Gallieni and Gallieni and Ors
[2012] FamCA 54
•14 February 2012
FAMILY COURT OF AUSTRALIA
| GALLIENI & GALLIENI AND ORS | [2012] FamCA 54 |
| FAMILY LAW - PROPERTY – STAY OF PROCEEDINGS – Application by husband seeking a stay of orders pending determination of an appeal |
| Family Law Act 1975 (Cth) Corporations Act 2001 (Cth) |
| Aldridge v Keaton(stay appeal) [2009] FamCAFC 106 Carlin v Carlin (1977) FLC 90-321 Kelly v Kelly (1981) FLC 91-007 Warby v Warby (2002) FLC 93-091 ANC 078272 867 Pty Limited (in liquidation )(formerly Advance Finances Pty Ltd & Anor) and Deputy Commissioner of Taxation & Anor [2011] HCA 46 |
| APPLICANT: | Mr Gallieni |
| RESPONDENT: | Ms Gallieni |
| FIRST INTERVENOR: | Mr D |
| SECOND INTERVENOR: | Ms D |
| THIRD INTERVENOR: | Mr H |
| FORTH INTERVENOR: | Ms H |
| FILE NUMBER: | MLC | 7541 | of | 2008 |
| DATE DELIVERED: | 14 February 2012 |
| PLACE DELIVERED: | Hobart |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Benjamin J |
| HEARING DATE: | 14 December 2011 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr G Dickson |
| SOLICITOR FOR THE APPLICANT: | Septimus Jones & Lee |
| COUNSEL FOR THE RESPONDENT: | Mr O’Shannessy |
| SOLICITOR FOR THE RESPONDENT: | Slater & Gordon |
| COUNSEL FOR THE 1ST & 2ND INTERVENORS: | Ms Smallwood |
| SOLICITOR FOR THE 1ST & 2ND INTERVENORS: | Mallesons Stephen Jacques |
| COUNSEL FOR THE 3RD INTERVENOR: | Did not appear |
| COUNSEL FOR THE 4TH INTERVENOR: | Did not appear |
Orders
UNTIL FURTHER ORDER the liquidator of K Pty Ltd is directed not to make final distributions to the parties pending further direction of the Court.
UNTIL FURTHER ORDER and pending the outcome of the appeal:-
(a) order 21 of the property orders (as between the husband and wife) made 13 October 2011 is stayed, subject to the husband paying the normal monthly repayments of principal and interest on the St George Bank housing loan secured against the home, … S Street in E, as and from the first repayment due after the date of this order and until such time as this stay is lifted;
(b)leave is given for the wife to have the question of the continuation of the particular stay order relisted before the Court in the event that the husband does not make any one or other of the repayments in accordance with this order.
NOTATION:
(c)Nothing in this stay order shall prevent the liquidator from otherwise undertaking the steps towards liquidation of the company including the sale of the real estate owned by K Pty Ltd, payment of lawful debts of the company, the sum of $28,000 due to the third and fourth intervenors and liquidator’s expenses.
IT IS FURTHER ORDERED
(d)The costs of the husband, the wife and the first and second intervenors in respect of the stay application are reserved pending the determination of the appeal. Any application for costs must be made within twenty eight (28) days of the determination of the appeal.
IT IS CERTIFIED
(e)Pursuant to Rule 19.50 of the Family Law Rules 2004 it was reasonable to engage counsel to attend
IT IS NOTED that publication of this judgment under the pseudonym Gallieni & Gallieni and Ors 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 HOBART |
FILE NUMBER: MLC 7541 of 2008
Mr Gallieni
Applicant
AND
Ms Gallieni
Respondent
AND
Mr D
First Intervenor
AND
Ms D
Second Intervenor
AND
Mr H
Third Intervenor
AND
Ms H
Fourth Intervenor
REASONS FOR JUDGMENT
Mr Gallieni (the husband), seeks a stay of orders made by this Court on 13 October 2011 with the exception of order 9 (payment of a debt due to his parents), and orders 20 through to 31 (consent orders with regard to splitting superannuation).
The stay application is opposed by the wife and the first and second intervenors.
The husband’s parents, the third and forth intervenors, had notice of the application but did not appear nor did they participate. They have not sought to disturb the final orders made 13 October 2011.
The husband was the applicant in proceedings which were heard in the Family Court in Melbourne over a significant number of days between February 2011 and May 2011. Reasons were published on 5 October 2011 and the parties and the putative liquidator were invited to make submissions in respect of the precise terms of the orders (set out in draft but generally specific form in the reasons). Orders were subsequently made on 13 October 2011.
On 2 November 2011 the husband filed a Notice of Appeal setting out fifteen grounds. A copy of that notice is attached to the husband’s affidavit in support of his stay application. On 22 November 2011 the husband filed an affidavit and application seeking a stay of the orders.
The first and second intervenors filed a response opposing the stay and relied upon an affidavit of the first intervenor filed 30 November 2011.
In my reasons published 5 October 2011, I set out the background in paragraphs 4 to 17, issues in paragraph 18, the claims by the various parties in paragraphs 19 to 58 and details of the proceedings from paragraphs 59 to 73. I have had regard to the background, issues and various claims in terms of this determination.
The husband says in relation to the transfer of the former matrimonial home in E that the transfer should be stayed pending the outcome of the appeal. He says he would accept that the stay would be subject to him making the normal repayments of principal and interest on the housing loan in the meantime.
The submissions of the wife were that as she intends to retain the E home and her counsel could not identify any prejudice to her if the stay in respect of the formal transfer of that property is permitted, subject to the husband making the housing loan repayments as sought by his counsel. Counsel for the wife asserted, and I note that I found, that the husband was not reliable and that payments could be missed. However, having regard to that finding I will give the wife leave to apply to the Court in the event that any repayment is not made.
In that context, I will permit a stay of the order requiring the transfer of the E home. The grounds of appeal on the orders as between the husband and wife are not impressive or strong but they are not ones that, on their face, could be categorised as hopeless. The wife will remain in sole occupation of the E home and the husband will be required to meet the loan repayments, as he offered. If he fails to do so there are likely outcomes in terms of that part of the stay.
The primary issue relates to the stay of the liquidation of the company, K Pty Ltd.
THE RELEVANT LEGAL PRINCIPLES TO BE APPLIED
The law in relation to stay applications was set out by the Full Court in Aldridge v Keaton(stay appeal) [2009] FamCAFC 106 where Bryant CJ, Boland and Crisford JJ said:-
18.The principles to be applied in determining an application for a stay of orders both in the general law and in respect of parenting proceedings are also well known (see The Commissioner of Taxation of the Commonwealth of Australia v Myer Emporium Limited [No.1] (1986) 160 CLR 220 at 222; Alexander v Cambridge Credit Corporation (1985) 2 NSW LR 685; Jennings Construction Limited v Burgundy Royale Investments Pty Limited (1986) 161 CLR 681; Clemett & Clemett (1981) FLC 91-013; JRN & KEN v IEG & BLG (1998) 72 ALJR 1329 at 1332). The 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 bona fides of the applicant;
· 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;
· the desirability of limiting the frequency of any change in a child’s living arrangements;
· the period of time in which the appeal can be heard and whether existing satisfactory arrangements may support the granting of the stay for a short period of time; and
· the best interests of the child the subject of the proceedings are a significant consideration.
Counsel for the husband, submitted that a stay, in these proceeding, can only be granted in circumstances where an appellant can establish:-[1]
(a)there is a serious issue for determination and prospects for success in an appeal;
(b)the appeal would be rendered nugatory if there was no stay; and
(c)there will not be harm or prejudice to the respondents.
[1] Transcript of Proceedings dated 14 December 2011 at lines 40 to 46.
I agree, it is the balance of those factors that I must consider.
Counsel for the husband submitted that the appellant has to demonstrate that there are some prospects, “but that it is not a hopeless appeal. Otherwise, it’s not a matter of saying there will be no harm to the respondents to the appeal”.[2] He submitted it was “a matter of balancing the prejudice the appellant would suffer if the stay was not granted”[3] and the ultimate prejudice which would arise from an inability to claim the fruits of a successful appeal. In support of this submission counsel for the husband referred me to Watson SJ in Carlin v Carlin (1977) FLC 76,695 where His Honour said at 76,696:-
As a general principle of law the court does not make a practice of depriving a successful litigant of the “fruits of his litigation”. On the other hand an appellant, exercising his right to appeal should not be placed in a position that a successful appeal is rendered nugatory”…
[2] Ibid page 4 at lines 1 to 4.
[3] Ibid at lines 4 to 6.
He also referred me to the decision of Fogarty J in Kelly v Kelly (1981) FLC 91-007 where His Honour, at 76,104, quotes from Adam J in Scarborough v. Lews Junction Stores Pty. Ltd. (1963) V.R. 129 where His Honour said:-
The rule says that an appeal does not operate as a stay of execution. That is so, and an application for a stay of proceedings is not granted as of course. There must be special circumstances existing to justify an order staying the execution of the judgment — some special circumstances which must be relevant to the purpose for which the stay is granted. Such circumstances would exist where a successful appellant would be deprived of the fruits of his appeal if a stay of execution were not granted. It has been stated that the applicant for a stay of execution should show that he will `probably' not be able to recover from the other party the amount of judgment which he has been compelled to pay under execution, in order to satisfy the court that a stay should be granted. I do not think that the word `probably' has any particular merit. The test, I think, is, whether there is a real risk that the appeal would prove abortive if the applicant were not granted a stay.'
Counsel for the husband submitted that whilst he did argue against the prima facie rule that a litigant is entitled to the fruits of their judgment, the question was if the husband was successful in his appeal in arguing either in relation to the share issue or the liquidation issue, unless there has been a stay in the meantime it would be “impossible to unscramble the omelette, to use the vernacular.”[4] Because the liquidator may be well advanced and have spent a significant amount of money and may have proceeded with the sale of K Pty Ltd, which would trigger capital gains tax and may trigger other taxes. All of which he submitted would be irreversible if the husband was successful in his appeal. Counsel submitted that this would make it an absolutely nugatory appeal.
[4] Ibid at page 4 line 16.
Counsel for the husband said the “effect of implementing the judgment in terms of the liquidation aspect is irreversible”[5] because once the money is paid it is no longer part of the asset pool capable of being adjusted as between the parties. As a consequence, counsel submitted, the asset pool would be reduced. I do not accept this argument; if the appeal is successful there is no reason why the costs of the liquidator (which cost are measurable) cannot be visited in part or whole upon the wife and/or the first and second intervenors. In the meantime the affairs of the company (of which I expressed some serious reservations) can be put into some order. In addition the concerns raised by the wife and the first and second intervenors as to the application of income and assets of the company can be investigated.
[5] Ibid at page 5 lines 1 to 2.
Counsel for the husband submitted there was also the potential that the company would cease to exist upon winding up and could not be reinstated if the husband was successful in his appeal. I am certain that the company would cease to exist if wound up, but if final distribution was stayed the company would remain in existence pending the finalisation of the appeal. The shareholding of the company has presumably been rectified and there is, so far, no challenge to that determination by the third and fourth intervenors. There is the question of the sale of the factory, which is the primary asset of the company and the distribution.
Counsel for the husband argued that there were good prospects of success. He submitted that the “grounds are real and not illusory” and said that one of the grounds which they would press before the Full Court was that the wife and the first and second intervenors were still directors and had a duty to apply themselves assiduously to those duties as directors, and to read documents. As to the directors resuming their duties, having regard to the comments I made in my reasons as to the operation of the company and the high level of conflict between the parties I cannot accept that they are able to do so.
As to the winding up of the company, counsel for the husband asserted there were other options which the Court could have considered other than the winding up of the company, such as making an order regulating the conduct of the company’s affairs into the future (s 233(1)(c) of the Corporations Act 2001 (Cth) (“the Corporations Act”)), or an order restraining a person from engaging in specific conduct or an order for the purchase of shares with an appropriate reduction of the company’s share capital. All of which he submitted gave the husband reasonable prospects of success in the appeal.
In terms of balancing the prejudice, counsel for the husband submitted the prejudice to his client was “absolute” whereas the prejudice to the wife and the first and second intervenors was limited, based on the material that they had filed. He argued the only prejudice that the wife would suffer is that “she will have to wait to receive her judgment”[6] and that her solicitors will have to wait to receive their payment.
[6] Ibid at page 6 at lines 18 to 19.
Counsel for the husband conceded that there would be some prejudice to the wife in respect of the payment of her taxation bill of $36,020 if there was delay in payment of her entitlements if the appeal was unsuccessful. For a person of modest income, as was the findings in respect of the wife, who has already lost a number of tax refunds and has been exposed to penalties and interest for non payment of tax (in circumstance where the husband was at the relevant time well able to pay that tax), the prejudice is real and the impact on the wife would be significant.
Counsel for the wife submitted that even in circumstances, although unlikely, where that the appeal was successful and there was a retrial the liquidation of K Pty Ltd would still be required because of the “mess” its accounts were in. There is some force to that argument, given the state of the finances of the company and the application of capital and income over many years.
He submitted that if the Court were to assume, for the purposes of the argument that trial judge determined, that there should not be a liquidation and that the husband was entirely innocent of the conduct which the wife says led to the liquidation of K Pty Ltd, then in those circumstances the wife would retain the home and any liquidation fees lost from the husbands point of view, would be available for the trial judge to adjust in their entirety. Thus the continuation of the liquidation in the absence of a final distribution would cause little prejudice, except on the sale of the factory. I accept that argument.
Counsel for the wife submitted that the husband was unable to identify any prejudice in respect of the assets of the company being investigated by the liquidator. He said the husband at the trial sought an order of inter-entity and inter-personal loans. He submitted and I accept that it is “somewhat ironical”[7] that the husband was complaining on appeal about the orderly conduct of that investigation.
[7] Ibid at page 9 lines 38-39.
In respect of the husband’s complaint that he would have to pay taxes, counsel for the wife submitted that it was not a matter where there is a pre-GST asset where a change in ownership would identify a liability which would otherwise not be there. He said there were only “two things certain in life … death and taxes”.[8] He submitted that in reality all the husband was complaining about was that the inevitable tax liability which was to be paid sooner than later.
[8] Ibid at line 46.
Counsel for the wife asserted that the husband did not have to demonstrate that he has winning points, but rather that there is some prospect of success in respect of his grounds of appeal. He submitted that the difficulty in this matter is that all of the grounds of appeal go to matters of weight.
In relation to ground number 1, the weight as to the director’s duties, counsel for the wife submitted that the Court “placed substantial weight on the fact that there were four directors and they did, in fact, have duties”[9] and referred the Court to paragraph 450 of the Reasons in support of his assertion. He went on to say that the Court explored the director’s duties in paragraph after paragraph, this was a correct analysis.
[9] Ibid at page 10 lines 15 and 16.
Counsel for the wife submitted that the husband’s complaint that the Courts conclusion that liquidation was the only appropriate remedy and that the Court failed to consider the other matters which the husband, now asserts is unfounded. He submitted that the husband failed to raise those other remedies with the Court either when he was represented or unrepresented. Further, he submitted that the Court did not say “this is the only possible remedy”,[10] the Court said “this is the appropriate remedy”.[11] Counsel for the wife submitted there was little merit in ground 3 of the husband’s appeal that the Court failed to give adequate reasons for something which it was not asked to consider.
[10] Ibid at line 26.
[11] Ibid at line 27.
Counsel for the wife submitted that ground 4 of the husbands appeal was likely to fail given that K Pty Ltd had notice of the proceedings as each and every related party, shareholders, directors and interested parties were parties to the subject litigation.
In relation to the husband’s assertion that the Court failed to give adequate weight to the evidence of Mr S, (ground 5 of the husband’s appeal) counsel submitted this ground was also likely to fail. He asserted that the Court considered this evidence length saying:-[12]
Paragraph [ground] number 5, that your Honour didn't give weight to the evidence of [Mr S]. Your Honour considered that at length. In particular - and I just point to it at paragraph 126, that's 5 and 6. And your Honour dealt at length with the conundrum where the husband's own diary showed that the meeting with [Mr S] occurred on 6 March, not the 18th.
[12] Ibid at page 10 lines 34 to 38.
He submitted that this ground was not arguable.
Counsel for the wife submitted that:-[13]
… Your Honour will be urged to find that your Honour has been extraordinarily careful and that on the grounds of appeal as presented to you – and it’s not for your Honour to search amongst them and find how they might be improved. And as the matter as there argued, your Honour can only conclude that there is not any arguable ground of appeal at all. Though of course, it’s unnecessary for your Honour to find that it’s possible for the appeal to get up. But in terms of balancing the many matters that your Honour has to balance this is not a case where there are arguable grounds of appeal as it appears at this point in time.
[13] Ibid at page 11 lines 37 to 46.
Counsel for the wife submitted there was prejudice to the wife which went beyond the payment of the mortgage. He asserted the proceeding had been protracted and delayed. He said they were commenced in 2008 and would continue into 2012. He submitted that, “given that the wife is entitled to the fruits of the judgment, there are debts”[14] including the tax debt and the debt to the third and fourth intervenors.
[14] Ibid at page 12 lines 5 to 6.
I generally accept and adopt the submissions made by counsel for the wife.
Counsel for first and second intervenors submitted that her clients were entitled to the fruits of their labour. She argued that if a stay were granted, they would receive absolutely no benefit pending the outcome of the appeal, and that unless the Court’s decision was overturned, it was most important, “particularly in the light of the wife’s counsel’s suggestions about the husband’s proven lack of veracity and so forth in the past”.[15]
[15] Ibid at page 13 lines 20 to 21.
Counsel for the first and second intervenors submitted that a “stay is not an automatic right of courts. It’s granted in circumstances that are special.”[16] She asserted that the husband carried the entirety of the burden to establish the reasons why a stay of proceedings should be granted and submitted that he could not establish any of the requirements associated with his grounds of appeal. She asserted there were “no serious issues for determination and no prospects of success”.[17]
[16] Ibid at lines 24 to 25.
[17] Ibid at lines 29 to 31.
Counsel for the first and second intervenors submitted that grounds 1 to 6 of the husband’s appeal were the only ones which affected her client’s interests. She said none of those grounds challenged the findings pertinent to the operation of the Corporations Act2001 in respect of the Court’s findings as to the husband’s deceit and impropriety. Rather they went to matters of weight, apart from ground number 5.
Further, she asserted that none of the husband’s grounds of appeal impacted upon or sought to comment upon the rectification to the shareholdings and directorships of K Pty Ltd, which she said were rectified on the basis of the Court’s findings. She asserted that because of this “one would assume they’re content with the rectification orders because they (the third and fourth intervenors) are not appealing them”.[18]
[18] Ibid at page 14 lines 4 to 5.
She asserted that ground 4 of the husband’s grounds of appeal had no prospects of success given that all of the shareholders and directors of K Pty Ltd were parties to the proceedings. She submitted that as a consequence the company had notice of the proceedings in terms of procedural fairness, which she said could be “the backbone of failing to make orders with respect to parties who haven’t had the opportunity to be heard.”[19] She referred to Warby v Warby (2002) FLC 93-091 in support of her submission where the Full Court comprising of Nicholson CJ (as he then was), Finn and Strickland JJ said:-
44. … provided that a third party has notice of the proceedings against it listed before this Court and the Court is duly satisfied that such notice has been given, the Court is empowered to act as it would in any other undefended proceeding before it.
[19] Ibid at lines 13 to 14.
Further, she submitted that K Pty Ltd was “totally represented at the bar table”[20] and said it was “impossible to imagine that there would be any matter which [K Pty Ltd], per se, was interested in which was not put or able to be put by the husband or any other party before your Honour”.[21] Counsel for the first and second intervenors referred me to a recent unreported decision of ANC 078272 867 Pty Limited (in liquidation )(formerly Advance Finances Pty Ltd & Anor) and Deputy Commissioner of Taxation & Anor [2011] HCA 46. She said this case suggested, in matters where a company has not been given procedural fairness which results in its winding up, there four points/matters which are relevant to a court’s discretion:-
[20] Ibid at line 23.
[21] Ibid at lines 24 to 26.
(a)How much extra information could or would have been presented by the company.
She submitted that in this case the Court could “comfortably think nothing, in this instance”.[22]
[22] Ibid at lines 38 to 39.
(b)Whether those persons who were given a hearing could have fully comprehended the company's position and presented it.
Counsel for the first and second intervenors submitted “the answer absolutely must be yes to that”[23] and:-
[23] Ibid at line 46.
(c)Whether anyone who gave information at the hearing was, in effect, the "organising brain" of the company.
Counsel for the first and second intervenors submitted that “certainly, the husband would have you believe that was him.”[24]
(d)Practical considerations revealing the company's ability to give evidence.
Counsel for the first and second intervenors submitted that “the company and its goings on were the entirety of the dispute between my client’s and the husband, and that your Honour heard all about that from the material.”[25]
[24] Ibid at page 15 line 4.
[25] Ibid at lines 9 and 10.
Further, counsel for the first and second intervenors submitted that at the trial the husband himself sought orders affecting the rights and interests of K Pty Ltd, and at no time did he seek that K Pty Ltd be joined as a party to the proceedings. She asserted that it is “absolutely disingenuous of the husband to raise this as a potential ground of appeal” and demonstrated “even more why a stay should not be granted”.[26]
[26] Ibid at page 15 lines 15 to 16.
Counsel for the first and second intervenors submitted that the husband is not bona fides in his application and his appeal. She says the husband continues to seek orders on behalf to K Pty Ltd, as if it were his own alter ego and relied upon paragraph 13 of the husband’s affidavit in support of her assertion.
Counsel for the first and second intervenors submitted that ground 3 of the husband’s appeal had no success, as the winding up on K Pty Ltd was a remedy which was open pursuant to the Corporations Act. She submitted:-[27]
No challenge was made by the husband as to the appropriateness of a winding up as a remedy open to your Honour pursuant to the Corporations Act. He had every opportunity to make other submissions at that time, and did so, and your Honour made findings as to the husband's oppressive conduct, breakdown of mutual trust of shareholders and confidence between the shareholders, and the husband's refusal to purchase the first and second intervenors shares. All of those characteristics recommended the winding up as the only proper remedy available to your Honour and, indeed, the proper remedy adopted.
[27] Ibid at lines 29 to 36.
She went on to say that:-[28]
the findings as to the husband’s oppressive conduct, the breakdown of mutual trust and the confidence between the shareholders, and the husband’s refusal to purchase the [first and second intervenors’] shares recommended winding up as the proper remedy.
[28] At paragraph 7 of the Outline of submissions filed 12 December 2011.
She said the first and second intervenors assets were modest as was their income. She submitted that the whole purpose of investing in K Pty Ltd and the purchase of the factory was to provide them with a future benefit and that any further delays would further prejudice them. She argued there was no reason why the sale should not proceed and submitted that it would be open for the Court to make directions about holding moneys from the sale. Counsel urged me not to take that later course but conceded that it was open to me.
I generally accept and adopt the submission by counsel for the first and second respondents.
As to the prospects of success, the first six grounds relate to the liquidation and none of the grounds seem pertinent to the operation of the Corporations Act. Significantly the third and fourth intervenors (who would be the most advantaged by a successful appeal) have not sought to disturb the findings. Whilst the appeal is not doomed to failure or totally without merit, the grounds do not disclose a strong likelihood of success.
Having regard to the findings and concerns raised in the reasons as to the approach by the husband in relation to this company and his behaviour in respect of the transfer shares, which I have discussed elsewhere in these reasons, to stop the liquidation process and further delay the matter which has involved such time and cost would, on balance, be unjust to the wife and to the first and second intervenors. I had raised with counsel whether I should prevent the sale of the company’s property however, having regard to the submissions, particularly those of counsel for the first and second intervenors and its impact on the first and second intervenors, I determine on balance that the sale should proceed. The asset (in terms of the value of the company in money form) would remain safe, although in a different form.
What I will do is to stay the final distribution so that the assets of the company will still be in place but in a more liquid form. There is no reason that money could not earn interest.
I am satisfied that the company K Pty Ltd was to all intents and purposes on notice of the proceedings. There were views put by the husband and his parents, the first and second intervenors and the wife. There was no-one else who should have notice of it so the company certainly had notice of the proceedings albeit it was not served.
As to the husband’s prospects for success in this appeal, as I have indicated above, they are not strong but they are not hopeless or entirely without merit.
A distribution of the assets of the company by the liquidator could have that capacity to render any successful appeal nugatory, but at the same time the first and second intervenors are entitled to the fruits of their litigation. They have modest assets and income and they have been involved in lengthy and expensive litigation over a number of years. To prevent the liquidator from undertaking his investigation and sale of the company’s property would impose significant prejudice to the first and second intervenors. The appeal may take months or longer to be heard and determined. If the factory is sold the assets (namely it value – less capital gains tax and selling expenses) would be preserved. It is only on distribution that the appeal could become nugatory.
I am conscious that marketing and selling property is conducted over weeks or months and delaying the sale would impose a financial burden upon the intervenors. The wife has a tax debt and a debt for legal costs.
On balance it would be just to allow the liquidator to collect the capital, investigate the financial records and have the funds ready for distribution at the conclusion of the appeal. If the appeal is unsuccessful then distribution could be relatively promptly made. If the appeal is successful the funds would be available for further determination and the records of the company would be open to all the parties to enable any further determination. Issues such as the repayment of capital to the third and fourth intervenors could be quickly arranged and the assets and liabilities of the company would be more clearly defined.
The onus to establish a proper basis for the stay is on the applicant husband, but he does not need to demonstrate any special or exceptional circumstances, at the same time parties who have obtained a judgment are entitled to the benefit of that judgment and are entitled to presume the judgment is correct. There is nothing on the face of the grounds of appeal as they presently stand which impeaches that presumption.
As such I will not prevent the sale of the company’s property nor will I interfere with the broader work being undertaken by the liquidator. I will stay the final distribution of the assets of the company to the parties pending the outcome of the appeal. This will not prevent the liquidator from repaying the loan to the third and fourth intervenors nor from rectifying the accounting and statutory records of the company. His fees will be paid out of the assets of the company and in the event of a successful appeal the question of who or whom should carry that burden, as between the parties will remain open.
I certify that the preceding fifty eight (58) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Benjamin delivered on
Associate:
Date: 14 February 2012