Peterson & Davis (No 4)
[2022] FedCFamC1F 753
•30 September 2022
Federal Circuit and Family Court of Australia
(DIVISION 1)
Peterson & Davis (No 4) [2022] FedCFamC1F 753
File number(s): PAC 1208 of 2016 Judgment of: CAMPTON J Date of judgment: 30 September 2022 Catchwords: FAMILY LAW – PRACTICE AND PROCEDURE – Application in a proceeding – Stay of orders – Where the third and fourth respondents seek a stay of orders facilitating the sale of two real properties pending the determination of an appeal – Where a failure to grant the stay will render the appeal nugatory – Where a stay is granted pending appeal. Legislation: Family Law Act 1975 (Cth) s 90SM Cases cited: Alexander v Cambridge Credit Corporation (1985) 2 NSWLR 685
Edwards v Noble (1971) 125 CLR 296; [1971] HCA 54
Federal Commissioner of Taxation v Myer Emporium Ltd (1986) 160 CLR 220; [1986] HCA 13
Gronow v Gronow (1979) 144 CLR 513; [1979] HCA 63
Jennings Constructions Limited v Burgundy Royale Investments Pty Ltd (1986) 161 CLR 681; [1986] HCA 86
State Rail Authority of New South Wales v Earthline Constructions Pty Ltd (in liq) and Others (1999) 160 ALR 588; [1999] HCA 3
Division: Division 1 First Instance Number of paragraphs: 43 Date of hearing: 28 September 2022 Place: Sydney Counsel for the Applicant: Mr George Solicitor for the Applicant: Williamson & Learmonth Solicitors Solicitor for the First Respondent: Adams & Partners Lawyers Counsel for the Second Respondent: Mr Eardley Solicitor for the Second Respondent: Mercantile Legal Services Counsel for the Third and Fourth Respondents: Mr Ng Solicitor for the Third and Fourth Respondents: McEvoy Legal ORDERS
PAC 1208 of 2016 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS PETERSON
Applicant
AND: MR DAVIS
First Respondent
MR CUSSON
Second Respondent
MS DAVIS (and another named in the Schedule)
Third Respondent
order made by:
CAMPTON J
DATE OF ORDER:
30 September 2022
THE COURT ORDERS THAT:
1.That upon the third and fourth respondents each:
(a)Filing and serving an undertaking as to damages pursuant to r 10.18 using the prescribed Court form; and
(b)Filing and serving an undertaking to cause any arrears in respect of the mortgages secured on the properties at 1 N Street, D Town and 2 N Street, D Town in favour of the National Australia Bank to be paid and to pay any instalments due in respect of the said mortgages as and when they fall due.
Orders 8, 9 and 10 made on 31 August 2022 be stayed until the happening of the first of the following events:
(c)3 February
20222023; or(d)Either of the mortgages secured upon the D Town properties being in arrears for greater than one month; or
(e)The third and fourth respondents being in default in compliance with any orders or directions made in the prosecution of Appeal … of 2022 for a period of greater than seven days or Order 5 made 31 August 2022 for a period of greater than 14 days; or
(f)The Notice of Appeal in proceedings number … of 2022 is determined, withdrawn or discontinued
And upon the happening of the first such event, this Order is discharged.
2.The Application in a Proceeding of the third and fourth respondents filed 27 September 2022 otherwise be dismissed.
3.Each parties’ costs of and incidental to the Application in a Proceeding of the third and fourth respondents filed 27 September 2022 be reserved and are adjourned for directions at 9.30 am on 24 February 2023.
4.The Application in a Proceeding of the applicant as to costs filed 28 September 2022, and the Application in a Proceeding of the second respondent as to costs filed 28 September 2022 be adjourned for directions at 9.30 am on 24 February 2023.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Peterson & Davis has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
CAMPTON J:
Mr B Davis and Ms Davis (“the third and fourth respondents”) by way of a Notice of Appeal filed 26 September 2022 in proceedings number … of 2022, appeal from Orders 2, 3, 4, 5, 7, 8, 9, 10, and 14 made on 31 August 2022.
On 27 September 2022, the third and fourth respondents filed an Application in a Proceeding (“the Stay Application”) seeking orders in the following terms:
1. That Orders 2, 3, 4, 5, 7, 8, 9, 10 and 14 made by Justice Campton on 31 August 2022 be stayed pending the determination of the appeal in proceeding no. ….
2. Costs.
3. Any further or other Order that the Court deems fit.
Background
Ms Peterson (“the applicant”) and Mr Davis (“the respondent”) commenced a de facto relationship in early 1999. They did not marry. They had three children together. Their relationship ended upon the applicant vacating their former family home on 15 March 2010.
In late 2011 the applicant became bankrupt on her own petition. In early 2012 Mr Cusson (“the trustee”) was appointed trustee of the applicant’s bankrupt estate in place of the official trustee.
The applicant was discharged from bankruptcy late 2014. She was a discharged bankrupt at the date of filing her Initiating Application on 17 March 2016. The trustee was named as the second respondent to the applicant’s Initiating Application and has remained a party to the proceedings from that time.
By an order made on 15 November 2016 the third and fourth respondents successfully applied to be joined as parties to these proceedings.
A major issue for determination at trial was the beneficial ownership of two real properties at 1 N Street, D Town (“1 N Street”) and 2 N Street, D Town (“2 N Street”), (collectively, “the D Town properties”).
The D Town properties were legally and beneficially held by the third and fourth respondents until late 2008, on which date the third and fourth respondents transferred their interests in the properties to the applicant and respondent. The construction of their case was that the D Town properties had been transferred to the applicant and respondent in circumstances where they feared losing the properties to a hostile mortgagee who had commenced Supreme Court proceedings for possession subsequent to the third and fourth respondents’ default on their mortgage loan secured on the properties. They contended that the D Town properties were beneficially held for them by the respondent and the trustee.
The respondent, being the son of the third and fourth respondents, aligned his case with that of the third and fourth respondents.
The applicant and the trustee denied that the beneficial ownership of the properties remained with the third and fourth respondents.
The final orders made 31 August 2022
On 31 August 2022, for reasons then delivered, I made final orders dismissing the claim of the respondent and the third and fourth respondents as to the respondent and the trustee holding their legal interest in the D Town properties beneficially for the third and fourth respondents.
The orders that are the subject of appeal broadly provided for the D Town properties to be sold, for the mortgages secured on the properties to be discharged on the completion of the sales, for there to be a charge on the properties in favour of the third and fourth respondents at a value to be assessed carrying interest to be then paid and for any balance of the proceeds of sale to be thereafter distributed as between the applicant, the respondent and the trustee pursuant to s 90SM of the Family Law Act 1975 (Cth) (“the Act”). Other orders that were made pursuant to s 90SM of the Act are not the subject of appeal.
The stay hearing
Abandonment of the application to stay some of the primary orders
Over the course of the stay hearing, the third and fourth respondents abandoned the application for a stay of Orders 2, 3, 4, 7 and 14 made 31 August 2022.
Order 7 required the third and fourth respondents to do all things as are necessary to deliver up vacant possession of the D Town properties to the trustee within 28 days of the date of the orders, being on or before 28 September 2022. The third and fourth respondents advised during the hearing of the stay that they are not in possession of the properties, that they do not have the keys to the properties and “there is nothing further to be done” to provide the trustee with vacant possession of the said properties.
The evidence relied upon by each party
The third and fourth respondents relied on the following documents:
(a)The Stay Application filed on 27 September 2022;
(b)An affidavit of their solicitor, Mr AM, filed on 27 September 2022; and
(c)The Notice of Appeal filed on 26 September 2022, which was marked Exhibit 1.
Although it was not part of the orders sought by the third and fourth respondents as a condition of any stay, paragraph five of the affidavit of Mr AM records as follows:
5. In the meantime, pending the outcome of the appeal:
a. the Applicants propose to continue paying, or to indemnify the other parties to the proceedings for, all mortgage repayments and other ongoing costs, such as council and water rates, associated with the [D Town Properties] until the properties are transferred into their names or sold; and b. they will, to the extent necessary, provide the usual undertakings as to damages.
Counsel for the third and fourth respondents was invited to make an application for leave to amend the relief sought by the Stay Application pertaining to the conditions upon which the stay of orders was sought, by providing a Minute of Order particularising with precision the those conditions. That invitation was declined. Counsel submitted that it was wholly a matter for the Court to impose such conditions as appropriate in the indulgence of a stay.
The respondent supported the third and fourth respondents’ application for a stay. He adopted the submissions made on their behalf. He did not rely on any evidence.
The applicant and the trustee opposed the application for a stay of the third and fourth respondents. They each did not rely on any evidence in support of that opposition.
The law
The principles applicable to the granting of a stay pending determination of an appeal from primary orders, both in the general law and in respect of proceedings in this forum, are well settled (see The Commissioner of Taxation of the Commonwealth of Australia v Myer Emporium Limited (1986) 160 CLR 220 at 230; Alexander v Cambridge Credit Corporation (1985) 2 NSWLR 685; Jennings Constructions Limited v Burgundy Royale Investments Pty Ltd (1986) 161 CLR 681). The authorities stress the discretionary nature of the application which should be determined on its merits. Principles relevant to this matter include the following:
·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; and
·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.
The third and fourth respondents accepted that they bear the onus to establish a proper basis for the stay.
They submitted that consideration of the merits or likely success of the appeal was a “neutral factor” in the exercise of discretion to grant a stay in this case. The formulation of the grounds recorded in the Notice of Appeal are somewhat irregular. Counsel for the third and fourth respondents said that the construction of the grounds was to assist the Appellate Court in identifying the contended errors in the conclusions in the primary judgment. Counsel said the “grounds” of the appeal can be distilled to be paragraphs 1(n)-(r) inclusive, 2 (a)-(d) inclusive, 3(a) and (d), 4(d)-(f) inclusive, and 5 of the Notice of Appeal filed 26 September 2022
Counsel for the trustee submitted that the grounds as identified were in reality:
(a)Directed to weight issues. Counsel for the trustee correctly observed the reluctance of appellate intervention on matters relating purely to conflicting assessments of matters of weight (see Gronow v Gronow (1979) 144 CLR 513 at 519); and
(b)Directed to complaints as to findings of fact made in error, or a failure or make material findings of fact on the evidence. It was submitted that the likelihood of appellate intervention on such grounds in this case was remote. Counsel submitted that the fact that there may be another explanation available contrary to that engaged by the primary judge, is insufficient to demonstrate appellate error if there is evidence to support the primary judges findings. The test on appeal to ground intervention is whether the finding of fact or findings of fact material to the exercise of discretion were not reasonably open to the primary judge (see Edwards v Noble (1971) 125 CLR 296 at 304). Counsel highlighted that the test raised is one which is not lightly or readily satisfied. He further identified the material difference between a primary judge having the opportunity to see and hear the evidence and the witnesses who give it, and an appellate court simply reading what is recorded as having been said (see State Rail Authority of New South Wales v Earthline Constructions Pty Ltd (in liq) and Others (1999) 160 ALR 588).
Counsel for both the applicant and the trustee strongly submitted that the prospects of success of the appeal are poor, and that this is weighty factor in refusing the stay.
Counsel for the third and fourth respondents said that the gravamen of the appeal was that the primary judge was in error in failing to reach a conclusion at law from the uncontroversial and determined facts. This was not the understanding of counsel for the trustee on reading the grounds of appeal. I had some difficulty distilling such error of law as being the primary focus of the grounds as recorded in the notice of appeal. Counsel for the third and fourth respondents agreed that the basic tenant of the appeal was that the “evidence should have led somewhere else”, being other than as determined.
The third and fourth respondents contended that the focus of the stay enquiry should be on the potential prejudice to the third and fourth respondents in circumstances where the process prescribed by the primary orders required the respondent and the trustee to commence marketing the property for sale from “today”. It was submitted that the third and fourth respondents would suffer irreversible prejudice if the sale preceded and was completed prior to the appeal being determined.
The third and fourth respondents’ primary relief at trial was to obtain the transfer of the legal interest of the respondent and the trustee in the D Town property in their favour so as to receive the properties in specie. The affidavit of their solicitor, Mr AM, filed on 27 September 2022 records hearsay evidence as to the third and fourth respondents current intention to live in one of the D Town properties and to lease the other property in their retirement. This did not form part of the evidence at trial. I inquired with counsel for the third and fourth respondents as to the weight to be attached to the evidence of Mr AM, having regard to the deficiencies in the evidence of the third respondent at trial, the failure of the fourth respondent to give evidence at trial, and the absence of evidence as to their current financial circumstances so as to comply with any of the conditions of a stay as proffered by way of the evidence of Mr AM preserving it from any action by the mortgagee. I did not receive a responsive answer to that inquiry.
The applicant and the trustee were critical in their submissions as to the absence of evidence from the third and fourth respondents themselves in support of the stay. There was scant evidence of the financial circumstances of the third respondent at trial, save that he had been retired since 2004, that he had not filed a taxation return since that time, and that he was supported by his wife and adult son. It was uncontroversial that the fourth respondent is employed receiving and receives a modest substantial income. She did not give evidence at the trial. There is no evidence as to whether the mortgage payments are up to date or in arrears. The representation made by counsel for the third and fourth respondents at the hearing before me that “there is nothing further to be done” to provide the trustee with vacant possession of the properties, implies that the properties are not tenanted and that the third and fourth respondents are not receiving any rental income from the properties. There was no explanation as to why the third and fourth respondents did not give their own direct evidence on each of these subject matters in support of the stay. In the circumstances I place little weight on the evidence of Mr AM on these topics.
Enquiry was made of counsel for the third and fourth respondents as to the weight to be given in the exercise of discretion as to a stay in circumstance where an order was made on 16 October 2017 for the rent received from the D Town properties to be paid to the trustee and the conduct thereafter of the third and fourth respondents in unilaterally diverting those rental payments in contravention of that order from 30 August 2018 until the date of the trial. Counsel for the third and fourth respondents did not meaningfully engage with this enquiry.
Enquiry was made of counsel for the third and fourth respondents as to the evidentiary foundation supporting a stay of Order 5 made on 31 August 2022. It required the parties to agree as to the value of the equitable charge within 21 days of the orders. During the trial, senior counsel for the third and fourth respondents said that it was expected that such agreement or compromise as to quantum could be achieved expeditiously. Failing agreement, the orders required the parties to confer as to the identity of the assessor and the instructions to be provided to the assessor. There is no evidence that any of these orders have been implemented.
The third and fourth respondents gave no evidence to support the stay of Order 5 made 31 August 2022. The trustee was critical of the failures of the third and fourth respondents to engage in the processes mandated by Order 5.
It was submitted by the third and fourth respondents that compliance with the order would incur cost and expense that ought to be avoided until the appeal was determined. It was later conceded that the commencement of the process as ordered, including as to the identity of the assessor and the provision of any instructions for the assessor pursuant to the primary orders, would not be a significant cost. The failure of the third and fourth respondents to comply and implement orders of the court were identified as becoming a recurring theme, such that the courts orders are considered to be suggestions or guidelines.
The third and fourth respondents confirmed that if successful on the appeal they would not seek that the Full Court re-exercise discretion. I found this position to be puzzling having regard to the relief sought in the Notice of Appeal.
The applicant conceded some strength to the submission that a failure to a grant a stay would render the appeal nugatory. She highlighted that interest continues to be payable on the monies required to be accounted to the third and fourth respondents from the proceeds of sale of the D Town properties and hence the monies available do she, the respondent and the trustee are reducing each week the sales are delayed.
Counsel for the trustee identified relevant principles in favour of his client including that the trustee is entitled to the benefit of the judgment and that he is entitled to presume the judgment is correct. It was identified that it was necessary to weigh the balance of convenience and the competing rights of the parties, highlighting the six year period of the litigation to date and the mounting interest on the charge in similar terms as identified by the applicant.
All parties agreed that there is uncertainty as to when the appeal is likely to be heard and in those circumstances it was appropriate for me to make inquiries with the appeals registrar as to that matter. Those enquiries reveal that the appeal index is to be settled in or before late 2022 and that the appeal will be listed for hearing either in the Full Court sittings at Sydney commencing for the week commencing late 2022 or early 2023.
Conclusions
This is a very finely balanced matter.
I have reservations as to whether the Notice of Appeal discloses grounds sufficient to attract appellate intervention.
I am mindful as to the absence of evidence directly from each of the third and fourth respondents, as to their failure to comply with court orders and the other factors identified by each of the applicant and the trustee, including the mounting interest due on the charge on the D Town properties and the lengthy period of the litigation to date.
That said, a failure to grant a stay will render the appeal nugatory insofar as it reflects the relief sought by the third and fourth respondents at trial to retain their contended beneficial interest in the D Town properties in specie as those particular properties would sold pursuant to the primary orders prior to the appeal being determined. Putting it another way, restoration of the status quo could not be achieved.
Having regard to the comparatively short period of time in which the efficiency of the full court can determine the appeal the balance of convenience favours the granting of a stay on condition so as to mitigate any prejudice by way of the mortgages not being paid, so as to ensure that the third and fourth respondents prosecute the appeal expeditiously and without delay and otherwise imposing the conditions of a stay as offered by way of the affidavit of the third and fourth respondents’ solicitor.
The third and fourth respondents will be each personally required as a condition of the stay to enter, file and serve undertakings certified by a solicitor as to they having had explained to them the nature and terms of the undertaking; the promise to the court to comply with it, the effect of it and the consequences of breach. The order granting the indulgence of the stay will have both a condition and a sunset so as to motivate the diligent prosecution of the appeal by the third and fourth respondents and their and compliance with the orders of the Court.
The balance of convenience does not favour the stay of Order 5 made 31 August 2022. That relief will be dismissed.
I certify that the preceding forty-three (43) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Campton. Associate:
Dated: 30 August 2022
SCHEDULE OF PARTIES
PAC 1208 of 2016 Respondents
Fourth Respondent:
MR B DAVIS
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