Fontana and Fontana (No 2)
[2017] FamCA 615
•17 August 2017
FAMILY COURT OF AUSTRALIA
| FONTANA & FONTANA (NO 2) | [2017] FamCA 615 |
| FAMILY LAW – ORDERS – STAY PENDING APPEAL – Property orders – Where application for stay pending determination of Cross Appeal from final property orders – Where consideration of applicable principles – Application for stay granted. |
| Family Law Act 1975 (Cth) r 22.11 |
| Fauna Holding Pty Ltd & Ors & Mitchell [2000] FamCA 548 Stephens & Stephens (Stay application) [2010] FamCA FC 20 |
| APPLICANT: | Ms Fontana |
| RESPONDENT: | Mr Fontana |
| FILE NUMBER: | PAC | 5188 | of | 2008 |
| DATE DELIVERED: | 17 August 2017 |
| PLACE DELIVERED: | Parramatta |
| PLACE HEARD: | Parramatta |
| JUDGMENT OF: | Foster J |
| HEARING DATE: | 11 August 2017 |
REPRESENTATION
| SOLICITOR FOR THE APPLICANT: | Ms Satala of Agatha Satala & Associates |
| SOLICITOR FOR THE RESPONDENT: | Ms Alaouie of Gonzalez & Co |
Orders
That Order (1) made on 19 May 2017 be stayed pending determination of the present Appeal and Cross Appeal or otherwise agreement between the parties.
That the wife prosecute her Cross-Appeal to the Full Court of the Family Court of Australia No EA 67 of 2017 with all due diligence.
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 Fontana & Fontana (No 2) 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 PARRAMATTA |
FILE NUMBER: PAC 5188 of 2008
| Ms Fontana |
Applicant
And
| Mr Fontana |
Respondent
REASONS FOR JUDGMENT
The applicant wife seeks a stay of orders made 19 May 2017 in the context of final property proceedings between her and the husband.
Final property orders were made on 19 May 2017 (Fontana [2017] FamCA 374) as follows:
(1)That within three months from the date of these orders the wife pay to the husband $323,033.00 in default of payment by the due date interest to accrue.
(2)That in default of payment to the husband as provided the husband shall have liberty to apply as to enforcement.
(3)That the wife indemnify and save harmless the husband from any liability to [Mr CC] and [Mr SR] arising from work undertaken at the property at [Suburb BB].
(4)Otherwise, all applications be removed from the pending cases list.
(5)That any application for costs be made by way of written submission within one month from this date with any submissions in response to be within a further 14 days.
The litigation between the husband and wife has been ongoing since 2008.
The husband on 16 June 2017 filed a Notice of Appeal from orders made on 19 May 2017. In summary, he sought an order on appeal that would require the wife to pay him $772,988.00 in lieu of the amount awarded on 19 May 2017.
The husband does not seek a stay of orders.
On 31 July 2017 the wife filed a Notice of Cross-Appeal from orders made 19 May 2017. In summary, she sought an order that Order (1) set out above be discharged to the effect that she would not be required to pay to the husband any sum of money.
The wife pending appeal seeks a stay of orders and to that effect filed an Application in a Case on 31 July 2017. The wife seeks orders as follows:
a)that order (1) of the Honourable Justice Foster made 19 May 2017 be stayed pending appeal;
b)that the wife prosecute her cross-appeal to the Full Court of the Family Court of Australia No EA 67 of 2017 with all due diligence.
These reasons for judgment assume familiarity with the primary reasons for judgment delivered 19 May 2017 referred to above.
Stay Applications
It is well settled that a stay will not be granted lightly or as a matter of course.
The power to order a stay (r 22.11 of the Family Law Rules 2004 (Cth)) is incidental to the right of appeal and derives from the inherent power of the Court to do whatever is necessary to prevent injustice in relation to the proceedings in the Court: Fauna Holding Pty Ltd & Ors & Mitchell [2000] FamCA 548.
In Jackson & Balen [2009] FamCAFC 131 the Full Court said at [28]:
The principles to be applied in hearing a stay application pending an appeal are well settled (see Federal Commissioner of Taxation v Myer Emporium Ltd [No. 1] [1986] HCA 13; (1986) 160 CLR 220 at 222; Alexander v Cambridge Credit Corporation Ltd (1985) 2 NSWLR 685; Jennings Construction Ltd v Burgundy Royale Investments Pty Ltd [1986] HCA 84; (1986) 161 CLR 681). Those 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 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.
A consideration of the primary judgment reveals the receipt and disposition by the husband of significant funds and a marked failure by the husband to provide full and frank disclosure:
69.His circumstances following separation gave rise to an income protection insurance claim. He asserted that he has been unable to work since April 2012. The claim was approved in June 2012 and he has been receiving monthly payments of $10,500.00 per month since May 2013 at which time he received a lump sum of $108,549.00 representing period payment arrears from June 2012. He agreed that such payments have outgoings. It was agreed that his ongoing payments to age 65 are subject to review as to his capacity to work (Exh “L”) and CPI indexed.
70.His trauma insurance claim resulted in a lump sum payment of $562,045.00 on 6 July 2012.
71.These funds were, the husband says, in part expended as follows;
a)Repayment of family borrowings (legal fees) $60,000.00
b)Legal fees (July 2012 Exh “C1”) $35,000.00
c)Credit card debt (post separation) $20,000.00
d)Child’s school fees $ 9,500.00
e)Furniture $12,000.00
f)Donation to [S] College $10,000.00
g)Share in boat syndicate (later mostly refunded) $15,000.00
72.He has also paid GST and his personal tax liability as to post separation income that he otherwise had the benefit of. The husband produced no documents evidencing such liabilities or the payments in circumstances where it appears he had modest taxable income after the 2012 tax year being mainly interest on his lump sum payments received from the wife and his trauma claim as against a tax credit of $26,727.00 for the 2013 financial year.
73.Otherwise the husband asserted in his trial affidavit as having $250,000.00 in a term deposit. The Term deposit held a balance of $252,929.00 as at 15 January 2013 (Exh “X”). He says that the balance over and above the term deposit and the expenditure of $161,000.00 (the balance presumably being about $150,000.00) remained in his everyday account. Yet as at October 2016 the everyday account had a balance of $1,400.00.
74.In oral evidence the husband asserted he no longer has those funds. Some $415,000.00 thus remained unexplained before his oral evidence in cross examination.
75.He asserted an advance of $65,000.00 (later asserted to be $100,000.00) to his parents that has been repaid in part and from which he paid about $35,000.00 for legal fees. His parents were not called to give evidence.
76.The husband acknowledged a further lump sum payment to his bank account of $108,549.00 on 14 May 2013. He conceded that it was also a part of his insurance claims.
77.In oral evidence it became clear that the husband had also travelled overseas extensively. His oral evidence was vague, non-responsive and showed scant regard for his obligation as to full and frank disclosure. His evidence where in dispute could only be accepted where substantiated by objective documents.
78.He was given overnight following the first day of trial to produce further documents but only provided up to date bank balances for his accounts as at 21 February 2017 (Exh “I”) that revealed a bank balance of just $14,881.00 and a credit card debt of $18,900.00 and a bank statement for the period 31 January 2017 to 21 February 2017 (Exh “M”).
79.On further examination he revealed payments to his solicitors of about $35,000.00 since 18 January 2017.
80.He agreed that he had a tax credit of about $26,727.00 as at September 2014 for the 2013 Tax year where he had a taxable income of only $8,504.00. He could not account for those credit funds.
81.His taxable income post separation was for 2009: $66,754.00 and 2010: $93,252.00, substantially from distributions to him from his family trust that had total business income of $98,433.00 in 2009 and $124,870.00 in 2010. Yet no trust financial statements were provided to demonstrate the reality of the family trust’s overall trading circumstances and other benefits, if any, paid for him.
82.The husband asserts a tax liability of $41,323.00 as at 22 October 2016 (Exh “O”) but provided no other document evidencing how or why that asserted liability arose save for Exh “S” that comprises the husband’s tax portal statements for the period from separation to 21 February 2017. The documents only being produced at trial. It is clear that post separation the husband mostly failed to pay assessed provisional taxation liabilities from 1 July 2008 resulting in an outstanding taxation liability as at February 2011 of about $116,500.00. Various payments made left the balance owing as at 21 February 2017 of $42,837.00 that is consistent with Exh “O”.
Orders 23 July 2013
83.On 23 July 2013 Collier J relevantly made the following final orders as to property:
…
(16)That within three (3) months of the date of these Orders, or such other time as the parties may in writing agree, the wife shall pay to the husband the sums of $281,214 and $8,520, together totalling the sum of $289,734.
(17)That within three (3) months of the date of these Orders, or such other time as the parties may in writing agree, the wife shall pay, or cause to be paid, all monies necessary to obtain a discharge of mortgage and/or release of any encumbrance presently secured over both the former matrimonial home known as and situate at Suburb H, NSW, Certificate of Title Folio Identifier … (hereinafter referred to as “the property”) and the parties’ interest in the investment property known as and situate at Suburb D, NSW, Certificate of Title Folio Identifier … (hereinafter referred to as “the investment property”) so as to release the husband from any liability whatsoever in respect of any such mortgage or encumbrance.
(18)That upon payment of the sum of monies specified in Order 1 above within the time specified, and upon the wife having discharged the mortgage and/or encumbrance secured over and/or in respect of the property and the investment property, the husband shall thereupon transfer to the wife all his right, title and interest in the property, together with his right, title and interest in the investment property. To give effect to this order, the wife shall submit to the husband, in a timely fashion, all documents required for that purpose.
…
84.In September 2013 the wife borrowed $50,000.00 from her parents (Exh “BB”) to help fund the required payment to the husband. In addition she borrowed a further sum of $60,000.00 from her brother used in part to meet the payment to the husband and in part deposited to her offset bank account (Exh “CC” and “FF”).
85.In October 2013 the wife discharged the joint home loan secured over the [H] property in the sum of $106,000.00 from her funds and then borrowed by way of first mortgage secured over the [H] property the sum of $200,000.00 to fund the balance of the required payment to the husband pursuant to the orders. She has since reduced that debt to about $98,000.00 from her income.
86.There is no issue that the husband has been paid the sum of $289,000.00 by the wife on 18 October 2013. The husband’s evidence of the disposition of these funds was incomplete, vague and piecemeal.
87.Overall, he has had funds totalling $851,000.00 with the expenditure of about $590,000.00 since July 2012 substantially unexplained. His response in oral evidence being “I didn’t give it away”.
The wife contends (Exh “A”) that refusal to order a stay is likely to render the Appeal nugatory: see Stephens [2010] FamCA 20 at [82]. It is readily apparent that the uncertainty as to the outcome of the appeal renders the distribution of any of the funds to the husband problematic. He has no assets of significance. Funds are likely to be expended by him on legal fees and otherwise. Ultimately, any funds released would in all likelihood not be able to be recovered if it was necessary to do so as a consequence of the determination of the appeal or orders made on a rehearing if ordered. In such circumstances refusing to grant the stay would render the Cross Appeal nugatory at least in part and possibly as to the whole.
Whilst it can be argued that the husband was to an extent successful at trial and is entitled to the fruits of his judgment, the reality is that the substance of that judgment is now the subject of the present appeals.
None of the parties assert any hardship that would be occasioned by the granting or refusal of the stay. The husband’s circumstances will continue as they had for some time prior to hearing.
There is no contention that the subject appeals are without bona fides. They address matters going to the substance of the judgment.
As to the merits of the appeal, the husband’s grounds are in substance absence of reasons, that the exercise of discretion fell beyond the ambit of a reasonable exercise of discretion and the absence of enforcement orders. The merit of the appeal is not the subject of any detailed submission in the context of the present application. Such will be a matter for the Full Court.
The wife’s grounds of appeal, in summary, are as to a failure to consider the husband’s pending insurance claim (notwithstanding the abject lack of evidence as to same) and a failure to give consideration and weight to the wife’s post separation contributions. Again the merits of the Cross Appeal were not the subject of any detailed submissions in the context of the present application. Such will be a matter for the Full Court.
There is no evidence as to the likely time frame for the Appeals to be heard and determined.
In the circumstances, the risk that the wife’s Cross Appeal could be rendered nugatory provides a proper basis for stay of the orders. The wife should be required to prosecute her Cross Appeal diligently.
Orders will be made accordingly.
I certify that the preceding twenty-one (21) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Foster delivered on 17 August 2017.
Associate:
Date: 17 August 2017
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