ROSS & ROSS

[2015] FCCA 3218

FEDERAL CIRCUIT COURT OF AUSTRALIA

ROSS & ROSS [2015] FCCA 3218

Catchwords:
FAMILY LAW – Stay application – issue of whether wife had established a proper basis for the stay – whether or not granting stay would render her appeal nugatory – stay refused.

Legislation:

Property, Stock and Business Agents Act 2002 (NSW).

Property, Stock and Business Agents Regulations 2014 (NSW).

Trahn & Long (No.2) [2008] FamCAFC 194
Alexander & Cambridge Credit Corp (1985) 2 NSWLR 685
The Commissioner of Taxation of the Commonwealth of Australia v Myer Emporium Ltd [1986] HCA 13; (1986) 160 CLR 220
Jennings Construction Limited v Burgundy Royale Investments Pty Ltd [1986] HCA 84; (1986) 161 CLR 681
Clemett & Clemett (1981) FLC 91-013
Aldridge & Keaton [2009] FamCAFC 106
Pierce & Pierce [1998] FamCA 74
Ferraro & Ferraro (1993) FLC 92-335
C & C [2005] FamCA 429
Stanford v Stanford [2012] HCA 52

Applicant: MS ROSS

Respondent: MR ROSS

File Number: SYC 7593 of 2012

Judgment of: Judge Henderson

Hearing date: 10 November 2015

Date of Last Submission: 10 November 2015

Delivered at: Sydney

Delivered on: 8 December 2015

REPRESENTATION

Counsel for the Applicant: Mr Kearney SC

Solicitors for the Applicant: Barkus Doolan

Counsel for the Respondent: Mr Levy

Solicitors for the Respondent: Watts McCray Lawyers

ORDERS

1. The wife’s application for a stay of orders is dismissed.

2. In the event either party is the successful bidder at auction the other party has a caveatable interest in the property that may be protected by the lodgement of a caveat pending the determination of the appeal in this matter or as agreed.

3. In the event the home is sold to a third party the parties are to cause the sum of $250,000 or such sum as is agreed to be placed into a controlled monies account with the husband’s lawyers pending the determination of the appeal in this matter or as agreed.

4. Stand over the husband’s application for costs of the proceedings pending the outcome of the appeal.

IT IS NOTED that publication of this judgment under the pseudonym Ross & Ross is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT SYDNEY

SYC 7593 of 2012

MS ROSS

Applicant

And

MR ROSS

Respondent

REASONS FOR JUDGMENT

1. The matter of Ross is an application by the applicant wife seeking a stay of orders made on 6 August 2015 following a final hearing where final submissions were heard on 8 July 2015. The husband seeks his costs the hearing before me. The matter concerns property only.

2. Mr Kearney SC appeared on behalf of the applicant wife and Mr Levy of counsel who appeared at the substantive hearing appeared on behalf of the respondent husband. The husband resists the stay.

3. Going to the husband’s application for costs these relate to the substantive hearing and the husband’s application for amendment of the final orders under the slip rule. That application was resisted by the wife and it came before me in August 2015. The wife was wholly unsuccessful in her resistance to that application and I granted the amendments sought by the husband under the slip rule provisions.

4. It was clear from reading the orders delivered and reasons for judgment I had not carried out my intention to give to the husband 52 per cent of the total of the parties’ assets. My orders provided him with 52 per cent of the net proceeds of sale of the former matrimonial after sale at auction. The husband seeks his costs of both of his successful applications.

5. After some discussion from the Bar table I formed the view I would not entertain the costs application today. The wife sought the costs be detailed and to respond and given the matter is under appeal I did not determine it was appropriate I deal with a costs issue today. That application can be re-agitated after the appeal process is finalised or as agreed.

6. As part of the wife’s resistance to the slip rule application she had sought a stay of final orders. That application needed to be responded to by the husband and thus the matter comes before me today 10 November 2015.

7. The wife has filed a notice of appeal of my decision and was prompt in filing her appeal. The wife also sought an application for expedition which came before Aldridge J on 22 September 2015. The application for expedition was not successful, and I accept the evidence in Ms W’s affidavit that it will be some two years before the appeal is likely to be heard. There is no expectation when judgment would be delivered after hearing the appeal.

8. The material I read for the parties was as follows.

9. For the husband.

   a)Reply to response of an application in a case filed 28 September 2015.

   b)Application in a case filed 31 August 2015.

   c)Affidavits of 23 September 2015, 21 August 2015 and 5 November 2015.

   d)Husband’s Exhibit 1, the auction agency agreement the parties have entered into for the sale of their property at Property B with (omitted) in September 2015.

   e)Copies of the Property, Stock and Business Agents Regulations 2014 (NSW), regulation 15 and Property, Stock and Business Agents Act 2002 (NSW), section 66.

10. For the wife.

    a)Amended response to an application in a case filed 2 October 2015.

    b)Affidavits of 2 October 2015 and 28 August 2015.

    c)Notice of Appeal and Grounds of Appeal.

    d)Case outline prepared by Mr Kearney marked Wife’s Exhibit 1.

    e)Wife’s Exhibit 2, minute of order filed on the day of the hearing.

    f)Parts of the transcript of the hearing before myself, page 14 paragraph 35; page 15, paragraph 30; page 16, paragraph 40; page 17, paragraph 40. This is in relation to the evidence of Mr B, the valuer at the substantive hearing.

    g)The judgment delivered on 6 August 2015.

11. There are many grounds of appeal. The wife asserts I erred in the percentage each party was entitled to of their assets and on many other grounds.

12. My orders provided for the home to be sold at auction and the proceeds to be divided.

13. I ordered the property to be sold to obtain the best price reasonably obtainable. I did so as I determined that was the just and equitable manner to determine the value of the property in a rising Sydney market in the Property B area where one party sought to buy the other out was an auction. I determined that this was necessary in order to do justice and equity to the parties at the end of the day as set out at paragraph 139 of my judgment. I did so after hearing the cross-examination of Mr B, joint valuer, and reading his valuation report. Insofar as it was necessary for stamp duty purposes, I gave the wife the option to purchase the home at the auction.

14. This is the real gravamen of the stay application. The wife’s case prior to, at trial and now is that she will buy out the husband’s interest in the property as she is desirous of retaining the home.

15. The wife asserts I erred in not accepting Mr B’s valuation of the home at $1.8 million. The wife’s claim is she can purchase her husband’s interest in the home at this price. I am not clear whether this claim is dependent upon the wife receiving more than 48% of the assets as I determined or her now sought percentage.

16. This asserted error is the major ground of the appeal.

17. The wife’s prayer is that if I do not stay the orders I will render her appeal nugatory. The wife says if I do not stay the orders made on 6 August 2015 and the auction takes place the wife’s application, which has always been to retain this home, will fail unless she is the successful bidder at the auction.

18. Her case is she will or may not be able to retain the house as she has always desired to do and thus her appeal will be rendered nugatory.

19. After reading all the evidence and hearing submissions in essence one of the pivotal questions to be asked is by not staying the order what would I render nugatory?

20. The law in relation to stays is clear, well developed and settled.

21. In her application in a case the wife sought a stay of the orders simpliciter. At the hearing she amended her application for a stay on terms.

22. Her terms were that she would vacate the home, the home would be rented, the small mortgage of $75,000 paid, rates, taxes and the like paid and she and the husband would share the net rental. This puts each of them in the same position as the other, that is, they both will be renting privately awaiting the appeal and thus the prejudice to each is equal.

23. The husband has been out of the former matrimonial home for five years and the wife in sole occupation during that time. There is some force in the position the wife took after I raised with Counsel at the opening of the hearing that I could grant a stay on terms and gave as an example the position she ultimately adopted.

24. The husband says simply that the prejudice to him is overwhelming. He has been out of the home for five years. If the appeal is not heard for two years and let us say a judgment is not delivered for three months, he will have been out of the home approaching seven and a half years, and he will have been deprived of his equity in that home for seven and a half years. This time does not include a re-hearing and judgment if the appeal is successful.

25. Husband’s Exhibit 1 gives an estimated selling price at auction of between $2 million and $2.1 million. Interestingly, that is approaching a 10% to 15% increase in Mr B’s valuation of March 2015 of $1.8 million.

26. I accept Mr Kearny SC’s submission that this document cannot be a valuation. However, this is an indication from the real estate agents the parties have agreed to use at auction of their estimate of the value likely to be obtained at auction and it is within a range. That estimate at the lower end of the range is $2 million which is 10% to 11% more than the $1.8 million Mr B opined was the value of the home. To be fair Mr B agreed that his valuation could be out by 10% up or down and that this was an acceptable range.

27. Looking at the case law.

28. Mr Kearney SC referred to many decisions such as, Trahn & Long (No.2)[1] Alexander & Cambridge Credit Corp[2], The Commissioner of Taxation of the Commonwealth of Australia v Myer Emporium Ltd[3], Jennings Construction Limited v Burgundy Royale Investments Pty Ltd[4], Clemett & Clemett[5]. There is a long line of authority in relation to the principles surrounding a stay application pending an appeal. This is an area of law well settled and traversed for hundreds of years in a common law country such as ours.

    [1] [2008] FamCAFC 194.

    [2] (1985) 2 NSWLR 685.

    [3] [1986] HCA 13; (1986) 160 CLR 220.

    [4] [1986] HCA 84; (1986) 161 CLR 681.

    [5] (1981) FLC 91-013.

29. A leading decision in this jurisdiction on such a matter is Aldridge & Keaton[6], a decision of the Full Court. In that decision their Honours set out clearly the principles in a stay application. The statement of the principle of the law is set out in paragraph 18 and is as follows:

    [6] [2009] FamCAFC 106.

    ·The authorities stress the discretionary nature of the application which should be determined on its merits. Principles relevant to this matter include.

    · the onus to establish a proper basis for the stay is on the applicant for the stay

    · one does not have to demonstrate “special” or “exceptional” circumstances to support a stay .

    ·A person who has obtained a judgment is entitled to the benefit of that judgment.

    ·A person who has obtained a judgment is entitled to presume the judgment is correct.

    ·The mere filing of an appeal is insufficient to grant a stay.

    ·The bona fides of the appeal.

    ·A stay may be granted on terms that are fair to all parties. This may involve a Court weighing the balance of convenience and the competing rights of the parties.

    ·A weighing of the risk that an appeal may be rendered nugatory if a stay is not granted.

    ·Some preliminary assessment of the strength of the proposed appeal – whether the appellant has an arguable case.

    ·Period of time in which the appeal can be heard.

30. Dealing with the non-controversial matters as I see them.

31. I accept the wife does not have to establish special or exceptional circumstances to ground a stay. I accept the appeal has been brought on a bona fides basis by the wife and is not a mere delaying tactic. I cannot say that the appeal is without merit or doomed to failure on all grounds such as the percentage division I determined or how I dealt with the Ross Family Trust for example.

32. The husband is entitled to the benefit of the order and to presume the judgment is correct.

33. The 3 most controversial matters I am to address are:

    (a)Whether the wife has established proper grounds for the stay.

    (b)The impact of the unacceptable delay in the Appeal being heard which must also include if the wife is successful the re-hearing of the matter.

    (c)A weighing of the risk that the appeal may be rendered nugatory if a stay is not granted.

34. The husband conceded that if I do not grant a stay a percentage of the sale proceeds would not be distributed to the parties to ensure sufficient monies are available if the wife is successful in her claim that I erred in my percentage division to each and other issues.

35. The wife’s claim for a different percentage split or monetary adjustment to her is not rendered nugatory if I do not grant the stay in these circumstances.

36. The lengthy delay in having the appeal heard and judgment delivered of up to 2.5 years and if successful another 6 or so months for a re-hearing and a new judgment will result in the husband being deprived of occupation of the home and his capital for 8 years. Such a lengthy potential delay makes a mockery of his right to the benefit of the orders and to presume the judgment is correct. This is not intended to be a criticism of the Appeal process or the wife rather a statement of fact.

37. Granting the stay preserves the wife’s desire to buy out the husband’s interest in the home. Not granting the stay also preserves her desire to buy out her husband’s interest in the home as she can bid at the public auction. Thus I must enquire what is it that the wife seeks to preserve by the granting of the stay.

38. What the wife is asking me to preserve is her desire to buy out the husband’s interest in the home at $1.8 million.

39. This is the very essence of my decision. I found that to allow the wife to buy out her husband’s interest in the home at Property B at $1.8 million in a rising Sydney property would not result in a just and equitable division of the parties matrimonial assets on the evidence. I found that the best price reasonably attainable was the preferred method of determining value in order to do justice and equity otherwise my concern was the wife would profit at the expense of the husband. The gravamen of my decision was to allow the wife to buy the husband out at the best price reasonably obtainable not at a possible undervalue. Public auction is the approved method to determine the best price reasonably obtainable. I took this step in the interests of doing justice and equity to the parties in the division of their assets.

40. Mr Levy simply summed it up. What I am being asked to do is stay the operation of orders I made after a final hearing to enable the wife to purchase this property at $1.8 million. That is what I would render nugatory if the stay was not granted. Not her capacity to purchase this property, but her capacity to purchase it at a price namely $1.8 million.

41. Mr Kearney SC submitted to the wife was either not permitted to bid at the auction or was limited to one bid. To that end he referred me to section 66 of the Property Stock and Business Agents Act 2002 (NSW), prevention of dummy bidding, and the regulations governing these matters in particular Regulation 15 to the Act. Mr Levy disagreed with that submission.

42. Going to Section 66 of the Act. It is clear this section is designed to prevent dummy bids be it by owners or others in an endeavour to prevent the value of a home being unfairly inflated or deflated.

43. The relevant parts of section 66 are as follows.

44. 66 (5):

    This section does not apply to the making of a bid by or on behalf of a seller in either of the following cases, so long as the requirements of subsection (6) for bids by or on behalf of a seller as co-owner or as executor or administer are complied with:

    (a)     the seller is a co-owner of the land whether as joint tenants or tenants-in-common and the bid was made to enable the seller to purchase the interest of the other co-owner in the land.

45. Clearly, the husband and wife each fall into section 66 (5)(a) as co-owners of the property .

46. The requirements that must be complied with under subsection (6) are as follows:

    The requirements for bids by or on behalf of the seller as co-owner or as executor or administrator are as follows:

    (a)     the conditions under which the auction is conducted must permit the making of bids by or on behalf of a seller to purchase the interests of another co-owner in the land or to purchase as executor/administrator.

    (b)     the auctioneer must have announced at the auction before the start of the bidding the bids to purchase the interest of a co-owner in the land or to purchase as executor or administrator may be made by or on behalf of the seller.

47. I note the word “bids” in both (6)(a) and (b).

48. Going to regulation 15, these are the conditions applicable to the sale of property by auction:

    (1) The following conditions are prescribed as applicable to and in respect of the sale by auction of land or livestock:

    (a) Vendor’s reserve price must be given in writing.

    (b) A bid for a vendor cannot be made unless the auctioneer has, before the commencement of the auction, announced clearly and precisely the number of bids that may be made by or on behalf of the vendor.

    (c) The highest bidder is the purchaser, subject to the reserve.

49. Regulation 15(3):

    (a) More than one vendor bid may be made to purchase the interest of a co-owner.

50. Regulation 15(2):

    (b) Subject to subclause (3) the auctioneer may make only one vendor bid…

    (c) Immediately before making a vendor bid the auctioneer must announce that the bid is made on behalf of the seller or announce a “vendor bid”.

51. Regulation 15(3):

    The following conditions, in addition to those prescribed by subclauses (1) and (2), are prescribed in respect of the sale by auction of co-owned residential property –

    (a)    More than one vendor bid may be made to purchase the interest of a co-owner.

    (c) Before the commencement of the auction the auctioneer must announce that bids to purchase the interest of another co-owner may be made by or on behalf of the seller.

    (d) Before the commencement of the auction the auctioneer must announce the bidder registration of any co-owner.

52. I fail to see how ground 2 of the wife’s notice of appeal will be successful. That ground is that a reading of the regulation limits her to one bid. It does not. It limits the auctioneer to making one bid on behalf of a seller it does not limit a seller making multiple bids provided the relevant preconditions are met.

53. As I read this legislation it is clear. Provided the wife announces she has an interest in the property, advises the auctioneer the number of bids she wishes to make and that this interest is conveyed by the auctioneer to the other bidders she can make as many bids as she chooses to secure this property as she seeks to do.

54. The husband can bid at this auction, should he choose. He has indicated in his affidavit he will bid up to $1.9 million.

55. The wife’s capacity to purchase this property at $1.8 million is what Mr Kearney SC says I will render nugatory if I do not grant the stay. He submits that my determination to have the property sold by way of public auction and not permit the wife to buy out the husband’s interest at $1.8 million is an appealable error and thus to not ensure that this issue is able to be determined by the Full Court would render her appeal nugatory. Her case is that this is the most compelling consideration in the exercise of my discretion to grant or not the stay and I should grant the stay.

1. What I am being asked to accept is that the wife’s desire to purchase the husband’s interest in the property at $1.8 million when I have determined that to do so would not result in a just and equitable division of their assets is the most compelling factor and the stay should be granted. I disagree. This is not a proper basis for a stay for the following.

2. In the exercise of the discretion under section 79 of the Act I need to ensure that the order I make results in a just and equitable division of the parties’ assets. An important aspect of that determination is to establish the value of parties’ assets, their nature and kind. I then ascribe to the parties their contribution based entitlement expressed as a percentage and then determine whether that percentage ought to be varied having regard to their future needs and capacity to support themselves and others such as children. After that exercise I determine whether the orders I propose to make are just and equitable. See Pierce & Pierce[7]; Ferraro & Ferraro[8], C & C[9], Stanford v Stanford[10].

   [7] [1998] FamCA 74.

   [8] (1993) FLC 92-335.

   [9] [2005] FamCA 429.

   [10] [2012] HCA 52.

3. Part of the evidence before me was the valuation of Mr B. I did not accept that the value he ascribed to the property would result in a just and equitable division of the parties’ assets if the wife bought out the husband’s interest at that value. Although I did not accept his dollar figure it assisted me in understanding the potential value of the home and thereby allowed me to carry out the prescribed steps in the exercise of my discretion.

4. I do not see that the case law requires that I must ascribe precisely a value to an asset in a property matter before I am able to make a property division order that is just and equitable. This is particularly so when to accept a proffered value may not result in a just and equitable decision. There is a degree of artifice in both a property valuation which is not a science and in the determination of the value of the parties’ assets.

5. The wife was, I found at the hearing and by her conduct throughout this litigation, almost obsessed with retaining this home. I was not satisfied of her capacity to borrow sufficient to buy the property at $1.8 million on her own evidence as she required the assistance of her brothers. One pledged $100,000; another pledged $200,000, but would require his name to be on title. The wife I found was not careful in the preparation of her affidavit or her oral evidence, and it did not assist her case. I accept her evidence she intends to rent the property. There was significant contingency in her plan however I accepted her desire and she has the capacity to bid at the auction and secure this property.  

6. The husband has been out of the home, paying private rental, not for the whole of the five years but for some period of time approaching three years, sharing costs with his partner at about $340-odd a week while the wife has been in occupation of the home, paying a mortgage at maybe $100 per week, when I found they have similar incomes. Even at the hearing, Mr B gave evidence in his valuation that the rental of the property in 2015 could have been gross $65,000 per annum. The husband has been deprived of that income as well.

7. My concerns in the judgment were clearly set out in paragraph 40. If I accept the wife’s position that the property is worth $1.8 million, only she will reap the benefit of the strong Sydney property market. The home is the only significant liquid asset. If I am wrong and the home sells for this sum or less the wife will purchase it. Thus an auction at which the wife could bid was determined as the means by which each would receive the benefit of their contributions over the years of their marriage.

8. In refusing the stay I am not rendering the wife’s appeal nugatory. The wife’s concern in not being able to retain the property is not because of any order I have made but that the home will exceed a price of $1.8 million at auction. I may in refusing the stay be rendering her capacity to buy out the husband’s interest at $1.8 million nugatory but that is not a proper basis for a stay when the value of the home in 2 years is unknown and the wife has the ability to purchase the home at auction presently as she can bid at the auction.

9. The wife’s conduct and submissions make it clear she is of the view that the property may realise more than $1.8 million at auction. The sales agency agreement she and the husband signed with (omitted) says the home may achieve a sale at between $2 million to $2.1 million. The wife’s own evidence and conduct makes it abundantly clear this home may sell for more than $1.8 million at auction. That was apparent to me after listening to Mr B’s evidence at the hearing and is apparent today. This further supports my finding that the wife has not made out a proper basis for the stay.

10. As to the stay on terms. Given the lengthy delay in having the matter dealt with on appeal, the significant prejudice the husband has already suffered in being denied occupation of the home for 5 years and access to his equity in the home I do not see that the offer by the wife to vacate and rent the home with each to share the profits will address those matters.

11. I accept that on her proposal each will henceforth be equally prejudiced in not living in the home and each benefit from a sharing of the rent. However, for the wife her prejudice will be a period of 2.5 years, perhaps 3, if she is successful and the matter is to be re-heard. For the husband the delay will be approaching 8 years.

12. For all the above reasons I refuse the wife application for a stay of orders.

13. I will order that a sum of $250,000 or such sum as is agreed be placed in a controlled monies account from the sale proceeds in the event the wife and or husband is unsuccessful at the auction and the home is sold to a third party. This is to enable monies to be available in the event the wife’s appeal is successful and a further adjustment is to be made.

14. If the wife or husband is the successful bidder at auction I will make an order to enable the unsuccessful party to place a caveat on the title of the home to secure any further interest they may have in the equity as determined by the Court.

I certify that the preceding sixty-nine (69) paragraphs are a true copy of the reasons for judgment of Judge Henderson

Date: 8 December 2015