MACKERITH & MACKERITH

[2019] FamCAFC 44

FAMILY COURT OF AUSTRALIA

MACKERITH & MACKERITH [2019] FamCAFC 44

FAMILY LAW – APPEAL – PRACTICE AND PROCEDURE – LEAVE TO APPEAL – Where the husband sought to appeal interim property orders – Where leave to appeal is required under s 94AA of the Family Law Act 1975 (Cth) and reg 15A(1) of the Family Law Regulations 1984 (Cth) – Where the wife opposes the appeal – Leave to appeal granted.

Family Law Act 1975 (Cth) ss 94AA, 94AAA(3)

Medlow and Medlow (2016) FLC 93-692; [2016] FamCAFC 34

APPELLANT: Mr Mackerith

RESPONDENT: Ms Mackerith

FILE NUMBER: SYC 395 of 2018

APPEAL NUMBER: EA 158 of 2018

DATE DELIVERED: 18 March 2019

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Ainslie-Wallace J

HEARING DATE: 12 March 2019

LOWER COURT JURISDICTION: Federal Circuit Court of Australia

LOWER COURT JUDGMENT DATE: 14 November 2019

LOWER COURT MNC: [2018] FCCA 3853

REPRESENTATION

SOLICITOR FOR THE APPELLANT: Mr David Crawford, Crawford Ryan Lawyers

COUNSEL FOR THE RESPONDENT: Paul Livingstone

SOLICITOR FOR THE RESPONDENT: MCW Lawyers

Orders

1. Leave to appeal the orders made by Judge Smith on 14 November 2018 is granted.

2. Within 14 days of these orders the Appellant file and serve an Appeal Index.

Note: The form of the order is subject to the entry of the order in the Court’s records.

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

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 r 17.02 Family Law Rules 2004 (Cth).

THE APPELLATE JURISDICTION OF THE FAMILY COURT OF AUSTRALIA
AT SYDNEY

Appeal Number: EA 158 of 2018
File Number: SYD 395 of 2018

Mr Mackerith

Appellant

and

Ms Mackerith

Respondent

REASONS FOR JUDGMENT

1.

Mr Mackerith (“the husband”) by his Notice of Appeal filed on

11 December 2018 appeals against interlocutory orders made by Judge Smith on 14 November 2018.  His Honour’s orders provided for the sale of two properties owned by the husband and Ms Mackerith (“the wife”), and the distribution of the net proceeds of sale held pending determination of the parties competing applications for property settlement orders.  The primary judge has listed the matter for further mention in May 2019.  I understand that a date for final hearing has not yet been given.

2.The order sought to be challenged on appeal is an interlocutory one for which leave to appeal is necessary.  Before turning to a consideration of the question of leave it is necessary to consider the reasons of the primary judge and the orders made.

3.By direction of the Chief Justice given pursuant to s 94AAA(3) of the Family Law Act 1975 (Cth)(“the Act”), this application is being heard by a single judge of the Appeal Division of the Family Court.

4.The parties commenced property settlement proceedings in the Federal Circuit Court.  In October 2018 the wife sought interlocutory orders for the sale of the parties’ two properties; the marital home, Property A, New South Wales and an investment property which is a factory unit, Property B, also in New South Wales.

5.While there was no dispute between the parties that their former marital home should be sold, there was contention about the sale of the investment unit.  It seems that the borrowing to purchase the investment unit was secured by mortgage over the marital home, leaving the investment unit with no encumbrance. It produces rental income which is shared between the parties.

6.Dealing first with the marital home, it was common ground that by reason of financial difficulties the parties had defaulted on their mortgages and it was necessary that it be sold and the mortgages discharged ahead of action being contemplated by the parties’ bank to exercise its rights under the mortgage.

7.The husband opposed the sale of the investment unit and argued that if the marital home is sold and the mortgages (over it and over the investment unit) are discharged, the financial pressure on both he and the wife would be eased and, as a result, he could have an opportunity of retaining the investment unit, making the appropriate adjustment to the wife once their property interests were determined.  The husband argued that if the investment unit was sold it would be subject to Capital Gains Tax estimated to be between $70,000 and $80, 000.

8.The wife, on the other hand sought an order that the investment unit too be sold.  She contended that the husband did not have the financial capacity to retain the unit and pay her a sum equivalent of what property settlement order might ultimately be made in her favour.

9.The primary judge said:

27. So we have this situation where the wife says she cannot afford these mortgages and the parties agree the family home should be sold, and the question is what the husband’s capacity to take over [Property B] is in such a way that it will not lead to the fire sale of [Property B] and will not prejudice the capacity of the court or the parties on a final basis.

10.His Honour noted that the husband had earlier been ordered to file evidence of his capacity to borrow sufficient funds to acquire the wife’s interest in the investment property.  The primary judge referred to the husband’s evidence which was, in effect that while he was not then in employment because of incapacity through injury, he was hopeful of borrowing money from his mother and that he had approached a mortgage broker about borrowing money based on the income produced by the investment unit.  His Honour concluded that the evidence did not persuade him that the husband would be able to obtain a loan as he asserted (at [38]).

11.Thus his Honour ordered both properties to be sold and concluded that the question of the assessment of contributions and what property orders should be made be considered at a hearing in May 2019.

12.The parties each made submissions on the question of whether leave to appeal should be granted.  The question of whether leave should be granted was determined separately from the issue on appeal. 

13.It is accepted that the test for leave is two-fold.  First it must be established that the decision in question is attended with sufficient doubt to warrant a grant of leave and secondly, it must be shown that a substantial injustice will result from a refusal of leave to appeal (Medlow and Medlow (2016) FLC 93-692 at [57]). The tests are conjunctive – that is, each must be satisfied before leave will be granted.

14.I am satisfied that for these purposes that the husband has established that the decision is attended with sufficient doubt as to warrant a grant of leave and has also established that a substantial injustice would occur if leave was not granted.

15.Therefore I will grant leave to the husband to appeal the decision of Judge Smith.

16.That being the case, orders will be made requiring the preparation of an Appeal Index, the parties indicated during the oral argument that the content of is the Appeal Index can readily be agreed.  Following its filing, the matter will be listed for directions in order to prepare the appeal for hearing.

I certify that the preceding nineteen (19) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Ainslie-Wallace delivered on

18 March 2019.

Associate:     

Date:  18 March 2019