ENFORCEMENT OF A BINDING FINANCIAL AGREEMENT

Fan & Lok [2015] FamCA 816 (1 October 2015)

Last Updated: 8 October 2015

FAMILY COURT OF AUSTRALIA

REPRESENTATION

ORDERS

IT IS ORDERED
(1) That the financial agreement dated 20 January 2003 between Ms Fan (“the wife”) and Mr Lok (“the husband”) be enforced as if it were an order of the Court pursuant to section 90KA(c) of the Family Law Act 1975 (Cth) (“the Act”).
(2) That within 14 days of the date of these Orders the applicant pay to the HSBC Bank, in reduction of the borrowings secured over the properties at B Street, Suburb C in the State of New South Wales and D Street, Suburb E in the State of New South Wales, the sum of $7,292.59.
(3) That within 42 days of the date of these Orders the husband pay to the HSBC Bank such amount as is required to repay the debt arising from the borrowing of the husband and the wife of $430,000 in about November 2002 (“the principal amount”).
(4) That should the husband fail to pay the principal amount by the due date the husband forthwith sign all documents and do all acts and things to sell the property at B Street, Suburb C in the State of New South Wales upon the following terms and conditions:

<li “=””>(i) The property shall be listed for sale by private treaty for a period of two months after which time it shall be auctioned;<li “=””>(ii) The listing price, sale price and reserve price (at auction if required) shall be as agreed between the parties and failing agreement, as determined by a valuer as agreed or failing agreement as appointed by the NSW President of the Australian Property Institute;<li “=””>(iii) The real estate agent shall be as agreed and failing agreement as appointed by the NSW President of the Australian Property Institute;<li “=””>(iv) The solicitor acting on the sale shall be as agreed or failing agreement as determined by the President of the Law Society of NSW;<li “=””>(v) The terms and conditions of the sale shall be as agreed or failing agreement as determined by the solicitor acting on the sale; and<li “=””>(vi) Upon the sale of the property the net proceeds of sale, after payment of the real estate agent’s fees, including auction fees, and solicitor’s costs and disbursements of sale are to be paid to the HSBC Bank and applied towards the payment of the principal amount to HSBC; and<li “=””>(vii) The balance of the net proceeds of sale, if any, are to be distributed wholly to the husband.

(5) That if either party refuses or neglects to sign any document necessary to implement these Orders, that a Registrar sign the necessary document on behalf of the defaulting party pursuant to s 106A of the Act.
(6) That a failure by a party to respond to a party’s written proposal made in writing by or to a party’s solicitor, within 14 days, shall constitute a refusal for the purpose of Order 5.
(7) That a party’s proposal includes but is not limited to a proposed selection of agent, solicitor, listing price, selling price and reserve price.
(8) That a failure by a party to respond to a written request to sign any document necessary to implement these Orders within 14 days of such written request shall constitute a refusal by that party for the purpose of Order 5.
(9) That in the event that the husband ceases to be legally represented, notices and communications pursuant to these Orders may be forwarded by pre-paid post to the husband at B Street, Suburb C in the State of New South Wales or such other address as is notified by the husband in writing.
(10) That the parties have liberty to apply by arrangement with the Associate to the Honourable Justice Rees in relation to the implementation of these Orders.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Fan & Lok has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FILE NUMBER: SYC 1018 of 2013

Applicant

And

Respondent

REASONS FOR JUDGMENT

1. These proceedings relate to a Financial Agreement (“the Agreement”) entered into between Mr Lok (“the husband”) and Ms Fan (“the wife”) on 20 January 2003. The wife died in 2008 and the applicant in these proceedings is her estate.
2. On 27 February 2013, the applicant instituted proceedings to enforce the Agreement. By his response filed 15 August 2013, the husband sought to set aside the Agreement and also sought consequential orders for property settlement.
3. The application to set aside the Agreement was heard as a discreet issue and judgment in those proceedings was delivered on 28 April 2015.
4. The relevant facts are set out in the judgment and will not be repeated here. It is sufficient to state that the Agreement provided that on the death of the wife, or on separation, the jointly owned property at Suburb F was to be sold to pay out the mortgage owed to the HSBC Bank Australia Limited (“HSBC”) and, if the proceeds of that sale did not exceed the amount of $253,000, the husband and the wife were to be equally responsible for the payment of the shortfall from this amount and the husband was to be responsible for the balance of the mortgage debt.
5. There was a declaration made on 28 April 2015 that it would be unjust and inequitable if the Agreement were not enforced.
6. There has been no appeal against that decision.
7. The matter now listed is the application to enforce the Agreement and consequential orders for the sale of a property owned by the husband at Suburb C and the application of the proceeds of sale to the mortgage debt to HSBC, the proceeds of the sale of the Suburb F property having been insufficient to extinguish the debt.
8. The applicant deposed that HSBC has issued a demand for payment of $376,731.96 as at 21 July 2015.
9. The husband asks the Court to dismiss the application. It is the husband’s case that it is not just and equitable to enforce the terms of the Agreement by selling his property at Suburb C. It was submitted that the sale of the husband’s Suburb C property was excluded by the terms of the Agreement.
10. At paragraph 125 of the reasons for judgment delivered on 28 April 2015 I stated: “It would be unjust and inequitable if the husband were not held to his agreement”. A declaration was made to that effect. The husband did not appeal against the Orders made.
11. On behalf of the husband reliance is placed in Clause 4.3 of the Agreement which provides:

Each party acknowledges that it may apply to the Family Court for property settlement in relation to any other matrimonial property apart from the property mentioned in clause 4.2.1(a).

12. Clause 4.2, in its entirety, provides (bold emphasis added):

Upon the breakdown of their marriage or the death of either party and notwithstanding any unequal financial or non financial contributions by both parties to their matrimonial properties, both parties agree that:-
4.2.1 subject to the above provisions of this Agreement:-
(a) all the assets and liabilities of each party acquired and assumed prior to the date of this deed including but not limiting to the assets and liabilities of each party listed in the annexure marked ‘A’ “Premarital Assets and Liabilities”;
(b) Subject to paragraph 4.2.2 hereto, any income, asset, revenue, expenditure, value of capital, chose in action whether legal or equitable and equity derived or sourced from Premarital Assets and Liabilities which may accrue after the date of this deed, notwithstanding the nature or the substance of such assets and liabilities of each party may have been altered, substituted or otherwise changed and PROVIDED they are separately identifiable and can be traced from Pre-marital Assets and Liabilities.
shall be the absolute property, rights and liabilities of each party and shall not be included into the pool of matrimonial property or considered during any property settlement between the parties.

13. The schedule annexed “A” to the Agreement lists the wife’s property at Suburb E, the husband’s property at Suburb C and the jointly owned property at Suburb F as assets. It also lists the HSBC mortgage secured over the Suburb E property, in the total amount of $253,000, as a joint liability of the husband and the wife, and the HSBC mortgage secured over the Suburb C property, in the total amount of $177,000, as a sole liability of the husband.
14. Even if it were to be found that the husband has a remaining right to bring an application for property settlement, the Agreement specifically excludes a consideration of the husband’s Suburb C property or the wife’s Suburb E property from such an application.
15. Clause 4.2.2 provides:

The HSBC loan and the [Suburb F] property shall be dealt with in the following manner:
(a) The [Suburb F] property shall be sold by way of public auction or private treaty as agreed by the parties as soon as practicable;
(b) If the sale proceeds less all incidental expenses exceed $253,000.00 then $253,000.00 is to be paid off the HSBC loan while [the husband] must pay the balance amount required to discharge the HSBC loan and must ensure that [the wife] will obtain an unencumbered title to the [Suburb E] property. The balance sales proceeds of the [Suburb F] property shall be distributed equally between the parties.
(c) If the sales proceeds less all incidental expenses falls below $253,000.00 then the HSBC loan shall still be paid off in the same manner while the shortfall (from the $253,000.00) is to be made up by the parties in equal shares.

16. As was stated at paragraph 117 of the reasons for judgment delivered on 28 April 2015:

If the Agreement were enforced, then, as between the Applicant and the husband, the Applicant would be required to meet half the shortfall of $4,943.67; that is $2,471.83, and the husband to pay the same amount. Pursuant to clause 4.2.2 of the Agreement, the husband would then be required to pay the balance of the HSBC loan and must ensure that the Applicant obtains an unencumbered title to [Suburb E].

17. The argument on behalf of the husband appears to be that, because of contributions made by him during and after the marriage, his current financial circumstances, and the fact that the applicant and her siblings have received the benefit of the wife’s estate which included her superannuation and the proceeds of a life insurance policy, the Court should exercise its discretion not to enforce the Agreement.
18. When the Suburb F property was purchased and the HSBC mortgage taken out, the wife’s Suburb E property was unencumbered. The husband’s Suburb C property had a mortgage of $177,000. The HSBC loan was used, as to $177,000, to discharge the mortgage over the husband’s Suburb C property, and the balance was used to purchase the Suburb F property. HSBC was given security over all three properties. The husband’s position appears to be that he should keep the benefit of the $177,000 and the wife’s Suburb E property should be sold to repay the HSBC mortgage, leaving him with an unencumbered property at Suburb C.

THE HUSBAND’S SUBMISSIONS

19. Counsel for the husband submitted that the Court should exercise its wide discretion pursuant to s 80 of the Family Law Act 1975 (Cth) (“the Act”) not to enforce the Agreement.
20. The contention made on behalf of the husband, that is not just and equitable to enforce the terms of the Agreement, was the subject matter of the determination made on 28 April 2015. Counsel for the husband was asked to address the issue of res judicata estoppel in relation to the submission, made in these proceedings, that it is not just and equitable to enforce the terms of the Agreement.
21. Counsel relied on an assertion that the terms of the Agreement are ambiguous and capable of a different interpretation to that determined in the judgment of 28 April 2015. That submission could have been made in the hearing on 10 March 2015 but was not. At the very least, an issue estoppel arises in relation to that argument is so far as it relates to the submission that it is not just and equitable for the Agreement to be enforced.
22. I am of the view that res judicata estoppel arises in relation to the submission that it is not just and equitable to enforce the Agreement. However the issue of how the Agreement is to be enforced remains at large.
23. If I am wrong in that regard, and in my view that at the very least an issue estoppel arises, I propose to deal with the arguments raised by counsel for the husband in support of her submission that the Agreement should not be enforced.
24. Those arguments were enunciated as follows:
    • There are inconsistencies in the Agreement which have the effect that the Agreement cannot be given the construction for which the wife contends.
    • If the Agreement were enforced, the husband would be left in a financially precarious position.
    • The husband was entitled to rely on the fact that the wife had a life insurance policy.
    • Amounts drawn from the HSBC mortgage were used for the benefit of the wife’s children.
    • Laches.
25. Although it was not clearly enunciated, it is inferred from the submissions of counsel for the husband, and the reference to the decision in Polik & Polik [2015] FamCA 299, that the husband also submits that the Agreement should not be enforced because he made payments both before and after the wife’s death for her benefit and that of her children. It is convenient to deal with that submission at the same time as the submission in relation to the payments on behalf of the wife’s children.

INTEPRETATION OF THE AGREEMENT

26. There is a dispute between the parties as to how the terms of the Agreement are to be construed and whether the husband has fulfilled his obligations pursuant to the Agreement.
27. Counsel for the husband submitted that a potential inconsistency arises between the husband’s obligation pursuant to Clause 4.2.2 of the Agreement, which provides that he “must pay the balance of the amount required to discharge the HSBC loan and must ensure that [the wife] will obtain an unencumbered title to the [Suburb E] property”, and Clause 4.2.1(a) of the Agreement, which, she submitted, provides that his Suburb C property and the associated liability shall remain his “absolute” property and liability upon the breakdown of the marriage or the death of either party. While this specific issue was not raised in the previous proceedings relating to whether the Agreement is binding, I do not consider that counsel is estopped from making this submission in the current proceedings in relation to the question of how the Agreement is to be enforced.
28. Counsel for the husband submitted that the husband’s right to retain the Suburb C property pursuant to Clause 4.2.1(a) of the Agreement was not expressed to be subject to his obligation, pursuant to Clause 4.2.2, to ensure the discharge of the HSBC loan and that the wife receives an unencumbered title to Suburb E. Counsel for the husband submitted that it is clear, pursuant to the Agreement, that the Suburb C property should remain the sole asset of the husband upon the separation of the parties or the death of either party. It was contended that, accordingly, the extent of the husband’s obligations pursuant to Clause 4.2.2 was to effect the sale of the Suburb F property and apply those sale proceeds to the HSBC loan, and that these terms have already been implemented by him. The orders sought by the applicant requiring the husband to sell his property at Suburb C in order to discharge the entirety of the HSBC loan are, in counsel’s submission, in breach of the terms of the Agreement.
29. I do not agree with the submission made on behalf of the husband that he is required, pursuant to the Agreement, to do no more than apply the sale proceeds from the Suburb F property toward the HSBC loan in order to comply with his obligations under the Agreement. This is contrary to the clear wording of Clause 4.2.2(b) which states:

If the sale proceeds less all incidental expenses exceed $253,000.00 then $253,000.00 is to be paid off the HSBC loan while [the husband] must pay the balance amount required to discharge the HSBC loan and must ensure that [the wife] will obtain an unencumbered title to the Suburb E property.

30. In Kostres & Kostres [2009] FamCAFC 222; (2009) FLC 93-420 the Full Court outlined at 83,803:

113. In interpreting actual terms in a contract, the learned authors of Cheshire and Fifoot’s Law of Contract ( 9^th edition) explain at 429:
“The High Court has repeatedly emphasised that the court approaches the task of ascertaining the meaning of the parties’ expressions objectively. It is not interested in their subjective understanding, but applies the meaning that an objective outsider would attribute to the contract in the circumstances. …”
114. Later, at 429-430 the authors quote from the decision of the High Court in Toll (FGCT) Pty Ltd v Alphapharm Pty Ltd [2004] HCA 52; (2004) 219 CLR 165 at paragraph 40:
“References to the common intention of the parties to a contract are to be understood as referring to what a reasonable person would understand by the language in which the parties have expressed their agreement. The meaning of the terms of a contractual document is to be determined by what a reasonable person would have understood them to mean. That, normally, requires consideration not only of the text, but also of the surrounding circumstances known to the parties, and the purposes and object of the transaction.” (footnote omitted)

31. In Sanger & Sanger[2011] FamCAFC 210; (2011) FLC 93-484, the Full Court stated at 86,002:

Interpretation of the terms of the BFA
63. The law of contract is relevant to the interpretation of the terms of a BFA. The principles governing the interpretation of contracts are not in doubt and do not require extensive restatement for present purposes.
64. The learned author of J W Carter, Carter on Contract (Lexis Nexis Australia, online, at October 2011) provides a convenient summary of the principles applicable to the construction of contracts:
“The function of courts is to give effect to the bargain and not to deny its efficacy by a restrictive technical analysis. This finds its expression in a number of ways. These include the following.
First, in order to determine the meaning or legal effect of a particular term, the whole contract must be construed. This applies both to express and implied terms and requires implied terms to be taken into account when construing express terms.
Second, a commonsense approach is taken to the interpretation of commercial documents.
Third, a presumption is applied that the parties did not intend the terms of their contract to operate in an unreasonable way.
Fourth, rules have been developed to govern the forensic material which can be received to assist in the construction process.
Fifth, albeit somewhat belatedly, the role of context (surrounding circumstances) in determining meaning is acknowledged in the concept of the ‘factual matrix’.
Sixth, account is taken of the fact that there is more to contract law than linguistic meaning: more often than not, the ultimate concern is with the legal effect of a contract term.
Seventh, the general approach is to apply the same construction rules no matter what the form or nature of the clause or contract, so that the relevant principles do not depend on whether the contract is for the sale of goods or the provision of services and so on.” (original emphasis) (footnotes omitted)

32. I am satisfied from the clear wording of Clause 4.2.2 that the parties’ intentions at the time of making the Agreement was that the wife would not be responsible to pay any amount arising from the borrowings of $430,000 in November 2002 beyond half of any shortfall between the sale proceeds of the Suburb F property and the sum of $253,000 that was secured by her Suburb E property. This is particularly in light of the context of the Agreement, set out at Recital 3.5, that the remainder of the $430,000 which was borrowed by the parties in November 2002 was applied toward the repayment of the mortgage loan on the husband’s Suburb C property. None of the borrowings were applied toward the wife’s Suburb E property, which was unencumbered at the date of the loan, and therefore the wife did not receive the benefit received by the husband.
33. I do not consider that the fact that Clause 4.2.1(a) is not expressed to be subject to Clause 4.2.2 to be sufficient to relieve the husband from his obligations pursuant to Clause 4.2.2 to discharge the balance of the HSBC loan. If the husband does not meet this obligation, the burden of doing so will fall upon the applicant as the HSBC has indicated its intention to exercise its power of sale over the Suburb E property. This conflicts with the clear intention of the parties as expressed in Clause 4.2.2 of the Agreement that the husband would ensure that the wife would obtain an unencumbered title to the Suburb E property upon separation or the death of either party.
34. The Agreement operates only in relation to the liability associated with the borrowings of $430,000 from HSBC in or about November 2002, as is made clear by Recital 3.5 of the Agreement which defines the term “the HSBC loan”. Recital 3.5 states:

On 12 November 2012, [the wife] and the [husband] entered into a contract to purchase a property situated at [G Street, Suburb F] NSW … (Folio Identifier …) as joint tenants for $255,000.00. [The wife] and [the husband] acknowledge that the funds used to acquire the said property come from a loan from HSBC Bank Australia Limited (“the HSBC loan”) which both [B Street, Suburb C] (currently owned by [the husband]) and [D Street, Suburb E] (currently owned by [the wife]) are securities to it. [The wife] and [the husband] also acknowledge that the amount of the said loan is $430,000.00 in total. $177,000.00 of the said loan was applied towards the repayment of a mortgage loan of [the husband] which [B Street, Suburb C] is the security and the balance $253,000.00 was applied toward the purchase of [G Street, Suburb F]. The balance purchase price of the [Suburb F] property (including stamp duty and other incidental costs) were paid by [the husband] and [the wife] in equal shares.

35. In so far as there may have been other earlier or later borrowings unrelated to the $430,000 advanced in or about November 2002, they are not covered by the terms of Clause 4.2.2. The orders sought by the applicant appear to extend the husband’s obligations to discharge the balance of the loan to HSBC beyond what is intended pursuant to the Agreement.
36. The next question for determination is whether the Court may make orders requiring the sale of the Suburb C property and the application of the sale proceeds to the HSBC loan if the husband is otherwise unable to satisfy his obligations pursuant to Clause 4.2.2. It was submitted by counsel for the husband that orders to this effect would be in breach of Clause 4.2.1(a) of the Agreement which provides that the husband is to retain the Suburb C property upon separation or the death of the wife.
37. As asserted by counsel for the husband, Clause 4.2.1(a) is not expressly made subject to the requirement upon the husband, pursuant to Clause 4.2.2, to ensure the discharge of the balance of the HSBC loan so that the wife obtains an unencumbered title to the Suburb E property. Nevertheless I do not consider, in light of the unambiguous requirements set out in Clause 4.2.2, and the background to the Agreement as set out in Recital 3.5, that it was the intention of the parties that the husband would be relieved of his obligation to ensure the discharge of the HSBC loan in the event that the only means of him doing so was through the sale of his Suburb C property. It appears, particularly from the matters set out in Recital 3.5, that a key purpose of the Agreement was to ensure that the Suburb E property, which was used as security for but did not receive the benefit of the HSBC loan funds, would be returned to the wife (or to her estate) unencumbered upon her death, the husband’s death or the separation of the parties. Orders which provide for the sale of the Suburb C property in the event that the husband is unable to discharge the loan to HSBC as required by Clause 4.2.2 do not, in my view, constitute a breach of the terms of the Agreement.

POWER OF THE COURT TO MAKE AN ORDER FOR THE SALE OF THE SUBURB C PROPERTY

38. I turn now to consider the power of the Court to make an order for the sale of the Suburb C property, and for the application of the proceeds to the HSBC loan, by way of enforcement of the husband’s obligations pursuant to Clause 4.2.2 of the Agreement.
39. Section 90KA of the Act provides, in relation to the validity, enforceability and effect of financial agreements:

The question whether a financial agreement or a termination agreement is valid, enforceable or effective is to be determined by the court according to the principles of law and equity that are applicable in determining the validity, enforceability and effect of contracts and purported contracts, and, in proceedings relating to such an agreement, the court:
(a) subject to paragraph (b), has the same powers, may grant the same remedies and must have the same regard to the rights of third parties as the High Court has, may grant and is required to have in proceedings in connection with contracts or purported contracts, being proceedings in which the High Court has original jurisdiction; and
(b) has power to make an order for the payment, by a party to the agreement to another party to the agreement, of interest on an amount payable under the agreement, from the time when the amount became or becomes due and payable, at a rate not exceeding the rate prescribed by the applicable Rules of Court; and
(c) in addition to, or instead of, making an order or orders under paragraph (a) or (b), may order that the agreement, or a specified part of the agreement, be enforced as if it were an order of the court.

40. The wide powers of the High Court in its original jurisdiction are set out in ss 31 and 32 of Part IV of the Judiciary Act 1903 (Cth):

JUDICIARY ACT 1903 – SECT 31
Judgment and execution
The High Court in the exercise of its original jurisdiction may make and pronounce all such judgments as are necessary for doing complete justice in any cause or matter pending before it, and may for the execution of any such judgment in any part of the Commonwealth direct the issue of such process, whether in use in the Commonwealth before the commencement of this Act or not, as is permitted or prescribed by this or any Act or by Rules of Court.
JUDICIARY ACT 1903 – SECT 32
Complete relief to be granted
The High Court in the exercise of its original jurisdiction in any cause or matter pending before it, whether originated in the High Court or removed into it from another Court, shall have power to grant, and shall grant, either absolutely or on such terms and conditions as are just, all such remedies whatsoever as any of the parties thereto are entitled to in respect of any legal or equitable claim properly brought forward by them respectively in the cause or matter; so that as far as possible all matters in controversy between the parties regarding the cause of action, or arising out of or connected with the cause of action, may be completely and finally determined, and all multiplicity of legal proceedings concerning any of such matters may be avoided.

41. Section 80(1)(c) of the Act also provides that the Court may “order that payment of any sum ordered to be paid be wholly or partly secured in such manner as the court directs”. In Molier & Van Wyk (1980) FLC 90-911 (“Molier & Van Wyk”) the Full Court stated at 75,771- 75,772:

The power under sec. 80(c) to order that payment of a sum be wholly or partly secured is a wide one and includes power to order the realisation of the property against which the order is secured. While sec. 80 is not itself a head of power, the power to order security for the payment of a sum is available, either upon an original application for maintenance under sec. 74, or upon an application under sec. 83 to modify a maintenance order; it can also be used when orders are made under sec. 78 or 79.
The order for sale now appealed against could not depend upon sec. 80 as its source of power unless at the same time the Court was acting under one of those other sections.

42. While the Full Court in Molier & Van Wyk found that s 80 cannot be relied upon, in itself, as a source of power for orders requiring the sale of real property, the Court dismissed the appeal and held that the trial judge validly made the order for sale. The Full Court outlined at 75,773 that there is “an inherent power in this court to make the original order effective in accordance with the substance and intention of the order.” The Court also stated at 75,773:

In Kaljo (supra), it was held that an application can be made to the Court for further orders in relation to the implementation of the substantive order if such orders are necessary to give effect to the order or to work it out to cover unforeseen circumstances. This principle is, in our view, capable of extension to cover further orders necessary to give effect to the clear intention of the original order, where that order has failed to cover certain eventualities, including the failure to comply with an order for the settlement of a lump sum within the time prescribed.

43. I consider that an order which provides for the sale of the Suburb C property, in the event that the husband fails to comply with his obligation to pay the amount owing by him to HSBC, is available to the Court in the exercise of its wide powers pursuant to s 90KA. If I am wrong in this regard, I am also satisfied that the Court has the inherent power, as outlined in Molier & Van Wyk, to impose consequential provisions for the sale of the Suburb C property to ensure that the orders made requiring the husband to discharge the HSBC loan are carried into effect.
44. Further, Rule 20.05(a) of the Family Law Rules 2004 (Cth) expressly provides that the Court may make an enforcement order, in relation to an obligation to pay money, for the seizure and sale of real property.
45. Orders will be made facilitating the sale of the Suburb C property and the application of the sale proceeds to the HSBC loan (as it relates to the borrowings of $430,000 in or about November 2002), should the husband be otherwise unable to pay the amount owing by him to the HSBC pursuant to the Agreement.

THE EFFECT ON THE HUSBAND’S FINANCIAL POSITION

46. On behalf of the husband it was submitted that if the Agreement were enforced the husband would be left in a difficult financial position, close to bankruptcy.
47. There was no up to date Financial Statement filed on behalf of the husband. Reliance was placed on a Financial Statement sworn on 16 May 2013 although the significance of that document was not clear.
48. There was no evidence before the Court of the current value of the husband’s Suburb C property.
49. There was no evidence of the husband’s current income, assets or liabilities.
50. Whilst I accept that the sale of the Suburb C property and the payment of the amount owed to HSBC would lessen the husband’s assets, there is no evidence on which I can find that he would be placed in a difficult financial position.

THE LIFE INSURANCE POLICY

51. In his affidavit sworn on 5 June 2015 the husband deposed:

In or about 2003, my Wife and I decided to take out life insurance for couples as well as superannuation to further secure our property in case of the death of either party. This insurance was taken with AMP (Policy No:…).

52. The was no evidence before the Court of any conversation between the husband and the wife which gave rise to an inference that it was the joint intention of the husband and the wife to apply the proceeds of the life insurance policy to the reduction of the HSBC mortgage in the event of the death of either of them. The amount due pursuant to the insurance policy was paid to the wife’s estate after her death. That would suggest that the husband was not nominated as the beneficiary of the policy as might have been expected if it was the wife’s intention that the fund would be applied to the mortgage.
53. There is no evidence upon which it can be inferred, as counsel for the husband urged, that the husband was entitled to rely on a joint agreement to apply the proceeds of the insurance policy to the mortgage.

AMOUNTS SPENT ON THE WIFE AND THE WIFE’S CHILDREN

54. In 2006 two amounts of $10,000 were withdrawn from the HSBC mortgage. $10,000 was contributed to tuition fees owed by the wife’s daughter in relation to her tertiary studies and $10,000 was contributed towards the costs of the wedding of the wife’s son.
55. This was a decision made by the husband and the wife during their marriage when they were living together and making financial decisions together.
56. How this fact should have the effect that the husband should be relieved of his obligations in relation to the HSBC borrowing of $430,000 was not made clear.
57. The Agreement specifically reserves the right of the parties to make an application for property settlement in relation to any assets or liabilities of the parties other than the Suburb C property, the Suburb E property, the Suburb F property and the HSBC mortgage.
58. The contributions claimed by the husband towards the wife’s children might have been pleaded in such a claim but no such claim was made before the death of the wife.
59. I take a similar view in relation to the payments which the husband made on behalf of the wife up to the date of her death. The wife was unable to work after she became ill and the husband continued to pay all of their joint outgoings from his income and the rent from the Suburb F property. He paid the premiums on the AMP life insurance policy and their medical insurance.
60. Those contributions could have been taken into account in relation to a claim for property settlement had such a claim been made.

LACHES

61. This submission seemed to have two separate threads. Firstly it was submitted that, by not bringing proceedings to enforce the Agreement immediately after the wife’s death, the applicant deprived the husband of the opportunity to make a “Family Provision” claim. Presumably the reference is to a claim pursuant to the Succession Act 2006 (NSW) (“Succession Act”). Section 58 of that Act provides that such a claim must be made within 12 months of death.
62. How those two events are linked is not made clear. The husband could have pursued a claim under the Succession Act regardless of the Agreement. He did not do so.
63. The second limb of the submission appears to be that the husband went on paying the repayments to HSBC until 2013 because the applicant did not seek to enforce the Agreement.
64. There seems to be a logical deficiency in that argument. The Agreement, explicitly, required the husband to do three things.
65. Firstly, upon the death of the wife, he was required to sell the Suburb F property and apply $253,000 from the proceeds of sale to the HSBC mortgage.
66. Secondly, if the amount received from the net proceeds of sale was less than $253,000, he was required to pay to HSBC one half of the shortfall.
67. Thirdly, he was required to assume the responsibility for the balance of the HSBC mortgage and to ensure that the wife’s Suburb E property was unencumbered.
68. The husband did none of the three things. Rather he lodged a Notice of Death to cause the Suburb F property to be registered in his sole name.
69. It was the husband who chose not to fulfil his obligations under the Agreement.
70. The applicant was not notified by HSBC that the mortgage payments were in arrears although it can be assumed that the husband was aware that he was not making the payments from 2013. The husband himself did not notify the applicant that he had ceased making the payments.
71. The husband cannot rely on his own failure to fulfil his obligations in aid of a plea for the exercise of discretion in his favour.
72. Also in support of this submission, the husband claims that he should be given some credit or recognition for the fact that he paid the mortgage payments and the outgoings on the Suburb F property. In so far as the husband asserts that he was paying the mortgage over Suburb E, that was no more than he was obliged to do, after separation and the sale of Suburb F, by the Agreement (apart from the wife’s obligation to pay half of any shortfall from $253,000). In so far as he was paying rates and other outgoings on the Suburb F property, that again was no more than he was obliged to do, having transferred the ownership to himself.
73. I also note that, in consequence of the husband having transferred the ownership of the Suburb F property to himself, he was able to claim the whole of the loss on the sale of the property as a tax deduction and he did so.

ORDERS SOUGHT BY THE APPLICANT

74. The applicant seeks, firstly, an order that the husband within 14 days pay to HSBC the amount required to reduce the mortgage debt to $7,292.59. It is agreed that the difference between the sum of $253,000 referred to in Clause 4.2.2(c) and the amount actually paid to HSBC from the sale of Suburb F was $14,585.18 rather than the amount of $4,943.67 referred to in the judgment delivered on 28 April 2015. Thus the applicant is also required to pay $7,292.59 to HSBC.
75. The applicant then seeks an order that the husband pay the whole of the amount outstanding to HSBC. It is not reasonable to require the husband to effect a refinancing in 14 days and the time will be extended to 42 days.
76. If the husband does not pay the required amount within 42 days, then the applicant seeks orders for the sale of his Suburb C property and the payment, from the proceeds of the sale, of the amount due to HSBC.
77. The husband’s obligations under the Agreement extend only to the repayment of the liability arising from the borrowing of $430,000 in about November 2002. As outlined at paragraph 107 of the judgment delivered on 28 April 2015 in relation to the evidence before the Court:

It is not possible to ascertain which debt or debts within the HSBC loan refer to the borrowing of $430,000 referable to the purchase of [Suburb F] recited in the Agreement. It could be assumed that the two mortgages are the loans referable to the Agreement, being the [Suburb C] mortgage and the [Suburb F mortgage], but that does not assist in knowing what sums are outstanding pursuant to those mortgages.

78. Whilst it may be a complicated accounting exercise to ascertain what that liability arising from the borrowing of $430,000 now is, that is an exercise which the parties must undertake.
79. It is to be hoped that the parties can agree on the machinery provisions for calculating the amount of the husband’s liability. Since neither party argued this point, they have not had the opportunity to be heard on those machinery provisions. If they are unable to agree, then they can relist the matter before me to determine any dispute.
80. Otherwise, the orders sought by the applicant are appropriate.