Stelzer and Wallace

[2017] FamCA 39

FAMILY COURT OF AUSTRALIA

STELZER & WALLACE [2017] FamCA 39

FAMILY LAW – ENFORCEMENT – PROPERTY ORDERS – ALLOCATION PAYMENT & INTEREST CALCULATIONS – Application by wife seeking a declaration by the Court that husband is indebted to her in the amount of $652,980.73 as of the 9 September 2016 pursuant to Orders of the Court or in the alternative the wife seeks a declaration that the husband is indebted to her in the amount of $162,463.72 as of 9 September 2016 – Machinery Orders made to enable determination of the amount (if any) to be paid to the wife or repaid to the husband in accordance with the agreement and consequential orders

Family Law Act 1975 (Cth)

Visbord v Federal Commissioner of Taxation [1943] HCA 4; (1943) 68 CLR 354
Jackson, in the matter ofConway v Conway [2000] FCA 1530

APPLICANT: Ms Stelzer

RESPONDENT: Mr Wallace

FILE NUMBER: SYC 5433 of 2007

DATE DELIVERED: 11 January 2017

PLACE DELIVERED: Sydney

PLACE HEARD: In Chambers

JUDGMENT OF: Benjamin J

HEARING DATE: By way of written submissions

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr R G Lethbridge S.C.

SOLICITOR FOR THE APPLICANT: Deborah Searle of Searle & Associates

COUNSEL FOR THE RESPONDENT:

SOLICITOR FOR THE RESPONDENT: Mr Hall of Hall Partners

Orders

1. The wife and husband give written directions to Mr N to calculate the amount, if any, due to the wife pursuant to the orders made by this court on 11 February 2011 as varied by the orders of the Full Court on 11 December 2013.

2. Such calculations to be based upon the following:-

   a.Payments of $380,000 and $3,523,410 have already been made, as set out in annexure ‘B’ to  the affidavit of Mr N filed 7 September 2016 (‘N’s affidavit’);

   b.The dates of payment are to be as set out in the same annexure;

   c.Payments referred to as ‘Principal Payments’ and the payments referred to in ‘Appeal Stay Payments’ of $30,000 on 11 May 2011 and the payments of $30,000 on 7 March 2014 and the following four payments of $10,000 (referred to in annexure ‘B’ to N’s affidavit filed 7 September 2016); will be first allocated against the principal owing under the agreement and then against any accumulated interest;

   d.Payments referred to in ‘Appeal Stay Payments’ of $30,000 on 26 August 2011 up to and including the payment of $10,000 on  26 November 2013; will first be allocated against any accumulated interest and then against the principal owing under the financial agreement;

   e.No interest is to be added to the principal amount, and is to be instead reported separately under interest in the worksheets; and

   f.Calculation of interest on each day between payments will be at the interest rate for that period as set out in the Rate of Interest document provided to me, provided it accurately states the interest payable under the Family Law Rules 2004 (Cth).

3. In the event there is an issue as to the calculations, leave is given to the parties or either of them to apply for further directions, such leave to operate for a period of three months from the date of this order.

4. Subject to the preceding order and the wife’s amended application in a case all outstanding applications, except for costs, are dismissed.

5. Any application/s for costs to be made in accordance with Family Law Rules2004 (Cth).

6. This matter be removed from the list of cases requiring determination.

7. All subpoenaed documents are to be returned to the persons or institutions from which they emanated and all exhibits are to be returned to the person or persons who tendered the same.

IT IS CERTIFIED

1. Pursuant to Rule 19.50 of the Family Law Rules2004 (Cth) it was reasonable to engage counsel and senior counsel to attend.

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 Stelzer & Wallace 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 HOBART

FILE NUMBER: SYC 5433 of 2007

Ms Stelzer

Applicant

And

Mr Wallace

Respondent

REASONS FOR JUDGMENT

INTRODUCTION

1. Ms Stelzer (‘the wife’) and Mr Wallace (‘the husband) was a married couple who entered into a financial agreement (‘the financial agreement’) shortly before they married in 2005.

2. The parties’ marriage failed in mid 2007.  The wife sought enforcement of the financial agreement and the husband sought to have it set aside and/or a declaration that it was not binding on these parties.  Over the period from the start of the first instance proceedings until the final first instance orders were made there were amendments to the Family Law Act 1975 (Cth) (‘the Act’) which impacted on the validity of the financial agreement.

3. The financial agreement provided that the husband should pay to the wife the sum of $3,250,000 in the circumstances of their particular marriage breakdown.

4. On 31 January 2011 this Court declared that the financial agreement was enforceable and made consequential orders that the balance of the $3,250,000 be paid by the husband to the wife and for payment of interest (‘the final orders’).  Parts of the interest provisions contained in the final orders[1] were subsequently varied by order of the Full Court, but the remainder of the interest orders survived the appeal processes.  The relevant and enforceable part of the final order, regarding interest, provides:-

   2.A CONSEQUENTIAL ORDER that within twenty eight (28) days from the date of this order, the husband pay to the wife the amount of $3,150,000 plus interest calculated as follows:-

   (i)…

   (ii)From 2 March 2010 to the date of payment interest in accordance with the rate determined pursuant to the Family Law Rules 2004 (Cth).

   (iii)Interest is to be calculated on $3,250,000 until the date the husband paid $100,000 to the wife (in two sums each of $50,000), including part paid pursuant to orders made by this Court in about 23 August 2010 and thereafter interest on the sum of $3,150,000 until paid.   

   [1] Order 2(i) of the Orders made 11 February 2011.

5. There were various applications for stay of the operation of the final orders.

6. All appeals in respect of the substantive proceedings have now concluded and the parties’ disagreement is as to how much money, if any, remains outstanding by the husband to the wife.  There is an issue as to the meaning of an agreement noted in the 17 May 2011 Stay Order, made by a single judge of appeal, during the appeal process.  There is an issue as to the priority of various payments made by the husband; as to whether they ought to be first set off against the capital sum or interest accruing on that sum.

7. The wife claims, in her amended application in a case, that pursuant to the substantive orders the agreement made 17 May 2011 and the stay orders, the husband owes her $652,980.73 as at 9 September 2016.

8. In the alternative the wife claims that if her primary argument as to the calculation of interest and repayment is not accepted, that the husband still owes her $162,463.72.

9. The wife seeks a declaration as to the amount owing and there was no issue as to this Court’s power to make such a declaration.

10. The husband says that the whole of the judgment debt including interest has been paid. 

11. The issues then are:-

    (a)The categorisation of the payments pursuant to the orders made by the Full Court on 17 May 2011; and

    (b)The priority regarding payments made by the husband as to whether they apply to interest or to capital at various times.

12. The wife relies upon the following:-

    (a)Her amended application in a case filed 7 September 2016;

    (b)Affidavit of her solicitor filed 23 May 2016; and

    (c)Affidavit of Mr N (expert accountant) filed 1 September 2016;

    (d)Submissions on behalf of the wife by her senior counsel dated 17 August 2016;[2]

    (e)Submissions made by her senior counsel dated 2 December 2016;[3] and

    (f)Email to each of the parties’ legal representatives dated 13 December 2016 from my legal associate and email in reply from the wife’s legal practitioner stating:-

    The evidence of amounts paid to the Wife and how they have been treated is in the affidavit of [Mr N] sworn 1 September 2016, which I have attached.  He also sets out how much the Wife is still owed if those payments totaling (sic) $380,000 were applied to interest (first) on principal still owed.

    [2] Exhibit W1.

    [3] Exhibit W2.

13. The husband relies upon the following:-

    (a)His response to application in a case filed 6 April 2016;

    (b)Affidavit of Mr O filed 6 April 2016;

    (c)Husband’s submissions dated 6 December 2016; and

    (d)Email from husband’s solicitor dated 22 December 2016 in response to the emails referred to in 12(f) above.

BACKGROUND

1. This background was taken from the reasons of the first instance judgment delivered 31 January 2011 followed by orders made on 11 February 2011 and the uncontentious history set out in the submissions by senior counsel for the wife.[4]

   [4] Exhibit W2.

2. At the date of this hearing the husband was aged about 61 and the wife aged about 48.  They had been engaged in financial proceedings in the Family Court for almost a decade.

3. The husband met the wife in about May 1998 and they soon commenced a de facto relationship.

4. On 29 September 2005 the parties executed the financial agreement that they asserted was a financial agreement pursuant to the Act. The parties then stated their intention was to put in place an arrangement for the division of property in the event that their forthcoming marriage failed. The parties married in 2005.

5. In May 2007 the wife moved out of the matrimonial home and the parties separated at about that time.  Proceedings soon commenced in this Court.  The final hearing occurred before me over a number of days in August and October 2010.  Reasons were delivered and orders made on 11 February 2011.

6. This Court declared that the financial agreement was an enforceable financial agreement under the provisions of the Act and consequentially ordered the husband to pay the wife $3,150,000 plus interest. The effect of that declaration was to disempower a court from making property and/or spousal maintenance orders pursuant to Part VIII of the Act. The section provides:-

   Section 71A  

   This Part does not apply to certain matters covered by binding financial agreements

   (1)  This Part does not apply to:

   (a)  financial matters to which a financial agreement that is binding on the parties to the agreement applies; or

   (b)financial resources to which a financial agreement that is binding on the parties to the agreement applies.

   (2)  Subsection (1) does not apply in relation to proceedings of a kind referred to in paragraph (caa) or (cb) of the definition of matrimonial cause in subsection 4(1).

7. As indicated earlier, orders were made for calculation of interest.

8. The husband filed a notice of grounds of appeal in March 2011 and sought a stay of the order requiring payment of the $3,150,000.  I heard the stay application and it was conditionally granted on 18 March 2011.  The conditions included an order that the husband pay $1,000,000 to the wife’s solicitor’s trust account or controlled monies account by 25 March 2011 (Order 1(a) of 18 March 2011 Orders); and $2,150,000 to the wife’s solicitor’s trust account or controlled monies account by 21 April 2011, of which $700,000 was to be released to the wife with the balance to remain invested (Order 1(b) of 18 March 2011 Orders).[5]

   [5] Affidavit of Ms P – Annexure “C” - Orders made 18 March 2011 and the reasons.

9. The husband filed a notice of appeal in respect of the first instance stay orders of 18 March 2011.  The parties settled that appeal and consent orders were made on 17 May 2012 by the Full Court.[6]  Those orders contained a notation evidencing an agreement in the following terms:-[7]

   1.    Upon the making of these orders, the Husband will forthwith discontinue his appeal/application for leave to leave against the stay orders made by Benjamin J on 18 March 2011.

   2.    The costs of the said withdrawn proceedings are agreed to be costs in the appeal against the substantive orders made by Benjamin J on 11 February 2011.

   3.    NOTE that it is agreed between the parties that:

   (a)The Husband will forthwith pay to the Wife the sum of $150,000 to be applied as set forth in Order 1(a) made by Benjamin J in satisfaction of that order; and that in lieu of payment of the balance of $1,400,000 in the trust account of the Wife’s solicitor pursuant to Order 1(b), the Husband will pay income to the Wife at the rate of $30,000 per quarter, first payment to be made forthwith and such payments to continue until judgment is given by the Full Court on the principal appeal; (emphasis added).

   (b)The Wife accepts such payments as full satisfaction of the conditions of the stay ordered by Benjamin J;

   (c)The parties agree that the costs of the stay application, the enforcement application and appeal from the stay order made by Benjamin J will be costs in the principal appeal;

   (d)The Court notes that the Husband will forthwith cause the sum of $180,000 to be paid to the solicitors for the Wife for the purposes of finalising his obligations under these Orders.

   [6] Ibid – annexure “D”.

   [7] Affidavit of Deborah Searle – Annexure 4.

10. It seems uncontentious that the husband paid capital sums by way of full or partial satisfaction of the final order.  These payments were as follows:-[8]

19 or 20 April 2011            $   750,000

2 May 2011  $   850,000

11 May 2011    $   150,000

30 June 2014  $1,000,000

14 July 2014  $   773,410

Total  $3,523,410

[8] Affidavit of Mr N – Annexures “A” and “B”.

1. Apart from variations to the interest provisions,[9] the Full Court dismissed the husbands’ substantive appeal by orders made on 11 December 2013.  As such the declaration as to the agreement and the order to pay were affirmed.  In addition the stay orders and stay agreement ceased to have effect.

   [9] Ibid – Annexure “E”.

2. Following the Orders of the Full Court, the husband lodged an application for special leave to appeal to the High Court.  That special leave application was refused by the High Court on 20 June 2014.[10]

   [10] See High Court transcripts; >

   In the interregnum, the husband sought a further stay of the then substantive final orders.  On 28 February 2014 consent stay orders were made, and those orders included provision for security for the wife and that the husband pay money to the wife in the sum of $20,000 then $10,000 per month.[11]  Relevantly, the 28 February 2014 order provided:-

   5.The Husband is ordered to make payments to the Wife of the following amounts:

   5.1being payment to 17 February 2014 - $20,000 to be paid forthwith;

   5.2monthly payment to 17 March 2014 - $10,000 to be paid forthwith;

   5.3monthly payments to be paid on 17^th day of each month thereafter until disposal of the Husband’s High Court appeal or further order.

   [11] Ibid - Annexure “G”.

3. In his affidavit Mr N prepared a worksheet entitled ‘Payments Summary’.[12] In this he set out the following giving detail of the payments made pursuant to the 17 May 2011 agreement and the 28 February Stay order:-

   [12] Affidavit of Mr N - Annexure ‘B’.

   Appeal Stay Payments

   11/05/2011               $30,000.00

   26/08/2011               $30,000.00

   30/11/2011               $10,000.00

   01/12/2011               $20,000.00

   27/02/2012               $30,000.00

   30/05/2012               $20,000.00

   31/05/2012               $10,000.00

   04/09/2012               $15,100.00

   10/09/2012               $14,900.00

   29/11/2012               $20,000.00

   25/02/2013               $20,000.00

   26/02/2013               $10,000.00

   27/05/2013               $20,000.00

   28/05/2013               $20,000.00

   27/08/2013               $10,000.00

   28/08/2013               $10,000.00

   29/08/2013               $10,000.00

   26/11/2013               $10,000.00

   07/03/2014               $30,000.00

   18/03/2014               $10,000.00

   22/04/2014               $10,000.00

   19/05/2014               $10,000.00

   18/06/2014               $10,000.00

   $380,000.00

4. These payments were in addition to the principal payments to which I referred earlier, and totalled $3,523,410.

5. This schedule showing the payment of $380,000 was similar to that provided in the instructions from Ms Searle, however, the dates were slightly different.[13] In her instructions Ms Searle invited Mr N to ‘establish that the payments made are correct amounts and on the correct dates as set out in the attached list marked respectively “Stay Payments” and “Large Payments”’. Given that direction and the submission by senior counsel for wife,[14] and that no issue has been taken as to the actual payments set out in Mr N’s evidence; I will treat those payment schedules as being accurate.

   [13] Affidavit of Mr N - paragraph 3(a).

   [14] Submission on behalf of wife – Exhibit W2, page 1 paragraphs 1and 2.

6. Having regard to the final orders, as varied by the Full Court, namely orders 2(ii) and (iii), interest is to be calculated in accordance with the rate determined pursuant to the Family Law Rules 2004 (Cth). There are a number of relevant periods of time for calculation of interest:-

   a)From 2 March 2010 on $3,250,000 until the date the husband paid the first $50,000 (prior to the final orders) to the wife; referred to in order 2(ii);

   b)From the date the first $50,000 is paid on $3,200,000 until the date the husband paid the second $50,000 (prior to the final orders) to the wife;

   c)From the date the second $50,000 is paid on $3,150,000 until 18 March 2011 (the date of the first stay order);

   d)From the 19 March 2011 until the consent Full Court order was made on17 May 2011.  This includes having regard to the payments referred to by Mr N as the principal payments made in April and May 2011;

   e)From 18 May 2011 to 11 December 2013 when the appeal was substantially dismissed;  

   f)From 11 December 2013 until the stay order of the Full Court made 28 February 2014;

   g)From 29 February 2014 until 20 June 2014 when the special leave application of the husband was dismissed with costs.  The date the husband paid the second $50,000 (prior to the final orders) to the wife; and

   h)From 21 June 2014 to date.

7. The method of calculation undertaken by Mr N is set out in paragraph 3 of his affidavit.  He said the following in relation to completing the task:-

   (a)I checked the repayment amounts and the dates stated on the list supplied to me undercover of Annexure A against the documents in the folder marked Exhibit and found that although the total of the payments made were correct some of the dates on which payments  were made were not.  I then created my own Worksheet with   the correct dates of payments and calculated the interest rates from time to time from the Rates of Interest document also provided to me to establish the amounts said to be owed. This Worksheet is titled "Payments Summary" and is annexed hereto and marked B.

   (b)I prepared a Worksheet titled "Summary - inclusive of Stay Payments" which included Stay Payments totaling  $380,000.

   (c)I prepared a second Worksheet titled "Summary - exclusive of Stay Payments" which excluded Stay Payments.

   (d)I calculated interest on the balance of principal owing as shown in the columns titled "Amounts Owed - Opening Balance" in both Worksheets.

   (e)I did not add interest to the principal amount and reported it separately under columns titled "Interest" in both Worksheets.

   (f)I calculated interest on each day between payments at the interest rate for that period as set out in the Rate of Interest document provided to   me.

   (g)I applied the payments made firstly in reduction of cumulative interest and secondly to reduce the principal owing.

   (h)I processed the data provided to me into Microsoft Excel software which produced the Worksheets annexed hereto and marked C and D.

1. The nub of his calculation was contained in sub-paragraph ‘g’ in that he applied the ‘appeal stay payments’ to interest first then secondly to the ‘reduction of the principal’.

DISCUSSION AND CONCLUSION

1. The “first in, first out” rule or more properly described as a common law presumption, was set out in Devaynes v Noble [1815] EngR 77; (1816) 1 Mer 572; 35 ER 781 (Clayton's Case).  The presumption is based upon the approach of the “first in, first out” to determine the effect of payments from an account, and will normally apply in the absence of evidence of any other intention. Payments are presumed to be appropriated to debts in the order in which the debts are incurred.

2. The principle was considered in Corey Bros & Co v Owners of the Turkish Steamship Mecca ("The Mecca”) [1897] AC286 at 292, which in turn was approved and applied by the High Court in Visbord v Federal Commissioner of Taxation [1943] HCA 4; (1943) 68 CLR 354 at 371 where Latham CJ said:-

   If for some reason the Property Law Act (Vict.) did not apply in the case of the present receiver, the ordinary rule with respect to appropriation of payments would be applicable (Devaynes v. Noble; Clayton's Case [15]; The Mecca [16]). The debtor has the right when he makes a payment to appropriate the money to any of the debts owing to his creditor as he pleases, and, if the creditor takes the money, he is bound to recognize this appropriation. If the debtor does not make any appropriation when he makes the payment, the creditor is then entitled to make an appropriation, and he may do this at any time up to "the very last moment" (The Mecca [17]). In the present case the debtor appropriated all payments by the receiver in the first place to principal. If it could be held that for any reason such an appropriation of moneys in the hands of the receiver was ineffectual then the appropriation by the creditor to principal governs the case.

3. In this case there was no appropriation until late.  The husband purported to, impliedly, appropriate the payments first to principal and then to interest by his claim that the payments extinguished the debt on that calculation.  The wife asserted later the alternate view as is set out in the instructions to Mr N.

4. There is also the broader element of public policy application to consider.  That is that Court rules normally apply higher than commercial rates of interest to induce judgment debtors to comply with such orders.  A corollary of that approach is that such interest does not generally accrue on interest in that context.  This was discussed by Branson J in Jackson, in the matter ofConway v Conway [2000] FCA 1530, where she said:-

   10.    The applicant contends that if interest is payable on the whole of the judgment debt of $111,449.59, he will be paying interest on interest contrary to s 85(2)(c) of the DC Act.  Lockhart J gave consideration to s 85(2)(c) of the DC Act in Re Wong; ex parte Kitson (1979) 27 ALR 405 at 413. After noting that interest on a judgment debt would not ordinarily be understood as answering the description of a “judgment debt”, his Honour said:

   In my opinion, all that s 85(2)(c) does is to provide that for purposes of enforcement of the statutory obligation to pay interest on a judgment debt, the interest is to be treated as if it were part of the judgment debt itself; but it does not answer the description of ‘the judgment debt’ as defined in Div 4 of the District Court Act.

   11.    The significance of the concluding words of s 85(2)(c), in my view, is to make clear that although, for the purpose of enforcement of the statutory obligation to pay interest on a judgment debt, the interest is to be treated as if it were part of the judgment debt, compound interest on the judgment is not permitted.  That is, further interest on such interest is not payable.  The paragraph, however, has nothing to say concerning the payment of interest on the judgment debt itself.  That issue is governed by s 85(1) read with the definitions of “judgment” and “judgment debt” contained in s 84(1) of the DC Act.  Section 84(1) provides: 

   …

   12. The above definitions make it plain that the amount of the judgment debt upon which interest was payable, unless the District Court ordered otherwise, was the sum of $111,449.59 plus any amount ordered by the District Court to be paid as costs or any amount payable as provided by the rules as costs without an order of the District Court. Although the respondent obtained a costs order in her favour in the District Court, it has not been suggested that the judgment debt includes any amount representing costs. Interest is thus payable under s 85(1) of the DC Act on so much of the sum of $111,449.59 as is from time to time unpaid. As no amount of the sum of $111,449.59 has been paid, the respondent was entitled by the bankruptcy notice to claim interest on the entire amount of the judgment debt of $111,449.59 at the rate prescribed for the purposes of s 95(1) of the Supreme Court Act 1970 (NSW) (see s 85(2) of the DC Act).

5. The effect of applying payments first to interest then to principal must, in effect, compound the interest.

6. The payments of $1,750,000 made in April and May 2011 are clearly paid by the husband to the principal debt and would also be treated on a “first in first out” basis.  As such these payments should be applied to the principal liability of the husband to pay $3,150,000 to the wife.

7. Accordingly, any calculation of interest by Mr N or otherwise would need to be on that basis.

8. The payment of $30,000 made on 11 May 2011 was made before it was asserted that an agreement[15] had been reached, which was reflected in the 17 May 2011 agreement.  As such, it falls into the same category as the principal payments, that is that it ought to first be applied to the principal.

   [15] Submissions for wife - Exhibit W2 - page 5, paragraph 3.7.

9. The remaining payments of $30,000 per quarter paid from August 2011 until the payment of $10,000 on 26 November 2013 are made pursuant to the stay agreement contained in the Full Court order of the same date.  That evidenced the following inter party agreement:-

   … and that in lieu of payment of the balance of $1,400,000 in the trust account of the Wife’s solicitor pursuant to Order 1(b), the Husband will pay income to the Wife at the rate of $30,000 per quarter, first payment to be made forthwith and such payments to continue until judgment is given by the Full Court on the principal appeal

10. In this agreement the parties used the phrase ‘income to the wife’.  Senior counsel for the wife submitted:-[16]

    [16] The wife’s written submissions dated 2 December 2016.

    4.1The Husband is understood to resist the Wife’s claim on the basis that he has already paid her in full because the quarterly payments made to her pursuant to the Consent Orders of Justices Coleman and Aldridge off-set his liability under the Subject Orders.

    4.2That contention is and can only be incorrect for the following reasons:

    (a)Firstly, the Full Court of the Family Court has to power to make orders on such terms and conditions as it thinks fit (see r 1.10 Family Law Rules). Such power is not expressly confined by legislation and reflects the usual powers of a Court to control its own proceedings; and

    (b)Secondly, when properly characterised, the payments required by Clause 3(a) of the Consent Orders represent one of a number of conditions of a stay of the Subject Orders pending the determination of the related appeal.  They were not instalments of the principal owed under the said orders or payments intended to defray the interest on the debt given that:

    (i)The language of the Consent Orders describes the payments as “income” to be paid “in lieu of” a portion of the principal sum owed under the Subject Orders.  It is a contradiction in terms to speak of a payment being “in lieu of” another amount while at the same time asserting that it should off-set that amount so as to defray the residual principal liability; and

    (ii)When the stay application came before Benjamin J on 18 March 2011, the Husband’s legal representative made a submission to the effect that the Husband’s best case on appeal would be that, from the assets valued at between $16,000,000 and $17,000,000, the Wife was entitled to between 5% and 8% of those assets, i.e $800,000 to $1,300,000.   One of the orders made was that the Wife receive $700,000 by 21 April 2011 to spend as she wished, and that amount was below the minimum the Husband expected her to receive on appeal so would not need to be clawed back.  In view of the comments made by Benjamin J on 18 March 2011 at [10], it is illogical for the Husband to now say that the income payments were payments towards the principal debt or interest on the principal debt.

    4.3The Orders made by Aldridge J, which continued and varied the provisions of the Consent Orders, did not relevantly vary their character.  The obligation of the Husband to continue the amounts originally characterised as income was comprised in Order 5.

11. I do not accept or adopt the rationale of the learned senior counsel for the wife in terms of his categorisation of the orders of Aldridge J, or the categorisation of the exchanges between the Bench and Bar as an allocation of the payments to the interest debt. I do not accept that the Court had broad powers to make orders pursuant to Part VIII of the Act, given the declaration of the validity of the final agreement.

12. However, I do accept his characterisation of the payments of the $30,000 as being income; and consequently in payment of interest first.  Consequently, it is a joint election by the husband and wife to apply the payments firstly against interest.  As such the payments from August 2011 to November 2013 are to be set off first against the accumulated and accumulating interest.

13. The payment after the December Full Court Orders and after the Stay Order made 28 February 2014, being $30,000 on 7 March 2014 and followed by four payments of $10,000, are not a continuation of previous agreement, as those orders and agreements ceased once the Full Court made final orders on 11 December 2013.  The February Stay Order simply made directions to pay and did not allocate priority and as such ought be applied against the principal liability.

14. I will make directions for Mr N to redo the calculations in accordance with the allocation of priority I have determined and give leave for the parties to apply in the event of further disagreement.

15. As to costs, each party has applied.  Applications can be dealt with under the Family Law Rules 2004 (Cth). I am satisfied that it was appropriate to instruct senior counsel. I will so order.

I certify that the preceding forty seven (47) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Benjamin delivered on 11 January 2017.

Associate: 

Date:  11 January 2017