ATKINS & HUNT

[2015] FamCA 288

FAMILY COURT OF AUSTRALIA

ATKINS & HUNT [2015] FamCA 288

FAMILY LAW – PROPERTY – Application for a stay of final property orders – Where the wife seeks a stay of orders disposing of a parcel of real property at auction – Where the husband will suffer significant financial prejudice if property is not sold – Where the wife claims that she is suffering from financial hardship – Where the wife is appealing the final orders – Where the wife seeks to receive the property if the appeal is successful – Whether there is a risk that any appeal maybe rendered nugatory  if a stay is not ordered – Where the prospects of success on this aspect of the appeal are low – Where the wife’s application is dismissed.

FAMILY LAW – COSTS – Application for a stay of orders – Where the husband seeks an order for costs – Where the financial situation of both parties are considered – Where the application was brought late – Where the applicant is ordered to pay costs – Where the payment of costs are stayed until the determination of the appeal or further order of the court

Family Law Act 1975 (Cth) ss 75 (2), 79, 117

Trahn & Long(No. 2) [2008] FamCAFC 194

APPLICANT: Ms Atkins

RESPONDENT: Mr Hunt

FILE NUMBER: SYC 425 of 2012

DATE DELIVERED: 16 April 2015

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Aldridge J

HEARING DATE: 15 April 2015

REPRESENTATION

SOLICITOR FOR THE APPLICANT: In person with Mr Barry (solicitor)  as a McKenzie Friend

SOLICITOR FOR THE RESPONDENT: Sexton Family Law

Orders

1. The Application in a Case filed by the Wife on 8 April 2015 is dismissed.

1. That the Applicant Wife is to pay to the Respondent the amount of $2264.74 costs of the Application in a Case filed on 8 April 2015. The payment of those costs is stayed until the determination of the appeal or until further order of the court.

1. It is noted that the parties agree that the reserve price for the auction of the B Street property will be $1.8 million.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Atkins & Hunt has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYC 425 of 2012

Ms Atkins

Applicant

And

Mr Hunt

Respondent

EX TEMPORE REASONS FOR JUDGMENT

1. By way of an application in a case filed on 8 April 2015, the applicant seeks a stay of Orders 2 to 4 made by me on 4 December 2014.  The substantive proceedings were contested property proceedings which had been heard over many days.  The relevant orders were:

   (1)That the husband is to pay to the wife, within twenty-eight (28) days from the date of these Orders, the sum of $174,747.

   (2)That the parties are forthwith to take all necessary steps to sell the property at [B Street, Town M] (“the [B Street] property”) (folio identifier …) and for the purpose of implementing that sale the parties shall do the following:

   (a)List the property for sale by public auction, such auction is to occur within four (4) months of the making of these orders at a price to be agreed between the parties and failing such agreement at a price, or at a reserve price, nominated by the President of the New South Wales Division of the Australian Property Institute and his/her nominee;

   (b)Forthwith appoint such real estate agent and auctioneer, as the parties may agree and failing agreement within fourteen (14) days, list the property with such agent and auctioneer nominated by the President of the New South Wales Division of the Australian Property Institute (“the Agent”), the costs of and incidental to such appointment to be borne equally by the parties as and when they fall due.

   (c)The parties shall each co-operate in every way with the Agent including (without limiting the generality the foregoing):

   (i)       making the keys available to the Agent;

   (ii)allowing inspection of the property at all reasonable times as required by the Agent;

   (iii)not do or say anything to hinder or prevent a sale being effected;

   (iv)ensuring that the property including the grounds are in a neat, fit state of repair and tidy condition at the time of the inspection by the Agent and prospective purchasers;

   (v)sign all documents as requested by the Agent in relation to the listing for sale of the property except contracts or agreements for sale which have not been authorised by the parties’ solicitors;

   (vi)the parties shall each execute contracts for sale on the forms prepared by the solicitors having the conduct of the sale at a price or reserve price  agreed upon by the parties or in the absence of any agreement at or above the price nominated by the President of New South Wales Division of the Australian Property Institute;

   (vii)the parties shall do all things and sign all documents necessary to instruct a solicitor or licensed conveyancer within seven (7) days of the date of these orders to have the primary conduct of the sale on behalf of both parties and, failing agreement, such solicitor or conveyancer as nominated by the President of the New South Wales Division of the Australian Property Institute.

   (d)That any costs payable to the solicitors will be and form part of the legal costs of the sale to be deducted from the proceeds of sale.

   (e)Neither party may confer upon any agent without the consent of the other party any right, or sole or exclusive agency in respect to the property or to any commission. 

   (f)That the wife is to vacate the [B Street] property at least seven (7) days prior to settlement.

   (g)      The proceeds of the sale shall be disbursed as follows:

   (i)in payment of the usual costs associated with such sale including Agent’s commission, legal costs and disbursements;

   (ii)in discharge of any mortgage or other encumbrances held over the property;

   (iii)in discharge of any capital gains tax liability incurred on the sale of the property (and for the purpose of effecting such a payment the solicitor acting on the conveyance for the parties shall calculate and retain a sum sufficient for payment of the Capital Gains Tax);

   (iv)the balance is to be paid into an interest bearing bank account in the joint names of the parties or their instructing solicitors.

   (3)That upon the proceeds of sale from the [B Street] property being received into the joint bank account pursuant to Order 2(g)(iv) the funds in that bank account are to be distributed, if there is any surplus, as to twenty (20) per cent to the wife and eighty (80) per cent to the husband.

   (4)In the event of there being a shortfall in the sale of the [B Street] property, the husband is to bear the liabilities for that shortfall and indemnify the wife against any obligation to meet the liability comprising the shortfall.

2. The respondent has complied with Order 1 by making a required payment of $174 747.  Pursuant to Order 2, the sale of the B Street property has progressed to the point of an auction for its sale taking place on this coming Saturday, 18 April 2015.  In seeking the stay the applicant seeks to prevent the auction from proceeding.  The applicant filed a notice of appeal on 23 December 2014.  Despite the applicant having the view that the appeal was listed for hearing in August this year, in fact that is the date on which she is to file her outline of argument.  In the ordinary course the appeal will not come on for hearing before the middle of 2016 at the earliest. 

3. The essence of the application is twofold.  The applicant asserts that if the appeal is successful she hopes to receive the B Street property unencumbered as the appropriate division of the party’s property.  In the proceedings the B Street property was valued at $1.8 million, and was encumbered by mortgages in excess of two million.  Secondly, the applicant asserts that she has nowhere else to live if the property is sold, that she cannot find accommodation, and will be severely stressed by having to move.  The principles governed in a stay were summarised by the Full Court in Trahn & Long(No. 2) [2008] FamCAFC 194 at [38]:

   These principles, both in the general law and in respect of parenting proceedings, are well settled (see The Commissioner of Taxation of the Commonwealth of Australia v Myer Emporium Limited (1986) 160 CLR 220 at 230; Alexander v Cambridge Credit Corporation (1985) 2 NSWLR 685. Jennings Constructions Limited v Burgundy Royale Investments Pty Ltd (1986) 161 CLR 681; Clemett and Clemett (1981) FLC 91-013; JRN & KEN v IEG & BLG (1998) 72 ALJR 1329 at 1332). The authorities stress the discretionary nature of the application which should be determined on its merits. Principles relevant to this matter included the following:

   ·    the onus to establish a proper basis for the  stay is on the applicant for the stay however it is not necessary for the applicant to demonstrate “special” or “exceptional” circumstances;

   ·    a  person who has obtained a judgment is entitled to the benefit of that judgment;

   ·    the person who has obtained a judgment is entitled to presume the judgment is correct;

   ·    the mere filing of an appeal is insufficient to ground a stay;

   ·    the bona fides of the applicant;

   ·    a stay may be granted on terms that are fair to all parties – this may involve a court weighing the balance of convenience and the competing rights of the parties;

   ·    a weighing of the risk that an appeal may be rendered nugatory if a stay is not granted – this will be a substantial factor in determining whether  it will be appropriate to grant the stay;

   ·    some preliminary assessment of the strength of the proposed appeal - whether the  appellant has an arguable case;

   ·    the desirability of limiting the frequency of any change in a child’s living arrangements;

   ·    the period of time in which the appeal can be heard and whether existing satisfactory arrangements may support the granting of a stay for a short period of time; and

   ·    the best interests of the child the subject of the proceedings.

4. As that was a parenting case, not all the considerations listed by the Full Court apply here.  Although the applicant contended that there were exceptional circumstances that justified a stay, it is not necessary for her to establish exceptional circumstances to obtain the stay.  Notwithstanding, however, the exceptional circumstances were identified by her as being the status of her mental health, her inability to work, the lack of capacity to support herself, and her affinity with the B Street property.  The onus is upon the applicant to justify a stay and the mere lodging of an appeal is insufficient for that purpose. 

5. The respondent is entitled to the benefit of the judgment.  Indeed he has complied with his obligations as I have already said.  There was some attack by the respondent on the bona fides of the applicant.  He relied on the delay in filing the application.  The applicant left it until 10 days before the auction to file this application.  Whilst the applicant repeatedly told the real estate agent that she would be seeking a stay she gave no formal notice of any such application to the respondent.  By way of explanation she said that she could not consider bringing the stay application until she could be sure that the appeal would proceed. 

6. The applicant claimed that she could only be sure of that if she provided her lawyers with sufficient funds to prosecute the appeal on her behalf.  As she has only just done so she is, she says, only now in a position to seek a stay.  I should proceed, therefore, on the basis that both the appeal and the stay are bona fide applications.  Interestingly, however, the applicant’s lawyers did not assist her in this application as she could not afford to pay them.  Instead, a friend of hers has assisted with the application and made submissions on her behalf. 

7. I turn now to the competing rights of the parties and the balance of convenience.  The applicant says:

   At the time of lodging the appeal I was informed by my lawyers that they could not proceed with the appeal unless I provided them with funds in advance to cover the costs of the appeal. Prior to that I had expended over $450,000 in legal costs on the hearing. This had exhausted all of my funds and has left me in substantial debt. I have had to borrow the funds to cover the cost of my appeal and it has taken me nearly four months to raise this money. The last payment towards the costs of my appeal was made approximately 10 days ago. I was not in a position to make an application to stay the orders until I had raised enough money to go ahead with the appeal.

   From 27 March 2015 I have been trying unsuccessfully to raise extra money to pay the legal costs of making this application.  I have prepared this application with the assistance of a friends’ commercial Lawyer who agreed to help me due to my desperate situation.

   A payment of $174,747 was made to my lawyers in accordance with order 1 of Annexure A. All of this money was retained by my Lawyers to cover part of my legal expenses. I currently have $8.34 in my Commonwealth Bank savings account and $392.26 in my St George savings account. Because of my medical condition I do not work and reply on the maintenance payment of $1,288 per week from my former husband. At the time of separation in March 2011 I had credit card debts of approximately $60-80,000 and continue to make small payments against these debts. The balance of my funds is used for living expenses, mortgage payments, and food for my animals and myself. Annexed hereto and marked B is a copy of my Commonwealth Bank accounts summary. I have no other cash reserves.

   Apart from the Family home I own a property at [Town C] in New South Wales. This property has a value of approximately $350,000 and has two outstanding mortgages for $177,192 and $158,615. The mortgage repayments are $520 per week and I receive $250 rent from the current tenants. Annexed hereto and marked C are copies of the most recent mortgage statements for this property.

   (Affidavit of the applicant sworn 7 April 2015 at [6] – [9])

8. The applicant does not say how much money she has raised and provided to her lawyers, how she raised it, from whom it was raised, and what the terms of any advance might be, thus to that extent her present financial position is unknown.  The applicant is not presently working and her doctor states that she is suffering from an adjustment disorder with a mixed anxiety and depressed mood leading to cognitive changes that impair her decision making thus giving rise to an inability to work.  Consequently, the applicant submits that she cannot afford to house herself if the B Street property were to be sold. 

9. Whether she could use the money held by her lawyers for the purpose of those lawyers prosecuting the appeal on her behalf was not disclosed, but it was submitted on her behalf that, if she were to use those funds, that use would impact on the applicant’s ability to have lawyers act for her on the appeal.  I would infer from this, however, that at least part of those funds could be used for the purposes of obtaining accommodation for the applicant.  As to the applicant’s health her doctor said she is being treated by pharmacotherapy (Endep and Seroquel) and regular psychotherapy. 

10. These treatments can only be expected to provide limited effect in the presence of ongoing stresses.  In the event that the sale of her home proceeds and she is required to be evicted it would be reasonable to expect that the resultant stress would have a serious effect on her mental health by causing an escalation of her anxiety and depression.  This opinion must be tempered to some degree by the observation that the whole court process including an appeal and the subsequent uncertainty of the outcomes is likely to be very stressful for the applicant.  I accept, however, that her anxiety and depression are likely to be escalated if she is required to move out of the B Street property. 

11. On 15 June 2012, Ryan J made a number of orders requiring the respondent to pay the holding costs of the B Street property.  These continue and will continue until the completion of its sale.  Pursuant to these orders, the respondent is paying the loan repayments on the two mortgages secured on the property.  The interest rate is variable, but he pays approximately $2,500 per week in respect of the mortgages.  The respondent pays the applicant maintenance of $1,288.77 per week.  Pursuant to the orders of Ryan J, he is also obliged to pay the utilities, the telephone bill at the B Street property, insurance, and the health insurance for the applicant which the respondent says are about $300 per week. 

12. The respondent was also required to pay the registration, insurance and maintenance of the applicant’s car.  The respondent said without contradiction that these payments exceed $18 000 per month which is $216 000 per year.  To date, the respondent who is, pursuant to the orders, to bear the cost of sale has spent $17 057.90 on the cost of the real estate agent, advertising photography and special cleaning for the sale of the B Street property together with $2,500 of conveyancing costs.  These costs will be entirely wasted if the auction does not proceed.  It is true that these costs may be wasted if the auction is not successful, but that is one of the vicissitudes of any sale, and is not in my opinion a relevant factor. 

13. The applicant has offered to give the usual undertaking as to damages to support any stay.  This proposed undertaking is of no value.  If the applicant is not successful on the appeal she will have no means to repay any damages that have arisen including the holding costs that will have been expended by the respondent if the stay is put in place.  The respondent is meeting these expenses by borrowing from H Pty Ltd.  The respondent is meeting the maintenance payments, other payments for the applicant, and mortgage repayments by drawing on his superannuation entitlements and borrowing from H Pty Ltd. 

14. Whilst there are funds available from those sources to meet the expenses the payments are depleting the respondent’s capital.  The sums involved, even if the appeal is heard and determined within a year from today which is most unlikely, will require the respondent to spend from those sources for the benefit of the applicant sums well in excess of what has already been determined to be the appropriate final property settlement.  Those sums, as I have said, could not be recovered in due course from the applicant if she was unsuccessful on the appeal.  The costs that have been thrown away in preparing for the sale if there is to be a stay have been amplified by the delay in seeking it. 

15. The balance of convenience taking these matters into account counts against any stay.  The risk that any appeal might be rendered nugatory if there is no stay is a significant matter.  Here the applicant says that she wishes to retain the B Street property and that any appeal will be rendered nugatory at least in that regard if there is no stay.  The notice of appeal does not seek any order for the retention of the B Street property.  It seeks rather that an order be made for a lump sum payment of $1.8094 million to the applicant.  The applicant has foreshadowed an application to amend the notice of appeal to include the seeking of an order that the applicant should retain the property. 

16. I will proceed on the basis that it is that order that is sought.  It is conceded by the respondent that if the applicant succeeded on all her grounds of appeal she would on the present state of the evidence receive an order for the payment of $1.8094 million.  As the B Street property was valued at $1.8 million the applicant says that she therefore could conceivably obtain an order in due course to retain the B Street property.  As the respondent points out it is not that simple.  The applicant has received $174 147 from the applicant already.  This would need to be taken into account and repaid if the applicant were to receive the B Street property as the appropriate property division. 

1. The applicant has no source of funds or assets from which to repay the sum, and without employment may not and all probably would not be likely to obtain a loan to do so.  She has credit card liabilities in the order of $60 000 to $80 000.  These would need to be paid somehow.  It is by no means clear that if the applicant were to be successful on all grounds of the appeal the applicant would nonetheless be able to retain the B Street property.  On the present state of the evidence it is more likely than not that it would have to be sold.  If she has to repay loans for legal expenses which she says she has made this would make the retention of the property even less likely. 

2. The applicant says that she has a particular affinity for the B Street property:

   I have a particular affinity to the family home as I spent nearly 3 years designing and assisting the builder to construct the Family home. I have remained living in the Family home since the date that it was built over 8 years ago.

   (Affidavit of the applicant sworn 7 April 2015 at [13])

3. I have already referred to the applicant’s doctor’s opinion that her stress will be escalated if she has to leave that property. Whilst the applicant does indeed have an affinity for that home, even if the court were minded to try to fashion orders to enable her to retain it, it could only do so within the bounds of a property order under s 79 of the Family Law Act1975 (Cth) (“the Act”). As I have said that will be difficult and probably unlikely.

4. The appeal raises a number of different grounds.  The first is that I preferred the evidence of Ms LL to that of Mr MM as to the value of the husband’s shareholdings in the various companies the subject of the proceedings.  The difference between them was substantial, in the order of $4 million.  Each regarded the valuation of the other as beyond the range of a reasonable valuation.  This issue is the most significant issue in the appeal as far as quantum is concerned.  If the applicant does not succeed on this ground the sale of the B Street property is inevitable even if all of the other grounds succeed. 

5. The notice of appeal does not identify any error in the reasoning process which led to the preferring of Ms LL’s evidence to that of Mr MM.  It merely asserts that the findings as to the husband’s business interests were contrary to the evidence and the weight of the evidence.  In the absence of the identification of a specific error it is difficult to find that this ground of appeal has any particular prospects of success.  The submissions did not take this aspect of the matter any further.  Appeals based on the acceptance of one witness’ evidence in preference to that of another can be difficult appeals on which to succeed. 

6. The prospects of success on this ground on the material before me cannot be assessed as being anything other than low. This, therefore, reinforces the conclusion that it is more likely than not that the B Street property will have to be sold in any event. The other grounds of appeal challenge various aspects of the judgment including the exercise of the discretion under s 75(2) of the Act. Whilst there is force in the submission of the respondent that again this is a ground on which it is difficult to succeed on appeal because of the wide nature of the exercise of the discretion, I will assume that the appeal on the remaining grounds has reasonable grounds of success.

7. I do, however, accept the submission of the respondent that in the event that the appeal is allowed on the remaining grounds there is a reasonable probability that the Full Court would not re‑exercise the jurisdiction, but remit the matter for rehearing.  I accept that the applicant is in a difficult financial position, but that acceptance must be tempered by the failure of the applicant to disclose what sums are held by her lawyers, how, and on what terms they were raised.  It is likely, however, that the B Street property will have to be sold even if the applicant succeeds on all grounds as I have said.  I have found that her prospects of success on the valuation issues are not at all high, and if she fails on that ground then it will be inevitable that the property will need to be sold. 

8. The respondent will suffer significant financial prejudice by having to continue to pay the holding costs of the property and spousal maintenance if the B Street property is not sold, with no prospect of recovering those payments from the wife pursuant to a proposed undertaking should the appeal be successful.  Even if the appeal is successful, as I have said, it is likely to succeed on grounds other than those involving the valuation, and on grounds that are likely to lead to a rehearing, thus exacerbating the financial prejudice that would be suffered by the respondent if the orders of Ryan J continue. 

9. The delay in bringing this application means that if it succeeds significant costs incurred in preparing for the auction will be wasted.  I find these matters persuasive taking into account together with all of the matters raised by the applicant I am not persuaded by her that a stay of the sale orders should be imposed.  The application in a case filed on 8 April 2015 is dismissed.

10. The respondent has brought an application for costs of the stay application. Costs fall to be determined under section 117 of the Act. A general intention of that section is that parties are to bear their own costs, but that a different costs order may be made where the circumstances and justice so requires. In considering a costs order, the court is to take into account the matters set out in section 117(2)(a) of the Act. In the event the parties only addressed two of those matters, and I also shall confine myself to those.

11. The first is the competing financial circumstances of the parties.  The financial circumstances of the respondent are set out in the substantive judgment at paragraphs 301 and 302:

    The wife will retain and be liable for the following assets and liabilities:

    [Town C property]  350,000

    St George Bank Account  518

    Golf Cart4,000

    Paid Legal fees  469,104

    Sub- total 823,622

    Less

    CBA Loan [Town C]  342,288

    [Business Z Pty Ltd] Loans             140,000

    Sub-total482,288

    Net Assets$341,334

    The husband will retain and be liable for the following assets and liabilities:

    NAB Account  3,985

    Siam Commercial Bank account        28,996

    [N Pty Ltd] shares  1,327,126

    [T Pty Ltd] shares  1,313,855

    2,673,962

    Legal Fees  344,679

    3,018,641

    Superannuation  1,032,005

    Sub-total  4,050,646

    Less

    [N Pty Ltd] loan Wife  805,190

    [N Pty Ltd] loan Husband                588,178

    [H Pty Ltd] loan  139,526

    American Express  6,064

    Sub-total  1,538,958

    Net Assets  $2,511,680

12. If the B Street property sells for the reserve price the respondent is under the current orders required to meet the shortfall which would be at least $200 000.  It is submitted therefore on his behalf that his financial position is not strong.  His financial position, however, is much better than the applicant’s who effectively has no net assets and no income. 

13. In the judgment just delivered I referred to the Court not knowing what funds were held by the lawyers for the applicant and the terms on which those funds were raised or held.  On the hearing of the costs application I was informed by her solicitor making submissions on her behalf that those lawyers hold $70 000 which was borrowed from friends solely for that purpose and she cannot have access to it for another purpose. Nonetheless, her financial position is very much worse than the respondent.  However, I take into account that impecuniosity is not of itself a bar to a costs order being made.  The other issue raised was the consideration that the applicant was wholly unsuccessful.  The response to that was that the application had some merit notwithstanding it was unsuccessful. 

14. The respondent tendered without objection a summary of his lawyer’s costs of the stay application charged at the lawyer’s hourly rate pursuant to the costs agreement with their client.  Those costs total $4,756.40.  However, when the costs are assessed at scale rates they are $2,264.74.  The respondent contended for a lump sum order in the latter amount.  That would be the amount they assert to which they would be entitled at the least, on any assessment of their costs.  The issue then falls to be determined by weighing the poor financial position of the applicant against the applicant being wholly unsuccessful. 

15. These were proceedings to stay an order that was made pursuant to s 79 of the Act. It is not, therefore, an application for relief that arises in the ordinary course of the operation of the Act, but rather in relation to and in support of an appeal. The application was brought late and its delay exacerbated the difficulties of success on the application. Given the difficulties outlined in the judgment as to the application for a stay and taking into account the proposition that impecuniosity is not of itself a bar to costs I find that it is appropriate in these circumstances that there be an order for costs in the lump sum identified of $2,264.74.

16. In light of the applicant’s financial circumstances, however, and having regard to the pending appeal it is appropriate to stay the payment of those costs until the determination of the appeal or further order of the court. 

I certify that the preceding thirty-two (32) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Aldridge delivered on 16 April 2015.

Associate: 

Date:  24 April 2015