Hathaway & Hathaway
[2024] FedCFamC1F 78
•23 February 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Hathaway & Hathaway [2024] FedCFamC1F 78
File number: MLC 8027 of 2015 Judgment of: HARTNETT J Date of judgment: 23 February 2024 Catchwords: FAMILY LAW – PRACTICE AND PROCEDURE – Stay Application – Property – Where the husband sought a stay of the orders requiring him to make financial disclosure – Where the husband had filed a Notice of Appeal – Where the wife did not oppose nor consent to the husband’s application but sought a restraint to be imposed – Application for stay granted Cases cited: Aldridge & Keaton (Stay Appeal) [2009] FamCAFC 106
Cantrell & North (2019) FLC 93-921
Nikolaidis v Legal Services Commissioner [2005] NSWCA 91
Sullivan & Tyler and Anor (No 2) (2015) FLC 93-668
Ulster & Viney(No 2) (2016) FLC 93-743
Division: Division 1 First Instance Number of paragraphs: 17 Date of hearing: 8 February 2024 Place: Melbourne Counsel for the Applicant: Mr Anderson Solicitor for the Applicant: Resolve Divorce Lawyers Counsel for the First Respondent: Ms Swart Solicitor for the First Respondent: Lakey Family Law and Mediation Counsel for the Second Respondent Mr Anderson ORDERS
MLC 8027 of 2015 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MR HATHAWAY
Applicant
AND: MS HATHAWAY
First Respondent
Z2 PTY LTD
Second Respondent
ORDER MADE BY:
HARTNETT J
DATE OF ORDER:
23 FEBRUARY 2024
THE COURT ORDERS, UNTIL FURTHER ORDER, THAT:
1.The husband’s application for a stay of Order 1 of the Orders made 7 February 2024 be granted.
2.The costs of the parties be reserved.
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 Hathaway & Hathaway has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
HARTNETT J
INTRODUCTION
Orders were made by the Court in these proceedings on 7 February 2024 as follows:
THE COURT ORDERS THAT:
1. The Trustee of the [Z2 Superannuation Fund] before 8 February 2024 at 12.00pm make available to the Wife and her solicitors the taxation returns of the superannuation fund for the years ended 30 June 2020, 30 June 2021, 30 June 2022 and 30 June 2023.
2.On or before 9 February 2024 at 12.00pm the Husband pay to the wife $6,911.25 in land tax liability as paid by the Wife, being a partial payment of such tax.
AND THE COURT NOTES THAT:
A. There remains dispute between the parties as to the Husband’s payment of a further amount to the Wife in the sum of $2,214.
By Application in a Proceeding filed 8 February 2024, the applicant husband (“the husband”) sought the Court make the following orders:
1.That paragraph 1 of the Orders made by the Honourable Justice Hartnett on 7 February 2024 requiring [Z2 Pty Ltd] in its capacity as trustee of the [Z2 Superannuation Fund] (“the Fund”), to produce the Fund's taxation returns for the years ended 30 June 2020, 30 June 2021, 30 June 2022, and 30 June 2023 to the Wife be stayed until further order, or in any event, until the determination of the Application for leave to Appeal and/or the Notice of Appeal filed by the Applicant on 8 February 2024 (whichever is the latter).
2.That the Respondent, [Ms Hathaway], pay the costs of the Applicant and the Application referred to at paragraph 1 above on an indemnity basis.
In support of that Application, the husband relied upon an affidavit filed by him on 8 February 2024. The wife did not file any affidavit material in reply but relied upon her oral submissions made at the hearing which proceeded on 8 February 2024.
Prior to the hearing proceeding, the husband had filed a Notice of Appeal seeking leave to appeal Order 1 of the Orders made 7 February 2024.
BRIEF BACKGROUND
On 10 July 2018, the husband filed an Application for Enforcement in respect of final consent orders as made by Macmillan J on 13 April 2018 (“the 2018 final orders”). The 2018 final orders were as follows:
1.[Z2 Pty Ltd] (“the Trustee”) be joined as a party to these proceedings.
SUPERANNUATION
2.The Husband and Wife and the Trustee do all things and give all necessary authorities to facilitate a recalculation of their respective member’s account balances in the [Z2 Superannuation Fund] (“the Fund”) as at 13 April 2018 (“the valuation date”), to take into account:
(a)the Fund’s interest in the [Z Property Trust], based on the property at [Q Street, Suburb C] at a value of $1,850,000; and
(b) the then value of the Fund’s share and other investments, with the costs (if any) of such recalculation to be borne by the Fund.
3. Pending the Roll Out referred to in paragraph 8, neither the husband nor the wife shall take any steps to seek to withdraw any of their entitlements from the Fund (the husband warranting that he has not withdrawn any of his entitlements since 30 June 2016).
4. Paragraphs 5-8 of these orders are binding upon the Trustee of the Fund.
5.The base amount to be allocated to the wife out of the interest of the husband in the Fund is $X where
X= (A + B)/2 – B
A= the husband’s Members balance as at the valuation date
B= the wife’s Members Balance as at the valuation date.
6. That whenever the Trustee of the Fund makes a splittable payment from the interest held by the husband in the Fund the Trustee shall pay to the wife the amount which is calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001 and there be a corresponding reduction in the entitlement the husband would have had but for these Orders.
7. The operative time for the purpose of these orders shall be 31 May 2018 (“the Rollout date”).
8.By the Rollout date, the Trustee of the Fund do all things and sign all documents to roll out to an alternate complying superannuation fund nominated by the wife (the wife to furnish a certificate from the ATO confirming that it is a complying superannuation fund)her then Members entitlement (to include the payment split), with the rollout to include in specie all units held by the Fund in the [Z Property Trust No 2], and the balance of her entitlement to be in cash unless otherwise agreed.
9.Following the payment split and the rollout, the wife shall forthwith resign as a director of the Trustee of the Fund and transfer the shares held by her in the Trustee of the Fund to the husband, and resign as a member of the Fund, and the husband shall thereafter indemnify the wife in relation to all liabilities of, or arising from the wife’s involvement or association with, the Fund save from a liability arising as a consequence of any activity or conduct of the wife and save for any liability arising as a consequence of the wife’s use of [Q Street].
[B Street]
10. On or before the Rollout date:
(a) the Husband and Wife and [AA Pty Ltd] at the wife’s expense do all things and sign all documents to cause [AA Pty Ltd] as Trustee of the [Hathaway Trust] to make an in specie distribution in favour of the wife (as a beneficiary of [the Hathaway Trust]) of all units held by [the Hathaway Trust] in the [Z Property Trust No 3]; and
(b) the Husband do all things and sign all documents to:
(i) Transfer all shares held by the Husband in [Z Pty Ltd] to the wife (the other Respondents warranting that they hold no shares); and
(ii) resign any office held in [Z Pty Ltd].
11.The Husband pay, indemnify the wife and keep her indemnified in relation to any liabilities of [Z Pty Ltd], [Z Property Trust No 2] and [Z Property Trust No 3] extant as at the Rollout date save for any liability (other than existing liability for land tax) arising since 1 July 2011 with respect to [B Street] and relating to the land, the premises or the use of or activity occurring on that land and premises and save for any liability arising by reason of the past use by the wife of [Q Street, Suburb C].
OTHER
12. Save as provided in the preceding paragraphs, the wife shall forthwith upon compliance with paragraph 10 (at the husband’s expense):
(a)assign to the husband any interest held in any loan account or entitlement under any trust or corporation or trust hereunder;
(b) transfer to the husband any shares held in any corporation referred to hereunder;
(c) resign any office held in any corporation referred to hereunder;
(d) renounce any power, right, interest or entitlement under any trust referred to hereunder; and
(e) do all things necessary to facilitate her removal as a signatory to any bank account of any of the entities hereunder:
12.1 [AA Pty Ltd]
12.2 [Hathaway Trust]
12.3 [Hathaway Family Trust]
12.4 [Hathaway Family Trust No 2]
12.5 [BB2 Pty Ltd]
12.6 [BB2 Trust]
12.7 [BB3 Pty Ltd]
12.8 [PP Trust]
12.9 [BB Properties Pty Ltd]
12.10 [BB Properties Trust]
12.11 [JJ Pty Ltd]
12.12 [KK Trust]
12.13 [DD Properties Pty Ltd]
12.14 [DD Properties Trust]
12.15 [Hathaway Pty Ltd]
12.16 [Hathaway Practice Trust]
12.17 [Hathaway Family Savings Pty Ltd]
12.18 [Hathaway Family Savings Trust]
12.19 [Hathaway Family Investments Trust]
12.20 [Hathaway Family Investments Trust No 2]
12.21 [BB Holdings Pty Ltd]
12.22 [BB Investments Pty Ltd]
12.23 [Z2 Pty Ltd]
12.24 [Z2 Superannuation Fund]
12.25 [Z Pty Ltd]
12.26 [Z Property Trust No 4]
12.27 [JJ2 Pty Ltd]
(“the Entities”).
13.The Respondents jointly and severally pay, indemnify the wife and keep her indemnified in relation to any liabilities of, or arising from her involvement or association with, any and all of the Entities, including but not limited to taxation save for any liability arising by reason of the transfer of the units in the [Z Property Trust No 3], in which event the Husband and Wife shall assume equal responsibility for such liability, and each shall do all things reasonably necessary to secure rollover relief for Capital Gains Tax with respect to that transfer.
14. The wife otherwise retain, free from any claim by any of the Respondents (and they to remove any caveats lodged by any of them), her interest in:
[J Street, Suburb K]
[N Street, Suburb O]
[L Street, Suburb M].
15.As between the husband and wife, save as provided in these orders (other than for enforcement purposes):
(a) each of them shall retain all assets in their respective possession as at the date of these orders;
(b) each shall be solely liable for any liability attaching to any item of property being retained by them pursuant to these orders;
(c) each shall retain their respective superannuation entitlements.
16. The Husband shall look for and, if he locates, cause to be delivered to the Wife:
(a) her Certificate of Citizenship; and
(b) the […] brooch.
17.The Wife shall look for and, if she locates, cause to be delivered to the Husband:
(a) the Ketubah (religious Jewish marriage certificate); and
(b) the study desk given to the husband by his mother.
18. The Husband by 15 May 2018:
(a) deliver to a professional copying service provider nominated by the wife the family photo albums, to enable her to obtain copies, the wife not to remove such albums from the premises of the service provider; and
(b) return to the wife the key to the front door of [B Street] (if located).
ORDERS FOR A JEWISH DIVORCE (GETT)
19.The Husband and Wife shall appear before the Melbourne Beth Din (Jewish Ecclesiastical Court) forthwith upon being called upon by the other and/or summoned by the said Jewish Ecclesiastical Court so to do.
20.Each of the Husband and Wife shall thereupon grant a “Gett” (Jewish Bill of Divorce) to the other if and when required, orders and/or directed so to do by the said Jewish Ecclesiastical Court.
21.Each of the Husband and Wife shall do all acts and things as may be required of them by the said Jewish Ecclesiastical Court to give validity and operation according to “Halakhah” (Jewish Law) to:
(a) any grant of a Gett; and
(b) any requirement, order or direction of the said Jewish Ecclesiastical Court in relation to the dissolution of the parties’ marriage in Jewish Law.
22.The wife shall otherwise release the second to fifth Respondents from all or any claims she now has against any or all of them or any of their assets.
23.All extant applications be otherwise dismissed and removed from the list of cases awaiting hearing.
24. All parties bear their own costs of these proceedings.
IT IS DIRECTED THAT
25. All documents produced to the Court pursuant to subpoena and exhibits relied upon by the parties be returned by the subpoena clerk of the Family Court of Australia, Melbourne Registry, to the person or organisation who produced same.
On 30 July 2018, the husband discontinued his Enforcement Application in circumstances where the wife had provided the husband with the necessary documents to effect, it was said by him: the resignation by her as a director of Z2 Pty Ltd; the transfer by her of her shareholding in Z2 Pty Ltd; and the renunciation by her of all her “power, right, interest, position or entitlement as a beneficiary of the Fund or in any capacity whatsoever from the Fund”.[1]
[1] Husband’s affidavit filed 8 February 2024, paragraph 8.3.
On 31 July 2018, the husband, and the children of the parties as directors of Z2 Pty Ltd signed a ‘Resolution of the Directors of [Z2 Pty Ltd] as trustee of the Fund’ determining that the wife ceased to become a member of the self-managed Z2 Superannuation Fund with effect on 31 May 2018.
Commencing in February 2022, further litigation has ensued between the parties in respect of the funds properly belonging to the wife which remain, as an undisputed fact, in the self‑managed Z2 Superannuation Fund. Such funds have not been rolled out by the parties in accordance with Order 2 of the 2018 final orders.
On 7 February 2024, the matter proceeded before me by way of competing enforcement applications. On that day I made orders as they appear at [1] above. The husband seeks a stay of Order 1 of the orders. Accordingly, on 8 February 2024, and in circumstances where the stay judgement was reserved, I made an order that:
3.Time for compliance by the Husband with Order 1 of the Orders made 7 February 2024 is extended to be the date on which judgment in respect of the Husband’s stay application filed this day is delivered.
Counsel for the wife had sought that should a stay be granted, it be done on terms such that the husband be restrained from “dealing with, rolling out”,[2] or “withdrawing any amount held to his credit in his member balance in the fund”.[3] I determined the husband is already so restrained by the existence of Order 3 of the 2018 final orders. Further, there was no allegation that the husband had withdrawn any monies from the fund. I note the submissions of counsel for the husband that the husband continues to comply with the 2018 final orders.
[2] Transcript 8 February 2024, p.62 line 46.
[3] Transcript 8 February 2024, p.63 lines 1-2.
LEGAL PRINCIPLES
The principles relevant to a stay application are as set out in Aldridge & Keaton (Stay Appeal) [2009] FamCAFC 106, although the list of principles stated therein are not exhaustive. The principles as referred to are set out at [17] and [18] of that judgment and are as follows:
17.This is an appeal from a discretionary judgment. There are well established principles on the limits on interference by an appellate court with such a judgment (see House v The King (1936) 55 CLR 499; Gronow v Gronow (1979) 144 CLR 513; (1979) FLC 90-716).
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.
Curial intervention by the grant of a stay should not take place lightly as Bryson JA held in Nikolaidis v Legal Services Commissioner [2005] NSWCA 91 at [18] as follows:
18. …The power to order a stay is discretionary and such an intervention should not take place lightly. The outcome which is likely if there is no stay must be so adverse and severe that the attainment of justice requires interlocutory intervention. It must be shown that it is likely that there will be some adverse consequence of allowing the proceedings under challenge to continue and that the outcome will be so difficult to remedy or otherwise so adversely severe in its impact that intervention by the Court of Appeal should take place notwithstanding that there has not yet been an opportunity for full consideration.
CONSIDERATION
The husband in his affidavit filed 8 February 2024 stated that the Court erred in making Order 1 of the orders made 7 February 2024 for reasons, relevantly, as follows:[4]
[4] Husband’s affidavit filed 8 February 2024, paragraph 10.
…
10.1 The Wife is not a member of the fund and therefore has no proper interest in the Fund’s affairs since 2018;
10.2 The documents ordered to be produced are irrelevant to the matters in issue before the Court;
10.3 The financial and tax affairs of the Fund are confidential and to my knowledge, the trustee is concerned to avoid prejudice occasioned by disclosure to the Wife of the financial affairs of the Fund subsequent to the valuation date of 13 April 2018 pursuant to paragraph 2 of the Final Orders;
10.4 The Wife’s adjusted member entitlements in the Fund are required to be calculated as at 13 April 2018 in accordance with the recalculation of member balances in accordance with paragraph 2 of the Final Orders, with no allowance in the Final Orders for further adjustment after that date;
10.5 Any further adjustment of the Wife’s member balance in the Fund is predicated on the Wife’s persistent non-compliance since 31 May 2018 with paragraph 8 of the Final Orders and persistent refusal to provide documentation and information required to facilitate the rollout of her member benefits in accordance with paragraph 8 of the Final Orders;
10.6 The Husband has repeatedly stated that the Fund is ready, willing and able to rollout the Wife’s member balance recalculated as at 13 April 2018, however the Wife has refused to cooperate in respect of that rollout;
10.7 The Wife has since 31 May 2018, had control of the property at [Q Street, Suburb C] referred to in paragraph 2 of the Final Orders in which the Fund has an interest, including through her sole directorship of its registered proprietor, [Z Pty Ltd] which is the legal and beneficial owner of that property. As a consequence, the Wife has been in sole enjoyment of that property and its earnings which is inconsistent with the Wife maintaining that it or its earnings are part of the Fund, or that she benefits from it in her capacity as a member of the Fund.
10.8 The Wife seeks to benefit from her own delay in giving effect to the rollout from the Fund which was to take place on 31 May 2018. …
The wife submitted in reply that she in fact remains a member of the Z2 Superannuation Fund and has a member beneficial entitlement. Regardless of the characterisation of that entitlement, for accounting purposes, by the husband and the trustee of the fund, the wife’s superannuation entitlements remain in the fund and have not been rolled out. She is therefore entitled, as she is by virtue of her former position as a director and/or her current position as a director (statutorily required) to access the fund’s annual superannuation taxation returns.
I am mindful that a stay may be necessary to preserve the subject matter of an appeal.[5] Further, a ground for a stay may be that there is real risk that not granting a stay will render a successful appeal nugatory or will make it impossible or impractical to restore the situation presently existing.[6]
[5] Cantrell & North (2019) FLC 93-921 at [24].
[6] See Sullivan & Tyler and Anor (No 2) (2015) FLC 93-668 at [23]; Ulster & Viney (No 2) (2016) FLC 93-743, at [13].
I am satisfied that the husband has established a proper basis for the stay. His case is arguable. Should a stay not be granted, the husband’s appeal will be rendered nugatory. Further, requiring the husband to make financial disclosure to the wife prior to the hearing of the appeal would make it impossible or impractical to restore the situation presently existing. The husband’s application for leave to appeal, and any subsequent appeal should be able to be heard by the Full Court in a reasonable time frame, such that there is no prejudice to the wife in granting the stay, in particular, given the context of this matter where the parties themselves have engaged in considerable delay in resolving this issue.
Accordingly, and in the exercise of my discretion, the husband’s stay application shall be granted.
I certify that the preceding seventeen (17) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Hartnett. Associate:
Dated: 23 February 2024
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