Stelzer and Wallace

This matter came before Benjamin J concerning a dispute between a wife and husband regarding the calculation of amounts due under court orders made on 11 February 2011, as varied by the Full Court on 11 December 2013. The core of the dispute involved the proper allocation of payments made by the husband to satisfy his obligations, specifically whether payments should be applied first to principal or to accumulated interest.

The court was required to determine the correct method for calculating the outstanding debt, particularly how payments made by the husband should be appropriated between principal and interest. This involved interpreting the nature of various payments, including those made pursuant to an initial agreement, subsequent stay orders, and the final orders of the Full Court, and applying established legal principles regarding the appropriation of payments.

Benjamin J applied the common law presumption of "first in, first out" (Clayton's Case) and its subsequent interpretations, noting that while debtors generally have the right to appropriate payments, this right can be lost if not exercised. The court considered the wife's submission that certain payments, described as "income" under stay orders, should be applied first to interest. While not accepting the wife's counsel's broader characterisation of court powers, Benjamin J agreed that these payments should be treated as an election by the parties to apply them first against accumulated interest. However, payments made after the Full Court's final orders and the subsequent stay order were to be applied against the principal liability, as those orders did not specify an allocation priority. The court directed that calculations be redone based on these determinations.

The court ordered that written directions be given to Mr N to recalculate the amount due to the wife based on the determined allocation principles. Leave was granted for parties to apply for further directions within three months if issues arose with the calculations. All other outstanding applications, except for costs, were dismissed. The court certified that it was reasonable to engage senior counsel and that applications for costs should be made in accordance with the Family Law Rules 2004 (Cth).