Reeves and Turnbull
[2014] FamCAFC 183
•21 August 2014
FAMILY COURT OF AUSTRALIA
| REEVES & TURNBULL | [2014] FamCAFC 183 |
| FAMILY LAW – APPEAL – PROPERTY – Appeal against an interim order for the matrimonial home to be sold – Where the appellant had previously consented to the sale of the property – Where settlement of the sale is imminent – The appeal is moot and the grounds of appeal are not made out – The magistrate did not err by failing to identify the source of her power – The magistrate did not err by proceeding with an incomplete picture of the parties’ finances – Appeal dismissed. |
| Family Law Act 1975 (Cth), s 34, s 79, s 80, s 94AAA, s 114 |
| CDJ v VAJ (1998) 197 CLR 172 Harris and Harris (1993) FLC 92-378 Panshin & Farmer [2012] FamCAFC 197 |
| APPELLANT: | Mr Reeves |
| RESPONDENT: | Ms Turnbull |
| FILE NUMBER: | PTW | 2265 | of | 2012 |
| APPEAL NUMBER: | WA | 11L | of | 2014 |
| DATE DELIVERED: | 21 August 2014 |
| PLACE DELIVERED: | Perth |
| PLACE HEARD: | Perth |
| JUDGMENT OF: | Thackray J |
| HEARING DATE: | 21 August 2014 |
| LOWER COURT JURISDICTION: | Magistrates Court of Western Australia |
| LOWER COURT JUDGMENT DATE: | 15 April 2014 |
| LOWER COURT MNC: | Not applicable |
REPRESENTATION
| COUNSEL FOR THE APPELLANT: | Mr Nicholls QC |
| SOLICITOR FOR THE APPELLANT: | Perth Family Lawyers |
| COUNSEL FOR THE RESPONDENT: | Mr Hooper SC |
| SOLICITOR FOR THE RESPONDENT: | O’Sullivan Davies |
Orders
By consent, the appellant may adduce in evidence at the hearing of the appeal:
(a)The document entitled ‘[Ms Turnbull] - Partnership distribution and foreign income tax offset calculation – Year ended 3 June 2013’, annexed to his affidavit filed on 13 August 2014 marked “RR-8”.
(b)The document entitled ‘2013 Tax Estimate – [Ms Turnbull]’, annexed to his affidavit filed on 13 August 2014 marked “RR-7”.
The application in an appeal filed on 13 August 2014 and the response filed on 19 August 2014 be otherwise dismissed.
The appeal be dismissed.
Costs be reserved, with liberty to the parties to seek a relisting of the costs issue before Thackray J upon finalisation of the property settlement proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Reeves & Turnbull has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| IN THE APPELLATE JURISDICTION OF THE FAMILY COURT OF AUSTRALIA AT PERTH |
Appeal Number: WA 11L of 2014
File Number: PTW 2265 of 2012
| Mr Reeves |
Appellant
And
| Ms Turnbull |
Respondent
EX TEMPORE REASONS FOR JUDGMENT
I will give my reasons orally, given that the issue requiring determination is extremely urgent and that there is one aspect of the matter which I consider puts beyond doubt what the outcome should be.
Procedural background
The procedural background is somewhat unusual. Family Law Magistrate Walter made orders on 15 April 2014 which, in summary, permitted the sale of the parties’ former matrimonial home in D to a Mr F at a price of $3.3 million.
The husband was aggrieved by that order and he filed an appeal within time. As far as I am aware, no application was made for expedition of the hearing of the appeal and the matter was making its way through the usual processes.
The Chief Justice of the Family Court of Australia, pursuant to the power conferred by s 94AAA(3) of the Family Law Act1975 (Cth) (“the Act”), delegated the hearing of the appeal to a single judge.
The matter came before me for a special appointment last week and it was observed that the settlement of the sale of the property was imminent. It was also observed that the matter had been back before Magistrate Walter on the husband’s application for a stay filed on 12 May 2014, which her Honour dismissed on 3 June 2014.
I noted at the special appointment that there had been no appeal against the refusal of the stay and made directions for an application to be made for an extension of time within which to appeal the order of 3 June 2014. The parties were put on a very tight timetable which was complied with, to their credit. The extension of time application, filed on 13 August 2014, was listed for hearing before me today.
When reading the papers for this hearing, I realised that the interests of justice might be better served by the substantive appeal being heard today, rather than an argument in relation to the extension of time within which to appeal the stay decision. The extension of time application could only give the husband the right to file an appeal against the stay decision, which would then need to be heard and might not result in the outcome he was hoping to achieve.
To their credit, the very experienced counsel appearing before me recognised that their respective clients’ interests would be best served by this course, and were in a position to ably argue the merits of the substantive appeal today. It is therefore unnecessary for me to rule in relation to the application for an extension of time within which to appeal against the refusal to grant a stay.
The appellant filed an amended notice of appeal in the substantive appeal on 13 August 2014. During the course of the oral argument today, I granted leave for Part F of the amended notice of appeal to be amended to seek that paragraphs 3, 4, 5, 6 and 8 of the orders made on 15 April 2014 be discharged in the event the appeal is successful.
In hearing the appeal, I have had the benefit of a skeleton argument provided by Queen’s Counsel for the appellant and an outline of submissions provided by Senior Counsel for the respondent. Although originally directed to the application that was before the Court, these written submissions nevertheless refer to matters that are of assistance in dealing with the substantive appeal.
Factual background
I do not propose, given the confines of this hearing and the decision I have reached, to set out the full factual background. The background has been to some extent summarised in the written submissions, but is largely to be found in the reasons delivered by Magistrate Walter on 15 April 2014 and 3 June 2014.
Importantly for present purposes, her Honour’s reasons disclose that the D property had been on the market since 2012 and that the husband refused an offer in March 2012 at a price of $3.7 million.
The husband has, at times, consented to the sale of the property but behaved in such a manner as to persuade the Court that it would be appropriate for the wife be appointed as the trustee for sale. Whether or not there was justification for that order, it was not appealed.
Originally, the orders contemplated a sale price of over $4 million. A couple of offers were made that were attractive to the parties, but neither of these proceeded due to finance and/or other issues.
Ultimately, the matter came back before the Court on 26 November 2013, at which time a variety of orders were made by consent. Paragraph 19 was an order for the property to be sold by auction if efforts to sell it by private treaty were unsuccessful. The orders allowed the wife to continue being the sole trustee for sale on the terms set out in paragraphs 13 to 23. Paragraph 20 gave both parties general liberty to apply in respect of the sale.
The property proceeded to auction, because the efforts to sell by private treaty were unsuccessful. A valuation was obtained pursuant to an order made by the Court, which suggested a market price at $3.6 million, with a reserve price of $3.5 million.
At the public auction, there was only one bidder, Mr Z, who originally offered $2.5 million, but was talked up to $3.25 million. Another potential purchaser, Mr F, entered the scene and there were efforts to talk the competing purchasers up further. Mr F ultimately came to a figure of $3.3 million on a cash sale. The wife wished to accept Mr F’s offer, despite the discrepancy between his offer and the valuation.
On 28 March 2014, the wife accepted Mr F’s offer in her capacity as trustee, but noted that the acceptance was “conditional upon approval by the Family Court within 21 days”.
In the proceedings before Magistrate Walter on 11 April 2014, counsel for the wife accepted that if the offer was approved by the Court, then there would still be a live issue at trial as to whether the offer represented the proper value of the property. As he pointed out, the variation between the valuation and the figure offered by Mr F was of relatively modest proportion.
I accept that valuation is an art, not a science. The wife’s position needs to be understood in light of the history of difficulty in relation to the sale of the property and the fact that at a public auction, the best offer available was well below the parties’ expectations.
By paragraph 3 of the orders made on 15 April 2014, Magistrate Walter ordered that the wife be at liberty to accept Mr F’s offer. The orders then went on to:
a)provide for the manner in which the costs of sale and various liabilities relating to the property were to be discharged;
b)require the removal of a caveat; and
c)require the husband to vacate the property not less than seven days prior to the date nominated for settlement.
The offer and acceptance became unconditional upon this order being made and the purchaser was so informed. The husband, however, failed to vacate the property and otherwise declined to cooperate with the sale, leading to further proceedings.
On 7 August 2014, Crisford J made orders appointing the wife to execute various documents in the name of the husband, in order to ensure that the contract could proceed to settlement. Her Honour further ordered that the husband vacate the property within seven days.
The Court was informed that the husband duly vacated the property on 15 August 2014 and that settlement has been scheduled for next Monday, 25 August 2014.
Further evidence
The husband’s application in an appeal filed on 13 August 2014 seeks to introduce three further pieces of evidence in the appeal. Two documents relate to the tax position of the wife and the third document relates to the possible rental to be obtained from the property, the husband having now vacated it.
There is no objection to the first two items being received and I have already made an order that they be received. The only controversy concerns the rental analysis. As counsel for the wife submitted and counsel for the husband properly conceded, there was no suggestion at the hearing before Magistrate Walter that the D property could be rented as a means of allaying concerns about the wife continuing to meet the mortgage payments of approximately $5,000 per month.
Putting to one side the fact that the respondent had little opportunity to respond, the important question for me to determine is whether or not this is evidence properly admitted under the provisions of the Act.
I have taken into account what the High Court said in CDJ v VAJ (1998) 197 CLR 172 and arrived at the firm conclusion that this evidence ought not be permitted on the hearing of this appeal. It represents an attempt to present a case entirely different to that presented at the hearing below, in circumstances where the appellant had an opportunity to put it before the Court.
I therefore proceed on the basis of:
a)the record as it stood before Magistrate Walter;
b)the two additional items of evidence;
c)what has transpired in relation to the settlement of the property, which is common ground; and
d)what occurred before Crisford J.
A moot appeal?
Although the Court has heard interesting and eloquent argument in relation to the matters contained in the amended notice of appeal, the first matter that the Court should consider is the submission made on behalf of the wife that this appeal is entirely moot and even if successful, would not achieve the outcome the husband wants.
Part of that argument, as I understood it, related to the fact that Crisford J’s orders have not been appealed. However, as I indicated in the course of argument, it would seem to me that the logical course for the appellant to follow is, firstly, to challenge what might be considered to be the underlying orders of the magistrate and in the event that met with success, to then challenge the consequential orders made by Crisford J.
The other part of the respondent’s argument focuses on the fact that third party rights have now intervened. Counsel for the husband properly concedes the force of this argument and in my view, the argument is compelling. Mr F is in a position, as an anxious, albeit patient, prospective purchaser of this property, to seek specific performance of the unconditional contract.
The fact that this Court might find error in anything that was done by Magistrate Walter would not lead to any invalidity in the contract for sale, thus leaving the parties open to specific performance, high rates of interest and/or damages. It is also the case that the agent would be entitled to commission, which is not such a significant matter, given that the commission can be compensated for in the final settlement and noting that the husband proffered a form of an undertaking as to damages.
Although Mr F was put on notice in relation to an earlier unsuccessful attempt to prevent the sale of this property, there is no evidence before me that he is on notice in relation to this part of the proceedings. However, I do not come to my conclusion in this matter based upon that potentially important fact.
In his submissions, counsel for the husband drew attention to the wide power conferred upon an appellate court by s 94AAA of the Act, and protests that the husband has effectively been shut out from a right of appeal. Although accepting it is not a “breach of human rights”, counsel for the husband nevertheless contends it would lead to the husband having a jaundiced view of the system and – not his words – make a mockery of the right of appeal.
It cannot be denied that the way in which the matter proceeded has effectively left the husband, if my decision is correct, without a remedy. But that outcome, in my experience, is not unknown in this and other jurisdictions.
It was feasible for the husband to immediately appeal and immediately seek a stay, having appealed. It was also not beyond the realms of possibility that an appeal could have been urgently listed, although I consider it unlikely that would have occurred. It is therefore not as if the husband was entirely without remedy. I should also note that I do not see in the transcript any request for an order to be made which might, for example, have given the wife liberty to accept the offer only after the expiration of the time limit for filing an appeal.
I have formed the view that this appeal is moot. Even if it had merit, no useful purpose would be achieved by making the orders sought by the appellant.
That being the Court’s decision, it is not strictly necessary to engage with the eloquent and interesting propositions that were advanced in support of the ground of appeal, but out of courtesy and fairness, it is appropriate that I refer briefly to some of them.
Particular (e) – Source of power
Although touched on in particular (e) to the ground of appeal, the complaint advanced in oral submissions by counsel for the husband was somewhat wider than might have been suggested by reading the particular.
Counsel for the husband questioned what power her Honour was exercising in making the orders, especially order 3. He correctly identified the possible sources of power as ss 79, 80 and 114 of the Act and any equivalent provision to s 34 of the Act. Reference was also made to the inherent jurisdiction of the Court.
The failure to identify this as a ground in the notice, in my view, would probably have been fatal to it in any event, but the ground does raise an interesting question.
It is apparent from reading the judgment that Magistrate Walter considered she was exercising the power in s 79, because at [21] and following, her Honour clearly considered she was making an interim property order.
Section 80 was referred to as a possible source of power by counsel for the husband. However, authority indicates that s 80 is not a source of power as such, but ancillary to other powers in Part VIII of the Act: Harris and Harris (1993) FLC 92-378.
Section 114 is a potential contender. However, as counsel for the husband said in his submissions, order 3, standing alone, could not be seen as an injunction, because it did not require the wife to do anything.
I consider that her Honour had power to make the order that she did and I see her exercise of power on this occasion as merely facilitating earlier orders that were made, some of which were made by consent, relating to the sale of this property.
The wife, although not by consent, was appointed the trustee for sale. In my view, it is arguable that an order appointing a party as a trustee for sale, even though not interfering with the underlying entitlement in relation to the property, nevertheless answers the description of an order under s 79, because it interferes with or adjusts an interest of a party in the property, in that it removes their right to have input into the sale of it. I am therefore not satisfied that her Honour erred in referring to s 79 as the source of power.
It may be that what Coleman J said in Panshin & Farmer [2012] FamCAFC 197, the first case on the list of authorities of the respondent, points to another source of power. I accept the merit in counsel for the husband’s submission that the failure to identify a source of power can lead to error, in that there may be different tests to apply. However, I am of the same view as Coleman J in Panshin & Farmer – to the extent that there is a difference between what might be done under s 79 and s 114, it has not been demonstrated to me how this difference led to an erroneous outcome.
Particular (a) – Irreplaceable asset
The first particular in the amended notice of appeal concerns the nature of the asset that is subject to the order for sale. The particular describes the D property as a “unique and irreplaceable item of property” with “qualities that cannot be replaced by money” and asserts that the husband has a “special interest” in the property.
The difficulty with this proposition is that her Honour was dealing with this matter on the basis of what had gone before. The husband had previously agreed to the sale of the property and he consented to orders for the appointment of trustees for sale (although not the wife) as recently as 26 November 2013. In these circumstances, her Honour could be forgiven for proceeding on the basis of what the husband had earlier been prepared to do in relation to the disposition of the property.
I accept the force of the submission made by counsel for the husband that being willing to sell at a price of over $4 million is different to being willing to sell at $3.3 million. However, the “unique and irreplaceable item of property” remains the same. There is substance in counsel for the wife’s submissions in relation to this and the way in which the husband’s change of heart about this property should be characterised.
Magistrate Walter accepted at [68] that it is unusual for the Court to sell an item of property during the course of proceedings when one party ultimately seeks to retain it. I am not satisfied that her Honour placed insufficient weight on that factor.
Particular (b) – Incomplete picture of finances
The next complaint draws attention to the fact that the decision was made in light of what is described as “a necessarily incomplete picture as to the parties’ financial (and other) circumstances”. That is a point well made, but it was also known to her Honour. She very clearly identified the different asset pools being contended for by both parties in her judgment. It is not asserted on behalf of the appellant that her Honour erred in the way that she identified the pools.
In approaching the matter, her Honour appropriately recognised that the contentions between the parties relating to the asset pool, and, in particular, a very significant contention relating to the value of L & Co, had not been the subject of trial. Her Honour was in no position to determine on which side of the dispute the Court would ultimately come down, so she assessed the viability of the husband’s claim on the basis of his case, rather than the wife’s.
In doing so, her Honour took into account the percentage division claimed by each of the parties and assessed the outcomes based upon various possible scenarios. There is merit in what counsel for the husband said about property pools in Family Court proceedings being moving feasts. However, given the long delay in the sale of the property and the availability of a cash purchaser, I do not consider that her Honour erred in determining the matter on the basis of the competing positions of the parties on the day.
It might also be said, looking at the size of the legal bills that have been incurred in relation to this matter, that there was certainly one aspect of the parties’ financial positions that could be confidently expected to deteriorate significantly as the matter progressed, absent any suggestion that either party was going to be self-represented by the time the matter gets to a hearing.
Having carried out her analysis of the parties’ respective contentions in relation to the asset pool and their respective contentions concerning the division of the property, her Honour then embarked on a careful examination to ascertain whether the husband’s proposals were realistic.
Her Honour took into account evidence that had been presented by the husband and his parents in the form of affidavits. Her Honour also gave the husband the opportunity to improve his case by allowing counsel to telephone the husband’s father to ascertain the full extent of the beneficence that the husband’s parents were prepared to bestow upon him. The other party did not consent to the granting of this opportunity and her Honour treated the information obtained as evidence, when it might not otherwise have met that description.
Her Honour very properly drew attention to the fact that the evidence provided on the husband’s own behalf did not indicate that his parents were proposing to make a gift upon him; his parents needed to take other members of their family into account and expected repayment of their money with interest, although it was not clear when that interest would be payable.
Having considered this evidence, her Honour formed the view that it was not likely the husband would “be able to refinance the mortgages, take responsibility for his debts and receive the property without paying some monies to the wife” or be “able to pay any monies to the wife without selling the property”.
Given the husband’s precarious state of health and inability to earn income over an extended period, I am not persuaded that her Honour erred in determining that the husband’s proposals were unrealistic.
It would ordinarily be desirable to await trial before making such an order, but in the circumstances of this case, I am not persuaded that her Honour erred in the exercise of her discretion.
Particular (c) – Ongoing disclosure
The third particular relates to the fact that disclosure was ongoing and asserts fairly boldly that “it was very likely that further evidence would call into question some of the premises upon which the decision was based”.
Before Magistrate Walter, counsel for the husband drew attention to the ongoing nature of disclosure and to difficulties that the husband’s new representatives had in examining documents that were being held under lien by the husband’s former solicitors.
However, there was nothing in the submissions to suggest that any significant departure from the asset pool that her Honour based her decision on was likely.
Particular (d) – Untested evidence
The next particular contends there was untested evidence that the sale price might have been affected by representations. As acknowledged in her Honour’s reasons, there were allegations made by both parties in this respect. The wife asserted that the husband was deliberately disrupting the sale of the property and the husband asserted that the real estate agent had not conducted himself correctly.
The submissions in the hearing below indicated that both of the primary agents involved had been appointed on the suggestion of the husband, which is not challenged now. This property went to a public auction and the price achieved there was entirely unsatisfactory. I have not been taken to anything that would indicate that any representation made by an agent impacted upon members of the public who may have been anxious to acquire this unique property.
The husband’s health
The husband’s delicate state of health was not referred to directly in the grounds, but it was mentioned significantly at the hearing below and in the material before me in relation to the application for an extension of time.
The husband has been under the long term care of a psychologist and his GP. On one occasion, he had to be taken away from these courtrooms by ambulance.
Whilst this issue does not feature highly in the grounds of appeal, it is still appropriate for me to acknowledge that I have read about it, indicate my grave concern and accept that the husband’s health may well be as bad as indicated in the untested evidence provided to the Court. There are limits on the extent to which a court, especially in the exercise of appellate jurisdiction, can take such matters into account, but I have not discounted this matter in any way.
I note that the husband originally claimed he would not leave the property other than having suicided. Now he has left the property and instructed those who represent him to contend that the property can be let. I have grave concerns about the husband’s health and I have not overlooked it. However, I have found that the magistrate was right to conclude that the ultimate outcome in these proceedings would involve the sale of the property, whether that occurred on an interim or final basis.
For all of those reasons, I dismiss the appeal and order that costs be reserved, with liberty to the parties to seek the relisting of the matter before me, upon finalisation of the substantive property settlement proceedings.
I certify that the preceding seventy-two (72) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Thackray delivered on 21 August 2014, edited to correct grammatical errors and some infelicity of expression.
Associate:
Date: 22 September 2014
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