Shafton and Shafton
[2011] FMCAfam 46
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| SHAFTON & SHAFTON | [2011] FMCAfam 46 |
| FAMILY LAW – Enforcement – interpretation of consent orders. |
| Family Law Rules, r.20.11 |
| Codelfa Construction Pty Ltd v State Rail Authority of NSW [1982] HCA 24 Owston Nominees No 2 Pty Limited v Branir Pty Limited [2003] FCA629 |
| Applicant: | MS SHAFTON |
| Respondent: | MR SHAFTON |
| File Number: | NCC 1006 of 2009 |
| Judgment of: | Terry FM |
| Hearing date: | 16 August 2010 |
| Date of Last Submission: | 13 September 2010 |
| Delivered at: | Newcastle |
| Delivered on: | 21 January 2011 |
REPRESENTATION
| Counsel for the Applicant: | Mr Hamilton |
| Solicitors for the Applicant: | Kinnear & Company |
| Counsel for the Respondent: | Mr Graham |
| Solicitors for the Respondent: | Baker Love Lawyers |
ORDERS
That the wife’s application for a declaration that she is owed $80,346.06 by the husband is dismissed.
IT IS NOTED that publication of this judgment under the pseudonym Shafton & Shafton is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT NEWCASTLE |
NCC 1006 of 2009
| MS SHAFTON |
Applicant
And
| MR SHAFTON |
Respondent
REASONS FOR JUDGMENT
Introduction
The wife seeks, in aid of an enforcement application, a declaration that upon the proper construction of consent orders made on 28 April 2009 the husband owes her $80,346.06.
The husband seeks the dismissal of the wife’s application. He says that upon the proper construction of the orders he is up to date with his obligations and does not owe the wife anything.
The Evidence
The wife relied on her amended application in a case filed on 22 July 2010 and her affidavits filed on 22 May 2010, 22 July 2010 and
6 August 2010. The wife’s application was drawn for filing in the Family Court and the wife’s documents are in compliance with r.20.11 of the Family Court Rules.
The husband relied on his affidavits filed on 6 August 2010 and
6 August 2010.
The orders of 28 April 2009 were made by the Family Court. There was no dispute that they had been registered in this court.
At the hearing on 16 August 2010 the parties were cross examined and an order was made for the filing of written submissions. The husband was ordered to file and serve submissions within 7 days, the wife was ordered to file and serve submissions within a further 14 days and the husband was given liberty to file and serve submissions in reply within a further 7 days if he took issue with any matters of law in the wife’s submissions.
The husband’s submissions were filed on 20 August 2010 and the wife’s submissions were filed on 6 September 2010, in accordance with the orders.
The husband became self-represented after his submissions were filed. He filed what purported to be submissions in reply on 13 September 2010. The wife’s solicitors wrote to the court objecting to these submissions being taken into consideration.
The submissions filed by the husband on 13 September 2010 do not take issue with any matters of law raised in the wife’s submissions and are in effect a second attempt by the husband to argue his case. I have not taken these submissions into consideration.
The background to the dispute
The husband and wife married in 1994 and separated on 10 April 2007. In January 2009 they commenced participation in a collaborative law process in an endeavour to resolve their property matters.
The wife was legally represented throughout the collaborative law process. The husband was legally represented until 13 March 2009 and was thereafter self-represented.
The property available for division consisted firstly of three real properties in the parties’ names Property B, Property S and Property G and a quarter interest in another real property in the husband’s name.
Property B is the former matrimonial home and it has been the wife’s home since separation. It is mortgaged as security for two loans categorised by the husband as “home loans.”[1]
[1] Husband’s affidavit filed 26 July 2010 paragraph 4(c)
At separation the parties had been engaged, through companies and trusts, in developing a number of properties in (omitted). (hereinafter referred to as the commercial development) and this development was ongoing in January 2009. Some of the properties in the development were owned by (omitted) Pty Ltd as trustee for the (omitted) Unit Trust and some were owned by (omitted) as trustee for the (omitted) Trust.[2]
[2] Wife’s affidavit filed 25 May 2010 paragraph 5
The former matrimonial home is also mortgaged as security for borrowings in respect of the commercial development. It was accepted by both parties that this mortgage could not be removed, nor any substantial cash amount paid by the husband to the wife, until the commercial development was further advanced.
A further relevant background fact is that the wife is medically retired from employment and is in receipt of a superannuation pension. The husband is an architect.
At their first meeting in January 2009 the parties signed Heads of Agreement which contained the following broad general terms:
·The husband was to transfer his interest in the former matrimonial home to the wife.
·The wife was to resign as a director of several companies and be removed as the beneficiary of the Shafton Family Trust, effectively giving the husband sole ownership and control of the commercial development.
·The husband was to indemnify the wife against liabilities in relation to the companies.
·The husband was to pay the wife $2,166,000.00 in two instalments of $1,000,000.00 and $1,166,000.00 respectively from funds received by him as the commercial development progressed.
·The wife was to discharge the home loans upon receipt of the 1st instalment
·Until the wife discharged the home loan the husband was to pay the wife $60,000.00 per annum by equal monthly payments.
·Once he was in a financial position to do so the husband was to secure the discharge of the mortgage registered over the former matrimonial home in respect of the commercial development.
·The husband was to become the sole owner of the Property S and Property G real properties.
After the first meeting the parties began a process of exchanging draft terms of settlement and two further meetings took place.
On 23 April 2009 Terms of Settlement were signed and on 28 April 2009 orders were made by consent in the Family Court at Newcastle in terms of the Terms of Settlement.
The Terms of Settlement
The Terms of Settlement consist of both notations and of clauses which effectively became the orders.
Pursuant to Order 10 the husband is required to pay the wife $2,166,000.00 in two instalments, the first instalment of $1,166,000.00 to be paid on or before 19 January 2011 and the second instalment of $1,000,000.00 to be paid on or before 19 January 2012.
Pursuant to Order 2 the wife is required to pay out the home loans upon receipt of the first instalment.
Order 6 provides for the husband to make certain payments to the wife pending receipt by her of the first instalment, as follows:
Commencing 1st February 2009 and until payment in full by the husband of the first amount of money paid pursuant to Clause 10:
6.1 The husband pay to the wife $60,000.00 per annum as follows:
6.1.1$36,000.00 to the (bank omitted) mortgage loan account numbers (omitted); and
6.1.2$24,000.00 by way of spouse maintenance to a bank account nominated by the wife.
6.2Until 31st January 2010 the moneys paid by the husband pursuant to Clause 6.1.1 are to be paid as follows:
6.2.1$30,000.00 by a lump sum payment to the (bank omitted) mortgage loan account numbers (omitted) immediately upon the drawing down of the interim funding facility by (omitted) Pty Ltd; and
6.2.2$3,000.00 on 1st December 2009 and $3,000.00 on 1st January 2010 to the (bank omitted) mortgage loan account numbers (omitted); and
6.3Until 31st January 2010 the moneys to be paid by the husband pursuant to Clause 6.1.2 are to be paid as follows:
6.3.1$20,000.00 by way of a lump sum payment to a bank account nominated by the wife immediately upon the drawing down of the interim funding facility by (omitted) Pty Ltd;
6.3.2$2,000.00 on 1st December 2009 and $2,000.00 on 1st January 2010 to a bank account nominated by the wife.
6.4Until the husband makes payment of the money pursuant to Clauses 6.2.1 and 6.3.1 the husband is to:
6.4.1Pay $3,000.00 to the (bank omitted) to pay the loan repayments for the mortgage loan account numbers (omitted) on 1st April 2009 and every month thereafter until he complies with Order 6.2.1.
6.4.2Pay $2,000.00 per month to a bank account nominated by the wife on 1st April 2009 and every month thereafter until he complies with Clause 6.3.1.
6.5After 31st January 2010 the moneys to be paid by the husband pursuant to Clause 6.1.1 and 6.1.2 are to be paid as follows:
6.5.1$3,000.00 on the 1st day of each month to the (bank omitted) mortgage loan account numbers (omitted); and
6.5.2$2,000.00 per month on the 1st day of each month to a bank account nominated by the wife.
The interim funding facility is referred to in Notation AC which provides as follows:
The husband is in the process of organising an interim funding facility of $200,000.00 by (omitted) Pty Ltd with the (bank omitted) or other financial institution (“the interim funding facility”). The husband can only comply with the provisions of Clauses 6.2.1 and 6.3.1 when this money becomes available.
Pursuant to Order 11 the husband is required to do all acts and things necessary to cause (omitted) Pty Ltd to apply for an interim funding facility and also a Construction Loan for the purposes of development of the (omitted) Unit Trust properties.[3]
[3] Cf Notation AD & AB which when read together suggest that the purpose of the Construction Loan is to fund the development of the properties owned by both Unit Trusts.
Order 12 provides as follows:
Within 30 days of the date of establishment of the interim funding facility the husband must cause (omitted) Pty Ltd to draw down sufficient moneys from the (bank omitted) to comply with his obligations pursuant to Clause 6.2.1 and 6.3.1.
Pursuant to Order 29 the husband is required within 30 days of the Construction Loan being established to pay out the loan secured over the former matrimonial home in respect of the commercial development.
Pending compliance with this order the husband is required to make the repayments in respect of this loan.
Order 14 imposes an additional obligation on the husband as follows:
Forthwith upon the drawing down of the Construction Loan or 1 January 2010 whichever is earlier, the husband is to pay $8,290.00 to the wife.
The dispute
The husband has never paid the wife lump sum payments of $20,000.00 or $30,000.00 as required by orders 6.2.1 and 6.3.1. He has paid monthly instalments pursuant to 6.4 (until 31 January 2010) and 6.5, although not always on time.
The husband has not, in any separately identifiable form, paid the wife the amount of $8,290.00 as required by Order 14.
The wife’s case was that as at 16 August 2010 the husband owed her $80,346.06, made up of:
·the lump sums which should have been paid pursuant to Orders 6.2.1 and orders 6.3.1 ($50,000.00);
·monthly amounts which the husband ought to have paid after 31 January 2010 pursuant to Order 6.4;
·the amount of required to be paid by Order 14 ($8,290.00); and
·interest.
The wife case rested on the following propositions:
i)The husband’s liability to pay the lump sums existed as at the date of the orders, because the interim funding facility had been established prior to the Terms of Settlement being signed.
ii)In the alternative, on the proper construction of the orders the husband was liable to pay the lump sums by no later than 31 January 2010, whether or not the interim funding facility had been established.[4]
iii)It was never intended that payments made by the husband pursuant to Order 6.4 would be treated as part payments of the lump sums and on a clear reading of order 6 there was no provision for this to occur. The monthly payments pursuant to Order 6.4 were intended to be by way of penalty.[5] It did not matter, in other words whether the husband had paid the equivalent of $50,000.00 in the period 1 February 2010 to 31 January 2010 by way of making payments pursuant to Order 6.4. He was still obliged to pay the lump sums totalling $50,000.00.
iv)The husband’s liability to pay monthly amounts pursuant to 6.4 did not end on 31 January 2010, rather it continued for as long as the lump sums remained unpaid. In other words at the present time the husband was required to pay monthly amounts of $3,000.00 and $2,000.00 pursuant to Order 6.4 as well as monthly amounts of $3,000.00 and $2,000.00 pursuant to Order 6.5.[6]
v)$8,290.00 was due and owing pursuant to Order 10 as 1 January 2010 has now passed.
[4] This was the position outlined by the wife’s counsel at the commencement of the case, although in the written submissions filed by the wife no reference is made to this possible interpretation of the orders.
[5] Wife’s submissions paragraph 21.
[6] This is implicit in the wife’s calculation of the balance due to her in her affidavits filed on 25 May 2010 and 22 July 2010 although this issue was not addressed in the written submissions filed by the wife.
The husband’s case was that he did not owe the wife anything. His case rested on the following propositions:
i)The interim funding facility had never been established and therefore the liability to pay the two lump sums had never arisen.
ii)It could not be read into the order that the lump sums were payable by 31 January 2010 whether or not the interim funding facility had been established.
iii)It was always intended that the husband’s liability to pay the lump sums would be reduced by any amounts paid pursuant to Order 6.4. He had paid the equivalent of the lump sums by making payments pursuant to Order 6.4 and therefore he no longer had any liability to the wife pursuant to Orders 6.2.1 or 6.3.1.
iv)It was never intended that payments pursuant to Order 6.4 would continue after 31 January 2010. After that date Order 6.5 applied, and the husband had made the payments required by Order 6.5.
v)The amount of $8,290.00 had not been paid as such but the husband had overpaid his obligations in other respects and therefore did not owe the wife any money pursuant to the orders.
There are a number of disputes contained in the above propositions, and more than one way to approach resolution of the matter.
One option would be to deal first with the dispute about whether the interim funding facility had in fact ever been established, because if the finding was that it had not, and the wife’s argument that the lump sums were due anyway by 31 January fails, that would, at least for the time being, almost be the end of the matter. It would not then be necessary to consider whether any payments made pursuant to Order 6.4 should be treated as part payment of the lump sums, although it would be necessary to consider whether the obligation to make payments pursuant to Order 6.4 continued once Order 6.5 came into play.
The other option and in my view the preferable option is to deal first with the issue of whether, upon the proper construction of the orders, the husband’s overarching liability was to pay $60,000.00 per annum or whether he was liable, for the period 1 February 2009 to 31 January 2010, to pay both the lump sums amounts referred to in 6.2.1 and 6.3.1 and (until he paid the lump sums) the amounts required by 6.4.
If this issue is resolved in favour of the wife, I will then need to consider her other arguments, namely the argument that the interim funding facility has been established and that therefore the lump sums are presently due and owing and the argument that payments pursuant to Order 6.4 were intended to continue even after the husband’s liability pursuant to order 6.5 commenced.
If however this issue is resolved in favour of the husband it is effectively the end of the matter, as the wife conceded that the husband was up to date with his obligations pursuant to 6.4 (to the 31 January 2010) and 6.5 and she did not take issue with his assertion that he had overpaid these obligations to an extent which covered his liability pursuant to Order 14.
The principles to be applied
The authorities make it clear that when interpreting an order a court must first consider whether the order is clear on its face.
In Langford & Coleman, the Full Court was dealing with an appeal in a matter where the proper interpretation of a consent order had arisen in the context of enforcement proceedings. The appellant husband argued for a literal interpretation of the order. The respondent wife submitted that the parties’ intentions when the order was made should be taken into account when interpreting the order.
The husband was successful and Nygh J said as follows:
… in my view, regrettably, there is clear authority for the proposition that at least in matrimonial causes once any financial agreement reached between the parties is embodied in consent orders, it is to these orders alone that the Court must look…... It follows that [..] an order made by consent must be treated like any other non-consensual court order. It must be read and interpreted quite independently of what the parties subjectively might have intended thereby. It must be read as standing on its own feet, as it were.[7]
[7] In the Marriage of Langford & Coleman (1992) 110FLR 396 at 401. See also Fooks v Clark (2004) 34FamLR 149
In Yunghanns & Yunghanns the Full Court put the matter this way:
In the absence of any allegation of fraud or mistake or other vitiating circumstances in the formation, drafting or recording of the orders, extrinsic evidence is not admissible to contradict the plain words of the order, or to seek to establish the agreement between the parties which lay behind it: Langford and Coleman (1993) FLC 92-346 at 79,671 and Harrington v Lowe (1996) 136 ALR 42; FLC 92-668.[8]
[8] Yunghanns & Yunghanns (1999)FLC92-836 paragraph 143
There are however times when orders are not plain but are ambiguous and in those circumstances the court can sometimes have regard to some extrinsic material. In Owston Nominees No 2 Pty Ltd & Branir Pty Limited,[9] a decision of the Federal Court, Allsop J said as follows:
In Repatriation Commission v Nation (1995) 57 FCR 25, 33-34 Beaumont J said the following (with which Black CJ and Jenkinson J concurred) about this power:
The rule in England is that when a judgment is clear as to its terms, not even the pleadings nor the history of the action may be utilised to construe the judgment contrary to its clear meaning (see Halsbury's Laws of England, (4th ed, 1979), Vol 26, p 273).
Where, however, the judgment or order is ambiguous, it may be permissible to resort to extrinsic material, including the reasons for judgment, to resolve the ambiguity (see Gordon v Gonda [1955] 2 All ER 762 at 765, 768).
Under the ordinary rules of construction, evidence of surrounding circumstances is admissible to assist in the interpretation of an instrument if the language is ambiguous or susceptible of more than one meaning, but not admissible to contradict the language of the instrument when it has "a plain meaning" (see Codelfa Construction Pty Ltd v State Rail Authority of NSW [1982] HCA 24; (1982) 149 CLR 337 per Mason J at 352).[10]
[9] Owston Nominees No 2 Pty Limited v Branir Pty Limited (2003) FCA629
[10] Owston Nominees No 2 Pty Limited v Branir Pty Limited [2003] FCA629
In the matter before me, each party, without objection by the other, gave evidence about the negotiations which led up to the Terms of Settlement being signed, and about their own state of mind and their own intentions during the negotiations, and their respective counsels made reference to this evidence in submissions.
The wife’s counsel submitted for example that “if there is any doubt in respect to the interpretation of [Order 6] the Court can have regard to the extraneous circumstances of the negotiation between the husband and the wife which are referred to in the annexures to the Wife’s affidavit filed 6 August 2010.”[11]
[11] Wife’s submissions paragraph 17
In Codelfa Construction Pty Ltd v State Rail Authority of NSW which was referred to by Allsop J in Owston Nominees No 2 Pty Limited v Branir Pty Limited however Mason J said as follows:
The true rule is that evidence of surrounding circumstances is admissible to assist in the interpretation of the contract if the language is ambiguous or susceptible of more than one meaning. But it is not admissible to contradict the language of the contract when it has a plain meaning. Generally speaking facts existing when the contract was made will not be receivable as part of the surrounding circumstances as an aid to construction, unless they were known to both parties, although, as we have seen, if the facts are notorious knowledge of them will be presumed.
It is here that a difficulty arises with respect to the evidence of prior negotiations. Obviously the prior negotiations will tend to establish objective background facts which were known to both parties and the subject matter of the contract. To the extent to which they have this tendency they are admissible. But in so far as they consist of statements and actions of the parties which are reflective of their actual intentions and expectations they are not receivable. The point is that such statements and actions reveal the terms of the contract which the parties intended or hoped to make. They are superseded by, and merged in, the contract itself. The object of the parol evidence rule is to exclude them, the prior oral agreement of the parties being inadmissible in aid of construction, though admissible in an action for rectification.
Consequently when the issue is which of two or more possible meanings is to be given to a contractual provision we look, not to the actual intentions, aspirations or expectations of the parties before or at the time of the contract, except in so far as they are expressed in the contract, but to the objective framework of facts within which the contract came into existence, and to the parties’ presumed intention in this setting. 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.[12]
[12] Codelfa Construction Pty Ltd v State Rail Authority of NSW [1982]HCA24 at paragraphs 22-25
Codelfa Construction was concerned with the interpretation of the terms of a contract, but, consistently with Langford & Coleman, Mason J’s observations are equally applicable when the issue is the interpretation of consent orders.
In my view it is not permissible for me to have regard to the evidence about the parties’ negotiations, or their states of mind or intentions during the negotiations, as an aid to construing Order 6 should I consider it ambiguous.
Whether any reference can be made to the Heads of Agreement referred to earlier in this judgment is a nice point. The wife introduced the Heads of Agreement into evidence, and as it happens, the contents of the Heads of Agreement are replicated more or less exactly in the Terms of Settlement ultimately signed. However the safest course is to regard the contents of the Heads of Agreement as part of the negotiations between the parties and to disregard them when interpreting Order 6.
The other piece of evidence which went in without objection and which was the subject of cross-examination was a letter written by the wife on 3 October 2010 in which the wife expressed a view about the operation of Order 6 which coincides with the view expressed by the husband in these proceedings. I concur with the submissions by the wife’s counsel that I cannot have regard to this letter as an aid to construing Order 6.
When it comes to interpreting Order 6 therefore I am principally thrown back on the orders themselves. It is of importance however to remember that Order 6 is but one order in a set of orders and notations.
In Ford v Beech (1848) 11QB 852 at 866 Parke B said as follows:
The common and universal principle ought to be applied: namely, that [a contract] ought to receive that construction which its language will admit, and which will best effectuate the intention of the parties, to be collected from the whole agreement; and that greater regard is to be had to the clear intention of the parties than to any particular words which may have been used in the expression of their intent.[13]
[13] Ford v Beech (1848) 11QB 852 at 866
In Yunghanns & Yunghanns the Full Court said as follows:
The only order of those made on 26 June, 1996, of which the Respondents contended that the statutory demands constitute a breach, was order 13. That order must be construed in the context of the other orders also contained in the consent orders of that date, and in the light of the proceedings of which they were the culmination and of the parties thereto.[14]
[14] Yunghanns & Yunghanns (supra) paragraph 142
I therefore need to construe Order 6 in the light of the contents of the Orders and Notations as a whole.
The construction of order 6
The wife’s counsel submitted that Order 6 was “literally clear and unambiguous.” He submitted that if it had been intended that any payments made by the husband pursuant to Order 6.4 were to be treated as part payment of the lump sums referred to in Order 6.1 & 6.2, this would be have been specifically stated. It was not specifically stated and therefore the provisions of Order 6.2.1 and 6.3.1 (requiring the payment of the lump sum) and the provisions of Order 6.4 (requiring the monthly payments while the lump sum remained unpaid) should be treated as cumulative.
I do not accept however that the provisions of Order 6 when read as whole are literally clear and unambiguous. The interpretation of the orders pressed by the wife’s counsel is certainly open, but the interpretation pressed by the husband’s counsel is equally open.
The husband’s counsel submitted that the overarching purpose of Order 6, as expressed in Order 6.1, was that the husband should pay the wife $60,000.00 per annum pending the payment of the first large instalment and in his affidavit filed on 26 July 2010 the husband outlined his view that the balance of Order 6 was simply directed to making provision for how the amount of $60,000.00 was to be paid, in a cascading series of alternatives. If this interpretation is correct then of necessity any payments made by the husband pursuant to Order 6.4 would have to be taken into account when calculating any liability by the husband from time to time to pay the lump sums.
I am satisfied that there is ambiguity in Order 6, and it is therefore necessary for me to consider the proper construction of Order 6 in the light of the uncontroversial background facts and the intentions of the parties as they can be divined from the Terms of Settlement as a whole.
A consideration of the purpose of Order 6 as divined from the non-controversial background and the orders as a whole supports the construction proposed by the husband.
There was an acceptance by the parties from the start of the negotiations that the husband would be unable to pay the wife any significant amount of cash by way of a property settlement until the commercial development was further advanced.
It is clear, when the orders or notations are considered as a whole, that the purpose of Order 6 was to ensure that the wife was protected, as far as payment of the home mortgage and spousal support was concerned, pending the receipt by her of the first instalment from the husband. The fact that the orders were designed for that purpose is reinforced by Order 8, which provides that:
No further payment is to be made by the husband pursuant to Clauses[sic] 6 after the husband has paid the first payment in full to the wife pursuant to Clause 10
Notation AA spells out the intention that the husband should pay the home loan mortgage until the first instalment is paid. It provides as follows:
Neither the husband nor the wife are in a position to discharge the mortgage loan account numbers (omitted). The intention of the orders is that the wife will discharge these loan accounts upon payment to her of the first payment made pursuant to Clause 10 and that until the first payment is made that the husband will make the mortgage payments to the (bank omitted) as and when they fall due.
Order 6 read as a whole recognises that an amount of $3,000.00 per month is sufficient for this purpose. A construction of Order 6 which requires the husband to pay the lump sum of $30,000.00 (10 months worth of payments at $3,000.00) plus an additional $3,000.00 per month while the lump sum of $30,000.00 remains unpaid would result in the husband paying 100% more each month than was required for the purpose of Notation AA, until the lump sum of $30,000.00 was paid.
The wife’s case in effect was that the solution to this dilemma was in the husband’s hands, and that the imposition on him of the 100% penalty was designed to be just that, a penalty to ensure prompt payment of the lump sum.
One difficulty with this argument is that order 6.4 requires the husband to make the first additional payment of $3,000.00 on 1 April 2009, in other words at a time pre-dating the husband, even on the wife’s case at its highest, having any liability to pay the lump sum.
If the provisions of Order 6.4 had been intended as a penalty of this magnitude and if the payment of the $50,000.00 in the first year by way of lump sum rather than by way of monthly payments had been of critical importance for the financial protection of the wife, one would have expected that there would have been some strict deadline imposed on the husband to pay the lump sums. As it is, the orders simply provide for the husband to pay the lump sums when he establishes the interim funding facility and inherent in this is the possibility that the facility might never be established.
Another matter militating against a finding that Order 6.4 was intended as a penalty on the husband is that the orders as a whole contain other provisions to compensate the wife in the event of the husband’s non-compliance with the orders and in particular in the event of his non payment of the mortgage.
Order 7 provides as follows:
If after 1st February 2009 the wife pays the loan repayments for mortgage loan account numbers (omitted) the husband is to reimburse the wife for such payments made by her within 21 days of the wife making such payments.
Order 9 provides as follows:
If the non-payment of the moneys by the husband pursuant to clauses (sic) 6 leads to the wife incurring any penalty or additional cost, the husband must forthwith reimburse the wife for such penalty or additional cost.
Order 44 provides that if the husband defaults in payment of any moneys due pursuant to the orders he shall pay interest.
The potential penalty inherent in the wife’s interpretation of Order 6 is so harsh that one would have expected it to be very clearly spelled out if imposing it had indeed been the intention of the order.
The wife is really forced, adopting the position she does that the payments pursuant to Order 6.4 were intended to be a penalty, to argue that the payments pursuant to Order 6.4 were intended to continue even once the payments pursuant to 6.5 commenced. This interpretation of the orders however would result in the husband at present being required to pay double the amount necessary to keep the home mortgage payments up to date. It is a very harsh outcome and it conflicts with Notation AA, which refers to an intention that the husband should pay the home mortgage payments each month, and not double the home mortgage payments each month.
I do not accept the submission by the wife’s counsel that because the orders were approved by the Registrar pursuant to s.79 the orders have been adjudged to be just and equitable and I therefore cannot take into account the potential harshness inherent in the wife’s interpretation of Order 6 when construing the order. It is very unlikely that the potential harshness of Order 6 as it is interpreted by the wife would have been apparent to the Registrar on a reading of the orders. The Registrar’s focus would have been on the overall division between the parties and not on the fine details of orders such as order 6.
The wife conceded that if Order 6 was construed as proposed by the husband, then he did not owe her any money pursuant to the orders. In the circumstances the wife’s application for a declaration that the husband owes her $80,346.06 must be dismissed.
As a result of my finding that the construction of Order 6 proposed by the husband is to be preferred, it is unnecessary for me to make a finding about the dispute concerning the interim funding facility, but I will nevertheless deal briefly with this issue, because it is possible that a belief by the wife that the husband has received the interim funding facility (as defined in the Terms of Settlement) and yet has stubbornly refused to pay the lump sums may be creating a level of difficulty in this matter.
It was conceded by the wife that there was no evidence that (omitted) Pty Ltd had received any money after the orders were made which could be characterised as an ‘interim funding facility.’ It was however common ground that the husband had applied for and obtained a loan from (bank omitted) for $200,000.00 prior to the Terms of Settlement being signed, and that on 24 March 2009 funds were drawn down in the sum of $188,159.82 (being the $200,000.00 less bank fees) and the money deposited into (omitted) Bank Account
This event preceded the signing of the Terms of Settlement by a month, but the wife said as follows:
To the best of my knowledge this deposit [of $188,159.82] represented the drawing down of “the interim funding facility” referred to in Notation AC and Paragraph 12 of the Orders.[15]
[15] Wife’s affidavit filed 25 May 2010 paragraph 18
The wife argued that events had simply overtaken the drafting of the final Terms of Settlement.
The husband maintained that the $188,159.82 was not the interim funding facility envisaged by the orders.
There is strength in this argument. Notation AC which refers to the interim funding facility says as follows:
The husband is in the process of organising an interim funding facility of $200,000.00 by (omitted) Pty Ltd with the (bank omitted) or other financial institution (‘the interim funding facility”). The husband can only comply with the provisions of Clauses 6.2.1 and 6.3.1 when this money becomes available. (my emphasis)
The wording of Notation AC clearly refers to an event expected to happen after the orders were made.
Order 11 provides that:
The husband is to do all acts and things and execute all documents so as to cause (omitted) Pty Ltd to apply to the (bank omitted) or other financial institution of his choice for an interim funding facility and the Construction Loan for the purposes of development of (omitted) Unit Trust properties.
Order 12 provides that:
Within 30 days of the date of establishment of the interim funding facility the husband must cause (omitted) Pty Ltd to draw down sufficient moneys from the (bank omitted) to comply with his obligations pursuant to Clause 6.2.1 and 6.3.1.
Any independent person reading the Terms of Settlement as a whole would assume that the interim funding facility referred to in that document was something which the husband was required to obtain in the future. The coincidence between the amount obtained on 24 March 2009 and the amount referred to in Notation AC is not sufficient to enable me to be satisfied on the balance of probabilities that the money paid into (omitted).’s bank account on 24 March 2009 was the interim funding facility referred to in the orders.
The wife did not attempt to establish that the husband had failed to make any reasonable efforts after the Terms of Settlement were signed to obtain an interim funding facility. In my view therefore the wife’s claim that the lump sums pursuant to Order 6 were due and payable on the day the orders were signed cannot succeed.
For all of the above reasons the order of the court shall be as set out at the beginning of this judgement.
I certify that the preceding eighty seven (87) paragraphs are a true copy of the reasons for judgment of Terry FM
Date: 21 January 2011
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