LFDB v SM (No 2)

Case [2016] FCA 295

FEDERAL COURT OF AUSTRALIA

LFDB v SM (No 2) [2016] FCA 295

File number(s): NSD 1665 of 2015
Judge(s): GRIFFITHS J
Date of judgment: 23 March 2016
Catchwords: PRACTICE AND PROCEDURE - application to stay execution of judgments registered under the Trans-Tasman Proceedings Act 2010 (Cth) – appeal proceedings in New Zealand and applications to set aside the registered judgments – relevant considerations in determining whether or not to grant a stay – relevance of first applicant’s conduct in previous proceedings in New Zealand and critical observations of that conduct by various New Zealand Courts – relevance of comity – stay granted on appropriate conditions
Legislation:

Federal Court of Australia Act 1976 (Cth), s 37AF

Foreign Judgments Act 1991 (Cth), s 8

Property (Relationships) Act 1976 (NZ)

Trans-Tasman Proceedings Act 2010 (Cth), ss 72(1), 76(1)
Cases cited:

Dawn Jade Ltd v Himanshu Girdhar Dua [2014] NSWSC 1085

LFDB v SM [2015] FCA 725
Date of hearing: 23 March 2016
Registry: New South Wales
Division: General Division
National Practice Area: Commercial and Corporations
Sub-area: General and Personal Insolvency
Category: Catchwords
Number of paragraphs: 33
Counsel for the Applicants: Mr P Herzfeld
Solicitor for the Applicants: O’Neill Partners Commercial Lawyers
Counsel for the Respondent: Dr C Ward SC
Solicitor for the Respondent: Marque Lawyers

ORDERS

NSD 1665 of 2015
BETWEEN:

LFDB (and others named in the Schedule)

First Applicant
AND:

SM

Respondent

JUDGE:

GRIFFITHS J

DATE OF ORDER:

23 MARCH 2016

THE COURT ORDERS THAT:

1.Within seven days hereof the parties are to provide short minutes of order, either by consent or individually if they cannot agree, to give effect to these reasons. 

Note:    Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.


REASONS FOR JUDGMENT

GRIFFITHS J:

  1. By originating applications filed on 12 February 2016 (NSD 1664/2015 and NSD 1665/2015), the applicants seek orders under s 72(1) of the Trans-Tasman Proceedings Act 2010 (Cth) (the Act) setting aside registration of two judgments of the High Court of New Zealand given on 26 November 2015 and orders under s 76(1) of the Act staying the enforcement of those judgments and orders pending the determination of the originating applications.  In the first New Zealand judgment, which dealt with relationship property under the Property (Relationships) Act 1976 (NZ), Ellis J in the High Court of New Zealand ordered the first applicant to pay his ex-partner SM an amount of approximately $5.5m plus interest and costs.  The second judgment relates to five other costs orders totalling approximately $22,000 plus interest and costs. 

  2. By order made on 23 February 2016, the two proceedings in this Court were consolidated and given the single file number, NSD1665/2015. By orders made by this Court on 14 March 2016, the applicants were ordered to pay security for costs in respect of their application for a stay. Non-publication orders were also made on that day under s 37AF of the Federal Court of Australia Act 1976 (Cth).

    Background

  3. The first applicant is…

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AGLC
LFDB v SM (No 2) [2016] FCA 295
Case
[2016] FCA 295
Decision Date

CaseChat Overview and Summary

In the matter of LFDB v SM (No 2), the applicants sought a stay of the enforcement of judgments registered under the Trans-Tasman Proceedings Act 2010 (Cth). The applicants were LFDB and three companies associated with him. They were in a former domestic partnership with SM, who had commenced proceedings in the New Zealand Family Court seeking a division of property. The applicants were ordered to pay security for costs and non-publication orders were made. The applicants sought a stay of the execution of the registered judgments pending the outcome of the proceedings in the New Zealand Court of Appeal and the possible hearing and determination of the originating applications in the Federal Court of Australia.

The primary legal issue was whether the court should grant a stay of execution of the registered judgments. The court considered the principles applicable to the stay of execution of judgments of Australian courts pending an appeal. The applicants had the onus to demonstrate a proper basis for the stay, and that a stay would be fair to all parties. The court weighed considerations such as the balance of convenience and the competing rights of the parties. The court also considered the applicants' financial position and the risk that their assets would be disposed of if a stay was granted. The applicants proffered an undertaking which was in the nature of a freezing order in respect of their assets in Australia.

The court considered it appropriate to stay the execution of the registered judgments pending the outcome of the proceedings in the Court of Appeal of New Zealand and the possible hearing and determination of the originating applications in the Federal Court of Australia, but subject to appropriate conditions. The essential purpose of the stay was to enable the applicants to prosecute their appeal in the New Zealand Court of Appeal and, if necessary, to prosecute their originating applications in the Federal Court of Australia to have the registered judgments set aside. The court considered that it was both unnecessary and undesirable to express any view at this stage regarding the strength of the applicants' contentions that registration was contrary to public policy. The court also considered that considerations of comity justified the Federal Court of Australia awaiting the outcome of the appellate proceedings in the Court of Appeal in which, if time was extended, that appellate court would have an opportunity to remedy any legal deficiencies in the final judgment and final orders which would then absolve the Federal Court of Australia from having to determine the applicants' public policy contentions.

The court granted a stay of the execution of the registered judgments pending the outcome of the proceedings in the Court of Appeal of New Zealand and the possible hearing and determination of the originating applications in the Federal Court of Australia, but subject to appropriate conditions. The court considered that it was appropriate to impose conditions that the applicants make an application to set aside, vary or appeal against the judgment to a New Zealand court or tribunal that has power to grant the application by the end of a period specified in the order, and that the applicants prosecute that application expeditiously. The court also considered that it was appropriate to impose conditions that the applicants give security for costs in the New Zealand Court of Appeal and the Federal Court of Australia.

Orders

Orders of the court

1. Within seven days hereof the parties are to provide short minutes of order, either by consent or individually if they cannot agree, to give effect to these reasons.

Note: Entry of orders is dealt with in Rule 39.32 of the Federal Court Rules 2011.

Background

Background to the litigation

By order made on 23 February 2016, the two proceedings in this Court were consolidated and given the single file number, NSD1665/2015. By orders made by this Court on 14 March 2016, the applicants were ordered to pay security for costs in respect of their application for a stay. Non-publication orders were also made on that day under s 37AF of the Federal Court of Australia Act 1976 (Cth). Background The first applicant is LFDB. The second, third and fourth applicants are companies associated with him. LFDB and SM were in a domestic partnership relationship for several years. Some of that time they lived in New Zealand; for a longer period, they lived in Australia. They separated in January 2009. SM commenced a proceeding in the Family Court of New Zealand seeking division of property under the Property (Relationships) Act 1976 (NZ) (the NZ proceeding). The NZ proceeding was subsequently transferred to the High Court of New Zealand. The parties have engaged in serial litigation in both the High Court and the Court of Appeal. Some of the history of what one New Zealand High Court Judge described as “the intractable and protracted litigation” in which the parties were locked is described in Gleeson J’s judgment in this Court in LFDB v SM [2015] FCA 725 (which related to the setting aside of the registration of freezing orders made by the High Court of New Zealand). The intensity and frequency of the litigation between the parties is reflected in the fact that, when the proceedings were transferred to the High Court in October 2011, the parties had already engaged in 23 interlocutory applications, filed 53 affidavits and received seven court judgments or directions. Justice Ellis was particularly critical of what her Honour described as the first applicant’s deliberate strategy of “dragging things through the Courts” in circumstances where he had:(a)made six unsuccessful challenges to the jurisdiction of the Courts, including two which were described as “oppressive” or “vexatious”;(b)brought seven unsuccessful appeal proceedings: three of which were out of time, and four of which were abandoned (one of which the defendant applied to reinstate);(c)made five unsuccessful stay applications, including one that duplicated an application that the defendant had withdrawn upon making consent orders and at his request;(d)made nine unsuccessful applications for extensions of time: seven of which were made in respect of monetary orders, and two of which were abandoned;(e)made 15 unsuccessful attempts to possess or sell M Street, including duplicate applications in the tort proceedings (that he failed to prosecute);(f)unsuccessfully disputed, or ignored every monetary order as and when made, including 15 costs orders (resulting in bankruptcy proceedings and two “unless orders”), two orders to pay mortgages over the parties’ properties, and an interim distribution; and(g)failed to comply with three discovery orders, having sought to impose conditions on their terms.

Evidence

Evidence Before The Court

Full text does not contain this section.

Decision

Reasons for decision

Section 76 of the Act provides as follows:76Stay of enforcement of registered NZ judgment so that the liable person can appeal it(1)An Australian court in which an NZ judgment has been registered may, on an application by a liable person under subsection (3), order that a proceeding in that court for enforcement of the judgment:(a) not be commenced until a specified time or event; or(b) be stayed for a specified period.(2) The order:(a) must be made subject to the following conditions:(i)that the liable person make an application to set aside, vary or appeal against the judgment to a New Zealand court or tribunal that has power to grant the application by the end of a period specified in the order;(ii)that the liable person prosecute that application expeditiously; and(b)may be made subject to any other conditions that the Australian court considers appropriate (including conditions as to the giving of security).(3) The liable person’s application must be made within:(a)30 working days of the Australian court after the day the liable person was given notice of the registration under section 73; or(b)if, before or after that period, the liable person applies to the Australian court for a longer period—any longer period the Australian court considers appropriate.(4)This section does not affect any other powers of the Australian court to stay the enforcement of the registered NZ judgment on any grounds on which the court could stay the enforcement of a judgment of an Australian court or tribunal. Neither party drew the Court’s attention to any direct authority concerning the exercise of the power under s 76(1) of the Act. However, in the similar context of s 8 of the Foreign Judgments Act 1991 (Cth), courts have applied the principles applicable to the stay of execution of judgments of Australian courts pending an appeal. Those principles are helpfully set out by Adamson J in Dawn Jade Ltd v Himanshu Girdhar Dua [2014] NSWSC 1085 at [34]-[37]:(a)the onus is on the applicant to demonstrate a proper basis for the stay, and that a stay will be fair to all parties;(b)in the exercise of its discretion, the court will weigh considerations such as the balance of convenience and the competing rights of the parties;(c)where there is a risk that, if a stay is granted, the assets of the applicant will be disposed of, the court may refuse a stay, but this may be able to be addressed by the imposition of appropriate conditions, including but not limited to security which, in an appropriate case, should at most protect the existing value of the registered judgment and not increase its value;(d)where there is a risk that the appeal will prove abortive if the applicant succeeds and a stay is not granted, courts will normally exercise their discretion in favour of granting a stay; and(e)courts approaching applications for a stay will not generally speculate about the applicant’s prospects of success, given that argument concerning the substance of the appeal is typically and necessarily attenuated. The court needs to be satisfied that the case which is sought to be adduced by the party seeking a stay is brought bona fide and is not merely a delaying tactic. The applicants’ financial position

Ratio Decidendi

Legal Principle Established

The applicants submitted that any perceived risk that, if a stay is granted, the assets of the applicants will be disposed of can be addressed by an undertaking which they proffered. The proposed undertaking is in the nature of a freezing order in respect of the applicants’ assets in Australia. Consideration For the following reasons, and not without some reservations, I consider that it is appropriate to stay the execution of the registered judgments pending the outcome of the proceedings in the Court of Appeal of New Zealand and the possible hearing and determination of the originating applications in this Court, but subject to appropriate conditions. First, the essential purpose of the stay is to enable:(a)the first applicant to seek an extension of time to appeal Ellis J’s final orders and to prosecute an appeal if an extension is granted; and(b)if necessary, and depending upon the outcome of the New Zealand appellate proceedings, for the applicants to prosecute their originating applications in this Court to have the registered judgments set aside. Secondly, I accept Mr Herzfeld’s submission that this Court should not proceed to hear and determine the application to set aside the registered judgments until the outcome of the proceedings in the New Zealand Court of Appeal is known. That is principally because the applicants propose to argue in this Court that registration was contrary to public policy having regard to what they say are serious denials of procedural fairness at various levels of the proceedings to date in the New Zealand Courts, including but not limited to the making, operation and effect of the “unless orders”. Some of those matters are outlined above. It is both unnecessary and undesirable to express any view at this stage regarding the strength of those contentions. I should also add that I do not mean to suggest that the applicants’ “contrary to public policy” ground is limited to procedural unfairness. I accept, however, Mr Herzfeld’s submission that considerations of comity justify this Court awaiting the outcome of the appellate proceedings in the Court of Appeal in which, if time is extended, that appellate court will have an opportunity to remedy any legal deficiencies in the final judgment and final orders which would then absolve this Court from having to determine the applicants’ public policy contentions. In other words, if the appeal succeeds, the registered judgments could not stand and there would be no need to determine the originating applications in this Court seeking to have those judgments set aside. As noted above, the first applicant submitted revised appeal documents in the New Zealand Court of Appeal yesterday. It is unknown how long it will take for the extension of time application to be heard (although it is evident that there is available in an appropriate case a fast-track procedure), nor how long the appeal processes will take if an extension were granted. It may reasonably be assumed, however, that the extension of time application will be heard and determined fairly shortly.