Default Provisions

Default provisions in property Orders provide for the payment of money in consideration of the Transfer usually of real estate, and come into force if the money is not paid.

The question is whether or not default provisions should be included in Orders.

The answer will probably depend on whether our client is the person who is required to pay the money or our client is the person who is to receive the money. Where our client has a requirement to pay money to the other side we are of the view that default provisions are mandatory. This is because the default provisions set out what steps can be taken to enforce the Order and in many cases will reduce the amount payable to the other side if the property is sold for less than the value.

On the other hand, if our client is to receive the money we take the view that a default provision should not be included in the Orders. This is because it fixes the amount that our client is entitled to together with interest pursuant to the Family Law Act, currently 10.75% calculated daily. There are other alternatives to recover the monies, other than through family law proceedings, for example, Bankruptcy proceedings.

We have recently received instructions to enforce an Order for the payment of monies to our client without any default provisions. This has enabled us to take a “stand and deliver position” and cause a Bankruptcy Notice to be issued against the defaulting party, giving the defaulting party very little room to manoeuvre or negotiate.