Keil and Kingscote

[2018] FamCAFC 169

FAMILY COURT OF AUSTRALIA

KEIL & KINGSCOTE [2018] FamCAFC 169

FAMILY LAW – APPEAL – APPLICATION IN AN APPEAL – The husband seeks an extension of time within which to file a Notice of Appeal against property settlement orders – Where the orders provided for the husband to retain certain properties and pay the wife a fixed sum but failing this the properties were to be sold – Where the orders did not contain a “rise and fall” provision in the event the properties were sold – Both parties had an opportunity to consider the final orders to be made – Waters and Waters (1981) FLC 91-019 considered – Held no substantial issue to be raised on appeal – Where there has been a delay of over two years – Found no adequate explanation for the delay – History of the proceedings and hardship to the wife considered – Application dismissed – Husband to contribute to the wife’s costs of the application to be assessed if not agreed.

Family Law Act 1975 (Cth) s 94(2D)(a)

Family Law Rules 2004 (Cth) r 1.14

Gallo v Dawson (1990) 93 ALR 479; [1990] HCA 30
Joshua v Joshua (1997) FLC 92-767; [1997] FamCA 31
Waters and Waters (1981) FLC 91-019; [1981] FamCA 19

APPLICANT: Mr Keil

RESPONDENT: Ms Kingscote

FILE NUMBER: PTW 3739 of 2013

APPEAL NUMBER: WA 20 of 2018

DATE DELIVERED: 29 August 2018

PLACE DELIVERED: Perth

PLACE HEARD: Perth

JUDGMENT OF: Thackray J

HEARING DATE: 29 August 2018

LOWER COURT JURISDICTION: Family Court of Western Australia

LOWER COURT JUDGMENT DATE: 20 May 2016

LOWER COURT MNC: Ex tempore reasons

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Berry SC

SOLICITOR FOR THE APPLICANT: DCH Legal Group

COUNSEL FOR THE RESPONDENT: Mr Hedges

SOLICITOR FOR THE RESPONDENT: Pinnington & Associates

Orders

1. The Application in an Appeal filed 8 June 2018 be dismissed.

2. The applicant pay the respondent’s costs of the Application to be assessed if not agreed.

Note: The form of the order is subject to the entry of the order in the Court’s records.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Keil & Kingscote has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).

THE APPELLATE JURISDICTION OF THE FAMILY COURT OF AUSTRALIA AT PERTH

Appeal Number: WA 20 of 2018
File Number: PTW 3739 of 2013

Mr Keil

Applicant

And

Ms Kingscote

Respondent

EX TEMPORE REASONS FOR JUDGMENT

1. Before the Court today is the Application in an Appeal filed by the applicant, Mr Keil (“the husband”) on 8 June 2018. The respondent to the proposed appeal is Ms Kingscote (“the wife”). The application seeks, pursuant to s 94(2D)(a) of the Family Law Act 1975 (Cth) (“the Act”), an extension of time within which to appeal against orders made by Walters J on 20 May 2016 in the Family Court of Western Australia.

2. The husband filed an affidavit on 8 June 2018, setting out some of the background and otherwise supporting his application.  The wife filed a response on 21 August 2018, seeking that the application be dismissed and that the husband pay her costs of the proceedings.  The response is supported by a lengthy affidavit, setting out in somewhat greater detail the post-trial events relating to enforcement of the orders made by Walters J, and otherwise dealing with the issues concerning delay and prejudice to the wife in the event the application was successful. 

Background

1. The property settlement proceedings between the husband and the wife proceeded to trial over three days in May 2016.  The wife had legal representation at the trial, but the husband had discharged his lawyers prior to the trial and thereafter was self-represented, although he again sought legal advice following the handing down of the decision. 

2. At the conclusion of the evidence on 20 May 2016, Walters J delivered ex tempore reasons for judgment in which he determined that the assets, following the relatively short relationship of the parties, should be divided in proportions 62.5 per cent to the wife and 37.5 per cent to the husband.  That finding is not controversial in the proposed appeal. 

3. His Honour also found, again uncontroversially, that the assets owned by the wife were worth $1.148 million net, those owned by the husband were worth $809,347 net, and that there were jointly owned assets worth $98,085 net.  His Honour calculated that if the husband was to retain his assets, including the two blocks of land in his name, and the jointly owned property in Suburb A, he would need to pay the wife an adjusting sum of $136,408.

4. His Honour pointed out that while it was probably not likely to occur, it was open to the wife to retain the Suburb A property, in which case the husband would only have to pay her approximately $40,000.  His Honour found that whatever happened it would be necessary for the wife to be removed from any liability in respect of debts associated with property the husband was to retain.

5. Having delivered his reasons, his Honour stood the matter down to allow discussions between the husband and the wife’s legal representative.  According to the unchallenged affidavit of the wife, agreement could not be reached about the way to effect the division of property foreshadowed in his Honour’s reasons.  Importantly, time was then allowed for the parties to consider their position and, according to the wife’s affidavit, on 23 May 2016 the parties received from the court a draft set of orders, together with an email inquiring whether either party had “any discomfort with the draft Orders”.

6. The orders provided for payment by the husband to the wife of the sum of $136,408 and other orders designed to release the wife from the relevant liabilities.  Mr Hedges submitted that this form of orders was essentially that proposed by the husband.  The intention of the parties, and the intention of his Honour when one reads his reasons, was for each party to largely retain assets they had brought into the relationship.  The main point of difference between the parties’ positions according to Mr Hedges was whether it should be the wife making a payment to the husband or the husband making a payment to the wife.  Ultimately, the husband was ordered to make the payment, but the overall structure of the orders was in general keeping with what the husband had wanted: he wanted to keep his properties, and he also seemingly wanted to keep the Suburb A property. 

7. According to the wife’s affidavit, having received the draft form of orders, a couple of days later, on 25 May 2016, the husband advised the court of concerns he had in relation to some of the terms of the orders.  These concerns were discussed at a telephone hearing before Walters J, and as a result of what was said on that occasion, (noting I have not been provided with a transcript), his Honour agreed to extend the time within which the husband had to make the payment to the wife.  It seems the draft orders provided for that payment to be made on 15 July 2016, but the orders, as ultimately made, required the payment to be made on or before 12 August 2016.

8. The ultimate form of orders made, seemingly not contested by the husband, was that he retain his properties and the Suburb A property, but the orders also contained default provisions requiring the sale of these properties in the event that he did not make the required payment on time or in the event he did not obtain the release of the wife from liabilities associated with the properties he was to retain.

9. Importantly, in my view, at no point in this process of discussing the form of orders did the husband seek that the proposed orders be varied so as to provide for what is known as a “rise and fall provision” to take into account the possibility that, in the event of him not making the required payment to the wife, the three pieces of property might sell for less or more than their ascribed value at trial.

10. The effect of the final orders was that the wife was guaranteed to receive the sum of $136,408, regardless of the sale price of the properties, and if they sold for less than their ascribed values, the husband would carry the loss, but if they sold for more, he would take the surplus.  The husband failed to pay the wife the $136,408 ordered, and he also failed to obtain her release from the relevant liabilities.  The husband puts this failure to comply with the orders down to the fact that at the time of trial, he had an offer for one of the properties which he had accepted, but which was subsequently withdrawn without him seemingly having any recourse against the proposed purchaser.  The orders made by Walters J, currently uncontroversially, provided for the wife to be appointed as trustee for sale of the three properties which the orders had anticipated would be retained by the husband, provided he made the required payment to the wife.

11. When the husband failed to comply with his obligations, the wife began the process of selling the properties.  There then followed numerous court hearings, which are described in the affidavits and which I will not seek to repeat here.  I consider the chronology is satisfactorily explained in the wife’s affidavit in response to the present application.  It is sufficient to say in summary that the husband appears to have attempted to prevent the sale of each of the properties at the prices proposed, but all have ultimately sold for less than the value ascribed to them at trial.  I note though the wife too sold an item of real estate to which she was entitled under the terms of the order, that is, the Suburb B property, and that property also did not realise the amount at which it had been valued. 

12. On the basis of the evidence before the Court, it is unknown whether other assets held by the wife, including a piece of real estate in the Eastern States, retained their value and, of course, it is unknown what amount she might receive if at some stage in the future she liquidates her remaining assets.

13. In any event, the husband now complains that as a result of these three properties selling for much less than was anticipated, he has received nothing like a 37.5 per cent share of the assets.  The husband submits that he would receive as little as 15 per cent of the overall assets; a long way short of what both the husband had hoped and what the primary judge intended to be his entitlement.  I emphasise though that those calculations do not take into account current values of the wife’s assets, which are unknown.  In sum, the husband asserts that the failure of the primary judge to fashion orders to prevent precisely this sort of outcome constitutes appealable error, and he seeks the opportunity for that argument to be advanced by the granting of leave to appeal more than two years out of time.

The law

1. Section 94 of the Act provides for appeals to the Full Court of the Family Court of Australia from courts other than the Federal Circuit Court and the Magistrates Court of Western Australia. Section 94(1A) provides as follows:

   An appeal under subsection (1) or (1AA) shall be instituted within the time prescribed by the standard Rules of Court or within such further time as is allowed in accordance with the standard Rules of Court.

2. Sections 94(2D) and (2F) are also relevant and state:

   (2D)    Applications of a procedural nature, including applications:

   (a)for an extension of time within which to institute an appeal under subsection (1) or (1AA);

   …

   may be heard and determined by a Judge of the Appeal Division or other Judge if there is no Judge of the Appeal Division available, or by a Full Court of the Family Court.

   …

   (2F)No appeal lies under this section from an order or decision made under subsection (2B) or (2D).

3. Chapter 22 of the Family Law Rules 2004 (Cth) deals with appeals, including how an appeal is to be commenced. Rule 22.03 provides that a Notice of Appeal must be filed within 28 days after the order appealed from is made. This appeal was not filed until June 2018, a long time after the 28 days had expired. Importantly though, r 1.14 deals with the extending of the time in which anything is to be done pursuant to the Rules, and provides:

   (1) A party may apply to the court to shorten or extend a time that is fixed under these Rules or by a procedural order.

   (2) A party may make an application under subrule (1) for an order extending a time to be made even though the time fixed by the rule or order has passed.

   (3) A party who makes an application under subrule (1) for an extension of time may be ordered to pay any other party’s costs in relation to the application.

4. Senior counsel for the husband refers to the well-known statement of the law set out by McHugh J in Gallo v Dawson (1990) 93 ALR 479 at 480:

   The grant of an extension of time under this rule is not automatic.  The object of the rule is to ensure that those Rules which fix times for doing acts do not become instruments of injustice.  The discretion to extend time is given for the sole purpose of enabling the court or justice to do justice between the parties: see Hughes v National Trustees Executors & Agency Co of Australasia Ltd [1978] VR 257 at 262. This means that the discretion can only be exercised in favour of an applicant upon proof that strict compliance with the rules will work an injustice upon the applicant. In order to determine whether the rules will work an injustice, it is necessary to have regard to the history of the proceedings, the conduct of the parties, the nature of the litigation, and the consequences for the parties of the grant or refusal of the application for extension of time: see Avery v No 2 Public Service Appeal Board [1973] 2 NZLR 86 at 92; Jess v Scott (1986) 12 FCR 187 at 194-5; 70 ALR 185. When the application is for an extension of time in which to file an appeal, it is always necessary to consider the prospects of the applicant succeeding in the appeal: see Burns v Grigg [1967] VR 871, at 872; Hughes, at 263-4; Mitchelson v Mitchelson (1979) 24 ALR 522 at 524. It is also necessary to bear in mind in such an application that, upon the expiry of the time for appealing, the respondent has “a vested right to retain the judgment” unless the application is granted: Vilenius v Heinegar (1962) 36 ALJR 200 at 201. It follows that, before the applicant can succeed in this application, there must be material upon which I can be satisfied that to refuse the application would constitute an injustice.

5. Lindenmayer J discussed applications for extensions of time in Joshua v Joshua (1997) FLC 92-767 and relevantly stated:

   The power of the Court to extend the time for the institution of an appeal is a discretionary power to be exercised when it is shown to the Court’s satisfaction by the applicant that strict compliance with the rules will work an injustice to the applicant: GallovDawson (1990) 93 ALR 479 at 480. Thus, as the Full Court of this Court said in Coombs and Moore (1990) FLC ¶ 92-175 at 78,189:

   “The Court, in our view, must have demonstrated to it by the applicant for an extension of time that an injustice will occur if the appeal does not proceed. It is not enough for the Court to have doubts about the propriety of the order sought to be set aside.”

   Accordingly, the first and most important question to be determined upon such an application as this is whether the applicant has established that there is a substantial issue to be raised on appeal.  If not, the application must fail.  If so, then other considerations may become relevant to the exercise of the discretion, namely: the extent of the delay and the reasonableness of any explanations offered for it; any hardship or prejudice flowing to the respondent from the applicant’s delay which cannot be compensated for by orders as to costs or otherwise: and the desirability, in the public interest, that there be finality to litigation. In that regard see also McMahon and McMahon (1976) FLC ¶ 90-038 at 75,144 and Tormsen and Tormsen (1993) FLC ¶ 92-392.

Discussion

1. I now need to turn my mind to the exercise of the discretion to extend the time within which to appeal, and as both counsel have said, I must first consider the merits of the proposed appeal, or in Lindenmayer J’s terms, whether there is a substantial issue to be raised on appeal.

2. Both counsel are in agreement that the law is well-settled in that it is generally appropriate when an order is being made for the sale of real estate or other property that there ought to be a rise and fall provision to take account of the fact that valuation is not a science, and that injustices can be done to parties in circumstances where properties do not realise on the market what it is hoped or expected that they might realise when the matter is being considered at trial.

3. In Waters and Waters (1981) FLC 91-019, the Full Court said at 76,208:

   (a) Generally, it is preferable to make orders which give to each party a percentage of the current value of the property rather than a fixed amount. This is especially so where a future sale is proposed as there may be delays in carrying into effect such an order.

   (b) It may well be proper to order a fixed amount in a particular case provided there is available a proper and recent valuation and it is clear from the orders that such an amount is to be paid within a relatively short period of time. If a later sale is provided in default of payment, the considerations referred to in (a) above would ordinarily apply in relation to an order for sale.

   (c) In any event, it is usually reasonable to include an order for interest at current rates to operate at least from the due date of payment.

4. Mr Berry SC also referred to a long line of authority, including cases such as Docters Van Leeuwen (1990) FLC 92-148 and more recently the case of Trask & Westlake (2015) FLC 93-662, which is referred to in the proposed grounds of appeal. There is no doubt that, as a generality, orders should contain a rise and fall provision, but I am not persuaded that that holds good in every case and I accept Mr Hedges’ submission that it is more appropriate to consider the particular circumstances of each case in deciding whether or not it is an appealable error for a judge to fail to include a rise and fall clause.

5. I have in hearing the argument this morning sought to distinguish between two different types of orders: (1) where there is a guaranteed sale of the property because that is either what the parties have asked for or because that is what the court of its own motion has determined; and (2) cases where one party seeks to retain items of property, but it is necessary to include a default provision because there is a balancing payment to be made, as was the case here.

6. I am not persuaded on the authorities that it is anywhere near as clear that in the second category of cases rise and fall provisions should be included because one party has effectively held up the other party by seeking time to retain a property, and it is only in the event of non-payment that a sale becomes relevant.  In my experience in this court it is not common for there to be a rise and fall provision in those circumstances, and I am certainly not aware of any authority to say that it constitutes appealable error in those types of cases for there not to be a rise and fall provision.

7. If I am wrong in that regard, I think it is also important to take into account that in this case, as in many others, both parties were retaining items of real estate.  Whilst they are a mixed bag, in that one of the properties the wife was retaining might be seen as being in the same market as the properties the husband was retaining, the other property was in a different market.  In this case, it is difficult to see how could it be absolutely necessary, or appropriate, or just and equitable, that there should be a rise and fall provision in relation to the sale of property owned by one party without there being provision made, for example, for such readjustment in relation to the property owned by the other party.

1. Another reason I consider there is not a substantial issue to be raised on appeal is that the parties were given adequate time in which to consider the terms of the orders.  Having said that, I recognise that these orders are complex and the husband was self-represented and would not have been as alert to these issues as a legal practitioner might have been.  Nevertheless, both parties were given time to consider the matter and hence time, if they elected, to obtain legal advice.  As Mr Berry properly conceded, having legal representation is a misfortune, not a privilege.  Further, as I have said, in the event a property sold for more than it was said to be worth at the time of trial, the husband would have taken the benefit of it and in that circumstance it is unlikely he would have complained.

2. Another reason why it was not erroneous for the judge not to include a rise and fall provision is that two of the properties the husband was retaining had some complexity associated with them; they were the subject of an agreement with a third party in relation to a subdivision, which seemingly had not yet been completed.  It is also not outside the realms of possibility in relation to a subdivision that things might be done to a property which may impact on the value of it quite apart from the impact of market forces.

3. For all of those reasons, I am not persuaded there is any appealable error or a substantial issue to be raised on appeal.  If I am wrong in that regard, and for the sake of completeness, I refer briefly to the other matters that would have been relevant in the event that I considered there was merit in the appeal. 

4. The first issue is the delay and any explanation for it.  The husband properly conceded the delay here is quite a long one.  Two years is a long time in the scheme of these sorts of applications.  I am not satisfied that there has been an adequate explanation for the delay.  The evidence allows a finding to be drawn that the husband sought legal advice in relation to an appeal as long ago as October 2016.  Counsel was consulted, albeit it seems rather perfunctorily, but the lawyers then representing the husband gave the question of an appeal consideration for which he was charged, and no appeal was lodged.

5. Instead there was a series of drawn out and expensive legal skirmishes which were founded on the assumption that the orders were appropriate, and the husband sought, no doubt for good reason, to stop the properties being sold.  All of this occupied time of the court, and more importantly, occupied time and expense of the wife. 

6. The history of the proceedings is another relevant matter and it does not assist the husband in seeking to obtain the indulgence he seeks this morning.

7. Another matter I need to consider is the question of hardship or prejudice.  I acknowledge and understand the husband’s complaint.  He has come out of this not as well as he had hoped, and to that extent he is prejudiced by not having an opportunity to readjust the property settlement.  In that regard, however, there is some substance in the submissions of the wife that given the short duration of the relationship and the way in which the arguments at trial were formulated, it is by no means guaranteed that if the appeal was successful and the matter was remitted, that the contributions would necessarily be assessed in the same way they were assessed at trial.

8. Even more significant is the matter of the hardship to the wife.  After spending a great deal of time and money dealing with the enforcement of the orders that had not been appealed, she is now met, not only by a s 79A application, which I have today learned has not yet been completed, but also the prospect of an appeal and consequent delay of not less than six months.  It is accepted both parties have health difficulties and allowing this application would give rise to a drawn out and expensive appeal.  If the appeal was allowed, given the current state of the matter, it is likely the matter would be remitted and the parties would go back to where they started.  They would then spend probably another couple of years, unless they settled the matter, litigating and expending their time and money.  This gives rise to the final issue I will mention; the matter of proportionality.  In my view, the cost, time and stress of further litigation on two mature people with health difficulties would be such that this would be a disproportionate exercise.

9. For all those reasons the application for an extension of time will be dismissed.

RECORDED; NOT TRANSCRIBED

Costs

1. The application before the Court now is that of the wife seeking the costs associated with her successful opposition to the husband’s application for an extension of time in which to appeal.  In support of the application, the wife relies upon the fact that the husband was wholly unsuccessful and points to the pool from which an order for costs could be met.

2. In response, the husband submits that the difference in the respective financial positions of the parties is such that the Court ought not depart from the default position that each party should meet their own costs.  He also argues that the application, although unsuccessful, was not frivolous. 

3. I accept the application was not frivolous – there was potentially some merit in the argument that was put.  It was however entirely unsuccessful and it comes on top of a variety of other pieces of litigation.  Whilst I understand the position of the husband, the fact that the application was wholly unsuccessful in the circumstances of this case persuades me it is appropriate to depart from the usual rule.  There will therefore be an order that the husband pay the wife’s costs of the application for an extension of time to be assessed if not agreed.

I certify that the preceding thirty-nine (39) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Thackray delivered on 29 August 2018.

Associate:

Date:  17 December 2018