CARCHAR & HBENUM
[2011] FamCA 496
•27 June 2011
FAMILY COURT OF AUSTRALIA
| CARCHAR & HBENUM | [2011] FamCA 496 |
| FAMILY LAW – PROPERTY – Time of application |
FAMILY LAW – ENFORCEMENT OF ORDERS
| Evidence Act 1995 (Cth) Family Law Act 1975 (Cth) |
| Codelfa Construction Pty Ltd v State Rail Authority of NSW [1982] HCA 24; (1982) 149 CLR 337 Corin v Patton (1991) 69 CLR 540 James v Federal Commissioner of Taxation [1955] HCA 75; (1955) 93 CLR 631 Molier and Van Wyk (1980) FLC 90-911 Mullane (1983) FLC 91-373 Norman & Howarth [2003] FamCA 1284 Ramsay and Ramsay (No 2) (1983) FLC 91-323 Ravasini and Ravasini (1983) FLC 93-312 Stephens and Stephens and Anor (Enforcement) [2009] FamCAFC 240 |
| APPLICANT: | Ms Carchar by her case guardian Mr KH |
| RESPONDENT: | Mr Hbenum by his case guardian Mr BE |
| FILE NUMBER: | DGC | 280 | of | 2010 |
| DATE DELIVERED: | 27 June 2011 |
| PLACE DELIVERED: | Melbourne |
| PLACE HEARD: | Melbourne |
| JUDGMENT OF: | Cronin J |
| HEARING DATE: | 9 June 2011 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Hall |
| SOLICITOR FOR THE APPLICANT: | Willerby’s |
| COUNSEL FOR THE RESPONDENT: | Mr Weir |
| SOLICITOR FOR THE RESPONDENT: | John Snodgrass & Associates |
Orders
That the implementation of paragraph 4 of the orders made on 7 November 1991 is stayed until 4 pm on 27 August 2011.
That to give effect to paragraph 4 of the orders made on 7 November 1991,and pursuant to s 106A of the Family Law Act 1975, by 4 pm on 27 August 2011, Mr BE as the Case Guardian of the husband sign all such documents in the name of the husband and do all things necessary to transfer to the wife (and if necessary, to the wife’s executor as her legal personal representative) all of the interest of the husband in the real property at R Street, Town 1 UPON A TRUST for the sale of the said property.
That as soon as practicable after 27 August 2011, the Executor of the Estate of the wife implement the provisions of paragraph 4 of the orders made 7 November 1991.
That paragraph 5(a) of the orders made 7 November 1991 is discharged as and from 4 pm on 27 August 2011.
That if the husband has not provided vacant possession of the premises at R Street, Town 1 by 4 pm on 27 August 2011, the wife have liberty to apply on short notice for appropriate orders.
For the purposes of paragraph 4(c) of the orders made 7 November 1991, the words “with interest at the rate of eighteen (18) per centum per annum adjusted monthly from the date” shall mean that simple interest at 18% shall be calculated on $25,000 from 27 October 1991 until the date of payment to the wife on a monthly rather than a daily basis and the reference to “monthly” includes the part of any month.
That save as to the issue of costs, the application (as amended) filed 5 July 2010 and the response (as amended) filed 9 February 2011 are each otherwise dismissed.
That should any party desire to make any application for costs arising out of these orders, they may do so in writing by submission together with reference to any affidavit material they so desire to be considered and such submission shall be filed and served by 4 pm on 30 June 2011 and any submission in response thereto shall be filed and served by 4 pm on 8 July 2011. Any such submission shall be endorsed by the legal practitioner that a copy of it has been served upon the other party.
IT IS CERTIFIED:
That pursuant to Order 19.50 of the Family Law Rules 2004 it was reasonable to engage counsel to attend.
IT IS NOTED that publication of this judgment under the pseudonym Carchar & Hbenum is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| FAMILY COURT OF AUSTRALIA AT MELBOURNE |
FILE NUMBER: DGC 280 of 2010
| Ms Carchar by her case guardian Mr KH |
Applicant
And
| Mr Hbenum by his case guardian Mr BE |
Respondent
REASONS FOR JUDGMENT
In 1991, the husband and wife as parties to property proceedings, consented to an order that:
(a)the husband pay to the wife $25,000 (“the capital payment”) on or before 27 October 1991; and
(b)contemporaneously with the capital payment, the wife transfer to the husband all of her interest in R Street, Town 1 (“R Street”).
The order had a default provision entitling the wife to sell the property if the capital payment was not made and pending receipt of her money, interest was to accrue on the capital payment at the rate of 18 per cent per annum adjusted monthly.
According to the wife, the capital payment was never made and in any event, the evidence shows that the legal interest of the wife in R Street was not transferred to the husband.
Nineteen years later, an enforcement application was made on behalf of the wife. It was opposed on behalf of the husband. On 9 June 2011 I heard evidence and submissions from both parties and reserved judgment.
The issues
A number of issues arise in the proceedings:
(a)Should the application be stayed because of the wife’s delay on the basis that it is an abuse of process?
(b)On a justice and equity basis, should the Court refuse to enforce its order because of the husband’s current personal and financial circumstances?
(c)Does the evidence, such as it is, support a finding that the capital payment was paid anyway?
(d)Does the Court have power to alter the order and in particular the entitlement to interest on the capital sum and for that matter, to alter the specific interest rate in the order?
(e)If the capital payment has not been made, has the wife by her conduct waived her entitlements and is she therefore consequently estopped from asserting a right to those entitlements? That is, is there a debt to enforce at all?
(f)Should the Court enforce the order and if so, for what amount?
The simple answers to those questions are:
(a)No;
(b)No;
(c)No;
(d)No;
(e)No
(f)Yes, $25,000 plus interest of $88,497 (calculated to 26 June 2011 on the presumption that the capital payment is not paid by that date) and interest of 18 per centum per annum on $25,000 until payment is made.
What follows are my reasons.
Not only has the passing of time created problems with the evidence, it has also marched on for the parties. The wife is deceased and her interests are represented in the proceedings by the executor of her estate who was also her husband at the time of her death. He is now her sole beneficiary.
The respondent to the proceedings is the wife’s first husband. He is a man aged 72 years who does not enjoy good physical or mental health. He appears by a case guardian as a result of an order of the Court made on 28 June 2010. In addition, there is a VCAT order about the husband having a legal administrator.
The controversial order of 1991
The order of 7 November 1991 was not the only litigation between the husband and wife but it is the relevant order. It was a final order under s 79 of the Family Law Act 1975 (Cth) (“the Act”). It has not been discharged. The relevant parts of it provided:
2.That the Husband pay to the Wife the sum of $25,000.00 (“the payment”) on or before the 27th day of October, 1991 (“the date”).
3.That contemporaneously with the payment:
(a)The Wife do all such acts and sign all such documents as may be required to transfer to the Husband, at the expense of the Husband all of her interest in the real property known as [R Street, Town 1] (“the real property”).
(b)The Husband indemnify the Wife against any liability pursuant to secured encumbrances and all rates and outgoings with respect to the real property.
4.That in default of the payment by the date the Husband sign all documents and do all things necessary to transfer to the Wife the real property to be held on trust for sale. The real property be sold as soon as possible out of Court (“the sale’) and the proceeds of the sale be applied in the following order:
(a)To pay all costs, commissions and expenses of the sale.
(b)To discharge the mortgage and any other encumbrances affecting the real property.
(c)In payment of the sum of $25,0000.00 together with interest at the rate of eighteen (18%) per centum per annum adjusted monthly from the date to the Wife.
(d)The balance to the Husband.
5.That pending the payment or completion of the sale:
(a)The Husband have the sole right to occupy the real property. During such right of occupation the Husband pay all instalments pursuant to secured encumbrances and all rates and like apportionable outgoings of the real property as they fall due.
(b)The parties hold their respective interest in the real property upon trust pursuant to these Orders.
(c)Neither party shall encumber the real property without the consent in writing of the other party.
No application was made under s 79A of the Act to set aside or vary the order.
The respective positions of the parties
Before turning to the details of the evidence, it is instructive to examine the approaches of the parties to this litigation. The wife submitted that the evidence enabled a finding that the husband’s obligations under the order had not been satisfied and it further explained, if not justified, her delay of 18 years. Her position was that the order is executory.
The husband submitted that by permitting the wife to proceed after all these years and thereby refusing to stay the wife’s application, the Court was denying the husband an opportunity to defend himself. That was particularly so where no objection was taken to a psychologist’s report dated 7 May 2010 which said that the husband would be almost totally incapable of engaging in the proceedings in a court hearing as his understanding of verbal concepts was extremely poor. His ability to comprehend and use the English language was also extremely poor and his short term auditory memory indicated that he would not retain sufficient information even if his understanding was average or better. It was further submitted that many of the documents that both parties would want to rely upon had been lost or destroyed.
The husband’s position was also that the enforcement could not proceed because any entitlement or rights that the wife had pursuant to the orders had been waived by her. It was submitted that by her conduct, the wife was estopped from bringing any proceedings.
Counsel for the husband pointed to the fact that 18 years had passed since any steps to enforce the orders were taken by the wife. That meant the absence of the availability of financial data as well as an opportunity to cross-examine witnesses which may have enabled the husband to prove that he had in fact paid the wife the money due under the orders.
Counsel also submitted that s 81 of the Act was noted on the orders and allowing the current application to proceed flew in the face of that section which required the Court to bring all proceedings to an end in 1991. Thus, to allow this proceeding to continue was contrary to public policy.
It was not an issue in dispute that the husband was an ill and elderly man who would be seriously and adversely financially affected by a sale of the home. There was no prospect of him otherwise raising any money. The simple facts of the 1991 order would mean that $25,000 due under it together with 18 per cent per annum interest adjusted monthly, was a large sum of money regardless of which way the interest provision was read.
The husband through his case guardian suggested that he had a claim to the wife’s interest in the home by adverse possession but I note in passing that no such application has been made.
The husband had not signed any affidavit nor participated personally in the proceedings notwithstanding his involvement with lawyers in 2009 to which I shall refer below but he did rely on the psychologist’s report mentioned earlier.
The issue for determination is not simple.
The applications
The application of the wife was filed on 5 July 2010 by her husband who was then her case guardian. She died on 30 August 2010. No issue was taken by the respondent about the applicant’s legal standing although comment was made about him being the protagonist of the proceedings as well as the ultimate beneficiary. In my view, nothing turns on that. The wife sought the following orders:
· The husband vacate the real property at R Street, Town 1;
· The real property be transferred to the case guardian upon trust for sale;
· The wife sell the real property;
· The net proceeds of sale be distributed in accordance with the orders;
· Any shortfall in the payments to the wife remain a debt due by the husband to the wife;
· In the alternative the net proceeds be divided as to 60 per cent to the wife and 40 per cent to the husband; and
· Further or in the alternative, enforcement of the orders and specifically of paragraph 4 made on 7 November 1991.
The response of the husband was filed on 9 February 2011 by his case guardian. He sought orders that the wife’s application be stayed and/or dismissed and in the alternative, that there be no order by way of enforcement.
In respect of the stay application and the alternative, a significant number of grounds were set out in the application for final orders (perhaps unnecessarily).
The evidence
Mr KH the husband of the wife as well as her legal personal representative filed an affidavit on 12 May 2011. He was not required for cross-examination. His evidence therefore stands unchallenged. He said that his information came from reviewing documents on the court files, correspondence he obtained from his late wife, his own knowledge of dealing with the wife and her solicitor as well as conversations during her lifetime. Objection was taken to the last of those points on the grounds that it was hearsay but that issue could not be argued seriously having regard to the various provisions in the Evidence Act1995 (Cth) (see sections 64, 67 and 68).
Mr KH summarised the orders of November 1991 and he noted that shortly before the orders were pronounced, a request had been made for an extension of time by the husband to pay the $25,000. The curious feature of that request was that it was contained in a letter from the solicitors who were then acting for the husband. The letter was dated 1 November 1991 which was a week prior to the final orders being made. Despite the various proposals in that letter, the orders still went ahead on 7 November 1991.
Importantly for this application, Mr KH said that around 1991, the settlement monies were not paid to the wife and her then solicitor sought to arrange the sale of the properties pursuant to the Court’s orders. He pointed to a letter from the wife’s then lawyers dated 3 March 1992 indicating that the husband’s solicitors had not responded to their correspondence about the sale of the home. The wife therefore made an application for the sale of the home on 17 September 1992.
It will be clear from the chronology that by September 1992, payment had not been made by the husband.
Mr KH also relied upon an affidavit by Mr C filed on 17 August 2010 to which Mr C annexed an affidavit he also swore and which was filed in the Court on 17 September 1992. Mr C was not required for cross-examination. In 1992, Mr C said that he was a sub-agent working for a firm of real estate agents and an authority to sell R Street had been given to him signed by the wife. As a result of receiving the instructions, he attended the premises where the husband lived but there was no-one home. He left his business card and subsequently received a telephone call from a person who identified himself as the husband. Mr C said:
He told me that he was not interested in selling the property and would either kill himself or blow the house up.
In his 2010 affidavit, Mr C said that subsequent to swearing the 1992 affidavit, he spoke to the wife who told him that she had obtained court orders requiring the husband to cooperate in respect of the sale of the property and that the husband was required to allow access to the property for inspections. Mr C said that he went back to the property again and the husband refused to allow him into the house. Mr C said:
He told me that he had a gun and that if I came back to the property again he would shoot me.
Mr C said that he told the wife that he could not sell the house whilst the husband was residing in it.
This evidence was relied upon to explain the wife’s delay in bringing these enforcement proceedings. It was asserted by Mr KH that the wife was in fear of the husband and not just in 1992.
Mr KH went on in his evidence to say that as at December 1992, the wife swore an affidavit to say that she had not been paid the money. Mr KH met the wife in late 1992 and she showed him an intervention order she obtained against the husband. He was of the impression that the husband did not know where the wife lived. He gave evidence about her fear and that she told him she had not received any part of the monies due under the 1991 orders. He was able to also say that he was privy to her banking statements at that time and that enabled him to say that she had not received the money. Mr KH said that he was present with the wife when she spoke to an estate agent about selling the house and showed the agent the order. He was present in the subsequent conversation when the agent indicated the husband had refused access to the house.
Mr KH said that in 1993 he attended a meeting with the wife and her solicitors where the question of enforcement of the orders was canvassed and the costs were discussed for that enforcement process. He said the wife did not want to spend the money and in his presence, told her lawyer not to do anything further but she would provide him with instructions when she felt in a position to proceed.
Mr KH said that over the years of the marriage to her, this question of her entitlement came up from time to time and he said she expressed her distress to him at not being able to share in her entitlements. Mr KH confirmed that it was his suggestion that she do something about the matter. In the middle of 2009, Mr KH’s wife’s condition deteriorated to the point that he was no longer able to care for her and she became a resident in a high care nursing home until she died.
Another piece of evidence which is important in this case is a letter dated 21 December 2009 from Lantern Hill Lawyers of Town 1. This letter was addressed to the wife. A number of observations need to be made. First, the letter is addressed to Mrs KH so the husband must have known that the wife had remarried. Secondly, it referred to the fact that the solicitors acted on behalf of the husband. Thirdly, the letter confirmed the husband had remained in occupation of the home and that the wife had taken no steps after 1992 to enforce her claim to the interest in the property. The letter said “It is therefore assumed that you have abandoned any such claims”.
The Lantern Hill Lawyers’ letter continued and said that it was noted that the title to the property was still in joint names and the husband wanted to amend that to avoid any complications with subsequent dealings involving the property as well as avoiding any liabilities that might accrue to the wife relating to rates and expenses.
The Lantern Hill Lawyers’ letter can only be interpreted in one way. In my view, the inference is clear that as at 21 December 2009, the husband was confirming that payment had not been made to the wife. Only some months later, the husband’s psychologist indicated the poor intellectual functioning of the husband. Be that as it may, the husband clearly understood what he was doing by going to the lawyers in 2009 not only to assert his rights but to fix up the title. All of that enables me to make a finding that on the balance of probabilities, the payment to the wife had never been made. In addition, I am entitled to take into account that the wife had remarried and there is no evidence from Mr KH about any payment in or around 2009 nor was he required for cross-examination wherein some suggestion along those lines could have been put to him.
Absent any cross-examination, there is no reason for me to doubt the evidence of Mr KH.
Mr BE is the case guardian of the husband. He filed a number of affidavits and asked to be permitted to rely upon them. The early affidavits were of no relevance to this application bearing in mind that they related to the application that he be appointed case guardian.
Mr BE was required for cross-examination but much of his evidence was not challenged. He said that he observed the husband to have no idea of financial concepts beyond simple transactions but in November 2009, the husband asked him to help remove the wife’s name from the title to the property because he believed he was entitled to the property due to the lapse of time. Mr BE set out what he thereafter did but he made no reference to Lantern Hill Lawyers. Again, it is relevant that Mr BE had a conversation with the husband about removing the wife’s name but at no time was it suggested by the husband that he had paid the money that was due to the wife. Mr BE said that his inquiries revealed the husband had paid out the mortgage on the property.
Mr BE said that his perception of the husband’s financial position was that for the Court to take away assets would make him reliant upon government support and he would not be able to purchase an alternate dwelling. To the extent that those matters are relevant, they could only affect the exercise of discretion.
On 15 April 2011, Mr BE filed a further affidavit and said that he had searched bank records of the husband unsuccessfully about the payment to the wife. He said that he could not find any evidence to support or deny any allegations that the moneys under the 1991 orders were not paid. That was a curious statement having regard to the earlier discussion he had had with the husband not to mention the instructions that the husband gave to Lantern Hill Lawyers.
The discharging of the mortgage and the provision of the title to the husband was an intriguing event. Mr BE said that he found correspondence from the mortgagee dated 8 May 1995 saying that the mortgage account could not be finalised without the signature of the wife. Somehow, the mortgage was discharged and it would appear that it was organised through a firm of solicitors who no longer exist. That all occurred in August 2003. At that point, Mr KH was married to the wife and there was no indication in his affidavit nor was it put to him in cross-examination that something happened in 2003 that would have given rise to the wife attending lawyers to arrange the discharge of the mortgage. It would seem unlikely in the circumstances that the husband would go to the trouble of paying the wife money but not obtain a transfer of land particularly where he used a variety of lawyers for the various transactions concerning the home. Mr BE concluded that the wife did sign some documents because there was no other explanation. I do not need to find what happened there but I doubt that.
Mr BE said that there was not any possibility of obtaining meaningful information from the husband and that the husband was happy living in the home at the present time but as he aged, he would need to consider moving to a more manageable home with support available.
Finding as to the payment of the capital payment
A fundamental finding that I do have to make relates to the question of whether or not the debt has been paid. I am satisfied on the balance of probabilities that it has not.
The enforcement discretion
It was common ground that enforcement of the order was a discretionary matter. The range of options open include dismissing the application, staying the application and enforcing the order on terms and conditions. The power to enforce orders lies in s 105(1) of the Family Law Act 1975 (Cth) (“the Act”).
Enforcing the order but imposing terms and conditions sounds simple but once the jurisdiction in s 79 is exhausted, save as to the confined circumstances in s 79A, a review of a decision of a delegated officer or an appeal, the Court cannot alter the substantive entitlements of the parties (see Mullane (1983) FLC 91-373). Any suggestion that the capital payment or the 18 per cent interest rate could be altered would require a finding that the order or part of it to be altered was a machinery provision rather than a substantive entitlement of the parties. As explained in Ravasini and Ravasini (1983) FLC 93-312, the Court has power to vary machinery or consequential provisions of a property order. However, the power to vary machinery provisions is limited and can only be implemented to allow the intention of the order to be effected. In varying such a provision, a court must have regard to issues of justice and equity between the parties. The test of whether a provision is consequential or substantive is whether the change concerns a part of the substantive order or whether it is simply a change to give efficacy to the substantive order.
In this case, there is no power for me to alter the provisions of the order by way of a term or condition without affecting the substantive right of the wife and ultimately, the husband.
As Nygh J pointed out in Ramsay and Ramsay (No 2) (1983) FLC 91-323, the use of s 80(1)(k) and (i) do not empower the Court to refashion the order however unjust the original order may seem in hindsight.
Similarly, the use of the declaratory power in s 78 of the Act cannot be used to manipulate an interest which has already been the subject of a s 79 order (see Molier and Van Wyk (1980) FLC 90-911). Whilst Nygh J in Ramsay (supra) had some doubt about the proposition concerning s 78 on the basis that the comments of the Full Court in Molier and Van Wyk (supra) were obiter, his Honour agreed that it would not be appropriate to use s 78 of the Act to modify orders.
An order staying the application for enforcement does not affect the legal entitlement of the parties to the order. In this case, it would simply be putting off the alteration of the legal title. Thus, problems arising from the death of a party and/or a bankruptcy would have consequences that would have to be faced possibly in other jurisdictions. Those courts may have to look to this Court if it was accepted that there was exclusive jurisdiction to enforce orders. Dismissing an enforcement application as well as staying it, would leave the parties’ entitlements intact.
I was urged by counsel for the husband to follow the decision of Le Poer Trench J in Norman & Howarth [2003] FamCA 1284. In that case, final orders had been made in 1988 and 15 years later, the wife brought an application to set them aside. The husband sought that the court order a permanent stay of the application on the basis that it was an abuse of process. There was no dispute about the jurisdiction of the court to make such an order. Le Poer Trench J set out the circumstances in which such an order might be made. Whilst saying that the relief should be rarely and sparingly granted, his Honour said that commencing or continuing proceedings in the following circumstances may amount to an abuse of process:
1.(a) The proceedings are commenced not in good faith and for an improper purposes;
(b)The Court “is satisfied that the continuation of the proceedings would be so unfairly and unjustifiably oppressive.”
(c)The processes and procedures of the Court, which exist to administer justice with fairness and impartiality, may be converted into instruments of injustice or unfairness.
(d)It would be manifestly unfair to a party, or would otherwise bring the administration of justice into disrepute among right-thinking people.
(e)The proceedings are frivolous, vexatious or oppressive.
2.That the application of the relief should only be applied in an exceptional or extreme case. Sparingly and with the utmost caution.
3.The proceedings may be “unjustifiably oppressive” where there is inordinate delay in commencing the litigation.
4.“Where there is delay the whole quality of justice deteriorates. What has been forgotten can rarely be shown”.
5.Long delay gives rise to a general presumption of prejudice.
6.Delay may give rise to an abuse where it is such that a court could conclude that by the time the matter came to trial relevant facts would no longer be in the minds of the potential witnesses.
7.The finding of actual prejudice and the possibility of other prejudice should give rise to the relief sought.
That decision is distinguishable. There, the order under challenge was said to have been made as a result of a miscarriage of justice. Here, the order is not under challenge but its enforcement is. Whilst there may be some argument about the payment issue, the extraneous evidence strongly suggests payment had not been made. In Norman, of the delay, the trial judge said that it was an incontrovertible fact that the applicant had not brought the action for 15 years but during that time, there was discussion about the wife’s dissatisfaction with the order but no action. In addition, because of the delay, the evidence upon which the respondent wished to defend the matter could not be produced. If there was evidence such as to set aside the order, there would then need to be evidence to satisfy the s 79 matters and the husband’s complaint about not having that evidence after all those years was seen as a factor in his favour. The delay there was different to here because as I have found, the wife justifiably feared the husband and could not bring the action for her justifiable entitlement as reflected in the Court’s order. At no time had the husband suggested that the order to which he had consented was not just and equitable. In my view, the explanation for the delay here is acceptable and an enforcement application is not an abuse of process because at all times, the husband would have known of his obligation to provide to the wife her justifiable entitlement.
The equitable jurisdiction
In Ramsay (supra) Nygh J raised the question of a further alteration to the existing entitlements of the parties by virtue of the intervention of equity. It would clearly be an appropriate basis to refuse to enforce an order where the unconditional transfer of a legal title or for that matter, the payment of money, no longer represented the entitlement of the party in equity because of subsequent conduct of a party. For example, that conduct might arise in this case if there was evidence to show that the husband had reacquired the beneficial interest of the wife in the property if in fact, she had such an interest.
The husband raised the issue by reference to both estoppel and waiver principles indicating that the wife had abandoned her entitlements and therefore had lost them. I reject that. There are a number of principles at play here.
Prior to the making of the orders in 1991, the husband and the wife were recorded on the title to R Street as joint tenants. The order specifically provided for the severance of that tenancy. The severance of the tenancy arises not so much from the order but by the conduct of the parties in agreeing to an order which is inconsistent with the continuation of the joint tenancy. The specific drafting of an order severing the tenancy is but one facet of the severance. The sale of the property or a transfer of it as occurred here was an indication to the world at large that the parties were operating inconsistently with the joint tenancy. Such an indication and the order itself, is not operative at law until the appropriate documents have been executed and registered with the Land Titles Office. Notwithstanding the legal position may not have altered according to title, equity will not permit the court order to be frustrated. In this case, the making of the order meant that the husband and wife held the property from that moment onwards as tenants in common but the wife’s interest as a tenant in common was held by her on trust for the husband subject to his payment to her of the $25,000 together with the 18 per cent interest (see Corin v Patton (1991) 69 CLR 540).
Thus, the husband had the right to the whole of the property notwithstanding the joint tenancy at law and could call upon the wife to complete her obligation under the trust providing he paid her what she was due. Because of the finding about payment above, that has not occurred.
To give effect to the trust, the orders of 1991 put in place machinery provisions which were not then operative but which could now be altered to be implemented to give effect to the orders.
The specific orders and the trusts arising therefrom complicate the question of whether or not the husband might have done something to reacquire the wife’s interest in the sense used by Nygh J in Ramsay (supra) because of the beneficial interests to which I have just referred. Even if that is not a problem, what evidence is there that the husband has been induced by any representation of the wife upon which there has been a detrimental reliance by the husband to give rise to an estoppel? The only evidence that the husband can point to is the fact that the wife did not enforce the order but there is no evidence that he relied upon that. I do not accept that the letter of Lantern Hill Lawyers establishes that the husband had accepted that the wife had abandoned her claim to the capital payment. The correspondence from Lantern Hill Lawyers to the wife as earlier mentioned, acknowledged that the order was still executory. It was therefore not until that letter was sent that the husband complained that the wife had not fulfilled her part of the obligations under the trust created by the orders. Lack of enforcement by the wife was matched by lack of enforcement by the husband.
To the extent that the husband owed the wife money, he was the debtor and she, the creditor, and he had an obligation to pay her (see James v Federal Commissioner of Taxation [1955] HCA 75; (1955) 93 CLR 631). That makes the abandonment argument more difficult. There is no statutory limitation on the action.
I accept the evidence of Mr KH that the wife was in fear of the husband. That fear was reasonable in the circumstances having regard to the evidence of Mr C. To give effect to the legal title requirements arising out of the severance of the tenancy, the husband needed to call upon equity so that he could enforce his rights and on the basis of the evidence to which I have just referred, he had anything other than clean hands. In my view, equity would not have come to his aid and would have required him to pay the wife what she was due.
On the basis that there is no evidence of anything significant that the husband has done to alter the interests of the parties in R Street, there is no basis for him to call upon equity to impose some form of constructive trust in any event.
What is the appropriate order?
Despite the delays, there is no reason for the Court not to enforce its orders upon request. Much was made of the husband’s financial and health position. Those are only matters that can go to the question of the discretion to exercise the power to enforce the order and I have already dealt with that issue earlier.
There was debate as to what the appropriate sum was. This is not a case in which there is any room for doubt arising from the provisions of s 117B of the Act. The parties chose in 1991 to fix the rate of interest rather than leave the provisions of the Act to apply. For the reasons I earlier outlined about that being a substantive entitlement, there is no power for the Court to alter it notwithstanding the substantially different interest regime that now applies. (see also the discussion in Stephens and Stephens and Anor (Enforcement) [2009] FamCAFC 240 at 413 and the subsequent comment of the High Court in the special leave application).
The order provided that the 18% interest was to be “adjusted monthly”. In my view, that adds nothing to the argument. It does not mean that each month a calculation was to be made and the interest was to be added to the capital debt. It means that when the calculation is done, 18% is to be assessed on $25,000 based on the number of months since the capital payment was due. If it were otherwise, a capitalization process would give rise to an interest on interest arrangement. The order did not contemplate that or if it did, it would have to be clearly articulated and it was not.
Despite the fact that 19 years has past, the appropriate provision of interest is a flat rate rather than compound interest. Compound interest has always been described as interest upon interest (see Codelfa Construction Pty Ltd v State Rail Authority of NSW [1982] HCA 24; (1982) 149 CLR 337). Nothing in the order in 1991 provided for compound interest and nothing in s 117B to the extent that it might apply indicates that such a provision should apply when interpreting orders such as this. Interest is designed to discourage debtors from failing to pay, particularly by use of interest rates higher than banking rates but equally, it is to encourage creditors to finalise matters to which they are entitled by enforcing orders rather than allowing the debtor to drift. It is in the creditor’s interest to get the money in so that the capital payment can be wisely invested even to the extent of obtaining compound interest. It ought not be the function of interest rates on judgments to provide that investment strategy. Interest therefore affects both parties. Accordingly, it is clear that the application of the wife should not be stayed nor should it be altered and for the sake of certainty, enforcement orders should be clear.
As there may be costs consequences arising from these orders, I propose to allow any party wishing to seek costs to do so by way of written submission no doubt if necessary supported by affidavit and I shall determine that application in chambers.
There is not sufficient evidence for me to understand what would be the consequences of enforcement of the original orders. I appreciate the submission about why the order would impact on the husband but I am uncertain about time frames and what action he would take. I would not be prepared to make an order that he immediately vacate R Street. Paragraph 4 of the original orders provided that there be a sale upon the title being transferred to the wife on trust for sale. Paragraph 5 of the original orders provided for him to remain in occupation pending settlement of the sale. Paragraph 6 gave liberty to apply in respect of the terms and conditions of the sale. Having regard to what has occurred, I do not consider it appropriate to allow paragraph 5 to continue.
Having regard to the lengthy delay and the husband’s health issues, the Case Guardian for the husband needs time to arrange his life so that alternate accommodation can be obtained. The Case Guardian has the personal responsibilities to ensure the orders are carried out. It would be unfortunate if the forces of the law were required to implement vacant possession but that could occur using the original paragraph 6.
I consider it appropriate for the husband to be given a short time to reorganize things. Bearing in mind that interest is still continuing, I would have thought two months to find alternate accommodation and to leave the property vacant before a sale process begins should be sufficient. Because of the husband’s past behaviour, I do not consider it appropriate for the sale process to be continuing whilst he is still in the property.
I certify that the preceding Sixty Eight (68) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin delivered on 27 June 2011.
Associate:
Date: 27 June 2011
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