McGrath and McGrath and Ors
[2018] FamCA 667
•31 August 2018
FAMILY COURT OF AUSTRALIA
| MCGRATH & MCGRATH & ORS | [2018] FamCA 667 |
| FAMILY LAW – CONSENT ORDERS – enforcement application where the construction of a consent order was in issue – jurisdiction - 79A – where parties have agreed the wording of an order in the event that either party succeeds – where consent order was ambiguous – final order varied. FAMILY LAW – WASTED COSTS –issue of whether legal practitioners ought to be restrained from charging costs for the proceedings may be considered subject to practitioners being accorded procedural fairness. |
Family Law Act 1975 (Cth)
| DJL v The Central Authority (2000) FLC 93-105 [25] Shout Rocks Cafes v the City of Port Philip (2018) VSC 120 |
| APPLICANT: | Ms McGrath |
| RESPONDENT: | Mr McGrath |
| SECOND RESPONDENT: | McGrath Pty Ltd |
| THIRD RESPONDENT | B Pty Ltd |
| FOURTH RESPONDENT | C Pty Ltd |
| FILE NUMBER: | MLC | 814 | of | 2016 |
| DATE DELIVERED: | 31 August 2018 |
| PLACE DELIVERED: | Melbourne |
| PLACE HEARD: | Melbourne |
| JUDGMENT OF: | Bennett J |
| HEARING DATE: | 27 April 2018 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Glick QC with Mr Sweeney |
| SOLICITOR FOR THE APPLICANT: | Lander & Rogers |
| COUNSEL FOR THE RESPONDENT: | Mr T. North SC with Mr Wodak |
| SOLICITOR FOR THE RESPONDENT: | Foster Nicholson |
Orders
Paragraph 16(b) of the Order made 1 September 2017 be set side and in lieu thereof be inserted:
The parties do all acts and things necessary to ensure that with respect to the personal Notices of Assessment issued to the husband and the wife for each of the years 2015, 2016 and 2017, the husband and the wife cause to be paid such amount (if any) of the taxation liability described as “outcome of this notice” in each Notice of Assessment that was outstanding as at 1 September 2017 in the proportions:
(a) 55 per cent to the husband; and
(b) 45 per cent to the wife.
I adjourn the issue of costs to 5 October 2018 at 10.00 a.m. or such other agreed date as is convenient to counsel and can be settled with my Associate.
The applications of the parties be otherwise dismissed save as to costs.
Note: The form of the order is subject to the entry of the order in the Court’s records.
IT IS NOTED that publication of this judgment by this Court under the pseudonym McGrath & McGrath has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).
| FAMILY COURT OF AUSTRALIA AT MELBOURNE |
FILE NUMBER: MLC 814 of 2016
| Ms McGrath |
Applicant
And
| Mr McGrath |
Respondent
And
McGrath Pty Ltd
Second Respondent
And
B Pty Ltd
Third Respondent
And
C Pty Ltd
Fourth Respondent
REASONS FOR JUDGMENT
Introduction
This matter comes before me as contested enforcement proceedings in relation to paragraph 16(b) in the suite of orders[1] made by me on 1 September 2017 (“the Order”) which resolved property proceedings between the husband and the wife. The minute of order which was handed up, and eventually made, runs to 50 paragraphs and includes three extensive notations. The Order was made on the application of the wife, without opposition by the husband, as opposed to being made “by consent”.
[1] Paragraphs 7 and 11 of those orders were amended by consent of the parties on 6 October 2017
The proceedings which are now before me were initiated by the wife’s application in a case filed on 13 December 2017, which effectively sought enforcement of one aspect[2] of the final order. The husband responded to that on 20 December 2017. The wife filed and served an amended application in a case on 26 February 2018. The issue of construction arises as part of the enforcement application.
[2] The wife also sought orders in relation to the construction of orders that dealt with superannuation entitlements, but Mr Glick QC, for the wife, asked that I treat that part of her application as withdrawn as the parties were seeking to resolve the issue without Court intervention.
There is no suggestion that whatever is ultimately decided to be the correct construction of the Order, will not be complied with.
Neither party sought by application filed with the court that the Order or any part of it be set aside pursuant to s.79A of the Act.
At the hearing, the parties agreed on what orders would be appropriate in the event that either case was to succeed. Through counsel, they agreed that order to be made in the event that the wife’s construction is accepted (which it is) would be that which was tendered and marked Exhibit “C1”. For ease of reference, it reads as follows:-
Order 16(b) of the orders of this Court made 1 September 2017 be construed as follows:
“With respect to the personal Notices of Assessment issued to the husband and the wife for each of the years 2015, 2016 and 2017, the husband and the wife cause to be paid such amount (if any) of the taxation liability described as “outcome of this notice’ in each Notice of Assessment that was outstanding as at 1 September 2017 in the proportions:
a) 55 per cent to the husband; and
b) 45 per cent to the wife.
The minute of order to be made in the event that the husband’s construction was accepted (which it is not) was marked Exhibit “C2”. It reads as follows:-
That 16(b) of the orders made on 1 September 2017 be construed so that the husband is liable for 55 per cent, and the wife 45 per cent, of the total amount of tax assessed for the husband and the wife for the years 2015, 2016 and 2017 (being the amount shown on each assessment as the “outcome of this notice” plus any amounts shown as PAYG instalments plus any amounts shown as PAYG withholding).
I direct that Exhibits “C1” and “C2” remain on the Court file.
Jurisdiction to make either order sought
I am functus officio in relation to property settlement proceedings. I can enforce, and in that process interpret, paragraph 16(b) of the Order. Alternatively, the parties can invoke s79A. Here the formal application is for enforcement but, if I conclude (as I do) that the paragraph in question cannot be interpreted because it is ambiguous, the situation cannot be remedied by enforcement. As was observed by the plurality of the High Court in DJL v The Central Authority (2000) FLC 93-105 [25], this is not a Court of inherent jurisdiction.
My impression is that the initial position of each party was that paragraph 16(b) in its current form is capable of supporting the result for which they contend. However, by the provision to me of Exhibits “C1” and “C2” after a short adjournment, I take it that their alternative, if not preferred, applications are for paragraph 16(b) to be varied by deleting it and replacing it with another paragraph which unambiguously and self-evidently provides for how the income taxation of the parties over the specified period is to be attributed between the parties. Accordingly, I have taken Exhibits “C1” and “C2”, as each party’s oral application pursuant to s79A(1)(a) for paragraph 16(b) of the Order to be varied on the basis that there has been a miscarriage of justice by reason of “any other circumstance”. The “other circumstance” is the fact that paragraph 16(b) of the Order is not capable of being implemented and is thus inhibiting the final alteration of property interests in terms proposed by the wife, unopposed by the husband and ordered by the Court.
For certain, neither party is proposing that I set aside all or part of the Order and I proceed to hear a full blown s79 case. However, unless I am satisfied (which I am not) that the existing 16(b) can be enforced in its current form, I am requested to exercise my discretion under s79(1)(a) to vary paragraph 16(b) so that it reads as either “C1” or “C2”.
If I was to set aside the Order or paragraph 16(b) pursuant to s79A(1), my discretion to make a substitute order would be a discretion to be exercised in accordance with s79. However, my power to vary (as opposed to set aside) appears to attract a discretion at large. Within that discretion at large, counsel could (and I think do) ask me to make an order in the terms of Exhibit “C1” or “C2”.
If I am wrong about my discretion being at large and unconfined by s79, the parties are submitting that I exercise the s 79 discretion in terms of Exhibits “C1” or “C2”. Accordingly, each must concede that a variation of the Order in terms of Exhibits “C1” or “C2” would be “appropriate” within the meaning of s79(1) and I have already satisfied myself that it is just and equitable for there to be a property order pursuant to s79.
Documents relied upon
The documents relied upon by the wife were:
(a) her outline of submissions;[3]
(b) the affidavit of the wife sworn on 8 December 2017;[4]
(c) the affidavit of the wife sworn 23 February 2018;[5] and
(d) the affidavit of the wife sworn 28 March 2018.[6]
[3] Folio 110
[4] Folio 99
[5] Folio 105
[6] Folio 109
The documents relied upon by the husband were as follows:
(a) his counsel’s outline of submissions;[7]
(b) the husband’s affidavit sworn 14 March 2018;[8]
(c) the husband’s affidavit sworn 18 April 2018, which was filed with leave and served as sealed.[9]
[7] Folio 113
[8] Folio 106
[9] Folio 114
The matter proceeded by way of submissions. Towards the end of the submissions, I was informed that there had been objections to the affidavit material raised by each party and that all objections were, in fact, allowed. I was handed the objections, and the husband’s objections to the wife’s evidence I will mark exhibit “C3”, and the objections of the wife to the husband’s evidence I will mark exhibit “C4”. I direct that both remain on the Court file.
The parties were represented by senior and junior counsel. It would have been desirable for the practitioners to have arranged for redacted copies of the affidavits to be made available to me before the commencement of the case or, at the very latest, during the running of the case. As it happened, I was required to request that they provide those redacted versions following the conclusion of the case, and it is to those documents that I have regard in reaching my determination.[10]
[10] The redacted documents were filed or received by chambers on 2 May 2018
Background
By way of brief background, the parties were married in 1994 and separated, on the husband’s version in 2011 or 2012 and, on the wife’s version, in 2016. The trial of this matter was set down for hearing before me on 28 August 2017 and at trial the parties were represented by experienced solicitors and counsel. Mr Geddes of Her Majesty’s Counsel and Mr Crofts appeared on behalf of the husband and Mr Richardson of Her Majesty’s Counsel and Mr Sweeney appeared on behalf of the wife. The asset pool was said to be in the vicinity of approximately $70 million to $90 million, as reflected in the evidence of a single expert witness. The matter was stood down for extensive negotiations and finally resolved in the terms of the final order on 1 September 2017.
I accepted an outline of Mr Richardson QC for the wife of the settlement arrived at by the parties and Mr Geddes QC (for the husband) did not oppose or contradict that outline. I found that it was just and equitable for there to be an alteration of property interests within the meaning of s79(2) of the Act. I found that the orders sought were appropriate within the meaning of s79(1) of the Act. I made orders in the terms sought by the wife and not opposed by the husband (“the Order”).
Paragraph 16(b) of the Order provided as follows:-
The husband and the wife do all acts and things required to cause:
…
(b) the payment of the net total personal taxation assessments for the 2015, 2016 and 2017 (after allowance for any amounts prepaid prior to the date of these orders) of the husband and the wife, in the proportions of :-
(i) 55 per cent by the husband; and
(ii) 45 per cent by the wife.
The matter that I am required to determine is the proper construction of paragraph 16(b) of the Order. In essence, the question is whether:-
(a) the husband is to meet 55 per cent and the wife 45 per cent of the parties’ personal income taxation for the period 2015 to 2017 financial years as remained unpaid as at 1 September 2017. This is the outcome for which the wife contends; or,
(b) the husband is to meet 55 per cent and the wife 45 per cent of the entire net total personal taxation assessments of the husband and the wife for the 2015 to 2017 financial years, regardless of what had been paid. This is the outcome for which the husband contends.
Onus and burden of proof
The wife has the onus of proving the order which she seeks to enforce. Within that construct, each party bears the onus of satisfying the court that the construction for which they contend is the appropriate construction.
The burden of proof is to a balance of probabilities.[11]
[11]Evidence Act 1995 (Cth) s 140
Findings of fact
In these reasons a statement of fact is a finding of fact.
Taxation assessments
Noting that the income tax payable for the 2016/2017 year has not yet been assessed, the tax assessed for the relevant years for the husband and the wife is as follows:
Year
Husband
Wife
2015
1,664,322.64
372,668.05
2016
1,036,118.98
564,609.97
2017
Not yet assessed
Not yet assessed
Total
2,700,341.62
937,278.02
Combined Total
3,637,619.64
The husband has asserted that there is an amendment required to his 2016 income tax return so as to include the value of certain options as assessable income. This required amendment is not conceded by the wife. It is common ground that I can disregard this because there is no evidence before me at the moment and no pending controversy.
The construction of consent orders
The authorities are not well-settled in relation to whether a Court can have regard to surrounding circumstances in order to determine the construction of a consent order where the order itself is not ambiguous. The parties made opposing submissions about how I ought to approach the task of construing the orders.
The husband, through his counsel, Mr North SC, submits that I should not have regard to the surrounding circumstances unless I find the order is ambiguous,[12] and in his submission it is not. The wife submits that it is not necessary that I find the order to be ambiguous to have regard to the surrounding circumstances, but in any event, the order does contain some ambiguity so I am able to have regard to the surrounding circumstances.
[12] I note that the husband’s written submissions say otherwise
In their written submissions, the parties both referred me to the Le Poer Trench J’s decision in Apoda & Apoda (2013) FamCA 218 wherein his Honour considered the case law in relation to the construction of court orders. His Honour observed:[13]
[13]Apoda & Apoda (2013) FamCA 218, [35]-[46]
The interpretation of Court orders
35.Earlier authorities on the topic of the interpretation of Court orders suggested that a Court would only look to the reasons for judgment attaching to an order in the event that there was some ambiguity in the language of the order itself. This was the position adopted by Southwell J in McNair Anderson Associates Pty Ltd v Hinch who noted:
One must first look at the order and decide whether it is clear and unambiguous in its terms. If it is, then it is unnecessary to look beyond it in order to aid construction.
36.This view accorded with the well-known approach to the interpretation of contracts enunciated by the High Court in Codelfa Construction Pty Ltd v State Rail Authority (NSW) (“Codelfa”) per Mason J. On that approach, reference to extrinsic evidence would only be made where a contractual term was unclear or ambiguous. More recently, however, the High Court has suggested that ambiguity is no longer a pre-requisite for reference to extrinsic material when construing the terms of a contract: Pacific Carriers Ltd v BNP Paribas.
37.The common law approach to the interpretation of Court orders has evolved similarly to the law of contractual interpretation, such that there is now a line of authority in support of the position that recourse should be had to the reasons for judgment and extrinsic materials, whether or not the order is framed in ambiguous language: Yates Property Corporation Pty Ltd v Boland and Ors (“Yates”) per Drummond, Sundberg and Finkelstein JJ; applied in Re Tower Software Engineering Pty Ltd; McCann and Ors v Pendant Software Pty Ltd and Anor ; per Finkelstein J. In Yates, Drummond J found that regard should be had to the reasons even where the language of an order is unambiguous and stated as follows:
It is impermissible, in my view, as well as being quite unrealistic, to attempt to read, that is, to understand, an order in isolation from the context of the reasons for it being made.
Two lines of authority
38.In Athens and Anor v Randwick City Council (“Athens”), Santow J discussed two lines of authority that have emerged with respect to whether or not reasons for judgment and extrinsic material should be consulted when interpreting the orders of a Court. His Honour described these two approaches as “representing weak and strong variants of the same principal”.
39.The “weak variant”, according to his Honour, is the line of authority suggesting that the reasons for judgment should not be examined except where an order is ambiguous. The “strong variant”, the approach preferred by his Honour, was the line of authority which suggested that: the meaning of words in an order should in an appropriate case be considered by reference to the reasons for judgment, themselves finding their context in the overall proceedings: Athens, per Allsop J.
40.His Honour proceeded to discuss the relationship between orders and judgments, suggesting that, in some instances, it may even be necessary to consider these in the context of the proceedings as a whole. His Honour at [136] noted the following:
The making of orders is not always a mechanical extrapolation from the originating judgment. There may be room for a range of possible orders, and possible meanings of those orders, which would conform. Then the wider context of the proceedings can have an important bearing, particularly the pleadings which should identify the orders sought. . . The judgment may need to be understood by reference to how the parties put their cases.
41.The Family Court of Australia has adopted the “strong variant” preferred by Allsop J. In the Full Court judgment of Rand v Rand, Bryant CJ, Coleman and Boland JJ stated the following:
In Owston Nominees No 2 Pty Ltd v Branir Pty Ltd, Allsop J was concerned with an order which was ambiguous. His Honour referred to the judgment of Drummond J in Yates Property Corp Pty Ltd v Boland in which Drummond J said:
... [i]t is impermissible, ... as well as being quite unrealistic, to attempt to read, that is, to understand, an order in isolation from the context of the reasons for it being made. The Full Court of the Supreme Court of Queensland, in Australian Energy Ltd v Lennard Oil NL (No 2) held that, in interpreting an order of a court framed in unambiguous language, regard should still be had to the reasons given by the court for making the order because they form part of a context in which the order was made. The case for referring to the reasons for an order where there is any suggestion that order may be expressed in unclear terms is a fortiori.
Allsop J observed that “[n]evertheless, it is plain that parties should not have to examine the entrails of a long proceeding to understand their rights and obligations (including potential liability for contempt)”. Having concluded that the order previously made by another Federal Court judge was ambiguous, Allsop J recorded that the orders lacked “precision and clarity” and suggested that court orders “be clear and should reflect, without giving pause for thought as far as that is possible, what was intended by the court”. The earlier orders did not reflect “with precision” what the judge who made them had intended, and were able to be varied by Allsop J pursuant to the remedy of a “construction summons”.
Consent orders
42.With respect to consent orders in particular, in Kirkpatrick v Kotis (“Kirkpatrick”) Campbell J discussed by reference to a string of authorities the method in which such orders should be construed. His Honour at [45] concluded that:
authority and principle both favour the view that surrounding circumstances can be used to construe a consent order. The type of surrounding circumstances which can be used are those which can be used to construe a contract, in accordance with the principles laid down by Mason J in Codelfa Construction Pty Ltd v State Rail Authority of NSW .
43.His Honour provided further clarity as to the “surrounding circumstances” that can be used as an aid to construction, describing these as:
facts known to all parties to the consent order. . . the very thing that a person trying to understand and obey the order would take into account.
Subjective intention
44.In accordance with the principles for construing contracts laid down in Codelfa, which received the endorsement of Campbell J in Kirkpatrick, the subjective intention of the parties are not to be taken into account. As Mason J explained in Codelfa:
We do not take into account the actual intentions of the parties and for the very good reason that an investigation of those matters would not only be time consuming but it would also be unrewarding as it would tend to give too much weight to these factors at the expense of the actual language of the written contract.
45.In the decision in Hughes and Hughes Macmillan J concluded she could not look to the subjective intention of parties at the time the order was made in aid of interpreting the order.
Discussion and Determination
46.Adopting the approach dictated by the above extrapolation of case law, I consider that the exercise to be conducted consists of the following:
a) Determine if there is any ambiguity created by the orders.
b) Whether there be ambiguity or not, identify the “surrounding circumstances” (other than the subjective intention of the parties) of the making of the orders and what has occurred thereafter to create the dispute, so far as those circumstances are such as might be available to assist in the construction of a contract.
c) Reach a conclusion in relation to the construction.
(footnotes omitted)
Mr Glick QC, in his oral submissions, also referred me to a Victorian Supreme Court decision of Forrest J in Shout Rocks Cafes v the City of Port Philip where his Honour said:[14]
14. Although not entirely clear, in my opinion, there is authority for the proposition that in construing consent orders, a Court may have regard to evidence of the circumstances surrounding the making of such orders. The circumstances which can be considered are those that would be ‘used to construct a contract’. In Rogers v Wentworth, for example, regard was had to an affidavit in support to determine that ‘caveat’ as used in consent orders meant one caveat in particular rather than ‘caveat’ more generally. Mahoney JA reasoned ‘it would not be contemplated that the consent order would be construed differently from the compromise which it was to carry into effect’. While it can be accepted that the ‘ordinary rules’ in relation to the construction of contracts and orders may have been the subject of change, at the very least, where the language of the instrument is susceptible to two meanings, evidence of surrounding circumstances is admissible.
15. Although there are examples of this Court in the past refraining from looking beyond the orders in question to determine their meaning, these cases relate to applications for contempt. Consequently, they have focused particularly on the question of whether the orders are ‘clear and unambiguous’. In Livingstone v Ng,however, Cavanough J noted that outside the context of contempt, courts appeared ‘relatively free’ to take into account extrinsic material to resolve ambiguities.
16. I am satisfied that I should follow the decisions of intermediate appellate Courts, which entitle this Court to have regard to the circumstances surrounding the making of the consent orders in giving effect to them.
17. If, contrary to this view, it is necessary to identify a situation in which an expression used in a consent order is capable of two meanings, then I am satisfied such a situation occurs here…(footnotes omitted)
[14] (2018) VSC 120.
I agree with his Honour, Forrest J’s approach to the task of construction.
As a matter of legal principle, I do not accept that it is necessary for order 16(b) to be ambiguous in order to allow my consideration of the circumstances surrounding the making of the consent order. However, I do find that order 16(b) is not “clear and unambiguous”. In particular, it is unclear what “net total personal taxation assessments” means. It is capable of meaning the amount of total personal taxation for those years still outstanding and to be paid as at the date of the orders, the construction urged by the wife. It could mean, the outstanding amount due to be paid after a notice of assessment has been made, ie. the ‘result’ or ‘outcome’ of a notice of assessment for each year or it could mean the construction for which the husband contends, which I will explain later in these reasons. In my view, the inclusion of the parenthesis “(after allowance for any amounts prepaid prior to the date of these orders)” does not cure the ambiguity.
Avoiding an unjust or absurd result
Apart from considering the surrounding circumstances of these orders, there are other settled rules of construction to which I must adhere. In this case, the husband submitted that the wife’s construction would lead to an absurd result and the wife submitted that the husband’s construction would lead to an unjust result. Each party submitted that the Court should adopt their preferred construction to avoid such a result. Each submitted that the injustice or absurdity that would result is that they would pay more of the other’s tax liability than they ought. That is not something I can determine in this case. The parties negotiated an outcome at the door of the court, albeit over a number of days, on terms intended to bring their financial relationship with one another to an end; in doing so, they drafted orders that rearranged the ownership of assets and responsibility for debts that had been jointly or solely held or owed by the parties or a corporate entity they controlled during the marriage. As the husband’s submissions say “a complicated outcome, such as the one represented by the consent orders, inevitably involves ‘give and take’.”[15] In a case where there was no agreement between the parties as to the value of the asset pool but it was estimated to be between $70 and $90 million; it would be inappropriate to consider the impact of a particular order which on either party’s case dealt with less than $3.7 million (between 4.1 per cent and 5.3 per cent of the pool), where each party would presumably hold a subjective view as to how that order, fit in with the suite of other orders dealing with their property. It is settled law that I can only have regard to the objective, not the subjective, intentions of the parties in this regard. I will return to the various submissions made by the parties about the injustice or absurdity of the other’s construction of the order below.
[15] Husband’s outline of submissions filed 18 April 2018, [44]
Objective circumstances known to both parties surrounding the making of the orders
The parties agreed that if surrounding circumstances are to be taken into account, I may take into account the following objective facts:
a)The husband’s personal income tax return for the financial year ended 30 June 2015 was assessed the sum of $1,335,885.60 in July 2016.
b)Pursuant to an order of the court made 20 January 2017, the sum of $3,000,000 was drawn down by the husband from the mortgage secured on the title to D Street, Suburb E, to meet taxation liabilities then due for the parties for the financial year ended 30 June 2015;
c)On 17 February 2017, the husband paid the following amounts $836,965.60, $14,642.61, $62,956.90 (totalling $914,565.11) towards his personal taxation liability for the 2015 financial year leaving nothing outstanding in respect of his liability for 2015;
d)The wife’s personal taxation liabilities for the 2015 and 2016 financial years were not assessed until July 2017;
e)Prior to 1 September 2017, neither party paid any part of the wife’s outstanding 2015 or 2016 personal taxation liability after the notice of assessment was issued in July 2017;
f)As at 1 September 2017, the parties were aware of the liability arising from:
i)The husband’s personal taxation for the 2015 financial year;
ii)The husband’s personal taxation for the 2016 financial year;
iii)The wife’s personal taxation for the 2015 financial year; and
iv)The wife’s personal taxation for the 2016 financial year;
g)As at 1 September 2017, the parties were not aware of either the husband’s or the wife’s personal taxation liability for the 2017 financial year; and
h)As at 1 September 2017, the only personal taxation liability of either that had been fully paid was the husband’s personal taxation liability for the 2015 financial year.
Another objective fact emphasised by the husband, is that the husband and the wife had both made payments towards their tax liabilities for the 2015 and 2016 financial years through PAYG payments. I do not understand that to be disputed by the wife. The amount of PAYG paid as at the date of the notices of assessment were as follows:[16]
[16] Extracted from notices of assessment annexed to the husband’s affidavit sworn 14 March 2018
Husband Wife PAYG for 2015 financial year $328,437.00 $9,999.00 PAYG for 2016 financial year $126,252.00 (in instalments)
$172,794.00
Total for 2016: $299,046.00$149,999.00 Total PAYG for 2015 and 2016 financial years $627,483 $159,998
In the wife’s written submissions, it was submitted that another objective fact was that: “the amounts withdrawn against the mortgage [on D Street, Suburb E] were funds that would otherwise have been available for adjustment, in part, to the wife at the trial.” Another matter submitted by Mr Glick orally, was that “the husband took money out of the pool for the purpose of paying his tax and the wife’s tax, paid his own tax.” In respect of both statements, I agree with the submission of Mr North that that is an unfair characterisation. I have already indicated that D Street, Suburb E was encumbered in accordance with an order made on 20 January 2017. Relevantly, those orders said:
7. That the parties forthwith do all acts and things and sign all documents as may be required to facilitate the following:
7.1 The creation of a $3 million dollar draw down facility to be secured against the real property at [D Street, Suburb E] (“the facility”);
7.2 Upon the facility becoming available same is to be drawn down to meet the following:
7.2.1 to reduce the current balance of the facility secured over [F Street] to a balance of $2.5 million;
7.2.2 to meet all taxation liabilities of the parties inclusive of penalties and interest.
8. That until further order the husband meet all payments pursuant to each of the facilities over the [D Street] and [F Street] properties.
(emphasis added)
As I have earlier set out, $914,565.11 was paid by the husband to the ATO to meet his liability for the 2015 year in February 2017. I have also said that the wife’s personal taxation liabilities for the 2015 and 2016 financial years were not assessed until July 2017, not long before the first day of the final hearing (29 August 2017). Given the short period in which the husband could have applied funds to meet the wife’s personal taxation liability, I agree with Mr North’s submission that the husband was not wilfully ignoring his obligations under the 20 January 2017 orders. Further, whilst it is true that had the D Street property not been mortgaged (as required by the 20 January 2017 orders), that property would have been available for division between the parties, unencumbered; in my view, that is neither here nor there, because the parties reached a negotiated outcome.
That outcome came about because on the first day of trial, Mr Richardson, senior counsel for the wife, sought my leave to make a without notice, oral application for interim orders. Along with an injunction against the husband which is not presently relevant, the wife was seeking a mandatory injunction against the husband requiring him to pay immediately $560,000 to the Australian Tax Office in respect of her tax liabilities for the 2015 and 2016 financial years. Mr Richardson submitted that the money raised from the mortgage of the D Street property had been applied, according to the husband’s evidence, to matters other than those provided for in the 20 January 2017 orders, “in circumstances that remain controversial”. That application was never determined because, after standing down the matter to allow Mr Geddes, counsel for the husband, to get instructions from his client, counsel for both parties indicated that they were having fruitful discussions in relation to resolving the matter overall. On 1 September 2017, the parties provided me with orders endorsed by the wife and not opposed by the husband. For the avoidance of doubt, I state now that I do not consider the submission of Mr Richardson about where the money raised by the D Street property was directed as objective fact save that I accept it was not directed to pay the wife’s taxation liability prior to 1 September 2017.
The final orders made that day included the following:
11. Contemporaneously with the transfer of F Street:
…
(e) the orders of 20 January 2017 be and are hereby discharged
…
12. That on or before the [F Street] transfer date the husband at his election:
(a) Pay all monies as required to discharge the mortgage encumbering the real property known as and situate at [D Street, Suburb E] ("the [D Street] property") being the property more particularly described in certificate of title volume … Folio … with the Commonwealth Bank of Australia; or
(b) Procure an unconditional release (and provide confirmation of same in writing) of any liability of the wife pursuant to the mortgage.
…
45. That the husband retain for his sole use and benefit:
…
(b) [D Street] and the contents of [D Street]…
Ultimately, it was the husband who retained D Street, but that was subject to the mortgage that had been raised in accordance to the 20 January 2017 orders. The value of D Street was apparently calculated net of the mortgage encumbrance. It is the wife’s contention that the D Street mortgage was included as a liability in the assets available for division between the parties and “accordingly”, she has “already paid my 45 per cent share of the husband’s 2015 taxation through the inclusion of the mortgage facility as an agreed liability.”[17] The mortgage was clearly a liability of the parties at the time the final orders were made and treated as such. However, in my view, it would be inappropriate to characterise the situation as one where the wife was deprived of the asset of the D Street property due to the actions of the husband in paying his personal taxation liability from the mortgage drawn down on it, and not hers. The parties were assisted by experienced practitioners, who were no doubt cognisant of these matters, when they negotiated an outcome during the final trial.
[17] Wife’s affidavit dated 23 February 2018, [14]
It was not in dispute that I could also refer to the submissions of the parties on 1 September 2017.[18] Of relevance for these purposes, were the following exchanges:
[18] Coshott v Barry [2016] NSWCA 358, per Beazley ACJ at [42], with whom Meagher and Payne JA agreed
MR RICHARDSON: The division effected by the orders is one as to 55 per cent to the interest of the husband, 45 per cent to the interest of the wife, with the exception of the real estate that falls in relation to the [Suburb G] property and the ..... property to the husband, and then the ..... property to the wife. We tracked down through each parcel of investment, including the superannuation, dividing it in specie by the division, with the exception of within the [McGrath] Superannuation Fund, there is one of the factory bays that are relevant to [Mr H]; there is some artwork that remains with the husband; and there is a berth at a marina that remains with him. And there is a cash adjustment featured within the agreed implementation of the splitting order that they will remain with him.
So she receives an additional parcel of cash in her member entitlement as it splits out. In relation to the [Mr H] Unit Trust, as part of the reconciliation – I’m sorry – within the units of that trust is the main adjustment between them to take up the 45 per cent/55 per cent reflection in other assets. And that resulted in my client receiving some 27 of the issued units of the seventy two and a half that are presently held by the [Mr McGrath] Family Trust. There’s some arrangements that are given effect that, effectively, provide to [Mr McGrath] an opportunity, without interfering with the structure of that trust, for him to pursue his aim in relation to the sale of AMA. And your Honour will see there’s some consequential things there that depend upon how the mechanics of that sale may take place.
HER HONOUR: I don’t take it the parties received some financial accounting advice in relation to these?
MR RICHARDSON: My client certainly has. And I understand that there has been tax advice in other issues pursued by our friends.
…
MR RICHARDSON: I should say to your Honour, this – these orders are, in a strict sense, sought by the – with the consent of my client. I understand that Mr Geddes will explain to your Honours – to your Honour that his client’s position is one more of not wishing to be heard in opposition to the orders being made because of concerns he has about his responsibilities on the issues that were opened earlier in the trial. But I shall leave it to him to explain anything further about his client’s position.
HER HONOUR: Thank you very much.
MR RICHARDSON: Thank you, your Honour.
HER HONOUR: So, Mr Geddes, this is when I would ask if you want to say anything to talk me out of making them, but you want to just tell me ‑ ‑ ‑
MR GEDDES: I don’t want to talk your Honour out of them, no.
HER HONOUR: ‑ ‑ ‑ something more of the context.
MR GEDDES: Yes. Simply, your Honour, as we discussed the other day, the impact of the Corporations Act upon what my client is allowed to do in terms of disposing of any units and – or any shares, more correctly; and, your Honour, the orders – also the order – order 47, which is to get around the publication of an announcement by the husband of him disposing of such an interest to the wife of those shares. So, strictly speaking, your Honour, we cannot consent to the orders, but we don’t want to be heard to be opposing the orders being made.…
MR GEDDES: Thank you, your Honour.
HER HONOUR: All right. Well, I’ve read – I’ve skimmed the minutes, as I said, and I’ve heard the helpful summation by Mr Richardson, and I had read the documents at the beginning of the trial. Both of you have had extremely skilled legal advice. I have no doubt that this is a resolution which is fair, that it’s just and equitable to make a final property order, and that the terms of the settlement that you have been assisted to reach is proper within the meaning of the legislation. So I’m perfectly happy to make the orders as I have amended them slightly, as you have amended them slightly as well.
ORDERS DELIVERED
Mr Glick urged me to accept that the wife’s construction is supported by the submission made by Mr Richardson that the division effected by the final orders represented a split of property interests as to 55 per cent to the husband and 45 per cent to the wife. It was Mr Glick’s submissions that the construction of order 16(b) for which the wife contends, is consistent with that division, whereas the construction that the husband urges is inconsistent. Mr North submits that the percentage split of 55/45 is not something I can have regard to in the construction of order 16(b). That is because, firstly, the Mr Geddes neither demurred nor adopted that submission, and more importantly, because there was a dispute as to the value of the assets of the parties and no findings were ever made about value because the parties negotiated an outcome. Notably the dispute was over the large sum of $20 million, being the difference between $70 million for which the husband contended and the $90 million for which the wife contended. Mr North submits that if it be that the wife believed the division was 55/45 and considered that the orders, including 16(b) gave effect to a division of 55/45, that fact is a subjective one, as there were neither findings as to value, nor any evidence of an agreement as to value where there was a dispute. Mr North contends that the 55/45 division is merely the wife’s assessment of the negotiated outcome and I should not have regard to it in construing order 16(b).
During his submissions, I asked Mr North if, because Mr Geddes did not address the point on 1 September 2017, I was thereby misled by the submissions of Mr Richardson. Mr North submitted as I was not because, the wife’s assessment might have been different from the husband’s, but he did not oppose the order.
Mr North submitted that in any event, we could not be sure that when Mr Richardson made his submissions, he construed paragraph 16(b) in the way that Mr Glick now urges it should be construed.
I accept (as Mr North contends) that the submission of Mr Richardson on 1 September 2017, that the orders effected a division of property interests 55 per cent as to the husband and 45 per cent as to the wife, is not an objective fact that I can have regard to. Indeed, where there is no agreement or finding as the value of the assets, the assessment of the wife when commending the orders as to what they effected, although not demurred by the husband, cannot be used to support her case in the construction of paragraph 16(b).
The construction of order
I have already set out paragraph 16(b) above, but it is worth repeating with me placing emphasis on the words around which this dispute revolves:
The husband and the wife do all acts and things required to cause:
…
(b) the payment of the net total personal taxation assessments for the 2015, 2016 and 2017 (after allowance for any amounts prepaid prior to the date of these orders) of the husband and the wife, in the proportions of :-
(i) 55 per cent by the husband; and
(ii) 45 per cent by the wife.
The parties agree that the paragraph does not adopt the language of the Income Tax Assessment Act 1936 (Cth) or the Income Tax Assessment Act 1997 (Cth) and therefore that legislation does not assist.
For the purposes of understanding the parties’ submissions it is helpful to set out part of a notice of assessment:
Notice of assessment - year ended 30 June 20xx[19] | ||
| Description | Debits $ | Credits $ |
| Your taxable income is $xxx,xxx | ||
| Tax on your taxable or net income | x,xxx,xxx | |
| Less refundable tax offsets Franking credit offset | xxx,xxx | |
| Assessed tax payable $x,xxx,xxx DR | ||
| Plus other liabilities Medicare levy Temporary budget repair level Less tax offset refunds | xx,xxx xx,xxx x | |
| Less Pay as you go (PAYG) credits and other entitlements PAYG withholding (eg tax deducted by your employer or bank) | xxx,xxx | |
| Result of this notice | x,xxx,xxxDR | |
| Outcome of this notice | $x,xxx,xxx DR | |
| Payment for this notice was due | [date] | |
| Total amount payable/refundable | Refer to Statement of Account | |
[19] X represents numerical values
The nub of the dispute is this:
a)The wife contends that “total personal taxation assessment” means the “outcome” of a Notice of Assessment issued by the ATO each financial year and “prepaid” means “already paid”. Her submission is that the phrase “net total personal taxation assessments … (after allowance for any amounts prepaid prior to the date of these orders)” means the “outcome” of a Notice of Assessment issued by the ATO minus (or, “net” of) all amounts already paid by the parties or both of them to the ATO prior to the date of the orders.
b)The husband contends that “net personal … taxation assessment” means (with reference to a Notice of Assessment) the assessed tax payable plus the Medicare levy and any surcharge plus the temporary budget repair levy; that is, the total amount of taxation liability owed in that financial year. It is the husband’s submission that the reference to “total” in “net total personal taxation assessment” is a reference to the total over three years. The husband contends that “after allowance for any amounts prepaid” means amounts paid prior to the issue of the notices of assessment; that is the PAYG instalment payments and PAYG withholding payments. His submission is that the phrase “net total personal taxation assessments … (after allowance for any amounts prepaid prior to the date of these orders)” means the total amount of taxation liability owed in that financial year including the amounts paid through PAYG prior to the issue of the notices of assessment. The husband’s construction disregards any amounts paid by the parties, or either of them, to the ATO in satisfaction of the liability for taxation.
The wife’s contention
In short, the wife’s case is that paragraph 16(b) is intended to apportion liability for unpaid or outstanding amounts owed to the ATO for the 2015 to 2017 years; that is, for the years 2015 to 2016 the amounts still outstanding as at the date of the order and the outcome of the notice of assessments once each party filed their personal income tax returns for the 2017 year. If the wife is correct, under order 16(b) the husband was liable for 55 per cent, and the wife was liable for 45 per cent, of:
a)the wife’s 2015 outcome of notice of assessment (entirety outstanding at 1 September 2017);
b)the wife’s 2016 outcome of notice of assessment (entirety outstanding at 1 September 2017);
c)the amount outstanding of the husband’s 2016 outcome of notice of assessment; and
d)the outcomes of each parties 2017 assessments (not yet assessed at 1 September 2017).
The wife submitted that “the agreement of the parties embodied in Order 16(1)(b) is that any unpaid or outstanding amounts in relation to income tax assessments for the years 2015, 2016 and 2017 are to be paid in the proportion of 55 per cent by the husband and 45 per cent by the Wife.”[20]
[20] Wife’s outline of submissions filed 6 April 2018, [2]
In her written submissions, the wife said:
6. The personal income tax assessments in fact issued by the ATO do not refer to or use the term “net”; instead, the relevant assessments list a number of debits and credits to arrive at an “outcome of this notice” (as to either a debt or credit) for the taxpayer.
7. The words in parenthesis in order 16(1)(b) are plainly intended to define the concept of what constitutes a net total personal taxation assessment. The obligation under 16(1)(b) is to make the payment in the future, that is, it imposes a prospective obligation on the Husband and Wife. That obligation is to make a payment of any tax outstanding that is unpaid, for the relevant tax years. That clear intention results from the words in parenthesis which require an allowance be made for any amounts paid with respect to those assessments prior to 1 September 2017.
Mr Glick submitted that “traditionally the word “net” means gross net….take into account positives and negatives”. He said the words in parenthesis explains the concept of how to work out the “net” of the “total personal taxation assessments”. He submitted that paragraph 16(b) is phrased in the same way that proceeds of sale orders are commonly expressed. He gave the example of an order that reads: “the husband pay to the wife the net proceeds of the land (allowing for the usual sales expenses).” He submitted that in construing that order, one would deduct the usual sale expenses from the amount received from the sale to get the “net proceeds of the land”. Therefore he says, requires 16(b) requires that any amount paid prior to the orders be disregarded.
The wife’s written submissions said:
4. Prepaid in that sense means no more or less than already paid. The concept of a net total personal tax assessment means net of any amounts already paid in respect of such assessments.
The husband submits that the words “prepayments” ordinarily means payments made prior to the Notices of Assessment being issued.[21] Thus he says the wife has failed to advance a reason why “prepaid” should have the meaning she contends for. In his oral submissions, Mr Glick agreed with me that the wife’s construction did not make use of the prefix “pre” in “prepaid”. Mr Glick submitted that the intention of the order was to refer to amounts “paid prior to the date of these orders” rather than amounts “prepaid prior to the date of these orders”.
[21] Husband’s outline of submissions filed 18 April 2018, [38]
With no apparent regard for the proverb - people who live in glass houses shouldn’t throw stones – counsel for the husband submitted that:[22]
[22] Husband’s outline of submissions filed 18 April 2018
30. [The wife’s] [c]onstruction “is not available, having regard to the form of order chosen by the parties. Had the parties intended the wife’s construction, [16(b)] would inevitably have been in a substantially different form. For example, it may well have read:
The husband and the wife do all acts and things required to cause:
(b) The payment of the net total personal taxation assessments for 2015, 2016 and 2017 of the husband and wife, to the extent those assessments are outstanding as at the date of these orders, in the proportions of:…
31. The underlined words in the draft order in the preceding paragraphs represent drafting which would readily have achieved the result for which the wife contends. However neither that wording nor any other equivalent was chosen.
In my view, the same criticism could be made of the husband’s construction and as I have already indicated, I find that the words in order 16(b) are ambiguous.
The fact is that drafting of order 16(b) left something to be desired and neither party’s construction gives effect to every word in the order. In the wife’s contended construction, the prefix “pre” in prepaid is superfluous but the husband also has superfluous words with which to contend.
The husband’s contention
The husband’s case is that order 16(b) is intended to apportion liability for the totality of the tax owed by the parties to the ATO for the 2015 to 2017 years. The total liability for each year can be calculated (with reference to the Notice of Assessment for that year) either by adding the Medicare and temporary budget repair levy to the amount of assessed tax payable or by subtracting the PAYG withholding from the outcome of the notice. If the husband is correct, paragraph 16(b) provides that the husband is liable for 55 per cent and the wife is liable for 45 per cent of the total tax owed by each of the parties for the 2015, 2016 and 2017 financial years, regardless of what amounts had been paid prior to the date of the orders.
The husband submitted that:
17.[16(b)] provides for the husband and the wife to pay the net total personal taxation assessments for the 2015-2017 years in certain proportions, after allowance for amounts pre-paid prior to the date of the orders.
What is the net total personal taxation assessment?
18.Having regard to the issued assessments, the net total personal taxation assessment of each of the husband and the wife is:
a)The ‘assessed tax payable’ (which is the tax on taxable or net income less the franking credit offset); plus
b)The Medicare levy and any surcharge; plus
c)The temporary budget repair levy.
19.Adding these items gives the total amount of taxation that a person is liable to pay in respect of one of the relevant years.
20.The tax assessments contain two measures of tax: the ‘tax on your taxable or net income’ and the ‘assessed tax payable’.
21.The word ‘net’ refers to the existence or refundable tax offsets (relevantly, the franking credit offset). Refundable tax offsets go to reduce the total tax assessed, leaving a net figure.
22.The ‘assessed tax payable’ takes account of a refundable tax offsets, while the ‘tax on your taxable or net income’ does not. It is the ‘assessed tax payable’ figure – the net figure – which is relevant, as this represents the amount of tax actually payable by the taxpayer pursuant to the assessment.
23.The assessments also show amounts already paid towards that liability – for example – PAYG instalments and PAYG withholding payments which have been paid prior to the Notices of Assessment having been issued.
…
What is meant by the phrase ‘after allowance for amounts pre-paid prior to the date of the orders’?
25.Both the husband and the wife paid instalments towards their tax prior to the issue of the 2015 and 2016 notices of assessment.
26.“The term ‘prepayment’ is used in the ordinary course of accounting for business and commercial activities to describe a payment made in advance of an obligation to make the payment, or a debt owing or arising. A prepayment is a payment on account of a future liability that has not yet arisen and is therefore not yet on account of a debt due.”
27.[16(b)] relates to liability for payment of the net total personal taxation assessments for the husband and wife. To properly allocate such liability for payment, allowance must be made for amounts paid prior to the date of the issue of the Notices of Assessment – that is, all such amounts must be added back.
28.Viewed objectively, the reference to “allowance for any amount pre-paid” was clearly intended by the parties to avoid the injustice to the husband occasioned by the fact that the wife had made far smaller pre-payments towards her taxation obligations prior to the issue of the assessments than had the husband (that is, PAYG instalment payments and PAYG withholding payments).
(footnotes omitted – note the quotation marks at paragraph 26 quoted a witness no longer relied on)
The wife submitted that:[23]
The Husband's construction of 16(1)(b) …requires the court to assume that the parties were intending to differentiate between the various credits in the assessment and to make provision or allowance for only some of those credits. Furthermore, the Husband's construction flies in the face of the known facts and would result in a gross injustice being imposed on the Wife. If the husband’s interpretation were accepted then the husband would be reimbursed wholly for a payment that the parties have effectively “jointly” paid prior to the orders. He would receive a “windfall” not contemplated by the order and a “windfall” not contemplated by the parties’ submissions to the Court at the time the orders were made. In other words this would not be consistent with an adjustment of their property interests of 55 per cent to the husband and 45 per cent to the wife.
[23] Wife’s outline of submissions filed 6 April 2018, [8]
Mr Glick submitted orally that the husband had taken money out of the asset pool of the parties for the purpose of paying his tax and the wife’s tax, but only paid his own tax. He asked rhetorically, “Why would it be thought that the wife would agree that her funds are used to pay the husband’s tax, then she will pay 45 per cent again?” It is a good question. On the other hand, the husband says that the wife’s construction would create an “absurd” result because her construction implies a situation where the husband’s position would have been improved if he had failed to pay the outstanding amount in his 2015 tax assessment.
As I have already said, I do not accept that Mr Richardson’s submission can be used to support the wife’s construction as that reflects a subjective and not objective view of the orders. As for the other submissions, in my view, the analysis is interesting but it is mere conjecture. In an outcome negotiated by the parties which dealt with numerous liabilities and assets, I am unable to conclude on an objective basis that the parties’ took a narrow view about tax liabilities and not a global view about the division of the various assets and liabilities that were dealt with by the orders as a whole. I do not therefore, accept that concepts like “windfall” have a place in the construction of paragraph 16(b).
In oral submissions, Mr North said, by reference to a Notice of Assessment, that the “assessed tax payable” is equivalent to, in the words of the order, a “personal taxation assessment” before it is netted. He submitted that the outcome of the Notice of Assessment is to be regarded as the “net”. If that is the case, namely that the “net assessed tax payable” is the outcome of the Notice, then, Mr North said, the meaning I should ascribe to the words in parentheses is that it alters the “net” by making allowances for payments made prior to the date of the order. He says I should add back the “prepaid” amounts to arrive at the liability to be apportioned for each year between the husband and the wife. He says that accordingly “for the three tax years, the total tax payable by each of them shall be borne proportionately 55/45 rather than that amount that…is remaining to be paid.” Mr North submitted that the construction contended for by the husband gives the most complete meaning to the words used in 16(b) and there is nothing in the context of the other orders made on 1 September 2017 or in the circumstances objective facts leading up to it that allow me to find that construction is incorrect.
Conclusion
I prefer the construction of paragraph 16(b) urged by the wife. It is the outcome to which I instinctively gravitate as being sensible. It represents a less tortured and acrobatic interpretation of the paragraph than that for which the husband contends.
Of course, the construction of the wife is not wholly sound. If pre-paid was supposed to be “paid”, as she contends, why did the paragraph say pre-paid? However, the husband’s construction gives no work to the term “prior to the date of the orders”. The superfluous words for which the husband must account are strongly evocative of the outcome contended for by the wife. The first three superfluous letters in “pre-paid” are not as inconsistent with the wife’s case as the words “prior to the date of the orders” are to the husband’s.
Another option would be for me to decline to make either order sought on the basis that both cases are flawed and one is not more persuasive than the other. To do so would give full recognition to the fact that the paragraph is defective. I am at all not troubled that a simple dismissal of both applications would likely impel one or other of the parties to seek compensation elsewhere. In fact, that may happen anyway.
There are two reasons why I will not decline to make either order sought. First and foremost, I find the wife’s construction to be more sensible than the husband’s construction. Second, to prefer one construction over another provides finality to the parties which is constituent with the objectives of the legislation which finds expression in making orders which shall, as far as practicable, finally determine the financial relationships between the parties.
As I have already said, the parties agreed on a set of orders to be made in the event that I preferred the construction contended by the wife which was exhibited as “C1”. I now make those orders.
Cost to the parties
I am concerned about the cost to the parties.
I did not raise this with counsel who appeared at the hearing which was deceptively brief, having regard to the work which obviously went into the construction of each party’s argument reviewed by me for this decision. Needless to say, I will accord each set of practitioners an opportunity to consider their position and to be heard on this last issue.
I am concerned that the husband and the wife have each been put to the expense of this hearing unnecessarily and for reasons outside their control. That is, an order drafted by those who represent them is defective and could not have brought about the result for which either contended. The amount in dispute is considerable by community standards but small when viewed in the context of the value of the legal and equitable property divisible between the husband and wife. However, no one should have to waste money.
Care must be taken in drafting consensual arrangements and, in this case, each party had the benefit of very senior counsel who negotiated and honed the terms of settlement over a number of days. They were not rushed in the process.
The court has been called upon to deal with a matter which should not have been necessary. It might be said that I did not pick up the imprecision in the minute of orders when they were handed up on 1 September 2017. Detailed submissions were made on behalf of the wife by Mr Richardson and not contradicted by counsel for the husband. No misunderstanding of, or issue around, paragraph 16(b) was mentioned. A judge cannot subject complex minutes such as those to minute scrutiny without some accompanying input into the cogitations of both parties. The cogitations would be obvious from evidence called in contested proceedings directed to justifying the making of an order as “appropriate” but they are not adumbrated when both parties want orders in agreed terms. I read the minute and attributed to paragraph 16(b) a meaning which, these proceedings have revealed to me, was not universally shared. I agree that paragraph 16(b) of the Order cannot be saved and I have determines which order is appropriate to stand in its stead.
My concern about costs would be different if one party (husband/wife) led the other to believe that an interpretation of paragraph 16(b) was available whilst concealing an intention to always rely on another less apparent interpretation which they would well knew would not have been countenanced, much less agreed to, by the other party. Colloquially speaking, the party who tries to pull a fast one, and fails, deserves to pay costs.
I am considering making an order whereby the parties do not pay for this tranche of the proceedings being the application and hearings to enforce and/or vary the Order. I understand that counsel who appeared in the last tranche, Mr North SC and Mr Glick QC and their respective juniors, are not the primary architects of the trouble but, as it appears to me, neither are the parties.
I will adjourn the proceedings for about a month. If, prior to the adjourned date, my Associate is informed in writing that their client will either not be charged or has no concern about costs, then I will not give further consideration to the matter. Any solicitor who wishes to be heard on the adjourned date should bring with them a memorandum of the costs and disbursements referrable to the ambiguity in the Order. This is predicated on solicitors being responsible for counsel’s fees or being authorised by counsel to speak on his behalf. It goes without saying that, as officers of the court, each firm of solicitors must give their own client an ample and realistic opportunity to obtain independent legal advice on the issue of costs and that the independent lawyer will, at the very least, be given these reasons.
I certify that the preceding seventy six (76) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Bennett delivered on 31 August 2018
Associate:
Date: 31 August 2018