Casboult and Close (No.2)
[2013] FMCAfam 244
FEDERAL MAGISTRATES COURT OF AUSTRALIA
| CASBOULT & CLOSE (NO.2) | [2013] FMCAfam 244 |
| FAMILY LAW – Application for rehearing following ex parte property proceedings – in the alternative application for stay of orders pending disposal of appeal – matters to be considered. |
| Federal Magistrates Court Rules; rr.16.05, 22.12 Cairns BC: Australian Civil Procedure 9th Edition (Law Book Company 2011) |
| Casboult & Close [2013] FMCAfam 130 Clifford & Mountford [2006] FMCAfam 450 Fauna Holdings Proprietary Limited and Others v Mitchell (2000) FLC 93 024 |
| Applicant: | MS CASBOULT |
| Respondent: | MR CLOSE |
| File Number: | ADC 2567 of 2010 |
| Judgment of: | Brown FM |
| Hearing date: | 15 March 2013 |
| Date of Last Submission: | 15 March 2013 |
| Delivered at: | Adelaide |
| Delivered on: | 20 March 2013 |
REPRESENTATION
| Counsel for the Applicant: | Mr J McGinn |
| Solicitors for the Applicant: | Nelson & Co |
| Counsel for the Respondent: | Mr Reynolds |
| Solicitors for the Respondent: | SRG Lawyers |
ORDERS
The application for a re-hearing is dismissed.
The orally made application for a stay of the orders made 19 February 2013 pending the outcome of the appeal filed in this case is dismissed.
The matter is fixed for final hearing before Federal Magistrate Brown on 6, 7 and 8 November 2013 at 10:00am NOTING 3 days allowed.
That further consideration of this matter is adjourned to 24 April 2013 at 9:30am for directions.
IT IS NOTED that publication of this judgment under the pseudonym Casboult & Close (No.2) is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL MAGISTRATES COURT OF AUSTRALIA AT ADELAIDE |
ADC 2567 of 2010
| MS CASBOULT |
Applicant
And
| MR CLOSE |
Respondent
REASONS FOR JUDGMENT
Introduction
On 19 February 2013, after what I hoped was a considered judgment,[1] I ordered that Mr Close (“the husband”) vacate the properties in which he was living, situated at [2] and [1] Property A, [A], no later than 12 March 2013 and thereafter the two properties concerned be placed on the market for sale.
[1] See Casboult & Close [2013] FMCAfam 130
At the time, I was well aware that the orders would be controversial, so far as the husband was concerned and, as such, were unlikely to meet with compliance. So it has proved to be.
On 8 March 2013, the husband filed a Notice of Appeal to the Family Court. On the same day, he filed an application in a case, in which he has sought a rehearing of the application of Ms Casboult (“the wife”), which gave rise to the orders of 19 February 2013.
Pending both the hearing of the appeal and the application for rehearing, the husband seeks to remain in occupation of [2] Property A, [A][2] and that otherwise there be a stay of the various orders made on 19 February 2013.
[2] For reasons provided in the earlier judgement, the husband concedes that [1] Property A is not fit for human habitation. The two properties concerned adjoin one another.
The wife opposes both such applications. It is her position that, in all the circumstances prevailing, it would be unfair to her for the immediate operation of the orders requiring the vacation and sale of the two properties concerned to be delayed, particularly given her own parlous financial circumstances and the fact that she has been advocating the sale of the properties concerned for some time, a fact well known to the husband.
These reasons for judgment are directed towards the resolution of both the stay and rehearing applications. Notwithstanding the court’s resolution of each of these issues, other matters remain outstanding between the parties and it will ultimately be necessary to allocate further dates for the final hearing of their respective matrimonial property applications.
The grounds of appeal
The grounds of the husband’s appeal are as follows:
“The orders of the learned Federal Magistrate were so unreasonable and manifestly unjust, that it may be properly inferred that there has been a failure to properly exercise the discretion reposed in His Honour.
That the orders made by the learned Federal Magistrate were not just and equitable in that the orders fell outside of the reasonably generous ambit of discretion.
That the learned Federal Magistrate erred at law or alternatively in the exercise of his discretion in proceeding to hear and determine the wife’s application in the absence of the husband.
That the learned Federal Magistrate erred at law or alternatively in the exercise of his discretion in failing to grant the husband’s application for an adjournment.
That the learned Federal Magistrate erred at law or alternatively in the exercise of his discretion in making orders for partial or interim property settlement pending the final hearing of the matter.”
I have not been advised when it is anticipated that the Full Court will be in a position to deal with the appeal. As I understand matters, a draft index to the appeal book is due to be filed no later than 5 April 2013. The Chief Justice of the Family Court has not as yet determined whether the appeal will be heard by a single Justice of the Court or by a bench of three.
The husband’s application in a case
The husband seeks the following orders, in his application in a case, filed on 8 March 2013:
“That there be a re-hearing of the mother’s application previously heard on 15 February 2013.
That there be a stay of the orders made of 15 February 2013 pending the re-hearing of the matter.
That the application be granted leave to remain in the property at [2] Property A pending the re-hearing of the matter.”
Originally, this application was made returnable on 13 May 2013. There has not as yet been a formal application for a stay of orders pending appeal. Given the urgency of the matter, from both parties’ perspectives, it is expedient that the stay issue be determined forthwith, along with the rehearing application.
The matter comes before the court as a consequence of the orders made on 19 February 2013. On this day the proceedings were adjourned to 15 March 2013 to allocate a trial date and to make orders in respect of such hearing. Accordingly, the availability of this date has provided the court with an opportunity to expedite the husband’s application for a rehearing.
The wife herself has not as yet had the opportunity to file any answering material in respect of the rehearing application. She opposes the application but agrees that it is expedient to expedite the hearing of the husband’s application.
The husband’s application is supported by an affidavit filed by his solicitor, Mr Reynolds. It is Mr Reynolds’ evidence that the husband has been too ill to attend at his office to execute his own affidavit.
Mr Reynolds’ affidavit is brief. He deposes as follows:
“Orders were made on 15 February 2013 by Federal Magistrate Brown that the two properties located at [1] Property A in the State of South Australia and [2] Property A in the State of South Australia be placed on the market forthwith.
Orders were further made that the applicant vacate [2] Property A within 21 days of the orders such date being Friday 8 March 2013.
I do not believe that the matter can proceed until such time as a determination has been made in relation to the application for the re-hearing of the matter and the Notice of Appeal.
I have instructions from the applicant to put a partial settlement proposal to the respondent wife that proposal based upon the following:
The applicant’s sister has advised the applicant that she will purchase the property at [2] Property A so that he can continue to reside there. Further to this, the applicant’s partner has advised that she is in a position to purchase a 25% share of the property at [1] Property A.
The applicant’s sister and partner have agreed to purchase these properties at a value determined by an independent valuer appointed by both parties with the proceeds from the sale to be placed into an interest bearing account agreed to by both parties.
This will allow the matter to be resolved while not resulting in the applicant losing the family home and being forced to relocate while he is recuperating from heart surgery.
I do not believe that a stay of proceedings will prejudice the respondent as there is a proposal for a partial property settlement which if accepted can still result in the sale of the properties.”
The legal principles applicable
Pursuant to Rule 16.05(2) of the Federal Magistrates Court Rules 2001 the court may vary or set aside its judgment or order after it has been entered if:
“(a) the order is made in the absence of a party; or
(b) the order is obtained by fraud; or
(c) the order is interlocutory; or
(d)the order is an injunction or for the appointment of a receiver; or
(e) the order does not reflect the intention of the Court; or
(f) the party in whose favour the order is made consents.”
Rule 16.05(2) provides the court with a discretion to set aside its orders in a number of specified circumstances. In this case, it is clear that the orders in question were made in the absence of the husband and, as such, can be categorised as ex parte orders.
Although the discretion is expressed as being unfettered, in my view, it must be exercised judicially. Essentially, it is an instrument to avoid injustice being inflicted on one or other of the parties concerned to the judgment in question or to avoid a slip or mistake, on the part of the court itself, which in turn leads to injustice.
As such, in my view, the application of the rule must depend on the circumstances prevailing in the case concerned and the overall interests of justice. It is a rule designed to remedy cases of practical injustice or to rectify procedural unfairness. A rehearing is not analogous to an appeal to which a party to concluded litigation has as a matter of right.
The learned author of Australian Civil Litigation has opined that a party applying to set aside an ex parte order:
“Must produce additional material to show a different light on the situation between the parties. A review of an ex parte order is not allowed to mount to an appeal to another Judge, as would be the case if additional material were not disclosed. Material non-disclosure by the party who made the ex parte application is relevant on an application to set aside the order but the court still has a discretion as to whether the order should stand or be recalled. The balance of hardship may also be relevant …”[3]
[3] See Cairns BC: Australian Civil Procedure 9th Edition (Law Book Company 2011) at [14.120]
It is in the public interest that there be an end to litigation and that issues in dispute between parties, once resolved, should not be subject to endless review and revision. However, the court has been provided with jurisdiction to rectify judgments that do not correctly express its intention or have been entered unfairly.
However, such corrections must be distinguished from instances where a party claims the judgment is wrong. If the judgment correctly expresses the intention of the court, it may be set aside or varied only on appeal.[4]
[4] See Cairns (supra) at [16.340]
In Clifford & Mountford,[5] Jarrett FM, after a detailed analysis of various authorities, concluded as follows:
[5] See Clifford & Mountford [2006] FMCAfam 450 at [34]
“a) The discretion to be exercised is unfettered, but nonetheless to be exercised judicially and bearing in mind the public interest in there being an end to litigation.
b) There are three criteria, each of which should usually be demonstrated before a judgment or order is set aside under r.16.05(2)(a), namely:
i) a reasonable explanation for the applicant's absence at the trial or hearing;
ii) material arguments available to the applicant that might reasonably lead to the making of an order different to that sought to be set aside; and
iii) no prejudice to the party with the benefit of the orders sought to be set aside that is not able to be adequately addressed by the Court.
c) Matters relevant to the three criteria set out above will include, but will not necessarily be limited to:
i) Whether a party with notice of proceedings disregarded the opportunity of appearing at and participating in the trial;
ii) Delay, if any, in bringing the application to set aside and whether, if during the period of delay the successful party has acted on the judgment, or third parties have acquired rights by reference to it;
iii) the conduct of the applicant since the judgment or order sought to be set aside was made.”
Rule 22.12 of the Family Law Rules deals with stay orders pending appeal. It reads as follows:
(1)The filing of a form 20 does not stay the operation or enforcement of the order appealed from unless otherwise provided by a legislative provision.
(2)If an appeal has been started or a party has applied for permission to appeal against an order, any party may apply for an order staying the operation or enforcement of all or part of the order to which the appeal or application relates.
(3)An application for a stay must be made to the judge, Federal Magistrate or Magistrate who made the order under appeal.
Accordingly it is clear a stay is not to be granted to an appellant as a matter of course. It is clear from authorities such as Fauna Holdings Proprietary Limited and Others v Mitchell[6] the question of whether to refuse or grant a stay is a discretionary decision. However, the discretion is not an unfettered one and must be exercised according to criteria laid down by the superior courts. Those criteria or guidelines, I think, can be summarised as follows:
·Firstly, whether refusing a stay will render a successful appeal nugatory. That is, will it make it impossible to restore the situation prior to the decision appealed against?
·Secondly, in granting a stay there must be some consideration of the merits of the appeal concerned.
·Thirdly, there must be an examination of any delay in applying for a stay.
·Fourthly - and this relates to the consideration of the merits of the appeal itself - the court must look at the bona fides of any application for a stay is the stay sought as a tactical devise to delay the inevitable and to, in effect, stall for time.
·Fifthly, the court is directed to look at when the appeal is likely to be heard.
[6] Fauna Holdings Proprietary Limited and Others v Mitchell (2000) FLC 93 024
Essentially, the court must balance the convenience of the respective parties in either granting the stay on the one hand, or not granting it on the other. Ordinarily, a successful party in proceedings is entitled to the fruits of any judgment made in his or her favour until such time as the judgment in question has been successfully impugned on appeal.
The husband’s submissions
Mr Reynolds, the husband’s solicitor, has been intermittently instructed by his client throughout the lengthy proceedings before the court. He was present, although his client was not, when the proceedings were fixed for hearing on 15 February 2013, in respect of the wife’s application for the two properties in question to be sold.
In addition, it is clear that the husband himself was aware of this fact, as he emailed an application seeking to adjourn the wife’s application to May 2013. The ground proffered for the adjournment being his incapacity as a result of coronary artery bypass surgery.
It is Mr Reynolds’ submission that his client has provided a “solution” to the dilemma, which confronted both the court and the wife (and indeed the husband himself) on 15 February 2013. This solution is that his sister will purchase [2] Property A and his partner will purchase twenty-five percent of [1] Property A, at values in the case of each property as determined by an agreed valuer.
Mr Reynolds argues that given purchasers have been found for the parties’ major assets, who will allow him to remain in occupation of [2] Property A, any prejudice to the wife will be negated. In addition, more importantly, the grave prejudice to be occasion to him from having to leave his home, whilst incapacitated, will be forestalled.
In all these circumstances, it is Mr Reynolds’ position that the court should, in effect, rehear his client’s application for an adjournment of the proceedings and grant it, given the compelling and uncontested explanation his client has given regarding his failure to attend or otherwise engage with the proceedings concerned on 15 February 2013, namely his ill health.
The wife’s submissions
Mr McGinn of counsel appeared for the wife on the husband’s stay and rehearing application, as he did in respect of the wife’s application for the sale of the two properties concerned. He characterises the husband’s current application as an exercise in “cynical sabotage” of his client’s financial circumstances, which are likely to be further worsened by any delay in the sale of the properties concerned.
It is Mr McGinn’s submission that, as the husband is seeking the court’s indulgence, regarding the discretionary grant of a rehearing of an application, to which he had previously not responded, it behoves him to have “clean hands” in order to be granted such an indulgence. It is Mr McGinn’s assertion that the husband’s conduct cannot be categorised in this way.
Mr McGinn points to the lengthy and convoluted history of the litigation between the parties and particularly that the proceedings had been listed for final hearing on several past occasions. In this context, Mr McGinn submitted that it was clear that the husband was well aware of the wife’s position regarding the need to sell the two properties in question but has refrained from providing his so-called solution until such time as she had successfully obtained an order for the sale of the properties in question and a direction that he quit them.
In addition, Mr McGinn points to the fact that the material relied on by the husband and the grounds of appeal submitted by him do not seek to impugn the findings of fact made by me in the judgment in question. These findings of fact, which were central to my conclusion that it was necessary for the properties in question to be sold were summarised by me as follows:
“The wife is in a parlous financial situation.
She has a large debt to Centrelink, which will result in her Social Security payments being reduced.
Due to her impaired health, she has a limited capacity to seek paid employment.
She is the major provider of care for the parties’ three children. Mr Close pays her no child support.
The wife is being pursued in respect of a mortgage debt for a property which she does not occupy and which she has no capacity to pay.
The husband is in default of the order made on 16 May 2012 that he make all necessary arrangements and pay all necessary sums to the Adelaide Bank to ensure the Bank’s threat of foreclosure is not proceeded with.
On the husband’s own case, No [1] is uninhabitable.
Accordingly, the husband is in occupation at No [2]. However, it seems incontrovertible that he is not in a position to make an acceptable accommodation with the Bank of Adelaide to prevent it from foreclosing on the mortgage secured against the property.
The husband is in poor health. In addition, he has not been in the paid workforce for many years.
The husband’s sole source of income is Social Security.
Like the wife, at this stage, the husband is likely to have a significant liability to Centrelink for the overpayment of Social Security payments apparently unlawfully obtained.
The husband also has a significant debt to the ANZ Bank in respect of No [1].
The properties are likely to secure a great return if sold together.
Given the indication made by the Bank of Adelaide, it appears that the sale of No [2] is inevitable.
The husband concedes that he cannot live at No [1].”[7]
[7] See Casboult & Close (supra) at [68]
In particular, Mr McGinn was critical that Mr Close has not himself sought to approach the mortgagee in question (the Bank of Adelaide), who has indicated that it will exercise its rights of sale arising from the mortgage held by it in respect of number [2] Property A to ascertain whether his proposal is acceptable to it.
In all the circumstances, it is the wife’s position that she is sceptical about the husband’s proposal that his sister and partner will purchase the properties in question, in the absence of any direct overtures from them to her and given that she has not been provided with any direct documentary evidence to support the husband’s contention that either such party has recourse to the financial resources necessary to secure such outcomes.
In all these circumstances, it is Mr McGinn’s position that the husband has done nothing of a concrete nature to assuage her concerns that the Bank of Adelaide will act to sell [2] Property A, to both her and the husband’s detriment.
In these circumstances, the wife remains suspicious that the husband’s self-categorised solution to the parties’ current and longstanding financial crisis is without substance and designed by Mr Close to gain more breathing space for himself or some other ulterior motive. Perhaps to do her financial harm.
Conclusions
The husband has provided a reason as to why he did not appear at court on 15 February 2013. It is the same reason, which I accepted prior to embarking on a hearing of the wife’s application, namely that he was unwell as a result of recent heart surgery.
I said as follows in the judgment:
“The husband seeks an adjournment of the proceedings for approximately five months, which application is supported by credible medical material. Clearly the husband’s surgery was major in nature. However the period sought is too long to be fair to the wife, given the Bank of Adelaide’s intransigence.
Were it not for the imminent financial catastrophe confronting the parties, which is coupled with the absence of any proposals from the husband to deal with it, ordinarily the Court would grant the husband’s application for adjournment out of considerations of probity and fairness. But the gravity of the financial circumstances confronting the wife and the possibility of such an adjournment creating irretrievable prejudice to her take this case out of the ordinary run of matters.”
As such, I acknowledge that it was an exceptional decision not to adjourn the proceedings, given the husband’s ill health. However, for the reasons provided, the situation of financial crisis confronting, not only the wife, but also the husband, took this out of the normal run of cases and made it an extraordinary one.
The husband, has not, in my view, provided any adequate explanation as to why he did not instruct Mr Reynolds to appear on his behalf on 15 February 2013, notwithstanding his ill health and more importantly, why he did not convey his proposal that his sister would purchase [2] Property A, at market value, to the wife either prior to his admission to hospital, in the lead up to the aborted January hearing, or indeed afterwards, when the wife’s application for sale of the properties in question was relisted.
In these circumstances, I am left with the uncomfortable conclusion that the husband expected that the mere tender of his medical certificate, which I concede disclosed a very serious condition, would inevitably result in the adjournment of the proceedings in question and, as such, he needed to do nothing further about the wife’s application for the immediate sale of the properties concerned.
In my view, it is telling that it is only when the court has acceded to the extraordinary remedies sought by the wife that the husband has produced an offer to ameliorate the immediately pressing financial crisis confronting the parties. It is in this context that Mr McGinn categorises it as a cynical and possibly insincere gesture on the husband’s part.
The situation of financial disaster, stalking the parties, has been a long time in the making. The husband acknowledges that he has not been in a position to make the payments due to the Bank of Adelaide, under the mortgage secured against [2] Property A, for a significant period of time. It is the wife’s position that she is in a similar position and in any event it would be unfair for her to pay the monies due given that the husband is in occupation of the property concerned.
The husband’s partner was able to contact Mr Reynolds prior to the January trial dates and instruct him to appear at court. It is axiomatic that the husband is currently well enough to respond to the orders made on 15 February 2013, which he finds unpalatable. It is in this context that the proposal that his sister purchase [2] Property A has materialised. The husband has been well enough to convey this offer to Mr Reynolds, who has passed it on, in turn, to the court and the wife.
In all these circumstances, the wife is suspicious of the husband’s proposal, given that it was not raised at any earlier stage of the proceedings, certainly not prior to the husband’s indisposition. In particular, the wife sought to agitate her application to sell the properties in question in November of 2011, after the trial in September was aborted. It is the wife’s case that this was a natural and obvious time for the husband to float his proposal for her consideration and to avoid the need for an interim hearing.
In addition, it is the wife’s position that, once the court had determined that it was more appropriate for an attempt to be made for all the outstanding issues to be determined by the court, at a further expedited final hearing scheduled to take place in January, the husband was provided with a further opportunity to put his proposal to her regarding the sale of the properties, which again pre-dated his myocardial infarction.
This opportunity was provided by the direction that he file his affidavit material for the January trial on or before 20 December 2012. The husband chose to utilise this direction to file material regarding the Centrelink overpayment issue rather than matters to do with the mortgage on [2] Property A and how it could be satisfied.
In this regard, it is only after the court has indicated its concern, in the recently published judgement, that the husband had chosen not to make any “proposals as to how the parties’ current parlous financial affairs are to be managed”[8] that Mr Close has floated the idea of his sister purchasing [2] Property A. The proposal has materialised only in response to his unsuccessful adjournment application and the orders which followed. This situation strikes me as being opportunistic and reactive, rather than coincidental. No adequate explanation has been provided as to why the proposal was not advanced sooner.
[8] See Casboult & Close (supra) at paragraph 79
In my view, the husband’s proposal is amorphous and lacking in both certainty and credibility. The proposal involves Mr Close’s sister advancing a significant sum of money, which at first blush may be contrary to her financial interests, particularly given her brother’s ill health and lack of income. The court has been provided with no evidence regarding the lady’s financial circumstances and how she would raise the sum in question.
For all I know, she may be a person of significant wealth and the sum involved is trifling to her. However, the fact remains that she has not herself provided any affidavit evidence regarding the proposal nor is it supported by any independent documentation such as a formal offer to purchase; a contract of sale; or mortgage finance approval.
In all these circumstances, I am not persuaded that, if this imprecise and unformed evidence, regarding the possibility of Mr Close’s sister purchasing [2] Property A, had been available at the time of the earlier hearing, it would have necessarily led to a different result having occurred. In addition, an adjournment on this basis, in my view, continues to have the potential to cause extreme prejudice to the wife.
If the husband’s proposal does not materialise, the wife’s opportunity to forestall the mortgagee’s sale will have been lost. She is not likely to have any remedy against either the husband or his sister in these circumstances. In addition, it is clear that the husband’s proposal has not been put to the relevant authorities at the Adelaide Bank. As I observed in the earlier judgment, delaying the sale has the potential to intensify the financial catastrophe facing the parties.
In any event, the absence or otherwise of a rehearing or indeed of a stay pending appeal does not pre-empt the husband and his sister proceeding with the offer to purchase [2] Property A and the wife accepting such a proposal, if it is acceptable to her.
The only prejudice to be occasioned to the husband, by refusing the rehearing and stay applications, is if his proposal is bona fide and meets both the wife and the bank’s approval, is that he may have to move out of the property concerned, whilst the purchase is finalised.
I concede that, if a stay is not granted, it is highly probable Mr Close’s appeal will be rendered nugatory, particularly if the appeal itself cannot be expedited. However, regardless of this circumstance, it seems inevitable that the Bank of Adelaide will move on the mortgage and this eventuality will also render the appeal pointless.
Given the recent provenance of Mr Close’s proposal to resolve all interim issues, I am concerned that the appeal may be a tactic to stall for time. However, regardless of whether this is the case or not, it will have no effect on any actions, which the Bank of Adelaide may choose to take. In this context, in my view, there is considerable potential for the wife to be prejudiced, if a stay is granted.
Given the unusual circumstances surrounding the matter, Mr Close’s appeal is not without its merits. I concede that it is an unusual situation to, in effect, deal with an application of this type, in the absence of one of the parties, who has recently been hospitalised for a serious illness.
However, given the uncertainty regarding when the appeal can be heard and the potential for prejudice to be occasioned to the wife, I have come to the conclusion that the stay sought should not be granted. Once again, whether or not there is a stay pending appeal, it will not affect the wife accepting the offer to purchase, if the proposal is acceptable to her.
For all these reasons, the orders of the court will be as set out at the commencement of these reasons for judgment.
I certify that the preceding sixty-one (61) paragraphs are a true copy of the reasons for judgment of Brown FM
Associate:
Date: 20 March 2013
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