Dorfer and Dorfer

[2009] FamCA 893

FAMILY COURT OF AUSTRALIA

DORFER & DORFER [2009 ] FamCA 893

FAMILY LAW – ENFORCEMENT – Penalty clause

APPLICANT: Mr Dorfer

RESPONDENT: Ms Dorfer

FILE NUMBER: SYF 2189 of 1991

DATE DELIVERED: 2 September 2009

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: STEVENSON J

HEARING DATE:

9 & 10 July 2009

17 August 2009

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Jackson

SOLICITOR FOR THE APPLICANT: Anne Day & Associates

COUNSEL FOR THE RESPONDENT: Mr Maurice

SOLICITOR FOR THE RESPONDENT: David H Cohen & Co

Orders

1. That the application of the wife filed on 14 November 2006 is dismissed.

2. That both parties do all things and execute all documents required to authorise David H Cohen & Co. to distribute the funds held on trust for them in Commonwealth Bank account number … as follows:

   2.1in payment of the sum of $165,624 to the husband

   2.2in payment of the balance to the wife.

3. That all outstanding applications and responses are otherwise dismissed.

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

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYF 2189 of 1991

MR DORFER

Applicant

And

MS DORFER

Respondent

REASONS FOR JUDGMENT

the proceedings

1. On 31 May 1993 Mr Dorfer and Ms Dorfer entered into consent orders for settlement of their property.  In summary, these provided as follows:

   ·    The wife and the two children of the marriage to live in the former matrimonial home until the younger child attained 18 years of age or became self supporting, whichever event first occurred (“the triggering event”)

   ·    The husband to continue to pay the mortgage on the property, in lieu of child support

   ·    The wife to pay outgoings on the property including “rates, taxes, stamp duties, house insurance, et cetera”

   ·    upon the triggering event,  the parties to sell the property and divide the net proceeds as to 65% to the husband and the balance to the wife

   ·    for the period between the triggering event and the sale of the property, the wife to pay an amount described as “rent”, in a sum equivalent to “0.15% of the market value of the house”.

2. The younger of the parties’ two children, their son, turned 18 in January 2005.  Contracts for sale of the property were exchanged in November 2006 and settlement took place in February 2007.

3. On 13 September 2006 the husband filed an application for an order pursuant to section 106A, to appoint a Registrar to execute all documents necessary to effect the sale of the property on behalf of the wife.  On 31 October 2006 he filed an amended application seeking orders “by way implementation of the consent orders made on 31 May 1993”.  Specifically he sought that the wife pay the outgoings on the property and “rent” for the period from 17 January 2005 to the settlement of the sale.  Any such unpaid amounts would be deducted from the wife’s share of the proceeds of sale of the property.

4. On 13 November 2006 the wife filed a response seeking dismissal of the husband’s application of 31 October 2006.  On 14 November 2006 she filed an application seeking an extension of time to file a review of the decision of the Deputy Registrar who made the consent orders on 31 May 1993.  In that event, she sought orders that the parties join in the sale of the former matrimonial home and effect a division of the proceeds as to 65% to herself and the balance to the husband.  In the alternative, she sought orders pursuant to section 79A to set aside the consent orders of 31 May 1993 and to divide the proceeds of sale of the property as above.

5. The husband sought a summary dismissal of the wife’s claims. That application was heard on 18 December 2006 and dismissed on 26 February 2007.

6. On 24 May 2007 a Judicial Registrar heard the wife’s application for an extension of time to file a review of the decision of the Deputy Registrar who made the consent orders on 31 May 1993.  The application was dismissed on 1 June 2007.  The wife filed an application for review of the decision of the Judicial Registrar on 5 June 2007.

7. The wife’s application pursuant to section 79A and for a review of the decision of the Judicial Registrar came before me on 9 and 10 July 2009. I reserved judgment but caused the proceedings to be relisted on 17 August 2009.  I then invited submissions as to the appropriateness or otherwise of the wife’s paying interest on the husband’s share of the proceeds of sale, rather than an amount generated by enforcement of the “rent clause”.  I also sought submissions as to the proper rate of interest, as the formula provided in the Rules would generate a figure well out of step with current economic conditions.

Background

1. The wife was born overseas in 1956 and moved to Switzerland with her parents as a teenager. The husband was born in Switzerland in 1956.

2. The parties began to live together in Switzerland in about 1975 and married in 1981.  They migrated to Australia around September 1981.  They have two children:  a daughter born in 1984 (25) and a son born in 1987 (22).

3. In 1986 the parties purchased the former matrimonial home at H for $69,000.  They borrowed $45,000 or $50,000 from the Commonwealth Bank.  They disagreed about the source of the balance of the purchase money but it is not necessary for me to resolve that issue for present purposes. 

4. In February 1989 the parties separated under one roof.  They both lived in the former matrimonial home until September 1989, when the husband vacated the property. 

5. On 28 October 1991 the parties consented to parenting orders in relation to the children.  At this time the wife had legal representation, as she was able to obtain a grant of legal aid.

6. The wife was unrepresented during the negotiations for property settlement and when the orders were made on 31 May 1993.  The husband has had the services of a solicitor at all relevant times.

7. In 2004 the wife learned that her mother had been diagnosed with cancer.  She spent three months with her in Switzerland between March and June 2004.  During this period the husband lived in the former matrimonial home with the parties’ son, who did the Higher School Certificate in 2004.

8. On 4 January 2005 the husband’s solicitor wrote to the wife and requested that she arrange for the sale of the home, following their son’s 18^th birthday in January 2005.   The wife did not reply to this letter.  The husband’s solicitor wrote again on 26 April 2005, in similar terms, and received no reply. 

9. In July 2005 the wife and the children made an urgent trip to Switzerland to visit her mother, who died the day after their arrival.  They returned to Australia around the end of August 2005.  

10. On 13 December 2005 the parties attended the office of a real estate agent and signed a sales agreement.  On 19 April 2006 they attended the office of a different real estate agent and signed another sales agreement.

11. On 16 August 2006 the husband’s solicitors wrote to the wife and advised that he would commence litigation unless she arranged to sign a contract for sale within seven days.  On 31 August 2006 the husband’s solicitors received a medical certificate from a Dr L which stated:  “[The wife] is experiencing stress and has problem with concentration due to stress.  She finds it hard for her to take decisions for things she would like to do.”

12. On 13 September 2006 the husband filed the application which commenced the present proceedings.  Contracts for sale of the former matrimonial home were exchanged on 10 November 2006, at a price of $465,000.

13. The wife and the two adult children vacated the home on 18 November 2006.  They moved into a rented townhouse.

14. The sale of the property yielded net proceeds of approximately $445,000.  On 30 June 2008 orders were made by consent, which provided that the husband and the wife receive $150,00 and $30,000 respectively from this money.

The Application for Extension to File a Review

1. The application for review should have been filed within 7 days of the making of the orders on 31 May 1993.  The relevant provisions are currently contained in Rule 18.08 and Table 18.6, which are identical in terms to the Regulations applicable in 1993.  The wife’s application pursuant to Rule 1.14 is thus approximately 13.5 years out of time.

2. A decision to extend time to file a review is discretionary.  Well-known authorities indicate that certain matters should be considered by the court in the exercise of this discretion.  The Act and Rules prescribe no criteria, unlike, for example, an application for leave to commence proceedings out of time pursuant to section 44(3).

3. The basic issue is whether an extension of time will enable the court to do justice as between the parties.  In making this determination it is useful and appropriate to consider matters such as:

   ·    hardship to the applicant if there is no extension of time

   ·    prejudice to the respondent if time is extended

   ·    the existence of an adequate explanation for delay

   See, for example, (In the Marriage of Tormsen (1993) 18 FamLr 232:  McIntyre and McIntyre (1994) FLC 92-468).

Hardship to the Applicant

1. Leaving aside the “rent clause”, implementation of the 1993 orders would mean that the husband receives approximately $289,250 from the net proceeds of sale of the property and the wife the balance of about $155,750.  The differential is thus $133,500 in favour of the husband. 

2. At first glance, it may appear that this result of itself visits hardship on the wife.  It should be remembered, however, that she had the benefit of occupation of the property for approximately 12½ years prior to their son’s 18^th birthday.  During this period the husband was solely responsible for payment of the mortgage, although the wife received no child support.  In 1993 the mortgage payout figure was approximately $45,000 but the property was unencumbered when the sale was completed in February 2007 (exhibit 4). 

3. Viewed in this light, the result of the orders is not quite so harsh from the wife’s perspective.  I would observe in passing, however, that there were probably solid reasons why orders of this nature gradually fell from favour.  The wife is a good example of a woman who lives for years in a former matrimonial home but ultimately lacks sufficient capital, and borrowing capacity, to purchase another property.

4. The wife had no legal representation when the agreement for property settlement was negotiated and a Deputy Registrar made the consent orders.  She said that she was able to obtain a grant of legal aid for the parenting proceedings but not for the property settlement.  I accept this evidence, which is consistent with my own knowledge of the policies of the Legal Aid Commission of New South Wales at that time.  The grants policies of the Legal Aid Commission of New South Wales have been widely promulgated and in the public domain at all times.  I am thus of the view that I am entitled to take judicial notice of this information.  On the other hand, the husband had the benefit of legal representation at all relevant times.  Clearly, he had an advantage over the wife in this regard. 

5. The wife also claimed that she was disadvantaged by an imperfect command of the English language when the property settlement was negotiated and the consent orders were made.  I have some difficulty in accepting this evidence.  By 1993 the wife had lived in Australia for approximately 12 years.  She had studied English at school in Switzerland and had a “basic” knowledge, to use her word, of the language when she arrived in Australia in 1981.  She studied English with fellow migrants for the next two years.

6. The wife worked from home as a sales catalogue consultant for an unspecified period prior to the birth of the children.  Her command of English must have been sufficient for that purpose.

7. Similarly, the wife’s fluency in English was adequate to enable her to consult a psychiatrist, Dr S, in 1989.  For these reasons, I do not accept that she was disadvantaged by an insufficient command of English when the property settlement was negotiated and the consent orders were made.

8. The most concerning aspect of the circumstances in which the orders were made is the dearth of relevant information available to both the court and the wife.  I was invited to read the judgment of the Judicial Registrar, in which these circumstances were set out.  The Judicial Registrar repeated, for convenience, material contained in the judgment of Watts J in rejecting the husband’s application for summary dismissal of the wife’s claims. 

9. Included in the reasons of the Judicial Registrar was an observation of Watts J that the file contained three documents relevant to the making of the consent orders.  These documents were an application for settlement of property verified by the husband on 11 February 1993; a Notice of Address for Service signed by the wife on 8 February 1993 and an affidavit sworn by the wife on 8 February 1993.  Before me, these documents were tendered as exhibit 7.

10. These documents reveal the following matters of significance:

    ·    the Notice of Address for Service stated that the wife received “a sealed copy of an application filed on [ ]December 1992”

    ·    the wife’s affidavit sworn on 8 February 1993 stated:

    “1.     I am the respondent wife herein;

    2.I have reached an agreement with my husband concerning property which has been reduced to writing and executed by the parties;

    3.I understand that I could seek legal advice in relation to the terms of the orders sought but do not wish to do so;

    4.The property settlement is set out in the consent orders executed by the parties;

    5.That I believe it is the best settlement that both my husband and I could agree to;

    6.I therefore respectively request that the court make the orders set out in the short minutes of orders concerning property.  Notwithstanding the fact that I have no instructed a solicitor because I do not wish to do so.”

    ·    the husband’s application for property settlement verified on 11 February 1993 relevantly stated:

    “The husband and wife cohabited during the following periods:

    Not applicable

    All the property of each party at the time of the filing of this application is identified and described as to the best of the applicant’s knowledge and ability in the Statement of Financial Circumstances, or affidavit in lieu of that statement, filed with this application.

    The facts relied on be the applicant in seeking an order under Section 78 of the Act are as follows:

    Not applicable

    The initial financial contribution of each party at the time of the commencement of cohabitation was as follows:

    Not applicable

    The facts relied upon pursuant to paragraphs 79(4)(e) of the Family Law Act are as follows:

    Not applicable

    The facts relied upon pursuant to paragraph 79(4)(e) of the Family Law Act are as follows:

    Not applicable

    Other relevant facts relied upon by the applicant are as follows:

    Not applicable.”

    (The grammatical and spelling errors contained in the originals of these documents are reproduced here.)

    ·    all three of these documents were filed on 19 May 1993

11. It is immediately obvious that the wife could not have received a sealed copy of the husband’s application by 8 February 1993, as it was verified three days later on until 11 February 1993 and filed in May 1993.  It could well have been that the wife did not receive a copy of the application prior to the making of the orders or at all.  These facts should have caught the attention of the Deputy Registrar and raised doubts as to whether he or she should have made the orders. 

12. The Deputy Registrar should also have been concerned about the complete absence of information relating to the parties’ respective contributions, pursuant to section 79, and relevant factors set out in section 75(2).  There was no evidence as to the financial position of either party before the court. 

13. In 1993 section 79(2) provided that:

    “The court shall not make an order under this section unless it is satisfied that, in all the circumstances, it is just and equitable to make the order.”

    I am at a loss to understand how the Deputy Registrar could have formed any view as to whether the proposed orders were just and equitable without any information about the parties’ contributions, relevant section 75(2) factors and their respective financial positions.

14. For these reasons it seems to me that these orders should never have been made by the Deputy Registrar.  To summarise, the available information made it impossible for him or her to reach any conclusion as to whether the orders were just and equitable as required by section 79.  Further, it is blatantly clear that the wife could not have received a sealed copy of the husband’s application by 8 February 1993.  It is highly likely that she did not see a copy of the application before the orders were made.

15. In addition to these considerations the “rent clause” should have created substantial disquiet in the mind of the Deputy Registrar.  In my view it is virtually inconceivable that such an order would have been made after a contested hearing.  This provision was obviously intended to ensure that the wife complied with the orders for the sale of the property.  Its potential operation was very onerous to her, however, and she did not have the benefit of legal advice.

16. These considerations lead me to the conclusion that the orders have created hardship for the wife.  The next consideration is what prejudice would flow to the husband, if the wife is granted an extension of time to file a review of the decision of the Deputy Registrar.

Prejudice to the Respondent

1. For 13 years the wife has allowed the husband to believe that the proceeds of sale of the former matrimonial home would ultimately be divided in accordance with the consent orders.  The agreed list of assets and liabilities (exhibit 8) indicates that he has acquired property and taken on liabilities since 1993.  He was entitled to make his financial arrangements on the assumption that he would receive 65% of the net proceeds of sale of the H property no later than early in 2005.  These considerations suggest to me that the husband will suffer prejudice if leave is now granted to the wife to file a review out of time.

2. In my view, the husband will clearly suffer further prejudice if he now has to face litigation over settlement of property.  He would have had no reason to think that he needed to keep financial records dating back to the beginning of the parties’ cohabitation in the mid-1970s.  He would have had no reason to think that he needed to remember or record details of the financial history of the parties’ relationship.  The wife allowed him to believe that the 1993 consent orders finalised the financial relationship between the parties.

3. Another significant prejudice to the husband is the fact that he was deprived of the use of cash equal to his interest in the former matrimonial home for over 13 years.  He received no benefit from this delay, in contrast to the wife who had the advantage of occupation of the former matrimonial home.

4. For these reasons, I am comfortably satisfied that the husband would be prejudiced by an extension of time to file a review of the decision of the Deputy Registrar.  The next consideration is whether the wife has adequately explained her delay.

Explanation for Delay

1. In her written and oral evidence the wife advanced no real explanation for her delay in seeking an extension of time to file a review.  It may well be that she does not have a plausible explanation.

2. The fact is that the wife’s application for an extension of time came only in response to the husband’s attempt to enforce the 1993 orders.  She was content to accept the benefit of occupation of the former matrimonial home, with the husband paying the mortgage, for close to 13 years.  She took issue with the orders only when their effect was to require her to leave the property. 

Conclusion

1. I am satisfied that the wife would suffer hardship if there is no extension of time to file an application for review of the decision of the Deputy Registrar.  On the other hand, an extension of time would visit substantial prejudice on the husband.  On the hearing de novo, the wife would not consent to orders in accordance with the 1993 terms of settlement.  The husband would then face litigation over settlement of property more than 16 years after he believed that this issue had been finally resolved.  As noted, he has been entitled to act on the assumption that there was no necessity for him to retain documents or to remember details of the parties’ financial history. 

2. Another consideration which militates against the granting of an extension of time is the inadequacy, or non existence, of the wife’s explanation for her delay.  All of these matters lead me to the conclusion that the application for leave to extend time to file a review of the decision of the Deputy Registrar must fail.  This application will be dismissed.

The Section 79A Application

1. Initially the wife’s case was that the orders should be set aside on the grounds of duress and miscarriage of justice.  Wisely, she abandoned the duress argument at the end of the trial.  Her evidence, taken at its highest, fell very far short of establishing that ground.

2. I have referred already to the unsatisfactory circumstances in which the Deputy Registrar made the 1993 orders.  I have also indicated that I consider it unlikely that these orders would have been made at the conclusion of a proper trial. 

3. I have also referred to the wife’s evidence that she could not obtain legal advice for the purposes of negotiating a property settlement.  As noted, I accept that she could not obtain a grant of legal aid and that she could not afford to engage a solicitor. 

4. It may be that these matters are sufficient to establish that a miscarriage of justice has occurred.  If so, however, the wife still has the onus of persuading me to exercise discretion in her favour.  In my view, she faces a number of obstacles in this regard. 

5. One such obstacle is her lengthy delay in bringing the application pursuant to section 79A.  The wife was content to live in the property for 13 years, while the husband paid the mortgage.  She applied to set aside the orders only when he resorted to enforcement proceedings 21 months after the event which triggered the sale of the property.  As noted, I am of the view that she failed to give a satisfactory explanation for her delay.  In fact, it might be reasonable to conclude that she did not explain her delay at all.

6. Another obstacle to a favourable exercise of discretion is the prejudice to the husband, if the orders are set aside.  I have already identified and considered this prejudice in the context of the application for an extension of time.

7. I thus conclude that any hardship which the wife may suffer, if the orders are not set aside, is outweighed by the prejudice to the husband and the inadequacy or absence of an explanation for the 13 year delay.  In the exercise of my discretion, I refuse this application.

Enforcement of order 5 of 31 May 1993:  “The Rent Clause”

1. In my view this order is severable from the remainder of the orders.  This clause clearly constituted a penalty provision, which would come into operation only if the wife failed to comply with the order for sale of the property on the triggering event. 

2. Enforcement of orders is always a matter of discretion.  In my opinion there are a number of reasons why I should exercise discretion against enforcement of this order. 

3. Firstly, on its face the meaning of the order is uncertain.  Order 5 reads:

   “Upon the youngest child attaining eighteen (18) years or becomes self supporting and until the former matrimonial home is sold the wife shall pay rent monies to the husband at the calculated rate of 0.15% of the market value of the house, until the said matrimonial home is sold.  The market value of the house will be assessed by a Real Estate Agent.”

   Recital 10 reads: 

   “Upon the youngest child attaining the age of eighteen (18) years or becomes self supporting, which ever shall first occur, and until the former matrimonial home is sold, the wife shall pay rent at the market rate to the husband, to be calculated at 0.15% per week of the market value of the house.  The market value will be assessed by a real estate agent.” 

4. The words “per week” appear in the recital but not the order.  On the face of the order itself, therefore, it is impossible to calculate the amount payable by the wife.

5. Secondly, the order would operate in a draconian way against the wife.  She would inevitably incur an obligation to pay money to the husband, unless she managed to time the settlement of the sale of the property to the day of the triggering event.  In other words, the orders contain no provision for a period of time during which the parties could arrange an orderly sale of the property. The only way in which the wife could avoid payment of “rent” would be to vacate the property ahead of the triggering event.  She would thus forfeit part of the benefit bestowed upon her by the orders.

6. Thirdly, the amount sought by the husband is calculated on the basis of a payment of $700 per week.  In the opinion of the valuer, Mr M, the market rental for the property for the period 17 January 2005 to 24 November 2006 was $245 to $260 per week. 

7. Of course, the order was not expressed in terms of market rental and was clearly intended to be a penalty provision to discourage any unwillingness on the part of the wife to facilitate the sale of the property.  The practical effect of this order, however, is a very rapid reduction in the amount which the wife receives from the sale proceeds. 

8. Additionally, the “rent clause” does not specify the time when the market value of the property is to be calculated.  There could be a substantial variation, depending on market forces from time to time, which could operate to the detriment of one party and the benefit of the other.

9. The husband sought that the wife pay to him an amount of $68,090 for the period from 17 January 2005 to 10 November 2006, which was from the son’s 18^th birthday until the exchange of contracts for sale.  The result would be that the wife receives $87,660 or 19.7% of the proceeds of sale and the husband $357,340 or 80.3%.

10. In my view, all of these factors militate against enforcement of the “rent clause”.  On the other hand there are considerations which suggest that discretion should be exercised in favour of enforcement of this order.

11. One such consideration is that the wife did not do all that she could to facilitate the sale of the property.  In cross-examination she admitted that she did nothing in response to the letters from the husband’s solicitor dated 4 January 2005 and 26 April 2005.  She also admitted that she took no steps herself to arrange a sale of the property and that she was reluctant to provide a key to the real estate agent. 

12. Further, the husband was deprived of his share of the proceeds of sale of the property for approximately 95 weeks, largely due to the wife’s inaction.  As I have observed, however, properly drafted orders should have provided a reasonable period after the triggering event for the parties to effect a sale of the property. A period of three months is frequently prescribed in these circumstances.  For that reason, I would regard a period of 83 weeks as appropriate for the purposes of potential enforcement of this order.

13. The husband conceded that the market value should reflect the lowest figure in the range set out in the letter from R Real Estate dated 6 January 2005 (annexure HD3 to the husband’s affidavit sworn on 27 October 2006) which is $480,000.  0.15% of $480,000 equals $720.  If the deficiency on the face of the order is ignored and this figure is applied for 83 weeks, the result would be that the wife pays to the husband a sum of $59,760.  She would then receive $95,990 or 21.5% of the net proceeds of sale of the property and the husband would take $349,010 or 78.5%.  As a matter of discretion, I have difficulty with this result. 

14. On 17 August 2009 I raised with counsel the possibility of inclusion of an interest component on the husband’s share of the proceeds of sale of the property in the event that I declined to enforce the “rent clause”.  I also expressed concern that application of the formula prescribed in the Rules would generate an interest rate significantly out of step with current economic reality.

15. Counsel for the wife submitted that interest could be payable only pursuant to section 117B, which contains a prerequisite of “an order for payment of money”.  He contended that there would be no such order if the wife’s application pursuant to section 79A is dismissed.

16. Counsel for the husband submitted that an interest component could properly be included on his share of the proceeds of the sale of the property.  He indicated that the husband’s choices as to an interest rate were as follows, in order of priority:

    ·the historical rate provided from time to time by the Rules

    ·the current variable bank home loan mortgage interest rate

    ·a rate which the court selects in its discretion.

17. It seems to me that there are two possible bases upon which I could make an order that the wife pay interest on the husband’s share of the proceeds of sale.  In my view I could do so pursuant to either or both of sections 80(1)(k) and 117B.

18. Section 80(1)(k) provides:

    The court, in exercising its powers under this Part, may…

    make any other order (whether or not of the same nature as those mentioned in the preceding paragraphs of this section), which it thinks it is necessary to make to do justice;

    It has been held that this power could ground an interest component, in appropriate circumstances, if there is a necessary connection to Part VIII of the Act.  In In The Marriage of Davidson (1993-1994) 17 Fam LR 656 at 667 the Full Court said:

    “For purposes relevant to these proceedings the terms of s.80(1) itself and the authorities in relation to it and its predecessors indicate that:

    ·Section 80(1) is limited by its introductory words, namely that ‘the court, in exercising its powers under this Part, may do any or all of the following…..’ That is, s.80(1) is activated by the exercise by the court of some other of the powers in Pt VIII.

    For example, a proceeding which sought a lump sum payment would not be within power unless it was connected to an existing or previous proceeding for orders for maintenance or property settlement;  similarly with proceedings seeking a secured payment, the execution of a document, the transfer of property, consent orders, etcetera, as enumerated in s.80(1).

    ·However, once s.80(1) is activated there is no basis for reading down its powers or scope (other than the limitations to which we have referred generally above).  It is an enabling provision and the court in exercising its powers may do so in ways which are suitable and appropriate to meet the varying circumstances which arise in individual cases.

    ·A relevant connection or relationship is required between a primary power within Pt VIII and the exercise of any of the powers in s.80(1).  That is, it is not sufficient in order to attract the powers under s.80(1) that the court is exercising or has exercised one or more of the other powers in Pt VIII;  there must be some connection or relationship between those two circumstances.”

19. In Yunghanns v Yunghanns (1998-1999) 24 Fam LR 400 at 435 the Full Court left open the question whether in proceedings for enforcement, the court is exercising power under Part VIII and Part XIII. Their Honours said:

    “Section 80 is not an independent source of jurisdiction, but only a section empowering the court to make ancillary orders of various kinds (including, no doubt, injunctions) ‘in exercising its powers under this Part’ (ie ‘Part VIII- Property, Spousal Maintenance and Maintenance Agreements’): In the Marriage of Davidson (1994) 17 Fam LR 656; FLC 92-469. It is a moot point whether in proceedings to enforce an order made under Part VIII the court is ‘exercising its powers under this Part’ or rather exercising its powers under Part XIII (‘enforcement of decrees’).

20. Clearly the 1993 orders were made under Part VIII.  In my view there is a “connection or relationship” between that primary power and the exercise of power pursuant to section 80(1)(k), so as to include an interest component on the husband’s share of the proceeds of sale.  There has been a delay in his receiving his share of the proceeds, as contemplated by the orders, due to inaction on the part of the wife.  It is proper that he receive some recompense, which is achievable by the application of section 80(1)(k). 

21. Section 117B provides:

    “(1)    Subject to any order made by the court under subsection (2), where, in proceedings under this Act, a court makes an order for the payment of money (other than an order for the payment by way of maintenance of a periodic sum), interest is payable, at the rate prescribed by the applicable Rules of Court, from:

    (a)the date on which the order is made;  or

    (b)the date on which the order takes effect;

    whichever is later, on so much of the money as is from time to time unpaid.

    (2)       A court that makes an order for the payment of money as mentioned in subsection (1) may order that interest is not payable on the money payable under the first-mentioned order or may order:

    (a)that interest is payable at a rate specified in the order, being a rate other than the rate prescribed by the applicable Rules of court; or

    (b)that interest is payable from a date specified in the order, being a date other than the date from which the interest would be payable under subsection (1).

    The question is whether this provision can apply in the present circumstances. 

22. In In The Marriage of Jones (1990-1991) 14 Fam LR 19 at 28 the Full Court said:

    “We are of opinion that on its proper construction s117B when it refers to ‘an order for payment of money’ prima facie means an order for the payment of money by one party to the other.  Ordinarily it would not refer to a situation such as the one here, where jointly owned property is to be realised by the parties and where the proceeds of such realisation are to be distributed between the parties.  In the present case each of the parties was required by the order to join in the sale of the home and the distribution of the proceeds.  To order the husband to pay interest on moneys payable to the wife, the bulk of which had to be raised by the wife herself out of her own share in the home, was quite unjust and not a result which was intended by s.117B.

    There may be cases where one party has the sole use of the property to the exclusion of the other until a sale takes place and in such a case it might be appropriate to order the payment of interest or to make some other adjustment pending the completion of the sale.  Similarly, it might be appropriate to order the payment of interest where one party unreasonably delays or frustrates the ordered sale.  However, this was not such a case.  In our opinion the order for the payment of interest by the husband to the wife cannot be justified.”

23. In my opinion the wife did “unreasonably delay or frustrate the ordered sale”, so this provision could be applied to order her to pay interest on the husband’s share of the proceeds.  Section 117(2) allows a discretion to select the date from which interest runs and to vary the rate from that provided by the Rules.

24. As I have indicated, I regard the rate provided by the Rules as out of step with prevailing economic conditions.  This formula would generate a current interest rate of 8%.  I would regard a rate equal to the average of current variable home loan interest as more equitable.  Further, I have indicated that a reasonable period should have been allowed, beyond the triggering event, to accommodate an orderly sale of the property before the penalty provision began to operate.  I have assessed an appropriate period at 3 months.

25. Counsel for the husband helpfully submitted a document headed “Further Calculations Prepared for Husband Using Current Variable Bank Home Loan Mortgage Interest Rate”.  The current variable rate is between 5.81% (ANZ and Westpac Banks) and 5.87% (NAB and Commonwealth Banks), which yields an average of 5.84%. 

26. The period from a date 3 months after the son’s birthday and the exchange of contracts for the sale of the property is 17 April 2005 until 10 November 2006, which totals 571 days.  The net proceeds of sale amounted to $444,927, of which the husband’s 65% share amounted to $289,203.  Interest on that sum at the rate of 5.84% for 571 days amounts to $26,421.  In the exercise of my discretion, I find that the wife should pay interest to the husband in an amount of $26,421.

Result

1. The husband’s entitlement to the net proceeds of sale thus amounts to $289,203 plus interest of $26,421 less the interim distribution of $150,000, which equals $165,624.  The wife will receive the balance of $99,303, which is her share of 35% less interest of $26,421 and her interim distribution of $30,000.

I certify that the preceding eighty two (82) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Stevenson

Associate:     

Date:             2 September 2009