Price v O'Grady [2005] ACTSC 65 (13 July 2005)

Last Updated: 11 August 2005

CAROLE LYNN PRICE v KEITH ANTHONY O'GRADY [2005]

ACTSC 65 (13 July 2005)

EX TEMPORE JUDGMENT

No SC 843 of 2001

Judge: Crispin J

Supreme Court of the ACT

Date: 26 July 2005

IN THE SUPREME COURT OF THE )

) No SC 843 of 2001

AUSTRALIAN CAPITAL TERRITORY )

BETWEEN: CAROLE LYNN PRICE

Plaintiff

AND: KEITH ANTHONY O'GRADY

Defendant

ORDER

Judge: Crispin J

Date: 13 July 2005

Place: Canberra

THE COURT ORDERS THAT:

1. the Writ of fieri facias be set aside.

1. This is an application to set aside a Writ of fieri facias granted on the application of the plaintiff to enforce payment of money then said to have been outstanding under a judgment made by consent on 22 October 2002.

2. The orders made on that day gave effect to a settlement of proceedings commenced by the plaintiff against the defendant under the Domestic Relationships Act 1994. The orders made by consent included an order that the defendant pay to the plaintiff the sum of $45,000.00 and that figure was referred to in subsequent orders as the "settlement sum".

3. Order 2 provided, and I quote:

That the Defendant pay the settlement sum at the rate of $750.00 per month, payable on the 15th day of each month, by direct deposit into the Plaintiff's [bank account] of such payments falling due on or before 15 September 2002 PROVIDED HOWEVER that the Defendant may make additional lump sum payments to the Plaintiff which shall reduce the balance outstanding to the Plaintiff pursuant to these Orders.

4. Order 3 provided, and again I quote:

That no interest shall accrue on the settlement sum provided that all payments are made strictly in accordance with Order 2 hereof, otherwise interest shall accrue at the rate prescribed by the ACT Supreme Court Act 1933, as amended.

5. The succeeding orders, numbered 4 to 10 inclusive, provided for the transfer of certain property between the parties and for the parties to make available certain other property for collection. The orders also provided for each party to pay his or her own costs and granted each liberty to apply in relation to the implementation or enforcement of the orders on seven days notice to the court and to the other party.

6. In support of the application for the Writ of fieri facias, the plaintiff filed an affidavit sworn 19 August 2004 which annexed a copy of the consent orders, referred to orders (2) and (3), and asserted that the defendant had "not strictly complied with or adhered to the terms of the instalment order" made in the proceedings. The plaintiff deposed to the fact that the defendant had made only a number of payments amounting in all to the sum of $10,750.00, and in paragraph (7) said, "The amount of principal that remains outstanding to me as at the date of this my affidavit is $34,250.00". In paragraph (8), she stated that "due to the defendant's default, interest accrues on so much of the settlement sum that remains unpaid at the rate of 11.0% per annum". She then set out calculations of interest amounting to $7,779.26. Accordingly, the affidavit suggested that the total amount "due and owing", as at 6 August 2004 had been $42,029.26.

7. The writ sought was duly issued.

8. On 24 November 2004, the defendant made an application to have the Writ stayed or set aside and, in support filed a brief affidavit sworn on the same day in which he stated inter alia:

That on or about the end of November 2003 the plaintiff and I maintained a friendly and regular communication. Around this time the plaintiff advised me that she had certain monies to reinvest. I suggested she invest an amount of this money in my business. She refused my request but did agree that I would withhold monthly payments to her for a period of twelve months at an interest rate of 11%.

9. In a subsequent affidavit sworn 18 February 2005, the defendant deposed to the fact that he had suffered a heart attack and had been in Intensive Care at Calvary Hospital from 14 to 19 October 2003 and that this episode had been followed by recuperation and surgery in December 2003. He went on to say that it was during this period, that is in November and December 2003, that he had had conversations with the plaintiff leading to the deferment of monthly payments for a period of 12 months. He added that he had been unable to work full-time due to his medical condition and severely reduced earning capacity.

10. The plaintiff responded to these contentions in an affidavit, sworn 1 March 2005, in which she denied the existence of any such agreement. She said that she did recall contacting the defendant by telephone a short time after an instalment had been due on 15 November 2003 to enquire as to when she could expect payment. She said that it was during that conversation that the defendant had used words to the effect of, "Can you invest $50,000 into my business"? She said that they had discussed why he needed the money and how her potential investment would be secured, but claimed that, in the end she had rejected the proposal.

11. She said that she had continued to contact the defendant directly concerning the non-payment of instalments but that, "by about January or February 2004", he had told her that he had given the money to another person to pay for his father's funeral". She said, in essence, that she continued to maintain further contact with the defendant and claimed that she had continued to ask him when he was going to pay her. She said that the defendant had replied on each occasion by promising to put some money into her account shortly. She said that by about mid 2004 she had approached her solicitor to initiate enforcement action on her behalf.

12. The plaintiff and the defendant were both called to give evidence and be cross-examined in relation to the assertions contained in their respective affidavits. The defendant, in particular, was subjected to a searching cross-examination and I had the opportunity to observe his demeanour in the witness box over an extended period as issues were raised with him. I formed the impression that he was taciturn, perhaps even a somewhat gruff man whose use of language was normally reasonably accurate, but who was not concerned about matters of semantic precision, such as the precise date upon which the alleged agreement commenced and finished, but rather with matters of substance. In fact, in assessing his credibility I was also conscious of the fact that at the time he had the conversation with the plaintiff which led to this agreement, he had not long been out of hospital following a heart attack. Despite the searching cross-examination to which he was subjected, I formed the impression that he was an honest witness who had done the best that he could to tell the truth.

13. The plaintiff also gave evidence and again I had an opportunity to observe her in the witness box over some period of time, though nowhere near as long as the period in which the defendant was engaged in giving evidence. Her evidence was clearly coloured by some measure of resentment, though whether at antecedent events, the non-payment of money or simply the stress of litigation; I was unable to say. There was no particular matter which, taken alone, would have caused me to reject her evidence, though it did strike me as being somewhat incongruous that she would have had her solicitors write to the defendant on 6 April 2004 raising with him the non provision of a rangehood, cooktop or oven, but not raising with him his failure to make the agreed payments, if in fact there had been no agreement of the kind alleged. However, it is true that by early May 2004, she had raised that issue with Mr Friesen, her solicitor. A copy of the letter of 5 May 2004 to Mr Friesen referring to that issue was tendered in evidence together with a copy of his reply dated 18 May 2004.

14. Having considered the parties' evidence carefully in the light of the supporting documentation that has been tendered and in the light of their demeanour in the witness box as best I could judge it, I ultimately preferred the evidence of the defendant in relation to the dispute concerning the formation of the agreement.

15. There was, however, a further issue in the case concerning the interpretation of orders (2) and (3) of the consent orders dated 22 October 2002. The plaintiff maintained that the second order provided for payment of a minimum amount of $750 per month and contended that the further clause after the words "PROVIDED HOWEVER" made it clear that any further sum paid in any given month should not be seen as a payment of monthly instalments, whether in arrears or in advance, but as an additional payment made in reduction of principal. Accordingly, as Mr Friesen who appeared for the plaintiff explained in his submissions, if in any given month the defendant paid the sum of $1,000, then the additional $250 should be seen as a payment directly related to principal and not as a payment for which credit should be given in relation to the next instalment, or indeed in relation to any past instalment not previously made.

16. When I asked Mr Friesen to specifically address the question of what the effect of the clause would have been if there had been one instalment paid even one day late, he maintained that the consequence of such a delay would have been that interest would have been payable in respect of that missed instalment for the whole period of the contract. Indeed, he maintained, "that is the strength of the plaintiff's position". This conclusion would have followed, in his submission, because the subsequent payment of any equivalent sum of money should have been treated as a payment in reduction of capital rather than an instalment.

17. In support of this contention, he drew my attention to the use of the term "strictly" in order (3). Whilst I accept that this word should be given its full force and effect, it does not seem to provide any real support for his contention because interest would not, in any event, be payable until the relevant liability had actually arisen and would cease to accrue when the liability had been discharged.

18. Mr Friesen maintained that any defaults that had occurred were incurable because subsequent payments would not have the effect of offsetting previous defaults but, insofar as they extended beyond any further payments of instalments then falling due, they would be attributable to the repayment of capital.

19. I am unable to accept either of these contentions. In my view, order (2) of the orders made on 22 October 2002, required the defendant to pay instalments at the rate of $750 per month. The order also permitted the defendant to go beyond that and to make additional payments for the purpose of reducing the balance outstanding under the orders. There is, in my view, no reason to construe the words "the balance outstanding to the plaintiff pursuant to these orders" as meaning the principal sum calculated without reference to any overdue instalments.

20. The defendant was at liberty to make such additional payments as would reduce the overall balance due to the defendant at any time. It may be that, had he chosen to identify payments as being referable to principal in contradistinction to instalments, such payments would not have relieved him of the obligation to make payments of $750 in subsequent months. However, I do not need to consider that issue at this stage because it is clear that the true character of the payments that have been made in this case were not intended to be, as it were, a contribution to capital but rather to make up the arrears of the payments that should have been previously made.

21. Mr Friesen also submitted that I should find that the orders included an implied order to the effect that, in the event of any default in payment of the monthly instalments, the whole of the outstanding balance of the settlement sum should become immediately due and payable. I am unable to draw such an inference from the orders actually made.

22. The orders are on their face complete. They reflected terms of settlement embodying an agreement which the parties had reached during the previous month. A further term of an agreement between the parties will be implied only if the proponent of such a term can establish a number of factors. First, the term must be reasonable and equitable. Second, it must be necessary to give business efficacy to the contract. Third, it must be so obvious that it "goes without saying". Fourth, it must be capable of clear expression. Fifth, it must not contradict any express term of the contract. These requirements were laid down the Privy Council in BP Refinery (Westernport) Pty. Ltd v. Shire of Hastings (1977) 52 ALJR 20 at 26, and were adopted by the Full Court of the Federal Court of Australia in Mann v Capital Territory Health Commission (1981) 54 FLR 23. There are of course other authorities to like effect.

23. Having regard to these requirements I can see no reason to construe the terms of the agreement contained in the terms of settlement as being subject to such an implied term. Whilst such a term would no doubt have been entirely in the interests of the plaintiff, it is by no means clear that it would have been required to lend business efficacy to the arrangement and it is certainly not so obvious as to go without saying. Furthermore, I can see no reason to imagine that, in making orders in terms of those terms of settlement, the court had intended to otherwise import any further order that it had failed to state.

24. The consequence of these findings is that the amount claimed as a debt in the affidavit filed in support of the application for the Writ of fieri facias was not payable at the relevant time, because the obligation to make good the arrears had been suspended pursuant to an agreement between the parties.

25. In the ordinary course of events, a mere offer of forbearance unsupported by any consideration may be unenforceable but, in this case, I accept the defendant's evidence that it was supported by an offer to pay 11% interest. It is true that the plaintiff would in any event have been entitled to interest on outstanding amounts, but that interest would have been calculated by reference to order (3) of the orders made of 22 October 2002 at the rate prescribed by the Supreme Court Act. The rates so prescribed for the period in question were 9% rather than 11% as offered by the plaintiff.

26. The Writ was founded upon an affidavit that asserted a debt was then due and payable. The plaintiff may have then believed that was the case by reason of legal advice that she received and I cannot exclude the possibility that, having regard to the level of feeling between the parties, she may have gradually over time come to believe that she had not actually formed such an agreement with the defendant. However, no matter what the true explanation for the assertion, I am satisfied that the debt was not then due and payable and the Writ must be set aside.

27. It seems to have been conceded that the payments are now up to date save perhaps for some question of interest, which I am not required to address. Should that issue be pressed, one hopes it can be sorted out between the parties. If not, it will have to be left to another day, if only because the amount claimed in the affidavit has, as I have indicated, been calculated at the wrong rate.

28. The order I make that the Writ of fieri facias in this case be set aside.

I certify that the preceding twenty-eight (28) numbered paragraphs are a true copy of the Reasons for Judgment herein of his Honour, Justice Crispin.

Associate:

Date: 2 August 2005

Counsel for the plaintiff: Mr R Friesen

Solicitor for the plaintiff: Dibbs Barker Gosling

Counsel for the defendant: Self represented litigant

Date of hearing 13 July 2005

Date of judgment 13 July 2005