Koch & Kest (No. 2)

[2021] FamCA 510

FAMILY COURT OF AUSTRALIA

Koch & Kest (No. 2) [2021] FamCA 510  

File number(s):

SYC 8089 of 2018

Judgment of:

GILL J

Date of judgment:

13 July 2021

Catchwords:

FAMILY LAW – PRACTICE AND PROCEDURE – Application for stay pending appeal of property orders – Whether failure to grant stay would render appeal nugatory – Consideration of financial hardship – Application for stay refused.

Legislation:

Family Law Act 1975 (Cth) s 117

Evidence Act 1995 (Cth) s 81

Cases cited:

Aldridge & Keaton [2009] FamCAFC 106

Colgate-Palmolive Co v Cussons Pty Ltd (1993) 118 ALR 248

Commissioner of Taxation v Myer Emporium Ltd (1986) 160 CLR 220

Number of paragraphs:

25

Date of hearing:

13 July 2021

Place:

Canberra

Solicitor for the Applicant:

Browns the Family Lawyers

Counsel for the Respondent:

Mr Rosic

Solicitor for the Respondent:

Diana Perla & Associates

ORDERS

SYC 8089 of 2018
BETWEEN:	MR KEST Applicant
AND:	MS KOCH Respondent

ORDER MADE BY:	GILL J
DATE OF ORDER:	13 JULY 2021

THE COURT ORDERS THAT:

1.The husband’s Application filed 29 June 2021 seeking a stay is refused. 

2.The husband pay the wife's costs in relation to the Application filed 29 June 2021 as agreed or as assessed.

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 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to 17.02 Family Law Rules 2004 (Cth).

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

EX TEMPORE REASONS FOR JUDGMENT

GILL J

1. This is an application by the husband for a stay of orders made by me that relate to the transfer of title of a property to the wife, the payment of a sum of money to the wife and the payment for a defined period of spousal maintenance to the wife pending an appeal of those orders to the Full Court. 

2. The leading case in relation to the granting of such stays is Aldridge & Keaton [2009] FamCAFC 106 which emphasises that the decision to grant a stay is a discretionary decision and the court is to determine that on principles whereby the onus to establish the basis for a stay is on the applicant for a stay, where the respondent is entitled to the benefit of a judgment that is presumed to be correct, where the mere filing of an appeal is not a sufficient basis for the granting of a stay, where the court is to assess the bona fides of the applicant and the terms on which a stay might be sought.

3. The substantial ground the court is to consider is whether or not the failure to grant a stay would render an appeal nugatory which implicitly requires the court to consider the hardship for each of the parties which flows from either granting or not granting a stay and, as explained in Myer Emporium,[1] relates to an assessment of whether or not there is a real risk that it is not possible for the applicant to be restored substantially to their former position should they succeed on appeal.  The court is to consider the strength of the appeal, in particular whether there is an arguable case made by the applicant and the timing of any application made by the applicant. 

   [1] Commissioner of Taxation v Myer Emporium (1986) 160 CLR 220.

4. Although there was some questioning of the bona fides of the application, the dispute between the parties centred on the issues as to whether or not the failure to grant a stay would render the husband's appeal nugatory or would result in hardship to the wife and to the strengths of the case put forward by the husband. 

5. The husband centres his application on the proposition that he will lose his current residence if the present orders are enforced in advance of the hearing of the matter by the Full Court.  His assertion is that it will be necessary for him to dispose of the Suburb H property and then acquire more finances in order to pay the cash portion of the settlement to the wife.  Although at some points he asserted that it would be inevitable should the orders be upheld or should there be no stay granted that he would lose the Suburb H property in which he currently lives there was some prevarication on his part as to that in his sworn material.  While at some instances he said that it would be definite that a sale would take place, at [22] he reduced that to it “will almost certainly be sold”.[2]  That matter was perhaps somewhat undermining of his assertion, but those differences would need to be treated with some care.  Of greater importance is that the husband disclosed no enquiries made by him as to his capacity to raise the funds without a sale of the Suburb H property. 

   [2] Affidavit of Mr Kest filed 29 June 2021.

6. The husband also spoke to psychological impact upon him if the home is sold, although he did not provide support for the propositions that he raised. 

7. What he did in support of his application for a stay is that he offered as a term of the stay that he would pay part of the expenses, or part of the loan expenses, of the Suburb G property, which is currently occupied by the wife and which as a term of the orders is to be transferred to her.  He asserts in general terms that if he was to do this both of the parties’ positions would be kept somewhat in stasis and he would preserve the possibility to retain the Suburb H property if he was successful on appeal. 

8. In carefully prepared submissions he argued in written form that the fruits for the wife of the judgment should be identified as the making of the cash payment there prescribed of $264,000 and the making of spousal maintenance payments at $800 per week.  As a result of this he asserted that what would be caused by a stay would be mere delay of these matters rather than frustration of the orders in favour of the wife.  He asserted that on compliance with the terms that he offers that the wife would continue to benefit from the occupation of the Suburb G property pending the appeal.  In his oral submissions he conceded that the fruit of the judgment to be accorded to the wife is to both receive and retain the Suburb G property not merely to receive a cash payment. 

9. These are matters of which the wife will be deprived of the immediate enjoyment with such being delayed and potentially causing further erosion of what are parlous financial circumstances faced by the wife.  As to the terms offered by the husband he asserted that the terms of which he offered would allow her continued occupation.  The evidence is firstly suggestive that the wife lacks the means to secure her ongoing occupation and would thereby be reliant on the payment of the mortgage expenses by the husband.  The husband offered to pay certain, but only part of those mortgage expenses.  The wife would then be reliant upon him being compliant with the conditions of the stay which required him to do so. 

10. It must be said that I have no confidence that the husband would do so.  In the substantive judgment in this matter I observed the husband's egregious non-compliance with previous orders made by Justice Henderson in interlocutory proceedings between the parties that required him to meet the expenses of the Suburb G property pending the trial.  He simply disregarded those orders, which although made on 12 July 2019 were not complied with at any stage up until the delivery of judgment in this matter approximately two years after that date.  It can be seen then that the husband's previously non-compliant conduct means that there is no reasonable grounds to be confident that such order or such term of a stay will be complied with by him, the consequence that it may be expected that the wife would be required to return to the court to seek a discharge of the stay to then enjoy the fruit of the orders which she currently is to enjoy.  In the meantime, pending the resolution of those matters, the wife will continue in a parlous financial circumstance with potentially worsening circumstances with the bank given her difficulties in seeking to finance the ongoing expenses of the Suburb G property absent receiving the fruits of the judgment to which she is entitled.

11. In relation to the spousal maintenance it is asserted there would be no loss to the wife if it is not paid pending the appeal of this matter because of the impact on the wife’s social security payments and because of the husband's commitment that he offers to pay $333 per week towards the wife’s mortgage expenses. 

12. The submission is reasonably made where the wife has asserted that her social security will be adjusted because of the spousal maintenance and that she will be no better off if the spousal maintenance is paid.  That is certainly what she appeared to say in her affidavit but it is also palpably clear that the spousal maintenance that she is to be paid by the husband is greater than her whole receipts from social security, incorporating both means tested amounts and any non-means tested amounts that may be contained therein.  Hence, it must be taken despite the wife's assertion in her affidavit that she would be in a worse position without the payment of spousal maintenance unless the husband was to pay, as he represents that he will, a matter the doubt about which I have already expressed.

13. Before concluding from these matters issues relating to the balance of hardship or whether or not the failure to grant a stay would render the appeal nugatory I will turn to the strength of the appeal. 

14. I note that I am not hearing the appeal but am assessing whether there are arguable prospects on the grounds that are being proffered. 

15. The first two of the grounds relate to the nexus between the family violence that I found that the husband had perpetrated upon the wife and the rendering of her contributions more onerous. I identified that the authorities require evidence to establish that the family violence had a discernible impact or that there was a nexus between the family violence and an impact upon the rendering of a contribution by the wife. I identified that the wife did not provide such evidence, although she established that the family violence had occurred. I identified the evidence which, in the absence of that evidence from the wife, still established such a nexus or discernible impact. Despite what was asserted in support of the ground, the judgment was not a mere assumption as to an asserted impact of the family violence but was founded on a permitted use of the evidence of what the father had said to his psychiatrist about the matter as being an admission against interest pursuant to s 81 of the Evidence Act 1995. 

16. The third ground related to my declining to add back a sum drawn down by the wife from the parties’ joint funds following separation.  It was suggested that there was no evidence as to the disposal of the portion of those funds by the wife.  There was evidence led during the trial, which was identified by me in the judgment.  I identified the weaknesses within that evidence but held that it was sufficient to conclude that it was not such as to justify adding back the disposal of those sums against the wife. 

17. The fourth ground related to my findings in relation to the husband's use of joint funds and that those justified an adding back of his disposal of funds taken at the end of the relationship.  It should be observed that contrary to submissions I did not add back legitimate expenditure undertaken by the husband.  I specifically did not accept that that was the use to which he applied those funds in the context of the other funds that he had had available to him.  I determined that he had used the funds that I determined should be added back to engage in his self-described lavish lifestyle as a premature distribution of those funds.  Ground four as stated and as explained misrepresented what was contained in the judgment. 

18. The fifth and sixth grounds related to the findings pertinent to spousal maintenance as did the seventh ground.  There was complaint regarding the assessment made as to the requirements of the wife to have support.  I observed in the judgment that she had established a shortfall to her of $1,200 per week.  She however made a claim of only $800 per week.  I determined that it was appropriate that her claim should be lower than the $1,200 per week, that is lower than her asserted shortfall, for the very reasons that it was suggested were not taken into account, which included her capacity to engage in some employment and the appropriation of some of those expenses for her adult children.  Specifically, I took into account the issue of the wife not being in current employment but there being potential for her to engage in employment.  The final of those grounds related to the husband's capacity to provide support where the orders would require the sale of his home and his acquiring of another funds to meet the orders in relation to the wife.  Again, the orders that were applied upon him were specifically taken into account, his capacity to pay was carefully assessed and found not to accord with the representations that he had made in his evidence. 

19. I do not assess the appeal grounds as particularly strong, although I accept that a Full Court may take a different view on a full exploration of matters.

20. I return then to the question as to whether or not a stay should be granted.  As observed by counsel for the wife, the onus is on the husband to establish the appropriateness of the granting of a stay.  To do so here he relies primarily upon the hardship that will be accorded to him if a stay is not granted, that being a financial hardship.  Yet, as submitted by counsel for the mother, he clouded the financial position that he brought before the court.  He did not bring corroboration but made bare assertions in the context where at trial there were severe doubts raised as to his credibility in respect of financial matters.  That is, in coming before me and seeking a stay it is certainly not clear what his financial position is in truth.  That weakness was exacerbated by his failure to make any enquiries that he set before the court to establish the certainty of disposal, being a disposal that it appeared that he also prevaricated about.  Hence, the result which he says justifies a stay is an asserted result, not a demonstrated result on his part.  Further, if one was to take his financial circumstances as he asserted, then there are strong concerns arising from a delay in the wife receiving the receipt of her judgment in that her ultimate receipt of that judgment, should she be successful in resisting the appeal, is prejudiced.  His assertions as to his finances as brought before the court demonstrate a significant depletion of his circumstances from those that were agreed and found at trial.  Without explanation he now asserts that the business that at trial had an agreed value of $200,000, today has a value of only $10,000.  How or why or what has happened to the business was a subject of no explanation by the husband but leaves open the spectre that should there be a delay in the wife receiving the judgment there may be no receipt of that judgment by her at all. 

21. Finally, the husband sought a stay to be justified on the basis of terms.  There can be no satisfaction given his previous non-compliance with orders of this court that he would comply with terms as repeatedly he has not in the past.  That would leave the wife then in a worse position than she is now.  She would be required then to seek a discharge of the stay, all the while having her financial circumstances worsened.

22. While it is true that the benefit of spousal maintenance to the wife is limited it is a benefit of significance in her parlous position.  She should not be deprived or delayed of that due to what are clouded financial circumstances put forward by the husband.  In the exercise of the discretion the stay will not be granted.  I am not satisfied that it will render the husband's appeal nugatory due to the lack of clarity as to his financial circumstances.  I am not satisfied that it will do other than prejudice the wife's receipt of the fruits of the judgment.  I am not satisfied that the husband will comply with the terms that he offers and I am not satisfied that the terms that he offers would have been sufficient in any event.  Accordingly, it is ordered that the application for a stay is refused. 

    COSTS OF THE STAY APPLICATION

23. In this matter the wife seeks the costs of the stay application on an indemnity basis, being the seeking of $6,800 for the costs that she has actually incurred with her solicitor, along with counsel's fees.  No matters were identified as to bring this within the rare circumstances that justify the making of an order for indemnity costs set out in the case of Colgate-Palmolive Co v Cussons Pty Ltd (1993) 118 ALR 248. There are strong reasons however to make an order for costs in the more usual terms.

24. I note that the starting position is that parties are each to bear their own costs unless there are justifying circumstances providing otherwise pursuant to s 117 of the Family Law Act. The parties’ financial positions are before the court and as I have observed the wife is in parlous circumstances while the husband is in clouded circumstances. The particular matter which is pivotal in determining this matter is the lack of success on the part of the husband in pursuing his application for stay. That is, he has made an application in which he has been wholly unsuccessful. That matter, in the general circumstances of the parties, taking into account the matters contained at s 117 is sufficient to justify an order for costs on the usual basis.

25. Accordingly, it is ordered that the husband pay the wife's costs as agreed or as assessed.

I certify that the preceding twenty-five (25) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Gill.

Associate:

Dated:       13 July 2021