Reichstein and Reichstein

[2007] FamCA 365

FAMILY COURT OF AUSTRALIA

REICHSTEIN & REICHSTEIN [2007] FamCA 365

APPEAL – STAY APPLICATION  - Pending Application for Special Leave to Appeal to the High Court – Grounds of appeal directed to the re-exercise of discretion by the Full Court - No matter of public policy or important question of law arising -  No issue relevant to the administration of justice –– No substantial prospect of success -  Whether a stay was necessary to preserve the subject matter of the litigation – Balance of convenience – Wife’s entitlement to fruits of litigation -   Application dismissed – Costs

Federal Commissioner of Taxation v The Myer Emporium Ltd [No.1] (1986) 160 CLR 220
Alexander v Cambridge Credit Corporation (1985) 2 NSWLR 685
Jennings Constructions Ltd v Burgundy Royale Investments Pty Ltd (1986) 161 CLR 681

Family Law Act 1975 (Cth) ss 79, 117
Judiciary Act 1903 (Cth) s 35A

APPELLANT HUSBAND: REICHSTEIN

RESPONDENT WIFE: REICHSTEIN

FILE NUMBER: ADF 908 of 2004

APPEAL NUMBER: SA 15 of 2006

DATE DELIVERED: 29 January 2007

PLACE DELIVERED: Melbourne

JUDGMENT OF: Bryant CJ
Kay J
Boland J

HEARING DATE: 29 January 2007

COURT JURISDICTION SUBJECT TO APPLICATION:

Full Court

Family Court of Australia

COURT JUDGMENT DATE: 29 November 2006

LOWER COURT MNC: [2006] FamCA 1422

REPRESENTATION

COUNSEL FOR THE APPELLANT: In person

COUNSEL FOR THE RESPONDENT: Mr Berman

SOLICITOR FOR THE RESPONDENT: Adey Lawyers

Orders

IT IS ORDERED:-

1. That the Husband's Application for a Stay of paragraphs 6.1.1 and 6.2 of the Order of this Honourable Court made on 29 November 2006, filed on 16 January 2007, be dismissed.

2. That the Husband pay the Wife's costs in the sum of $1,200 within one month.

IT IS NOTED IN CONNECTION WITH THESE ORDERS that the judgment of the Full Court delivered this day will for all publication and reporting purposes be referred to as Reichstein v Reichstein.

FAMILY COURT OF AUSTRALIA AT MELBOURNE

Appeal Number: SA 15  of 2006
File Number: ADF 908  of 2004

REICHSTEIN

Appellant Husband

And

REICHSTEIN

Respondent Wife

REASONS FOR JUDGMENT

BRYANT CJ:

1. This is an application by [Mr] Reichstein, the husband, filed on 16 January 2007 in which he seeks to stay on terms orders made by the Full Court on 29 November 2006 pending an application for special leave to the High Court of Australia.  The husband's application is supported by an affidavit sworn by him on 16 January 2007, annexed to his affidavit is a copy of his application for special leave to which I will return.  The application is opposed by the wife.

2. The proceedings before the Full Court arose out of an appeal by the husband against orders made by Morgan J on 15 February 2006, as amended under the slip rule by Mushin J on 6 March 2006, in proceedings between husband and wife for property settlement under section 79 of the Family Law Act 1975 (Cth). 

3. The orders made on 6 March 2006 required the husband to pay to the wife the sum of $440,654 and all relevant times it has been common ground that the wife would retain a property at [F] owned by her at cohabitation, a motor vehicle, a yacht berth and some furniture.  It is also common ground that the husband would retain properties in [I], [R], and shares motor vehicles and a boat and some overseas cash to which I will make further reference.

4. There is also some superannuation and a splitting order made by her Honour, although there is no appeal in relation to the splitting orders.

5. The trial Judge's orders represented a division between the parties of 62 per cent of the assets to the husband and 38 per cent to the wife in relation to a net property pool of $1,556,002 and superannuation of approximately $355,500.

6. On appeal, in summary, the Full Court found some of the appellant husband's grounds made out and on a re-exercise of discretion, which the parties agreed the court should undertake, adjusted the net property pool to $1,447,207, changed the percentage split from 38 per cent to the wife to 30 per cent to the wife, and changed the payment from the husband to the wife from $440,654 to $313,827.

7. On appeal before the Full Court, the husband sought a percentage division of 80 per cent of the assets to him and 20 per cent to the wife.  The effect of the orders that he now seeks in relation to his application for special leave is effectively a split of 83 per cent to him and 17 per cent to the wife. Given the change in the asset pool values, this is similar to the orders that he originally sought.

8. The relevant background material is set out in paragraphs 4 to 22 of the Full Court judgment:-

Background

4.There is no dispute about the factual background as set out by the trial Judge.

5.The parties met in … 1992. The wife had been previously married and had two children a son, A, who was born on 10 January 1983 and a daughter, E, born on 29 September 1986.

6.The parties married on … 1993. Their first child, J, was born on … 1994 and their younger daughter, V, was born on … 1998.

7.The parties separated under the same roof in early 2003 and physically separated on … 2003. At the time of the separation the wife and children left the former matrimonial home.

8.In August 2003, the wife commenced a relationship with Dr [N].  At about the same time the husband commenced a relationship with Ms [F]. In October 2003 Dr [N] purchased a house at P.  The wife and children moved into Dr [N]’s home. The children changed school at the time of moving to P.

9.At the commencement of cohabitation the husband was the registered proprietor of the property … [R], New South Wales (…). The husband purchased the [R] property in 1978 for a purchase price of $48,000.00. The purchase price was funded from a small deposit and borrowings from the Commonwealth Bank. There was no evidence of the value of the [R] property at the date of commencement of cohabitation.

10.In 1985 the husband purchased a property at … [I], South Australia (…). The husband asserted the purchase price was $176,000.00 and that he funded the purchase with a loan of $20,000.00 “and the remainder from repatriated capital”.

11.In July 1987 the husband purchased a Porsche motor vehicle.

12.In 1991 the husband entered into an arrangement with friends who were in financial difficulty to purchase their property at [H] (…) for a purchase price of $178,000.00. The purchase price was funded from a mortgage advance of $129,000.00 and the husband’s savings. The friends subsequently repurchased the [H] property from the husband. There was no admissible evidence of the value of the [H] property at the commencement of cohabitation, or the mortgage debt in respect of that property.

13.At the commencement of cohabitation the wife was the registered proprietor of a home at [F] (…).  The wife asserted she had approximately $20,000.00 equity in the [F] property at the commencement of cohabitation. The husband did not challenge that assertion. She also had household goods and a 1981 Toyota Celica motor vehicle.

14.In 1995 the parties carried out extensive renovations to the [I] property which property the parties occupied as their matrimonial home. The husband asserted that he had sufficient borrowing capacity to meet the immediate cost of the additions and incidental expenses associated with the renovations.

15.The husband, at the commencement of cohabitation, had funds and shares invested with [CS] in Switzerland (…). The husband’s Outline of Case document asserted that his interest in the [CS] account had a value of $224,000.00. The husband asserted that he had no funds held overseas after July 2003. He agreed with a schedule of figures, presented by the wife to the Child Support Agency, which set out transfers by him from the [CS] account to accounts in Australia totalling $224,000.00. The husband asserted $215,000.00 was transferred during the marriage. The wife produced a statement as at 31 December 2002 showing a credit balance in the [CS] account in the husband’s name of $348,874.00. No documents in respect of the [CS] account were produced by the husband.

16.The husband gave oral evidence that the [CS] account was established by himself and two colleagues when working in Africa in 1984. He said in 1986 the account was transferred to his sole name. The trial judge recorded the husband’s evidence about the [CS] account as follows:

64. … He said that he and two colleagues, ‘Mr Smith and Mr Minogue’, had set up the fund when working in Africa in 1984.  He said they had each invested $50,000 in a numbered account managed by [CS] which made all the investment decisions.  In 1986 the account was transferred into the husband's name.  From 1990, although the account was still held with [CS], the husband managed the funds and made all decisions about investments.  In 1994 the husband began to ‘repatriate’ or transfer funds to accounts in Australia.  He said that was done by means of a phone call to a bank officer in Switzerland and verbal instructions as to the account to which the funds would be transferred.  When he wished to sell an asset of the fund he would again give telephone instructions and request the transfer of the proceeds to his nominated account.  He swore that by July 2003 all of his equity had been transferred to his Australian accounts and expended.  He swore that he had no interest in any assets remaining in the fund which, he said, were beneficially owned by Mr Smith and Mr Minogue.

65. In evidence in chief the husband swore that he received statements every six months until June 2003.  He said he did not retain the statements.  He swore that he had received no statements since, although the account has not been closed.  That was in the face of the statement of investments in the husband's name dated the 31st of December 2003 [sic] to which I have referred.

17.In about 1993 the parties purchased a Mercedes 380SE motor vehicle. This vehicle was sold in about 2001 when the wife purchased a Toyota Celica motor vehicle.

18.In 2001 the husband purchased a half share in a home unit at Hobart jointly with Mr [D] (…). Mr [D] is also a director of a company [T] Pty Limited (…). The husband conceded that [T] was his “alter ego”.

19.In March 2000 the wife purchased a 12 metre berth at the …Yacht Club, … for a purchase price of $21,394.50. The wife obtained borrowings to fund the purchase of the berth. The wife sold the yacht berth in early 2004 for a sale price of $21,000.00.

20.In August 2002 the husband purchased a yacht known as “[W]” for a purchase price of $82,000.00.

21.During the marriage the parties acquired shares in various companies including the Commonwealth Bank, David Jones and TAB.

22.In March 2003 the husband asserted he was approached by a friend for a loan and that he advanced $20,000.00 repayable on demand. He subsequently agreed to advance a further $32,500.00 and asserted the funds so advanced were used to purchase equipment (…). The husband sought to have taken into account as a liability of [T] a Citibank debt of approximately $53,000.00 on the basis this was the sum borrowed pursuant to the agreement.

1. Rule 22.12 of the Family Law Rules 2004 (Cth) provides the procedure applicable to an application for a stay.

2. The relevant law to be applied in considering an application for a stay pending appeal is well settled.  I refer to simply the cases of Federal Commissioner of Taxation v The Myer Emporium Ltd [No.1] (1986) 160 CLR 220; Alexander v Cambridge Credit Corporation (1985) 2 NSWLR 685, and Jennings Constructions Ltd v  Burgundy Royale Investments Pty Ltd (1986) 161 CLR 681.

3. In the latter case, Brennan J, as he then was, considered an application for stay pending determination of an application for special leave to appeal to the High Court.  He said at page 684:

   A stay to preserve the subject-matter of litigation pending an application for special leave to appeal is an extraordinary jurisdiction and exceptional circumstances must be shown before its exercise is warranted.

   At page 685, his Honour said:

In exercising the extraordinary jurisdiction to stay, the following factors are material to the exercise of this Court's discretion.  In each case when the court is satisfied a stay is required to preserve the subject-matter of the litigation, it is relevant to consider: first, whether there is a substantial prospect that special leave to appeal will be granted; secondly, whether the applicant has failed to take whatever steps are necessary to seek a stay from the court in which the matter is pending; thirdly, whether the grant of the stay will cause loss to the respondent and fourthly, where the balance of convenience lies.

1. The relevant matters to be considered were also considered by Kirby J in Bryant v Commonwealth Bank of Australia (1996) 134 ALR 460.

2. I propose to consider the husband's application having regard to the principles enunciated by Brennan J in Jennings Constructions Ltd v  Burgundy Royale Investments Pty Ltd (supra).

3. First, as to the applicant's prospects of success on special leave. Criteria for grant of special leave are found in section 35A of the Judiciary Act 1903 (Cth). Criteria potentially relevant to this application include whether the Full Court judgment involves a question of law, which raises a question of public importance because of the general application or otherwise, and whether the interests of the administration of justice, either generally or in the particular case, require consideration by the High Court.

4. I turn now to the husband's application for special leave of which there are nine grounds in total.  As far as grounds 3 to 9 are concerned they can be disposed of in my view fairly shortly.  Each of them challenges in broad terms the re‑exercise of the discretion by the Full Court.  There is no dispute that the parties each sought the Full Court should re-exercise the discretion of the trial judge if the appeal was successful, and neither party sought to put any further material before the Full Court.  Having regard to appellate principles, I am not satisfied that any issue of principle as required under the Judiciary Act arises from any of appeal grounds 3 to 9.

5. I add, by way of completion, that some of the husband's grounds of appeal before the Full Court, if successful, required the Full Court to reconstruct the asset pool on a re-exercise of discretion which was done on the basis of the agreement of both of the parties.  Ground 1 of the husband's Special Leave Application challenges, absent a cross-appeal, findings of the Full Court about the value of a property at C Street.  Ground 2 asserts in a similar vein an error on the part of the Full Court for allowing disputation, absent a cross‑appeal, about facts in relation to repatriated funds which were agreed at trial.

6. True it is that there was no cross‑appeal by the wife.  However, as I have indicated, the issues about the pool, and in particular what the parties agreed was an error by the trial judge as a result of a mistake by her in relation to the pool itself, required, firstly, by reason of the grounds of appeal, an examination of precisely what the pool consisted of and how that was arrived at.  This was then relevant to the reconstruction of the pool for the re-exercise of discretion by the Full Court having found that the husband's appeal was successful.  The Full Court did so on the basis of concessions made during the course of the hearing by counsel for both parties.

7. Having regard to those matters and to the other grounds, it seems to me that there is no matter of public policy or an important question of law that arises, and there is no matter which raises an issue regarding the administration of justice.  I repeat that most of the grounds of appeal are directed to challenges to the re‑exercise of a discretion by the Full Court.  In my view, in relation to the grounds there is no substantial prospect of success.

8. The second and third matters that I then turn to are whether the grant of a stay will cause loss to the respondent and where the balance of convenience lies.  This, put another way, requires an answer to the question, is a stay necessary to preserve the subject matter of the litigation, or, if the application is successful, would a refusal of the stay make it difficult for the High Court to grant the relief sought ?

9. The appellant does not seek to disturb the splitting order made in relation to superannuation.  He seeks only to change the amount of the payment that he is required to make to the wife.  In his application he indicates that although no payment has yet been made he is prepared to pay to her the sum of $133,800 by 2 February 2007, rather than the amount of $313,827 that an order requires him to pay. 

10. I make the following comments in relation to this question.  The first is that when the wife receives that payment and having real estate worth $125,000, the wife would be in a position, were the husband to ultimately be successful, to repay to him the difference, which is about $180,000.  The appellant puts no evidence before us to suggest that this would not be the case or that there is any reason why, if he were ultimately successful, the readjustment could not be made.

11. Secondly, what he did put before us was that effectively the balance of convenience supported him in that if he were required to now make payment he would have to sell property which he would then be unable to regain if he were to be successful.

12. He raised other matters regarding the difficulties in payment because of the caveat lodged by the wife.  I cannot see how that would be an impediment to him seeking to comply with orders which would benefit her.  In any event, as Mr Berman for the respondent wife submits, the husband has not put any evidence before the court about difficulties in compliance, such as would assist him in what is an onerous obligation to satisfy the court that a stay should be granted.  I further note that any difficulties the husband might have in relation to payment to the wife would apply equally to the payment of $133,800 that he himself says that he would pay.

13. A further matter which is of relevance is that the Full Court in its reasons at paragraph 66, noted that the trial judge had included in the pool of assets available for division between the parties, the full value of a [CS] account in the sum of $444,672.  The Full Court there then said (at para 66):

    Although the husband denied during the course of the proceedings that he had any interest in the existing [CS] account, and this evidence was not accepted by the trial Judge, there is no appeal against her Honour’s findings on this issue.

14. I note that there is still no appeal, even in his application for special leave, on that issue.  That being so, the husband must be taken to have a substantial sum of money available to him from which he could pay the wife.  The wife is entitled, absent satisfaction of the matters to which I referred, to the fruits of the litigation.  She has already had to wait for payment through an appeal and as a result of the appeal, the amount payable to her has been significantly reduced.  Having regard to those matters, in my view the husband has not satisfied me that he has demonstrated any of the exceptional circumstances which the High Court says in Jennings Constructions v Burgundy Royale (supra) must be shown before he would be entitled to the benefit of a stay.

15. For those reasons I would dismiss his application.

KAY J:

1. I agree that the application should be dismissed.  As dangerous as it may be for an intermediate appellate court to predict the outcome of matters before the High Court, it would appear on the face of the material that there is no substantial prospect of special leave to appeal being granted, nor does the material before the court indicate that the balance of convenience favours the appellant to the point where it would be appropriate to deny the respondent to this application the fruits of the litigation.

1. I am not as certain as the Chief Justice is that the relevant rule is 22.12 which applies to appeals to the Full Court, not appeals from the Full Court.  However, the principles that are discussed in Jennings Constructions are clearly applicable in this application.  I agree that the application should be dismissed.

BOLAND J:

1. I agree with the reasons of the Chief Justice and the comments of Kay J.  I too believe the application for a stay should be dismissed and I have nothing further to add.

BRYANT CJ:

1. The respondent seeks an order for costs in the sum of $1,200. There is no dispute as to the quantum of costs payable. However, the appellant submits that this is not an appropriate case for costs. In my view it is. I refer only briefly to s 117 of the Family Law Act 1975 (Cth). The husband has been unsuccessful in this application and the nature of the application itself suggests in my view, with the difficulties of persuading a court, that it is appropriate for a costs order to follow.

2. The financial circumstances of the plaintiff are well set out, both in the original trial judgment and the Full Court judgment.  The very nature of the division of the assets indicates quite clearly that there is a capacity on the part of the husband and accordingly, in my view, the husband should be responsible for the costs in the sum of $1,200.

KAY J:

1. I agree.

BOLAND J:

1. I agree with the reasons of the Chief Justice.

I certify that the preceding forty-seven (47) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court Bryant CJ, Kay and Boland JJ

Associate: 

Date: