Sartin and Sartin and Anor (No.3)
[2017] FCCA 2588
•26 October 2017
FEDERAL CIRCUIT COURT OF AUSTRALIA
| SARTIN & SARTIN & ANOR (No.3) | [2017] FCCA 2588 |
| Catchwords: FAMILY LAW – Property – application under the slip rule – where final orders made and judgment handed down in 2016. |
| Legislation: Family Law Act 1975 (Cth), s.75 Federal Circuit Court Amendment (Costs and Other Measures) Rules 2017 (Cth) |
| Cases cited: Apoda & Apoda [2013] FamCA 265 Bevan & Bevan [2013] FamCAFC 116 DJL v The Central Authority (2000) 201 CLR 226 Grassby v The Queen (1989) 168 CLR 1 Hamilton v. Oades (1989) 63 ALJR 352 Minjarez & Minjarez [2017] FamCAFC 222 Pawley & Pawley (No.2) [2017] FamCAFC 136 |
| Applicant: | MS SARTIN |
| First Respondent: | MR SARTIN |
| Second Respondent: | MS MOSS |
| File Number: | SYC 4514 of 2013 |
| Judgment of: | Judge Harper |
| Hearing date: | 30 August 2017 |
| Date of Last Submission: | 30 August 2017 |
| Delivered at: | Sydney |
| Delivered on: | 26 October 2017 |
REPRESENTATION
| Counsel for the Applicant: | Mr Dura |
| Solicitors for the Applicant: | Harpreet Bawa |
| Counsel for the First Respondent: | Mr Ford |
| Solicitors for the First Respondent: | Willis & Bowring Solicitors |
THE COURT ORDERS THAT:
Pursuant to r.16.05(2) of the Federal Circuit Court Rules 2001 (Cth), order 5 of the orders made by Her Honour Judge Sexton on 11 April 2016 be amended, as follows:
5. On settlement of the sale of the property pursuant to Orders (1) or (2) above, the proceeds of sale shall be paid in the following manner and priority:
a.All costs and expenses of sale including legal costs and disbursements, Real Estate Agent's commission, auctioneer's costs, advertising costs, valuer's fees and auction expenses (including repayments of any of these expenses as have been paid by any of the parties);
b.The amounts required to pay any outgoings of the Property including but not limited to all council and water rates outstanding with respect to the property;
c.In payment of the sum of $648,982.58 to the Second Respondent, Ms Moss;
d.In payment of the sum of $120,000 to (omitted) Mortgage plus 83% of any amount in excess of $145,000 required to discharge the mortgage held by (omitted) Mortgage;
e.In payment of 70% of the balance then remaining to the Wife;
f.In payment to the Wife the sum of $12,605.60;
g.In payment of the sum of $25,000
(or the sum required to discharge the mortgage)to (omitted) Mortgage plus 17% of any amount in excess of $145,000 required to discharge the mortgage held by (omitted) Mortgage; andh.In payment of the balance to the Husband.
The matter is, otherwise, removed from the active pending cases list.
IT IS NOTED that publication of this judgment under the pseudonym Sartin & Sartin & Anor (No.3) is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYC 4514 of 2013
| MS SARTIN |
Applicant
And
| MR SARTIN |
First Respondent
MS MOSS
Second Respondent
REASONS FOR JUDGMENT
Introduction
This judgment relates to property proceedings between Ms Sartin (“the wife”), Mr Sartin (“the husband”) and Ms Moss (“the wife’s mother”) that were finalised when Her Honour Judge Sexton handed down judgment and made final orders in early 2016. The proceedings came before me in relation to the interpretation, and possible amendment, of order 5 of those final orders.
The husband filed his Initiating Application, Financial Statement and Affidavit in Support on 30 May 2017. The wife filed her Response to Initiating Application on 8 August 2017. When the matter was before me in my duty list on 30 August 2017, Mr Ford of counsel appeared for the husband and Mr Dura of counsel appeared for the wife. I note here that the second respondent, the wife’s mother, played no part in these proceedings.
Background
In this matter, the final hearing in property proceedings took place on 3, 4 & 5 August 2015. Reasons for Judgment (“the Reasons”) were delivered and final orders (“the Final Orders”) were made by Her Honour on 11 April 2016.
Order 5 of the Final Orders is phrased in the following terms:
5. On settlement of the sale of the property pursuant to Orders (1) or (2) above, the proceeds of sale shall be paid in the following manner and priority:
a.All costs and expenses of sale including legal costs and disbursements, Real Estate Agent's commission, auctioneer's costs, advertising costs, valuer's fees and auction expenses (including repayments of any of these expenses as have been paid by any of the parties);
b.The amounts required to pay any outgoings of the Property including but not limited to all council and water rates outstanding with respect to the property;
c.In payment of the sum of $648,982.58 to the Second Respondent, Ms Moss;
d.In payment of the sum of $120,000 to (omitted) Mortgage;
e.In payment of 70% of the balance then remaining to the Wife;
f.In payment to the Wife the sum of $12,605.60;
g.In payment of the sum of $25,000 (or the sum required to discharge the mortgage) to (omitted) Mortgage; and
h.In payment of the balance to the Husband.
The phrase “the sale of the property pursuant to Orders (1) or (2)” is a reference to the sale of Property A being (omitted) in Deposited Plan (omitted) (“the Property A property”). Pursuant to orders 1 and 2 of the Final Orders, in summary, the Property A property was to be sold by auction within 28 days of the Final Orders, and, if not sold at the first auction, a second auction was to take place within 2 months.
There has been no appeal from these orders.
A dispute has arisen between the parties about the meaning and effect of orders 5(d) & 5(g). The dispute revolves around the treatment of arrears of costs, charges and interest, totalling $46,219.73, payable on a principal loan amount of $145,000.00 owing to (omitted) (“the (omitted) loan”), and referred to in those orders.
The (omitted) loan was secured by mortgage over the Property A property (“the (omitted) mortgage”). The Property A property was sold on 20 February 2017. At settlement, the total amount required to discharge the (omitted) mortgage was $191,219.73. This figure was comprised of $145,000.00 of principal, and a further $46,219.73. This latter figure was comprised of a number of costs and charges for preparing a payout figure, enforcement costs from July 2014 and April 2015, as well as interest payable at the “higher rate” and applied from August 2010 through to February 2017. These costs and charges are discussed in more detail below.
The contentions of the parties
The wife contended that by reason of the combination of orders 5(d) & 5(g), and particularly the words “or the sum required to discharge the mortgage” in order 5(g), the entire $46,219.73 is to be paid by the husband from his share of the proceeds of sale. The husband argued that if orders 5(d) & 5(g) mean such an outcome is correct, they should be amended because they do not reflect of the intention of the Court.
The Law
The husband applied for relief under the “slip rule”, (namely r.16.05(2)(e) of the Federal Circuit Court Rules 2001 (Cth) (“the Rules”)), or the Court’s implied power to amend order 5(d) of the Final Orders.
Rule 16.05 of the Rules is in the following terms:
Setting aside or varying judgments or orders
(1) The Court or a Registrar may vary or set aside a judgment or order before it has been entered.
(2) The Court or a Registrar may vary or set aside a judgment or order after it has been entered if:
(a) it was made in the absence of a party; or
(b) it was obtained by fraud; or
(c) it is interlocutory; or
(d) it is an injunction or for the appointment of a receiver; or
(e) it does not reflect the intention of the Court; or
(f) the party in whose favour it was made consents; or
(g) there is a clerical mistake in the judgment or order; or
(h) there is an error arising in the judgment or order from an accidental slip or omission.
(3) This rule does not affect the power of the Court or a Registrar to vary or terminate the operation of an order by a further order.
I observe here that shortly before the matter was before me on 30 August 2017, r.16.05 was amended by Part 2 of Schedule 1 of the Federal Circuit Court Amendment (Costs and Other Measures) Rules 2017 (Cth). This amendment added paragraphs (g) & (h) to r.16.05(2) and commenced on 3 August 2017.
The husband expressly relied upon r.16.05(2)(e) of the Rules, contending that order 5(g) of the Final Orders does not reflect the intention of the Court.
Rule 16.05(2)(h) now addresses “an error arising in the judgment or order from an accidental slip or omission”, which r.16.05(2) did not include in its unamended form. Although not expressly mentioned by him, the husband also appears to rely upon r.16.05(2)(h). His case outline referred to at [166], a decision of the Court of Appeal of the Supreme Court of New South Wales where Spigelman CJ remarked: “A judgment or order may be an “error” arising from an “accidental slip or omission” because of unintended or unforeseen consequences”. Rule 16.05(2)(h) of the Rules uses the same wording.
The husband also relied upon the implied power of the Court to amend its orders.
Although a statutory inferior Court, such as this Court, has no inherent powers, it has implied powers arising by virtue of the fact that the grant of a power to a Court “carries with it everything necessary for its exercise”: Grassby v The Queen (1989) 168 CLR 1 at 16 (per Dawson J, with whom the other members of the High Court of Australia agreed). In Jago v District Court(NSW) (1989) 168 CLR 23 at 74 Gaudron J said:
The power of a court to control its own process and proceedings is such that its exercise is not restricted to defined and closed categories, but may be exercised as and when the administration of justice demands. (Citing Jackson v. Sterling Industries Ltd (1987) 162 CLR 612, at p 639; Hamilton v. Oades (1989) 63 ALJR 352, at p 358; 85 ALR 1, at p 11).
In DJL v The Central Authority (2000) 201 CLR 226 at [25], the plurality, commenting on the Family Court of Australia, confirmed a Court exercising jurisdiction or powers conferred by statute “has powers expressly or by implication conferred by the legislation which governs it” and “[t]his is a matter of statutory construction”. Such a Court also has “in addition such powers as are incidental and necessary to the exercise of the jurisdiction or the powers so conferred”. These comments apply equally to the Federal Circuit Court of Australia.
In Pawley & Pawley (No.2) [2017] FamCAFC 136 at [32]-[33] Thackray J, with whom Kent and Loughnan JJ agreed, referred to the scope of the implied powers as well as relationship between r.16.05 of the Rules and the implied powers, as follows:
[32] Although the topic was not the subject of submissions, I consider that r 16.05 does not constitute a code which replaces the implied power of the Federal Circuit Court to control its own process, including the power to take action to prevent injustice. See the authorities discussed in Teo & Guan [2015] FamCAFC 94; (2015) FLC 93-653 at [36] et seq and Newmont Yandal Operations Pty Ltd v The J Aron Corporation and the Goldman Sachs Group Inc and Ors [2007] NSWCA 195; (2007) 70 NSWLR 411 at [18].
[33] Therefore, although not provided for in r 16.05, I accept that the power of a court to correct its own order also extends to cases where a matter was not dealt with as a result of inadvertence: Raybos Australia Pty Ltd and Anor v Tectran Corportion Pty Ltd and Ors [1988] HCA 2; (1988) 77 ALR 190. However, there is a distinction between cases where an amendment of an order is proposed to give effect to the court’s original intention, and cases where the court proposes to correct an order by including a provision dealing with a matter that was not dealt with at the original hearing. In cases of the latter type, the power to amend appears to be limited to correcting only ancillary or consequential matters and not “substantial” questions. However there is no such limitation where a change is to be made to reflect the original intention of the court: Owston Nominees No 2 Pty Ltd and Anor v Branir Pty Ltd and Ors [2003] FCA 629; (2003) 129 FCR 558 at [25].
Pawley & Pawley (No.2) (supra) was decided prior to the insertion of paragraphs (g) & (h) into r.16.05(2) of the Rules. However, as can be seen from [32] as set out above, in Pawley& Pawley (No.2) (supra) His Honour cited Newmont Yandal Operations (supra) at [18]. There, Spigelman CJ said:
The Rules of court do not constitute some type of mini-code replacing the inherent jurisdiction. It may very well be that the Court’s inherent jurisdiction calls for a variation of orders in circumstances falling outside the slip rule.
Spigelman CJ also said at [19]: “It is often said that the slip rule “reflects” the inherent jurisdiction…That does not, however, mean that the inherent jurisdiction can be expressed in the same terms as the rule.” Although stated in terms of inherent jurisdiction, these comments have equal application to inherent powers of statutory courts.
In my view, the recent amendments to r.16.05 of the Rules do not affect the expression of opinion of Thackray J in Pawley & Pawley (No.2) (supra) concerning the scope of implied powers or the relationship between implied powers and r.16.05 of the Rules, which I respectfully adopt.
Neither party made any argument that the Court failed to advert to the question of unpaid arrears of interest and other costs and expenses charged to the (omitted) loan. Rather, the husband says order 5(g) adverted to this question ambiguously, while the wife argues the liability was laid unambiguously at the feet of the husband.
The husband made reference to Suiter & Suiter [2016] FamCAFC 72 at [21] and Apoda & Apoda [2013] FamCA 265 at [35] to [41]. In my view these authorities, together with Rand v Rand (2010) 43 FamLR 570 at [105]-[106] and Pawley & Pawley (No.2) (supra) at [34], make clear it would be impermissible to approach construction of the orders without considering “surrounding circumstances”, and it is not necessary to identify an ambiguity before moving to consider surrounding circumstances. Such circumstances can include the Reasons, pleadings and, if necessary, the evidence and how the case was conducted. They also include evidence of what has occurred after orders are pronounced to create the dispute.
The Full Court in Suiter (supra) at [21] referred to a three step process identified in Apoda (supra), namely, determining whether there is ambiguity, identify surrounding circumstances, and reach a conclusion in relation to construction.
As to the last step, in my view, adopting what was said in Newmont Yandal Operations (supra) at [152], [153], the exercise here does not require resolution of competing arguments as to the correct construction of the order. The identification of ambiguity and intention are the essential steps. An ambiguous order can be corrected to make clear the Court’s intention without the final resolution of its proper construction. This is so because the relevant “error” is not making the Court’s intention clear.
Whether reliance is placed on r.16.05(2)(e) or r.16.05(2)(h) or an implied power, the central task is to ascertain the intention of the court. The relevant intention is the intention of the Court objectively ascertained at the time the original orders were made: Newmont Yandal Operations (supra).
Discussion
For present purposes, most of the relevant circumstances are comprised of the Reasons. There is also some additional factual evidence relating to the period after the final hearing, referred to below.
The Reasons
The (omitted) loan was a central issue in the final hearing. In the Reasons at [6(a)] the Court identified, as one of two issues for determination, the following:
Whether a debt of $145,000 to (omitted) Mortgage [”(omitted)”] secured by the Property A property, $120,000 borrowed by the parties 4 months prior to the date of separation and $25,000 borrowed nearly 2 years after separation, should be solely the responsibility of the husband in whole or in part.
It is important to set out the findings in the Reasons concerning the creation of the (omitted) loan, and the part it played in the eventual just and equitable result found by the Court.
The (omitted) loan
The circumstances leading to the creation of the (omitted) loan are set out in paragraphs [23] to [26] of the Reasons. In short, the husband and a former colleague registered a company known as (business omitted) Pty Ltd in May 2010. In June 2010, 4 months prior to their separation in October 2010, the husband approached the wife for her consent to borrow $120,000.00 from (omitted) secured against the Property A’s property to invest in the new business. The loan funds were drawn down in July 2010. In July 2012, nearly 2 years after the parties’ separation, the husband sought the wife’s consent to extend the (omitted) loan to borrow a further $25,000.00.
The wife consented to the increase in the loan. She imposed a condition that the husband would take responsibility for the whole of the debt of $145,000.00 (120,000.00+25,000.00). The husband initially agreed to this condition but said in his evidence that he had agreed because he was desperate at the time.
However, ultimately, after consideration of the evidence, Her Honour, at [24] to [26] of the Reasons, found the $120,000.00 should be the responsibility of both parties, while the husband would be solely responsibility for the additional $25,000.00 borrowed from (omitted).
These findings were incorporated, at paragraph [27] of the Reasons, into the table setting forth the assets and liabilities of the parties as found by Her Honour at the date of hearing. The table included “mortgage to (omitted) Mortgage (joint) -$120,000” and “Debt to (omitted) Mortgage (for which the husband will be responsible) -$25,000”.
I observe here that $120,000.00 constitutes 83%, and $25,000.00 constitutes 17%, of the principal loan of $145,000.00.
Her Honour also made findings relevant to the servicing of the (omitted) loan. She found that on 15 April 2013 the husband moved to (country omitted) and ceased paying monthly instalments on the (omitted) loan. A notice pursuant to s.57(2)(b) of the Real Property Act 1900 (NSW) was issued in about September 2013 in respect of the (omitted) mortgage. In September 2013, the wife’s mother, who became the second respondent in the proceedings, started making interest only payments on the loan to avoid foreclosure. Her Honour found that the wife’s mother paid the interest instalments on the (omitted) loan in the sum of $1,100.00 per month, protecting the parties from foreclosure on the property[1]. Between December 2013 and July 2015 the mother lent the wife $26,368.70 for interest payments on the (omitted) loan. In April 2014, the wife and her mother formalised a loan agreement[2].
[1] See [79] of the Reasons.
[2] See [60]-[64] of the Reasons.
Her Honour determined that, after weighing the factors in s.75(2) of the Family Law Act 1975 (Cth) (“the Act”), an adjustment should be made in favour of the wife. At [101] of the Reasons Her Honour found:
On a weighing of the factors to which I have referred under s.75(2), I have decided the wife will receive an adjustment of 5%. This means the net assets of the parties will be divided as to 70% to the wife and 30% to the husband. As already noted, the husband will pay $25,000 of the (omitted) debt (or whatever amount remains payable to discharge the loan) from his 30% share.
In further discussing the justice and equity of the outcome Her Honour said at [106] to [108]:
[106] Counsel for each of the spouse parties, submitted percentage positions on the sale proceeds of the Property A home only, and did not address me on the overall net asset position. I have determined the Wife will receive 70% of the overall net asset pool as I have identified and the Husband 30% less $25,000. To achieve this result, the Wife will receive a payment of $12,605.60 from the Husband as well as 70% of the sale proceeds after payment of sale costs, payment of $648,982.58 to the Second Respondent and payment of $120,000 to (omitted). The Husband will receive 30% of the sale proceeds after the same deductions, and will pay the balance of the debt to (omitted) from his 30% share.
[107] On the figures agreed, the sale of the Property A home will realise $1,375,000 less sale costs, less $648,982.58 (payable to the Second Respondent) less $145,000 (payable to (omitted)). In order of priority at settlement of the sale, the Wife will receive 70% of the balance of $1,375,000 less sale costs, less $648,982.58, less $120,000. That is approximately $403,212.19 (if sale costs are estimated at $30,000). She will then receive the adjusting payment of $12,605.60 for the assets excluding Property A, to give her 70% overall. The Husband will then receive 30% of the balance, from which he will pay $25,000 to (omitted).
[108] Having regard to my findings in this case, I am satisfied that the orders set out at the beginning of these Reasons are just and equitable.
(Emphasis added)
It should be stressed at this point that, even if not a “threshold issue” (Bevan & Bevan [2013] FamCAFC 116) or necessary to be subject of an express finding (Hearne & Hearne [2015] FamCAFC 178; 53 Fam LR 454 at [72]), Her Honour’s finding that it was just and equitable within s.79(2) of the Act to make the final orders was a matter about which it was essential for Her Honour to be satisfied: Stanford v Stanford (2012) 247 CLR 108 at [35].
In my view, the findings that $120,000.00 was a joint liability and $25,000.00 was the husband’s sole liability, were central to the ultimate finding that a 70/30 (less $25,000.00 from the husband’s share) split was a just and equitable result. These findings are critical in ascertaining the intention of the Court.
Sale of the Property A property
As already noted above, settlement of the sale of the Property A property took place on or about Monday, 20 February 2017. This was some 18 months after the final hearing and just over 10 months after the Final Orders.
In preparation for settlement, the solicitor acting on the conveyance prepared a Distribution Statement (Annexure “C” to the Affidavit of the wife). At settlement, the total amount required to discharge the (omitted) mortgage was $191,219.73. This figure was comprised of $145,000.00 of principal, and a further $46,219.73. This latter figure was comprised of a number of costs and charges for preparing a payout figure and enforcement costs from July 2014 and April 2015, as well as interest payable at the “higher rate” and applied from August 2010 through to February 2017. These are discussed in more detail below.
The Distribution Statement therefore set out calculations on the basis that the husband was to receive $240,181.37, from which was to be deducted $71,219.73 (i.e. $25,000.00+$46,219 73).
In this way the Distribution Statement assumed that the husband, in addition to $25,000.00, was to be liable for $46,219.73, being all unpaid arrears of interest and other costs and expenses charged to the (omitted) loan account from 2010 to 2017.
I note here that the solicitor acting on the conveyance was also the solicitor who acted for the wife’s mother, the second respondent, in the substantive proceedings.
Correspondence ensued between the solicitors for the husband and wife, in which the wife supported the interpretation reflected in the Distribution Statement.
The husband strongly disputed it. He accepted that he was liable for $25,000.00 and this should be deducted from his 30% share of the net assets. However, he argued that the amount $46,219.73 should be shared jointly between the parties.
“The sum required to discharge the mortgage”
As will be apparent, the heart of the difficulty here lies in the meaning of the bracketed words “(or the sum required to discharge the mortgage)” in order 5 (g) of the Final Orders. Order 5(e) of the Final Orders is clear in its terms and accords with the Reasons, since within the hierarchy of payments in order 5, the position of the payment of $120,000.00 means it fell jointly on the parties’ asset pool. This is consistent with its status as a joint liability.
If order 5(g) of the Final Orders simply said “In payment of the sum of $25,000 to (omitted) Mortgage”, this wording too would unarguably accord with the Reasons in that such a payment would fall solely on the husband’s 30% share of the asset pool, as was clearly intended.
The wife argues that the terms of order 5(g) are clear and unambiguous, reflecting the intention of the Court. The bracketed words “(or the sum required to discharge the mortgage)” mean what they say and were intended to impose on the husband to sole liability for the amount necessary, whatever it was, to discharge the (omitted) mortgage, after $120,000.00 had been repaid from the joint asset pool. The necessary amount was $71,219.73, i.e., $25,000+$46,219 73, as set out in the Distribution Statement, and this should be deducted from the husband’s share of the proceeds.
The husband argued that, properly construed, order 5(g) and in particular the bracketed words “(or the sum required to discharge the mortgage)” can only have one interpretation, given the context of the Reasons, namely that “these words are meant to impose an obligation on the husband pay the sum of $25,000.00 or any interest fees and charges on that sum” and not to impose an obligation on the husband to pay the arrears of interest costs and charges on the entire (omitted) loan. He submits that this is the only construction which is consistent with the Reasons, especially paragraphs [104] to [107] (set out above). In his summary of argument, the husband contended that to visit the entire arrears of the (omitted) loan on the husband would not be in accordance with the Reasons, would be unjust and inequitable, and would unjustly enrich the wife to the extent of $46,219.73.
The competing contentions demonstrate that there is an ambiguity in Order 5(g). It contains an error in that it does not make the Court’s intention clear.
I reject the husband’s submission that the wife’s construction would unjustly enrich the wife to the extent of $46,219.73. On his own construction of the Final Orders, he would be liable for the proportion of $46,219.73 referrable to $25,000.00 of principal, and both parties to the proportion referrable to $120,000.00 of principal. However, the submission does concentrate attention on a proportional approach to the disputed amount.
No separate calculation was submitted by either party of the exact proportion of $46,219.73 which was referrable to either the amount of $25,000.00 or the amount of $120,000.00. Annexure “E” to the husband’s Affidavit is a settlement statement dated 20 February 2017, from (omitted), prepared for the purpose of settlement of the sale and discharge of the (omitted) mortgage. It demonstrates that up to August 2015, and thus the date of final hearing, (omitted) charged a total of $19,649.37 for a variety of fees, costs and interest charges, including management fees, solicitor costs, default costs and interest. It further demonstrates that from August 2015 until January 2017, interest was accruing on the (omitted) loan, at the “higher rate” of 11.75% and in the amount of $1,419.79 per month.
If the percentage proportions of 83/17 are applied to the figure of $19,649, on the basis of Annexure “E”, the husband alone would be liable for 17% of $19,649.37 (Interests and other charges up to July 2016), being $2,554 (rounded) and the parties jointly for 83%, being $17,095 (rounded) or $8,547.50 each. Applying the same approach to the balance of $26,570.36, the husband alone would be liable for $4,517.00 of interest from August 2015 up to February 2017 (17% of $26,570.36) and the parties jointly for 83% being $22,053.00 (rounded) or $11,026.50 each.
Accordingly, the wife, on her construction of Order 5(g), would benefit to the extent of $8,547.50 + $11,026.50, or $19,574.00, not $46,219.73.
However, the husband points out that the Reasons clearly express an intention that the husband was to receive 30% of the net assets, less $25,000.00. The discussion of the justice and equity of the outcome at [103] to [107] of the Reasons makes this plain. If the wife is correct, he will receive significantly less than this intended outcome. The husband’s essential argument is that this does not reflect the intention of the Court because it undermines the essential findings of a just and equitable result.
To ascertain the intention of the court, if any, regarding liability for the disputed $46,219.73, it is necessary to refer to some additional factual matters.
The findings in the Reasons at paragraphs [60] to [64] show that the husband made payments on the total (omitted) loan of $145,000.00 between July 2012 and April 2013, whilst the wife’s mother lent her $26,368.70 for the payment of interest on the (omitted) loan. Annexure “D” to the wife’s Affidavit contains a range of correspondence and texts messages between 2013 and 2014. In a text message dated 1 February 2014 the husband alleged the (omitted) loan had a debit balance of $172,350.00 “with all penalty interest included and legal fees yet to be determined”. In her Affidavit at paragraph 10, the wife makes clear that after August 2015, when the final hearing took place, she made no further payments towards the (omitted) loan.
It is unclear why the (omitted) loan was not being serviced after August 2015. Annexure “E” to the wife’s Affidavit is a letter dated 10 August 2015 from the wife’s solicitors to the husband’s solicitors. In it, reference was made to an offer the husband was said to have made to pay $400.00 towards the (omitted) loan each month. Account details for payment were included. This suggests the parties had turned their minds to servicing the (omitted) loan after August 2015. It suggests the wife, who continued to live in the Property A property until it was sold, considered herself responsible for the balance of the monthly payments to (omitted) beyond $400.00. As already noted above, neither party actually paid any amount towards the (omitted) loan after August 2015.
The salient point, however, is that there is nothing in the Reasons suggesting the parties at final hearing drew the Court’s attention, either by way of evidence or submissions, to the existence of, or the possibility of, arrears and costs of such a magnitude then, or, when final orders were pronounced, to the fact that the (omitted) loan was not being serviced from August 2015.
This discussion brings the bracketed words “(or the sum required to discharge the mortgage)” into focus. Apart from the body of the Final Orders, they appear in one other place, [102] of the Reasons. This paragraph precedes the discussion of the justice and equity of the outcome. In all other relevant places in the Reasons Her Honour referred to the precise sum of $25,000.00 as falling on the husband’s share.
The bracketed words themselves are an objective indicator that the court intended the husband to bear some liability for the (omitted) loan beyond the precise amount of $25,000.00.
However, in my view it does not follow that the Court objectively intended the husband to be liable for the entirety of the disputed $46,219.73. This is because there is no objective basis in the Reasons, and therefore at the date of the Final Orders, for concluding that the court was in a position to know the actual or likely size of “the sum required to discharge the mortgage” because the parties did not tell it. Consequently, it was objectively impossible for the Court to form an intention that the husband should be obliged to pay an amount that was almost three times greater than $25,000.00, thus violating the boundaries of the 70/30 just and equitable result.
Conclusion
Therefore, although I am satisfied that objectively Her Honour formed an intention to make orders imposing a liability on the husband which may have been in excess of $25,000.00, that intention was formed without the benefit of any information from the parties about what the likely excess would be. This leads to the inference that the court assumed any such additional liability would be sufficiently modest to cause the total liability to remain consistent with the just and equitable outcome apportioning 30% of the matrimonial assets to the husband, less $25,000.00.
In support of this conclusion one can point to the very fact that the bracketed words are in brackets. This indicates that they were in the nature of an afterthought, and not a central element of a just and equitable outcome, which itself was essential.
I am satisfied that order 5(g) in its current form does not reflect the intention of the Court, is an ‘error’ arising from an ‘accidental slip or omission’ because of unintended or unforeseen consequences, and in the control of the Court’s processes, if left undisturbed, it would result in injustice to the husband. Consequently, the power to amend the order is enlivened.
I am satisfied that if the Court’s attention has been drawn to the difficulty at the time the orders were made, Her Honour would have “at once” made an appropriate order to ensure the just and equitable result was not disturbed.
The simplest amendment to the Final Orders which will conform to the intended just and equitable outcome is to apportion 83 per cent of $46,219.73 as a joint liability, i.e. $38,363.00, 17 per cent, i.e. $7,857.00, as a sole liability of the husband. This will come closest to preserving the just and equitable outcome of a 70/30 (less $25,000.00) split.
I add that in my view this is not a substantive amendment rather than an amendment giving effect to a plain judicial intention. Difference of opinion is inherent in differing constructions of a court order. However, the competing arguments do not raise the impediment to invoking the slip rule identified by Thackray J in Pawley & Pawley (No.2) (supra) where he said that: “the authorities make plain that the slip rule can be applied only where the amendment is one upon which no real difference of opinion can exist”. Recently in Minjarez & Minjarez [2017] FamCAFC 222 at [27]ff Murphy J, with whom Thackray and Aldridge JJ agreed, specifically rejected the submission that this principle would prevent application of the slip rule where one party argues there is no error in the orders made so that the parties have a real difference of opinion in relation to the actual intention of the Order. Murphy J said:
28. Thackray J’s statement just referred to is succeeded by the statement that “[h]ence, [the slip rule] cannot apply where there is any question involving the exercise of discretion by the judge”. His Honour cannot, in my respectful view, be taken to mean that the slip rule cannot be properly invoked when there is any difference of opinion. If that were so there could never be an amendment pursuant to the slip rule on the application by one party where that party’s contention as to intention is plainly correct and the other party’s different contention is plainly wrong.
29. His Honour, it should be noted, refers to a “real” difference of opinion which is to be equated to the need for discretionary intervention by the primary judge. The distinction there drawn by his Honour is, in my respectful view, the distinction drawn in the earlier authorities to which his Honour refers, namely where the “real difference in opinion” is a proper pointer to the issue being one of substantive amendment rather than an amendment giving effect to a plain judicial intention.
This is consistent with Newmont Yandal Operations (supra) where it was pointed out that there is more than one way the Court’s intention can be implemented (at [143]) and the existence of a choice between alternative means of carrying the Court’s intention into effect does not involve an evaluative or discretionary judgment in the sense used in the authorities (at [143], [185], [194]). In light of the above discussion, I accept that no real difference of opinion exists on these facts as I find no requirement for discretionary intervention by the primary judge. Accordingly, orders will be made amending order 5 of the Final Orders pursuant to r.16.05(2) of the Rules, as set out at the commencement of these reasons.
I certify that the preceding seventy (70) paragraphs are a true copy of the reasons for judgment of Judge Harper
Date: 26 October 2017
0
19
5