Liatos and Liatos (No. 2)
[2007] FamCA 1057
•10 September 2007
FAMILY COURT OF AUSTRALIA
| LIATOS & LIATOS (NO. 2) | [2007] FamCA 1057 |
| FAMILY LAW – PRACTICE AND PROCEDURE - Stay of order |
| B & B [2006] FamCA 166 |
| APPLICANT: | Mrs Liatos |
| RESPONDENT: | Mr Liatos |
| SECOND RESPONDENT: | J Capital Ltd |
| FILE NUMBER: | SYC | 579 | of | 2007 |
| DATE DELIVERED: | 10 September 2007 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | O'Ryan J |
| HEARING DATE: | 6 September 2007 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr W Lloyd |
| SOLICITOR FOR THE APPLICANT: | Prosilis Lawyers |
| COUNSEL FOR THE RESPONDENT: | Mr Richardson SC |
| SOLICITOR FOR THE RESPONDENT: | Meyer Pigdon |
| COUNSEL FOR THE INTERVENOR: | Mr J Lloyd |
| SOLICITOR FOR THE INTERVENOR: | Newnhams Solicitors |
Orders
The operation of Order 3 made on 28 August 2007 be stayed until further order.
The Wife expeditiously seek a hearing of her application to the Full Court for leave to appeal against order 3 made by me on 28 August 2007 and if leave is granted expeditiously seek a hearing of the appeal.
IT IS NOTED IN CONNECTION WITH THESE ORDERS that the judgment of the Honourable Justice O’Ryan delivered this day will for all publication and reporting purposes be referred to as Liatos & Liatos.
| FAMILY COURT OF AUSTRALIA AT SYDNEY |
FILE NUMBER: SYC 579 of 2007
| Mrs Liatos |
Applicant
And
| Mr Liatos |
Respondent
REASONS FOR JUDGMENT
Introduction
Before me for hearing is in an application filed on 31 August 2007 by Mrs Liatos who I shall refer to as the Wife. The Wife is seeking a stay of an order I made on 28 August 2007 discharging an order made on 2 August 2007 restraining the Husband from leaving the Commonwealth of Australia. The Husband is Mr Liatos.
There are pending proceedings for settlement of property between the Husband and the Wife which were commenced by application filed by the Husband on 30 January 2007. In the property settlement proceedings there is a significant issue as to the extent and value of the net assets of the parties.
The Wife contends that the Husband has failed to make a full and frank disclosure of the parties financial circumstances despite her repeated requests for disclosure and that the Husband has significant interests overseas. The Wife contends that during the marriage the Husband hid transactions from her and did so in circumstances where he failed to advise, consult, request or deliberate with her on his decisions either prior to taking such actions or after he made these decisions. The Wife contends that the Husband never discussed with her the use of company or trust finances or the use of finances that are secured by her share of the matrimonial assets for the purpose of transferring these funds overseas or to overseas accounts or to any of several countries. The Husband contends that he has made a full and frank of the parties’ financial circumstances and that he has no assets located overseas.
On 26 July 2007 an application in a case was filed on behalf of the Wife in which she sought the following:
1. That this matter be heard on an urgent ex-parte basis as soon as possible or within 24 hours of the 26th July 2007.
2. That the wife […] be appointed as the Trustee for the sale of the property situated at and known as, scheduled for completion of sale on the 7 August 2007 in Queensland, and that upon completion of such sale that the wife deposit the monies received from such sale into an interest bearing account in the names of both the husband and the wife to be held on trust pending the final determination of the property proceedings between the parties presently before this honourable court and that the wife shall direct her solicitor Mr Ovid Prosilis of […] to undertake such deposits.
3. That the wife as trustee for the sale of the property aforementioned in paragraph 2 herein direct that the mortgage monies of about $2,407,035.00 owing to [J] Capital Limited be deposited into a interest bearing account to be held in trust in the names of both the husband and the wife and [J] Capital Limited pending the final determination of the property proceedings, and that the wife shall direct her solicitor Ovid Prosilis to undertake such deposit.
4. That the wife do all things and sign all documents required to ensure that the mortgage owing to Suncorp Metway in the amount of $2,215,376.00 be paid to Suncorp Metway at completion of the aforesaid sale.
5. That the husband, […], in his capacity as a sole director of the [Liatos] Group Pty Ltd in its capacity as the Trustee of the [A] Property Trust not do any act or thing or cause any action to be undertaken that would have the effect of preventing the sale of the property located at [A] to be completed.
6. That the husband pay the wife’s costs of and incidental to this application.
7. That the wife cause to be sent to Gadens Solicitors of […] a copy of these Orders forthwith.
8. That the wife cause to be sent to the solicitors representing the husband being Fritchley solicitors at […] a copy of these orders forthwith.
9. Any other order this Honourable Court deems fit.
On 31 July 2007 an application in a case was filed on behalf of the Wife in which she sought the following:
1. That this matter be heard on an urgent ex-parte basis as soon as possible or within 24 hours of 31st July 2007.
2. That an order for service be made so that copies of these orders, the application made this day and the affidavit of [the wife] sworn 30 July 2007 be served either on the said [husband] as soon as possible or upon his solicitor Mr Edwin Fritchley of ….
3. That until further order of the Family Court of Australia, the husband, […] be and is hereby restrained from leaving the Commonwealth of Australia.
4. That subject to paragraph 3 herein, the Commissioner of the Australian Federal Police take all necessary steps to immediately place the name/s of the husband:
(a)[…] born […] 1969, aka
(b)[…] born […] 1969, aka
(c)[…] born […] 1969, aka
(d)[…] born […] 1969 aka
(e)[…] born […] 1969 aka
(f)[…] born […] 1969;
on the airport watch list also known as the P.A.S.S. system, at all ports of arrival and departure in the Commonwealth of Australia.
5. That subject to paragraph 3 herein, the Australian Federal Police maintain an airport watch of the said husband on all flights leaving any international airport in all States and Territories in the Commonwealth of Australia.
6. That subject to paragraph 3 herein, the Australian Federal Police and the Police Forces of the States and territories of the Commonwealth of Australia assist in the implementation of and give effect to those Orders AND IT IS REQUESTED that the Marshal of the Court and all agents of the Australian Federal Police and all Police Forces and services of various States and Territories of Australia are required and empowered to give effect to these Orders to take all necessary steps to restrain the husband from leaving, or his servants or his agents from attempting to remove the said husband from the Commonwealth of Australia.
7. That forthwith upon service of this order upon the husband, the husband deliver and deposit and leave it/them deposited, any passport/s in the husband’s possession or power issued to him by both the Australian Government and the Greek Government to the Registrar of the Sydney Registry of the Family Court of Australia to be held by the said Registrar pending further order of the Family Court of Australia.
8. That until further order the husband be and is hereby restrained from applying to the Australian Government for or obtaining further passport/s in the name/s of:
(i)[…] born […] 1969, aka
(ii)[…] born […] 1969, aka
(iii)[…] born […] 1969, aka
(iv)[…] born […] 1969 aka
(v)[…] born […] 1969 aka
(vi)[…] born […] 1969;
without a further order of the Family Court of Australia.
9. That until further order the husband be and is hereby restrained from applying to the Greek Government for or obtaining further passport/s in the name/s of:
(i)[…] born […] 1969, aka
(ii)[…] born […] 1969, aka
(iii)[…] born […] 1969, aka
(iv)[…] born […] 1969 aka
(v)[…] born […] 1969 aka
(vi)[…] born […] 1969;
without a further order of the Family Court of Australia.
10. That forthwith, the Department of Immigration and Ethnic Affairs [“the department”] is to be given notice of this order by the wife forthwith and the Department is requested to assist and ensuring that the said [husband] does not breach the injunctions herein granted.
11. That the husband pay the wife’s cost of and incidental to this application.
12. Any other Order this Honourable Court deems fit.
Orders were made by Judicial Registrar Loughnan on 26 July 2007 and 2 August 2007 and by Steele J on 31 July 2007. The Husband and the Second Respondent sought that the applications be dismissed and the orders made on 26 and 31 July 2007 and 2 August 2007 be discharged.
On 9 August 2007 a Response was filed on behalf of the Husband and he sought the following orders:
1. That the husband do all acts and things necessary to cause Liatos Group Pty Limited as Trustee for the [Liatos A] Property Trust to complete the contract for sale of the property situate at and known as [the A property] on 21 August 2007 or the earliest date otherwise available pursuant to the existing contract for sale.
2. That the husband shall do all acts and things necessary to cause the proceeds of sale of the [A] property to be paid and applied as follows:-
(a)In payment of agents commission and legal fees on sale;
(b)In payment of such sum as is necessary to discharge the existing mortgage to Suncorp Metway;
(c)In payment of any GST or any other Commonwealth Tax Liability due on the sale;
(d)In payment to [J] Capital the sum of $2,384,029.07 together with any additional interest accrued to the date of settlement;
(e)As to the balance to be paid into and retained by Gadens Lawyers in an interest bearing controlled money account (“the trust account”) for [the Liatos A Property Trust] pending further order of the Court or consent by the parties in writing, subject to any order made pursuant to paragraph 7 below.
3. That the interim applications of the wife filed on each of 26 and 31 July 2007 be dismissed.
4. That pending further order the Wife be restrained from doing any act or thing to transfer, dispose of or further encumber her interest in the property situate at and known as [the V Property] being the property comprised in Certificate of Title folio identifier […].
5. That within 48 hours the wife deliver to the husband, at the offices of his solicitors, all documents being documents being documents relating to the following entities:-
(a)The [Liatos] Group Pty Limited
(b)The [Liatos A] Property Trust
(c)The [B] Property Trust
(d)The [Liatos Group Facilities] Trust
(e)[Liatos Seaside] Pty Limited
(f)[Liatos Administration] Pty Limited
(g)The [P] Pty Limited
(h)The [Liatos] Group Property Trust
(i)The [C] Property Trust
(j)The [D] Property Trust
(k)The company [OO] Pty Limited trading as [the franchise in L]
(l)All of the documents delivered by the Husband to the wife in April 2007
6. That the Wife pay to the Husband from monies held by the wife in the ANZ bank account […], or otherwise, the following amounts:
a.The sum of $1,700.00 per week, first payment in 7 days and weekly thereafter;
b.The sum of $13,300.00 forthwith;
c.The sum of $22,601.40 for payment to [W] accountants;
d.The sum of $70,000.00 within 7 days
7. In the alternative to order 7 above (but only in the event that it is refused), each of the parties do all acts and things including giving written instructions necessary to cause the husband to be paid form the trust account the amounts referred to in order 6 above.
8. That the wife pay the husband’s costs of and incidental to the applications of each 26 and 31 July 2007 and the husband’s response thereto.
On 9 August 2007 a response was filed on behalf the Second Respondent seeking the following orders:
1. That the husband and wife do all acts and things and execute all documents, instruments and writings necessary to cause [Liatos] Group Pty Limited as Trustee for the [Liatos A] Property Trust to repay all funds payable to [J Capital Limited] pursuant to the Mezzanine Debt Finance Agreement dated 28 April 2003 and accepted 8 May 2003 and Mezzanine Debt Finance Agreement dated 23 March 2004 and accepted on 2 April 2004 upon completion of the sale of [the A property], Queensland.
2. Damages.
3. That the husband and/or the wife pay the costs of [J] Capital Limited in relation to this application.
On 28 August 2007 I made the following orders:
1. The Husband in his capacity as the sole director of [Liatos] Group Pty Limited as trustee for the [A] Property Trust on completion of the sale of the property situate at and known as [the A Property] execute all documents and writings and do all acts and things necessary to cause the proceeds of sale to be paid in the following priority:
1.1 in payment of any agents commission;
1.2 in payment of the conveyancing costs and disbursements;
1.3in payment of the amount to discharge the mortgage to Suncorp Ltd;
1.4in payment of any statutory charges including any possible GST paid in addition to the purchase price;
1.5in payment of the balance to an interest bearing controlled monies account in the joint names of the solicitors for the Husband and the Wife.
2. Pending the hearing of the applications for a final property order each of the Husband and the Wife including the Husband in the capacity as the sole director of Liatos Group Pty Limited as trustee for the [A] Property Trust be restrained from assigning, transferring, encumbering by mortgage or charge or otherwise or in any way dealing with the amount in the controlled monies account referred to in Order 1.5 hereof.
3. Upon compliance with Order 1.5 hereof Orders 2.2 and 2.3 made on 2 August 2007 in relation to restraining the Husband from leaving the Commonwealth of Australia be discharged.
4. The Wife file within 48 hours an undertaking as to damages and that such undertaking be extended to [J] Capital Limited.
5. Liberty to all parties to apply in relation to these orders on giving written notice to the Court and all parties.
On 31 August 2007 the application was filed by the Wife seeking “permission to appeal” to the Full Court against the orders I made on 28 August 2007 and in particular order 3.
Relevant principles
I will repeat some of what I said in B & B [2006] FamCA 166. Rule 22.12 of the Family Law Rules (2004) states:
(1) The filing of a Form 20 does not stay the operation or enforcement of the order appealed from, unless otherwise provided by a legislative provision.
(2) If an appeal has been started, or a party has applied for permission to appeal against an order, any party may apply for an order staying the operation or enforcement of all, or part, of the order to which the appeal or application relates.
(3) An application for a stay must be made to the Judge, Federal Magistrate or Magistrate who made the order under appeal.
Note 1Under subsection 55 (3) of the Act, a divorce order is stayed until after an appeal against it is determined or discontinued.
Note 2An application for a stay may be listed before another judicial officer if the judicial officer who made the order under appeal is unavailable (see rule 1.13).
Rule 1.10 of the Family Law Rules states:
(1) Unless a legislative provision states otherwise, the court may make an order, on application or on its own initiative, in relation to any matter mentioned in these Rules.
(2) When making an order, the court may:
(a)impose terms and conditions;
(b)make a consequential order;
(c)specify the consequence of failure to comply with the order; and
(d)take into account whether a party has complied with a pre-action procedure.
An applicant has no automatic right to a stay of proceedings and prima facie the judgment appealed from is correct. The Court should therefore not deprive a party of the fruits of the victory without good cause: The Annot Lyle (1886) 11 PD 114; Monk v Bartram (1891) 1 QB 346; Kelly and Kelly (1981) FLC 91-007. Nevertheless r 22.12 confers an express power to order a stay of the operation or enforcement of all, or part, of the order to which the appeal relates.
It is not necessary for the grant of a stay that special or exceptional circumstances should be made out. However, in order to justify a stay an applicant must point to circumstances that warrant a departure from the general rule that the judgment below should be presumed to be correct and liable to be enforced: Alexander v Cambridge Credit Corporation Ltd (Receivers Appointed) (1985) 2 NSWLR 685 at 693-694; Powerflex Services Pty Ltd v Data Access Corporation (1996) 137 ALR 498 at 499. It is sufficient that the applicant for a stay demonstrates a reason or an appropriate case to warrant the exercise of discretion his/her favour: Alexander v Cambridge Credit Corp (Receivers Appointed) (supra) at 694.
No criteria are specified in the legislation relating to the exercise of discretion and of course much depends on the circumstances of the case: Kelly and Kelly (supra) at 76,105 per Fogarty J. However, the Court will weigh considerations such as the balance of convenience and the competing rights of the parties.
In Alexander v Cambridge Credit Corp (Receivers Appointed) (supra) the Court of Appeal (Kirby P, Hope and McHugh JJ.) said at 694-695 that the following principles are relevant.
·The onus is upon the applicant to demonstrate a proper basis for a stay that will be fair to all parties.
·The mere filing of an appeal will not, of itself, provide a reason or demonstrate an appropriate case, nor will it discharge the onus which the applicant bears.
·The Court has a discretion whether or not to grant a stay and, if so as to the terms that would be fair.
In the exercise of the discretion, the Court will consider the following:
·The Court will not generally speculate about the appellant’s prospects of success given that argument concerning the substance of the appeal is typically and necessarily attenuated. However, this does not prevent the Court from making some preliminary assessment about whether the appellant has an arguable case. The appeal may have no real prospect of success. Carlin v Carlin (1977) FLC 90-320. In fact, the existence of arguable grounds of appeal is not itself a sufficient basis for the exercise of discretion, Alexander v Cambridge Credits Corp Limited (supra) and McBride v Sandland (No. 2) (1918) 25 CLR 369 at 374.
·Whether there is a risk that if a stay is not granted the appeal would be rendered nugatory. For example, where money paid over to the respondent may be irrecoverable, if the appeal is successful or there may be difficulty or delay in repaying the money: Wilson v Church (No 2) (1879) 12 Ch D 454; TCN Channel 9 Pty Limited v Antoniadis (No. 2) (1999) 48 NSWLR 381; or where the subject matter of the action may otherwise be lost: The Annot Lyle.
·Whether to refuse a stay would deprive the appellant of the means of prosecuting the appeal or impose irreparable harm in the event of the appeal being successful.
·Whether there is a risk that if a stay is granted the assets of the appellant may be disposed of. In such circumstances a stay may be refused.
Other considerations include whether there has been a delay in applying for a stay, the bona fides of the applicant and the time it is expected for the appeal to be heard.
A stay justified by the principles considered may however, be subject to terms. Such terms may include requiring payment of the whole of the judgement debt or requiring security for the judgment debt. As an alternative to a stay the Court may require a respondent to give an undertaking, or security for repayment if the appeal succeeds.
Conclusion
In my judgment I said that at this stage of the property settlement proceedings I was of the view that the major area of inquiry will be the extent and value of the assets of the parties. I said that the determination of this issue will require consideration of various overseas resident entities and assets located overseas and whether they are owned and controlled by the Husband or he has an interest in them which he has not disclosed.
In my judgment I said that I was satisfied that there are serious questions to be tried in relation to the assets of the parties and in particular whether funds including the purported loan from the Second Respondent to the Liatos Family Trust are funds of which the Husband or entities controlled by him is or are the beneficial owners or have a significant interest in.
As to the injunction restraining the Husband from leaving Australia I said that there were some matters of concern. I said that there are deficiencies in the Husband’s evidence and they included that the Husband gave no evidence explaining where he was and what he was doing during the significant periods he has been overseas. The Husband gave no evidence about what income he had and/or what his expenses were and/or the source of funds to pay his expenses. I said that according to his evidence, and the tax returns that I have seen, he has no bank account overseas. I also said that the Husband gave no satisfactory evidence explaining what he is proposing to do and that the Husband made some very broad and unverified allegations about his future and I accepted that at the final hearing he may have to provide more evidence.
However I went on to say that notwithstanding the deficiencies the Husband contended that he proposes in person to participate in the proceedings. Importantly I said that if the Greek properties and the liabilities alleged to be owed to the Second Respondent are excluded then according to the Husband the parties have ascertained assets within the jurisdiction of about $8,970,000 net or perhaps more if the Husband’s superannuation is included.
I concluded that I accepted that there are a number of significant issues about the future of the Husband. However on the evidence before me, and on the basis that no further funds are transferred overseas pending the final hearing, I was not satisfied that the order sought by the Wife should be made. I found that the balance of convenience favoured the Husband.
I came to the conclusion that until the determination of the property settlement proceedings no funds should be remitted overseas to the Second Respondent and thus the amount that the Husband and others contend is to be paid to the Second Respondent from the investment in the A property project should be retained in this jurisdiction. I made an order that on completion of the sale of the A property project after the payment of costs of sale and the amount required to discharge the mortgage to Suncorp Metway the balance be paid into a controlled moneys account.
I made order that until compliance with the above order the Husband be restrained from leaving the Commonwealth of Australia and that upon the investment of the net proceeds of sale of the A land the Husband is at liberty to leave Australia. The Wife complains about this order.
In support of an application the Wife swore an affidavit on 31 August 2007. In my view there is very little material in this affidavit that is relevant. I also read an affidavit sworn by the Wife on 31 August 2007 which is in support of her application for permission to appeal. The Wife attached to this second affidavit a draft Notice of Appeal.
The Husband swore an affidavit on 5 September 2009 in which, amongst other things, he gave some evidence about what he was doing overseas between 5 June 2007 and 28 July 2007. As I said in discussion I accept that a number of matters the Husband gave evidence about, which I need not identify, will require investigation. What the Husband did say raises a number of questions.
There has been no delay in applying for a stay.
I accept the bona fides of the Wife in seeking a stay.
I have no evidence as to when the appeal will be heard if leave to appeal is granted.
Although I am not going to speculate about the Wife’s prospects of success I have considered the 13 paragraphs in that part of the draft Notice of Appeal where the grounds of appeal are set out. In fact there are 11 draft grounds and having considered what is contended in those paragraphs I am inclined to agree with the submissions of Senior Counsel for the Husband. However I am not prepared to say that the appeal is hopeless as it may be amended given what is said in paragraph 13.
In this case the significant matter is whether there is a risk that if a stay is not granted the appeal would be rendered nugatory. It is not a case where money paid over to the respondent may be irrecoverable if the appeal is successful or there may be difficulty or delay in repaying money. It may be that the Wife is contending that it is a case where the subject matter of the action may otherwise be lost. As I understand the Wife’s case she contends that if the Husband leaves Australia he will not return because he has unascertained assets overseas that he has not disclosed and that these assets are of a magnitude that would be an incentive to the Husband not to return to Australia and also because the Husband may seek to avoid confronting forgery allegations. The Wife seeks to ensure that the Husband remains in Australia until the outcome of the property settlement applications is known. The injunction I made attempts to ensure that no portion of the ascertained assets located in Australia is in any way paid to the Second Respondent pending the final hearing. Overall on the evidence presently available, prima facie, I have some difficulties with the contentions of the Wife in relation to assets beyond those that are ascertained including the identified funds that were sent overseas.
I take into account the prejudice to the Husband being his entitlement to the benefit of the order. However I also take into account that the Husband has now said that he has put in suspension any plans to travel overseas for the long term and that it is his hope that with the assistance of the Independent Child Lawyer and the Court his relationship with the children will be restored. I infer that he does not seek to travel overseas except for a specific purpose.
Notwithstanding my concerns about the grounds of appeal, the merits of the Wife’s claim and in some respects that way the case is being conducted I have come to the conclusion that I should grant a stay of order 3 made on 28 August 2007. I accept that if I did not grant a stay then the appeal would be rendered nugatory if the Husband went overseas. However it is on the basis that the Wife will expeditiously pursue her application to the Full Court for leave to appeal against order 3 made by me on 28 August 2007 and if leave is granted expeditiously pursue the hearing of the appeal.
I certify that the preceding 35 paragraphs are
a true copy of the reasons for judgment
of the Honourable Justice O’Ryan
………………………………………………………..
Associate:
Date: 10 September 2007
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