Khalif and Khalif and Anor (No 2)

[2020] FamCA 73

FAMILY COURT OF AUSTRALIA

KHALIF & KHALIF & ANOR (NO. 2) [2020] FamCA 73

FAMILY LAW – Stay – Application by the 2^nd Respondent to stay orders made.

FAMILY LAW –Apprehended Bias – Application by the 1^st respondent that the Judge recuse himself from hearing outstanding applications.

Family Law Act 1975 (Cth)
Family Law Rules 2004 (Cth) r 13.07

British Amercian Tobacco Australia Services Ltd v Laurie (2011) 242 CLR 283; [2011] HCA 2
Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337; [2000] HCA 63
Jackson & Balen [2009] FamCAFC 131

APPLICANT: Ms Khalif

1^st RESPONDENT: Mr Khalif

2^nd RESPONDENT: Mr B Khalif

INDEPENDENT CHILDREN’S LAWYER: Ms Weate

FILE NUMBER: SYC 6144 of 2016

DATE DELIVERED: 12 February 2020

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Watts J

HEARING DATE: 12 February 2020

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Lloyd SC

SOLICITOR FOR THE APPLICANT: Jordan Djundja Lawyers

COUNSEL FOR THE RESPONDENTS: Mr Robinson SC

SOLICITOR FOR THE RESPONDENTS: Aquila Lawyers Pty Ltd

SOLICITOR FOR THE INDEPENDENT CHILDREN’S LAWYER: Jennifer Weate & Associates

Orders

1. …

2. …

3. …

4. By consent and pending further order, orders are made in the terms of paragraphs 4, 5, 6 and 7 of the wife’s Application in a Case dated 11 February 2020 as follows:

   (a)The respondents be forthwith restrained by injunction from selling, mortgaging, encumbering or in any way dealing with their interest in the property situated at C Street, Suburb D (“the Suburb D property”) other than in accordance with the orders of Watts J made on 31 January 2020

   (b)The respondents forthwith be restrained by injunction from altering, modifying, removing, damaging and/or destroying any part of the residential dwelling on the Suburb D property

   (c)The respondents forthwith be restrained by injunction from altering, removing, modifying, damaging and/or destroying any fixture which is contained within the residential dwelling of the Suburb D property

   (d)The respondents forthwith be restrained by injunction from removing, modifying, damaging and/or destroying any fitting contained within the residential dwelling of the Suburb D property.

5. …

6. …

7. By consent, order 2 made 31 January 2020 is stayed.

8. I note that the 2^nd respondent does not press his application for a stay of order 4 made 31 January 2020.

9. The 2^nd respondent’s application for a stay of order 3 made 31 January 2020 is dismissed.

10. The 2^nd respondent serve a copy of these Reasons and Orders upon the husband’s Trustee in Bankruptcy as soon as is practicable and the Trustee in Bankruptcy, if he wishes, has leave within a period of 21 days from service of the order refusing the stay and the Reasons, to make an application for a relisting to be heard in respect of any application he wishes to make in relation to orders 7 and 9.

11. I recuse myself in relation to further hearing the parenting matter between the husband and wife and from hearing the applications for final property settlement orders between the wife and either the husband’s Trustee in Bankruptcy and/or the husband.

12. I will refer the matter to the Case Management Judge for the allocation of a different judge to complete that hearing.

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 Khalif & Khalif and Anor 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).

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYC 6144 of 2016

Ms Khalif

Applicant

And

Mr Khalif

1^st Respondent

And

Mr B Khalif
2^nd Respondent

EX TEMPORE REASONS FOR JUDGMENT

Application to stay order 3 made 31 January 2020

1. The 2^nd respondent makes an application that order 3 made 31 January 2020 be stayed. The wife opposes that application.

2. The other interested party in this application is the husband’s Trustee in Bankruptcy. He has not been notified of the 2^nd respondent’s application for a stay and indeed, given the husband has not complied with order 5 made 31 January 2020, he does not even know about the orders that were made on that day. I intend to proceed with the stay application on the basis that if the Trustee in Bankruptcy wishes to revisit orders 7 and 9 made on this day, he will have liberty on 21 days’ notice of having received a copy of the order to make an application to have the matter relisted so he can be heard in relation to those matters.

3. On 7 February 2020 the 2^nd respondent filed a Notice of Appeal against the orders made 31 January 2020. On 11 February 2020, the 2^nd respondent filed an Application in a Case which originally sought a stay of orders 2, 3 and 4 made 31 January 2020 until final determination of the applicant’s appeal. By consent, on the application of the 2^nd respondent, the wife has agreed to an order which stays order 2 made 31 January 2020 (order 7 made this day). The 2^nd respondent has indicated that the he does not press an application for a stay in relation to order 4 made 31 January 2020.

4. In relation to the application for a stay in respect to order 3, to put that order in context, the relevant orders made on 31 January 2020 are:

   (1)The 2^nd respondent is declared to hold 61.5 per cent of the beneficial interest in C Street, Suburb D (“the C Street property”) in trust for the husband.

   (2)The 2^nd respondent is to do all things and sign all necessary documents to transfer to the husband, as a tenant in common, 61.5 per cent of the legal interest in the C Street property.

   (3)The 2^nd respondent is to do all things and sign all necessary documents to discharge any mortgage or encumbrance on the C Street property so that any mortgages or encumbrances secured on the C Street property do not exceed 38.5 per cent of the value of the C Street property.

   (4)The 2^nd respondent indemnify the husband in relation to any mortgage or borrowing secured against the C Street property.

   (5)That the husband forthwith give his Trustee in Bankruptcy notice of these orders and a copy of these Reasons.

5. In the stay application, the 2^nd respondent does not seek to interfere with the declaration made 31 January 2020 that the 2^nd respondent holds 61.5 per cent of the beneficial interest in C Street, Suburb D in trust for the husband. No stay is now sought in relation to order 4. The stay of order 2 shall relieve the 2^nd respondent from any immediate obligation of transferring 61.5 per cent of his legal interest in the C Street to the husband as tenants in common. What remains outstanding is an objection by the 2^nd respondent to being required to discharge any mortgage or encumbrance on C Street that exceeds 38.5 per cent of the value of the property prior to the outcome of the hearing of the appeal in the Full Court.

6. The 2^nd respondent relies upon an affidavit of the solicitor for the 2^nd respondent in support of the stay application, filed and sworn 11 February 2020 and written and oral submissions by senior counsel for the 2^nd respondent. As I indicated during the oral submissions, any information that was attempted to be put before the court from the bar table will not be taken into account by me and I will be dealing with the matter on the evidence filed in support of the application, findings in the Reasons for Judgment dated 31 January 2020 and the contents of the Notice of Appeal. The affidavit in support of the stay application is very short. It does nothing more than record that a Notice of Appeal has been filed and purports to annex a copy of the Notice of Appeal (although that document is not annexed to the copy of the affidavit I have). That is of no consequence as I have a copy of the Notice of Appeal.

7. The normal considerations when granting stays are conveniently set out at [28] of the Full Court’s judgment in Jackson & Balen [2009] FamCAFC 131:

   The principles to be applied in hearing a stay application pending an appeal are well settled (see Federal Commissioner of Taxation v Myer Emporium Ltd [No.1] (1986) 160 CLR 220 at 222; Alexander v Cambridge Credit Corporation Ltd (1985) 2 NSWLR 685; Jennings Construction Ltd v Burgundy RoyaleInvestments Pty Ltd (1986) 161 CLR 681). Those 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 husband for the stay. However it is not necessary for the husband 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 application must be bona fides;

   ·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.

   (As per the original)

8. The onus is on the 2^nd respondent to establish a proper basis for the stay. The wife is entitled to obtain the benefit of the judgment and presume the judgment is correct and the mere filing of the appeal is insufficient to grant the stay.

9. No question is raised by the wife in relation to bona fides of the 2^nd respondent in bringing the appeal.

10. The 2^nd respondent asserts in the written submissions that the underlying basis of the stay application is that if order 3 were implemented, the appeal would, to use the words of senior counsel for the 2^nd respondent, be futile, or to use the more usual expression, the implementation of that order would render the appeal against order 3 nugatory. The 2^nd respondent submits that he merely seeks to preserve the status quo while he conducts his appeal and asks that he not be put to the trouble of reorganising his financial affairs.

11. It was also asserted in the submissions that there is a risk that the C Street property could be lost if the stay is not granted. I am unable to understand how that submission has any merit in relation to the application to stay order 3.

12. I take into account the orders that have been made, pending further order by consent today (order 4).

13. The previous relevant order that was made in relation to the C Street property was order 8 made 31 May 2018 which was in the following terms:

    Pending further order and until 4.30pm 9 November 2018, the 2^nd respondent is restrained from selling, encumbering or in any way dealing with the property at C Street, Suburb D.

14. The 2^nd respondent has given me no evidence in the context of the stay application as to whether or not there have been any other movements in relation to the security held by a financial institution over C Street between 9 November 2018 and the current date, nor has the 2^nd respondent provided any information about his current financial position. What I relevantly know about his financial circumstances is fairly scant. Firstly, at [83], [85] and [86] I record some details about the encumbrance on the C Street property, including by 15 May 2010 the loan facility was $946,349; at paragraph [85] I record that by 14 November 2011 the loan facility on C Street had been reduced to $10,732 and at [86] I record:

    In 2013, the loan facility on the C Street property was formally discharged although that facility had been paid out at an earlier time. The 2^nd respondent subsequently moved debt of about $1 million that was associated with his business at Suburb Q to be secured against the C Street property. That left the Suburb Q asset unencumbered.

15. In addition at [156] of the Reasons, I record that as at May 2009, the 2^nd respondent’s net worth was $10,340,000 consisting of assets of $21,750,000 and liabilities of $11,410,000.

16. It is unclear to me as to why the 2^nd respondent asserts that an implementation of order 3 would render the appeal nugatory. The 2^nd respondent simply does not set out any evidence in support of that assertion. There is no evidence as to the current financial circumstances of the 2^nd respondent and that makes it impossible for me to make any finding in the 2^nd respondent’s favour that an implementation of order 3 would be onerous or even mildly inconvenient.

17. Any application for a stay also usually involves some preliminary assessment of the strengths of the proposed appeal. The 2^nd respondent submits that the grounds of appeal are fully set out in the Notice of Appeal and that the Notice of Appeal is not “a holding document”. My overall preliminary assessment of the strengths of the grounds set out in Notice of Appeal is that they are not strong. It seems to me that a number of assertions in the Notice of Appeal are based upon a misreading of parts of the Reasons.

18. For those reasons, the 2^nd respondent’s application for a stay of order 3 made 31 January 2020 shall be dismissed.

Husband’s application that I recuse myself

1. As I have said, the husband’s Trustee in Bankruptcy does not yet know about the Reasons for Judgment and the orders of 31 January 2020. The Trustee has an interest in this application. 

2. The 1^st respondent makes an application that I recuse myself from further hearing the outstanding applications between the husband and wife in respect of parenting issues and he also suggests that I should recuse myself in relation to hearing further matters involving his Trustee in Bankruptcy and the wife in relation to property matters. His standing to make that suggestion might be questionable however I can entertain that suggestion on my own motion in any event.

3. In the context of proceedings between the husband and wife pursuant to s 79 Family Law Act 1975 (Cth), I had an application by the wife against the 2^nd respondent who is the husband’s brother, for a declaration that the 2^nd respondent holds a beneficial interest in the property a C Street, Suburb D in trust for the husband and an application for consequential orders. By Reasons for Judgment delivered 31 January 2020, orders were made in the wife’s favour and against the 2^nd respondent. Order 6 made 31 January 2020 is in the following terms:

   The matter be relisted on 12 February 2020 at 9 am for further directions in relation to the wife’s claim pursuant to s 79 of the Family Law Act 1975 (Cth). I shall also on that date entertain any application, if made, that I recuse myself from further hearing the substantive proceedings between the husband and wife both in relation to financial and parenting issues.

4. The wife did not make any such application nor did she wish to be heard in relation to the husband’s recusal application. The ICL also did not wish to be heard in relation to the recusal application.

5. In the Reasons for Judgment published 31 January 2020, adverse findings are made against the husband, including the following:

   52.The wife also challenged the credibility of the husband.

   53.The husband claimed in records for J Pty Ltd prepared for taxation purposes, that he paid rates and land tax, and repairs and maintenance, notwithstanding, that the company owned no buildings or real estate. The husband has not indicated how those claims were made. The wife gave evidence that the husband had told her that “I will claim the payments to [the 2^nd respondent] as rent for [the C Street property]”. I accept that the husband claimed substantial deductions to which he was not entitled.

   54.Relevant parts of the husband’s company’s financial records are unexplained. I find that they are unreliable.

   55.The husband deposed on his oath in his trial affidavit that “My brother made his own arrangements with the real estate agent to sign the contract for sale [of the C Street property]. This had nothing to do with me”. This was clearly false. The husband witnessed his brother’s signature on the contract.

   56.I have no confidence that I can rely upon the husband’s evidence. I am not prepared to accept the husband’s evidence where it conflicts with the evidence in the wife’s case, unless I conclude there is objective evidence which allows me to do so.

   119. I prefer the evidence of Mr K in preference to the evidence of the 2^nd respondent where it is in conflict. I find that Mr K dealt with the husband and wife in respect of the acquisition of the C St property and the price to be paid for the C St property. I do not accept the husband and the 2^nd respondent’s versions about how the C St property was found and how the interactions with the real estate agent took place, where those versions conflict with that of the wife and Mr K.  

6. The test is whether a fair-minded lay observer might reasonably apprehend that a decision-maker might not bring an independent mind to the resolution of the issues to be decided (Ebner v Official Trustee in Bankruptcy (2000) 205 CLR 337 at [33]).

7. In my Reasons I came to a clear view about the credit of the husband. I accept that a fair-minded lay observer might reasonably apprehend that I may not be inclined to depart from that view in a subsequent hearing. As the plurality of the High Court said in British American Tobacco Australia Services Ltd v Laurie (2011) 242 CLR 283 at [139], the apprehension of the fair-minded lay observer is taken to be based on a recognition of how human nature works.

8. In the circumstances outlined above, I shall recuse myself in relation to further hearing the parenting matter between the husband and wife.

9. From a case management point of view, I am of the view that splitting the property and parenting matters would not be in the interests of the parties or the reasonable management of the business of the court and consequently, I shall also recuse myself from hearing the application for final property settlement orders between the wife and either the husband or the husband’s Trustee in Bankruptcy. I will refer the matter to the Case Management Judge for the allocation of a different judge to complete that hearing.

I certify that the preceding twenty-seven (27) paragraphs are a true copy of the ex tempore reasons for judgment of the Honourable Justice Watts delivered on 12 February 2020.

Associate: 

Date:  13.2.2020