Coli and Pearson

[2019] FamCA 321

FAMILY COURT OF AUSTRALIA

COLI & PEARSON [2019] FamCA 321

FAMILY LAW – PRACTICE AND PROCEDURE – STAY PENDING APPEAL – interim property order – where application for stay pending determination of appeal from interim property order in favour of the wife – where consideration of applicable principles – where the husband failed to provide evidence establishing proper basis for a stay – application for stay refused.

Family Law Act 1975 (Cth)
Family Law Rules 2004 (Cth)

Commissioner of Taxation v Myer Emporium Ltd (1986) 160 CLR 220
Jackson & Balen [2009] FamCAFC 131
Medlow & Medlow (2016) FLC 93-692

APPLICANT: Mr Coli

RESPONDENT: Ms Pearson

FILE NUMBER: DGC 1112 of 2014

DATE DELIVERED: 9 May 2019

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Macmillan J

HEARING DATE: 12 April 2019

REPRESENTATION

COUNSEL FOR THE APPLICANT: Ms Stoikovska SC

SOLICITOR FOR THE APPLICANT: Berger Kordos Lawyers

COUNSEL FOR THE RESPONDENT: Mr North SC

SOLICITOR FOR THE RESPONDENT: Australian Family Lawyers

Orders

1. The Application in a Case filed 9 April 2019 be dismissed and removed from the list of cases awaiting hearing.

2. On or before 4.00 pm on 29 May 2019 the parties file and serve any written submissions in support of any application for costs arising out of or incidental to the hearing of the Application in a Case filed 9 April 2019.

3. On or before 4.00 pm on 12 June 2019 the parties file and serve any reply to any written submissions in support of any application for costs arising out of or incidental to the hearing of the Application in a Case filed 9 April 2019.

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 Coli & Pearson 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).

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: DGC 1112  of 2008

Mr Coli

Applicant

And

Ms Pearson

Respondent

REASONS FOR JUDGMENT

1. On 19 February 2019 I ordered that on or before 4.00pm on 22 April 2019 the husband pay the wife the sum of $400,000 by way of partial property settlement. I further ordered, as proposed by the wife, that in the event of there being no further adjustment of the parties’ legal and equitable interests in the property in the wife’s favour, the wife repay the whole of that payment to the husband within 60 days of judgment and final orders being made.

2. On 14 March 2019 the husband filed a Notice of Appeal together with his Application for Leave to Appeal paragraph 2 of the orders made 19 February 2019 requiring that the husband make the payment to the wife. On 9 April 2019 he filed an Application in a Case seeking a stay of that order. It is that application that is listed before me.

3. The principles to be applied by the Court in determining an application for a stay are well established and both counsel for the husband and wife referred me to the relevant authorities. In Jackson & Balen [2009] FamCAFC 131 the Full Court, highlighting the discretionary nature of an application for stay, summarised those principles at paragraph 28 as follows:

   ·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 application must be bona fides;

   ·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.

Discussion

1. Counsel for both parties focused their submissions the merits of the Application for Leave to Appeal and the strength of that appeal leave having been granted, the risk that the appeal might be rendered nugatory if a stay is not granted, and the balance of convenience. In this case there is some overlap, at least on an evidentiary basis, between the risk that the appeal might be rendered nugatory if a stay is refused, the balance of convenience, and, given the way in which the husband put his case, the merits of the leave application.

2. I propose to turn first to the merits of the Application for Leave to Appeal.  In Medlow & Medlow (2016) FLC 93-692 the Full Court departed from the test applied in this Court over many years that a party applying for leave must establish an error of principle and/or substantial injustice, in favour of the test applied by the Federal Court of Australia as to whether, in all of the circumstances of the case, the decision is attended by sufficient doubt as to warrant it being reconsidered by the Full Court and whether a substantial injustice would result if leave to appeal was not granted.

3. The Full Court in Medlow referred to the decision of a differently constituted Full Court in Jess & Ors & Jess & Ors (2014) FLC 93-620. In that case the Full Court, whilst saying they were inclined to depart from the “traditional test” in this Court, did not do so because of the way in which the matter had been canvassed in the case before them and because of the longstanding application of the test. The Full Court said, commencing at paragraph 59, as follows:

   [59]We are attracted to the formulation of the test used in the Full Court of the Federal Court for four primary reasons.

   [60]First, it has not been suggested there is anything in the legislative framework to suggest there is any logical basis for different approaches to be applied in the two courts. In our view, it is desirable there should be a uniform approach in federal intermediate appellate courts.

   [61]Secondly, there are many cases where a judge may have expressed himself or herself in a way which constitutes an “error of principle”, but nevertheless has arrived at a result which itself is not attended by “sufficient doubt” as to warrant a full blown appeal on an interlocutory issue.

   [62]Thirdly, the two “integers” are applied conjunctively, whereas the question of whether the test used in the Family Court is conjunctive or disjunctive has been left open: Fitzpatrick & Fitzpatrick [2005] FamCA 497 at [28] and [29]. The conjunctive approach raises the bar and, in our view, supports the policy considerations which led French J (as he then was) to say that “[t]he time and resources of the Court and the parties should not lightly be taken up with appeals about decisions in connection with proceedings which do not finally determine the rights of the parties”: Johnson Tiles Pty Ltd v Esso Australia Pty Ltd at 583 [42]. This is an increasingly important consideration as the Court attempts to deal with the large number of appeals coming before it.

   [63]Fourthly, ensuring the first limb of the test is directed to the outcome at first instance, rather than to the path by which that outcome was reached, will keep the focus firmly fixed on the real issue – i.e. whether there is a realistic prospect of the decision being reversed if the appeal proceeds.

4. Although in this case the husband may not be required to establish that there has been an error of principle, he does bear the onus of satisfying the court that not only is there sufficient doubt to warrant the Full Court reconsidering the matter but that there would be a substantial injustice to him if leave were not granted.

5. The husband in his Notice of Appeal identified what he said were a number of errors of principle in support of his application for leave. The first of those was that, although the order was expressed to be pursuant to s 79 of Family Law Act 1975 (Cth) (“the Act”), it was not apparent from the Reasons for Judgment which head of power had been exercised. Counsel for the wife submitted that it is clear by reference in the reasons to the applicable principles for making an order for partial property settlement that the court is exercising the powers in s 79 of the Act. In my view there is little merit in paragraph 2 and 3 of the matters relied upon by the husband in support of his Application for Leave to Appeal. Moreover, in circumstances where the order was made pursuant to s 79 of the Act, there is in my view little merit in the complaint that, in so far as the order was for litigation funding pursuant to s 117 of the Act, there is no mention in the Reasons for Judgment of any consideration of the matters in s 117(2A) of the Act.

6. The husband also relied upon there having been no consideration of the requirement that the Court consider, pursuant to s 79(2) of the Act, whether it was just and equitable to make an order adjusting the parties’ legal and equitable interests in property. However, as counsel for the wife submitted, in my view with some force, the wife having been granted leave out of time to review the Registrar’s orders made 26 May 2014, it was inevitable given the deficiencies in those orders that further orders would need to be made satisfying the requirement that it be just and equitable to make orders adjusting the parties property interests, whatever the quantum of those orders might be. Taking that submission a step further, arguably the orders having been set aside, the husband would want the protection of final property orders whether or not those orders ultimately provided for any additional payment or adjustment of property in the wife’s favour.

7. Finally, it was the husband’s case that the Reasons for Judgment omitted any consideration of material factual matters, including but not limited to: the challenge to the quantum sought by the wife; the availability to the wife of assets from which she could fund her litigation; and the difficulty the husband would face realising the funds needed to meet the order. Counsel for the wife submitted that in circumstances where there is reference in the Reasons for Judgment to these matters, there is little prospect that the husband could persuade the appellate court these matter were not considered and, in so far as there is an argument as to the weight afforded to these matters, that is not an error of principle.  

8. Whilst counsel for the wife focussed on there being no error of principle, his submissions with respect to the merit of the matters upon which the husband relied in support of his Application for Leave to Appeal highlighted the shortcomings in the husband’s case. In my view, whether they are properly considered errors principle or matters of weight, and even if there may be some merit in the husband’s case, his case falls well short of establishing that there is sufficient doubt as to warrant the Full Court reconsidering the matter.

9. Even if the husband had established that there is sufficient doubt to warrant the Full Court reconsidering the matter, he has not in my view established that there would be a substantial injustice to him if leave were not granted and the onus is on him to do so. Although Counsel’s submissions were directed to the possibility of his appeal being rendered nugatory, given the way in which he put his case those submissions are also relevant for the purposes of determining the merits of his Application for Leave to Appeal.  

10. In his affidavit filed in support of his application for a stay the husband deposed to having no liquid funds available to meet the order and in the annexure to his Notice of Appeal it was stated that the husband would only be able to comply with the order by “effecting a serious disposition” thereby rendering any appeal, if successful, nugatory.  In his affidavit the husband also deposed that he only has one unencumbered property, the other properties all being subject to cross-collateralised mortgages. That unencumbered property being the property in which he lives with the children when they are in his care. The husband also relied upon paragraph 31 of his affidavit filed 3 December 2018 and his Financial Statement filed 5 November 2018. Although in his Financial Statement filed 5 November 2018 the husband listed the property at P Street as unencumbered, his evidence is now that that property is in fact subject to a cross-collateralised mortgage with respect to another property he owns. He also deposed that his elderly parents live in P Street with his brother as their carer.

11. The husband annexed to his Financial Statement a schedule of his various properties and their respective mortgages. According to that schedule, several of the properties appear to have significant equity. Apart from his evidence in his affidavit filed 3 December 2018 that “a number” of his properties are subject to cross-collateralised mortgages, there is no further evidence as to which ones, what that would mean from the point of view of a sale or, as submitted by counsel for the wife, how that would impact upon his ability to borrow the funds necessary to comply with the order.  Also, although the husband also asserts in his affidavit filed 3 December 2018 that he has confirmed with his bank manager that he has limited borrowing capacity, he did not adduce any evidence to support this assertion. In particular, as submitted by counsel for the wife, the husband did not adduce any evidence as to any attempts he has made to borrow the funds he requires to comply with the order.

12. The order that requires the husband to pay the wife the sum of $400,000 is an interim order. It does not exhaust the Court’s power to make further orders adjusting the parties’ property interests and an allowance can be made for any interim order that has been made. However it is the husband’s case that having to sell real property would be a substantial disadvantage to him and render any appeal nugatory, notwithstanding that the orders require the wife to repay him if there is no further adjustment in her favour, simply because even if he had the funds he would not have the real property. Counsel for the husband did not refer me to any authority in support of the proposition that monetary compensation would not be sufficient in circumstances where a party has been required to sell a property. Both counsel for the husband and the wife referred me to the decision of Commissioner of Taxation v Myer Emporium Ltd (1986) 60 ALJR 300 at page 301, where Dawson J referred to the risk that it will not be possible for a successful appellant to be restored “substantially” to his former position if the judgment was executed against him (Commissioner of Taxation v Myer Emporium Ltd (1986) 160 CLR 220 at page 223).

13. The onus in this case lies on the husband to establish that there is a real risk that he cannot be “substantially” restored to his former position and that as a consequence he will suffer a substantial injustice and ultimately that the appeal, if successful, will be rendered nugatory if a stay is not granted. In my view he has not done so. I am not satisfied on the balance of probabilities that the husband has made any attempt to borrow the funds required to enable him to comply with the order or, in those circumstances, that there is any necessity for him to sell a property. The husband has also not adduced any evidence about which property he would sell if he had to or the disadvantages of doing so with respect to a particular property, and, on his evidence, he has bought and sold a number of properties since the May 2014 orders.

14. In my view for these reasons the prospects of the husband being granted leave to appeal are limited. Even if the husband were to be granted leave to appeal I am also not satisfied on the balance of probabilities that not granting a stay would render that appeal, if successful, nugatory.   

15. In all of the circumstances I propose to dismiss the husband’s application. As discussed with counsel, I also propose to put in place a timetable for any cost applications.   

I certify that the preceding eighteen (18) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Macmillan delivered on 9 May 2019.

Associate: 

Date:  9 May 2019