Fraser and Newton
[2016] FCCA 946
•18 April 2016
FEDERAL CIRCUIT COURT OF AUSTRALIA
| FRASER & NEWTON | [2016] FCCA 946 |
| Catchwords: FAMILY LAW – Property – application for stay pending Husband’s s.79A application – husband’s own mistake relied on – wife seeking to enforce orders and summary dismissal of husband’s s.79A application. |
| Legislation: Family Law Act 1975 (Cth), ss.75, 79 Federal Circuit Court Act 1999, s.17A |
| Cases cited: Dinci & Smith [2013] FamCA 682 Dmitrieff & Shaw and Ors [No.2] [2008] FamCA 992 Lamont & Lamont [2008] FMCAfam 845 Lindon & the Commonwealth (No.2) (1996) 70 ALJR 541 Pocock & Anor & Denton & Anor [2012] FamCA 3 Reiner & Reiner [2011] FMCAfam 1426 Wowk & Wowk (unreported) [1998] FamCA 278 |
| Applicant: | MR FRASER |
| Respondent: | MS NEWTON |
| File Number: | SYC 6778 of 2013 |
| Judgment of: | Judge Sexton |
| Hearing date: | 15 April 2016 |
| Date of Last Submission: | 15 April 2016 |
| Delivered at: | Sydney |
| Delivered on: | 18 April 2016 |
REPRESENTATION
| Counsel for the Applicant: | Mr T. Hodgson |
| Solicitors for the Applicant: | John Byrne and Associates |
| Solicitors for the Respondent: | Parker Law |
ORDERS
The Husband’s application for a stay, filed on 4 December 2015, be dismissed.
Within 30 days, the Husband pay to the Wife the amount outstanding to the Wife pursuant to Order 1 of Orders made 13 October 2015, together with interest calculated in accordance with the Family Law Rules 2004.
In default of Order (2), the Husband do all things necessary, within 7 days of such default, to list the property at Property H, New South Wales, being the property comprised in Certificate of Title Folio Identifier (omitted) (the Property H property) by auction at the earliest possible date, as follows:
(a)The parties will agree on a real estate agent, (“agent”) and if not agreed within 7 days of the default, an agent be appointed by the Real Estate Institute;
(b)If not otherwise agreed, the agent nominate the reserve price;
(c)The auctioneer be selected by the agent;
(d)The proceeds of sale be disbursed in the following order and priority:
(i)In payment of the agent’s commission and costs of sale, including but not limited to auction fees and conveyancing fees;
(ii)In payment of adjustments in outgoings in accordance with usual conveyancing practice;
(iii)In payment of the sum due to the Wife pursuant to the property Orders of 13 October 2015 inclusive of interest payable in accordance with the Family Law Rules 2004;
(iv)In payment of the balance to the Husband.
The Wife’s application for summary dismissal filed 19 January 2016 be dismissed.
The Wife file and serve any application for costs within 21 days.
The Husband file and serve any response within a further 21 days.
If costs are not agreed, the costs issue be listed before me for hearing at 10.00a.m. on 15 July 2016.
The Husband’s section 79A application be listed for mention in the call over before me at 9.30 a.m. on 22 September 2016.
IT IS NOTED that publication of this judgment under the pseudonym Fraser & Newton is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYC 6778 of 2013
| MR FRASER |
Applicant
And
| MS NEWTON |
Respondent
REASONS FOR JUDGMENT
Ex Tempore
On 13 July 2015, I finalised the property hearing between the parties. I delivered Judgment on 13 October 2015. The Orders provided, inter alia, for the Husband to pay to the Wife, within two calendar months, (that is, by 12 December 2015, the “due date of payment”) the sum of $211,938.24.
It is common ground that the Husband has not complied with that Order.
On 4 February 2016, the Husband paid to the Wife the sum of $110,000. Interest is accruing on the amount outstanding from the due date of payment. At the date of this hearing, the Wife’s legal representative submits that the Husband owes the wife $101,938.24 plus interest of $4,043.96, further interest accruing daily.
On 4 December 2015, the Husband filed an application seeking an order under section 79A(1)(a) of the Act to set aside Order 1 of the orders made on 13 October 2015, alleging that there has been a miscarriage of justice on the basis of “any other circumstance”, and an Order for Order 1 of the Orders to be stayed pending determination of a section 79A application.
On 19 January 2016, the Wife filed a response seeking a dismissal of the Husband’s application with costs. The Wife seeks an order on an interim basis that the Husband’s interim application be summarily dismissed with costs. In her affidavit sworn on 15 January 2016, the Wife seeks an order that the Husband’s applications, both interim and final, be dismissed.
The “any other circumstance” the Husband relies on is his own mistake. In cross-examination at the hearing, the Husband told the Court that he expected to be repaid the sum of $135,000, interest payments accrued on a debt of $150,000, over many years. In my Reasons for Judgment, I said this:
…. There is no dispute that the Husband owes the (omitted) Bank an amount of $285,000 as a result of the collapse of the (omitted), $150,000 for the original loan + $135,000 in accrued interest. The Husband understands he will be reimbursed for the whole of the interest by way of tax refunds over the next few years, but says that given the level of his current income, it may take a number of years to be reimbursed…The Husband’s counsel submits that…the interest component of $135,000 should be treated as a financial resource of the Husband.
I determined that the debt of $285,000 would be included as a liability in the balance sheet, but that there would be an adjustment under section 75(2) to take account of the tax relief the Husband expected to receive over time.
Having evaluated the contributions of each party, I assessed the Wife’s overall contributions at 21 per cent and the Husband’s at 79 per cent.
Later in my Reasons, I addressed the relevant 75(2) factors. I said this in relation to the tax relief the Husband had anticipated:
As already noted, I have taken into account that the Husband anticipates tax relief of $135,000 over time, the interest component of his debt to the (omitted) Bank. I questioned both counsel as to whether this whole interest component would ultimately be available to the Husband by way of tax relief and I was assured this was so by both counsel.
I had regard to the Husband’s age and to his greater opportunity to generate income and therefore acquire assets, borrow to invest and contribute to superannuation. I also had regard under section 75(2) to the income, property and financial resources of each party, and the physical and mental capacity of each of them for appropriate gainful employment. I made this finding:
I am satisfied that the Husband is considerably better resourced financially than the Wife by way of income.
I also made a finding that the Wife’s standard of living had reduced since separation, “particularly since she left the former matrimonial home. She is renting with a friend while the husband is living in his Property H home.”
In relation to section 75(2)(o), I said that I had regard to the fact that the Wife had owned a home prior to the parties’ co-habitation, had a good income at that time and was now worse off than she was then, both in terms of her asset position and her income. I took into account that the Wife would have to re-house, whereas the Husband was living in his own home.
I weighed all these section 75(2) factors together and made an adjustment of 5% in favour of the Wife. I note here that the sum of $135,000 amounted to 6.2% of the total net assets of the parties. It is plain from my reasons for Judgment that I had regard not only to the $135,000 the Husband was to be reimbursed, but also to the other matters to which I have referred, all of which favoured the Wife. Even then, I made a percentage adjustment of only 5%, which was a lower percentage than the value of the $135,000, without regard to any of the other factors.
This meant that the Wife received 26% of the total asset pool of the parties, considerably less than the percentage she sought at the hearing. In the circumstances, although I certainly had regard to the $135,000 the Husband expected to receive, it does not follow that I would necessarily have concluded that there should be a smaller section 75(2) adjustment had I been advised the Husband anticipated a refund of approximately $44,000 rather than $135,000.
Stay Application
As noted, the Husband seeks a stay of the Order requiring him to pay $211,938.24 to the Wife. In relation to the stay principles, neither parties’ legal representative submitted that the legal principles which apply to a stay application pending a section 79A application are different from the principles which apply to a stay application pending an appeal. I can find no Full Court authority on whether or not there is a difference. First instance Judgments of both the Family Court and this Court apply the same principles to a stay pending a section 79A application as apply to a stay pending an appeal[1]. I have also taken that approach.
[1] See for example Dinci & Smith [2013] FamCA 682 per Kent J; Pocock & Anor & Denton & Anor [2012] FamCA 3 per Forrest J; Unreported judgment of Wowk & Wowk [1998] FamCA 278 per Lindemayer J; Reiner & Reiner [2011] FMCAfam 1426 per Brown J; and Lamont& Lamont [2008] FMCAfam 845 per Terry J.
This Court has the power to make an Order for a stay. I refer to a decision of his Honour Justice Kent in Dinci & Smith[2] where his Honour said:
It is clear that the Court has an implied power, or inherent power, to stay the execution of orders or decrees upon a conclusion that such an exercise is necessary to prevent or avoid injustice. See Molier & Van Wyk (No. 2) (1981) FLC 91-001.
[2] [2013] FamCA 682
The question is whether the Court, in the circumstances of this case, should exercise the power. I agree with Judge Brown in Reiner’s case[3] (an application for a stay pending the outcome of a section 79A application) that:
….this court has an inherent power to stay proceedings. However… this power should only be utilised in extraordinary circumstances, when it is necessary to preserve the subject matter of potential litigation. Jennings Construction Limited v Burgundy Royale Investments Pty Ltd (No.1) [1986] HCA 84; (1986) 161 CLR 681
[3] Reiner & Reiner [2011] FMCAfam 1426
His Honour Justice Lindenmayer, in an unreported decision of Wowk[4], was also dealing with an application for a stay of property orders pending the determination of a section 79A application. His Honour says:
Those principles [being the principles relating to the stay pending appeal] are equally applicable where what is sought is a stay pending the determination of proceedings under s.79A, which is what I am now considering.
[4] [1998] FamCA 278
I therefore turn to the well settled principles which apply when a stay is sought pending an appeal. I have regard to her Honour Justice Boland’s decision in Dmitrieff & Shaw and Ors [No.2] in outlining the guiding principles to be applied[5]:
(a)Whether refusing a stay will render a successful appeal nugatory or make it impossible or impracticable to restore the position;
(b)Any hardship that would be suffered by each party as a result of granting or refusing a stay;
(c) The grounds and merits of the appeal;
(d)The mere filing of an appeal is not sufficient to ground a stay;
[5] [2008] FamCA 992 at paragraph 12
(e) Whether there has been a delay in applying for the stay;
(f)The bona fides of the applicant for the stay; The timing of the appeal;
(g)A person who has obtained a judgment is entitled to the benefit of that judgment; and
(h)A person who has obtained a judgment is entitled to assume the judgment is correct.
Whether refusing a stay will render a successful appear nugatory or make it impossible or impracticable to restore the position.
In the present case, I am not persuaded that refusing a stay will render a successful section 79A application nugatory or make it impossible or impracticable to restore the position.
The Husband’s Counsel submits that the Husband is concerned that the Wife will not comply with any Order to repay money if such an order is made in the section 79A proceedings. He bases his concern on the Wife’s past performance. He does not trust that the money will be repaid. However, Counsel was unable to refer me to a single example of the Wife failing to comply with a Court order, nor did the Husband give any such evidence in the affidavit he relies on in support of his application.
Any hardship that would be suffered by each party as a result of granting or refusing a stay.
I am satisfied that the Wife will suffer greater hardship if the stay is granted, than the Husband will suffer if the stay is not granted.
The Husband received 74% of the parties’ assets by way of the final orders, which included retaining the home at Property H. The Husband’s Counsel confirms my finding at trial that the Husband has the capacity to refinance the loan secured by the home to pay the Wife. The Wife must rehouse, having no home of her own available to her. She cannot move forward without the money she is due. Also, the Husband is in receipt of more income than the Wife, and has greater financial resources.
The grounds and merits of the appeal, in this case, the section 79A application.
The Husband argues that the Court decided the case on the basis of a significant error of fact. The Husband deposes to being advised, after the close of the case, but before Judgment was handed down, that he would not be reimbursed in an amount of $135,000 by way of tax refunds, but instead an amount of approximately $44,000. He claims to have misunderstood the advice of his accountant, which he annexes to his affidavit. The Husband argues that his error has caused a miscarriage of justice because the Court would have made a different order than the one made. He says the Orders require him to pay the Wife too much because of his mistake. When asked why the error was not brought to the Court’s attention when he realised the error on 31 July 2015, well before Judgment was delivered, the Husband’s Counsel suggests the Husband wanted to lodge his 2015 taxation return so the refund could be calculated precisely.
A section 79A application involves two steps; firstly, the Court must determine whether there is any basis to vary or set aside the orders or any of the orders; and secondly, if the Court is so satisfied an order should be varied or set aside, the Court can make another order in substitution of the order set aside “if it considers it appropriate”. As already noted, given the findings of the Court in the section 79 proceedings, the Husband’s case, particularly at the second step, has real difficulties.
The mere filing of an appeal is not sufficient to grant a stay.
The Husband’s Counsel submits that the Husband, failing to meet his obligation to pay the Wife by the due date, should be excused to some extent because he had filed his application on the section 79A before the due date for payment. I reject that submission. The filing of the application is not a ground for a stay.
Whether there has been a delay in applying for the stay.
The Husband filed his application for a stay on 4 December 2015. Delay is not a factor here.
The bona fides of the applicant for the stay.
The Husband has an obligation to pay to the Wife a sum of money. He has not met that obligation. I find his excuse for not doing so inadequate and unsatisfactory. On the evidence he presents in support of the application, he was never misinformed about his likely tax refund, but instead misunderstood the advice. The Husband was represented by Counsel who, it seems, also misunderstood the advice. It is difficult to explain why the Court was misled, particularly as I specifically questioned the accuracy of the tax refund evidence and the Husband had the opportunity to check his advice. I suggested the issue be further investigated. My advice was ignored. Further, had the Husband advised the Court when he became aware of his own error, which he contends occurred on 31 July of 2015, these proceedings could have been avoided altogether. By seeking a stay, I find the Husband is doing all he can to avoid his obligation under the orders.
The timing of the appeal.
There will be a lengthy delay before the section 79A application is heard. There is no urgency in this matter and no basis for expedition if the stay is refused. If the stay is granted, the Wife will face substantial injustice. She is entitled to the benefit of the Judgment and is entitled to assume the Judgment is correct.
Decision
As a result of my findings in relation to all of these principles, I find no basis for a stay to be granted. The stay application will be dismissed.
Enforcement Application
In an enforcement application, the provisions of Part 25B of the Federal Circuit Court Rules 2001 apply and address how an obligation to pay money can be enforced by the Court.
The Orders of 13 October 2013 provide for the Husband to pay a sum of money to the Wife. In my reasons for Judgment, I was satisfied that the Husband had the capacity to meet the payment to the Wife without the need to sell his Property H home. I did not therefore make the default order in relation to sale of the Property H property as sought by the Wife. The Wife filed an application in a case on 19 January 2016 in relation to enforcement of the Orders seeking, inter alia, an Order for the Property H property to be sold.
As already noted, the Husband delayed payment of any part of the sum due to the wife until 4 February 2016, nearly two months after the due date, and on that date the Husband paid only $110,000, not the almost $212,000 due. He therefore owes the outstanding balance and the substantial interest on the unpaid sums.
As I have refused the Husband’s application for a stay, the full amount due must therefore be paid. The Wife seeks an order for the sale of the Property H home, listing within 14 days. The Husband’s Counsel submits the Husband should be given further time to avoid the sale of the property. He asks for six weeks to enable his client to refinance his loan. Counsel for the Husband argues that the Husband did not obtain the finance after the order was made, and did not pay the amount due on time because he had filed his section 79A application on 4 December 2015, as though the filing of that application voided his obligation under the Order.
I find the Husband’s actions unjustified. The Husband was aware of his obligation on 13 October 2015. He should have made arrangements to pay the sum ordered immediately thereafter. I will not give the husband another six weeks to refinance. If the Husband does not pay the Wife the full amount due, which includes the interest payable in accordance with the rules within 30 days, pursuant to rule 25B.11(a) of the Federal Circuit Court Rules 2001, the Husband's Property H home will be listed for sale within a further seven days.
Summary dismissal
The Wife seeks summary dismissal of the Husband’s application for a stay, as well as summary dismissal of the Husband’s section 79A application. I have refused the stay and find it unnecessary, therefore, to determine the question of summary dismissal of the stay application. To dismiss an application summarily requires the same analysis as the one required for the stay application itself.
In relation to the section 79A application, the power of this Court to summarily dismiss an application is found in section 17A of the Federal Circuit Court Act 1999 and Rule 13.10 of the Federal Circuit Court Rules 2001.
Section 17A provides that the Federal Circuit Court may give summary judgment in a matter where it is satisfied that a proceeding or part of a proceeding has no reasonable prospects of success. The proceeding does not have to be hopeless or bound to fail for it to have no reasonable prospect of success[6].
[6] Section 17A(3)
Rule 13.10 provides as follows:
The Court may order that a proceeding be stayed, or dismissed generally or in relation to any claim for relief in the proceeding, if the Court is satisfied that:
1)the party prosecuting the proceeding or claim for relief has no reasonable prospect of successfully prosecuting the proceeding or claim; or
2)the proceeding or claim for relief is frivolous or vexatious; or
3)the proceeding or claim for relief is an abuse of the process of the Court.
The Full Court has adopted the principles outlined by his Honour Justice Kirby in Lindon & the Commonwealth (No 2)[7], which may be summarised as follows:
[7] (1996) 70 ALJR 541
It is a serious matter to deprive a party of access to the courts and the power to do so should be rarely and sparingly used;
The party seeking summary dismissal must show that it is clear on the face of the other party’s documents that the other party lacks a reasonable cause of action or is advancing a claim that is clearly frivolous or vexatious;
That a case appears weak and unlikely to succeed is of itself not sufficient to satisfy summary dismissal;
If there is a serious legal question to be tried, then it should ordinarily be determined at a trial of the issues;
Where, notwithstanding a defect in the pleadings, if it appears that a party may have a reasonable cause of action which has not been put in proper form, a Court will ordinarily allow that party to reframe the pleadings; and
The “guiding principle” is doing what is just.
His Honour Justice Kirby said:
If it is clear that proceedings within the concept of the pleading under scrutiny are doomed to fail, the Court should dismiss the action to protect the defendant from being further troubled, to save the plaintiff from further costs and disappointment and to relieve the court of the burden of further wasted time which could be devoted to the determination of claims which have legal merit.
As already noted, the Husband argues that he made a factual mistake in telling the Court he would ultimately be reimbursed the sum of $135,000 by way of taxation refunds. It is his case that the Court will find there has been a miscarriage of justice in the judicial process, that miscarriage of justice resulting in the order for him to pay almost $212,000 to the Wife.
As already noted, I had regard to the Husband’s evidence that he would be refunded an amount of $135,000, but I made other findings which favoured the wife on section 75(2) factors. There is certainly no guarantee that, had the Court been aware that the amount the Husband would be refunded was substantially less than $135,000, there would have been any reduction in the Wife’s entitlement under section 75(2). If the Husband’s section 79A application is unsuccessful, he risks a substantial costs order.
However, it is common ground that an error was made. It is common ground that the Court raised the issue directly with both counsel, and neither Counsel questioned its accuracy. It is not in dispute that the Court took the “mistake of fact” into account in reaching its decision. This is, therefore, not a case for summary dismissal.
As the authorities make clear, it is a serious matter to deprive a litigant of the opportunity to have a matter heard, and the discretion to exercise the power to summarily dismiss should be exercised “rarely and sparingly.” The Husband has the right to have his application heard. The Wife’s application for summary dismissal will be dismissed.
The Wife seeks her costs. If the parties are unable to agree on costs, the Wife’s application will be heard in July 2016, before the Husband’s section 79A application, which will be listed in the callover in September 2016.
I certify that the preceding forty-six (46) paragraphs are a true copy of the reasons for judgment of Judge Sexton
Date: 26 April 2016
Key Legal Topics
Areas of Law
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Family Law
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Civil Procedure
Legal Concepts
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Stay of Proceedings
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Summary Judgment
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Costs
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Remedies
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Appeal
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