Cantrell & North
[2019] FamCAFC 127
•1 August 2019
FAMILY COURT OF AUSTRALIA
| CANTRELL & NORTH AND ANOR | [2019] FamCAFC 127 |
| FAMILY LAW – PROPERTY – APPLICATION IN AN APPEAL – Application in an appeal for a stay of a number of orders made by a judge sitting in the Equity Division of the Supreme Court of New South Wales – Where a judge of the Supreme Court of New South Wales refused to extend a stay – Whether a judge of the Appeal Division of the Family Court of Australia has the power to hear an application for a stay of orders, whether or not such a stay application has been made to a trial judge – A court charged with hearing and determining appeals has incidental power to preserve the subject matter of the appeal, whether by a stay or by way of an injunction – Application of s 7(5) of the Jurisdiction of Courts (Cross-Vesting) Act 1987 (Cth) – Where the appeal, on the face of it, is reasonably arguable – Where the matters relevant to the grant of a stay are considered to be sufficient to find that it is possible that the appeal would be rendered nugatory if the property is sold before the appeal is heard – Orders made extending the stay – Undertakings provided by the applicant. |
| Conveyancing Act 1919 (NSW) s 37A Family Law Rules 2004 (Cth) |
| Aldridge & Keaton (Stay Appeal) [2009] FamCAFC 106 Alexander v Cambridge Credit Corporation Limited (1985) 2 NSWLR 685 Eberstaller v Poulos [2014], 87 NSWLR 394; [2014] NSWCA 211 Hussain v Haynoum Developments Pty Ltd [2014] NSWCA 173 |
| APPLICANT: | Ms Cantrell |
| FIRST RESPONDENT: | Mr North |
| SECOND RESPONDENT: | Mr Cantrell |
| APPEAL NUMBER: | EA | 64 | of | 2019 |
| DATE DELIVERED: | 1 August 2019 |
| PLACE DELIVERED: | Brisbane |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Aldridge J |
| HEARING DATE: | 23 July 2019 |
| LOWER COURT JURISDICTION: | Supreme Court of New South Wales |
| LOWER COURT JUDGMENT DATE: | 19 June 2019 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Herzfeld (with Mr Reynolds) |
| SOLICITOR FOR THE APPLICANT: | Meridian Lawyers |
| COUNSEL FOR THE FIRST RESPONDENT: | Mr Tregenza |
| SOLICITOR FOR THE FIRST RESPONDENT: | G J Gooden |
| THE SECOND RESPONDENT: | No appearance |
Orders made on 23 July 2019
The first respondent is granted leave to file and rely on the Affidavit of Gerard John Michael Gooden sworn on 17 December 2018.
The Application in an Appeal filed on 23 July 2019 is stood over to Wednesday 7 August 2019 at 2.15 pm.
The appeal from the orders of Justice Parker made on 22 July 2019 and any other appeals in relation to this matter are listed for directions on Wednesday 7 August 2019 at 2.15 pm.
Upon the applicant giving the usual undertaking as to damages, an undertaking to the Court that she will not in any way dispose of, encumber or in any way deal with, alienate or diminish the value of the property at Suburb CC (“the Suburb CC property”) and upon the further undertaking to commence an appeal against the orders of Justice Parker made on 22 July 2019, I extend the Stay made by Justice Parker on 27 June 2019 until further order of the Court.
The undertakings be reduced to writing and filed with the Court within 48 hours of the date of these orders.
Compliance with Rule 22.13(2) of the Family Law Rules 2004 be dispensed with.
Costs of this application be costs in the appeal.
Notation
A.The agreement between the parties for the continuation of the Caveat over the Suburb CC property remains in effect.
Note: The form of the order is subject to the entry of the order in the Court’s records.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Cantrell & North and Anor has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).
| THE APPELLATE JURISDICTION OF THE FAMILY COURT OF AUSTRALIA AT SYDNEY |
Appeal Number: EA 64 of 2019
File Number: 226458 of 2015
| Ms Cantrell |
Applicant
And
| Mr North |
First Respondent
And
| Mr Cantrell |
Second Respondent
REASONS FOR JUDGMENT
Introduction
This is an Application in an Appeal for a stay of a number of orders made by a judge, sitting in the Equity Division of the Supreme Court of New South Wales. The orders were made in three tranches since 2018. The effect of the orders is that a property owned by the applicant and in which she lives is to be sold to satisfy a debt owed by the second respondent to the first respondent. The judge found that the transfer of the property by the second respondent to the applicant was void as he intended thereby to defeat his creditors. She seeks a stay to prevent its sale, pending the determination of an appeal from the orders made by the judge.
As will be apparent, the matter was listed before me on 23 July 2019 because the stay previously granted by the judge was to expire later that same day. I heard the application and made orders continuing the stay and indicated that I would deliver my reasons as soon as I could. These are my reasons.
Background
In order to understand the submissions put on the stay application, it is necessary to understand both the background to the proceedings and the complicated procedural history of the proceedings before the judge and the appeals from them.
The applicant and the second respondent were married in 1976. They separated at some time between 2000 and 2006 and were divorced in 2013.
A property at Suburb CC (“the Suburb CC property”) was purchased in 1997 and registered in the sole name of the second respondent.
The second respondent commenced proceedings against the first respondent in May 2004. In May 2012, an Acting Judge entered a judgment in favour of the second respondent for $24,281.26. In June 2012, the Acting Judge ordered the second respondent to pay to the first respondent 90% of the costs of those proceedings. Default judgment for those costs was entered against the second respondent in a Local Court on 24 December 2013 in the sum of $93,960.45. On 6 February 2018, the first respondent obtained a further judgment for costs against the second respondent – this time for $286,555.13.
It is common ground that the debt owed to the first respondent, including interest, is now in the order of $450,000.
On 12 August 2013, the second respondent transferred his 100% interest in the Suburb CC property to himself and the applicant as joint tenants in equal shares.
In March 2014, the applicant and the second respondent approached the Family Court of Australia for consent property settlement orders. Ultimately, orders were made by consent on 8 May 2014, which included an order requiring the second respondent to transfer his remaining interest in the Suburb CC property to the applicant.
The first respondent sought to have both transfers and the consent orders set aside (under s 37A of the Conveyancing Act 1919 (NSW) (“the Conveyancing Act”) and s 79A of the Family Law Act 1975 (Cth) (“the Family Law Act”)).
He was successful.
On 12 April 2018, a judge declared that the two transfers were void pursuant to s 37A of the Conveyancing Act. His Honour also set aside the consent orders made in the Family Court of Australia on 8 May 2014. Two further orders were made which were:
3.Order that the [applicant] perform all acts and concur in all things necessary to make the [Suburb CC] property available for satisfying the debts owed by the second [respondent] to the [first respondent] and to any other creditors of the second [respondent].
…
6.Direct that the [applicant] pursue any claim for an adjustment of property pursuant to the Family Law Act, s 79A, by way of cross-claim in these proceedings, such cross-claim to be instituted within 28 days of today’s date.
On 15 June 2018, a judge made orders appointing a receiver to the Suburb CC property with power to sell the land. His Honour also directed that an advertisement be placed notifying creditors that if they had any claim against the second respondent, they should notify the solicitor of the first respondent.
The obvious intent of those orders was to ensure that the first respondent was paid but not at the expense of other creditors.
The orders of 15 June 2018 are, I am informed, the subject of an appeal in the Court of Appeal of New South Wales. That is a matter of some significance and I shall return to it shortly.
The applicant took up the offer of the judge to file a cross-claim in the proceedings before him, pressing her claim for orders under s 79 of the Family Law Act. The essence of her claim was twofold. First, that she was entitled to 100% of the Suburb CC property as against both the first and second respondents. Secondly, and alternatively, that her claim for property adjustment against the second respondent should be determined without considering the debt of the first respondent or, if it was to be considered, it should be considered only as against the second respondent.
The applicant was unsuccessful and her cross-claim was dismissed on 19 June 2019.
That decision is the subject of the appeal to this Court and the appeal in which this application is brought.
On 15 June 2018, the judge stayed the order made on 12 April 2018 requiring the Suburb CC property to be made available to satisfy the debt owed to the first respondent and the orders for appointment of a receiver made on that day until 5.00 pm on 25 July 2018. The stay was ultimately continued up until 11.59 pm on 23 July 2019.
On 22 July 2019, the judge refused to extend the stay.
The Application
The Family Law Rules 2004 (Cth) (“the Rules”) do not give an express power to a judge of the Appeal Division of the Family Court of Australia to hear an application for a stay of orders, whether or not such a stay application has been made to a trial judge. Rather, the practice of the Family Court of Australia has been to deal with stay applications in the context of an appeal against the trial judge’s refusal or grant of a stay. For obvious reasons, such an appeal has not yet been commenced.
Nonetheless, I accept that a court charged with hearing and determining appeals has the incidental power to preserve the subject matter of the appeal, whether by a stay or by way of an injunction. It was explained by McColl JA in Hussain v Haynoum Developments Pty Ltd [2014] NSWCA 173 as follows:
43.The power of this court to grant a stay of proceedings over a court over which it exercises supervisory jurisdiction pending appeal is incidental to the existence of a right of appeal to the court and derives from the inherent power of the court.
Although this Court does not have inherent power, no violence is done to her Honour’s reasons if the word “inherent” is replaced with “implied” from the right of appeal itself.
The rationale behind this was explained in Alexander v Cambridge Credit Corporation Limited (1985) 2 NSWLR 685 (“Alexander”) at 692 (the rationale remains the same despite the references to the rules and statutory provisions in that discussion). A stay may be necessary to preserve the subject matter of an appeal and thereby give effect to the right of appeal which otherwise might be lost.
At least in the case where no stay has been granted by the trial judge, a stay may be granted by a single judge pursuant to s 94(2D)(d) of the Family Law Act because a stay is a matter of practice (Alexander at 692).
There is, however, a difficulty. The orders for the sale of the Suburb CC property and for the appointment of the receiver are the subject of an appeal to the Court of Appeal of New South Wales. A stay of those orders for the purpose of that appeal is a matter for that Court in the exercise of its jurisdiction.
There is, however, force in the argument, that the appeal to this Court may be rendered nugatory if the property is sold. The existence of two appeals in two different courts concerning essentially the same subject matter and with the attendant difficulties and risks of intruding on the other’s jurisdiction by the grant of stays, are very much the sort of matters that were intended to be ameliorated by the Jurisdiction of Courts (Cross-Vesting) Act 1987 (Cth) (“the Cross-Vesting Act”).
Section 7(5) of the Cross-Vesting Act provides that, subject to exceptions, where it appears that a matter for determination in a proceeding by way of an appeal from a single judge of the Supreme Court of a state is a matter arising under, in this case, the Family Law Act, that proceeding shall be instituted only and shall be determined by the Full Court of the Family Court of Australia. An example is provided by Eberstaller v Poulos [2014] 87 NSWLR 394 (“Eberstaller”), where the Court of Appeal of New South Wales held in similar circumstances to the present, that it did not have jurisdiction to determine the appeal.
The applicant seeks to have the appeal in the Court of Appeal of New South Wales transferred to this Court. It is likely, given the Court’s decision in Eberstaller that this will occur. However, that is a matter for the Court of Appeal of New South Wales and not for this Court. The relevance for present purposes is that the element of disquiet I feel about granting a stay when at least one aspect of the matter is before the Court of Appeal of New South Wales would be removed if the appeal was transferred.
Nonetheless, it follows that if I am satisfied that there is an appeal before this Court, which could be rendered nugatory if a stay in not granted, the interests of justice would require a stay to be granted, despite the difficulty just noted. Otherwise, the right of appeal could be effectively lost.
The course I followed was to require the applicant to appeal against the refusal of the stay by the judge so as to remove any basis for jurisdictional doubt and to make clear that I am determining a stay in the context of the two appeals before this Court.
I turn then to the question of whether a stay ought to be granted.
In Aldridge & Keaton (Stay Appeal) [2009] FamCAFC 106, the Full Court of the Family Court of Australia identified a number of matters relevant to the grant of a stay. The Full Court said:
18.The principles to be applied in determining an application for a stay of orders both in the general law and in respect of parenting proceedings are also well known (see The Commissioner of Taxation of the Commonwealth of Australia v Myer Emporium Limited [No.1] (1986) 160 CLR 220 at 222; Alexander v Cambridge Credit Corporation (1985) 2 NSW LR 685; Jennings Construction Limited v Burgundy Royale Investments Pty Limited (1986) 161 CLR 681; Clemett & 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 include 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 any “special” or “exceptional” circumstances;
·a person who has obtained a judgment is entitled to the benefit of that judgment;
·a person who has obtained a judgment is entitled to presume the judgment is correct;
·the mere filing of an appeal is insufficient to grant 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 a 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 the stay for a short period of time; and
·the best interests of the child the subject of the proceedings are a significant consideration.
The applicant is 71 years old and is not in good health. The Suburb CC property has been her family home for over 20 years and she has no other place to live. Her sole source of income is a pension of $840 per fortnight. The aim of litigation, at least from her part, is to preserve the Suburb CC property for her benefit. Thus, if it was sold before the appeal was determined, the appeal would be rendered nugatory to that extent.
This is a consideration to which significant weight must be given.
In response, the first respondent submitted that it was most unlikely that the appeal would succeed and, in any event, the sale of the property is inevitable, even if the appeal was successful.
As to the prospects of the appeal, it is difficult for a court hearing an application of this kind to come to any informed view of the prospects of success of an appeal because it has neither the time to consider it nor the material available with which to do so.
There was a debate before me as to whether or not the applicant conceded to the judge that she could not obtain 100% of the property. That is a matter to be resolved in the appeal and not on this application.
In the cross-claim that was dismissed by the judge, the applicant sought orders that would see her retain the Suburb CC property. The contest was three-cornered because the proceedings were property settlement proceedings pursuant to s 79 of the Family Law Act between the applicant and the second respondent. However, regard was properly given to the interests of the first respondent as a creditor of the second respondent. His Honour had to consider how he approached the debt owed to the first respondent. Ultimately, his Honour decided to take it into account in the property pool, as against both parties (as opposed to against the second respondent alone), and to do so in its full value. Those two decisions are subjects of the appeal.
Secondly, it was put that as the second respondent had assets overseas and had not given proper disclosure, it was appropriate that the applicant receive all of the property in Australia. That too was unsuccessful and is a ground of appeal.
Finally, in undertaking a consideration of the parties’ contributions, his Honour spent some time considering the financial contributions made by the applicant and the second respondent to the Suburb CC property. His Honour did not undertake any consideration of any non-financial contributions to property or contributions to the welfare of the family. His Honour did not conduct any consideration as to whether any adjustment to the contribution based entitlements should be made pursuant to s 75(2) of the Family Law Act.
It follows, therefore, that the appeal is, on the face of it, reasonably arguable and that its scope extends to the whole of the Suburb CC property. Whether that is a likely outcome or not is a matter for the Full Court of the Family Court of Australia in due course.
These considerations are sufficient to find that it is possible that the appeal could be rendered nugatory if the property is sold before the appeal is heard. I also take into account the age and ill health of the applicant.
Against this, it must be said that the first respondent, a stranger to the marriage, is entitled to the fruits of his judgment. He has already been waiting a long time. This is a prejudice that will be suffered by him if a stay is to be continued. The first respondent, however, did not point to any further prejudice that would arise.
The stay can be granted on terms that would preserve the first respondent’s position by preventing any dealing with the Suburb CC property. The judgment and costs orders upon which he relies are currently accruing interest.
Taking these matters into account, I am satisfied that the stay granted by the judge up until 11.59 pm on 23 July 2019 should be extended and at least the matter could be reconsidered after the Court of Appeal of New South Wales has determined whether it or the Full Court of the Family Court of Australia will hear the appeal currently before the Supreme Court of New South Wales.
I required the applicant to give the usual undertakings as to damages to the Court and to undertake that the property would be preserved and that an appeal would be brought against the refusal of the stay by the judge.
I certify that the preceding forty-seven (47) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Aldridge delivered on 1 August 2019.
Associate:
Date: 1 August 2019
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