Watson and Watson

[2014] FamCA 263

FAMILY COURT OF AUSTRALIA

WATSON & WATSON [2014] FamCA 263

FAMILY LAW – ORDERS – Interpretation of orders – consideration of whether regard can be had to the intention of the parties in interpreting consent orders – where the wife seeks payment of interest on an outstanding balance in circumstances where the husband asserts that no amount is outstanding on which interest can be calculated – where consideration given to the meaning of “outstanding” – order made for the husband to pay interest.

Family Law Act 1975 (Cth)

Hughes & Hughes [2013] FamCAFC 146
Langford & Coleman (1993) FLC 92-346

APPLICANT: Ms Watson

RESPONDENT: Mr Watson

FILE NUMBER: MLC 5375 of 2009

DATE DELIVERED: 17 April 2014

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Macmillan J

HEARING DATES: 14 January 2014
3 April 2014

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Melilli

SOLICITOR FOR THE APPLICANT: Lander & Rogers

COUNSEL FOR THE RESPONDENT: Mr O’Shannessy

SOLICITOR FOR THE RESPONDENT: Aitken Partners

IT IS NOTED that publication of this judgment by this Court under the pseudonym Watson & Watson has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLC 5375 of 2009

Ms Watson

Applicant

And

Mr Watson

Respondent

REASONS FOR JUDGMENT

1. On 21 September 2012 Dessau J made final orders for property settlement by consent. It is the interpretation of her Honour’s orders made 21 September 2012 and in particular paragraph 10 of those orders which is the issue in dispute in these proceedings.

2. Paragraph 3 of Dessau J’s orders provided that the husband pay or cause to be paid to the wife the sum of $994,886 (“the payment”) as follows:

   (a)the sum of $450,000 on or before the date, such sum to be inclusive of $103,843 (gross) as an eligible termination payment for the [w]ife’s employment with the Watson Group;

   (b)the sum of $50,000 within 30 days from the date of these orders;

   (c)the balance payable not later than 21 September 2013.

3. Paragraph 10 of the orders provided as follows:

   That the Orders of this Court made on 4 November 2009 continue in full force and effect until the payment of all monies due pursuant to paragraphs 3 (a) and (b) and on such payments being made, those Orders be and are hereby discharged and thereafter the [h]usband shall pay to the [w]ife interest on any outstanding balance of the payment at the rate of 10% from the date until payment.

4. It is agreed by the parties that the husband made the payments he was ordered to make in accordance with those orders, including the final payment of $494,886 on 23 September 2013 (that date having been extended from 21 September 2013 by consent).

5. On 15 November 2013 the wife filed an initiating application in which she sought, inter alia, an order that pursuant to paragraph 3(c) and paragraph 10 of the orders made 21 September 2012, the husband pay to the wife, interest at the rate of 10 per cent per annum on the sum of $494,886 for the period from 21 December 2012 until payment in full of that interest.

6. The husband in his response filed 14 January 2014 sought orders that the wife’s application be dismissed, that the documents held by the wife pursuant to paragraph 5 of the orders made by Dessau J on 21 September 2012 be delivered up to the husband, and that the wife pay his costs of and incidental to his response to her initiating application on an indemnity basis. The husband did not pursue his application with respect to the documents referred to in paragraph 5 of Dessau J’s order.

7. The wife relied upon her affidavit filed 15 November 2013 and the husband relied upon his affidavit filed 13 January 2014.

8. The matter was first listed for hearing before me in the Judicial Duty List on 14 January 2014. After hearing submissions from counsel on that date, I ordered a transcript of the proceedings before Dessau J on 21 September 2012 and adjourned the matter for further hearing to a date to be fixed after receipt of that transcript. The transcript did not assist in the resolution of the dispute as to the interpretation of the orders. 

9. The issue I must determine in this case is whether, as submitted on behalf of the wife, the husband is required to pay interest on the sum of $499,886, being the balance of the sum of $994,886, payable to the wife not later than 21 September 2013 for the period between the payment of the second instalment and the final instalment. Or, as submitted by the husband, interest is only payable on any amount outstanding after 21 September 2013. It is agreed by the parties that if interest is payable then as at 3 April 2014 the amount payable is $63,179.  

Legal Principles

1. In Langford & Coleman (1993) FLC 92-346 Nygh J said at 79-671 as follows:

   ... 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. The Court cannot take into account whatever agreement might or might not been reached between the parties which led to the making of the consent orders, and the authority for that proposition is found in the opinion of the Privy Council on appeal from Hong Kong in de Lasala v. de Lasala [1980] AC 546 at 560, where Lord Diplock said:-

   Financial arrangements that are agreed upon between the parties for the purpose of receiving the approval and being made the subject of a consent order by the court, once they have been made the subject of the court order no longer depend upon the agreement of the parties as the source from which their legal effect is derived. Their legal effect is derived from the court order.

2. In Hughes & Hughes [2013] FamCAFC 146 the Full Court observed at paragraph 29 that “the construction of any provision in a document requires consideration of the document as a whole” and that, as held by the Full Court in Yunghanns v Yunghanns (1999) FLC 92-836 at [142], a specific order contained in a suite of consent orders “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.”

Discussion

1. Mr O’Shannessy submitted on behalf of the husband that pursuant to paragraph 3(c) of the orders made 21 September 2012 the sum of $494,886 was not due and payable other than at the election of the husband until 21 September 2013, and that on that basis there was no amount outstanding upon which interest would be payable. Counsel acknowledged, however, that his submission was based upon what he said was the meaning of the word “outstanding” in paragraph 10 of those orders. It was his submission that the word “outstanding” refers to an amount that is due and payable.

2. Counsel for the husband further submitted that it was clear that the order in question was drafted as a default provision on the basis that the 10 per cent interest rate was akin to a penalty interest rate. Counsel submitted that if the order had been intended to compensate the wife for having to wait for payment of her entitlements rather than penalise the husband for late payment, it would have been based upon an interest rate such as the overdraft rate of a commercial lending institution. In my view, it is not open to me to speculate upon the intention of the parties and the basis upon which they selected the specified interest rate.    

3. Mr Melilli submitted on behalf of the wife that the meaning of the orders is clear. Counsel referred me to paragraph 2 of the orders in which 21 December 2012 is designated as “the date”, and paragraph 3 of the orders which provides that the husband will pay the wife the sum of $994,886 (designated as “the payment”) and which sets out the schedule for payment of “the payment”. Counsel for the wife also referred me to the interim orders made 4 November 2009 which are referred to in paragraph 10 of the orders the subject of this application. The orders made 4 November 2009 make provision for spousal maintenance, both periodic and non-periodic, and child support.

4. It is the wife’s case that it is clear on the face of the orders that the husband was to continue meeting his maintenance and child support obligations until payment of the first $500,000 and that thereafter, and counsel submits that the use of the word “thereafter” is significant, the husband was to pay interest at the rate of 10 per cent on the outstanding balance of “the payment”. Counsel submits that it is the balance of the “the payment’ as defined in paragraph 3 of the orders that is outstanding after payment is made of the first two instalments which total $500,000.

5. In the fifth edition of the Australian Concise Oxford Dictionary, “outstanding” is defined as, inter alia, “(esp of a debt) not yet settled”. I do not agree, as was submitted on behalf of the husband, that “outstanding” cannot refer to a payment that is not yet due and payable, that is, in this matter, not until after 21 September 2013. It is a word that may equally be used, and in fact based upon the definition to which I have referred, is appropriately used to describe the balance of an amount that has not yet been paid, as in this case. For example, if monies are owed pursuant to a mortgage for a term of 25 years, the balance owing may be properly described as the “outstanding” balance of the mortgage, irrespective of the fact that the term of the mortgage is 25 years or whether or not there are any mortgage payments overdue.  

6. In my view, this definition of the word “outstanding” is also consistent with the orders as a whole. The wife was entitled to receive a payment of $994,886 (“the payment”) albeit that for whatever reason that amount was not immediately payable. The requirement that the husband continue to pay the spousal maintenance and child support until payment of the first $500,000 is, in my view, consistent with the wife possibly having to wait until 21 September 2013 for payment of the balance to which she was entitled pursuant to the orders and the husband being required to pay interest on the outstanding balance.

7. On the basis of the ordinary rules of construction and having regard to all of the relevant orders and the interpretation most consistent with the definition to which I have referred, in my view, interest is payable upon that part of the $994,886 outstanding after payment of the first $500,000 until payment in full of the sum of $994,886 (“the payment”) by no later than 21 September 2013 or earlier, at the husband’s election.

8. In all of the circumstances I therefore propose to accede to paragraph 1 of the wife’s application. The wife’s application sought further orders however these were not pursued and they will accordingly be dismissed save and except with respect to any application for costs.

9. Both the husband and wife have sought costs on an indemnity basis and I will make directions for the filing of written submissions with respect to costs.

10. The orders I propose to make, subject to further submissions from counsel as to the amount of interest payable as at the date of judgment, are therefore as follows:

    1.By 4.00 pm on 19 May 2014 the husband pay to the wife interest owing in the sum of $65,069.

    2.All questions of costs be reserved for determination.

    3.On or before 4.00 pm on 8 May 2014 the wife file and serve written submissions in support of any application for costs arising out of or incidental to the hearing of this matter.

    4.On or before 4.00 pm on 22 May 2014 the husband file and serve written submissions in support of any application for costs arising out of or incidental to the hearing of this matter and any reply to the submissions filed on behalf of the wife.

    5.All extant applications, save and except for any application for costs, be otherwise dismissed and the matter be removed from the list of cases awaiting hearing.

    IT IS DIRECTED THAT

    All documents produced to the Court pursuant to subpoena and exhibits relied upon by the parties be returned by the subpoena clerk of the Family Court of Australia, Melbourne Registry, to the person or organisation who produced same after the expiration of thirty (30) days from the date of these orders, or otherwise upon the conclusion of any appeal.

    IT IS CERTIFIED THAT
    Pursuant to Rule 19.50 of the Family Law Rules 2004 this matter reasonably required the attendance of counsel.

I certify that the preceding twenty-one (21) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Macmillan delivered on 17 April 2014.

Associate: 

Date:  16 April 2014