Elrod & Elrod
[2023] FedCFamC1F 889
•20 October 2023
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Elrod & Elrod [2023] FedCFamC1F 889
File number(s): PAC 3191 of 2019 Judgment of: RIETHMULLER J Date of judgment: 20 October 2023 Catchwords: FAMILY LAW - PROPERTY – Interest – Interest payable on late payments – Application of s 117B of the Family Law Act 1975 (Cth) – Calculation of Interest – No matters of principle. Legislation: Family Law Act 1975 (Cth) ss 79A, 117B
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) r 10.17
Cases cited: Perot v Perot [2013] FamCA 137
Stephens & Stephens & Anor (Enforcement) (2009) FLC 93-425; [2009] FamCAFC 240
Division: Division 1 First Instance Number of paragraphs: 25 Date of last submission/s: 1 October 2023 Date of hearing: 24 July 2023 & 11 August 2023 Place: Parramatta Counsel for the Applicant: Litigant in person Counsel for the Respondent: Litigant in person ORDERS
PAC 3191 of 2019 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS ELROD
Applicant
AND: MR ELROD
Respondent
ORDER MADE BY:
RIETHMULLER J
DATE OF ORDER:
20 OCTOBER 2023
THE COURT ORDERS THAT:
1.The respondent pay the applicant interest in the sum of $13,491.53 within 14 days of the date of these Orders.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under a pseudonym has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
RIETHMULLER J:
On 10 October 2022, the parties entered into consent orders resolving their dispute as to the matrimonial property settlement on a final basis.
Order 32 of the Orders made 10 October 2022 provided as follows:
Cash Payment
32. The [respondent] shall pay to the [applicant], or as directed by her, the sum of $1,100,000, as follows:
32.1. $150,000, within 30 days from the date hereof; and
32.2. A further $950,000 within 5 months from the date hereof.
The applicant says that the payments due in accordance with the Orders were made late and seeks interest for the period of the late payments. Two issues arise: firstly, whether any interest should be ordered (and if so at what rate), and secondly, the dates of actual payments which are necessary to calculate interest if it is ordered.
Whether Interest is Payable
Interest is provided for in s 117B of the Family Law Act 1975 (Cth) (“the Act”) as follows:
Interest on moneys ordered to be paid
(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 rate of interest is specified in r 10.17 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) (“the Rules”) as:
Rate of interest
The prescribed rate at which interest is payable under paragraphs 87(11)(b), 90KA(b), 90UN(b) and subsection 117B(1) of the Family Law Act is:
(a) in respect of the period from 1 January to 30 June in any year--the rate that is 6% above the cash rate last published by the Reserve Bank of Australia before that period commenced; and
(b)in respect of the period from 1 July to 31 December in any year--the rate that is 6% above the cash rate last published by the Reserve Bank of Australia before that period commenced.
Note: For the date from which interest is payable, see paragraphs 87(11)(b), 90KA(b) and subsection 117B(1) of the Family Law Act.
According to the Rules, the rate of interest payable is calculated by adding six per cent to the latest Reserve Bank of Australia cash rate that is published before the prescribed period in which the late payments are made, the prescribed periods being 1 January to 30 June, and 1 July to 31 December, respectively.
Section 117B(1) of the Act provides for interest from the later of either the date on which the order is made, or the date on which the order takes effect. In this case, the later date is when each of Order 32.1 and Order 32.2 required payment (within 30 days and within five months after 10 October 2022, respectively).
Whilst s 117B(2) of the Act makes provisions for the Court to order that interest is not payable or is payable at a different rate other than what is specified in the relevant rules, the wording of the section indicates that such orders must be made at the time of making the original order. To find otherwise would undermine the finality of the orders (see Stephens & Stephens & Anor (Enforcement) (2009) FLC 93-425). The purpose of the rate of interest set out in the Rules was explained in Perot v Perot [2013] FamCA 137 at [27], where it was said that:
27. The rate set in the Rules, by the body of Judges, is not simply a compensatory rate. It is also a rate aimed at providing some level of encouragement to litigants to comply with orders that require them to pay money within certain periods. Adopting the same public policy underpinning, namely the encouragement of litigants to comply with money orders made by the court, the rate selected is uniform across most superior courts.
The respondent, in his affidavit filed 15 August 2023, requests that the applicant’s claim for interest on the late payments be dismissed. The respondent describes several reasons for his difficulty in raising what he termed “instant cash”. He argues that all of his liquid funds had already been extinguished to make previous payments to the applicant. He says that he had already taken out the “maximum available” mortgage to pay the applicant’s living costs and legal fees. The respondent attempted to sell his United Kingdom property but was not able to due to tenancy laws that prevent tenancies being broken by landlords. The respondent also asserts that there were changes to United Kingdom laws regarding access to his United Kingdom pension fund. The respondent said that his Australian property, “B Street”, underwent a drastic price fall after the valuation of $2.5 million obtained for the hearing. The respondent argues that his difficulties in making the payments in the time frame provided by the orders of 10 October 2022 were such that he had suffered hardship trying to make these payments.
However, the parties entered into consent orders to resolve their dispute. It is not open to the Court, save in very limited circumstances (which have not been raised here), to alter final orders. The respondent does not bring an application pursuant to s 79A of the Act to set aside the orders, and it does not appear that he would have a prima facie case to do so. In substance, once final orders are made settling the parties’ dispute, the parties must comply with those orders. If the respondent faced difficulties in fulfilling the terms of the orders then he ought not to have consented to the orders in those terms. If the difficulties arose after consenting to the orders, that is a risk that the respondent must bear, just as the applicant might argue that she settled for less than she desired in order to end the dispute and be paid her entitlements in a fixed period rather than facing the ongoing risk of litigation. The principle of finality is strong and not easily displaced, otherwise litigation would never come to an end.
I am not persuaded that the respondent has shown facts or circumstances in this case that would be a basis for altering the terms of the orders, nor that there is a discretion pursuant to s 117B of the Act that is available after the final orders have been made.
Date of payment pursuant to Order 32.1
Payment of $150,000, in accordance with Order 32.1, was to be made within 30 days from the date of the Orders. That is on 9 November 2022. The relevant period for interest on the payment pursuant to Order 32.1 runs between 1 July to 31 December 2022. The last cash rate published before the commencement of this period was 0.85% on 8 June 2022. Therefore, the prescribed interest rate for this period is 6.85% (see r 10.17 of the Rules).
The applicant says that the payment of $150,000 was not made until 15 November 2022, some six days late. The respondent, in his submissions dated 29 August 2023, says that the payment of $150,000 was made to his solicitors in two parts on 9 November 2022.
The dispute as to when the first payment of $150,000 was paid is explicable when one turns to the evidence. The applicant included a receipt in her affidavit filed 4 May 2023 which showed that she received a deposit of $150,000 from the respondent’s solicitors on 14 November 2022 (five days late). The Orders required payment to the applicant. As the solicitors were the agents of the respondent, payment to his own solicitors was not sufficient to effect payment to the applicant. Any delay between the respondent paying his solicitors and them paying the applicant is ordinarily a matter between the respondent and his solicitors.
In his affidavit filed 15 August 2023, the respondent states that the payment was late because the applicant failed to provide her bank details until 14 November 2022 (see [15] of the respondent’s affidavit filed 15 August 2023). On 29 August 2023, the respondent provided an email from his solicitors dated 10 November 2022 informing him that they requested, from the applicant’s solicitors, direction and authority to make the payment, seeking the details of the account into which funds should be paid. Next, the respondent supplied an email from the applicant’s solicitors, dated 14 November 2022, where they provided the details of the applicant’s C Bank Account.
However, the applicant pointed out that the respondent was aware of her bank details prior to his solicitors’ request. She provided bank receipts showing the respondent paying an interim payment of $60,000 on 9 June 2022 into her C Bank Account. The applicant also provided a receipt from 19 October 2022 showing that the respondent sent money to her C Bank Account to pay for their child’s passport fees. The applicant provided evidence on 2 September 2023 of an email she sent to her solicitors on 10 November 2022 stating it should be the “C Bank account they always use”, indicating that the respondent and his solicitors were aware of her bank details. Whilst it is possible that the larger sum led to greater caution on the respondent’s part, causing his solicitors to seek direction and authority before the transfer, the verification email was only sent to the applicant’s solicitor on the day after payment was due. Such verification should have been sought in advance of the payment date if payment was to be by electronic means. The result was that the applicant did not receive the money until 14 November 2022.
The payment was five days late. Interest on the sum of $150,000 at 6.85% per annum for the period of five days is $140.75.
Dates of payments pursuant to Order 32.2
Payment of $950,000, in accordance with Order 32.2, was due by 10 March 2023. The late payments in this case occurred between 10 March 2023 and, on the applicant’s case, 25 June 2023. Therefore, the late payments would fall within the period from 1 January to 30 June of the same year and the prescribed interest rate remains the same throughout this period. The last cash rate published before 1 January 2023 was 3.1% on 7 December 2022 (as shown on the Reserve Bank of Australia website). Rule 10.17(a) of the Rules provides that the interest rate is 6% more than the cash rate. Therefore, I find that the applicable interest rate for this period is 9.1%.
The parties agree that the first four parts of the $950,000 were paid as follows:
(a)$100 on 4 April 2023;
(b)$99,900 on 5 April 2023;
(c)$500,000 on 12 April 2023; and
(d)$100,000 on 6 June 2023.
There is a dispute regarding the date of the final payment of $250,000. The applicant says this was paid on 26 June 2023 (see applicant’s affidavit filed 9 August 2023, page 4). The respondent says that this payment was made on 20 June 2023 (see respondent’s affidavit filed 15 August 2023). In his affidavit filed 21 July 2023, the respondent includes a C Bank receipt dated 23 June 2023 (which appears to be a bank teller’s receipt) showing a bank transfer for the amount of $250,000. The applicant has provided evidence that she received the deposit on 23 June 2023. I therefore proceed on the basis that the date of the final payment is 23 June 2023.
The above payments for the $950,000 were paid late in five parts, resulting in the necessity for simple interest calculations at 9.1% that take account of each part payment received by the applicant. These amounts are as follows:
(a)The whole of the payment due on 10 March 2023 was outstanding until the $100 payment on 4 April 2023, being a period of 25 days. Interest on the total sum or $950,000 at 9.1% per annum for 25 days is $5,921.23;
(b)A payment of $100 was made 4 April 2023 reducing the balance payable to $949,900. Interest on the remaining sum of $949,900 at 9.1% per annum for that one day is $236.82;
(c)A payment of $99,900 was made 5 April 2023, reducing the balance payable to $850,000. Interest on the sum of $850,000 at 9.1% per annum for the period of seven days between 5 April 2023 to 11 April 2023 is $1,483.42;
(d)A payment of $500,000 was made 12 April 2023, reducing the balance payable to $350,000. Interest on the sum of $350,000 at 9.1% per annum for the period of 54 days between 12 April 2023 to 5 June 2023 is $4,712.05; and
(e)A payment of $100,000 was made on 6 June 2023, reducing the balance payable to $250,000. Interest on the sum of $250,000 at 9.1% for the period of 16 days between 6 June 2023 to 22 June 2023 is $997.26.
The final payment of $250,000 was received on 23 June 2023, reducing the balance to nil.
Total interest for the late payment of $950,000, pursuant to Order 32.2, is therefore $13,350.78.
The combined sum of the interest of $140.75 and $13,350.78 is $13,491.53.
I therefore make orders that the respondent pay the applicant interest in the sum of $13,491.53 within 14 days.
I certify that the preceding twenty-five (25) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Riethmuller. Associate:
Dated: 20 October 2023
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