SALTZER & PACEK (No.3)
[2020] FCCA 1381
•4 June 2020
FEDERAL CIRCUIT COURT OF AUSTRALIA
| SALTZER & PACEK (No.3) | [2020] FCCA 1381 |
| Catchwords: FAMILY LAW – Application for stay of operation of orders pending appeal – where applicant had sought ex parte injunction to prevent respondent in her capacity as director of company, executing contract for sale of land – where substantive basis of application was that he did not want property sold until discovery complete – where it was accepted that the respondent had legal entitlement to execute contract – where submission made that the position was analogous to that of a party who sought to prevent sale on basis that order conferring right to purchase the property would be sought at trial – where such relief not sought in relation to this property in initiating application – where respondent proposes to retain net proceeds of sale in controlled monies account – where no case advanced that the respondent was acting in breach of directors duties – where applicant disavows that the company is trustee of trust – where no claim that respondent acting oppressively as shareholder – where no claim or evidence that the respondent wasting or dissipating assets – where no other serious question to be tried – where balance of convenience did not favour grant of relief – where application refused and respondent permitted to enter contract of sale – stay pending appeal – applicable principles – relevant considerations – whether appeal would be rendered nugatory – whether proposed grounds of appeal are of merit – discretionary considerations – where applicant offers undertakings – where applicant undertakes to pursue appeal with all due diligence – whether application bona fide – whether likelihood of appeal being heard in near future or being expedited – application granted upon undertakings. |
| Legislation: Family Law Act 1975 (Cth), ss.79, 81, 106B Family Law Rules 2004 (Cth), rr.1.05, 22.11 |
| Cases cited: Agricultural and Rural Finance Pty Ltd v Gardiner (2008) 238 CLR 570 Aldridge & Keaton (Stay Appeal) [2009] FamCAFC 106 Alexander v Cambridge Credit Corporation (1985) 2 NSWLR 685 Allesch v Maunz (2000) 203 CLR 172 Ascot Investments Pty Ltd v Harper (1981) 148 CLR 337 Jennings Construction Ltd v Burgundy Royale Investments Pty Ltd (1986) 161 CLR 681 JRN & KEN v IEG & BLG (1998) 72 ALJR 1329 Norbis & Norbis (1986) 161 CLR 513 Prestwell (dec’d) & Prestwell [2019] FamCA 395 Snedden v The Commonwealth (2014) 315 ALR 352 Stanford & Stanford (2012) 247 CLR 108 SZBEL v Minister for Immigration and Multicultural and Indigenous Affairs (2006) 228 CLR 152 The Commissioner of Taxation of the Commonwealth of Australia v Myer Emporium Limited [No.1] (1986) 160 CLR 220 |
| Applicant: | MR SALTZER |
| Respondent: | MS PACEK |
| File Number: | MLC 2954 of 2020 |
| Judgment of: | Judge A. Kelly |
| Hearing date: | 3 June 2020 |
| Date of Last Submission: | 3 June 2020 |
| Delivered at: | Melbourne |
| Delivered on: | 4 June 2020 |
REPRESENTATION
| Counsel for the Applicant: | Dr R. Smith |
| Solicitors for the Applicant: | Dwyer & Co, Legal |
| Counsel for the Respondent: | Ms S. Fisken |
| Solicitors for the Respondent: | Cornelius Family Law |
UPON THE APPLICANT, by his counsel undertaking to the court to:
(a)amend within seven (7) days, his initiating application as he deems fit;
(b)prosecute his appeal with all reasonable diligence;
(c)submit to such order (if any) as the Court may consider to be just for the payment of compensation, (to be assessed by the Court or as it may direct), to any person, (whether or not that person is a party), affected by the operation of the order or undertaking or any continuation (with or without variation) of the order or undertaking;
(d)pay the compensation referred to in (c) to the person affected by the operation of the order or undertaking; and
(e)remove caveat No ... lodged over title to the property situate at A Street, Suburb B, in the State of Victoria (property) being the whole of the land more particularly described in Certificate of Title, volume ..., folio ....
THE COURT ORDERS:
Pursuant to ss 67-68 of the Federal Circuit Court of Australia Act 1999 (Cth), the parties be allowed to appear and to make submissions before the court via audio and video link.
The applicant husband’s application in a case filed on 27 May 2020 be listed urgently before a judge of this court.
Pending the hearing and determination of the applicant’s notice of appeal filed on 27 May 2020 or further order, the Order made on 21 May 2020 be stayed.
Until further order, the respondent wife, whether by herself, her servants, her agents or howsoever otherwise be and is restrained from taking any step to perform or complete the contract of sale dated 27 May 2020 for the sale of the property or otherwise granting or permitting the transfer or disposition in any way of any interest in the property, whether to F Pty Ltd), or otherwise.
The parties’ costs of and incidental to the applicant’s application in a case filed on 27 May 2020 and the respondent’s response thereto dated 2 June 2020 be reserved.
Liberty to apply on reasonable notice.
IT IS NOTED that publication of this judgment under the pseudonym Saltzer & Pacek (No.3) is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT MELBOURNE |
MLC 2954 of 2020
| MR SALTZER |
Applicant
And
| MS PACEK |
Respondent
REASONS FOR JUDGMENT
Introduction
These reasons for judgment address an application in a case dated
27 May 2020 by the applicant husband seeking a stay pending appeal from an order made on 21 May 2020 (Order) together with an interlocutory injunction restraining the respondent wife from, in effect, transferring or disposing of any interest in A Street, Suburb B, in the State of Victoria (property) or otherwise completing a contract executed on 27 May 2020 (Contract of Sale) between E Pty Ltd and F Pty Ltd for the sale of the property. These reasons should be read together with the reasons for judgment in Saltzer & Pacek (No 1)[1] and the Order the subject of appeal, the reasons for which are given in Saltzer & Pacek (No 2).[2][1] [2020] FCCA 854.
[2] [2020] FCCA 1303.
I have concluded that, the applicant having proffered certain undertakings, including as to damages and to prosecute his appeal with due diligence, the applications for a stay and an interlocutory injunction should be granted. Those orders operate until further order.
In summary, assessed at a preliminary level, I do not consider that there is particular merit in the proposed grounds of appeal. I also have serious reservations as to the bona fides of the application. However, I accept that the appeal would be rendered nugatory if the stay was refused. Relatedly, a significant consideration is that the subject matter before the Full Court may cease to remain the property of E Pty Ltd.
The respondent has now executed the Contract to sell the property to F Pty Ltd. The respondent only did so some days after the application had been refused and before being notified of the appeal. The terms of the Contract fix settlement at 148 days from the “Day of Sale”.[3] Settlement is due in mid-October 2020. Contextually, since at least March 2020, the respondent had kept the applicant informed of her intention to enter negotiations to sell the property and to keep the net proceeds of any sale in a controlled monies account.
[3] Being the date upon which both parties executed the Contract (27 May 2020).
Not without reservation, I consider that the balance of convenience favours the grant of a stay in circumstances where the respondent will likely suffer no prejudice if the stay is granted on terms including the undertakings given and with liberty to apply. The prejudice which E Pty Ltd, any party or other person might suffer can be ameliorated by the applicant’s undertaking as to damages.
As I am prepared to grant the stay, I consider it is also appropriate to grant the injunction sought. The injunction will be granted until further order and again, should it emerge that circumstances have changed so as to justify revisiting this order, either party will be free to do so.
If the appeal is not heard and determined before October 2020, or the purchaser serves a notice of rescission, or for other good reason, a party may seek liberty to apply. As stated in argument, in the circumstances of this case, the stay, being interlocutory, may not continue in operation if a sufficient change in circumstances was demonstrated.
Overview
While the parties are now in dispute, the relationship is said to have been from at least eight to some twenty years in duration with the parties separating in August 2019. Together, they conducted the business known as the E Pty Ltd. Since the decisions referred to below, the applicant seeks to raise contentions as to the duration of the parties’ marriage and of the extent of their respective financial and non-financial contributions. Many of the issues which the applicant now seeks to raise were not in evidence at the time the court was called upon to decide the application which was refused and the Order pronounced that is the subject of appeal and this stay application. The applicant’s affidavit in reply observes that the applicant’s earlier affidavit had referred to the parties’ relationship spaning some twenty years.
From 2019, the parties sought to achieve an orderly sale of their interests. However, their relations soured and they became embroiled in disputes.
On 18 March 2020, the applicant’s former lawyers filed an initiating application for an adjustment of property interests including for an injunction to restrain the respondent from selling the former matrimonial home. Although the initiating application sought that the applicant be excused from further particularisation of the final orders to be sought by him, three matters are of immediate relevance to this application. First, by his affidavit made on 17 March 2020, he deposed at [72]-[74] that: he sought orders for an equal division of the net matrimonial assets once their due value had been ascertained; he believed this to be fair and reasonable notwithstanding he considered his contributions to be greater than those of the respondent; he sought an equal division of the net assets “to ensure the Respondent maintains a reasonable lifestyle after these proceedings are finalised.” Secondly, while an interlocutory injunction was sought to restrain the sale of the former matrimonial home, no injunction was sought respecting the property the subject of this application. Thirdly, no application was made that the applicant be permitted, or afforded an opportunity, to purchase the subject property.
On 23 March 2020, the application for an interim injunction was listed to be heard by a judge of the court on 14 April 2020. By that date, the applicant was also on notice of the proposed sale of the property.
At that time, no application was made for an injunction to prevent the sale of the property which is the subject of the present application.
On 14 April 2020, the applicant’s application for an injunction to restrain the respondent from completing a contract for the sale of the matrimonial home was refused: see Saltzer No 1.
On 21 May 2020, the applicant’s application for an injunction to restrain the respondent from executing a contract for the sale of the property was refused. The respondent was permitted to proceed with a sale: see Saltzer No 2. The court declined other relief for the reasons given.
One aspect of the respondent’s case in these proceedings is that a pattern is discernible in the applicant’s conduct of initially agreeing to a sale but then opposing it with the supposed strategy of “trying to drive down the value of the property so that he could then counter propose [so as] to purchase it for himself.”[4] Whether that is so is a matter I cannot decide at present.
[4] Respondent’s affidavit made on 18 May 2020, [24].
E Pty Ltd is the registered proprietor of the fee simple estate in the property and the respondent is the sole director and shareholder of that company. E Pty Ltd is one of the companies comprised in the H Group. At the hearing on 21 May 2020, and in response to a question raised by me, I was told that E Pty Ltd was not the trustee of any trust.[5] While the applicant now deposes that he has only recently discovered that it is a trustee, the respondent identifies a letter from his former solicitor sent in 2019 which discovers documents relevant to the trust. The Contract also identifies E Pty Ltd as trustee.[6]
[5]This is but one of the matters which is now in contention according to an affidavit filed by the applicant in support of his application for a stay of the Order.
[6] A matter which was not addressed before me on 21 May 2020.
From his affidavit made on 7 May 2020, the substantive bases on which the applicant sought an injunction to restrain entry into the Contract were that: the parties had agreed in consent orders made on 23 March 2020 that neither would dispose of or transfer their existing current office holdings or shareholdings in certain companies; despite the parties’ communications respecting a sale of the property, he had not consented to the sale and had not been consulted as to the terms of sale; he was concerned the respondent would continue to sell assets and that he did “not want any further properties sold until the parties have gone through the discovery process and attended Private Mediation”. By this affidavit, the applicant deposed that his previous solicitor had written to the respondent’s solicitor seeking an undertaking that the balance of the proceeds of a parcel of land would be held in trust.
While the history of the parties’ negotiations in relation to the proposed sale of the property are described in Saltzer No 2, from the applicant’s Outline of Case filed on 18 May 2020 in support of the application for an injunction and signed by counsel (Outline), it may be noted it was common ground that from at least late 2019, the parties had been in negotiations in relation to the sale of the property. In this context, a feature of the present dispute is that the applicant now contends he had not agreed in writing to any such sale. Upon the applicant’s Outline:
a)on 17 March 2020, the respondent’s lawyers transmitted an offer for the property (for a purchase price of $4.65M);
b)on 24 April 2020, the respondent’s solicitors advised the applicant’s solicitor that negotiations were underway to sell the property and that documents would be provided as they became available. It was proposed that the net proceeds of sale be held in a controlled monies account;
c)on 24 April 2020, the applicant’s solicitors wrote advising that the applicant did not agree in a sale of the property;
d)on 29 April 2020, the respondent’s solicitors sent the applicant’s solicitors a copy of the Contract;
e)on 30 April 2020, the applicant’s solicitors reiterated that the applicant did not agree in a sale of the property;
f)on 6 May 2020, the respondent’s solicitors advised that the respondent proposed to sign the Contract within seven days;
g)on 7 May 2020, the applicant applied for an ex parte injunction.
Having filed the application, in the period 8-21 May 2020, the applicant had the opportunity to prepare the evidence and formulate the submissions upon which he sought to rely. For some weeks before and during that period the applicant was legally represented.
From the content of his Outline, as distinct from his affidavit, the gravamen of the applicant’s claim for an injunction was that: he was entitled to an adjustment of interests in his favour; no contract had been executed; there had merely been discussions between the parties as to sale; the respondent had not involved him in negotiations for the sale of the property; he now wanted to retain the property for the business of H Group. The later claim was not made in his affidavit.
When, on 6 May 2020, the respondent’s solicitors wrote in relation to the sale of the property, it was stated in part that “[d]espite your client’s generalised comments that he seeks to retain part of the properties to be sold, there has not been produced any offer equalling the proposed sale figure foreshadowed to our office, nor any indication of how your client would in any event seek to retain such property as part of an overall settlement.” The applicant has abstained from ever making an offer.
The applicant adduced no evidence of his ability to purchase the property. Nor did he adduce any evidence of an offer equalling that which had been made. No submissions of that kind were made to me.
In support of the stated desire to retain the property, the applicant also relied upon correspondence from a local business and the local shire, each sent in 2014, concerning the prospect of the loss of the right to park vehicles and equipment on other property owned within the group, situate in K Street, Suburb L. No other more recent correspondence was relied upon and the applicant’s Outline accepted that at least certain of the trucks and equipment of the H Group continued to be parked at the K Street, Suburb L property. The applicant’s affidavit in support of the application for an injunction did not address the contention that parking trucks and equipment at the K Street, Suburb L property was currently imperilled by communications sent as long ago as 2014. No evidence was adduced of communications upon this topic in the six year period 2014-2020. Nor did the affidavit address any existing or proposed claim to acquire the subject property. The affidavit neither contained, nor exhibited, any offer to purchase the property on comparative terms or of any ability to finance such a purchase.
By the terms of the contract under negotiation, F Pty Ltd had offered to purchase the property for a sale price of $4.65M. Contrastingly, according to the evidence before me and on the parties’ submissions, G Group, which had been appointed as a joint expert by the parties to value certain property, had given a sworn valuation of the property the subject of the present application of $3.4M.[7] However, the applicant did not accept J Group’s opinion and wrote to J Group complaining of their opinion. The applicant proceeded to appoint another valuer who, in February 2020, provided an appraisal of the property for a figure markedly below the J Group valuation. The respondent deposes that the applicant’s recent valuation reiterates “in language and terms almost identical to what the applicant wrote in his initial complaint to G Group”. Somewhat remarkably, the applicant’s valuer had given an appraisal of the property in late-2019 which largely correlated to the valuation that had been provided by J Group.
[7]As stated in Saltzer No 2 at [20], this figure was based upon the sum of the two estimates of Lots 8A and 8B as stated in the applicant’s primary affidavit.
Objectively, F Pty Ltd was prepared to pay a sum of ~$1.25M over and above the current market value of the property as assessed by J Group and thus markedly above the recent appraisal as obtained from the applicant’s agent. I note that the recent appraisal was undertaken for the applicant by a person who has been his preferred agent in the sale of property including in relation to a possible sale of the subject property for the parties in late 2019.
Relevantly to the present application, in the course of the hearing on
21 May 2020, I heard submissions from counsel for the applicant and respondent respectively and then stood the matter down so as to facilitate that the applicant might have an opportunity to furnish further instructions in relation to issues that had emerged in the course of the parties’ submissions. A principal reason for standing the matter down was to afford counsel an opportunity to revise the applicant’s estimate of the total value of the net asset pool, doing so in circumstances where counsel had quite properly corrected and abandoned a submission made in the Outline that the asset pool did not include the property that is the subject of the application for an injunction (when it did). About half an hour later, the matter was recalled. Counsel for the applicant advised that she had been unable to obtain instructions. I did not inquire as to the reasons why that was so. Instead, upon consideration, I determined that having afforded counsel that opportunity, it was appropriate to decide the application. Counsel did not oppose that course or submit that she wished to address any other matters.After reserving my decision for some hours, on 21 May 2020, an order was made dismissing the applicant husband’s application in a case by which urgent relief was sought including that the respondent be restrained from entering into the Contract on behalf of E Pty Ltd for the sale of the property to F Pty Ltd. A further order was made granting the respondent wife’s application that she be permitted to enter into a contract to sell the property, such order being conditioned upon the net proceeds of sale being placed in a controlled monies account pending the hearing and determination of the proceeding.
On 27 May 2020, the respondent entered into and executed the Contract thereby agreeing to sell the property to F Pty Ltd for the stated price of $4.65M. The respondent communicated the fact of entry into the contract to the applicant solicitors. On the same date, the applicant filed a notice of appeal, the application for a stay and injunction and an affidavit in support. The respondent’s evidence is that a copy of the executed Contract was supplied to the applicant before his notice of appeal or application for a stay was notified to her.
On 28 May 2020, laudably, counsel were able to agree in a timetable to facilitate that the respondent would have an opportunity to consider the applicant’s affidavit, for the parties to exchange submissions and for a hearing of this application to take place in an orderly manner.
On 2 June 2020, the respondent filed a response seeking dismissal of the application for a stay and for an injunction pending appeal, with costs.
In the course of oral argument, questions arose as to whether it would be appropriate to consider terms upon which a stay might be conditioned and whether the grant of any stay might be revisited depending upon the occurrence or non-occurrence of events following this application but before the hearing or determination of the appeal, including, for example, that the purchaser had served a notice of rescission by reason of any failure on the part of the vendor to complete the contract. Those questions arose in circumstances where no terms of the kind described below had been proffered by the applicant. Following those submissions, the court provided the parties a draft form of undertaking and allowed the applicant an opportunity to consider whether to offer an undertaking of terms, if any, upon which any stay might be granted. Later, the applicant filed an undertaking in the following terms:
THE APPLICANT, MR SALTZER, by his counsel undertakes to the court to:
a)amend within seven (7) days, his initiating application as he deems fit;
b) prosecute his appeal with all reasonable diligence;
c)submit to such order (if any) as the Court may consider to be just for the payment of compensation, (to be assessed by the Court or as it may direct), to any person, (whether or not that person is a party), affected by the operation of the order or undertaking or any continuation (with or without variation) of the order or undertaking; and
d)to pay the compensation referred to in (c) to the person affected by the operation of the order or undertaking;
e)to remove caveat No ... lodged over title to the property situate at A Street, Suburb B, in the State of Victoria (property) being the whole of the land more particularly described in Certificate of Title, volume ... folio ....
Each of the parties took the opportunity to file an affidavit in relation to the application for a stay and an injunction. A number of the matters raised by the affidavits are notable in as much as they seek to suggest that the facts may be very different from those which were as presented by the evidence on the application made on 21 May 2020.
The matter is further complicated in the circumstance that the respondent’s affidavit in reply advances new matters which place yet a further gloss and perspective on the applicant’s evidence.
It is convenient to address the evidence in those affidavits insofar as may be relevant to particular issues arising in this application.
Applicable principles
Part 16 of the Federal Circuit Court Rules 2001, Judgments and Orders, does not expressly confer power on the Court to stay the operation or enforcement of an order. Where those rules are insufficient the court may apply, relevantly, the Family Court Rules: r 1.05(2). Rule 22.11 of the Family Court Rules confers power to stay the operation or enforcement of an order to which an appeal relates. A person who has filed a notice of appeal has standing to apply for a stay of the operation of the order the subject of the appeal.
The principles applicable to the consideration of an application for a stay are well settled. A stay will neither be lightly granted nor granted as a matter of course. In K & B,[8] a parenting case, Warnick, May and Boland JJ identified the principles applicable to the grant of a stay pending appeal: that the proposed appeal was shown to be based upon substantial grounds; was brought bona fide, and; was not merely a delaying tactic. The principles endorsed in K & B have been applied repeatedly.[9]
[8] (2006) FLC 93-288,
[9]See eg, Sheldon & Weir (Stay Application) [2011] FamCAFC 5, [14]-[15] (Bryant CJ, Finn and Ainslie-Wallace JJ), Baghti & Baghti (No.3) (2013) FamCAFC 201.
In Aldridge & Keaton (Stay Appeal)[10] Bryant CJ, Boland and Crisford JJ recognised that an order granting a stay of proceedings was a discretionary judgment[11] and stated:[12]
[10] [2009] FamCAFC 106.
[11] Ibid, [17].
[12] Ibid, [18].
The principles to be applied in determining an application for a stay of orders both in the general law and in respect of parenting proceedings are also well known.[13] The authorities stress the discretionary nature of the application which should be determined on its merits. Principles relevant to this matter include the following:
[13]Citing The Commissioner of Taxation of the Commonwealth of Australia v Myer Emporium Limited [No.1]; (1986) 160 CLR 220 at 222; Alexander v Cambridge Credit Corporation (1985) 2 NSWLR 685; Jennings Construction Limited v Burgundy Royale Investments Pty Limited; (1986) 161 CLR 681; Clemett & Clemett (1981) FLC 91-013; JRN & KEN v IEG & BLG (1998) 72 ALJR 1329 citing 1332.
·the onus to establish a proper basis for the stay is on the applicant for the stay. However it is not necessary for the applicant to demonstrate any “special” or “exceptional” circumstances;
·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 applicant;
·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 – this will be a substantial factor in determining whether it will be appropriate to grant a stay;
·some preliminary assessment of the strength of the proposed appeal – whether the appellant has an arguable case;
·the desirability of limiting the frequency of any change in a child’s living arrangements;
·the period of time in which the appeal can be heard and whether existing satisfactory arrangements may support the granting of the stay for a short period of time; and
·the best interests of the child the subject of the proceedings are a significant consideration.
Aldridge & Keaton has been treated as a seminal authority.[14]
[14]Redmond & Stolz [2015] FamCAFC 116, [24] (May, Ryan and Kent JJ); Lockley & Bardot [2016] FamCAFC 185, [13] (Aldridge J, Foster and Ryan JJ agreeing); Grange & Grange and Ors (No 2) [2018] FamCA 241, [9]-[12] (Kent J); Carson & Hillman [2018] FamCA 605, [6] (Carew J); Attaway & Balloch [2019] FamCAFC 206, [18].
Self-evidently, some of those principles are applicable to stay applications in parenting cases and are of no immediate relevance.
Consideration
As the Full Court observed in Aldridge & Keaton at [39], the application for a stay was essentially a challenge to his Honour’s exercise of discretion and the weight which had been attributed to various matters. Counsel made detailed submissions in relation to each of the matters addressed in Aldridge & Keaton.
The Order made on 21 May 2020 was an interlocutory order made in the exercise of a discretionary power conferred on the court. So too, the power conferred by r 22.11 is a statutory discretionary power. The grant or refusal of the stay application is a matter which turns on the exercise of that discretion and requires that consideration be given to the matters which are relied upon in support of and against the application and any other relevant considerations: Sheldon & Weir (Stay Application).[15]
[15] [2011] FamCAFC 5, [56].
The application for a stay and the further injunction raise issues which substantially overlap. The applicant properly submitted that the court is seized of jurisdiction and power to grant an injunction so as to preserve property pending appeal: citing Bass & Bass.[16] The critical issue in that application, however, was to consider the scope of the court’s power to make orders once, after a final hearing, it was functus officio. The present case may be distinguished from Bass & Bass. No final orders have been made in this case.
[16] [2015] FamCA 186, [40]-[47] (Aldridge J).
Counsel for the applicant properly accepted that his client bore the onus of proof to establish a proper basis for a stay and that it was not necessary to demonstrate either special or exceptional circumstances before relief was granted. I have applied the foregoing principles in the present case.
Benefit of judgment or order
It was also accepted that the respondent was entitled to the benefit of the judgment and a presumption as to its correctness.
As a result, the respondent was entitled to determine whether to enter into and execute a contract for the sale of the property. This she has now done. By the terms of the Contract, E Pty Ltd is obliged to do all things necessary to remove the caveat lodged by the applicant.[17]
[17] General Condition, cl 10.
A corollary of the benefit of the order in this case is that the respondent also bears the legally enforceable obligations under the Contract. Critically, unless that Contract is set aside or rescinded, E Pty Ltd is legally obliged to transfer the property to F Pty Ltd. The time at which that obligation becomes enforceable is at settlement.
Appeal rendered nugatory
I accept that if an appeal would be rendered nugatory absent a stay of the operation of an order, this would be a substantial factor in favour of a stay. It was submitted that the present appeal would be entirely nugatory by reason that the applicant sought to retain the property. To this end, the applicant pointed to the Contract executed on 27 May 2020 and submitted that if no stay was granted, the property would be sold.
The respondent submitted that execution of the Contract had, in effect, rendered the husband’s appeal redundant and, as was said, so much had been acknowledged by the submission that the applicant may need to make an application pursuant to s 106B of the Act to set aside the Contract. By s 106B, the court may set aside or restrain the making of an instrument or disposition, relevantly, by on behalf of a party which is made or proposed to be made to defeat an existing or anticipated order in proceedings “or which, irrespective of intention, is likely to defeat any such order.” The power conferred by s 106B is a power conferred on the court.[18] At first sight it is difficult to suggest that the respondent, in making the Contract, thereby engaged in conduct, irrespective of intention, which was likely to defeat any anticipated order, where neither the initiating application, nor any other application had been made by the applicant for an order that the might acquire the property. Particularly is that so, where the interim relief which he had sought was to prevent the sale of the matrimonial home on the stated basis that he also wished to obtain an order preventing the transfer of that property. At its highest, the applicant may be understood as having forecast an intention to seek such order. Despite being told on 17 March 2020 of the proposed sale at $4.65M, and notwithstanding the first application for an injunction was made on 14 April 2020, counsel recognises that no application has yet been made to set aside the Contract.
[18]Owners, “Shin Kobe Maru”: v Empire Shipping Company Inc (1994) 181 CLR 404.
Notwithstanding those considerations, in general, it is not for the court to constrain a party in the nature of the relief sought in a proceeding. At least at this stage, case management considerations should not prevent either party from advancing a tenable claim.
By contrast, it is for the court to consider the effect of refusing a stay. At the time of making the order dismissing the application for an injunction, it was common ground that the respondent was legally entitled to exercise her powers as director to enter into a contract in the best interests of E Pty Ltd. Equally, the court must consider whether it may have been wrong to refuse the injunction and should instead have granted interlocutory relief to prevent the respondent selling the property until further order or the hearing and determination of the proceeding. Had it been wrong to refuse the injunction, the refusal of the stay would now strip the appeal of content. Viewed from that perspective, subject to appropriate undertakings being given, a stay could be justified on the basis that it would preserve the authority of the Full Court to have an opportunity to consider whether the injunction ought to have been granted.[19] If, contrary to my view, this ought to have occurred on 21 May 2020, from a linear perspective the Contract would not have been executed on 27 May 2020, and if (again, contrary to my view), there was evidence of any intention to enter any transaction to defeat the applicant’s claim, it may be open to seek relief pursuant to s 106B. As counsel for the respondent submitted, at the time of the application on 21 May 2020, there was no evidence of any intention to enter any transaction to defeat the applicant’s claim (which he had, and still has not made), it may be open to seek relief pursuant to s 106B of the Act.
[19]Tait v The Queen (1962) 108 CLR 620, 624-5 (Dixon CJ); Patrick Stevedores Operations No 2 Pty Ltd v Maritime Union of Australia (1998) 72 ALJR 868, [1]-[2] (Hayne J).
The respondent submitted that the court was not free to disregard the equitable interest of the purchaser under the Contract where the evidence establishes that the purchaser fully intended to complete it, citing Ascot Investments Pty Ltd v Harper.[20] The ratio decidendi of Ascot Investments is that the Family Court has no power to direct a company or its directors to register a transfer of shares where the memorandum and articles of association of the company empower the directors to decline to register a transfer in the company and which is not completely controlled by the shareholder party, who is a party to the proceeding.
[20] (1981) 148 CLR 337, [19]-[21].
In the present case, the respondent is the sole shareholder and director. The present case has nothing to do with any restraint upon the respondent’s power to refuse to register a transfer of shares. No issue arose as to a transfer of shares in this case and no challenge was raised as to the power of the respondent to transfer the property the subject of the present application. The power of transfer was conceded.
That said, it is clear that the rights of a purchaser have now intervened upon entry into and execution of the Contract on 27 May 2020. Despite my views as to the merits of the grounds of appeal, I consider it is not unimportant to recognise that the Contract was executed after the injunction had been refused but before the time for appeal had expired.
For those reasons, I do not accept that execution of the Contract, in or of itself, requires a conclusion that the appeal is now redundant. It is an entirely separate question whether, on the evidence, the applicant has a tenable claim under s 106 of the Act to set aside the Contract. It having been conceded that the applicant had legal authority to execute the Contract the ambit of the issues arising under s 106 are narrowed. At some, not distant, point the applicant should be required to state precisely how this claim is being put.
For the avoidance of doubt, to accept that the appeal would be rendered nugatory if the stay was not granted does not elevate this consideration to one having dispositive or decisive weight.
Bona fides of the applicant
It was submitted for the applicant that he was bona fide in his application and, where the only avenue for preserving the property was to pursue an appeal, the application was brought on a bona fide basis.
The respondent forcefully contested the bona fides of the application. In this respect, I do not ignore her evidence that an emerging pattern in the applicant’s conduct is that, while agreeing to a sale, he will, as she claims, later try to drive down the value of the property so that he could make a counterproposal to purchase it for himself.
Nor do I ignore that having agreed upon a joint appointment for an expert, the applicant then contested the valuation of J Group or that, in February 2020, the applicant’s new valuer produced a value for the property being markedly below that of J Group and that the language of the revised valuation mirrored that of the applicant’s complaint in relation to the opinion expressed by J Group. The veracity of the more recent appraisal is to be gauged in the context of the 2019 appraisal by the same valuer which was for a figure which aligned more precisely with that of the J Group.
The bona fides of the application are also called into question by the evidence of the communications between the applicant and his valuer in 2019 exploring options to acquire alternative sites to the property and of his agent’s communications with the respondent at the time of the hearing on 21 May 2020 during which he advised that he had a buyer who was prepared to pay a higher price than that being offered by F Pty Ltd. None of those matters were disclosed by the applicant’s material. They are to be considered in the context of the respondent’s evidence that the applicant had threatened to “bury” the parties’ negotiations in court and “burning it all.”[21]
[21] Cf Saltzer No 1, [15]; Senior v Anderson (No 2) [2012] FamCA 880 (INSERT J)
In addition, the updated appraisal from the applicant’s valuer focused upon difficulties in selling on account of raw asphalt on the property which “could be viewed as a long contaminant” such that “buyers are unlikely to be willing to take a risk on this and banks are unlikely to lend a significant amount, if at all, due to the longer term value risk.” Contextually, the applicant has seized upon the allegations of contamination as grounding his opposition to the sale of the property to any third party as he asserts that to do so would constitute misleading conduct by the vendor (of which he is neither a director nor shareholder). He appears to accept, however, that the taint of contamination does mean that commercial lenders are unlikely to advance funds for any purchase of the property.
Another aspect of the bona fides of the application is presented by the context in which the applicant has made no offer to purchase the property or demonstrated that he has applied for or obtained finance to do so. The applicant’s first application for an injunction was in respect of the former matrimonial home, the sale price for which was $950,000. Although there was some evidence the applicant had recently enquired as to finance to complete a purchase of that property, he adduced no evidence that such finance had been offered. As the respondent submitted with some force, the applicant has been on notice since at least 17 March 2020 of the $4.65M offer and in the ensuing period of over six weeks has taken no step to offer to purchase the property for that sum; no step to amend his application seeking the subject relief; and adduced no evidence that he could finance the purchase at that price.
Added to this, the applicant’s submission on 14 April 2020 was that he wished to sell at least part of the subject property. This was also said to confirm the lack of bona fides in seeking now to be able to purchase the whole property.
Further, there is the evidence that the applicant’s agent contacted the respondent during and following the hearing on 21 May 2020 in which he, apparently knowing the purchase price being offered by F Pty Ltd of $4.65M, later confirmed he had received that information from the applicant husband, requested a copy of the vendor statement and stated he had a buyer interested in submitting an offer for a price in excess of that sum. The respondent’s evidence was that this communication came to her on the day of that hearing and, as it was said, “out of thin air”, she not having heard a word from that agent in the period February – May 2020. Relatedly, the agent’s email on that date assured the respondent that “I don’t get into playing games” but that “we would be seeking a sale fee should we be the successful agent to transact this site.” Late on Friday, 21 May 2020, the agent sent to the respondent an email into which he had cut-and-pasted a supposed offer for a price of $4.70M. In the form in which this offer was conveyed, neither the identity of the person who had transmitted the email to the agent, nor the supposed purchaser was identified. The respondent submitted that the communications from the agent on and after 21 May 2020 served to undermine the applicant’s bona fides because they confirmed the agent had obtained details of the $4.65M purchase price from the applicant, thereby supporting an inference that the applicant was willing to sell the property and, by extension, that he did not genuinely seek to retain it in the manner now suggested. Contextually, the evidence supports a conclusion that the agent was the applicant’s preferred selling agent for the property in 2019 and had acted as agent for the applicant in selling other property on at least one other occasion.
Quite apart from that, it appears the agent’s opinion as to value had been revised inasmuch as the agent advised the respondent by his email of 21 May 2020 that “in my opinion it will be in excess of the offer Ms Pacek mentioned you currently have at $4,650,000.”
Viewed collectively, these matters lend force to the submission that the applicant has a pattern of approbating and reprobating in his dealings with respect to the supposed orderly realisation of the parties’ property.
All these matters considered, a very real question exists as to the bona fides of the proposed application to purchase the property or of the genuineness of the appeal. I am less than persuaded of the applicant’s bona fides in pursuing this appeal and whether, in truth, it is part of an overall design to keep all options alive until a mediation is held. Support for that view is found in his affidavit sworn 7 May 2020 at [27]. Delay of that kind might be viewed somewhat differently from delay following final judgment. But it does not sit happily with a corresponding failure to comply with court orders, including by not giving discovery.
Preliminary assessment of merits of appeal
The applicant made submissions upon the strength of the grounds of appeal, emphasising that a preliminary assessment was required and in the context that it was to be assessed “only whether the applicant has an arguable case.” While the Full Court may of course take another view of the matter, I do not accept that the grounds stated in the notice of appeal are of merit.
In my view, an evaluation of the merits of the grounds of appeal is a significant consideration in the present case. In this context, the court does not conduct the hearing of an application for an interlocutory injunction “at large” but does so upon the issues joined by the parties. For that reason, it is well-settled that, in general, a party ought not to be permitted to raise on appeal a claim that had not been pressed at trial.[22] Relatedly, where their case had been run on a particular basis, a party cannot assert error or seek to “propound that the trial ought to have been run on another basis”: Britt & Britt.[23] Accordingly, on appellate review the court will insist that the decision under appeal “must be considered in light of the basis on which the application was made, not upon an entirely different basis which may occur to an applicant, or an applicant’s lawyers, at some later stage in the process”.[24] Those principles should inform the manner in which the court will undertake a preliminary assessment of the merits for the purposes of a stay.
[22] Water Board v Moutstakas (1994) 180 CLR 491, 497-498.
[23] [2020] FamCAFC 51, [17] (Aldridge J).
[24]S395/2002 v Minister for Immigration and Multicultural Affairs (2003) 216 CLR 473 at [1] (Gleeson CJ).
The applicant propounds four grounds of review.
Ground 1 – ‘property’
The applicant now contests the approach taken in identifying the ‘property’ which was the subject of the application for an injunction. As was made clear in Stanford & Stanford,[25] one of the fundamental matters which must not be obscured in the determination of an application for an adjustment of property interests is to begin by identifying, according to ordinary common law and equitable principles, the parties existing legal and equitable interests in any property. This principle has been affirmed on numerous occasions.[26] It was for this reason that I sought to ascertain the subject matter in respect of which the applicant grounded his claim for an injunction.
[25] (2012) 247 CLR 108, [36]-[37], [41], [50].
[26]See, eg, Marcin & Marcin [2020] FamCAFC 85, [101]; Prestwell (dec’d ) & Prestwell [2019] FamCA 395, [67].
As discussed in the course of argument on 21 May 2020, it is E Pty Ltd, not the respondent, which is the registered proprietor of the fee simple estate in the property. In an attempt to identify the respondent’s existing property interests, attention was drawn to the fact that she is the sole shareholder in E Pty Ltd and that it is the value of that shareholding which represents her existing interest in property. Although it might have been said, at no stage in the course of the application on 21 May 2020 was it suggested that the company was merely the respondent’s alter ego. But to have advanced the argument on that basis would not have changed the substantive nature of the claim. I do not understand how, by placing the label alter ego upon the relationship between a person and a company, identifying a person’s existing interest in property is assisted unless it is to be understood as expressing a conclusion as to the nature of that existing property interest. Nor, notwithstanding Saltzer No 1, was reference made in any submissions to Ascot Investments Pty Ltd v Harper.[27] And the only reference made to Kennon v Spry,[28] was in the ex tempore reasons in Saltzer No 2, [30]. Insofar as it was sought to be suggested that the respondent’s power – whether as director or shareholder of E Pty Ltd – was a species of property for the purposes of the Act, no such submission was made on the application for an injunction.
[27] (1981) 148 CLR 337.
[28] (2008) 238 CLR 366.
Whichever approach be taken of the matter, the critical finding for present purposes was made in favour of the applicant. I accepted and found that the property underlying the value of the respondent’s shares in E Pty Ltd was of substantial value: Saltzer No 2, [32].
The merit of Ground 1 is further called into question by the quite different case which the applicant now appears to wish to run; namely, that E Pty Ltd is in fact a trustee of a trust in which, he says, he has a beneficial interest. No attempt was made to prove the existence of such trust and when I enquired on 21 May 2020 as to whether E Pty Ltd held the property as trustee I was told by both counsel there was no trust in issue. Nor was my attention drawn to the reference in the Contract which I have now examined (and the coversheet of which named E Pty Ltd “as trustee for Q Family Trust”).
In his affidavit made on 27 May 2020, the applicant deposes that E Pty Ltd is “the corporate trustee of the Q Family Trust . . . both myself and the wife are beneficiaries of the Q Family Trust.” On the present state of the evidence the court has no information from which to determine whether the company is in fact a trustee, who are the objects of the trust, whether the trust is a fixed, unit or discretionary trust or the nature of any existing property interest which either of the parties may assert via such trust.
For present purposes, and at a preliminary level, a finding, contrary to the basis on which the application was run on 21 May 2020, that E Pty Ltd holds the property on trust would further undermine the merit of Ground 1 whereby it is sought to suggest that the company is merely the alter-ego of the respondent when in truth it may be a trustee.
In those circumstances, I consider there is little merit in Ground 1.
Ground 2 – ‘intention to defeat claims’
The applicant seeks to complain of a failure to consider “the fundamental question of whether there was any evidence of any intention by the wife to dispose of any assets pursuant to any scheme to defeat any judgment which the husband might obtain in the substantive proceedings.”
In my view, any suggested failure to do so falls for consideration in the context that it was no part of the applicant’s evidence or submissions that the respondent was conducting herself in such a manner. To the contrary, as recognised in both in Saltzer No 2 at [47] and [53], there is no evidence of waste or any attempt to dissipate assets or that the respondent is seeking to realise assets other than on advantageous terms. Further, as concerns each of the transactions which have been before the court to this point, the respondent has sought to retain the net proceeds of sale in a controlled monies account.
In support of a preliminary assessment of the merits of this ground, attention was drawn to two decisions of the Full Court which, it was submitted, endorsed the adoption of a more liberal approach when granting an injunction in an application made under the Family Law Act 1975 (Cth). The court was referred to neither of those decisions in the course of the application made on 21 May 2020.
In Waugh&Waugh,[29] the Full Court cautioned against the unguided use of principles applied to Mareva injunctions, noting the “essential connection between the substantive proceedings and the relevant property”. At the same time, the Full Court considered that it may be constructive to consider those principles as developed in the High Court and in other jurisdictions in relation to the refusal of Mareva type relief and it did so in some detail.[30] As counsel properly observed, in such cases, the court should consider “the fundamental question whether there was any evidence of any intention by the husband to dispose of any assets pursuant to any scheme to defeat any judgement.”[31]
[29] [2000] FamCA 1183, [31] (Lindenmayer, Coleman and Brown JJ).
[30] [2000] FamCA 1183, [33]-[41].
[31] [2000] FamCA 1183, [46].
Further, in M & DB,[32] it was observed that “a more liberal approach to the issue of injunctions” was indicated by the reasoning in Waugh&Waugh. These decisions emphasise the width of the power in s 114(3).
[32] [2006] FamCA 1380, [43(b)] (Kay, Warnick and Boland JJ).
Counsel for the applicant emphasised the statement of principle in Waugh&Waugh at [31] where the Full Court underlined the importance of bearing in mind that there may be a distinction to be drawn between civil proceedings for the recovery of a debt or damages and where an injunction was sought to restrain the dissipation of assets “to which it is expected that resort might ultimately be had to enforce a judgement” from a proceeding for an adjustment of property interests under s 79 of the Act in which an injunction was sought to restrain the dissipation of assets “which, although not the subject of a specific claim under s 79, represents the property of the parties to the marriage, or one of them, to which the applicant’s spouse claims to have made a relevant contribution”. Although the submissions made on 21 May 2020 were not framed in that way, the applicant does seek an adjustment of the parties’ property interests. I also accept that Counsel relied upon the analysis in Waugh&Waugh so as to mark out the distinction between, on the one hand, seeking a cash adjustment in final settlement and, on the other hand, seeking an order which afforded a party an opportunity to purchase specific property.
I also accept counsel’s submission that it was not necessary to establish on the balance of probabilities that the respondent had enacted a scheme intended to defeat a judgment before an injunction might have been granted. In M & DB, the Full Court stated:[33]
. . . we do not consider that the Full Court in Waugh intended to prescribe as a “fundamental” or “threshold” question whether a scheme to defeat judgment exists, to be answered in the affirmative on the balance of probabilities in every case, before an order preserving property is made.
In this case, I do not consider any such a test was applied (or discussed).
[33] [2006] FamCA 1380, [41].
While the ambit of that proposition may be examined in detail at some point, for the purposes of the application made on 21 May 2020 it appeared that a near complete answer to any suggestion of dissipation was the repeated statements by the respondent that the net proceeds of sale would be held in trust.
It was conceded that the applicant would need to amend his application to seek such relief. However, as I am concerned, the application on 21 May 2020 was conducted on the assumption that such relief would be sought. Indeed, my best recollection is that I articulated that claim to counsel for the applicant who embraced it as reflecting the applicant’s ultimate object.
However attractive was Dr Smith’s legal analysis of the distinction properly to be drawn between civil proceedings and proceedings under the Act as described above, it does not confront the need to establish, and that in this case there was an absence of any cogent, evidence that the respondent has at any stage sought to dissipate assets.
Answering that fundamental question posed by Waugh in the present case and at a preliminary level, I consider the reasons in Saltzer No 2 make clear findings of an absence of any evidence of any intention by the respondent wife to dispose of any assets pursuant to any scheme to defeat any judgment. And as the respondent submitted with some force, the applicant has made no claim by his initiating application for relief of the kind now claimed (to be able to purchase the property) and his evidence does not rise to the level of making any case that the respondent has any intention or design to implement a scheme to defeat his claim to a just and equitable adjustment of property in the case. Again, despite the opportunity to do so, the applicant has not amended his application to seek such relief.
The respondent’s evidence has consistently been that the parties had agreed to the sale of properties and that the net proceeds of sale would be held in a controlled monies account. And the respondent’s submissions had consistently been, relevantly, that: (1) she had been fully transparent in exploring a sale of the property; (2) on 17 March 2020, the offer to purchase the property for $4.65M had been communicated to the applicant; (3) that offer is highly advantageous measured against any current valuation or appraisal; (4) the respondent had been invited to match that offer but had not done so but merely wants to prevent any sales until mediation; (5) the respondent had adduced no evidence of his capacity to finance a purchase of the property at that price; (6) the respondent’s evidence (as distinct from his Outline), had did not assert any desire to purchase the property – he had merely indicated that he did not give his consent to any sale.
If the applicant seeks to be understood as meaning that as he now wishes to purchase the property – with the suggested result that a sale would thereby ‘defeat’ this aspiration – there is no such claim made by the initiating application; there was no evidence adduced by the affidavit in support of the application for an injunction of any offer to buy on equivalent terms or of any ability to finance a purchase of the property.
To my mind, it is a serious distortion of the principles identified in Waugh&Waugh and M & DB to suggest that a transparent process undertaken by a party on clear notice to the other of an intention to seek expressions of interest, to undertake negotiations and to sell for a price considerably above market value, constitutes a scheme to defeat any judgment in the sense in which it is employed in the authorities.[34] Fundamentally, there is no basis for a suggestion that the respondent is in any way seeking to abuse the court’s process in a way as would attract a Mareva injunction and in my view, none was suggested.
[34] See also Costello & Condi [2012] FamCA 355, [263] (O’Reilly J).
I consider this ground to be of little merit.
Ground 3 – ‘plainly unjust’
An assessment of the merit of this ground is complicated by the generality in which it is framed. The ground states that “In refusing to make the injunctive orders sought by the applicant, the learned judge at first instance exercised his discretion in a manner that was plainly unjust.” The applicant submitted that where the exercise of discretion appeared, upon the facts, to be “unreasonable or plainly unjust, the appellate court may infer that in some way that has been a failure properly to exercise the discretion which the law reposes in the court of first instance.”[35] It was further submitted, relying only upon the circumstances in relation to grounds 1-2 above that this supported an inference that the exercise of discretion had miscarried.
[35] Citing House v The King (1936) 55 CLR 499, 505.
With due respect, it is difficult to see what was “plainly unjust” in seeking to identify the true nature of the respondent’s existing interest in the property, particularly in circumstances where the terminal point of that analysis was a finding which accepted that the property was of substantial value. Equally, it is difficult to understand how it was “plainly unjust” to reject a suggestion of an intention to dispose of property so as to defeat the applicant’s claims, particularly in circumstances where: (1) no such claim for the purchase of the property was made in the: (i) initiating application; (ii) applicant’s affidavit in support of the injunction; (2) no offer was made to purchase the property for $4.65M; (3) despite the invitation to do so, no evidence was adduced to support a conclusion that the applicant had the means or ability to finance a purchase at that price.
In the course of argument on the application for a stay I sought an elucidation of the manner in which the exercise of the discretion had been plainly unjust. While the applicant’s affidavit made on 27 May 2020 in support of the application for a stay and injunction deposes to a number of matters, it is convenient to address them in the context of ground 3. As to this:
a)the applicant says he has “read and refer to the reasons delivered by His Honour Judge Kelly on 25 May 2020”. Although he deposed elsewhere to illiteracy, his statement was somewhat at odds with the applicant’s submission made to me on 14 April 2020 that he is illiterate: see Saltzer No 1, [3];[36]
[36]The respondent observed that none of the applicant’s four affidavits contained a jurat clause stating that the affidavit had first been read to the applicant before being sworn.
b)the applicant says the court had been critical of the parties in seeking to transmit a large volume of material on the day before and morning of the hearing on 21 May 2020. The applicant correctly observed that, having regard to the procedural history of the matter, and the opportunity which had been afforded to the parties to prepare their evidence, I was not prepared to accept as “evidence” a swathe of material which had been transmitted to chambers on 21 May 2020. Counsel for the applicant had not suggested that some of the material had in fact been submitted by the respondent’s lawyers. Counsel adjusted her submissions so as to confine them to the evidence which was before the court. The applicant’s affidavit also acknowledges he had transmitted material to chambers on 20 May 2020;
c)the applicant says he had not consented to the sale and contended that the respondent “had no regard to my claim or interests”. The adoption of that stance ignored that on 24 April and on 6 May 2020 respectively, the respondent’s solicitors had expressly advised the applicant’s solicitors of the proposed sale and had also: (1) stated documents would be provided as they became available; (2) proposed, upon orthodox terms, as to the manner in which the proceeds of sale would be treated and held; (3) observed that no equivalent offer or ability to purchase the property had been made or demonstrated by the applicant at any stage;
d)the applicant says that no weight had been attached to allegations of financial non-disclosure. This was not a matter addressed in the applicant’s Outline. His affidavit in support of the application for an injunction complained only that three of seven boxes containing records of the E Pty Ltd had been returned to him. The respondent contests the applicant’s version of events as to discovery observing that the applicant has at no stage contacted Mr G, the accountant of the E Pty Ltd, whether directly or through his new solicitors seeking documents and asserts the applicant’s evidence in relation to discovery is misleading. This evidence was corroborated by an affidavit sworn by Mr G. While these allegations are beyond the scope of the present application, the respondent vigorously contests the suggestion that she has been lax in making discovery or that discovery was made only after 21 May 2020. Further and contrastingly, she depose that despite orders to do so, the applicant has failed to make any discovery to her. In her view, the applicant seeks to hold her to a standard different from that which he has adopted. There appears to be some substance in her view;
e)in addition, the applicant now seeks to identify a series of six matters where he alleges financial irregularities by the respondent. The respondent’s affidavit in reply addresses each of these matters. However, the applicant relies upon them as supporting a conclusion that the respondent has “diverted income from H Group to companies of which she is the sole director and shareholder without my knowledge or consent.” None of the particulars relied upon relate to the proposed sale of the property by E Pty Ltd to F Pty Ltd. Instead, the evidence before the court on 21 May 2020 confirmed that the net proceeds of sale would be held in a controlled monies account;
f)the court observed the parties had accepted, for the purpose of the application, that on the basis of a long relationship they would prima facie commence an adjustment of their property interests from a position of equality. In the course of argument on 21 May 2020, counsel for the applicant did not contest that proposition. Much of the material set out in the applicant’s affidavit as to these matters was not before the court;
g)the applicant now deposes that he has reserved his right to particularise his claim following discovery and that he would be amending his initiating application in due course. This evidence may be understood as, in effect, a concession given in answer to a submission made on 21 May 2020 that one flaw in the claim for an injunction was that his initiating application contained no prayer for relief of the kind sought;
h)complaint is also made that the applicant’s counsel was not given a right of reply, a matter addressed below in relation to ground 4;
i)next it was said that the applicant was to be criticised for having changed his position for the reasons stated in Saltzer No 2 at [42]. Having considered those reasons, I adhere to them. Insofar as the applicant seeks to suggest that the respondent has somehow reneged upon a proposal that the balance of monies from the sale of property would be held in trust. I disagree. It appears to me that she has consistently acted in that way;
j)the applicant now seeks to adduce evidence respecting the history of the parties’ business dealings including in relation to H Group. This evidence was not before the court on 21 May 2020;
k)the applicant seeks to emphasise the importance of the property to the effective conduct of the business of H Group. I have referred above to the evidence which was before the court on 21 May 2020. In particular, while there was no evidence before the court on this issue, the applicant’s affidavit addressed this point only by way of assertion in a letter from his solicitor and extracted at [17] of that affidavit. Likewise, the applicant’s Outline merely submitted that “the husband’s seeks to retain” the property but said very little as to how this could be achieved. The weight to be attached to the submission is to be viewed in the following context. First, counsel properly corrected and abandoned the submission that the property was not included in the asset pool as estimated in the applicant’s primary affidavit. Secondly, the submissions were clearly framed with recognition that there had been no, let alone any substantive, response to the respondent’s correspondence transmitted before the application was issued advising that the applicant had not (1) made an offer equalling that which had been received (i.e. $4.65M); (2) demonstrated an ability to finance any purchase of the property for that sum. Thirdly, insofar as the applicant now deposes that H Group currently owns in excess of seventy trailers and trucks, this stands in stark contrast with the respondent’s evidence before the court on 21 May 2020 that the E Pty Ltd owns in total: (1) 7 trucks; (2) 25 trailers, and; (3) 11 tippers. Fourthly, the respondent’s evidence is that the subject property is far larger than is needed for the requirements of the E Pty Ltd and, to that end: (1) the applicant permitted other companies (S Pty Ltd, T Group and U Group) to park their vehicles on the property; (2) the applicant retained an agent to find alternative sites at which to house the transport equipment following a sale of the property; (3) the applicant’s submission on 14 April 2020 was that he in fact wanted a part of the (as yet un-subdivided) property to be sold;
l)contrary to the applicant’s submissions, I did take account of the two 2014 communications which were annexed to the Outline of counsel and the absence of any more recent suggestion or threat that the trucks and equipment of the business could not be stored upon the K Street, Suburb L property. As stated above, I consider that the weight attached to this issue was entirely proportionate to the weight which had (not) been given to it in the applicant’s evidence and submissions;
m)the applicant seeks to rely upon certain ‘contributions’ which he now says he made to the subject property. No evidence of this kind was before the court on 21 May 2020;
n)the applicant further deposes that “just because she is the registered legal owner” of certain assets, the respondent ought not be permitted to continue to dispose of them without his “agreement and consent”. While I have explained above my concern at the hearing on 21 May 2020 to identify the parties’ interests in existing property, it was expressly conceded on that date that the respondent had the legal right to dispose of the subject property. This in turn directed attention to the need to identify the right or interest which was being asserted as the foundation for a serious question to be tried and upon which an injunction should be granted;
o)As stated in Saltzer No 2 at [32]-[33], the only basis on which it was suggested that a serious question existed was by analogy with a claim by a party to seek at trial an order to “buy-out” the other party’s interest in a matrimonial home. As counsel for the respondent properly submitted, the initiating application contained no claim for relief of that kind in respect of the subject property and the evidence indicated that the applicant had made no offer equalling that of $4.65M made by F Pty Ltd or demonstrated an ability to finance such a purchase;
p)further, the applicant deposed to a claim on the basis that he was a beneficiary of the Q Family Trust, contending that E Pty Ltd held the property on trust for that family trust and further deposed to a ‘belief’ that H Group “has rights as a licensee with a right to park its trailers and trucks” on the property for which it had given consideration. No evidence or submissions as to these matters were before the court on 21 May 2020;
q)notwithstanding the matters detailed by his Outline, for the purposes of his stay application the applicant now contends that his disagreement over a proposed sale pre-dated the correspondence from his solicitors sent on 24 April 2020 or that this date was the first time he had indicated his opposition to the sale of the property. At least three difficulties confront this suggestion. First, the evidence given the applicant’s affidavit made on 7 May 2020 at [12]-[20] suggests that express disagreement first arose on 24 April 2020: [17]. Secondly, earlier in his affidavit, the applicant indicated that an agreement to sell a portion of the property had not gone ahead “even though we had agreed in principle”. Thirdly, the Outline explicitly suggests that disagreement arose on 24 April 2020. Fourthly, no contrary submission was made in the course of argument to suggest that the applicant had disagreed with the sale before that date;
r)the applicant complains he was given no opportunity to be heard on the question of costs. I accept that this is so.
Insofar as the applicant’s current affidavit seeks to adduce evidence of matters which were not before the court on 21 May 2020, I consider that his current affidavit seeks to rectify matters which could have been proved by evidence, particularly where the applicant had an extended period in which to do so.
If it is sought to be suggested that it was plainly unjust to have not considered the effect upon the E Pty Ltd of permitting the property to be sold, I do not accept that this issue was not considered. I do not accept that, beyond a generalised assertion in the Outline, it assumed particular prominence in the applicant’s submissions. No oral submission was made as to this issue. I consider that the issue received the consideration that was due to it in proportion to the evidence and submissions raised before me, including that the only evidence relied upon by the applicant respecting the supposed inability to house the trucks and equipment at the K Street, Suburb L property dated back to 2014 and was sought to be ‘proved’ by way of annexure to the Outline.
On the respondent’s case, the property has never been required for the parties’ business operations but has been an investment. The applicant now maintains that he wishes to park his various trucks, trailers and tippers on the property. Yet there is other evidence that those vehicles and equipment are parked on the K Street, Suburb L property and that the subject property is too large for the needs of the E Pty Ltd with the applicant permitting other companies to park their trucks and equipment there. Had this been such a significant issue, one would have expected more cogent evidence about it.
Further, the weight to be attached to this consideration arose in the context that the evidence demonstrated the applicant had resigned as a director of C Pty Ltd, transferring all of the shares in that company to an associate, Mr D, and that, according to the schedule of companies listed in the applicant’s application in a case dated 8 May 2020, the defined meaning of the expression “The E Pty Ltd” no longer included C Pty Ltd. Viewed collectively, those factors supported a conclusion that the company which owned a substantial number of the trucks and equipment has been sold, including without notice to, or the consent of, the respondent. In short, the sale of C Pty Ltd carried with it the consequence that it was no longer part of the E Pty Ltd and so the asserted need to park so many of the vehicles as were owned by C Pty Ltd ceased to be any part of the applicant’s concern.
Having regard to each of the matters above, the applicant’s affidavit suggests in a number of ways that the decision is affected by error by reason that no weight had been attached to particular matters. When assessed as against the grounds of appeal, however, unless this complaint is located beneath the ground of a decision that is said to be plainly unjust for reasons going beyond grounds 1-2, it does not appear that those matters are advanced as independent grounds of review. The circumstance that they were not so advanced may reflect recognition that a no weight ground of appeal involves a high bar.[37]
[37]Gronow & Gronow (1979) 144 CLR 513, 519-20; Norbis & Norbis (1986) 161 CLR 513, 539-540; AMS & AIF (1999) 199 CLR 160, [150].
I do not accept that upon a preliminary assessment of the matter, the decision or the manner of the conduct of the hearing was plainly unjust.
Ground 4 – ‘procedural fairness’
The applicant contends that he was denied procedural fairness.
First, it was said that I had refused to hear counsel for the applicant in reply, doing so in circumstances where I had stated that counsel may seek to revisit certain issues in reply. There is no doubt that I proposed the course which might be adopted. Counsel was invited to revisit certain issues because of the position in which counsel found herself when making submissions in relation to a number of matters and not having an immediate answer to questions posed. This is not to be critical of counsel. It is sometimes an inevitable feature of the particular brief. An opportunity to make submissions in reply was not denied.
Specifically, in the course of argument, the applicant’s counsel sought to correct an aspect of the outline of case in which it had been stated that:
The husband attests to the asset pool having a net value of $2,542,770. However the pool contained in his affidavit does not include the A Street, Suburb B property, which has a sworn valuation of $3,090,000 . . .
Counsel quite properly stated that this submission was erroneous and accepted that the net value of the asset pool in fact did include the value of the property. What was then said was that certain figures contained in the applicant’s affidavit should be further revised in light of more recent information. When I enquired as to what was the total value of the asset pool on the basis of that reassessment, it emerged the calculation had not been made. This could and should have been made in advance of the hearing (which occurred nearly a fortnight after the application had been filed). As I understood counsel’s submissions, the recalculation had not been done. It was primarily for this reason that I afforded counsel an opportunity to make the calculation and to inform me of the new figure in reply.
Other issues about which it appeared the applicant sought to reply were:
a)C Pty Ltd: this issue related to the question whether the applicant, without the respondent’s knowledge or consent, had resigned as a director of this company and transferred all of the shares to an associate, Mr D. I expressly declined to make any finding as to this: see Saltzer No 2, [46]. No weight was attached to the issue;
b)delay: for completeness, another issue that was not referred to in the applicant’s affidavit made on 7 May 2020 or the submissions in support of the stay, concerned a submission made on 21 May 2020 that the court might attach some weight to the applicant’s delay in seeking relief in the period between 14 April 2020 (when the first application for an injunction was before the court), and 21 May 2020 (being the hearing of the current application). The foundation for the submission was that the respondent sought to respond to a suggestion that he had taken no action in relation to the sale of the subject property notwithstanding that the prospect of a sale had been foreshadowed before the court on 14 April 2020. Far from denying the applicant counsel an opportunity to address this issue, I stated that the respondent had been self-represented on 14 April 2020 and in all the circumstances I would attach no weight to that consideration. This is precisely what occurred.
Viewed broadly, the applicant now contends that having been afforded an opportunity to consider and clarify certain issues, procedural fairness was then denied to the applicant as no reply was allowed. This is not what occurred.
After having stood the matter down, when I enquired of counsel as to the new revised calculation, counsel did not have a figure to hand. Further, having regard to the statements made by counsel at that time, I formed the view that a submission was being made that the attempts to obtain further instructions on any other issues had not been fruitful. It was in those circumstances I stated that it would be best to proceed. Counsel for the applicant did not oppose that course.
The authorities make clear that what is required by procedural fairness is a fair hearing, not a fair outcome.[38] In my view, the contention that the applicant was denied an opportunity to reply ignores that the hearing was stood down so as to afford counsel an opportunity to make a calculation as to the revised total value of the asset pool (a matter which could and should have been undertaken before the hearing). In the event, the matter was stood down for the better part of thirty minutes to allow the applicant’s counsel to consider the matter. I do not consider that counsel was denied a fair opportunity to make the desired calculation or obtain further instructions. Nor do I accept that a contention of a denial of procedural fairness is appropriately analysed by some ex-post facto reasoning that a difficulty in obtaining instructions requires the conclusion that the opportunity so afforded was not adequate.
[38]SZBEL v Minister for Immigration and Multicultural and Indigenous Affairs (2006) 228 CLR 152, [25] (The Court).
Had the applicant’s counsel wanted to say in reply anything of significance, I would have expected to be told of it. But this did not occur. In my view it is a serious mis-description of the course of the hearing on 21 May 2020 to suggest that counsel had, in effect, been “shutdown” and denied an opportunity to make submissions appropriate for reply. The intended course of the hearing was to allow counsel time to clarify matters.
Secondly, Ground 4 also complains of a denial of procedural fairness based upon the making of an order for costs “without hearing from the parties in relation to those orders”. Counsel for the appellant properly submitted that a decision-maker must ordinarily afford a person an opportunity to present material information and submissions relevant to such a decision before it is made.[39] The terms in which that principle was stated by the High Court necessarily admits of exceptions.
[39] Citing Allesch v Maunz (2000) 203 CLR 172.
The circumstances in which that order was made in the present case are described in Saltzer No 2 at [58]; see also, Saltzer No 1 at [50]. The quantum of the costs incurred by the respondent were addressed in her affidavit.
While I must accept there may be some merit in this ground, counsel did not identify what could and would have been said in relation to costs in all of the circumstances. The rules of procedural fairness do not have an immutably fixed content and “What will be both sufficient and necessary to ensure a fair hearing in any given case will depend on, and vary with, the context.”[40] On the evidence adduced by the applicant’s affidavit made on 7 May 2020, his lawyers had been put on notice as to costs from at least 29 April 2020.
[40]Snedden v Minister for Justice for the Commonwealth of Australia (2014) 315 ALR 352, [177] (Middleton and Wigney JJ).
The question of procedural fairness will often involve consideration of whether practical injustice has been occasioned in the circumstances. The materiality of this complaint is far from clear to me.
Period of time for appeal
Having made enquiries, Counsel for the applicant advised that if the appeal was heard by a single judge, it would be listed for hearing in between 3 to 6 months and if listed before a full bench would be listed for hearing no earlier than November 2020. It was further said that, if the matter were expedited, the appeal could be heard as early as August 2020. No submissions were made whether the applicant intended, or would undertake, to seek expedition of his appeal.
For that matter, it is not a question for the appellant alone. The respondent or indeed the court may consider that expedition is appropriate to the case, particularly in light of the Contract.
Balance of convenience
Counsel for the appellant, relying on Aldridge & Keaton, submitted that a stay may be granted on terms that were fair to all parties and that this may involve the court in weighing the balance of convenience and the competing rights of the parties. It was submitted that, the grounds of appeal being ‘arguable’, coupled with the significant consideration that the appeal would be rendered nugatory if the stay was not granted, the balance of convenience lay in making orders granting the stay pending appeal. This was a broad submission.
Little if anything, however, was said as to the competing considerations which should be weighed in assessing the balance of convenience.
Nothing was said as to how the parties’ competing rights might be properly preserved pending appeal if a stay was granted. At present, the respondent as sole shareholder of E Pty Ltd stands to receive $4.65M from the sale of the property and (after discharge of mortgage and sale costs has undertaken) offers to retain the net proceeds in a controlled monies account.
The respondent opposes the application on the substantive basis that she is at a substantial risk of being sued as a director of E Pty Ltd for failure to complete the Contract, including for damages.
Upon the terms of the Contract, a deposit of $465,000 has been paid and the balance is payable at settlement which appears due to occur “148 days from the day of sale” subject to certain provisions which were not addressed before me. The general conditions of the Contract are those published by the Law Institute of Victoria with the Real Estate Institute of Victoria.[41] At settlement, the vendor must do all things necessary to enable the purchaser to become the registered proprietor of the land and give either vacant possession or receipt of rents and profits in accordance with the particulars of sale: cl 17.1(b). Further, time is of the essence of the Contract and each party must do all things reasonably necessary to enable the contract to proceed to settlement, and must act in a prompt and efficient manner: cl 26.
[41] General Condition, cl 6.1.
As noted above, the Contract is due for settlement 148 days from 27 May 2020; that is, ~22 October 2020. If the appeal has not been heard and determined by that date, time being of the essence under the contract, E Pty Ltd will be exposed immediately to the risk that it is served with a notice of rescission and the consequent risk that the purchaser will terminate the Contract. E Pty Ltd and thus the respondent will immediately lose the benefit of that Contract. The price payable under the Contract is well above market value. Further, the purchaser will at the least be entitled to the return of the deposit together with compensation in accordance with the terms of the Contract.
The consequent risks to the respondent is that she will lose the presently enforceable opportunity to receive the price which the purchaser has agreed to pay under the Contract, being a price well in excess of market value. Instead, E Pty Ltd may be sued for breach of contract.
The applicant’s evidence and submissions did not address the prospect of loss and damage being sustained by the respondent or others if the Contract is rescinded. Those are serious considerations.
As raised with counsel, when a broad assessment of those matters is taken, it may be said that if the Contract was rescinded, an undertaking as to damages could conceivably involve a significant sum by way of compensation to affected parties. From this perspective, even at a preliminary level, on the basis of the present estimate of the asset pool, a question could arise whether enforcement of the undertaking might have a significant negative impact upon the applicant. If it truly is the applicant’s intention to bury the parties’ negotiations in litigation in this court and to burn everything, there may come a point at which it is no longer appropriate to maintain a stay. If for example, the purchaser did serve a notice of rescission and the prospect of the appeal being determined was far distant, the warrant for maintaining the stay and injunction may be undermined by a failure on the part of the applicant to amend his claim for relief in the manner foreshadowed or to demonstrate that he can acquire the property.
More immediately, the vendor is obliged to re move the caveat. A suggested solution to that problem was adopted by the applicant who has undertaken to now remove it.
In my view, those considerations are far from irrelevant.
In all of those circumstances, I am not persuaded that the balance of convenience tips decisively in favour of the grant of orders solely by reason of a submission that the appeal would be rendered nugatory, particularly where the respondent has consistently agreed to retain the net proceeds of sale in a controlled monies account pending the hearing and determination of the proceeding.
Discretionary considerations
The application for an injunction to restrain the respondent from transferring or disposing in any way or otherwise performing the Contract overlaps substantially with the stay application pending an appeal. Each arises in the circumstance that the respondent, on behalf of E Pty Ltd, has now executed and exchanged with the purchaser, a contract for the sale of the property. The purchaser has paid a substantial deposit and as observed in Saltzer No 1, has an equitable interest in the property under the uncompleted contract.[42] More broadly, it would seem inimical to the parties’ interests for the property to be sold at a value being well below the current value as assessed by J Group or for the applicant to oppose a sale on such favourable terms as those presently available under the Contract with F Pty Ltd.
[42] Tanwar Enterprises Pty Ltd v Gauchi (2003) 217 CLR 315.
These matters bring into sharp focus that if a stay is refused, the respondent would remain free to complete the Contract, including where the appeal may not have been determined before the date for settlement of the Contract has arisen.
By contrast, E Pty Ltd and, by extension, the respondent, would appear to suffer no immediate prejudice if relief was granted but the appeal was determined before the day of settlement. Particularly would that be so if the applicant gave to the court an undertaking as to damages in the usual form[43] and it was considered just to order him to pay compensation to any person, whether or not a party, affected by the stay and injunction.
[43]See Federal Court of Australia, Undertaking as to Damages, Practice Notes (GPN-UNDR). See also Family Court of Australia, Practice Direction, PD 90/2.
An undertaking to damages is an aspect of the principle that a party which seeks equitable relief, including an injunction, is required to do equity. In European Bank Ltd v Evans,[44] the Court stated:
A party seeking an equitable remedy is required to “do equity” and this is the origin of the requirement that the party giving an undertaking as to damages submit to such order for payment of compensation as the court may consider to be just. Given its origin and application to varied circumstances in particular cases, the process of assessment of compensation cannot be constrained by a rigid formulation.
This principle has been applied not infrequently.
[44] (2010) 240 CLR 432, [17].
Given my view of the merits of the grounds of appeal and the other factors referred to above, I enquired of counsel whether the applicant would give an undertaking as to damages as a condition of a stay and injunction together with an undertaking to prosecute his appeal with all due diligence. Further undertakings were sought from the applicant as a condition of the stay. Counsel drew my attention to Blue Seas Investments Pty Ltd v Mitchell[45] where a Full Court recognised the quite different context in which an undertaking as to damages may be sought in a civil suit from an application under the Act.
[45] (2000) 25 FamLR 65, [54] (Nicholson CJ, Lindemayer and O’Ryan JJ).
Recognising this to be so, in the present case, an applicant’s willingness to proffer such an undertaking is a factor to be considered in the evaluation whether a stay should be granted, particularly where the interests of third parties have now intervened and E Pty Ltd is directly exposed to risk for failing to honour the Contract. Those considerations cannot be ignored, particularly where the history of the case is suggestive of a process of approbation and reprobation. Parties contracting at arm’s length are entitled to enforce their bargain.
In the particular circumstances of this case and for reasons such as those identified in Saltzer No 1 and Saltzer No 2 respectively,[46] counsel was afforded an opportunity to obtain those instructions and as noted above, following the hearing, on 3 June 2020, an Undertaking was transmitted to the court. The applicant was afforded some hours to consider whether to give that, or any other, form of undertaking.
[46] Saltzer No 1 [2020] FCCA 854, [3] and Saltzer No 2 [2020] FCCA 1303, [9].
Conclusion
The applicant further submitted that, for the appeal to have any utility it was also likely that he may need to apply to have the Contract set aside.[47] Again, no relief of this kind has been sought, and until now has not been suggested. Yet it is said that, if this be required, such an application will be filed as soon as applicable. It is not apparent why the court should ‘require’ such an application to be made and at first sight it would seem to be entirely a matter for the applicant. An undertaking was offered to this effect. No submission was made whether it would be necessary to join E Pty Ltd or F Pty Ltd as parties to the proceeding.
[47] Act, s 106B.
For the reasons above, upon a preliminary assessment of the matter, I doubt that the grounds for the appeal are shown to be of sufficient merit and have serious doubts about the bona fides of the appeal.
However, having regard to the balance of convenience and discretionary considerations, including the question of immediate prejudice, a stay should be granted upon the undertakings that have been offered.
I certify that the preceding one hundred and thirty-five (135) paragraphs are a true copy of the reasons for judgment of Judge A. Kelly
Associate:
Date: 4 June 2020
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