Lacey and Lacey (No.2)

[2016] FCCA 1719

FEDERAL CIRCUIT COURT OF AUSTRALIA

LACEY & LACEY (No.2) [2016] FCCA 1719

Catchwords:
FAMILY LAW – Property – Application by the wife for an order that the husband pay interest on the sum of $1m from 27 February 2016 to 6 June 2016 – application by the wife for costs.

Legislation:

Family Law Act (Cth) 1975), ss.117, 117B

Applicant: MS LACEY

Respondent: MR LACEY

File Number: NCC 1128 of 2011

Judgment of: Judge Terry

Hearing date: 6 July 2016

Date of Last Submission: 6 July 2016

Delivered at: Newcastle

Delivered on: 11 July 2016

REPRESENTATION

Counsel for the Applicant: Mr Weightman

Solicitors for the Applicant: Bell & Johnson Solicitors

Counsel for the Respondent: Mr Graham

Solicitors for the Respondent: Palmers Solicitors

ORDERS

1. Pursuant to s.117B(1) Family Law Act the husband shall pay interest on the principal sum of $1,000,000.00 from 27 February 2016 to 6 June 2016 fixed in the sum of $22,076.50 with such sum to be paid to the wife by 4.00pm on 8 August 2016.

2. The husband shall pay the wife’s costs of and incidental to the enforcement application filed on 13 May 2015 fixed in the sum of $6,137.50 and this sum shall also be paid to the wife by 4.00pm on 8 August 2016.

IT IS NOTED that publication of this judgment under the pseudonym Lacey & Lacey (No.2) is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT NEWCASTLE

NCC 1128 of 2011

MS LACEY

Applicant

And

MR LACEY

Respondent

REASONS FOR JUDGMENT

Introduction

1. The wife seeks the following orders:

   a)That the husband pay her $22,076.50 interest on the principal sum of $1m which I ordered on 29 January 2016 be paid within 28 days. The money was not paid until 6 June 2016.

   b)That the husband pay costs of and incidental to her enforcement application filed on 13 May 2016 fixed at $6,137.50.

2. The husband seeks dismissal of these applications and an order that the wife pay his costs of and incidental to the enforcement application.

Background

1. On 16 January 2016 I determined that the husband should pay the wife $1m by way of interim property settlement.

2. I adjourned the matter to 29 January 2016 to hear submissions about the form of the order and after hearing submissions I made the following orders and notation:

   1) Pursuant to section 79 of the Family Law Act 1975, the Respondent pay to the Applicant by way of further interim property settlement the sum of one million dollars ($1,000,000.00).

   2)     In performance of Order 1, the Respondent shall pay the sum of $1,000,000.00 to the trust account of Bell & Johnson Solicitors within 28 days.

   3)     The Applicant undertakes that not less than $500,000.00 will remain in the trust account of Bell & Johnson Solicitors pending completion by the Applicant of the purchase of real property.

   4)     Within seven (7) days of exchange of the contract to purchase the real property the wife’s solicitor or conveyancer shall provide a copy of the contact of sale to the husband’s solicitor.

   5)     Within seven (7) days of completion of the sale the wife’s solicitor or conveyancer shall provide a copy of the settlement statement to the husband’s solicitor.

   6)     Upon the completion of the purchase of the Applicant’s investment property the Applicant is restrained from selling, mortgaging or otherwise encumbering such property without first procuring the Court’s direction permitting such dealing or alternatively, without first procuring the consent in writing of the Respondent for such dealing.

   7)     The wife is required to lodge Certificate of the Title for the property with her solicitors, Bell & Johnson upon settlement of the sale of the property and she shall thereafter not uplift the Certificate of Title without the written consent of the husband or Court Order.

   8)     The matter is adjourned to 9.30am on 24 February 2016 for further consideration.

   THE COURT NOTES THAT:

   A)    For the purpose of Order 3 if the purchase price of the Applicant’s real property is less than $500,000.00, the Applicant undertakes that any residue funds (i.e. $500,000 less purchase price and costs of and incidental to the purchase) will remain in the trust account of Bell & Johnson Lawyers.

3. The effect of Order 2 was that the husband was required to pay $1m by 27 February 2016.

4. On 22 February 2016 the husband lodged an appeal against the orders and also filed a stay application.

5. On 21 April 2016 I dismissed the stay application.

6. On 13 May 2016 the wife’s solicitor filed an enforcement application.

7. The husband subsequently withdrew his appeal and it was marked dismissed on 30 May 2016.

8. The husband paid the $1m on 6 June 2016 after the wife, at his insistence, signed an undertaking in terms of Order 3. The wife at all times maintained that this was not necessary but she eventually signed one to put an end to the dispute and achieve payment of the money.

9. It is the wife’s case that the husband should pay interest on the $1m from 27 February 2016 to 6 June 2016. The husband for a variety of reasons maintains that he should not be required to do so.

The applicable law

1. S. 117B of the Family Law Act provides as follows:

   (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).

2. The rate currently prescribed in the Family Law Rules is 8% and the wife submitted that she was entitled to interest and that this rate should apply. She calculated the interest from 27 February 2016 to 6 June 2016 to be $22,076.50 and the husband did not take issue with this calculation.

3. The husband’s counsel submitted that s.117B(2) gave the court a discretion to order that interest not be paid and that for a variety of reasons it should exercise its discretion in his favour and dismiss the wife’s application, or in the alternative order that interest should be paid for a lesser period of time.

4. The second proposition was not clearly articulated but is a natural consequence of some of the submissions made on the husband’s behalf if accepted in isolation.

The husband’s submissions

1. The husband’s Counsel submitted that the Counsel who appeared for the parties in the interim proceedings leading to the making of the 29 January 2016 order and later in connection with the stay application had agreed that no attempt would be made to enforce the order until the stay application was determined. He relied on the following evidence in an affidavit filed by the husband’s solicitor:

   Based upon an advice given to me by Mr Heazlewood of Counsel, I verily believe that, pending determination of the Husband’s Stay Application, the Wife agreed that no steps would be taken to enforce the interim payment of $1 million.[1]

   [1] Affidavit of Mr P filed on 24 June 2016.

2. The husband’s Counsel submitted that after the stay application was dismissed on 21 April 2016 the husband’s solicitor waited patiently for a signed undertaking by the wife to turn up because his interpretation of orders was that the husband was under no obligation to pay the money until the wife signed an undertaking in terms of Order 3.

3. When no undertaking turned up the husband’s solicitor began corresponding with the wife’s solicitors requesting and then pressing for the undertaking. The wife’s solicitor initially repeatedly refuted the claim that an undertaking was required but on 6 June 2016 the wife signed an undertaking and the money was paid the same day.

4. The husband’s Counsel submitted that the husband’s solicitor’s interpretation of the orders was correct and that the husband was under no obligation to pay the money until a separate undertaking was signed. He paid it forthwith upon the undertaking being provided and therefore no interest ever accrued.

5. The husband’s counsel finally submitted that even if the court formed the view that the husband’s solicitor was wrong and that a separate undertaking was not required it was a very simple thing for the wife to provide, and she should have simply provided it when it was requested.  By implication he submitted that the wife should bear the loss at least from the point the undertaking was requested because she was the person being unreasonable.

The wife’s submissions

1. The wife’s counsel did not seek to dispute that there was an agreement between counsel not to enforce the order pending the hearing of the stay application but said that this did not amount to an agreement that interest would be waived if the money was ultimately required to be paid.  

2. He submitted that nothing on the face of the orders required the wife to give a separate written undertaking in terms of Order 3 and nothing made payment of the $1m conditional on a separate undertaking being provided. The undertaking was given through counsel on 29 January 2016 and its existence was incorporated into the orders.

3. The fact that the wife finally gave the undertaking was not an admission that it was required but a practical step to resolve the matter. It was to her credit that she did so and it should not be used against her to deprive her of interest.

Discussion

1. There are a number of problems for the husband.

2. First, the undertaking to which the husband’s solicitor referred only applied to $500,000.00. Even if the husband’s solicitor’s argument about the need for an undertaking was correct it would only apply to $500,000.00. It would still be open to me to order that interest be paid on the remaining $500,000.00.

3. Second, the fact that the wife signed an undertaking on 6 June 2016 does not validate the husband’s argument. The wife’s agreement to sign the undertaking was akin to the action of a person mitigating their damages.

4. Third, there is nothing on the face of the orders which makes the payment of $1m conditional on the wife signing a separate undertaking. Orders 1 and 2 of the 29 January 2016 orders require the payment of $1m and the wife’s undertaking about what is to happen to $500,000.00 of the money is recorded on the face of the order in Order 3.

5. It was reiterated by wife’s counsel more than once during the proceedings on 29 January 2016 that “the wife is giving an undertaking” or words to that effect. The husband’s solicitor was aware of the proposed Order 3. He argued that the court should not be satisfied with an undertaking but should allow the husband to place a caveat on the real property but he did not submit on the day that if the court considered an undertaking sufficient then the court should require the wife to sign a separate document to this effect.

6. Fourth, although it does appear that there was an agreement between counsel that no enforcement proceedings would be commenced until the stay application had been dealt with, there was no agreement that interest would not ultimately be claimed. The husband always took his chances.

7. Fifth, the result of the husband not paying the money by the due date was that he continued to have the use of it with all that this entails, and this does not predispose me to relieve him of the responsibility to pay interest.

8. In my view he should be required to pay interest on the $1m from 27 February 2016. There was no dispute about the calculation of interest and I intend to order that the husband pay the amount of $22,076.50.

9. The husband’s counsel requested that in that event the husband be given 28 days to pay and the wife’s counsel did not object to that.

Costs

1. The wife’s counsel sought costs of and incidental to the enforcement application in the sum of $6,137.50. The costs are sought are in accordance with Schedule 1 of the Federal Circuit Court Rules.

2. Pursuant to s. 117 of the Family Law Act each party to proceedings under the Act is to bear their own costs but s. 117(2) provides that the court can make an order for costs if it considers that the circumstances of the case justify it doing so.

3. To determine whether a costs order should be made the court must have regard to the matters in s. 117(2A).

4. The first is the financial circumstances of the parties and nothing about this assists. The husband’s current income is not known to me but he has extensive assets and there was nothing to suggest that it would cause him hardship if he was ordered to pay costs.

5. When the interim property application was argued the wife was in receipt of Centrelink benefits and had more limited assets but she has now received the $1m and it will not cause her hardship if I refuse to make a costs order.

6. Neither party is in receipt of legal aid.

7. It was not suggested that there were any matters in connection with the way the parties had conducted the proceedings which were relevant to this costs application.

8. I must consider whether the proceedings have been necessitated by the failure of a party to comply with orders of the court and that is clearly the case here.

9. I must also consider whether one party has been wholly unsuccessful and that is also the case.

10. I must consider any offers of settlement but I was not informed of any offers relevant to the issue of whether interest was payable on the capital sum.

11. I must also consider any other relevant matter and it is to the wife’s credit that she eventually chose to sign the undertaking and put an end to the dispute about payment even though she considered that she was not legally obliged to do so. This mitigated not only the interest ultimately payable but also the wife’s costs in respect of this particular issue.

12. The husband has the capacity to meet the costs order, the proceedings were necessitated by the failure of the husband to comply with the order, the husband was wholly unsuccessful and the wife behaved very reasonably in an endeavour to put an end to the dispute. In all the circumstances of the case it is entirely appropriate that the husband be ordered to pay the wife’s costs of and incidental to the enforcement application fixed at $6,137.50.

13. I will give the husband 28 days to pay this amount also.

I certify that the preceding forty five (45) paragraphs are a true copy of the reasons for judgment of Judge Terry

Date:         11 July 2016