Kyte and Yorke

[2016] FamCA 295

FAMILY COURT OF AUSTRALIA

KYTE & YORKE [2016] FamCA 295

FAMILY LAW – PRACTICE AND PROCEDURE – Stay of proceedings – Where the Court ordered a partial stay of proceedings pending determination of the husband’s appeal

Family Law Rules 2004 (Cth) r 19.04(5)

APPLICANT: Mr Kyte

RESPONDENT: Ms Yorke

FILE NUMBER: SYC 1097 of 2010

DATE DELIVERED: 3 May 2016

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Rees J

HEARING DATE: 21 April 2016

REPRESENTATION

SOLICITOR FOR THE APPLICANT: Stacks Law Firm

COUNSEL FOR THE RESPONDENT: Mr Kearney SC

SOLICITOR FOR THE RESPONDENT: Gayle Meredith & Associates

Orders

IT IS ORDERED

1. That order 4 made 18 March 2016 be stayed pending determination of the husband’s appeal against those orders.

2. That the net proceeds of sale of the property at G Street, H Town, after payment out only of agent’s commission, sale expenses, legal expenses referrable to the sale and the mortgage to St George Bank, be held in a controlled monies account jointly by the solicitor for the wife and the solicitors for the husband.

3. That the husband diligently prosecutes the appeal including, but not limited to, compliance with all directions.

4. That the wife’s application for enforcement of the orders made 18 March 2016 and the wife’s application for costs be listed before the docket registrar for directions.

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

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYC 1097 of 2010

Mr Kyte

Applicant

And

Ms Yorke

Respondent

REASONS FOR JUDGMENT

1. On 18 March 2016 judgment was delivered and orders made in an application for property settlement between Ms Yorke (“the wife”) and Mr Kyte (“the husband”).

2. The orders provided, inter alia, for the residential property owned and occupied by the husband at H Town (“H Town”) to be sold and the proceeds to be paid to the wife, after the discharge of the mortgage and selling costs. The orders also relevantly provided that the husband in his capacity as director of the trustee of a superannuation fund, liquidate the investments of the fund and pay the proceeds to the wife.

3. The husband now applies for a stay of all the orders made in relation to the sale of H Town and the liquidation of the superannuation funds and consequent payment of the proceeds to the wife, pending the disposition of an appeal against those orders.

4. The wife opposes the application for a stay.

5. At trial, Senior Counsel for the husband submitted that the assets of the parties should be divided equally and that there should be no further adjustment for s 75(2) factors.

6. The wife sought a greater distribution in her favour including orders for the sale of H Town and the payment of the proceeds of sale to her.

7. The reasons for judgment record a finding that the parties’ contributions to the date of trial were equal and awarded a further adjustment of 7.5 percent to the wife for s 75(2) factors.

8. The husband’s appeal, because of the concessions made at trial, must necessarily be limited to an appeal against the 7.5 percent adjustment. There is no appeal against the quantification of the net asset pool at $2,937,359. Therefore the amount in dispute in the appeal is approximately $220,302 or a differential of $440, 604.

9. It is necessary here to observe that the trial was conducted by the wife on the basis that there had been significant and ongoing lack of disclosure by the husband and wilful failure on his part to comply with orders of the court, including orders restraining him from disposing of assets and orders requiring disclosure. Significant findings are made in the judgment about the husband’s failure to disclose, failure to comply with orders for disclosure, use of funds contrary to orders and reliance on documents that he knew to be inaccurate.

10. Costs disclosure letters were provided by both parties in the course of the trial. The husband’s outstanding costs to Stacks Law Firm were included in the joint balance sheet at $183,895. Rule 19.04(5) of the Family Law Rules 2004(Cth) require that costs disclosure letters specify “the source of funds for the costs paid or to be paid unless the court orders otherwise”.

11. The husband was at all times represented by Mr Fryatt of Stacks Law Firm, I Town who appeared before me on the stay application.

12. At trial, there was a mortgage registered over H Town by St George Bank (“St George”) in the sum of $231,604.

13. What was not disclosed at trial, either to the wife or to the Court, was that shortly before the commencement of the trial, the husband executed a mortgage over H Town in favour of his solicitors, for a consideration of $183,000. That matter only became apparent when it was disclosed in an affidavit of the husband sworn 20 April 2016, the day before the stay application was heard. The husband deposed:

    I have received an account from Stacks Law Firm dated 29 February 2016 in the amount of $178,666.84 which is annexed and marked “B”, which I am unable to pay. I have however signed a second mortgage to Stacks, a copy of which is annexed and marked with the letter “C”  

14. The mortgage is apparently unregistered. The copy annexed to the husband’s affidavit is not stamped. Also annexed is a caveat apparently lodged to support the mortgage.

15. Mr Fryatt told the Court that the mortgage had been prepared before the commencement of the trial; that it had been prepared in his office; that he was aware of the existence of the mortgage both before and during the trial; that he was aware of the husband’s obligation to disclose the existence of the mortgage in the course of the trial and that he was aware of his own obligation to ensure that the existence of the mortgage was disclosed.

16. Mr Fryatt told the Court that his failure to comply with his obligations and duty as an officer of the Court was “a mistake”.

17. I do not accept that explanation.

18. Mr Fryatt knew of the existence of the mortgage. He knew what his obligations were. He must have made a decision to withhold that information from the Court. In addition to those obligations, there was an obligation imposed by the Rules upon Mr Fryatt to disclose the source of funds from which the husband’s outstanding costs were to be paid, in this case, the mortgage.

19. In his affidavit the husband deposed:

    Should this Honourable Court grant the orders that I seek in my Stay Application, I propose that [H Town] be sold and the proceeds used to pay the mortgage to St George Bank and to pay out the second mortgage to Stacks.

20. The payment of some $232,000 to St George and a further $183,000 to Stacks Law Firm would have the effect of consuming most of the equity in H Town, valued at trial at $492,000, and frustrating the intention of the orders of 18 March 2016.

21. The husband’s application is to stay those orders which provide for the sale of H Town and the distribution of the proceeds of sale. The equity in H Town, after payment to St George, is approximately $260,000 which is more than the disputed 7.5 percent adjustment in favour of the wife and sufficient to ensure that the husband’s appeal is not rendered nugatory.

22. It is appropriate to stay such of Order 4 made on 18 March 2016 as requires the payment of the net proceeds of sale of H Town to the wife.

23. Further I propose to order that the proceeds of sale, after payment only of costs of sale and the discharge of the mortgage to St George, be held in a controlled monies account jointly by the solicitors for the wife and the solicitors for the husband pending determination of the appeal.

24. This order assumes that the mortgage in favour of Stacks The Law Firm has not been registered and that Stacks The Law Firm will remove the caveat over the title of H Town. If those assumptions are incorrect, the matter can be re-listed before me on the appropriate application.

25. The husband also seeks an order that he be permitted to draw $1,200 per week from the superannuation fund, pending further order. The basis on which that order is sought is not clear. How this could be an order which is a condition of the stay is not apparent. The application can only be construed as an application for the provision of support for the husband in circumstances where the court has already determined the financial claims between the parties.

26. It is not necessary to stay the balance of the orders made to protect the husband’s position on appeal. The wife has superannuation entitlements in excess of $700,000 to which she does not have access and which are available in the event that any amount is required to be paid by her to the husband, consequent on the determination of the appeal.

27. The husband should be required to prosecute his appeal diligently. It will be a condition of the stay that he does so. However, having regard to the nature of the proceedings and the heavy burden upon the Full Court, he is not required to apply for expedition of the Appeal.

I certify that the preceding twenty-seven (27) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Rees delivered on 3 May 2016.

Associate: 

Date:  3/5/2016