Judith Carol Gitin Eiman v. Richard Samuel Elman and Another

CACV000098/1986

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Headnote

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orders for lump sum payments in matrimonial proceedings carry statutory interest in default of payment.

BETWEEN

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Coram: Cons, V.-P. & Silke, J.A.

Dates of hearing: 21st October and 25th November, 1986.

Date of delivery of judgment: 5th December, 1986.

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JUDGMENT

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Cons, V.-P.:

1. This is an appeal from His Honour Judge O'Dea, sitting in the divorce jurisdiction of the District Court. It raises a question so simple in itself that the only background facts I need refer to are that in proceedings for divorce the husband and wife came to a financial agreement, which by consent was made an order of the Court; that the agreement made provision for a lump sum payment by the husband, to be paid by instalments over a number of years; and that the husband was in default of one payment for some considerable time. The question is whether the wife is entitled to interest for the period of that delayed payment. The agreement made no provision for interest but Section 50 of the District Court Ordinance Cap. 336 provides as follows: -

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50.      A judgment debt shall carry interest at the rate fixed by the Chief Justice by notice published in the Gazette on the aggregate amount thereof, or on such part thereof as for the time being remains unsatisfied, from the date of the judgment until satisfaction."

2. Had the proceedings been in the High Court the relevant section would have been Section 49 of the Supreme Court Ordinance Cap. 4 which, for the present purpose, is in identical terms.

3. The judge below put it as a more general question, to include periodical payments, although the order in question made no provision of that kind so far as the wife is concerned. He said -

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The point at issue is whether orders for maintenance, be they periodical payments or lump sum payments in lieu of monthly or weekly financial support come within the confines of a 'judgment debt' as referred to in Section 50. It is my view that maintenance does not constitute a judgment debt as envisaged in the provision in the District Court Ordinance. The determination and enforcement of orders for maintenance and/or lump sum payments are quite distinct from civil debts or claims for damages.It has it's own set of legislation and it's own unique form of enforcement namely by judgment summons with the ultimate penalty of imprisonment. I do not believe it was ever intended by the legislature that Section 50 of the Ordinance would encompass all orders for periodical payments of maintenance or instalments of lump sum payments."

4. With regard to lump sum payments a different view has been taken in England. In K. v. K.⁽¹⁾ Stephenson L.J. gave as an example -

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If therefore a husband had been ordered on May 17, 1964, to pay his wife a lump sum on September 1, 1964, interest would, in my judgment, have been payable on that sum from September 1....."

In Preston v. Preston ⁽²⁾ Ormrod L.J. said -

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After the sum becomes due, it attracts statutory interest as a judgment debt, automatically, under a High Court judgment (but not under a County Court judgment: see Burrows v. Burrows 1981 Times 10th march)"

In the same case Brandon L.J. said^{(3) _}

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The position is that, once any instalment falls due and remains unpaid, it is a judgment debt on which statutory interest is payable in the normal way."

Neither case is directly in point. K. v. K.⁽¹⁾ was concerned with the time from which interest on an order for costs ought to run, while in Preston v. Preston⁽²⁾ the question was whether a judge could order interest on instalments not yet due, a point now covered in England by an amendment to Section 23 of the Matrimonial Causes Act 1973. Nevertheless the position that an unpaid instalment order attracts interest appears to lie accepted, for example Butterworth's Family Law Service advises that "in the case of a garnishee to enforce a lump sum interest, calculated from the date of default, may also be claimed".⁽⁴⁾

5. The English legislation is contained in Sections 17 and 18 of the Judgments Act 1838 -

"17.   .... every judgment debt shall carry interest at the rate of £4 per centum per annum from the time of entering up the judgment .... until the sane shall be satisfied, and such interest may be levied under a writ of execution on such jgdgment.

18.   ..... all decrees and orders of courts of equity, and all rules of courts of common law .... whereby any sum of money, or any costs .... shall be payable to any person, shall have the effect of judgments in the superior courts of common law ...."

6. Mrs. Penlington, who appears for the husband, draws our particular attention to Section 18 which has no counterpart in Hong Kong. The implication, I take her to suggest, is that because of their express mention therein, decrees and so on cannot otherwise have been thought sufficient to create judgment debts with Section 17. In Hong Kong a decree is in any event, at least in the High Court, a judgment: Sec. 2, Supreme Court Ordinance. However if the substance of Section 18 is not, nor ever has been, part of the law of Hong Kong I cannot see its relevance. We must take Section 50 in its own context, not in that of other legislation.

7. That context then, as Mrs. Penlington reminds us, immediately includes Section 49, which provides power to order, on claims for debt or damages, interest from the date when the cause of action arose to that of judgment. It follows, so she suggests, that Section 50 is restricted to judgment debts in those two instances. With respect I am not persuaded that it does.  I can find no connection between the two sections, other than proximity.

8. It is then said that not all orders are judgments, that there is a distinction, as shown for example by Section 74 of the County Court Act 1984, which at last remedies the anomaly that judgment debts in the County Court did not carry interest. The section refers specifically to "judgments or orders". (The emphasis is my own). We are also referred to In re Olson ⁽⁵⁾ , in which an order made in favour of a husband for provision out of his late wife's estate was held not to carry interest under the equivalent New Zealand legislation. The reason given was that because the payment was to be made "out of the proceeds of the realisation of the estate", it was a conditionalorder and there is authority in that jurisdiction that an order for payment conditionally does not constitute such a judgment debt. It could perhaps have been argued, relying upon K. v. K.⁽¹⁾, that the payment was not due until the estate had in fact been realised, which due to the economic recession of the time took many many years.

9. Be that as it may, I accept that there will be orders which do not qualify as judgments sufficient to create judgment debts within Section 50. The question is whether orders for lump sum payments do or do not. I do not think it necessary to consider any esoteric distinction between judgments and orders as such. It is the substance of the order in question that is material. Lump sum orders are once-for-all orders.They are orders for the payment of money and unlike, for example periodical payments, the amount cannot be subsequently varied. At most the liability to pay can be deferred or made payable by instalments, either in the original order or upon a judgment summons taken out by the party in whose favour it was made. In the present instance it is doubtful whether even these possibilities remain open, for the order was made by consent.  However no point has been taken in this respect.  In my judgment the characteristics I have mentioned combine to make an order for lump sum payments something that is properly called a judgment debt.

10. But that is not an end of the matter. Even so, it is suggested that upon a proper construction of those words in Section 50 they do not extend to anything within the matrimonial jurisdiction, either because the Matrimonial Causes Rules, and in particular Rules 87 to 90 which relate to judgment summonses, provide a complete and exhaustive code of enforcement, or because the nature of the matrimonial jurisdiction is so alien to that of normal civil process that the legislature must have intended that the provisions enacted with regard to that normal process should not apply to matrimonial affairs. This is said to be illustrated by what we are told is the invariable practice of seeking to enforce matrimonial orders only by way of judgment summonses. A glance at Butterworth's Family Law Service suggests that it may not be the invariable practice in England, but, whatever the practice either here or there, it is clear that the Matrimonial Causes Rules themselves recognise other forms of enforcement. Rule 86(1) refers to "any process ..... issued for the enforcement of an order made in matrimonial proceedings" and Rule 86⁽²⁾makes special provision for "a writ of fieri facias or  warrant of execution ..... where an application for a variation order is pending".

11. However the question at issue is not concerned with how a judgment or order is to be enforced, but with what is imported by law into the judgment or order itself. Of course the factors which a court takes into consideration when assessing appropriate payments in matrimonial causes are very different from those to which it would refer in the assessment of damages for breach of contract or tort. But once the amount of the sum to be paid has been found it seems to me that there remains nothing to distinguish the one from the other. Both are sums of money which have been ordered to be paid. For myself I can see no reason why the legislature should have intended that, in default of payment, one should bear interest and the other should not.

12. For these reasons I would allow the appeal. The summons taken out before the judge below asked that an order for the payment of interest be made. I do not think that would be correct. Interest is provided for by the statute. It is sufficient for the Court to say that the order falls within the statute.

Silke, J.A.:

13. I am in complete agreement with the judgment of my Lord Vice President which I have had the opportunity to read in draft.

14. As it sets out, with his usual clarity, the reasons which are also mine I do not think, even though we respectfully differ from the trial judge, that there is anything I can usefully add.

(1)   [1977] 2 W.L.R. 55 at p.66

(2)    [1982] 1 All E. R. 41 at p.51a

(3)    at P.58b

(4)    Volume 1 page D804

(5)    [1944] N.Z.L.R. 778

Representation:

Gordon Hampton (M/s Hampton, Winter & Glynn) for Petitioner/Appellant

Mrs. V.A. Penlington (M/s Deacons) for 1st Respondent/Respondent