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Risks of Not Complying with Court Orders

By March 8, 2018Family Law
Court orders

 

It is generally thought that once Court Orders are made for a property settlement following a separation, that this is the end of the matter.  But what happens if a recalcitrant spouse refuses to comply with the Court Orders?  For instance, what are the consequences if the Orders provide that your former partner is to pay you a certain amount of money, but they delay, or simply refuse to pay?

This is where the drafting of the Court Orders is very important.  Firstly, it is essential to have a date that the payment will be made by, which is quite often somewhere between 42 and 90 days.  An experienced family lawyer will also ensure that there is a clause commonly referred to as a “default sale clause”.  Such a clause would provide that in the event the payment is not made within the timeframe, that a property or other asset owned by that spouse, is to be sold and that you be paid from the proceeds of sale, together with interest.

However, further problems can arise if your former spouse doesn’t agree to sell the property, even if there is such an order.  How do you get them to engage a real estate agent, or sign a Contract of Sale, or do all other things necessary to enforce the sale?  In that instance you may be able to apply to the Court to have a Registrar sign any documents that your former spouse is refusing to sign.  If this happens, the Court can make an order that the non-complying party, pay your costs of having to make that application.

Where a party does not comply with orders, the Court does have the ability to set aside the previous Orders and make new Orders.  For instance, in the case of Blackwell & Scott [2017] FamCAFC 77, Consent Orders were made in 2014, for the de facto husband to retain an investment property and pay the de facto wife an amount of $130,000 within 90 days.  However, the de facto husband did not make the payment for 13 months and didn’t pay any interest for another few months after that.

During that time the investment property had increased substantially in value.  In this respect, when the Consent Orders were made in 2014, the parties thought that the property was worth between $600,000 to $650,000.  However, by the time the de facto husband finally made the payment, the property had increased in value to $1 million.

The de facto wife made an application to set aside the 2014 Consent Orders, primarily on the basis that because of the de facto husband’s delay, the final outcome did not accurately reflect the intention under the Consent Orders.  In this regard, the payment of $130,000 in accordance with the Consent Orders reflected an equal division of the property of the parties.  However, as the investment property had increased so significantly, the $130,000 payment (even with interest), was not an equal division of the property.

In granting the wife’s application to set aside the 2014 Consent Orders, the Court was satisfied under section 90SN(1)(c) of the Family Law Act 1975, that the de facto husband had “defaulted in carrying out an obligation imposed” on  him and that “in the circumstances that have arisen as a result of that default, it is just and equitable to vary…or set aside…the order”.  Aldridge J held that given the de facto husband’s lengthy and substantial delay in complying with the order, by the time he did comply, the de facto wife did not receive anything close to 50% of the matrimonial property.

Whilst the Court set aside the Orders following a substantial increase in value of a property, it is very unlikely that a Court would set aside Orders following a substantial decrease in value of a property, as that would be ultimately rewarding the party who was in default.

The take home message is that there can be very severe consequences if a party does not comply with Court Orders, so it is imperative that Court Orders are complied with, or you could end up having to pay much more than you initially anticipated.  Obtaining the right legal and financial advice early can end up saving you thousands of dollars in the long-run.

 

Melissa Muir

 

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