Lesley and Lesley (No 2)

[2015] FamCA 1194

FAMILY COURT OF AUSTRALIA

LESLEY & LESLEY (NO. 2) [2015] FamCA 1194

FAMILY LAW – PRACTICE AND PROCEDURE – Stay – Where the husband seeks a stay of interim property orders pending determination of his appeal by the Full Court – Application for a stay dismissed in respect to payment of an interim property settlement to the wife – Conditional stay granted in respect to payment of the wife’s legal fees.

Family Law Act 1975 (Cth)

Jackson & Balen [2009] FamCAFC 131

APPLICANT: Mr Lesley

RESPONDENT: Ms Lesley

FILE NUMBER: SYC 1313 of 2015

DATE DELIVERED: 10 December 2015

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: McClelland J

HEARING DATE: 10 December 2015

REPRESENTATION

COUNSEL FOR THE APPLICANT: Ms Murphy

SOLICITOR FOR THE APPLICANT: Caroline Chung & Associates

COUNSEL FOR THE RESPONDENT: Mr White SC

SOLICITOR FOR THE RESPONDENT: Michael Conley Lawyers

Orders

The Court Orders that:

1. The applicant husband’s oral application to amend his Application in a Case filed on 23 November 2015 to include a Stay of Order 1 of the Orders made on 23 October 2015, is granted.

1. The applicant husband is granted leave to rely upon the affidavit of Mr Lesley filed 9 December 2015.

The Court further Orders that:

1. The oral application made in Court today on behalf of the applicant husband by his counsel that Order 1 of the Orders made on 23 October 2015 be stayed pending determination of the Appeal is dismissed.

1. Order 2 of the Orders made on 23 October 2015 is stayed on the following conditions:

   a.   That on or before 23 January 2016 the applicant husband is to pay to the respondent wife’s solicitors an amount equivalent to the amount which he has paid for legal costs and/or disbursement related to these proceeding to date; and

b.   That within 7 days of any monies being paid by or on the behalf of the applicant husband for legal costs and/or disbursements in relation to these proceedings, (but excluding the costs of any single expert) the applicant husband shall pay an equivalent amount to solicitors for the respondent wife to be applied solely to her legal costs and disbursements of these proceeding with characterisation of that sum to be reserved to the trial judge, those costs shall be payable on dollar for dollar basis.

1. The applicant husband’s costs of today be reserved pending determination of the Appeal.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Lesley & Lesley (No.2) 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 1313 of 2015

Mr Lesley

Applicant

And

Ms Lesley

Respondent

EX TEMPORE REASONS FOR JUDGMENT

1. This matter concerns an application by the husband in respect to interim property orders made by me on 23 October 2015, pending the determination of an appeal.  In particular, by way of Application in a Case filed 23 November 2015, the husband sought an order that Order 2 made on 23 October 2015 be stayed “to the extent that [those orders] require payment of costs exceeding those payable on a dollar for dollar basis”. 

2. In today’s proceedings, counsel for the husband made an oral application to also seek a stay of Order 1 of the Orders made on 23 October 2015. 

3. Order 1 and 2 of the Orders made on 23 October 2015 were as follows:

   (1) [That] within two months of the date of these Orders, the husband is to pay to the wife the sum of $250 000 by way of interim property settlement.

   (2)  [That] within three months of the date of these Orders, the husband is to pay into wife’s solicitor’s trust account the sum of $297 430 for the payment of the wife’s current and future legal costs in relation to these proceedings.

4. By way of brief background to this matter, I refer to my judgment delivered on 23 October 2015.[1]  I note that it was agreed between the parties that the net value of the matrimonial property exceeds $10.8 million.  The wife alleges it is a little higher, in the vicinity of $12 million. 

   [1] Lesley & Lesley [2015] FamCA 894.

5. The case, when ultimately heard, will involve quite some complexity, including identifying potential interests in some nine properties and seven business entities.  The subject matter of the appeal concerns those Orders 1 and 2 that I have referred to. Those orders were essentially for an interim property distribution to facilitate payment to the wife of the sum of $250 000 to address  her reduction in income and access to resources that has occurred since the separation, and also Order 2 which , as noted, was for a partial property distribution in respect to legal fees.

6. By way of summary, the husband’s case was that my decision to make orders for a partial property settlement was essentially based on the premise that I had identified that the parties had $10.8 million available to them by way of net matrimonial property, and that I failed to have regard to, or sufficient regard to, the difficulty that the husband would have in raising funds to satisfy the relevant orders. 

7. An affidavit in support of that argument was filed in the Registry on 10 December 2015 (“the husband’s affidavit”). I have read that affidavit despite objection from senior counsel for the wife. The affidavit details attempts that the husband has made to obtain funds to comply with  Orders 1 and 2 made on 23 October 2015 and concludes with a letter from Westpac to the husband dated 9 December 2015 wherein it is said:

   Westpac has reviewed your request for further funding in terms specified in the Family Law Court order as part of your proceedings before it.

   Please note Westpac has determined that we are unable to extend any further funding to the Group with overall income position insufficient to meet debt servicing requirements.

8. Senior counsel for the wife indicated that it is very difficult to identify the specific request that the letter from Westpac refers to.  However, counsel for the husband referred to an email, sent by the husband to a representative of Westpac on 27 November 2015, wherein the husband sought funds which he described as being for:

   1. Approximately $112 000 being a contribution towards my wife’s legal fees; 

   2. $250 000 as an advance to [the wife]; 

   3. $297 000 as a payment to Michael Conley Lawyers with regard to [the wife’s] legal fees. 

   Timing of draw down of funds would be as follows: 

   $112 000 - immediate; 

   $250 000 - by December 23 2015; 

   $297 000 - uncertain as this is subject to appeal.

9. The concern I have with the content of the husband’s affidavit is that there is insufficient information to permit me to assume that Westpac has necessarily denied an application in respect to the separate amounts sought by the husband.  That is, whether Westpac rejected the application for one or other of the amounts specified in the husband’s email of 27 November 2015, or, on the other hand, whether Westpac rejected the totality of the amount sought by the husband.

10. The husband’s case outline document indicated that the husband wishes to challenge my decision of 23 October 2015 on a number of grounds. Reference was made to the Further Amended Notice of Appeal which set out those grounds. In his application for leave to appeal, the husband has specified that:

    The appeal raises significant issues of principle that have general application to the approach to interim properly settlement applications and litigation funding applications (where s. 79 and s. 80 Family Law Act are relied upon as a source of power) …  

11. In that respect, it is clear that the husband wishes to request that the Full Court revisit the authority of the Full Court in Bing & Bing (2007) FLC 93-318, and also to challenge the way that that authority was applied in my judgment of 23 October 2015. Counsel for the husband indicated today that one of the bases upon which Bing (supra), would be challenged was that it predated Strahan[2] and may no longer be good law. 

    [2] Strahan & Strahan(Interim Property Orders) (2011) FLC 93-466.

12. In addition, the husband’s case outline indicated that the husband wishes to raise an issue as to whether the orders I made were excessive and introduced an unfairness or disadvantage to the husband. Additional matters were also raised as referred to in the husband’s outline of submissions.

13. The principles to be applied in hearing a stay application were essentially agreed between the parties. Those principles are set out in the decision of the Full Court in Jackson & Balen [2009] FamCAFC 131 at [28] as follows:

    ·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 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 with 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.

14. Dealing with those last three points in reverse. In considering whether the husband has an arguable case, it is very difficult to assess the prospects of an appeal in a stay application.  I note senior counsel for the wife’s reference to authorities that confirm the difficulties of succeeding in an appeal against a discretionary decision, particularly at an interlocutory stage. Reference was made to the decision of House v The King,[3] and other authorities that have relied on that well-known authority. 

    [3] (1936) 55 CLR 499.

15. On balance, however, I think that the husband has at least an arguable case on the issue of the reasoning of the Full Court in Bing and whether that authority was correctly applied in my judgment of 23 October 2015. 

16. Dealing with the seventh point, that is, whether the appeal would be rendered nugatory, counsel for the husband argued that the appeal would be rendered nugatory because, necessarily, the funds would be paid to the wife before the appeal is dealt with.  That is certainly the case. However, with respect, that submission ignores the fact that the appeal is against interim orders and, in the context where it is agreed that the matrimonial property pool exceeds $10 million, the Court at final hearing will be able to address the consequences of any orders I made on 23 October 2015.  In other words, it is clear that there are sufficient funds available for the Court to address those consequences of the interim property distribution.

17. The more complicated issue is in respect to the balance of convenience which both parties argued tilted their way.  In terms of the husband, who is the applicant in these proceedings, it was argued that the balance of convenience fell his way because he simply was unable to raise sufficient funds to satisfy the orders.  In that respect, I note my concerns that the husband’s affidavit filed 10 December 2015 fails to draw a complete picture as to precisely what funding was applied for and what was rejected. Counsel for the husband acknowledged that it seems extraordinary that a bank would take the view that it would not lend any monies to the husband in circumstances where the potential property pool available was in the order of $10.8 million.

18. The wife argued in respect to Order 1 that the balance of convenience favoured her position. I did not require senior counsel for the wife to address me on that issue.  I think the balance of convenience, in respect to Order 1, clearly favours the wife’s position in that respect. I refer to paragraph 41 of my judgment delivered 23 October 2015 where I said:

    In circumstances where the wife’s financial circumstances since separation are significantly inferior to those of the husband, it would not be a just and equitable outcome to leave the overwhelming majority of the assets in the hands of the husband as against those of the wife, even on an interim basis. 

    On that basis I determined that an amount of $250 000 should be paid to the wife by way of interim property settlement.

19. Accordingly, I determine that the balance of convenience clearly favours the wife in respect to Order 1 made on 23 October 2015, and on that basis I dismiss the husband’s application to stay that order.

20. In respect to Order 2 made on 23 October 2015 which relates to legal fees, I again note the same argument by the husband in respect to the balance of convenience and the difficulty he states that he has experienced in raising funds.  Senior counsel for the wife referred to the fact that a “dollar for dollar” order, as proposed by the husband, would be inadequate for the wife because her legal fees will necessarily be greater than those of the husband. It was submitted this is because the husband essentially controls the business entities to which I have referred, and the wife’s legal advisors will incur additional time trying to ascertain how those entities are operated and to identify the totality of resources that should be included in the matrimonial property pool. 

21. I recognise the argument presented by the wife in that respect.  I note, however, that, in fairness to the husband, he has proposed a “dollar for dollar” order, and when it was raised with him in the course of proceedings, acknowledged that that order was intended to include legal fees that he has already paid by the wife.

22. Senior counsel for the wife submitted that the Court would still have concerns in that the Court could not have confidence that the husband would comply with a “dollar for dollar” order on the basis that he has provided evidence that he cannot raise funds.  I accept the husband’s evidence, as set out in his affidavit filed 10 December 2015 that Westpac has declined to lend him the totality of the three amounts to which I have earlier referred. However, there is no evidence that the husband has applied for, or that Westpac has considered lending, a lesser amount to the husband.  To take up the words of counsel for the husband,  it would be extraordinary for  Westpac not to provide such a facility to a client who has access to the substantial financial resources that are available to the husband in this case.

23. However, in light of concerns expressed by counsel for the wife, I propose to make Order 2 conditional on the conditions of the stay being complied with, and if those conditions are not complied with, then Order 2 that I made on 23 October 2015 would be revived.

I certify that the preceding twenty-three (23) paragraphs are a true copy of the reasons for judgment of the Honourable Justice McClelland delivered on 10 December 2015.

Associate: 

Date:  21 January 2016.