Rand & Rand
[2009] FamCAFC 88
•25 May 2009
FAMILY COURT OF AUSTRALIA
| RAND & RAND | [2009] FamCAFC 88 |
| FAMILY LAW - APPEAL – APPLICATION IN AN APPEAL – where the husband sought to have his “permanently stayed” property appeal “re-instated” – where the court considers the husband is actually seeking an extension of time to pay security for the wife’s costs of the appeal which he was previously ordered to pay but did not pay – whether an extension of time to pay security is in the overall interests of justice – husband granted an extension of time to pay the security for the costs of the wife and providing this is done on the second working day after the making of these orders the permanent stay on the husband’s appeal is lifted. FAMILY LAW - APPEAL – COSTS – husband sought an indulgence from the court – husband to pay the wife’s costs of and incidental to the application. |
| Family Law Act 1975 (Cth) |
| Allesch v Maunz [1998] FamCA 680 (19 July 1998) Cooper v Williams [1963] 2 QB 567 at 580 and 582 Fennessy & Gregorian [2009] FamCAFC 44 [35] Gallo v Dawson (1990) 93 ALR 479 W & W (Unreported, Family Court of Australia, Ellis J, 4 July 1997) |
| APPLICANT/APPELLANT: | Mr M Rand |
| RESPONDENT: | Ms S Rand |
| FILE NUMBER: | SYF | 2153 | of | 2001 |
| APPEAL NUMBER: | EA | 16A | of | 2006 |
| DATE DELIVERED: | 25 May 2009 |
| PLACE DELIVERED: | Canberra |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Finn, May and Boland JJ |
| HEARING DATE: | 4 May 2009 |
| LOWER COURT JURISDICTION: | Family Court of Australia |
| LOWER COURT JUDGMENT DATE: | 10 January 2006 |
| LOWER COURT MNC: | [2006] FamCA 1530 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT/APPELLANT: | Mr Grieve SC with Ms Langley |
| SOLICITOR FOR THE APPELLANT: | Streeterlaw |
| SOLICITOR FOR THE RESPONDENT: | Mr Twigg, Adrian Twigg & Co |
Orders
That the time provided in Order 2 of the orders of the Full Court made on 23 August 2006, for the husband to pay security for the costs of the wife in Appeal Number EA 16A of 2006 (“the appeal”) be extended until 4 pm on the second working day after the date of these orders, notwithstanding that the time provided in Order 2 of the orders made on 23 August 2006 has passed.
That provided the husband has by 4 pm on the second working day after the date of these orders deposited by way of security for the costs of the wife in the appeal a bank cheque for the sum of $45,000 with the wife’s solicitors, Messrs Adrian Twigg & Co to be held by that firm upon trust to abide the further order of the Court, then:
(a)the permanent stay on the appeal imposed by the order of the Full Court made on 23 August 2006 shall be lifted, and
(b)the appeal be listed for hearing at the next available sitting of the Full Court in Sydney and subject to any order of the Full Court which hears the appeal shall be heard on the basis that the appeal is against Orders 3 and 11 of the orders of 10 January 2006 and on the basis of the following ground of appeal:
“That His Honour the Trial Judge erred at law in that he failed to recognise that following the husband’s bankruptcy, all property held by the Husband (save those specifically excluded under the Bankruptcy Act, not here relevant) passed from the Husband to his trustee in bankruptcy and did not re-vest in the Husband upon discharge from bankruptcy, thereby His Honour’s declaration/order No. 3 made on 10 January 2006 had no efficacy in law”.
That the husband pay the costs of the wife of and incidental to his application filed 1 October 2008 with such costs to be assessed in default of agreement and to be payable within 14 days of such assessment or agreement.
That the appeal be listed for directions before the Honourable Justice Finn or other Judge of the Appeal Division as soon as possible after the date of the making of these orders.
IT IS NOTED that publication of this judgment under the pseudonym Rand & Rand is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT SYDNEY |
Appeal Number: EA 16A of 2006
File Number: SYF 2153 of 2001
| Mr M Rand |
Applicant/Appellant
And
| Ms S Rand |
Respondent
REASONS FOR JUDGMENT
Introduction
On 23 August 2006 this Full Court ordered:
· that Mr Rand, (“the husband”), who had on 7 February 2006 filed an appeal (EA 16A of 2006) against Orders nos. 2, 3, 6, 9 and 11 made by Rowlands J on 10 January 2006 in property settlement proceedings between the husband and Ms Rand (“the wife”), should within 14 days lodge security in the sum of $45,000 for the costs of the respondent wife in that appeal (Order 2 of the Orders of 23 August 2006); and
· that in the event that the husband failed to comply with the order for security, the appeal “shall be permanently stayed” (Order 3 of the Orders of 23 August 2006).
The husband did not comply with the order for security, and thus his appeal became “permanently stayed”.
A little over two years after the order for security was made against the husband, an application was filed on his behalf on 1 October 2008 in which the following orders were sought (emphasis added):
1. That the Applicant Husband’s notice of appeal filed on 7 February 2006 be re-instated and listed for hearing so that the matter mentioned in paragraph 2 below (only) may be argued before the Full Court.
2.That the Applicant Husband have leave to amend his notice of appeal filed on 7 February 2006 so as to vary the terms of paragraph 3 of said notice of appeal to read:
“That His Honour the Trial Judge erred at law in that he failed to recognise that following the husband’s bankruptcy, all property held by the Husband (save those specifically excluded under the Bankruptcy Act, not here relevant) passed from the Husband to his trustee in bankruptcy and did not re-vest in the Husband upon discharge from bankruptcy, thereby His Honour’s declaration/order No. 3 made on 10 January 2006 had no efficacy in law”.
3. That the order requiring payment of security for costs be varied so as to prevent [sic] the Husband to pursue that ground as amended (only) without providing such security.
4.That the Respondent Wife pay the Applicant Husband’s costs of this application in the event she opposes it.
Order no. 3 of the orders of 10 January 2006 (to which reference is made in the husband’s application) provided:
3.And Declared that the Wife (subject to Order 11 hereof) is entitled to one half of any profits arising out of the patents or other intellectual property relating to the conversation [sic] of waste material to building products and further order that the Husband account and (subject to Order 11 hereof) pay to the Wife one half of any profits received in respect of the intellectual property of the various companies known as [NR] Technology Pty Limited, [NR] Corporation SARL, [B] Pty Limited and related entities.
Order no. 11 to which reference is made in Order 3 was as follows:
11. That the Wife’s entitlement to profits pursuant to Order 3 above be limited in amount to the sum of:
a) any balance outstanding in respect to the sum of $4,417,406 referred to in the final paragraph of the Reasons for Judgment of 10 January 2006, plus
b)any costs ordered in favour of the Wife in respect of these proceedings including their enforcement, plus
c)interest on sums outstanding referred to in (a) and (b) above, at the rate of interest prescribed by the Family Law Rules or as otherwise ordered.
The affidavit of the husband, also filed on 1 October 2006, in support of the application for “re-instatement” of his appeal, stated:
1.I am the Husband and the Appellant in these proceedings.
2.I was made bankrupt on 28 November 2002.
3. I was discharged from bankruptcy on 29 November 2005 pursuant to s 149 of the Bankruptcy Act.
Thus, it will be seen that the husband now applies to be permitted to pursue his appeal, which is currently “permanently stayed” on account of his failure to lodge security in respect of the wife’s costs in the appeal within the required time, in order to challenge Order 3 of the orders of 10 January 2006. His proposed challenge to Order 3 is on the basis that the intellectual property and/or shares which are the subject of Order 3, had upon his becoming bankrupt on 28 November 2002, vested in his trustee in bankruptcy, and had not re-vested in him upon his discharge from bankruptcy.
These reasons for judgment relate to this application by the husband.
The husband’s case for “reinstatement” of his appeal
Senior Counsel for the husband, relying on the observations of Lord Denning MR and Danckwerts LJ in Cooper v Williams [1963] 2 QB 567 at 580 and 582, submitted that a “permanent” stay is not absolute or irreversible. Senior Counsel further submitted that Order 3 of 23 August 2006 (the order for the permanent stay if the security was not paid) was made in aid of Order 2 (the order for the payment of security), and that while Order 2 required payment of the security within 14 days, the effect of the two orders was that in the event payment was made or proferred at a later time, there would be jurisdiction, or power, to remove the stay. We were informed in this regard that the husband was in a position to offer a bank cheque at, or subsequent to, the hearing before us (on 4 May 2009). Given this information from Senior Counsel, it could be assumed that proposed Order 3 in the husband’s application of 1 October 2008 is not pursued.
It was further submitted on behalf of the husband that in the present case, the interests of justice required the removal of the stay. This was because it had been recognised in our reasons for judgment in relation to the security order, that the appeal could not be regarded as hopeless (at least if the grounds of appeal were amended), and in addition, the husband had now been found to be in contempt for failing to comply with Order 3 of the Orders of 10 January 2006 and sentenced to be imprisoned for such contempt until discharged by an order of the court. Although the husband proposes to challenge Order 3 of 10 January 2006 in an appeal which he has filed against the order of contempt and the sentence of imprisonment, it is more appropriate, according to the submissions on his behalf, that such a challenge be made directly in an appeal against Order 3.
We were informed by Senior Counsel for the husband of the various factual matters mentioned in the last two paragraphs without objection.
The wife’s case in opposition to “re-instatement” of the appeal
In his submissions in opposition to the re-instatement of the husband’s appeal, the solicitor for the wife endeavoured first to distinguish Cooper v Williams (supra) on the basis that it did not involve a “permanent” stay.
It was further submitted that the husband’s proposed amended ground of appeal would have little or no prospect of success for the reason that the husband’s trustee in bankruptcy had effectively disavowed any interest in the intellectual property which was the subject of Order 3; that the husband had offered no explanation at all for his delay in seeking to re-instate the appeal; and that significant prejudice, not curable by a costs order, would be suffered by the wife if the husband was permitted now to pursue his appeal.
Discussion and Conclusion
Although the husband’s application is drafted in terms of seeking “a re-instatement of his appeal” it appears to us in light of the submissions made in support of the application, that what the husband is actually seeking, is an extension of time to pay the security which he was ordered to pay within 14 days of 23 August 2006.
Our orders for the husband to pay security and for his appeal to be stayed in the event that the security was not paid within the time ordered, were made under Part 19.3 of the Family Law Rules 2004. There is power in the Rules for the Court to extend a time period provided under the Rules or under “a procedural order” even though the time fixed under the rule or order has passed. An order for the provision of security for costs in relation to an appeal can be regarded as a procedural order (see s 94(2D)(f) of the Family Law Act 1975 (Cth)).
We are thus satisfied that there is a discretionary power in this Court to extend the time for the husband to pay the security originally ordered to be paid within 14 days of 23 August 2006, notwithstanding that the period of time has long passed. The principles to be applied, and the considerations thus relevant in the determination of an application to extend time in such circumstances are those found in the decision of McHugh J in Gallo v Dawson (1990) 93 ALR 479. Those principles are also the principles to be applied in the determination of an application to re-instate an appeal which has been deemed abandoned under the Rules, or for an application to extend time to appeal. (See in this regard the unreported decisions of Ellis J in W & W (4 July 1997) and O’Ryan J in Allesch v Maunz [1998] FamCA 680 (19 July 1998) and the authorities cited in those decisions.)
The submissions made to us in support of, and in opposition to, the husband’s application in this case can clearly be seen as having been made with regard to the principles enunciated and considerations held to be relevant, in Gallo v Dawson. There can therefore be no prejudice to either party by our determining this application on the basis that in light of our consideration since the hearing, are now of the opinion that the application is most appropriately viewed, and determined, as an application by the husband to extend time to pay the security ordered to be paid on 23 August 2006.
We do not consider that the provisions in our orders of 23 August 2006 for the imposition of a permanent stay in the event that the security was not paid within the then required time, would operate to prevent an extension of time being granted for the provision of the security (notwithstanding that the original time period provided had expired), thereby resulting in the lifting of the permanent stay. As was recently observed by the Full Court in Fennessy & Gregorian [2009] FamCAFC 44 [35] “[a]n order permanently staying the proceedings must of its nature preserve some prospect of further litigation in this Court”. The Full Court did not further explain its reasoning behind this statement. But an important factor in a case such as the present must be that there has been so far no consideration of the matter on its merits.
Clearly, in circumstances such as the present where the husband has previously failed to comply with the order to lodge security within a specified time, the discretionary power to extend time for him to lodge security and thus to permit his appeal now to proceed and to do so on the basis of an amended ground of appeal, would only be exercised in the most compelling circumstances. The test for the exercise of such a power is, as explained in Gallo v Dawson (supra), the overall interests of justice, as was effectively submitted by Senior Counsel for the husband.
A powerful consideration against the exercise of the discretion in the husband’s favour in this case, and one relied upon by the wife, is that he has offered no explanation for his failure to comply with the earlier order to lodge security, nor for his delay of over two years in seeking to “re-instate” his appeal. It could well be assumed that the husband has only now been motivated to challenge certain of the orders of 10 January 2006 because of the imposition of a term of imprisonment on account of his failure to comply with one of those orders.
A further matter relied upon by the wife in opposition to the husband’s application is the prejudice which she will suffer if the husband is permitted now to proceed with his appeal. It was submitted on her behalf that such prejudice is not curable by a costs order. The submissions on her behalf endeavoured to explain this prejudice by reference to the lengthy and complex litigation arising out of the breakdown of the parties’ marriage, which has been, and continues to be, conducted in this and other courts.
Certain of the submissions made in relation to the likely prejudice to the wife if the husband’s appeal was now permitted to proceed involve speculation about the future. Furthermore, the wife’s costs in relation to the appeal would now be secured because we would not permit the appeal to proceed without the husband lodging the security which he now proposes to pay. Nonetheless, it must be accepted that to permit the husband’s appeal to proceed now would undoubtedly involve significant prejudice to the wife.
Given this prejudice to the wife, and given also the lack of explanation from the husband regarding both the delay in bringing this application and his failure to comply with the previous order for security, the issue of the merits of the proposed appeal assume great significance, again as was recognised in the submissions of senior counsel for the husband.
In order to make an assessment of the merits, or prospects of success, of the appeal, it is necessary to make some reference to the passages in Rowland J’s reasons for judgment (published on 10 January 2006) which can be seen as supporting or at least having relevance to his only order now sought to be challenged, being Order 3 (although as earlier indicated, if Order 3 were to be discharged there would be no purpose to Order 11).
In his schedule of the “Known Assets” of the husband and the wife (which his Honour found to have a value of just over five and three quarter million dollars with liabilities to be included of just over $230,000), his Honour included the following items and notes:
3.
[NR] Corporation SARL
$123,997(1) }Total worth unknown but
4.
[NR] Technology Pty Ltd
} a large sum in the order of
5.
[NR] International Pty Ltd
}a million dollars or more
The note marked (1) to Item 3 read:
“Order 30A Statement (it does not include intellectual property)”. [The reference to an Order 30A statement can be taken as a reference to an expert witness’ statement.]
Then in paragraphs 34 to 72 of his reasons his Honour discussed at length the husband’s involvement in a technology apparently known as NR Technology, which according to his Honour, “involves the "agglomeration" (forming of mass) from waste products, particularly from the by-product of power stations”, and which “with treatment by chemicals the by-product may be used [in] …building”.
At the hearing of the husband’s application for re-instatement of his appeal, both sides placed reliance on various passages towards the end of his Honour’s discussion of the husband’s involvement with the NR technology. In order to put those passages in context, it is necessary to refer to some earlier passages in his Honour’s discussion.
After describing the technology, his Honour continued:
35.It is clear that the Husband has been keenly interested in ventures, including a large one in South Africa, relating to the commercial development of this technology. His present position appears to be that the venture is not succeeding and he has no interest in it nor is he part of it or linked to it.
36. It is the Wife's case that the Husband remains associated with the project to exploit the technology (with associated patents) and that he fails to provide a full and frank disclosure to her, and the Court, in relation to it…
His Honour then recorded the material relied on by the wife in support of her case. Much of that material is correspondence, all of which appears to be dated prior to the husband’s bankruptcy on 28 November 2002.
His Honour then proceeded to make the following observations and findings:
39.As is apparent from Exhibit W21, 2 January 2001, the Husband instructed … [a] patent attorney, to transfer the patent from [NR] International to [NR] Corporation SARL. The Husband was Managing Director of [NR] Corporation and of [NR] International.
40.On the 16th January 2001 the Wife commenced proceedings in this Court.
41. On the 17th January 2001 the Husband emailed … the patent attorney, seeking the patent to be transferred to one [MM Rand] of [an address in suburb A]. That man … is a relation of the Husband's and in fact … has never lived in [Suburb A] or indeed in Australia.
…
43. By email of 9 July 2001 (Ex W22) the patent attorney… sent to the Husband a document for the assignment of the patent from [NR] International Limited to [NR] Corporation to be signed by [Mr G Rand] (the Husband) as Director for and on behalf of [NR] International Limited.
…
45.It is apparent from the foregoing that, on the balance of probabilities, despite his protestations to the contrary, the Husband, through entities owned and controlled by him, had an ongoing interest in the "Process of Agglomerating Particulate Material" as the invention is called in the assignment document emailed on the 9th [sic] July 2001 (Ex W22). His entities include the … Company [NR] Corporation SARL (in which the Husband owns some 98% of the shares), [NR] International Limited … for whom he signs and [NR] Technology Pty Limited of which he is the beneficial owner.
…
47.It appears that the owner of the invention may be [NR] Corporation SARL or [NR] Technology Pty Limited. However Exhibit W70 contains a draft licence from [N] Pty Ltd to [W] Pty Ltd for [MM Rand] technology.
48. The Husband's assertion that the present owner is [MM Rand] cannot be accepted at face value. If he is then the exercise to have him the nominal owner appears to be a "sham" to seem to remove that asset from the Husband's entities [sic]. Apart from the matrimonial problem the Husband's status as a bankrupt (2002-2005) had to be accommodated.
…
51.In all the circumstances of the case, I am left with the impression that the Husband in fact has access to and control in respect of the invention and the technology. This is based upon by [sic] a consideration of the evidence detailed and the evidence in the Husband's affidavit of 3 May 2002 at para 39, and in exhibits. It demonstrates the Husband's likely corporate activity in relation to the technology to 2004 and beyond. This must be coupled with his lack of disclosure and the fact that much of the revealed material was only obtained by zealous efforts on behalf of the Wife. The technology appears to be ‘his’ from the way in which he operates in relation to it.
…
55.The totality of the evidence, on balance suggests that the Husband has access to the technology; with the probability, on his own admissions, that its value is significant. He is obviously anxious to distance himself from it for the present. It is significant that post separation, while suggesting to the Wife that there had been a failure, he was much later confirming to others the great financial worth of the project.
…
60.I infer the Husband's technology operations continue from records available as late as 2004 (see Exhibits WB70 and 71). It is appropriate to infer continuance in light of the earlier false denials in relation to such matters and the material concerning current matters set out below.
61.With the bankruptcy of the Husband now past it is reasonable to assume that interests controlled by the Husband held by his father or entities, will in due course benefit the Husband as the circumstances allow.
…
68.In all of the circumstances, the evidence and the Husband's approach permits the finding I make that the technology is worth to the Husband something in the order of a million dollars or more.
…
70.On the balance of probabilities this apparent series of similar actions supports the general thesis of the wife in relation to these contentious property items:
· [NR] Technology
· [RE Pty Ltd] and
· [RE Family Trust — S Pty Ltd]
in this case.
71.Returning to the [NR] Technology item. Given the approach the authorities encourage me to take: the evidence suggests a finding that the Technology is within the beneficial control of the husband, that he has or had had the benefit of it and that it is worth a million dollars or more but otherwise I cannot be more precise.
These then would appear to be his Honour’s reasons for Order 3 of his orders, which the husband now seeks to be permitted to appeal and which for convenience we now repeat:
3.And Declared that the Wife (subject to Order 11 hereof) is entitled to one half of any profits arising out of the patents or other intellectual property relating to the conversation [sic] of waste material to building products and further order that the Husband account and (subject to Order 11 hereof) pay to the Wife one half of any profits received in respect of the intellectual property of the various companies known as [NR] Technology Pty Limited, [NR] Corporation SARL, [B] Pty Limited and related entities.
The husband’s challenge to this order in his proposed amended ground of appeal, is that in making this order, his Honour failed to have regard to the fact that on the husband’s bankruptcy at the end of 2002, all the husband’s property (other than excluded property which would not cover the property referred to in Order 3) would have vested in the husband’s trustee in bankruptcy and would not have re-vested in him on his discharge from bankruptcy.
The wife would resist this challenge on the basis of her claim that the husband’s trustee in bankruptcy disavowed the property which is the subject of Order 3, and also on the basis of his Honour’s apparent findings in paragraphs 61 and 71 of his reasons, of a beneficial interest in the husband in the property in question.
It will thus be seen that serious and contentious issues would be raised by the husband’s “re-instated” appeal against Order 3. It is not for us to determine those issues. We need only say that the appeal could certainly not be regarded as being without some merit.
We observe in this regard that while his Honour provided some acknowledgement in paragraph 48 and then again in paragraph 61 of his reasons, of the fact of the husband’s bankruptcy and also it would seem, the impact of it on his interests in the NR Technology, the issue of the impact of the bankruptcy on those interests, and importantly on the order which his Honour proposed to make, was not explored in his Honour’s reasons.
In addition to the merits of the appeal, we must also take into account in determining the application, the serious consequences for the husband of a breach of Order 3 particularly if it be found to be an order with which the husband cannot comply.
Accordingly, notwithstanding the undoubted prejudice to the wife, we propose to grant the husband’s application to permit his appeal against Orders 3 (and 11) now to proceed to a hearing, on the basis of the ground of appeal contained in Order 2 of the orders sought in his application filed 1 October 2008, but also subject to the condition that within two (2) business days of the delivery of these reasons for judgment and the making of orders to give effect to these reasons, the husband deposits by way of a bank cheque the sum of $45,000 with the wife’s solicitors to be held by that firm upon trust to abide by further orders of the Court.
Costs of this application
At the conclusion of the hearing of this application, senior counsel for the husband submitted that the costs of the application should be costs in the appeal. However, the solicitor for the wife sought an order for costs in favour of his client on the basis that the husband was seeking an indulgence from the Court.
The husband has certainly sought an indulgence from the Court, and it might well be said, a very great indulgence from the Court. We are therefore entirely satisfied that the circumstances justify the making of an order for costs in favour of the wife.
_____________________________________________________________________
I certify that the preceding forty (40) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court
Associate:
Date: 25 May 2009
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