Elgin and Elgin (No 2)

[2014] FamCA 282

FAMILY COURT OF AUSTRALIA

ELGIN & ELGIN (NO 2) [2014] FamCA 282

FAMLY LAW – ORDERS – Stay – Where the husband has filed an Appeal of the final property determination – Where the husband seeks a stay of an order requiring him to pay an amount of money to the wife – Where the husband has already paid a portion of the amount required by the order – Where the balance will accrue interest – Where the Appeal is likely to be heard in August of this year – Where conditions are imposed in relation to continued disclosure by the husband – Where the stay is granted.

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

Aldridge & Keaton (Stay Appeal) [2009] FamCAFC 106

APPLICANT: Mr Elgin

RESPONDENT: Ms Elgin

FILE NUMBER: BRC 2909 of 2010

DATE DELIVERED: 2 May 2014

PLACE DELIVERED: Brisbane

PLACE HEARD: Brisbane

JUDGMENT OF: Forrest J

HEARING DATE: 29 April 2014

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Kirk of Queen's Counsel with Mr S Williams of Counsel

SOLICITOR FOR THE APPLICANT: Hartley Healy

COUNSEL FOR THE RESPONDENT: Mr North of Senior Counsel with Mr Sweeney of Counsel

SOLICITOR FOR THE RESPONDENT: Glezer Lanteri & Associates Pty Ltd

Orders

1. That conditional upon the husband’s compliance with the obligations imposed upon him by paragraphs 2 and 3 of these Orders, the operation of paragraph 1 of my Orders of 17 January 2014 in this matter, to the extent that the husband has not yet complied with it, is stayed until the determination of the husband’s appeal against those Orders of 17 January 2014 in Appeal file number NA 6 of 2014.

1. That within 14 days of the date hereof, the husband provide to the wife:

(i)Financial accounts of each entity and trust valued in the report of Ms CCC of 16 July 2012 for the years ended 30 June 2012 and 30 June 2013;

(ii)All Management Accounts for the said entities and trusts for the nine (9) months to 31 March 2014;

(iii)Copies of all settlement statements of the sale of real estate by the said entities and trusts from 30 June 2011 to date;

(iv)Bank statements evidencing the transfer of any monies by himself, an entity or trust to any overseas account between 30 June 2011 to date;

(v)Copies of any mortgages or any other document evidencing borrowings in excess of $50,000 by:

(a)himself; and/or

(b)any Trust referred to herein from 30 June 2011 to date.

1. That the husband forthwith provide further documents of the type described in paragraph 2 hereof within seven (7) days of those documents coming into existence.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Elgin & Elgin 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 BRISBANE

FILE NUMBER: BRC 2909 of 2010

Mr Elgin

Applicant

And

Ms Elgin

Respondent

REASONS FOR JUDGMENT

1. From the 18^th to the 20th, July 2012 I presided at a trial of competing applications for property adjustment orders pursuant to s 79 of the Family Law Act 1975 (Cth).

1. At the commencement of that trial, the husband applied for an adjournment of the trial because the report of the single expert accountant engaged by the parties to prepare a report as to the value of the parties’ interests in certain companies and trusts had only been made available by the single expert on the eve of the trial. For reasons I gave orally at the time I dismissed the husband’s adjournment application and proceeded to hear the trial.

1. I delivered my judgment on 17 January 2014, 19 months after the trial and 16 months after written submissions for the parties were filed.

1. By my judgment, I divided net property interests of the parties or either of them, that I determined to have a total value of $44,319,922, equally between the parties. That was to be achieved by the wife retaining certain property, as well as receiving transfers of three particular pieces of real property and receiving from the husband a payment of $15,432,457 within 45 days of the date of judgment.

1. On 14 February, 2014 the husband filed a Notice of Appeal against my orders. On 28 February, 2014 the husband filed an application for an order staying my order that he pay the wife $15,432,457, conditioned upon paying her forthwith the sum of $5,000,000 and causing the transfer of the three pieces of real property that he was ordered to cause to be transferred to the wife. Although the stay order that the husband applied for has no expiration date or event expressed within it, I consider it safe to conclude that he seeks a stay of my order until the determination of his appeal against my orders.

1. The application for the stay, opposed by the wife, was heard by me on 29 April, 2014. Each party was represented by senior and junior counsel.

1. Mr Kirk QC and Mr Williams included in their written submissions the assertion that “advices have been received from the Appeals Registry that the Husband’s appeal will likely be heard by the Full Court in the week commencing 4 August 2014”. I am aware the Full Court is currently scheduled to sit in this Registry that week. No issue was taken with that assertion by Mr North SC and Mr Sweeney for the wife.

1. Further, there was no dispute that since the filing of the Notice of Appeal and the application for the stay order the husband has actually paid the wife the sum of $5,000,000 and caused the three pieces of real property to be transferred to her. Pursuant to paragraph 1 of my Orders of 17 January 2014, he therefore remains obliged to pay the wife a further $10,432,457. Effectively, it is that obligation, now overdue, that he seeks to have stayed pending the determination of his appeal against my Orders.

1. Unsurprisingly, there was no issue between the parties as to the principles relevant to the discretionary determination of an application for a stay pending appeal. Both sets of counsel referred to Aldridge & Keaton (Stay Appeal)[1], a Full Court decision in which relevant principles were set out. In summary, those were:

   [1] [2009] FamCAFC 106.

   ·The onus to establish a proper basis for the stay is on the applicant for the stay, but with there being no need for demonstration of any “special” or “exceptional” circumstances;

   ·The person who has obtained a Judgment is entitled to the benefit of that Judgment and is entitled to presume that it is correct;

   ·Filing an appeal is, of itself, not sufficient to justify a stay;

   ·The applicant’s good faith or otherwise is to be considered;

   ·A stay may be granted on terms that are fair to all parties, which may involve weighing the balance of convenience and the parties’ competing rights;

   ·There is to be a weighing of the risk that the appeal will be rendered nugatory if the stay sought is not granted and this will be a substantial part of the determination as to whether the stay is granted;

   ·Some preliminary assessment of the strength of the proposed appeal is required;

   ·The period of time within which the appeal can be heard, and the nature of the circumstances existing in the meantime, are to be considered in determining whether the granting of a stay is appropriate.

1. In the Notice of Appeal filed, five grounds of appeal are listed. They are:

1.That His Honour erred in refusing to grant the Husband an adjournment of the trial in circumstances where:

(a)the Husband received a single expert report of 374 pages the day prior to the commencement of the trial;

(b)the Husband was prejudiced by the late receipt of such report aforesaid in that inter alia the report “overstates the value of the assets by some $12 million”;

(c)the Husband was denied procedural fairness in the determination of property pool issues;

(d)the course adopted by His Honour was manifestly unjust to the Husband in his position;

(e)the course adopted by His Honour precluded the Husband and the Court having available to it the tax consequences which in para 2.11 of the single expert report she said “must be considered prior to the finalisation of any orders”;

(f)the refusal to grant the Husband’s application for an adjournment was such that His Honour was unable to properly assess the relevant matters affecting the parties pursuant to section 79(4) of the Family Law Act 1975 (Cth).

2.That His Honour erred in refusing the Husband’s application to revalue real property Lots in the “Town IJ” development.

3.Paragraph 2.11 of the unchallenged evidence of the single expert, Ms CCC provided:

I have not considered the effect of future Capital Gains Tax (CGT) income tax or Goods and Services Tax (GST) on the realisation of the assets of the entities or the parties’ interests in the entities, with the exception of notional income tax calculations for those entities that hold properties for sale, not investment purposes.  Should assets be sold or transferred between the parties as a consequence of these proceedings, the tax consequences and any other realisation costs must be considered prior to the finalisation of any orders.

In the face of that unchallenged evidence, his Honour:

(a)erred by making the orders which he did on a final basis; and

(b)erred in ordering in Order (7) that, inter alia, the “Husband indemnify the Wife in respect of all past, present and future liabilities arising as a result of the Orders herein … including any and all taxation liabilities.”

4.That His Honour erred in the findings made in relation to the property of the parties, in particular by:

(c)relying on inaccurate and unreliable evidence;

(d)failing to take account of capital gains tax issues likely to materialise on the realisation of real property to give effect to the Orders;

(e)assessing the property of the parties at $44,319,922.00.

5.Given the inordinate delay in the hearing and determination of the proceeding, his Honour erred by failing to give any or any property (sic) regard to the parties’ financial position at the time of determining the proceeding.

1. In his oral submissions, Mr Kirk placed particular emphasis on the grounds of appeal involving my refusal to grant the husband the adjournment he sought at the start of the trial and the denial of procedural fairness to the husband asserted to have been perpetrated by the refusal to adjourn the trial. In their written submissions, counsel for the husband also placed particular emphasis on the fact that the single expert witness had in her report (at paragraph 2.11) said the following:

   I have not considered the effect of future Capital Gains Tax (CGT), income tax or Goods and Services Tax (GST) on the realisation of the assets of the entities or the parties’ interests in the entities, with the exception of notional income tax calculations for those entities that hold properties for sale, not investment purposes. Should assets be sold or transferred between the parties as a consequence of these proceedings, the tax consequences and any other realisation costs must be considered prior to the finalisation of any orders.

2. There is no dispute that I did not address any issues arising from that paragraph in my judgment. Also, there is no dispute that neither party addressed any of those issues during the adjournment application, the trial itself or the lengthy written submissions filed by counsel a number of months after the trial concluded.

3. On this application, for the husband, it was submitted that in the limited time between the receipt of the report and the commencement of the trial he did not read that paragraph of the expert’s report and was not advised that he needed evidence to address that issue. It was submitted that because I did not address those issues in my final judgment I have not been able to make a proper finding as to the identity and value of the property, liabilities and financial resources of the parties and that constitutes appealable error.

1. In response, counsel for the wife, submitted, in summary, that a party is bound by the case he or she presents to the Court and that a trial judge cannot be said to have erred if he has not acted in any way on an issue such as this when he or she was not asked to by a party. In this respect, I observed during oral argument that the husband was represented by experienced and competent family law solicitors and counsel at all times during the progress of these proceedings through this Court, as well as having long-term, well established relationships with his commercial solicitor and accountant who were also advising him throughout these proceedings. As such, the issues referred to by the single expert was one which the minds of such professional advisers might very well be expected to have considered well before the receipt of the single expert report.

2. Counsel for the wife also submitted in response that the appeal against my refusal to give an adjournment is an appeal against a discretionary determination. The submission was that in the absence of express challenge to findings upon which I based the refusal to grant the adjournment, the husband will have difficulty persuading the Full Court that there was error.

1. Whilst I consider there to be merit in the submissions made by counsel for the wife as to the strength of the appeal, it is clearly not my role to determine the husband’s appeal in this process. Whilst not convinced that the appeal will necessarily succeed, I am certainly prepared to accept, on this preliminary assessment of the matter, that the husband has a number of arguments reasonably worthy of consideration by the Full Court: that he has, in other words, an arguable case.

1. In support of a submission that the appeal would be rendered nugatory in the absence of the stay, counsel for the husband referred to the evidence now adduced by the husband that he is currently in a dire financial predicament, is unable to pay or finance the payment to the wife of the balance of the money ordered to be paid to her and will face personal bankruptcy and liquidation of many of the family companies if the stay is not granted. Counsel submitted that, on the other hand, the wife has recently received $5,000,000 in cash and the three valuable properties which she was to receive pursuant to the Orders and that the balance of the amount owed to her by the husband continues to attract interest pursuant to the Family Law Rules 2004 (Cth), even if the order is stayed, which interest will have to be paid in the event that the appeal is unsuccessful. It was also submitted that what the wife has already received from the husband is around the amount that she would be entitled to in the event that the husband is successful on the appeal and then on a retrial which he seeks.

1. Counsel for the wife submitted in response that the husband had not sufficiently proved his claimed dire financial circumstances and that he had repeatedly denied her requested disclosure of relevant financial documents since the trial such to put her in a position that prevented her from confirming or disproving his asserted current position. Reference was also made to the wife’s evidence that she intended to invest the money when paid and to retain it until the appeal was determined, making it easily repayable to the husband in the event of his success on the appeal.

2. Submissions were also made to the Court in respect of the question of the husband’s good faith in bringing the appeal. Although I acknowledge that in my involvement in the proceedings to date, I have made adverse credit findings against the husband and that I even have serious doubts about the credibility of his evidence adduced now in which he asserts he was not aware of his right to bring an application to reopen the case whilst judgment was reserved and for further evidence as to changed financial circumstances to be adduced, I am in no doubt that his determination to appeal against my orders, to seek to have them set aside on legitimate grounds, if possible, and to secure a retrial, is a genuinely held determination. I do not consider the fact that he has consistently argued a case that the wife is not entitled to as much of their property as she asserts she is, and now, as I have determined is appropriate and just and equitable for her to receive, is evidence that the appeal is based in bad faith. That I am satisfied he was recalcitrant in respect of disclosure and cooperation in getting the matter ready for trial in a timely fashion and that it seems apparent that his attitude to disclosure has changed little since the trial, is not sufficient, in my view, to determine that there is such a lack of good faith in his appeal that a stay should be denied.

1. A stay can be ordered on terms determined to be fair to the parties, particularly to the party being kept out of the judgment she is entitled to and is entitled to presume is correct. Neither party submitted to the Court when the issue was raised by me that a stay conditioned on compliance with ongoing disclosure requirements could not be ordered, although I acknowledge that counsel for the husband submitted that such orders were not necessary. He submitted that the husband, since recently engaging new solicitors, had begun to provide necessary disclosure. With respect, that recent development must be considered in the context of its proximity to the husband’s application for the Court to exercise a significant discretion in his favour.

1. Ultimately, satisfied of the following:

   ·that the husband has an arguable case on his appeal that is likely to be heard in just on three months from now;

   ·that the husband appeals in apparent good faith;

   ·that the wife’s financial position pending determination of the husband’s appeal is relatively secure and comfortable given that she has now received sufficient cash and property to enable her to enjoy life to the full for a long time, with the continuing prospect of receipt of a further $10,432,457 in the event the appeal is unsuccessful;

   ·that the balance of the money the husband is obliged to pay pursuant to the orders under appeal continues to attract interest until paid or the orders are otherwise set aside by the Full Court; and

   ·that the wife’s position, given the husband’s assertions that he is in dire financial circumstances, facing bankruptcy and cannot afford to pay the balance owed to the wife in any event (that she does not currently accept), can be further protected pending the determination of the appeal by conditioning a stay on compliance with ongoing disclosure obligations

   I have determined to grant the stay sought but to condition it as I have discussed.

1. Considering this might be the course I took, at the hearing of this application I gave counsel for the wife the opportunity to draft the terms of such orders requiring continuing disclosure that the wife would be satisfied with in the event that she was unsuccessful in resisting the stay application. Such a draft of terms was handed to me after Mr North and Mr Sweeney were able to confer with their instructing solicitor and their client. Mr Kirk submitted such orders were not necessary but did not propose any change in form in the event that I determined it was appropriate to make such orders. Accordingly, having determined that it is appropriate and fair to all parties to grant the stay sought conditioned on the husband’s compliance with continuing disclosure obligations, I will make the orders in the terms proposed in that draft provided to the Court by the wife’s counsel.

1. I order as set out at the outset of these reasons.

I certify that the preceding twenty-three (23) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Forrest delivered on 2 May 2014.

Associate:

Date:  2 May 2014