Malloy & Stopford Malloy & Ors (Stay)
[2016] FamCA 1040
•7 December 2016
FAMILY COURT OF AUSTRALIA
| MALLOY & STOPFORD MALLOY AND ORS (STAY) | [2016] FamCA 1040 |
| FAMILY LAW – SPOUSE MAINTENANCE – ENFORCEMENT – STAY – Application for a stay of orders pending determination of an appeal – Application of husband granted – Application of third parties dismissed on the basis that the orders appealed do not impose any obligation on them nor affect their rights. |
| Family Law Act 1975 (Cth) |
Family Law Rules 2004 (Cth)
| Aldridge & Keaton [2009] FamCAFC 106 |
| APPLICANT: | Mr Malloy |
| FIRST RESPONDENT: | Ms Stopford Malloy |
| SECOND RESPONDENT: | Mr Q Malloy |
| THIRD RESPONDENT: | The Malloy Group |
| FILE NUMBER: | ADC | 2595 | of | 2015 |
| DATE DELIVERED: | 7 December 2016 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Melbourne |
| JUDGMENT OF: | Bryant CJ |
| HEARING DATE: | 14 October 2016 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Whitington QC with Mr Richards |
| SOLICITOR FOR THE APPLICANT: | Howe Jenkin |
| COUNSEL FOR THE FIRST RESPONDENT: | Mr McGinn |
SOLICITOR FOR THE FIRST RESPONDENT: | Piper Alderman |
| COUNSEL FOR THE SECOND AND THIRD RESPONDENTS: | Mr Harris QC with Ms Kari |
| SOLICITOR FOR THE SECOND AND THIRD RESPONDENTS: | Barnes Brinsley Shaw |
Orders
On the application in a case filed by the applicant husband on 4 October 2016, Orders 1–12 and 14 of the orders made by this Honourable Court on 5 September 2016 be stayed pending the determination of the appeal pursuant to the notice of appeal filed on behalf of the applicant husband in SOA87 of 2016.
The application in a case filed by the second and third respondents on 11 October 2016 be dismissed.
Orders 1, 2, 3, 4 and 5 of the orders sought in the wife’s response to an application in a case filed 14 October 2016 be dismissed.
Orders 6 and 7 of the wife’s response to an application in a case filed 14 October 2016 be dealt with by written submissions as follows:
(a)The wife file and serve written submissions in relation to the costs sought within fourteen (14) days of the date of these orders.
(b)The husband and the second and third respondents file and serve submissions in reply within fourteen (14) days of receipt of the wife’s submissions.
(c)The wife file and serve any further reply within seven (7) days of receipt of the last of the submissions of the husband and the second and third respondents.
The husband’s solicitors forthwith serve the Receivers with a copy of these orders and the Reasons for Judgment.
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 Malloy & Stopford Malloy and Ors (Stay) 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).
| FAMILY COURT OF AUSTRALIA AT MELBOURNE |
FILE NUMBER: ADC 2595 of 2015
| Mr Malloy |
Applicant
And
| Ms Stopford Malloy |
First Respondent
And
| Mr Q Malloy |
Second Respondent
And
| The Malloy Group |
Third Respondent
REASONS FOR JUDGMENT
On 5 September 2016 the court made orders dismissing the husband’s application to vary spouse maintenance orders and made orders in relation to the enforcement of arrears, in particular by the appointment of receivers of the income and property of the husband. The orders for spouse maintenance giving rise to the liability as found were made by consent on 19 October 2015 with a variation made on 22 April 2016.
In addition to the husband and wife, the parties include the second and third respondents (“the third parties”), being Mr Q Malloy, the husband’s father, and the Malloy Group. The gravamen of the husband’s case giving rise to the orders of 5 September 2016 was that he has no independent income and is solely reliant on the third parties for his own support and consequently his capacity to contribute to the support of the wife and the parties’ child.
The orders made on 5 September 2016 are as follows:
1.That pursuant to r 20.46 of the Family Law Rules 2004 (Cth) (“the Rules”), Messers [R] and [S] of [T Accountants] are appointed as joint and several receivers (“the Receivers”) of the income and property of Mr Malloy (“the husband”) so as to give effect to Order 1 of the Orders of the Honourable Justice Dawe made on 19 October 2015 and as varied on 22 April 2016 (“the Orders”).
2.In particular, that the Receivers be appointed to receive the following:
(a) the husband’s jewellery;
(b) the husband’s household contents;
(c)the properties of which the husband is the registered proprietor at:
(i)[U Street, Suburb E], South Australia ([Suburb E]) and
(ii)[V Street, Suburb V], South Australia ([Suburb V] )
3.That pursuant to r 20.47(3) of the Rules, the Receivers are authorised to do (in the Receivers’ name or otherwise) anything the husband may do.
4.That pursuant to r 20.47(4) of the Rules the Receivers’ powers operate to the exclusion of the powers of the husband during the receivership in relation to compliance with the Orders.
5.That the Receivers’ remuneration be paid from the financial resources of the husband and such remuneration be calculated in accordance with the standard rates effective from time to time as set out in Annexure “OSM-7” to the wife’s affidavit sworn 7 June 2016.
6. That no security be given by the Receivers.
7. That the husband is to co-operate with the Receivers and shall:
(a)Provide all such documents, financial records, bank statements/books, tax records and any other financial documents as required by the Receivers within twenty-four (24) hours of the request by the Receivers;
(b)Provide full details to the Receivers within twenty-four (24) hours of request of the names and address of any employer or entity controlled by the husband which has received remuneration within the last seven (7) days;
(c)Provide any other information sought by the Receivers which relates to income or property of the husband.
8.That, in particular, the Receivers may sell any assets collected by them pursuant to Order 2 upon such terms and conditions as they shall see fit and after payment of the costs and expenses of sale and payment of registered encumbrances are to apply the net proceeds of such sale:
(a)in payment of the Receivers’ fees and the costs and expenses of such sales;
(b)in payment to the wife of such sum or sums as shall be outstanding from time to time pursuant to the Orders;
(c)in payment of any order for costs in favour of the wife made in these proceedings;
(d)the balance, if any, to be held as security for and applied to the payment of spousal maintenance pursuant to the Orders.
9.That the husband is directed and an injunction is granted directing the husband to deliver up to the Receivers and/or make available for collection by the Receivers in good order and repair the husband’s jewellery and household contents upon such date and at such time as the said Receivers shall advise him in writing delivered to [U Street, Suburb E] in the State of South Australia.
10.That the husband do, and an injunction is granted directing the husband to do, all things, provide all documents and authorities, and execute all documents necessary to cause any credit provider or any person providing financial accommodation to the husband to pay any monies or the money equivalent of any accommodation to the Receivers.
11.That the Receivers submit accounts to the following parties on a three (3) monthly basis for work done pursuant to these orders:
(a) The wife; and
(b) The husband.
12.In default (whether such default be by reason of any act or omission or neglect) of the husband executing any document necessary to give effect to these orders within twenty-four (24) hours of the same having been delivered to the husband’s solicitors whilst they maintain a notice of address for service on behalf of the husband in the state of South Australia then and in such event a Registrar of this Honourable Court upon proof by affidavit of such default is hereby authorised and directed to sign all such documents and if in the Registrar’s opinion it is necessary to do so to settle the same and to do all things to give effect to these orders.
13.The husband’s application for variation of the maintenance orders made 19 October 2015 as varied by order made 22 April 2016 (“the spouse maintenance orders”) contained in his response filed 9 June 2016 is dismissed.
14.The husband pay the wife’s’ costs of and incidental to the enforcement application filed by her on 13 May 2016 and his application to vary the spouse maintenance orders contained in his response filed 9 June 2016, as assessed in default of agreement.
15.The application for orders sought by the second and third respondents in their response dated 14 June 2016 is dismissed.
The reasons underpinning the making of the orders appear in the reasons for judgment delivered on that day.
The only order directly affecting the third parties was Order 15, which dismissed their application.
On 3 October 2016 the husband filed a notice of appeal seeking leave to appeal all orders of 5 September 2016.
Also on 3 October 2016, notwithstanding the form of the orders does not directly affect them, the third parties also filed a notice of appeal, seeking to also appeal all orders in substantially (although not completely) similar terms.
On 4 October 2016 the husband filed an application in a case seeking a stay of the orders pending appeal; on 11 October 2016 the third parties also filed an application in a case seeking a stay pending appeal.
By his application in a case, the husband sought that paragraphs 1–12 and 14 of the orders made on 5 September 2016 be stayed pending the determination of his appeal. The third parties sought that all of the orders made on 5 September be stayed pending the outcome of their appeal.
The wife opposed both applications for a stay and applied for an adjournment of the stay proceedings, as well as leave to adduce evidence from an expert.
The wife’s applications were dealt with first. The adjournment was refused and the application to adduce evidence from an expert was dismissed.
The husband relied upon an affidavit sworn on 30 September 2016. The third parties relied upon an affidavit by Mr MM, described as the new Chief Executive Officer of the Malloy Group.
The Receiver appointed pursuant to the orders of 5 September 2016, Mr R, was represented by Ms Carne who indicated that if the matter proceeded the Receiver would seek to withdraw and would abide by orders of the court. The Receiver filed an affidavit on 14 October 2016, which was accepted by the court but on the basis that weight would not be placed on any material that appeared to be controversial or the subject of challenge. Annexed to Mr R’s affidavit is a report which identifies the husband’s property and the steps taken to date to realise it.
Relevantly for the purpose of this application:
a)The Receiver, in relation to the real property of the husband, indicated that he has “not sought to realise these properties at this time as I am unsure as to the equity available to the Husband after taking into account the secured liabilities”.
b)The Receiver’s costs to 11 October 2016 are $15,150.36 and solicitors’ fees are $5,382.58.
The wife’s applications for an adjournment and to rely upon evidence of an expert
The wife filed an affidavit on 14 October 2016 in support of her application for leave to adduce expert evidence. She attached a number of exhibits to her affidavit, largely making the point that she does not have sufficient income to support herself and the child and that the husband is not meeting the spouse maintenance orders. The wife says she has received $650 per week from DD Pty Ltd (the corporate trustee of the Malloy Family Trust) since 29 April 2016. The husband and the third parties do not dispute the wife’s evidence that the order for maintenance is not being met and the wife is receiving $650 per week from DD Pty Ltd.
I was unpersuaded that there would be any further material that the wife could adduce in respect of the application for a stay of proceedings which would be uncontroversial and could persuade me to exercise my discretion to adjourn the matter and, as a consequence, I dismissed her application. I also took into account the fact that, having made enquiries, the appeal can be listed for hearing in February 2017 which is four months away.
The affidavit of the expert which the wife sought to admit asserted that Mr NN, the principal of NN Forensic Accounting, had examined documents and financial statements of the Malloy Group and ascertained that the husband had due to him “unpaid present entitlements” with book values totalling $2,739,257. The wife asserted that this material was germane to the stay application because it suggested the husband’s financial position was not as he had portrayed it; that he did have assets; that he had not been truthful. All of this material, she contended, was relevant to the question of whether to grant a stay of the proceedings.
This material was filed very late in the proceedings and the husband and third parties did not have an opportunity to respond to it. I also accept their submissions that figures that appear in financial statements from previous years, which are based on directors’ assertions as to value, may or may not represent realisable value for these entitlements, and also concern interrelated parties. Without further analysis and evidence, no inferences as sought by the wife could reasonably be drawn at this stage from this material and, accordingly, I indicated it had no probative value and the wife’s application was refused.
The husband’s application for a stay
The principles both in the general law and in respect of parenting proceedings in relation to the granting of a stay of orders pending the determination of an appeal against those orders is well settled: see TheCommissioner of Taxation of the Commonwealth of Australia v Myer Emporium Limited [No 1] (1986) 160 CLR 220 at 222; Alexander v Cambridge Credit Corporation (1985) 2 NSWLR 685; Jennings Construction Limited v Burgundy Royale Investments Proprietary Limited (1986) 161 CLR 681; Clemett & Clemett (1981) FLC
91-013; JRN & KEN v IEG & BLG (1998) 72 ALJR 1329 at 1332. In Sullivan & Tyler (No 2) (2015) FLC 93-668 the Full Court of the Family Court indicated that the authorities stressed the discretionary nature of the application which should be determined on its merits and endorsed a non-exhaustive set of principles relevant to the exercise of that discretion which were laid out in the Full Court decision of Trahn & Long (No 2) [2008] FamCAFC 194 at [38], 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 “special” or “exceptional” circumstances;
· a person who has obtained a judgment is entitled to the benefit of that judgment;
· the person who has obtained a judgment is entitled to presume the judgment is correct;
· the mere filing of an appeal is insufficient to ground a stay;
· the bona fides of the applicant;
· a stay may be granted on terms that are fair to all parties — this may involve a court weighing the balance of convenience and 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 the stay;
· some preliminary assessment of the strength of the proposed appeal — whether the appellant has an arguable case;
· the desirability of limiting the frequency of any change in a child’s living arrangements;
· the period of time in which the appeal can be heard and whether existing satisfactory arrangements may support the granting of a stay for a short period of time; and
· the best interests of the child the subject of the proceedings.
See also Aldridge & Keaton [2009] FamCAFC 106 at [18].
Counsel for the husband grouped these elements into what he described as three main discretionary factors:
(i)The consequences that might ensue if the stay is not granted;
(ii)The merits of the appeal; and
(iii)The balance of convenience — that is, the prejudice to the party applying for the stay if it is not granted and prejudice to the other party if it is granted.
The husband identified in his outline of submissions the prejudice that he says he would suffer if the orders were allowed to stand as being:
(i)The entirety of the husband’s assets would be sold;
(ii)The husband would be denuded of his personal effects including those required for living purposes;
(iii)The husband’s indebtedness for his borrowings secured over the Suburb B and Suburb E properties would be crystallised, potentially in circumstances where the sale price would not be maximised and his indebtedness would thereby be increased;
(iv)The husband would be required to undertake further indebtedness under any existing financial accommodation (pursuant to Order 10);
(v)The husband would be required to pay any form of financial accommodation, including for his sustenance and basic support, to the Receivers thereby depriving him of the means of support and legal representation;
(vi)The husband will be denied his fundamental right to legal representation;
(vii)The appointment of the Receivers puts the husband in breach of his obligations under the loan and guarantee arrangements with the two banks and the Malloy Group;
(viii)The requirements in Order 5 expose the husband to liabilities which, in turn, expose him to a sequestration order under the Bankruptcy Act1966 (Cth).
I do not accept that all of these arguments are justified in fact or are germane to the ultimate appeal. In particular, the interpretation that the husband places upon Order 10 (outlined above). That order is not in my view as broad or as onerous as he suggests. However, given the dispute that appears to have arisen about the reach of this order, I would in any event be prepared to stay the operation of Order 10 irrespective of the other orders simply because, in my view, the balance of convenience supports the removal of a source of agitation which can only incur costs and potentially involve the parties in further interlocutory proceedings pending the hearing of the appeal.
The other matters that I do take into account as having relevance to the exercise of discretion is that the husband is required pursuant to Order 5 to be responsible for the Receiver’s remuneration and, were the appeal to be successful, the work undertaken by the Receiver pursuant to the orders of 5 September 2016 might involve unnecessary expenditure if a stay were not granted.
I further take into account the fact that although the husband says that he has no equity in the Suburb B and Suburb E properties, his indebtedness will be crystallised. Whilst I do not necessarily accept that the sale price would not be maximised by the Receivers, costs and expenses associated with a sale might ultimately be unnecessary and could potentially disadvantage the husband.
The merits of the appeal
In relation to the merits of the appeal, the husband asserted in support of one of his grounds of appeal in his outline of submissions that:
8.In circumstances where it is common ground that the husband had met his obligation to pay spousal maintenance pursuant to the Order of 19 October 2015 by irregular payments that did not, in each period, precisely equate to the amount ordered, it is reasonably open to doubt that payments made by the husband to the wife during a period of attempted reconciliation should be found to be made under a different arrangement (voluntarily) or that a test of unconscionability is relevant to their characterization under the Family Law Act.
9. There is a related issue as to whether an attempted reconciliation necessarily suspends the operation of an order for spousal maintenance and whether payments made in consequence of the attempted reconciliation are automatically disqualified as payments of spousal maintenance.
10. The husband contends that the law in relation to the proper characterization of payment of spousal maintenance has not been authoratively [sic] addressed by this Court.
Whilst I am inclined to accept the last contention, that does not itself add anything to the husband’s arguments if they are otherwise unmeritorious.
In response, the wife sought to rely upon Truscott & Truscott (1986) FLC
91-761 (“Truscott”), where the Full Court held (at 75,567) that “[a]ny periods of resumption of cohabitation may be taken into account, along with other circumstances, by the Court in exercising its discretion in enforcement proceedings”.
The question in Truscott was whether an order for maintenance ceased to have effect if the parties resumed a period of cohabitation so that it did not revive upon a further separation. The Full Court said (at 75,566):
It could further equally be said that the automatic annulment or cessation of effect of a maintenance order by recommencement of a period of cohabitation could be a positive hindrance to any likely reconciliation of parties, which the Family Law Act otherwise encourages; and that it is undesirable in the public interest that maintenance orders obtained at some cost and expense (often at a charge to the public purse through provision of legal assistance to needy applicants) should be so annulled by an attempted reconciliation of parties, no matter how brief its duration.
However, the facts in this case are not on all fours with Truscott. Here, the husband was not arguing about whether the existing order for maintenance resumed after a further separation. He was asserting that support given to the wife and child during the period of resumed cohabitation could subsequently be calculated and, if it exceeded the amount he was obliged to pay under the orders, that sum should be taken into account as offsetting any subsequent obligation to pay maintenance for the wife and child after the reconciliation had broken down. That is a very different position to that which occurred in Truscott and I do not accept that it has direct relevance to the present case. That said, there is no decided case that I could find on the issues that arose in this matter.
As to the appointment of Receivers, I accept that it is a relatively unusual order and that there is at present little law or guidance available to the court on the appropriate circumstances in which to appoint a receiver. I do not agree with Counsel for the husband that the court must find that the appointment is “necessary” in terms of s 80(1)(k) of the Family Law Act 1975 (Cth) (“the Act”), as the Full Court held in D Pty Ltd and Ord & Sadler and Ors [2016] FamCAFC 187, where it said:
44.We turn then to the main challenge to the decision to appoint receivers, which is the appellants’ contention that the primary judge misapprehended both the potential effect of the appointment of the receivers on the appellants and the role of the receivers in facilitating the redemption of the units held by the three Sadler trusts. The appellants contend that this misapprehension then led to an error in the exercise of the discretion to appoint the receivers. Further, they submitted this misapprehension led to her Honour appointing the receivers because it was “proper”, whereas s 80(1)(k) of the Act could only be enlivened by a finding that the appointment was “necessary” being the term used in the provision.
However this order was not made under s 80(1)(k). The order was made under s 80(3), which says:
The applicable Rules of Court may make provision with respect to the making of orders under this Part in relation to the maintenance of parties to marriages (whether as to their form or otherwise) for the purpose of facilitating their enforcement and the collection of maintenance payable under them.
As the court clearly set out in the reasons for judgment of 5 September 2016 at [113] – [116], the orders were made under ch 20 of the Family Law Rules 2004 (Cth) (“the Rules”), which provides for the enforcement of financial orders and obligations. The relevant rule-making power is provided by s 80(3) of the Act and the orders for appointment of receivers were made clearly under those rules in relation to enforcement of maintenance orders.
However I accept that there is no authority specifically in relation to the appointment of receivers under ch 20 of the Rules.
In relation to the merits of the appeal, I also take into account that the onus is on the husband to demonstrate that there is an arguable ground of appeal. The difficulty faced by the husband is also increased because the orders sought to be appealed are interlocutory, for which a grant of leave is required, and the test to be applied is “whether, in all of the circumstances, the decision is attended by sufficient doubt to warrant it being reconsidered by the Full Court and whether substantial injustice would result if leave were refused, supposing the decision to be wrong”: Medlow & Medlow (2016) FLC 93-692 at 81,086.
Whilst I accept the submission of the wife that the orders appealed do not comprise a determination of substantive rights, they do have some significant financial ramifications and I am prepared to accept that there is an argument, at least, that substantial injustice might result if leave were refused. Further, because of the novelty of some of the arguments, which have not been definitively determined previously, I am prepared to say that there may be sufficient doubt to warrant consideration of these matters by the Full Court. That is not to say of course that the arguments would necessarily be successful but, rather, that there is a triable case.
Balance of convenience
I must consider whether the increasing costs of the Receiver and the potential for sale of the real property, with cost to the husband, outweighs the prejudice to the wife in not receiving the payments to which she is entitled pursuant to the orders.
I take into account the difficulties that the wife faces in this case in immediately obtaining the fruits of her orders in any event. The reasons for judgment of 5 September 2016 contain findings that there was no certainty of payments to the husband by the third parties (at [156]) and that there was no certainty that sale of the husband’s assets would necessarily meet his obligations to the wife (at [146]). At the same time, I accept that there is no proposal on behalf of the husband as to how the non-compliance with the spouse maintenance orders is to be remedied. I also take into account that the appeal can be heard in February 2017.
I also take into account, although this was not the subject of any submissions, that the litigation between the parties in relation to settlement of property is ongoing and that processes for discovery and disclosure will continue whether or not receivers are involved in relation to sale of the husband’s assets. I am not satisfied that, as the husband argues, the Receivers would act in any heavy-handed way or that any issues that arose could not be resolved by the court in relation to the powers of the Receivers were it necessary to do so (see in particular r 20.47(5)).
On balance, when these various matters are weighed, I am prepared to grant the stay on the husband’s application and to make orders in accordance with paragraph 2 of his application in a case filed 4 October 2016.
The third parties’ application for a stay
Whilst the relief sought by the third parties is similar to that sought by the husband, with the difference being that they have sought a stay of all of the orders whereas the husband did not seek a stay of Orders 13 and 15, the basis of their application is very different.
Insofar as the merits of the appeal are concerned, I again make the point that leave to appeal is required so the decision must be attended by sufficient doubt to warrant it being reconsidered by the Full Court and there must be a possibility that substantial injustice would result if leave were refused
Insofar as Grounds 1, 2 and 3 are concerned, it is difficult to see what standing the third parties have to appeal orders which relate solely to the husband and which do not have any impact on them, either by depriving them of an existing right or imposing on them a duty which they would not otherwise be liable to perform: Ascot Investments Pty Ltd v Harper (1981) 148 CLR 337 at 354. None of the orders affect the third parties and are directed solely to the husband. Inferences drawn by the court in relation to matters pertaining to the discretion to enforce against the husband do not create any obligation on the third parties nor affect any of their rights. The wife sought orders which would have had an effect on the third parties but her application for those orders was dismissed.
At [155] of the reasons for judgment dated 5 September 2016, the court said:
155.… Accordingly [Counsel for the wife] argued that discretionary payments made by the husband’s father or the trust discharging the husband’s credit card liabilities could fall within an injunction made under Section 106B.
156.Even if that submission is correct, and I make no finding, I am not prepared to make such an order. It is clear from the relationship between the parties that the husband’s father’s willingness to make payments varies from time to time and there is no certainty of payments to the husband. … I proposed to dismiss the wife’s application in respect of the Third Parties.
At [136] the court said:
136.… In the course of written submissions Senior Counsel indicated that the husband never had a personal ability to meet maintenance payments without funds from third parties; that neither the husband’s father nor the [Malloy Group] have any legal liability to make payments and that the father is entitled to refuse to make any payments to or for the wife’s benefit. The only way the husband could meet any payments would be as a result of him continuing to benefit from the largesse of [Mr Q Malloy] and the [Malloy Group].
137.I accept that on the evidence to date that is before the court those submissions are legally correct. However the question is whether I should enforce the obligation of the husband pursuant to an order to which he consented, and the basis of that consent, in my view, can both be taken as an admission that the husband wished to make payments to the wife, and that he had the capacity to arrange to do so, albeit from funds made available from his father. …
(Emphasis added)
At [142], the court said:
142.As the Full Court said in Reynolds & Reynolds (1985) FLC 91-632 at 80,113, when discussing benefits conferred without legal control:
There is no formula for quantifying future generosity on the part of a group of people whether bound by ties of blood or not. One can only look at the past history and weigh the probabilities.
143.In Hall v Hall [2016] HCA 23 the plurality of the High Court said:
55.Whether a potential source of financial support amounts to a financial resource of a party turns in most cases on a factual enquiry as to whether or not support from that source could reasonably be expected to be forthcoming were the party to call on it.
144. But, if applicable, neither of those statements in Reyonlds [sic] and Hall necessarily permit enforcement against the assets of the third party.
Paragraph 9 of the outline of submissions by the third parties asserts that:
9.2.3. Any Order for spousal maintenance in these proceedings is an Order effectively made against a non-party to the marriage, for which the Court has no power to make.
9.2.4The Court cannot compel a stranger to the marriage to provide any support to the Wife, let alone a level of financial support beyond that which that person is prepared to extend.
In my view, neither the orders nor the reasons for judgment support the conclusion in 9.2.3 and, despite the obviously uncomfortable nature of trial judges having to assess the merits of an appeal, I would be prepared to say that there is little merit in those grounds if indeed the third parties have standing to appeal orders which do not affect them. Similarly in my view the appeal against the enforcement of maintenance, which is entirely discretionary, and the appointment of a Receiver of the husband’s property falls into the same category.
Whilst I have found that the husband’s appeal is not without merit, I am not satisfied that the same can be said about the appeal of the third parties. The appointment of the Receiver was made in in accordance with the Rules in relation to the enforcement of maintenance. Whilst the husband is responsible for the costs of the Receiver and I have found that to be a relevant fact, the third parties are not, and I again find it difficult to see any merit in the idea that third parties are able to appeal against orders which do not affect them.
The third parties’ notice of appeal also contends that that they had an interest which was not adequately taken into account as a second mortgagee and as a party or guarantor in relation to one of the first mortgages secured over the husband’s real property.
Given the requirement for leave, I am far from satisfied that a “substantial injustice” would flow to the third parties if leave to appeal were refused. For example, whilst the third parties assert that they do not wish a sale of the properties as mortgagees in the current financial climate because the debt would be crystallised and would not be fully met, their legal position is no different whether or not the property is sold. The husband’s indebtedness to them is not changed by sale of the property other than to the extent that part or all of his liability to them can be met from the proceeds of sale. If the monies owing are all met from the proceeds of sale, presumably the third parties are better off or at least no worse off as mortgagee. If the liability cannot all be met from the proceeds of sale, then obviously the security the third parties presently have is inadequate to meet the whole liability, but that is simply a question of fact and the crystallisation of that fact does not alter the husband’s underlying indebtedness or his capacity to meet it from secured assets.
Given that the orders do not affect the third parties, my conclusion is that, given the need for leave to appeal, the third parties do not have an arguable case, that the appeal is not likely to be rendered nugatory in respect of their interests if the stay is not granted and, in respect of their interests, the balance of convenience supports the wife rather than the third parties.
However, if I am wrong, then the third parties’ interests are entirely protected by the stay that I have granted in relation to the husband’s application. In that case their application is entirely unnecessary and I observe that their application was not conditional upon the failure of the husband’ application. The application of the third parties will be dismissed.
I certify that the preceding fifty-two (52) paragraphs are a true copy of the reasons for judgment of the Honourable Chief Justice Bryant delivered on
7 December 2016.
Associate:
Date: 7 December 2016
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