference in paragraph 75(2)(b) to “property and financial resources” and then in paragraph 75(2)(f) has contained reference to “a... benefit... under any superannuation fund or scheme”. Thus, the treatment by the legislation of a superannuation benefit or entitlement as a concept separate from property and financial resources is not new.

1. It appears to us that the real focus in Coghlan was on the power of the Court to make a splitting order, in and so doing, to determine how the superannuation interest to be split should be determined in the context of s 79 proceedings, rather than to consider whether an order which provided for each party to retain their respective entitlement to a superannuation fund was an order dealing with property.
2. Further in Coghlan the majority considered (at paragraph 61) nothing prevented parties from including their superannuation interests as an item of property in their list of assets. They also explained that the Court could include the superannuation interest as property where it was satisfied it was property for the purposes of s 4(1).
3. However we are cognisant that in Mullane v Mullane [1983] HCA 4; (1982-1983) 158 CLR 436 at 445 the High Court recognised that an order which is made under section 79 must effect an alteration of an interest in property. The High Court said:

In our opinion, therefore, s 79 on its proper construction refers only to orders which work an alteration of the legal or equitable interests in the property of the parties or either of them. An interest in property is a right of a proprietary nature, not a mere personal right...

1. We have already noted we are constrained in determining this aspect of the appeal as we did not have the benefit of argument on the cases discussed above. The appeal book does not provide documents which establish that the parties at the s 79 hearing agreed to treat their superannuation interest as property, or that the evidence established that the superannuation fund would fall within the definition of s 4(1) property. But no issue was raised before the trial Judge, or in the appeal, that the superannuation fund was not property, and we have drawn the inference the parties intended it be treated as such by incorporating paragraph 4(b) and Order 1 into the consent orders made under s 79. It appears to us arguable that, having regard to the order which provided for the wife to receive the paintings Z and A (assets of the superannuation fund), Order 11 of the orders altered the interest of the husband in the superannuation fund, as did Order 12 which required the wife to transfer 1,000 Telstra shares to the superannuation fund. We accept the various clauses of the order may be seen in totality as one order under s 79 altering the interests of the parties in their property (see Hickey at paragraph 47). We consider it is unnecessary, and would be inappropriate, for us to do so without the benefit of argument, to determine whether Order 4(b) was made under s 78 rather than s 79. Thus, it is also unnecessary for us to determine whether the alternate source of power to make the order dealing with the superannuation interests was s 78 (see Hickey at paragraph 38), and to determine if superannuation, a chose in action, is property for the purposes of the definition in s 4(1).
2. The husband’s evidence before the trial Judge about the superannuation fund comprised, inter alia, copies of taxation returns for the fund for the year ended 30 June 1998. That return disclosed the assets of the fund included 2,368 Telstra shares and six paintings, including four paintings by “R. Ryan” titled “[A]”, “[W]”, “[Z]” and “[V]”. The return also disclosed that the husband and wife were the trustees of the fund.
3. Also annexed to the husband’s affidavit was a copy of a deed dated 25 August 1988 whereby the wife was appointed a trustee of the superannuation fund. Other documents annexed to the husband’s affidavit disclosed that, in 2004, the parties were removed as trustees of the superannuation fund, and a corporate trustee appointed in lieu. The deed disclosed as at that date the husband was the only member of the fund.
4. In his reasons for judgment the trial Judge noted, correctly, that the documents disclosed the wife had signed the deed in 1988 appointing her as a trustee of the fund as well as other documents relating to the fund. His Honour also noted that on inspection of the painting by the husband it was ascertained that the painting the wife referred to as “[V]” was identical to the painting referred to by the husband in his affidavit in support of the enforcement application as “[R]”.
5. It is not in doubt that the Court, being a court exercising jurisdiction under the Act, had jurisdiction by reason of s 8(1) in respect of a matrimonial cause, and that jurisdiction could not be exercised by a State court. The Court also had, in the exercise of its discretion, power to make consequential orders.
6. As we have already explained in paragraph 43, and now expand, we do not accept that it was necessary for the corporate trustee of the superannuation fund to be joined as a party to the proceedings. It follows that we also do not accept that any proceedings concerning assets of the superannuation fund were required to be instituted as civil proceedings in a State court. In so determining, we have taken the following matters into account :
   • the Court was asked to deal with an application for enforcement of a decree arising out of concluded property proceedings between the husband and wife – a matrimonial cause as defined in s 4(1)(f);
   • the Court had jurisdiction to make orders altering or declaring the parties’ property interests;
   • the parties themselves chose to deal with their respective superannuation interests (wife – Order 1) (husband - Order 4) in orders made under s 79;
   • the husband was entitled as a result of Order 4, to retain his superannuation fund, just as the wife was entitled (under Order 1) to retain her property entitlement recorded as her motor vehicle, cash and superannuation entitlement;
   • there was no evidence that there had been any change in the membership of the superannuation fund after 2004, and that there were any members of the fund other than the husband;
   • the trial Judge was satisfied on the balance of probabilities that the disputed paintings were assets of the superannuation fund to which the husband was entitled;
   • the consent orders, although deficient in some respects in their drafting, provided for the wife to receive paintings from the superannuation fund (A and Z), but made no like provision for her to receive V/R;
   • the consent orders made a specific provision for the transfer of only 1,000 shares held by the wife to the superannuation fund;
   • the “enforcement order” made, merely required the wife to deliver the property of the superannuation fund, recorded in its financial statements, to the husband as the member of the fund having the entitlement to those assets; and
   • the order made by the trial Judge was a consequential order to give effect to Order 4 (b) of the consent orders.
7. In summary, we conclude that the Court had jurisdiction to deal with the superannuation fund; the parties treated their respective superannuation interests as property in the consent orders, altered the husband’s interest in his superannuation fund by transferring paintings to the wife and by the transfer of shares by the wife to the fund. The trustee was not affected by the s 79 orders (or the consequential orders) and did not need to be joined to the proceedings, and if the proceedings were by way of enforcement (which is unnecessary for us to determine), or were consequential orders, there was power to make such orders.

ASSERTED DEFICIENCIES IN THE HUSBAND’S APPLICATION

1. Grounds 4 asserts error by the trial Judge in making orders other than in accordance with the husband’s application as filed on 14 June 2007. We have already earlier in our reasons set out the orders sought in both parties’ documents neither of which is clearly drafted to assist the trial Judge identify the relief sought. However, we are satisfied that (notwithstanding the deficiencies which are common to both the application and response) the wife’s response put beyond doubt that the issue of ownership the painting V and the Telstra shares was before the Court. Although the wife disputed the painting had ever been sold to the superannuation fund, his Honour had before him the records of the superannuation fund which demonstrated the subject paintings were recorded as assets of the fund at a time when the wife was a trustee of the fund.
2. A reading of transcript reveals the issue of whether the wife had paintings and shares which belonged to the superannuation fund, and that the husband wanted those assets returned to the fund, was never in doubt.
3. We were not taken to any material which suggested either party was in any doubt about the relief the other was seeking, nor on our examination of the transcript can we find that counsel raised the issue of deficiencies in the competing applications before the trial Judge, or that the wife was prejudiced in any way by the lack of precision in the orders sought causing procedural unfairness to her. Accordingly we are satisfied there is no merit in this ground.

MACHINERY OR SUBSTANTIVE ORDERS

1. We turn then to consider whether his Honour’s orders were machinery or substantive. We are of the view that this issue also encompasses the complaint about the matter being heard “on the papers”.

Relevant Principles – Machinery orders

1. In Slapp & Slapp (1989) FLC 92-022 the Full Court discussed the limitations on the power of the Court to vary an order made under s 79 and said at 77,360:

It is not open to a court to make a substantive variation to orders previously made under sec. 79. That proposition can today no longer be doubted. It is based upon the principle, endorsed by the High Court in the case of Taylor v. Taylor [1979] HCA 38; (1979) FLC 90-674; 5 Fam. L.R. 289, that an order under sec. 79 is a once and for all proposition.

Such an order can only be varied on appeal or, where the circumstances warrant the same, pursuant to sec. 79A. As counsel for the husband pointed out, the first extension of time can be seen as either an extension by agreement between the parties made by the very authority of the order itself, or alternatively as an exercise of the court's power to vary an order by the consent of the parties pursuant to sec. 79A(1A).

However, the orders made by his Honour on 7 October 1988 were not made by consent and the question therefore arises as to whether those orders affected the substance of the orders or were merely dealing with the machinery aspect of implementing those orders.

1. The applicable principles were similarly referred to by Frederico J in Cranage & Cranage (1981) FLC 91-039 as follows at 76,344:

The Family Law Act confers no power on the Court to vary an order for settlement of property (Taylor and Taylor [1978] HCA 4; (1977) FLC 90-226; King and King (1977) FLC 90-299; Kaljo and Kaljo (1978) FLC 90-445; Branchflower and Branchflower (1980) FLC 90-857). The Court has power to set aside a property order only on the narrow grounds set out under sec. 79A, and the parties make no application under that section. Nor has any appeal been brought against his Honour's order.

However, in McDonald and McDonald (1976) FLC 90-047, the Full Court held that “there is ample power to modify the machinery provisions of a property order provided this does not affect the substantive property rights or cause undue hardship to either party”. This view was followed in Kaljo and Kaljo (supra) and more recently in Molier and Van Wyk (1980) FLC 90-911. The Court derives such power from sec. 80 of the Family Law Act. An application might be made for the Court to exercise the power even though liberty to apply had not been reserved expressly.

1. The distinction between a machinery and a substantive order is extensively discussed by the Full Court in Ravasini & Ravasini (1983) FLC 93-312 at 78,126 to 78,127:

Counsel for the appellant referred to McDonald and McDonald (1976) FLC 90-047, Kaljo and Kaljo (1978) FLC 90-445 and Molier and Van Wyk (1980) FLC 90-911 as authority for the power of the Court to make what is termed a machinery order. There is no question of the power of the Court to make what we would with respect suggest is more properly called a consequential order. The real questions are what is the proper definition of a consequential or machinery order and where is the dividing line between a consequential order which may be varied or modified and a substantive order which the Act gives no power to the Court to modify or vary. Counsel for the appellant was unable to refer the Court to any authority on this point but argued the submission rather by comparison with the facts of the cases referred to.

...

It is appropriate then to look at what a consequential order is. The Shorter Oxford Dictionary defines “consequential” as meaning “Following esp. as an effect, immediate or eventual, or as a logical inference”.

The Universal English Dictionary defines the word as “Following as a consequence, on what has gone before, resultant: consequential alteration in wording of a document, those made necessary by others already made.” The same dictionary defines “consequence” as “Event which follows upon something else which is, or appears to be, the cause; a result, outcome of what has gone before.”

A consequential order then, in a property matter, would include an order following logically or of necessity from a prior substantive order.

What a consequential order is not is an order the effect of which is to vary the prior order for property settlement. It is not possible to suggest that even the slightest variation of the original order is a consequence of it. What is being submitted in this appeal is that the original order should be amended not as a consequence of that order itself, not as a necessary follow up of that original order but rather as a consequence of events which have happened in the market place since that order was made rendering the facts on which it was based no longer accurate.

Discussion

1. His Honour was cognisant that, having made the consent orders under s 79, he was functus officio, but could make machinery orders to give effect to the consent orders. His Honour considered each category of order he had been asked to make. In respect of the paintings his Honour said “my orders clarify ownership rather than alter it. An ownership dispute was certainly not contemplated by either party on 4 April.” (paragraph 60) Earlier in his reasons (at paragraph 35) his Honour explained that the paintings held by the wife were to be returned to the husband for delivery to the superannuation fund, but if there was agreement the wife could purchase the paintings. We accept that Order 1 of his Honour’s orders was a consequential order to ensure the husband obtained the assets belonging to the superannuation fund.

Asserted failure to make an order that V/R be sold to the wife

1. The wife’s counsel in his submissions asserted the trial Judge erred in failing to make an order that she could purchase the paintings from the superannuation fund at a market valuation. We discern no error by the trial Judge in failing to make such an order.
2. We see some contradiction in the wife’s position in respect of this challenge having regard to her grounds of appeal asserting the husband’s application did not properly set out the relief he sought, and her assertion that the assets of the superannuation fund could only be determined in a civil court with the trustee of the fund as the opposing party. First, the wife did not seek an order for sale of the painting to her in her response. Secondly, it is not an order sought by her if the appeal is allowed and we re-exercise the discretion, and finally such an order could not be characterised as a machinery order, it being one which requires the trustee of the superannuation fund to effect a sale to her.
3. Save for our comments below, it is unnecessary that we say anything further about the Telstra shares which the husband asserted were owned by the superannuation fund, as ultimately his Honour made no orders in respect of the those shares.
4. The wife does however assert error by the trial Judge in failing to make an order declaring the same Telstra shares to be her property. The trial Judge was simply unable, on the evidence before him, to determine whether the superannuation fund had a beneficial interest in the remaining Telstra shares registered in the wife’s name. In those circumstances, we see no error by the trial Judge who was conscious that he could not “go behind the orders”, but only make machinery orders to give effect to them, in refusing in the exercise of his discretion, to make a consequential order about the Telstra shares.

Challenge to the trial Judge’s treatment of the mortgagee’s fees

1. The trial Judge explained at paragraph 55 of his reasons, that the mortgagee’s fees arose only because the wife determined to discharge the loan, rather than taking it over. His Honour then examined paragraphs 6 and 14 of the consent orders and concluded “it must mean any liability incurred by the husband over and above $150,000 because otherwise the wife could extend the debt and attribute it to the husband” (paragraph 56 – original emphasis).
2. We agree with his Honour’s interpretation of paragraphs 6 and 14 of the consent orders. Thus we discern no error by the trial Judge, and we accept it would have been open to his Honour to have simply dismissed the wife’s claim for re-imbursement of, or contribution by the husband to, the mortgagee’s fees, if the husband had not volunteered to accept responsibility for one half of those fees.

THE NATURAL JUSTICE CHALLENGE

1. The parties had participated in a defended hearing, before the same trial Judge who heard four days of their property dispute, and whilst legally represented, had asked his Honour to make orders by consent. The competing applications later before the trial Judge did not require his Honour to deal with substantive rights, which had already been subject of final determination under s 79 by the making of the consent orders, but were applications for procedural orders to give effect to those orders.
2. Part 5.2 of the Family Law Rules 2004 deals with interim and procedural hearings, and r 5.10(1) and (2) provide respectively that the hearing must be no longer than two hours’ duration, and that cross examination will only be allowed in exceptional circumstances.
3. The wife’s counsel asserts the wife should have been afforded the opportunity to cross-examine the husband. It is difficult to see how cross-examination could have materially impacted on the outcome, which turned essentially on the interpretation of the consent orders and the significance of the documentation relating to the disputed property, which documentation spoke for itself.
4. Having regard to the nature of the applications before the trial Judge which were procedural applications, and the lack of practical utility of cross-examination, we see no error in the manner by which those applications were determined.

THE COSTS APPEAL

1. The wife relied on 32 grounds of appeal in the costs appeal. The wife’s submissions in support of the costs appeal do not address the grounds of appeal as drafted.
2. There appears to us to be substantial overlap in a number of the grounds. In summary the wife asserts error by the trial Judge in that:
   • the costs order was against the weight of the evidence;
   • insufficient weight was given to relevant factors under s 117(2A);
   • insufficient weight was given to s 117(1);
   • insufficient consideration was given to the terms of the orders made by Bell J on 22 June 2006;
   • insufficient consideration was given to the wife’s written submissions on costs.
3. A number of the grounds appear to repeat matters raised in the substantive appeal including grounds 14, 17, 20, 21, 25, and 31.
4. Each of the parties, at the conclusion of the enforcement proceedings, provided extensive written submissions on costs. In the case of the husband his written submissions ran to 12 pages, and the submissions filed on behalf of the wife comprised some 18 pages.
5. In his costs judgment the trial Judge recorded brief facts relevant to the history of the litigation, and explained that the husband sought costs for “a variety of appearances as well as the preparation of documents by counsel...” and “a limited amount of costs for the attendance by his solicitor”. His Honour also recorded that written submissions had been received from the wife who disputed the husband’s entitlement to costs, and also sought an order that the husband pay her costs incurred in the preparation of the costs submissions in a total sum of $5,357.40.
6. His Honour recorded the “nub” of the wife’s argument on costs by explaining he perceived the wife asserted she had an arguable case, and therefore the provisions of s 117(1), that each party pay their own costs, should be strictly applied. His Honour accepted, at paragraph 11 of his reasons, as correct, the wife’s submissions that costs should be calculated in accordance with the scale set out in the Family Law Rules 2004, that counsel’s fees for 5 July 2006 should be at the rate of $1,250.00, and that the wife should be liable to pay the costs “thrown away” on 5 July 2006.
7. At paragraph 14 his Honour said:

These were proceedings that could have been and should have been dealt with on a summary basis because they were enforcement proceedings. Of necessity from a resource point of view, the Court has an entitlement as well as an obligation to truncate such enforcement proceedings. Parties seeking orders should have come to such a proceeding ready to proceed...

1. We endorse his Honour’s comments.
2. Having set out the provisions of s 117(1) and (2) his Honour then carefully examined and made findings about relevant matters under s 117(2A), and concluded that the wife should make a contribution to the husband’s costs in the sum of $6,632.00.
3. The authorities dealing with costs emphasise the wide discretion available to a judge making a costs order, and that reasons for awarding costs need not be extensive. In Penfold & Penfold [1980] HCA 4; (1980) 144 CLR 311 the High Court discussed the power to award costs under the Act and said at 315:

It is an accurate description of s. 117(1) to say that it expresses a general rule, provided that it is firmly understood that the sub-section is not paramount to s. 117(2). As sub-s. (1) is expressed to be subject to sub-s. (2) the former must yield whenever a judge finds in a particular case that there are circumstances justifying the making of an order for costs.

Sub-section (2) requires a finding of justifying circumstances as an essential preliminary to the making of an order. Beyond this there is nothing in the subject matter or in the interrelationship of the two provisions which imposes any additional or special onus on an applicant for an order for costs. Consequently, with respect to their Honours in the Family Court, we do not agree with the suggestion made in the judgment under appeal that an order can only be made under s 117 (2) in “a clear case”.

1. In Harris & Harris (1991) FLC 92-254 the Full Court said at 78,711 “[o]rders for costs are peculiarly a matter which are within the discretion of the trial Judge and it is only in the rarest of cases that the Full Court should interfere with a costs order”. Whilst this statement was regarded by the Full Court in Browne & Green [2002] FamCA 791; (2002) FLC 93-115 as “perhaps stating the position at its highest”, that Full Court noted at paragraph 49 that “[c]osts orders are thought to be particularly immune from attack” [from appellate interference], citing from the decision of Wilson J in Mallet & Mallet [1984] HCA 21; (1984) 156 CLR 605; (1984) FLC 91-507.
2. In this case the trial Judge:
   • had regard to the statute;
   • considered the parties’ financial circumstances;
   • had taken into account the attitude adopted by the wife to the application which had “to some extent” required an adjournment;
   • determined that the wife had not complied with provisions of the consent orders;
   • found on balance that the husband was more successful than the wife; and
   • then carefully calculated the basis of the fixed quantum of costs ultimately ordered.
3. Applying the principles set out above, we regard the trial Judge’s consideration of the issues, and weight afforded to the various relevant sub-sections of s 117(2A), were within the reasonable ambit of his Honour’s discretion, and there is no merit in any of the grounds agitated in the costs appeal. We also agree with the trial Judge that issues raised in the wife’s submissions were not directly related to the issue of costs, but rather sought to re-agitate the correctness of his Honour’s findings. Further, we conclude the extensive nature of the submissions lacked proportionality to the matters in issue. Thus we discern no error by the trial Judge in the costs order made, and no merit in the grounds of appeal raised in the costs appeal.

COSTS OF THE SUBSTANTIVE APPEAL AND COSTS APPEAL

1. At the conclusion of the hearing of the appeals we sought submissions from the parties on costs. Counsel for the husband sought, in the event that the wife was unsuccessful, an order that she pay the husband’s costs in the sum of $13,640.00.
2. We have already referred to the parties’ financial circumstances as found by the trial Judge. We are satisfied the wife has the capacity to meet a costs order. The wife has been wholly unsuccessful in both the substantive appeal and the costs appeal. In these circumstances we are satisfied that the wife should pay the husband’s costs of the substantive appeal and the costs appeal.
3. As we are not in a position to assess the reasonableness or otherwise of the quantum of the costs claimed by the husband, we propose to order that the wife pay the husband’s costs as agreed and failing agreement as assessed.

I certify that the preceding eighty-eight (88) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court.

Associate:

Date: 27 June 2008