Gibbs & Gibbs (No 3)
[2022] FedCFamC1F 1054
Federal Circuit and Family Court of Australia
(DIVISION 1)
Gibbs & Gibbs (No 3) [2022] FedCFamC1F 1054
File number(s): SYC 5405 of 2018 Judgment of: CHRISTIE J Date of judgment: 22 December 2022 Catchwords: FAMILY LAW – STAY APPLICATION – Where the husband has filed a Notice of Appeal from final orders made 31 October 2022 – Where the husband seeks a stay of the final orders – Where the wife opposes the stay application – Where a partial stay of the final orders is granted on conditions. Legislation: Family Law Act 1975 (Cth) s 121;
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) r 13.12
Cases cited: House v The King (1936) 55 CLR 499; [1936] HCA 40
Trahn & Long (No 2) [2008] FamCAFC 194
Division: Division 1 First Instance Number of paragraphs: 45 Date of hearing: 21 December 2022 Place: Sydney Counsel for the Respondent: Mr Watkins Solicitor for the Respondent: Solari & Stock Lawyers, Ms Quirk Solicitor for the Applicant: Nora Michael Family Lawyers, Ms Michael ORDERS
SYC 5405 of 2018 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MR GIBBS
Applicant
AND: MS GIBBS
Respondent
order made by:
CHRISTIE J
DATE OF ORDER:
22 December 2022
THE COURT ORDERS THAT:
1.The husband be permitted to provide a copy of the orders and reasons for judgment of 31 October 2022 to any lender for the purpose of securing finance to comply with orders of this Court.
2.Orders 1 and 3 to 6 of the 31 October 2022 orders made by the Honourable Justice Christie be stayed on condition that:
(a)the husband complies with Order 12 on or before 9 January 2023; and
(b)the husband pay to the wife or as she may direct the sum of $2,646,117.70 on or before 23 January 2023.
3.In the event that the husband fails to comply with, either or both conditions, in Order 2 the stay will lapse.
4.The case management hearing on 17 January 2023 is vacated.
5.The Application in a Proceeding filed 28 November 2022 is stood over until after disposition of the Husband’s Notice of Appeal filed 25 November 2022, with liberty to the wife to relist on providing Notice to chambers and the Respondent.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Gibbs & Gibbs has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
EX-TEMPORE REASONS FOR JUDGMENT
CHRISTIE J:
The husband seeks a stay of property adjustment orders made on a final basis on 31 October 2022 (“the final orders”).
Order 1 of the final orders provided for payment to the wife of $3,303,714 by 12 December 2022 and Order 12 provided for payment to the wife of $29,832. The total amount payable by the husband to the wife is in the sum of $3,333,546.
The husband filed an appeal against the final orders on 25 November 2022. The filing of the appeal does not operate as a stay.
If the husband does not comply with the orders, a default clause requires sale of real property to make payment to the wife.
The wife opposes the stay.
In order to evaluate the merits of the application it is necessary to have regard to the asset pool as set out in Gibbs & Gibbs (No 2) [2022] FedCFamC1F 831 at [97]:
Property
Ownership
Wife’s Value
Husband’s Value
ASSETS H Street, Suburb F H $2,590,000 $2,590,000 2 G Street, Suburb F 50% H $1,000,000 $1,000,000 3 G Street, Suburb F 20% H $390,000 $390,000 2 H Street, Suburb F 20% H $560,000 $560,000 E Street, Suburb F H $1,000,000 $1,000,000 G Street, Suburb F (life estate) H $334,000 $334,000 Husband’s interest in the estate of his late sisterH$666,413NKCBA account ending in #...56 W $29,833 $29,833 CBA account ending in #...60 W $2,005 $2,005 CBA account ending in #...29 W $8,007 $8,007 Motor Vehicle 1 W $7,000 $7,000 Personal effects W $1,000 $1,000 N shares H $1,617 $1,617 N shares W $3,873 $3,873 D Pty Ltd 25% H $483,000 $483,000 K Pty Ltd 50% H $1,412,000 $1,412,000 Furniture and home contents H $10,000 $10,000 CD collection H $1,000 $1,000 Total: $7,833,335 $7,833,335 SUPERANNUATION Superannuation Fund 1 W $203,935 $203,935 Superannuation Fund 2 H $239,035 $239,035 Total: $442,970 $442,970 Total Assets: $8,276,305 $8,276,305 LIABILITIES NAB Investment loan (2 H Street) H $107,600 $107,600 CBA Line of credit H $119,350 $119,350 CBA Gold credit card H $19,340 $19,340 CBA home loan (H Street) H $184,089 $184,089 Total: $430,379 $430,379 Net Assets: $7,845,926 $7,845,926 ADDBACKS Money paid by the husband on legal fees H $197,000 $197,000 Money paid by the wife on legal fees W $109,000 $109,000 Total add backs: $306,000 $306,000 Net property and notional property $8,151,926 $8,151,926
At the hearing of the stay I was informed that the appeal has been listed for determination on 27 February 2023 and the index to the appeal book is due to be filed by 4.00 pm on 23 December 2022.
The Law
The granting or refusal of a stay is a discretionary decision. The Court can order a stay where it would be proper and on such terms as it considers proper.
Rule 13.12 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) deals with the rules which apply on application for a stay:
(1)The filing of a Notice of Appeal does not stay the operation or enforcement of the order appealed from, unless otherwise provided by a legislative provision.
(2)If an appeal has been started, or a party has applied for leave to appeal against an order, any party may apply for an order staying the operation or enforcement of all, or part, of the order to which the appeal or application relates.
(3) An application for a stay must:
(a) be filed in the registry in which the order under appeal was made; and
(b)be heard by the Judge or Magistrate who made the order under appeal, unless that judicial officer is unavailable.
The onus to establish the facts and circumstances necessary to grant a stay is borne by the applicant. Some of the matters which will be relevant to exercise of the discretion have been set out in the case law: see for example Trahn & Long (No 2) [2008] FamCAFC 194 at [38]. These include:
(a)Whether refusing a stay would render the appeal nugatory;
(b)The entitlement of the other party to the fruits of the judgement at first instance;
(c)Any hardship caused by granting or refusal of the stay;
(d)The balance of convenience;
(e)The merits and likely disposition of any appeal; and
(f)Any delay in seeking the stay.
Consideration
Appeal rendered nugatory
The husband has set out his orders sought in the event that the appeal Court re-exercises discretion.
The husband says at Part F of his Notice of Appeal (affidavit of Mr Gibbs filed 9 December 2022 at annexure A ):
3.In the alternative to Order 2 [remitter] the lump sum payable to the respondent wife pursuant to Order 1 of Orders dated 31 October 2022 be varied such that having regard to the value of the net property of the parties as found by the Full Court in the re-exercise of discretion, the respondent wife receives overall 40% of the net property of the parties.
I accept that the husband’s primary relief on appeal is that the matter be remitted. However, it is relevant to assess what he submits the proper result ought be if his appeal is successful. Assuming the same pool of assets as at trial, if the husband were required to pay the wife an amount equivalent to 40 per cent of the net pool that would require she receive $3,260,770 (including cash of $2,896,117).
The husband says the asset pool may change if the matter is remitted. I accept it may increase, decrease or stay the same.
The husband has proposed certain terms as part of his application for a stay. His solicitor referred to the husband being prepared to provide an undertaking. The husband did not file an undertaking nor did he make plain the precise terms of any undertaking he was prepared to offer. His evidence said he undertook to quarantine the proceeds of sale of a property at W Street, Suburb X (“the Suburb X property”) in the estimated sum of $1,571,220. As discussed below, that property is owned by D Pty Ltd (“the company”) and the husband’s affidavit should be understood as suggesting he was going to quarantine the company’s funds. Assuming that the husband had the authority to offer such an undertaking (and there was no evidence before the Court that he did) three further issues arise:
(1)He is not offering to pay those funds to the wife – merely to quarantine them;
(2)The sum is not adequate to discharge what he accepts is an appropriate payment to the wife (on the basis of the existing asset pool); and
(3)The husband’s late sister Ms B owned shares in the company which owns the Suburb X property. The evidence at trial was that no application for Letters of Administration had been made. The wife appropriately raised that the husband’s proposal if accepted was likely to result in delay.
The wife submits that the evidence relied upon by the husband in the stay application does not disclose any source of funds from which the husband could meet the payment to the wife which he says is appropriate if he is successful on appeal. I accept that submission. The husband’s interest in the proceeds of the Suburb X property are not clear and his interest is a minority shareholder of the company that owns the property. According to the single expert the husband’s share in the company is not of sufficient value to fund the wife’s entitlements.
The failure to reveal any sources of funds or capacity to borrow (either at trial or during the application for a stay) means that the husband cannot submit that his appeal would be rendered nugatory by orders which required him to sell assets to satisfy the outstanding obligation to the wife.
The husband gave no evidence on the stay application as to the source of the $250,000 he paid to the wife. His affidavit was silent on the topic and the asset pool set out above does not disclose an apparent source.
The husband argued that unless the stay was granted his appeal would be rendered nugatory. When pressed, his solicitor conceded this was because the husband wishes to retain E Street, Suburb F and H Street, Suburb F and the orders which provide for sale in the event the husband defaults in his obligation to pay the wife, require sale of one or both the properties. The husband’s appeal cannot be said to be rendered nugatory if he is required to sell a property. The expression nugatory in this context means futile or meaningless. If the husband is successful on appeal (and the court elected to make the alternate order he sought) then he would be required to pay the wife less money.
If the husband’s contention that the appeal would be rendered nugatory is dependent upon the contention that a successful appeal would allow him to keep all of his properties he is required, not merely to assert that fact but, to demonstrate it through admissible evidence. He has failed to do so. The husband had 42 days from the date of the final orders to make an application for finance and inquiries. He provides no evidence of having done so.
Entitlement to the fruits of judgment
The wife has net assets of $364,653. They include her superannuation (to which she is not presently entitled) and $109,000 in paid legal fees (which are notional rather than actual assets). The effect of this is that the wife has $51,718 in assets. At the same time the husband has $7,787,273 in assets in his name (a very small proportion being superannuation and notional assets).
As is plain it is significant that the wife will be out of the fruits of her judgment. She resides with family. The husband continues to reside in the home the parties previously occupied.
Hardship caused by granting or refusing the stay
The husband submitted that there was no prejudice to the wife in granting the stay since the orders protect her right to recover the funds in due course. The prejudice to the wife is that she is presently entitled to be paid money and she has not been paid money. The hardship to the wife would appear to be:
(a)She has outstanding legal fees; and
(b)She has very little liquid capital.
The husband cannot point to any specific hardship to him if the stay is refused, save the requirement that he comply with court orders which require the sale of property. Absent evidence he is in a position to retain that property that is not a relevant hardship.
Balance of convenience
This appeal can be heard expeditiously. The husband says that supports the making of a stay order. I accept the fact that the court can hear the appeal quickly is relevant to whether a stay should be ordered. However, it has to be remembered that these proceedings commenced in 2018. In addition, if a stay is granted the wife was entitled to be paid her entitlements on 12 December 2022. On 12 December 2022 (or 13 December 2022) she received a sum equivalent to less than 8 per cent of her entitlements. If a stay were to be granted as the husband proposes she would be without further funds until one of the following occurred:
(a)The husband’s appeal was dismissed and the husband complied with the 31 October 2022 orders – on even a best case scenario, no earlier than April 2023; or
(b)The husband’s appeal was allowed on the alternate basis and the husband complied with the requirement to pay the lesser sum – on even a best case scenario, unlikely to be earlier than April 2023; or
(c)The husband’s appeal was allowed on the primary basis and remitted for rehearing –probably some time in 2024.
Merits and likely disposition of the appeal
It must be observed that this is an appeal against a discretionary judgment and will face the usual difficulties set out in House v The King [1936] 55 CLR 499.
The appeal raises lack of adequate reasons (Ground 1), error of principle (Grounds 2 and 4), failure to consider a relevant matter (Ground 3) and finally, a catch all, unreasonable and plainly unjust (Ground 5). The last appeal ground is perhaps the most curious since the appellant’s orders contend that an amount 5 per cent less would be appropriate.
The husband’s solicitor submitted that she may be instructed to amend the Notice of Appeal. While true I can only determine the husband’s application on the basis of the evidence before me at the time.
Any delay
There was no delay in filing the appeal. There was unfortunate delay in filing the stay application. It was filed on the very day that compliance with the final orders was required. This could never have provided the respondent with time to meet a stay application.
However, in the scheme of things the delay is not material to the merits of the stay application.
Stay on terms
Sometimes a party who has appealed will say in support of their application for a stay – the evidence suggests that if I am successful I will not be required to sell a specific property or properties. The evidence in this case falls short of supporting that proposition.
The husband said he has capacity to pay $250,000 on or before 12 December 2022 and will do so by way of a bank cheque. The wife’s affidavit evidence confirms those funds were indeed paid and are in the trust account of her solicitors. If they are applied to her legal fees they will not discharge her indebtedness as there will be a balance of $107,105 which will remain outstanding. The husband said the payment of those monies adequately deal with prejudice but that significantly misstates the disparity in the respective financial positions of the parties.
The husband also says he accepts that the wife has caused a caveat to be registered against the title of the property at E Street, Suburb F and he would not seek to remove the caveat pending disposition of the appeal. However he notes that he may need to have the caveat removed in order to raise funds to meet his obligations.
It is true that the wife’s interests are protected by the orders of 31 October 2022 but that is separate from the question of whether there should be a delay in the receipt of funds by her.
As outlined above, the husband was prepared to offer the Court an undertaking to quarantine the net proceeds of sale of the Suburb X property received by him by depositing such into his lawyers trust account. That property is owned by the company. The husband owns 20 per cent of the shares in the company. The husband’s affidavit says he was prepared to give an irrevocable authority and direct his lawyer to pay the net proceeds of sale of the Suburb X property to the wife, should the appeal be dismissed. It is not plain how much the company will realise from the sale and therefore how much the husband is representing will be retained.
The husband’s proposal is that he pay (and has paid) $250,000 and he will quarantine his share of sale proceeds from the Suburb X property. At this point it is unknown what the sale proceeds will be – however it is unlikely that the husband’s share will exceed the value of his shares in the company namely $483,000. The husband says he will borrow the remainder of the net proceeds of the company’s sale of the Suburb X property from his siblings. He has not provided any evidence of their agreement to his proposal. The company is not a party to the proceedings. That property has not exchanged so that wife is concerned that her entitlements will not be secured by a property which is not in the sole name of the husband and has not exchanged. There is merit in that submission.
Hence, it seems plain that the terms that the husband proposes will leave the wife substantially out of pocket while his appeal is considered when one has regard to what his solicitor submitted was an appropriate division.
The wife has proposed different terms. She says that the husband should pay the amount he proposes in the alternative relief in his Notice of Appeal. She points to the fact that the proceedings have been on foot for a considerable period and he has had time to organise his financial affairs. He does not come to the Court with any indication of likely borrowing capacity.
The stay orders I propose to make will give the husband a further opportunity to raise the required funds but if he cannot do so in a timely fashion then the wife should have her entitlements.
The husband sought a stay of the costs order, namely Order 12 of the final orders. No appeal grounds are directed to the costs order (being costs thrown away) and I propose to dismiss that aspect of his application. It follows that the husband is obliged to pay that costs order.
The amount to be paid is calculated by taking 5 per cent or $407,596.30 away from the sum which was provided for in Order 1, namely $3,303,714 and acknowledging and hence deducting the $250,000 already paid leaving a balance to be paid of $2,646,117.70. In addition, as explained above the husband should comply with the requirement to pay the costs order in the sum of $29,832.
If the appeal is dismissed the husband acknowledges that he will be required to make a further payment of $407,596.30. Interest will run on these outstanding monies. They are also secured by the remaining orders of 31 October 2022 which have not been stayed.
Effectively the husband’s stay operates to extend time for compliance (to allow him to raise funds) and stays the payment of the amount he says is in issue in the appeal. This is the appropriate balance of the parties’ competing interests. Of course, if the husband does not comply with the terms of the stay it will lapse.
Finally the husband sought an order permitting him to give the final orders to people who may provide finance to him. The wife agreed. I do not accept that provision of orders to banks, brokers or lenders constitutes a breach of s 121 of the Family Law Act 1975 (Cth) and accordingly do not think that an order is required but have made the order with the parties’ agreement.
The parties have agreed to adjourn the wife’s costs application until after the appeal has been heard and determined and I will make orders to that effect.
I certify that the preceding forty-five (45) numbered paragraphs are a true copy of the Ex-tempore Reasons for Judgment of the Honourable Justice Christie. Associate:
Dated: 22 December 2022
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