R and D

[2009] FCWA 130

[2009] FCWA 130

JURISDICTION	:	FAMILY COURT OF WESTERN AUSTRALIA
ACT	:	FAMILY LAW ACT 1975
LOCATION	:	PERTH
CITATION	:	R and D [2009] FCWA 130
CORAM	:	MONCRIEFF J
HEARD	:	25 SEPTEMBER 2009
DELIVERED	:	25 SEPTEMBER 2009
PUBLISHED	:	8 OCTOBER 2009
FILE NO/S	:	PTW 4941 of 2006

BETWEEN : R

Applicant/Father

AND

D

Respondent/Mother

Catchwords:

ORDERS - enforcement - stay

Legislation:

Family Law Rules 2004 Rule 22.11

Category: Not Reportable

Representation:

Counsel:

Applicant	:	Mr F Castiglione QC
Respondent	:	Self Represented Litigant

Solicitors:

Applicant	:	Hudson Henning & Goodman
Respondent	:	Self-Represented Litigant

[2009] FCWA 130

Case(s) referred to in judgment(s):

Carlin v Carlin (1977) FLC 90-320
DS v DS (2003) FLC 93-165
Eastland Technology Australia Pty Ltd and Ors v Whisson and Ors (2003) 28 WAR 308
Federal Commissioner of Taxation v Myer Emporium Ltd (1986) 160 CLR 220
House and the King (1936) 55 CLR 499
In Re Evelyn (No 2) (1998) FLC 92-807
Kelly v Kelly (1981) FLC 91-007
Scarborough v Lews Junction Stores Pty Ltd (1963) VR 129

[2009] FCWA 130

1 Let me say at the very outset I reserve the right to correct any grammatical or other errors in this judgment, other than of course as to the substance thereof.

2 The Court has to consider the competing applications of the wife for

enforcement of the orders made by the Honourable Justice Penny (as she then was) on 19 June 2009, following a trial of the proceedings between the parties, that application being filed on 28 August 2009, and also the application of the husband filed on 25 August 2009 for a stay of those orders and also the subsequent costs order of 29 June 2009.

3 The husband has filed an appeal against the orders made by her Honour which

followed a trial between the parties heard over three days in December 2009, with judgment being delivered on 19 June 2009. The wife seeks to enforce the payment of $60,000 as ordered on 19 June and also the payment of $24,000, being the costs in accordance with the orders made by her Honour for their payment.

4 The husband has filed an amended notice of appeal and he seeks to rely on the following grounds:

(1)	that the applicant husband was not afforded procedural fairness by the learned trial Judge at the trial in these proceedings in which the husband was self-represented;
(2)	that the learned trial Judge erred in law and in fact by not including the husband's capital gains tax in the sum of $111,764 as a liability of the parties in the schedule of assets and liabilities;
(3)	that the learned trial Judge erred in fact in making a finding that the husband would not continue to have shared care of the children of the marriage into the foreseeable future and thereby misdirected herself in relation to section 75(2);
(4)	that the learned trial Judge erred in the exercise of her discretion by including various add-backs when it was manifestly incorrect to do so, interest and charges on a loan incurred as a result of husband not placing property on the market for sale, being $32,369 (sic) and the loss on sale price of properties due to husband refusing to comply with court orders in the sum of $60,000.

5 As an outcome, the husband seeks orders that orders (1) and (4)(c) of the orders

made on 19 June 2009 obliging the husband to pay $60,000 be set aside and that the order made on 29 June 2009 obliging the husband to pay $24,000 be set aside and that the wife pay to the husband a sum to be quantified within 28 days.

6 It is not clear whether as an outcome from the appeal it would be likely that the

Full Court would re-exercise its discretion if they found her Honour to be in error or remit the matter for rehearing. If the husband were to succeed with his first ground of appeal, it would be more likely than not that the matter would have to be remitted for a rehearing. I must of necessity reflect upon the likely prospects of an appeal in the consideration of an application for a stay of the orders pending that appeal.

[2009] FCWA 130

7 The appeal is likely to be listed in March 2010. The granting of a stay pursuant

to Rule 22.11 is discretionary and the principles that I must apply in the exercise of that discretion are well summarised by Ryan FM, as she then was, in DS v DS (2003) FLC 93-165 at paragraph 22, where her Honour referred to the authority of In Re Evelyn (No 2) (1998) FLC 92-807, where the Full Court of the Family Court summarised the relevant law, adopting a passage from Carlin v Carlin (1977) FLC 90- 320 at 76,696, where Watson SJ said:

“Without in any way fettering discretion, it seems to me that I should in this case consider (a) the rights of the children, (b) the delays as to appeal, (c) whether refusal of the stay renders a successful appeal nugatory, (d) the hardship to the successful respondent in comparison with the hardship to the applicant, (e) the grounds of appeal.”

8 Whilst DS v DS and In Re Evelyn expounded as a principle relevant to appeals from orders related to children, they sit comfortably with the general principles expounded by the various courts as to the approach to be adopted in property matters. Generally, the principles could be summarised as follows:

(1)	That a basic principle of law is the Court does not make a practice of depriving a successful litigant of the fruits of his litigation;
(2)	There is an obligation to demonstrate that a stay is appropriate in all the circumstances.

9 As noted by Adam J in Scarborough v Lews Junction Stores Pty Ltd (1963) VR 129 at p 130, and cited with approval by Fogarty J in Kelly v Kelly (1981) FLC 91- 007:

“There must be special circumstances existing to justify an order staying the execution of the judgment, some special circumstances which must be relevant for the purpose for which the stay is granted. Such circumstances would exist where a successful applicant would be deprived of the fruits of his appeal if a stay of execution were not granted.”

10 It has been stated that an applicant for a stay of execution should show that he

would probably not be able to recover from the other party the amount of judgment which he has been compelled to pay under execution in order to satisfy the Court that a stay should be granted. I do not think the word "probably" has any particular merit. The test I think is whether there is a real risk, as identified by Mr Castiglione, that the appeal would prove abortive if the appellant were not granted a stay. I turn to consider the question of risk later. In Kelly v Kelly, Fogarty J observed as follows:

“It is I think unhelpful to attempt to circumscribe the exercise of that discretion by particular phrases or by reference to particular categories. Each case must be looked at in the light of its own circumstances against the background of that general approach and a decision made in each case as to whether a stay is proper in light of the words of the regulations considered against the background of decided cases. The discretion should be wide and untrammelled by reference to particular categories, in particular it is particularly important under the Family Law Act.

[2009] FCWA 130

Confining one self to property orders experience shows that the scope and impact of orders under s 78 and s 79 of the Family Law Act can vary considerably and the relevance of an application for a stay would vary markedly, for example, the ordinary type of order encountered frequently in this jurisdiction is an order for the sale of the only asset of the parties, namely the former matrimonial home which may be occupied by one of them and perhaps the children of the marriage. Ordinarily and what one would anticipate that it would be proper to grant a stay in respect of such an order because it may prove impossible or impracticable to restore the previously existing situation if the appeal were successful, but the sale had been carried through in the meantime. Numerous instances have come to mind.”

11 The position with the law as it currently is stated in the State of Western

Australia is best expounded in Eastland Technology Australia Pty Ltd and Ors v Whisson and Ors (2003) 28 WAR 308. At page 311 the Court summarises the principles thus, and I point out for the sake of the parties that each and every case that has been mentioned today was considered by the Court in that case and the matter was argued extensively by three senior counsel. The Court determined that:

“In the light of the authorities, we may attempt to distil what we take to be

the general applicable relevant principles –

• The successful litigant at first instance will ordinarily be entitled to enforce the judgment pending the determination of any appeal.

• It is for the applicant for a stay to move the court to a favourable exercise of its discretion.

• It will not do so unless special circumstances are shown justifying the departure from the ordinary rule.

• The central issue will be whether the grant of a stay is perceived to be necessary to preserve the subject matter or the integrity of the litigation, or where refusal of a stay could create practical difficulties in respect of the relief which may be granted on appeal. It is often put shortly that it will first and foremost be necessary to establish that without the grant of a stay, the right of appeal, whether upon the grant of leave or special leave or not, will be rendered nugatory.

• If that can be demonstrated, the stay will generally still be refused unless it can be established that the appeal process, whether upon the grant of leave or special leave or not, has ultimately reasonable prospects of success so as to result in the grant of relief to the appellant.

• If that hurdle can be overcome, the stay may still be refused where it appears that the balance of convenience does not lie in favour of the applicant; where, for example, the grant of a stay will occasion

[2009] FCWA 130

hardship to the respondent which may not be alleviated by the
terms upon which the stay may be granted.

It was by the application of these principles that the court determined the applications to which these reasons relate. Both were dismissed.”

12 I turn to consider the nature of the appeal. There are no particulars as to the

absence of procedural fairness that the husband claims was missing at the trial before her Honour and I can make little or no comment about that ground of appeal, save and except to refer to some matters that have been raised where there is controversy about the evidence before her Honour as referred to in the affidavits.

13 As to the appeal from the treatment by her Honour as to capital gains tax, I note

in her Honour's judgment she determined not to include the liabilities for capital gains tax, dealing with the matter on the basis that it be borne equally between the parties once the liability had been quantified. Her Honour gave a clear statement of intent and whilst it may be that that statement of intent is not strictly reflected in the orders made upon the publication of the judgment, a correction in that regard may not necessarily require an appeal.

14 There was no finding, however, accordingly by her Honour in the judgment as to

the liability. Such an open finding as to the liability was of course available to her Honour in the exercise of her discretion to apportion the capital gains tax as she did and to appeal from that determination is an appeal against an exercise of discretion.

15 In Ground 3 the appellant asserts that her Honour had erred in fact by making a

finding that the husband would not continue to have shared care of the children and thereby misdirected herself with respect to section 75(2): the finding made by her Honour in this regard was based on her assessment of the parties' credit and the circumstances in which the husband had attempted to vary the care arrangements for the children. Her Honour refers thereto in paragraph 96 of her judgment where she says:

“On 3 August 2007 the parties settled matters in relation to the children. The children were to spend a week about with each party. That continued until the trial. After the trial in January 2009 the husband emailed the wife and stated as follows, "[Ms D], given the current situation, the children are going to have to reside with you full-time until I can afford to continue to pay the mortgage. [Mr R”.”

16 Findings of credit are notoriously difficult to a challenge on appeal and indeed,

there is no challenge to her Honour's findings as to the credibility of the parties in the
notice of appeal.

17 Ground 4 of the appeal itself acknowledges that her Honour was exercising a

discretion in the inclusion of add-backs. As I have said, discretionary judgments are notoriously difficult to overturn on appeal and I refer to the oft-quoted judgment of Dixon, Evatt and McTiernan JJ in House and the King (1936) 55 CLR 499 at pp 504

[2009] FCWA 130

and 505 where their Honours refer to the manner in which appeals against an exercise
of discretion should be determined, saying:

“The manner in which an appeal against an exercise of discretion should be determined is governed by established principles. It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so.”

18 It would seem on the face of the appeal that the husband may have some

difficulty. However, whilst I must consider the grounds of appeal, that is not determinative of the application. I must also consider particularly whether the appeal would be rendered nugatory or, as I have quoted from Adam J, whether there is a real risk that the appeal would prove abortive if the applicant were not granted a stay.

19 In terms of the assessment of the question of risk I also note the submission by

Mr Castiglione, one of Her Majesty’s Counsel, where he refers to the balancing of a present and imminent risk with respect to the possibility of a forced sale of the husband's property. In Federal Commissioner of Taxation v Myer Emporium Ltd (1986) 160 CLR 220, Dawson J, at p 222 going onto p 223, considered the question of risk and he says:

“Special circumstances justifying a stay will exist where it is necessary to

prevent the appeal, if successful, from being nugatory” …

and his Honour referred to various authorities. He went on to say:

“Generally, that will occur because of the respondent's financial state; there is no reasonable prospect of recovering moneys paid pursuant to the judgment at first instance. However, special circumstances are not limited to that situation and will I think exist where, for whatever reason, there is a real risk that it will not be possible for a successful appellant to be restored substantially to his former position if the judgment against him is executed.”

20 The effect of her Honour's orders was to settle upon the wife assets in the sum of

$759,220, the principal asset being the unencumbered house property at [the address in the suburbs]. The husband, based on her Honour's figures, retained assets of $517,000, although a significant portion of those assets comprised add-backs. I should also note at this point that in the calculation of add-backs her Honour, in the exercise of her discretion, significantly discounted the same.

21 By reference to the schedule of assets and liabilities contained in her Honour's judgment at paragraph 88, it would appear that the husband has the following assets:

[2009] FCWA 130

• land and improvements at [another suburban address] to the with a value of $770,000;

• a business – [WITPL], with a value of $26,661;

• a [ motor car] with a value of $7700;

• a [motor vehicle] with a value of $12,700;

• a boat with a value of $10,000,

giving him gross retained assets of $827,861, against which there are liabilities of a mortgage and tax totalling $514,521 or a net position of $313,340. I have excluded from the assets of the husband his superannuation entitlements.

22 This position does not compare favourably with that which the husband now

represents to the Court as being his financial position, where he says in his updated statement of financial circumstances that his liabilities now exceed his assets, where he estimates the total value of property owned by him to be $791,569 against liabilities of $829,693.

23 In support of his application the husband says that he would experience hardship

if he was forced to make the payments that the orders specify and in paragraph 11 of
his first affidavit filed on 25 August he gives the following reasons, namely:

“1.	I have been receiving a Newstart government allowance since December 2008;
2.	I owe approximately $17,000 in overdue mortgage payments;
3.	I am on hardship terms for the payment of my land and water rates and will receive a government hardship utility grant to assist me with payment of my recent electricity and gas accounts.”

24 The husband goes on to say that he has no assets that he can sell to make a

payment of the sums ordered by her Honour. The husband does indicate that if he were to sell his car and other personal items he would, in his estimation, be able to raise only $10,000 but this would cause him hardship as the three children of the parties spend at least 50 per cent of their time with him and now it would seem that the parties' son Jordan spends a greater proportion of the time with his father.

25 The husband says he has applied to his superannuation fund to have funds

released to him on the grounds of hardship. The husband says he has commenced
employment on a commission basis with [a real estate company].

26 I turn to consider what her Honour said in paragraph 111 of her judgment, and I

quote:

“The husband is aged 42 years and the wife almost 41. The husband has a degree in [communications], has worked in the area of computer IT, real estate and now mortgage broking. While he has been unemployed on a number of occasions during the marriage, this has not been for lengthy periods. In my opinion, his failure to obtain proper employment since

[2009] FCWA 130

2008 is as a result of these proceedings. In my view, he wishes to avoid any obligation to pay child support and, for the purposes of these proceedings, wishes to be seen as unemployed.”

27 Her Honour then goes on to find in paragraph 112 that the husband has a capacity to earn a significant income:

“Prior to separation he earned sums in excess of $100,000 a year. I can see no reason, given all his qualifications and experience, that he cannot earn those sums again.”

28 On the face of the appeal there appears to be no challenge to those findings and,

significantly, her Honour records that the husband had previously represented to the Court that his care of the children would not impact on his earning capacity. There is no suggestion by the husband that compliance with the orders would require him to sell the [encumbered] property. Given the representations of the husband as to his financial circumstances in any event, it would seem if those representations were accurate as to his current financial state that the [encumbered] property would need to be sold in any event.

29 I am troubled by the absence of any real evidence as to forbearance by the bank,

and as to the ability of the husband to ever raise the sums required to discharge the mortgage to the ANZ Bank and refinance to relieve the wife of her contractual liability to the bank; to pay off his mounting credit card debt, which is now in excess of $104,000 as at 14 September 2009, having been nil in July 2007 as found by her Honour; and given the husband's claimed state of income, where he represents that he has recently sold a property and is entitled to $8000 commission - there is no evidence of that, and as to future income for the husband, it would seem to be resting on the hope and expectation of the husband that properties that he has listed will sell quickly and that the sales will proceed to settlement.

30 I express concern that the equity in the property that was available in June

appears to have diminished from a positive position now to the representation by the husband as to a minus equity. The saving grace, it would seem, to the husband is that he suggested that the property has increased in value. The wife, on the other hand, has an unencumbered property. In the event that the husband is successful in his appeal it is reasonable to anticipate that the wife will be able to repay to the husband any amount that the appellate court directed as a consequence of its orders or a subsequent hearing that should be repaid to the husband.

31 I am not satisfied that a refusal to grant a stay in this case would render the

husband's appeal nugatory in the sense of him being unable to recover from the wife any sums ordered to be paid ultimately to him by the wife whenever a decision on that appeal - fairly conceded by Mr Castiglione to be likely to be August of next year, subject of course to the possibility that the Full Court may order a retrial if the husband is successful on his appeal.

32 I am not satisfied that the balance of prejudice rests with the husband. I am

concerned that with the diminishing equity in the property held by the husband, by the uncertainty of his ability to be able to borrow within a reasonably acceptable period of

[2009] FCWA 130

time the sums required to be paid to the wife, indeed the balance of prejudice in this
case rests in my finding with the wife.

33 There is no evidence, as I have mentioned, before me that gives me any certainty

that the husband will at any future time or foreseeable future time be able to satisfy the obligations required of him by the orders of this Court. As the wife points out in her submission to me today, based on the husband's representations as to his financial circumstances, he has a deficit of $8,000 per month which would require him to earn an after-tax income of $96,000 merely to service his current obligations. He would need to earn a greater sum than that to actually reduce his liabilities, ignoring the liability to the wife pursuant to her Honour's orders.

34 In all the circumstances, I am not satisfied in this case that there are

circumstances to warrant the grant of a stay and accordingly, I dismiss the husband's
application.

I certify that the preceding [34] paragraphs are a true copy of the reasons for

judgment delivered by this Honourable Court

Associate