Adcock & Sealy (No 3)
[2024] FedCFamC1F 298
•1 May 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Adcock & Sealy (No 3) [2024] FedCFamC1F 298
File number(s): MLC 6991 of 2022 Judgment of: MCNAB J Date of judgment: 1 May 2024 Catchwords: FAMILY LAW – PROPERTY – Procedural – Where applicant has applied for a stay of orders following judgment and pending appeal of same – Where the applicant has not established the ground of a stay is appropriate – Where it is not just and equitable that the respondent should bear the burden imposed by orders to pay the sum of $750,000 to the applicant without the respondent meeting corresponding obligations to transfer her interest in the property and vacate the premises – Where the application for a stay is dismissed. Legislation: Family Law Act 1975 (Cth)
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)
Division: Division 1 First Instance Number of paragraphs: 28 Date of last submission/s: 30 April 2024 Date of hearing: 30 April 2024 Counsel for the Applicant: Ms Dellidis SC Solicitor for the Applicant: Farrar Gesini Dunn Counsel for the Respondent: Ms Coulton Solicitor for the Respondent: Westminster Lawyers Pty Ltd ORDERS
MLC 6991 of 2022 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS ADCOCK
ApplicantAND: MR SEALY
Respondent
ORDER MADE BY:
MCNAB J
DATE OF ORDER:
1 MAY 2024
THE COURT ORDERS THAT:
1.The Amended Application in a Proceeding filed 24 April 2024 be dismissed.
Costs
2.Within 7 days the respondent file and serve brief submissions and any supporting evidence regarding an application for costs of this application.
3.Within 14 days the applicant file and serve any submissions and supporting evidence in response to the costs application.
4.The quantum of costs including as to whether the determination be held over until the determination of the appeal be considered and determined on the papers.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Part XIVB of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish an account of proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under a pseudonym has been approved pursuant to subsection 114Q(2) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
McNab J
The Court has before it for consideration an Amended Application for a Stay of Orders pronounced on 6 March 2024. The Amended Application was filed on 24 April 2024. The orders pronounced on 6 March 2024 provide, relevantly, that:
2.The applicant forthwith do all acts and things necessary to transfer (“the transfer") to the respondent, at his expense, all of her right, title and interest in the real property situate at and known as N Street, Suburb B.
3.Within 60 days from the date of this order, being 5 May 2024, the applicant vacate N Street.
4.Contemporaneously with the transfer the respondent indemnify the applicant with respect to all liabilities encumbering N Street as and when they fall due.
5.Within 60 days from the date of this order, being 5 May 2024, the respondent pay the applicant the sum of $750,000.
6.The respondent cause the Motor Vehicle 1 bearing registration plate ... to be transferred to the applicant and that the applicant retain the Motor Vehicle 1 vehicle which she is currently in possession of.
The applicant filed a Notice of Appeal on 3 April 2024. On 16 April 2024 the Court had before it an application by the respondent where he sought leave to make an application for costs out of time. At the time of the hearing the applicant raised that she had filed an Application for a Stay of the Final Orders pending appeal.
The applicant’s Application for a Stay filed on 16 April 2024 sought that Orders 2 - 5 of the orders made on 6 March 2024 be stayed. This included the order that the respondent pay to the applicant the sum of $750,000. By an affidavit in support of her application for a stay filed on 15 April 2024, the applicant provided the following warranties
8.If a Stay is granted I undertake to:
(a) diligently prosecute my appeal in a timely way to conclusion;
(b) pay the repayments of ANZ loan […] which is the loan secured against the [Suburb B] property
(c)pay all outgoings for [N Street].
9.I give an undertaking on those terms on the basis the [Suburb B] loan and all outgoings are paid up to date.
10.I would need to borrow from friends and family in the short term to meet those outgoings. I asked my friend, [Ms T], if she would assist me by providing funds in the short term and she said she would.
11.I acknowledge that if I am not able to comply with the above conditions, that I will have to vacate [N Street] property forthwith.
By a different affidavit which was filed in opposition to the respondent’s application for costs, the applicant deposed by an affidavit affirmed on 15 April 2024, at [7]:
My financial circumstances have not changed since my Financial Statement filed on 26 October 2023.
That sworn financial statement indicated that the applicant had weekly living expenses of about $18,000 which expenses did not include the cost of meeting mortgages, outgoings and insurances.
At the hearing of this application on 30 April 2024, counsel for the applicant sought to disavow any reliance on that affidavit and said, in fact, that:
There is no real evidence about her current expenditure.
A submission was made to the effect that it was not possible that the expenditure would be $18,000 per week, because she had to curtail her spending to meet her circumstances. I do not agree and say that the applicant’s evidence about her current expenditure as at 15 April 2024 is relevant when considering this application, and it is not possible to simply disavow an affidavit sworn on 15 April 2024 when considering the matter on 30 April 2024.
The applicant’s Amended Application filed 24 April 2024 varies the application in a significant respect. It now seeks a stay of the orders requiring the applicant to transfer her interest in the Suburb B property but maintains that the respondent must comply with the order that he pay $750,000. Rather than borrowing funds from a friend to fund the costs of the mortgage and outgoings pending the resolution of the appeal, those financial obligations are to be met from the $750,000 paid by the respondent pursuant to the otherwise stayed orders.
The orders sought by the applicant, as advised to the Court, are in the form of what was alternative relief in her Amended Application filed on 24 April 2024, and that provides that:
1.Orders 2 - 4 of the orders of the Honourable Justice McNab dated 6 March 2024 be stayed pending determination of the Notice of Appeal NAA 78 of 2024.
…
6.That Order 5 is conditional on:
6.1The Appellant in the Appeal diligently prosecuting the appeal to a resolution without delay
6.2The Applicant servicing the interests of the ANZ loan [ending #...39] as such interest payments fall due,
6.3The Applicant paying all other outgoings for the property at [N Street, Suburb B], as they fall due.
7.It is noted that Order 6 was made on the basis the relevant loan repayments and outgoings were all up to date at the date of these Orders.
The applicant, by her affidavit affirmed on 24 April 2024, asserts that she will be able to meet the outgoings of the property through a number of means. She was principally relying on the funds which were to be paid by the respondent in the amount of $750,000. In addition to that, she raised that:
(a)she would be looking to rent out the Suburb B property, whether as a short-term or long-term rental, and had spoken to some letting agents in that respect about the prospects of doing that;
(b)she would be using it as a venue and she says that she has an event tentatively booked in late 2024 where she is renting the property for 48 hours for the sum of $5000;
(c)it would be used as a business venue; and
(d)as an event venue, and she states that she has tentatively booked the property for a function in July for $2500; and finally
(e)that she had a “short, medium or long-term business plan” for the property including hosting a business centre.
The applicant also gives evidence that she has made inquiries regarding her capacity to borrow for the purposes of taking on the existing $4.5 million loan and making a $2 million payment to the respondent, which would satisfy the terms of the orders, if she were successful on her appeal.
In terms of prejudice if the stay is not granted, the applicant states, at [40]:
(a) I seek to retain the [N Street] in specie on a final basis. [Mr Sealy] has not offered an undertaking not to dispose of it pending determination of the appeal.
(b)I have nowhere to live. The Final Orders provide for a cash payment immediately made simultaneously with me vacating [N Street]. I cannot obtain alternative accommodation without the funds being available.
(c)My daughter, [Ms U] is 21 and currently in her sophomore year at University in (the USA) on a scholarship. She is due to return home to Australia to stay with me for the American summer holidays for several weeks at least. [Ms U] is very anxious about losing her home and calls me frequently (up to 4 times a day some days).
(d) My daughter [V] is in Year 12. She is a Monday to Friday boarder at a school in Melbourne. She routinely comes home during the week and on weekends and for holidays. She loves our home. I say us moving house in the middle of Year 12 would be very destabilising for her. She suffers from anxiety and is finding Year 12 challenging.
(e) There is a significant practical and psychological impact on me of having to find somewhere to live whilst supporting [V].
(f)It would be costly if I had to move out and move all things out, and then later only be permitted to move back in. I have made inquiries with [removalists]. They have indicated the associated costs would be $6,930 to pack up, remove and store for a period of one month and every month thereafter would be an additional $800 plus GST plus insurance. I understand the cost to move back in would be another $6,930.
(g) It would be physically demanding for me to pack up the house and then later move back in, if that is what eventuates, particularly as I am in remission from [a medical condition].
The applicant asserts there is no prejudice to the respondent if the property is not vacated and sold.
The respondent opposes the grant of a stay and relies on an affidavit sworn on 29 April 2024. By that affidavit he deposes, at [21], that the mortgage instalments and the outgoings on the property equate to about $255,000 per year. He refers to the applicant’s affidavit of 15 April 2024 in respect of the evidence about her current financial capacity at [24] of his affidavit filed 29 April 2024 she gives evidence that:
a she has not worked for 24 years and has not looked for any jobs since the trial
b. she has $37 in her bank account
c. she no longer receives child support
d. her personal expenses are $18,000 per week - excluding accommodation, car registration & insurance costs
e. she owes $2155 on her credit card;
f. she owes $244,933 to her sister (excluding interest)
g. she owes a further $9,500 to her sister incurred since the trial in October 2023
h.she owes $20,000 to girlfriends, incurred since the trial in October 2023.
The applicant sought not to rely on any affidavit other than the affidavit affirmed by her in support of the amended application, being an affidavit was sworn on 24 April 2024. I do not accept that the evidence that she gave on 15 April 2024 can simply be excluded or ignored by the Court for the reasons I have outlined earlier.
The respondent gives evidence that the proposals for the commercial use of the property are undeveloped and have been since trial and have not been further developed since then. He opposes the grant of the stay. Principally he says that he is entitled to the benefits of the judgment. He wishes to sell the property and free up the capital in that property and reduce the indebtedness and the obligations to make ongoing payments of interest.
In terms of the principles to be applied in considering the grant of a stay, those principles are conveniently set out in the written submissions filed on behalf of the respondent (citations omitted):
(1)The Court is entitled to assume the decision which is the subject of appeal is correct, and the respondent is entitled to the benefits of the judgment and Full Court must approach the appeal on the basis of a strong presumption that the decision is correct.
(2)The authorities stress that the application is to be determined on its merits and at the Court’s discretion and the discretion to stay the operation of orders pending an appeal must only be exercised where special circumstances justify there be departure from the ordinary rule, being that the successful litigant is entitled to the fruits of their litigation.
(3)Special circumstances will exist where an appeal would otherwise be rendered nugatory or where there is a risk that the successful appellant cannot be restored to their former position if the judgment against them is executed.
(4)The Court is to consider the prospects of the appeal and where the balance of convenience lies.
(5)Relevant considerations as enunciated by the Full Court are:
(a)The bona fides of the application
(b)Whether refusing a stay would render the appeal nugatory;
(c)A preliminary assessment of the strength of the Applicant's case which the stay is intended to protect;
(d)Hardship caused by the granting or refusal of the stay
(e)The length of time of the operation of any stay.
One of the matters raised by the considerations is that there has got to be a preliminary assessment of the strengths of the applicant’s case which the stay is intended to protect.
In terms of the grounds of appeal, given that the judgment involves an exercise of discretion, it is arguable that the discretion miscarried. The submissions made on behalf of the applicant were not developed in any detailed way, and I accept that counsel for the applicant never put the strengths of the appeal on anything higher than arguable. The emphasis on the submissions in this regard was that the disparity in wealth between the parties means that the result produced by the judgment and orders is not just and equitable. I am approaching this application on the basis that it is not a hopeless appeal and that there are arguable grounds raised, but I would have to say that on the basis of the Notice of Appeal and the grounds that they are somewhat opaque, but no doubt they will be developed in further submissions before the Appeal Court.
CONCLUSION
The applicant has not established the ground of a stay of the orders made on 6 March 2024 is warranted. I do not accept that it is appropriate or just and equitable that the respondent should bear the burden imposed by the orders by paying the sum of $750,000 to the applicant without the respondent meeting the plainly corresponding obligations to transfer her interest in the property and vacate the premises. I do not accept that the respondent has an obligation to pay the sum of $750,000, were the applicant says that she is for the period of any stay relieved of the obligation to transfer her interest in the property.
Had the applicant been in a position to make good on her undertaking to borrow funds from a friend or a relative and provide evidence that she had been able to do that at the time of making an application, so that there was real tangible evidence of the capacity to meet the undertaking, then different considerations would apply and the determination of the question as to whether a stay would be granted would be more finely balanced. However no evidence was produced and, in fact, that proposal was abandoned and the undertaking withdrawn.
The evidence that has been produced by the applicant regarding her proposed commercial uses of the property are unpersuasive. There is no evidence that any steps have been taken to obtain planning approval for any commercial activities on the property as a venue. The applicant’s evidence at trial was that about $250,000 of funds were needed at the property to bring it up to standard. There is no evidence before the Court that the applicant has spent any money whatsoever in pursuit of making arrangements so that these proposals could be given effect to, and it is not the case that the applicant will suffer prejudice as a result of expenditure on the proposals being thrown away because a stay is not granted. There has been no expenditure.
In terms of prejudice and hardship, I accept that relocating from the property will involve disruption, but I bear in mind that the applicant has relatives who live in the area which she gave evidence about at trial, and she will have access to $750,000 to cover the costs of relocating and obtaining alternative accommodation. Her daughters have fathers. There are relatives in the area and the wife appears to have the support of friends and relatives.
The judgment will not be rendered nugatory, and, if the appeal is successful, it will be expressed in a sum of money by which the applicant can buy an alternative property.
I do not see that the loss of the prospect of running a business from the property which the applicant gives evidence about is of any value, given the lack of any clarity or evidence of any development in relation to those prospects.
On the evidence before me on this application for a stay, it is overwhelming that the applicant will be unable to retain the property even if she were successful on an appeal as she does not have the financial means to meet the obligations imposed by the orders that she seeks. If she were successful on appeal the evidence of a letter from the mortgage broker at 102 - 104 of the annexures to the applicant’s affidavit of 24 April 2024 is not sufficient to demonstrate her capacity to borrow to satisfy the appeal judgment.
There is no evidence of what financial information was provided to the mortgage broker. It seems apparent that the mortgage broker is not aware of the fact that orders of the Court that the applicant seeks will require that she pay to the respondent the sum of $2 million in addition to paying out the $4.5 million mortgage and it is not at all clear how that is to be achieved. On the funds that are said to be available to the customer on the proposal that has been put forward by the mortgage broker there is a shortfall of about $600,000 in relation to that. The material is entirely unsatisfactory in order to prove capacity to pay the respondent the amount that the applicant will be required to pay to the respondent if she is entirely successful in the appeal either now or in the future.
For those reasons I dismiss the application for a stay.
I certify that the preceding twenty-eight (28) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice McNab.
Associate:
Dated: 7 May 2024
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