Lovine and Conner (No 2)

[2012] FamCA 687

FAMILY COURT OF AUSTRALIA

LOVINE & CONNER (NO. 2) [2012] FamCA 687

FAMILY LAW – ENFORCEMENT - Interpretation of orders – application that the Court is functus officio dismissed

Family Law Act 1975 (Cth)

Cicolini and Cicolini (1998) Fam CA 15 unreported
Langford and Coleman (1993) FLC 92-346

APPLICANT: Mr Lovine

RESPONDENT: Ms Connor

FILE NUMBER: MLC 9419 of 2009

DATE DELIVERED: 29 March 2012

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Cronin J

HEARING DATE: 29 March 2012

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr St John SC

SOLICITOR FOR THE APPLICANT: Taussig Cherrie Fildes

COUNSEL FOR THE RESPONDENT: Ms Vohra

SOLICITOR FOR THE RESPONDENT: Lander & Rogers

Orders

1. That the husband’s application that the Court is functus officio is refused.

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

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLC 9419  of 2009

Mr Lovine

Applicant

And

Ms Connor

Respondent

REASONS FOR JUDGMENT

1. On 29 March 2012, I rejected a submission on an enforcement application that the Court had no jurisdiction to make orders because it was functus officio. These are my written reasons.

2. The dispute between the husband and wife concerned outstanding invoices given to the wife by a builder who was constructing a house in R Suburb for the parties. That house was an asset in their property dispute.

3. The wife, by amended response to an application in a case brought by the husband and which she filed on 27 March 2012, sought orders that the husband pay all outstanding invoices “in respect of the construction of the property” at R Suburb.  The wife maintained that the husband’s obligation arose by virtue of paragraphs 17 and 18 of orders made on 5 May 2010.  On its face, this was an enforcement application.

4. The May 2010 orders required the construction to proceed pending the parties’ property dispute and for the production of a certificate of occupancy “as soon as practicable and in any event by no later than 31 October 2010”.

5. Relevantly, the orders provided for the husband to pay for all invoices provided by the builder as they fell due. The husband had some control because the works had to be undertaken with his approval. He could not unreasonably withhold his approval but the limit for the invoices was $100,000.

6. The orders also provided that if the certificate of occupancy was not provided within the time frame, the husband could elect to appoint a named builder to complete the task. He therefore had control.

7. Along with the construction, the property proceedings continued towards a trial.

8. Subsequent to the orders of May 2010, the husband paid various invoices although the construction did not advance significantly.  The parties then proceeded to the final hearing which commenced before Mushin J on 25 October 2010.  The hearing was finished in February 2011 with the reserving of judgment. 

9. Significantly, for the purposes of that final hearing, a valuation had been undertaken of the R Suburb property which had two prominent features.  The first was that it was said that upon completion of the construction, the property would be worth $1.8 million.  The second was that the valuer estimated that the amount required to complete the construction would be $90,000.  Both of those amounts appear in the judgment of his Honour as agreed values. 

10. In due course, the defended property proceedings were heard by Mushin J. His Honour ordered that the husband pay the wife $3.2 million and then ordered:

    16.Until the payment the husband continue to pay or cause to be paid to the wife all amounts due to her pursuant to the Orders of the Court made on 5 May 2010, at which time all prior orders be and are hereby discharged.

11. The husband paid the $3.2 million. The initial dispute therefore was whether, upon the payment of the $3.2 million, the automatic discharge of the May 2010 orders meant that anything outstanding was the responsibility of the husband or the wife. Was the “discharge” ab initio?

12. Ultimately, this dispute was about a sum of $45,000 which was modest in a pool of assets in the substantive proceedings which exceeded $13 million.

13. The evidence at trial was that the estimate of the cost was $90,000. Despite as has transpired, it was much higher, neither party disabused his Honour of that fact. Mushin J ordered a capitalisation of any liability of the husband at $90,000.  That is clear from the reasons for judgment. Mushin J divided the parties’ assets on a percentage basis. The net pool was not agreed but there were items within that pool that were common ground as to value. His Honour made rulings about the contentious items. His Honour reserved judgment between February 2011 and June 2011.

14. Subsequent to the hearing, the construction continued. The husband paid invoices in the vicinity of $170,000.  To get the project (according to the wife) to the stage where a certificate of occupancy could issue, $45,000 was to be paid to the builder. Hence, the $45,000 dispute.

15. The dispute in this case is therefore about the meaning of the obligations under the orders when read either separately or collectively.

16. When the parties were before the Court on other issues on 29 March 2012, it was the stand off on this matter that was argued.  Sensibly, the parties compromised their respective positions at the end of a long day but in reality, that compromise arose out of a ruling upon which the following expands.

17. Counsel for the husband argued that the Court was functus officio because of paragraph 16 of the Mushin J orders.  She argued that the whole debt was included in the orders and as the $3.2 million had been paid, paragraph 16 discharged prior orders.

18. Senior counsel for the wife argued that to take the position adopted by the husband was wrong in law and that the Court was not able to infer from the orders of Mushin J that there was a discharge of arrears (if any) under any previous order.

19. In respect of whether the payment of $3.2 million by the husband discharged his obligations, paragraph 16 of the orders must be read as meaning “subject to any accrued obligations still outstanding” unless it is said otherwise.  That is because the liability of the husband arising out of the May 2010 orders was an unquantified and ongoing liability which was continuing to accrue.  If arrears under that order had accrued, the subsequent discharge of the order must be interpreted as simply stopping the liability from running unless it says otherwise.  I do not interpret paragraph 16 of the orders of 10 June 2011 to mean that any outstanding payments under the May orders were discharged.  That was the wife’s position but senior counsel was not able to point to any authority to that effect.

20. Once obligations of a financial nature are embodied in consent orders, the Court must look to the execution of the orders.  The Court should not take into account what agreement might or might not have been reached between the parties leading up to the orders or try to read what occurred leading up to those orders unless there is patent ambiguity or obscurity.(see Langford and Coleman (1993) FLC 92-346). Accordingly, the Court must interpret its orders as best it can on the face of the document.

21. In my view, the very first question must be answered on the basis that the orders cannot discharge an accrued liability unless they specifically say so. That can be done in two ways. First, the orders can refer to a discharge ab initio or secondly, make reference to the accrued and unpaid obligations. Neither of those situations occurred here. The accrued liability must therefore remain.

22. If the Court is not being asked to interpret its orders but to exercise its discretion as to whether it should enforce them, it is permissible to look at the reasons why the orders were made (see the Full Court decision of Cicolini and Cicolini (1998) Fam CA 15 unreported). That became unnecessary to consider further here.

23. After discussion between counsel, a compromise was reached and orders were made.

I certify that the preceding twenty three (23) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin delivered on 29 March 2012.

Associate: 

Date:  17 August 2012