Sellers and Burns and Anor

[2018] FamCA 93

FAMILY COURT OF AUSTRALIA

SELLERS & BURNS AND ANOR [2018] FamCA 93

FAMILY LAW – PRACTICE AND PROCEDURE – Stay of proceedings – Where application for stay pending Leave to Appeal and Appeal to Full Court – Interim orders as to spouse maintenance and interim property – Consideration of applicable principles – Where the husband’s appeal lacks merit – Where the appeal would not be rendered nugatory if a stay is not granted – Stay granted on terms as to spouse maintenance – Stay refused as to interim property

Family Law Rules 2004 (Cth) r 22.11

Burns & Sellers (No2) [2017] FamCA 914
Fauna Holding Pty Ltd & Ors & Mitchell [2000] FamCA 548
House v R [1936] HCA 40
Jackson & Balen [2009] FamCAFC 131
Strahan & Strahan [2009] FamCAFC 166

APPLICANT: Mr Sellers

FIRST RESPONDENT: Ms Burns

SECOND RESPONDENT: Mr Kirk

FILE NUMBER: PAC 5854 of 2016

DATE DELIVERED: 23 February 2018

PLACE DELIVERED: Parramatta

PLACE HEARD: Parramatta

JUDGMENT OF: Foster J

HEARING DATE: 23 January 2018

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Batey

SOLICITOR FOR THE APPLICANT: McAuley Hawach Lawyers

COUNSEL FOR THE FIRST RESPONDENT: Mr Schonell SC

SOLICITOR FOR THE FIRST RESPONDENT: Karras Partners Lawyers

SOLICITOR FOR THE SECOND RESPONDENT: Nicholas Eddy & Company

Orders

1. That the interim order as to spouse maintenance made on 14 November 2017 be stayed pending determination of the husband’s Application for Leave to Appeal and Appeal to the Full Court pursuant to Notice of Appeal filed 11 December 2017 provided that the husband pay to the wife by way of interim spouse maintenance the sum of $1,850.00 per week commencing 11 December 2017.

2. That the husband’s Application for Stay of the interim property order made 14 November 2017 be dismissed.

3. That costs of both parties of and incidental to the Application for Stay be reserved pending determination of the Application for Leave to Appeal and Appeal to the Full Court.

Note: The form of the order is subject to the entry of the order in the Court’s records.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Sellers& Burns and Anor has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).

FAMILY COURT OF AUSTRALIA AT PARRAMATTA

FILE NUMBER: PAC 5854  of 2016

Mr Sellers

Applicant

And

Ms Burns

First Respondent

And

Mr Kirk

Second Respondent

REASONS FOR JUDGMENT

1. The application for determination is the Application in a Case filed by the husband on 20 December 2017 seeking orders as follows:

   a)that orders 1, 2(a), 2(b) and 2(c) of the orders dated 14 November 2017 be stayed pending the determination of the Appeal proceedings;

   b)that the wife pay the husband’s costs of and incidental to this application.

2. On 14 November 2017 interim orders were made as follows:

Interim Spouse Maintenance

(1)That the husband pay to a bank account, nominated by the wife in writing within two days from the date of these orders, the sum of $3,250.00 per week by way of interim spousal maintenance pending further order with the first payment within seven days from the date of these orders.

Interim property adjustment

(2)That the husband pay to the wife the sum of $150,000.00 by way of interim property adjustment with payments as follows:

(a)As to the sum of $50,000.00 within 14 days from the date of these orders;

(b)As to the further sum of $100,000.00 within two months from the date of these orders;

(c)Such payments to be made to a bank account, nominated by the wife in writing within two days from the date of these orders.

1. These reasons for judgment assume familiarity with reasons for judgment delivered 14 November 2017: Burns & Sellers (No2) [2017] FamCA 914.

The Law

1. The principles applicable to a stay of orders pending appeal are well settled.

2. A stay will not be granted lightly or as a matter of course.

3. The power to order a stay (r 22.11 of the Family Law Rules 2004 (Cth)) is incidental to the right of appeal and derives from the inherent power of the Court to do whatever is necessary to prevent injustice in relation to the proceedings in the Court: Fauna Holding Pty Ltd & Ors & Mitchell [2000] FamCA 548.

4. In Jackson & Balen [2009] FamCAFC 131 the Full Court said at [28]:

   The principles to be applied in hearing a stay application pending an appeal are well settled (see Federal Commissioner of Taxation v Myer Emporium Ltd [No. 1][1986] HCA 13; (1986) 160 CLR 220 at 222; Alexander v Cambridge Credit Corporation Ltd(1985) 2 NSWLR 685; Jennings Construction Ltd v Burgundy Royale Investments Pty Ltd[1986] HCA 84; (1986) 161 CLR 681). Those authorities stress the discretionary nature of the application which should be determined on its merits. Principles relevant to this matter include the following:

   ·     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 application must be bona fides;

   ·     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.

5. Subject to the husband being granted leave to appeal, his first hurdle, the ambit for appellate intervention in a discretionary judgment such as the one impugned by the husband is well settled:

   It is not enough that the judges composing the appellate court consider that, if they had been in the position of the primary judge, they would have taken a different course. It must appear that some error has been made in exercising the discretion. If the judge acts upon a wrong principle, if he allows extraneous or irrelevant matters to guide or affect him, if he mistakes the facts, if he does not take into account some material consideration, then his determination should be reviewed and the appellate court may exercise its own discretion in substitution for his if it has the materials for doing so. It may not appear how the primary judge has reached the result embodied in his order, but, if upon the facts it is unreasonable or plainly unjust, the appellate court may infer that in some way there has been a failure properly to exercise the discretion which the law reposes in the court of first instance. In such a case, although the nature of the error may not be discoverable, the exercise of the discretion is reviewed on the ground that a substantial wrong has in fact occurred: House v R [1936] HCA 40.

The Application for Stay

1. The husband relied on:

   a)his Application in a Case filed 20 December 2017;

   b)his affidavit filed 20 December 2017; and

   c)his further affidavit filed 11 January 2018.

2. The wife seeks in response a dismissal of the husband’s application.

3. In the event that the husband’s Application for Stay is refused, the wife in her Application in a Case filed 10 January 2018 seeks orders by way of enforcement of the orders made in November 2017. The wife relied on her affidavit filed 10 January 2018.

4. In summary, the wife by way of a enforcement seeks the following orders:

   a)that she be ordered as Appointor of the Mr Sellers Investment Trust (“the trust”);

   b)that as Appointor she resolve that E Pty Ltd be “dismissed” as trustee of the trust;

   c)that as Appointor she resolve that she or her nominee be appointed trustee of the Trust;

   d)that as trustee of the trust she take all steps necessary to implement orders 1 and 2 of the orders made 14 November 2017 and to otherwise realise all assets of the trust and resolve all necessary distributions to enforce the husband’s obligations pursuant to the said orders and thereafter manage the affairs of the trust pending completion of the substantive financial proceedings and to provide to the husband monthly reports of all transactions undertaken by the trust until such time as she ceases to be a trustee;

   e)that the husband be restrained from exercising any power of appointment pursuant to the Deed of Settlement of the trust pending further order.

The husband’s Notice of Appeal

1. The husband’s Notice of Appeal was filed on 11 December 2017. The husband is required to and seeks leave to appeal the interlocutory orders made in November 2017.

2. In support of his Application for Leave to Appeal he relies on the following assertions:

   a)that the orders made in November 2017 may result in the rights of a third party, namely the second respondent in the proceedings, being significantly affected in that their ability to remain living in their home will be compromised;

   b)that the appellant would suffer a substantial injustice in the event that leave were not granted in that the orders made are not orders that are capable of being reversed or rectified at any final hearing; and

   c)that the orders made are not capable of being complied with.

3. Subject to leave being granted the husband, in summary, relies on the following grounds of appeal:

   a)Spouse maintenance:

   i)That the trial Judge erred in making incorrect findings of fact not supported by the evidence in determining the wife’s reasonable living expenses being:

   -a finding that the husband’s food expenses were $400.00 per week when comparing the amount for food expenses claimed by the wife;

   -a finding that the wife’s rental could be reduced by $800.00 – $900.00 per week but only allowing a reduction of $704.00 per week;

   -a finding that the wife’s claim of $150.00 per week for medical and dental expenses on the basis of the husband claiming the sum of $100.00 per week without having regard to the husband meeting the whole of the parties health insurance which the wife did not;

   -a finding that the wife’s expenses generally without any evidentiary basis, other than in several instances justifying the amount claimed, by the wife as being a similar amount being claimed by the husband; and

   -an inconsistent approach to the onus of the wife to establish a basis for the expenses claimed.

   ii)The wife’s capacity to adequately support herself:

   -the evidence of the wife’s capacity to adequately support herself were disregarded by the judge when assessing either her reasonable needs or her capacity to adequately support herself with no reasons or adequate reasons being given as to why the wife’s income earning capacity was not taken into account in any or any meaningful way;

   -the judge gave no weight or little weight to the evidence that clearly supported a finding of the wife retaining some income earning capacity in circumstances where the judge made a finding that the wife produced no objective evidence in support of her not exercising that capacity;

   -the judge gave no weight or no significant weight to the debt owed to the wife for unpaid consultancy fees, or the unsupported evidence as to why the underpaid consultancy fees were not available to her;

   -the judge failed to give any weight to the financial resource of the wife’s sister who provided substantial unsecured financial support since separation;

   -there was no evidence or no acceptable corroborated evidence that the family support hitherto unconditionally provided by the wife’s family was at an end; and

   -the finding that the wife’s obligation to her children as their primary carer meant that she was unable to support herself adequately was not supported by either the evidence or the respondent’s past employment history.

   iii)The husband’s reasonable expenses:

   -the judge erred when assessing the husband’s weekly expenses as $9,500.00 per week without including the husband’s obligations pursuant to existing orders of 21 April 2017; and

   -accordingly, to find the husband’s expenditure of $9,500.00 per week “would continue unabated” was neither available to the judge by inference or supported by the evidence.

   iv)The husband’s capacity to pay:

   -the judge erred in a assuming that past dividend payments and income of the husband would continue in circumstances where the evidence was clearly that part of the dividends and payment were referable as a one-off transactions in 2016 with no evidence that these payments would resume or continue during the currency of the spouse maintenance order;

   -there was no evidence that the husband could borrow against the estate of his late mother where the only and accepted evidence was that the Deed entered into between the husband and Mr Kirk for a 10 year lease existed for the security identified by the judge and for which no application was sought in the instant proceedings to set aside the Deed;

   -there was no acceptable evidence nor does the judge give reasons or any adequate reasons as to a finding that the husband had an ability to manipulate his taxable income through his Trust, or that he had available to him “significant financial resources”;

   -the judge erred when assessing the husband’s capacity to pay in considering or taking into account, the husband’s interest in the trust in the absence of evidence as to the value of the trust, which had not yet been completed by the appointed single expert value (sic) and the judge’s acknowledgement of the uncertainty of any net value; and

   -the judge erred in failing to give reasons or any adequate reasons as to a finding of “significant financial disparity in the party’s respective income earning capacity where the evidence of the parties historic income earning capacity would not support such a finding

   v)The husband’s nondisclosure:

   -that the judge erred in finding that against the sworn evidence of the wife that the husband had failed to notify the wife or had failed to notify the wife in a timely fashion of his intention to sell and his sale of “Company G”; and

   -that the judge erred in finding that the husband had “provided no documents post-January 2017” when the unchallenged evidence clearly revealed that the documents were produced but held by the wife’s prior solicitor.

   b)Interim property:

   i)Capacity to pay:

   -the husband repeats and relies upon the grounds of appeal detailed above;

   -without a provisional finding of an assessment of the net property pool of the parties, the judge erred in making any assessment of the wife’s range of property settlement entitlements;

   -without a finding, as to why the percentage will quantum of the respondent’s range of property settlement entitlements there was no evidence before his Honour to support a finding that a payment to the wife of $150,000.00, or any sum at all by way of partial property settlement was “just and equitable”; and

   -the judge’s discretion miscarried in finding that the amount of $150,000.00 to be paid to the wife was “safe”.

   c)Lack of procedural fairness:

   -the judge failed to have regard to, or failed to give any weight or any adequate weight to the effect of the orders on the second respondent’s occupation of the inherited property pursuant to the Deed between the husband and the second respondent;

   -the judge did not extend to the second respondent a right to be heard in respect of the proposed orders, which in part, the judge should have known would affect the property occupied by the second respondent if used as security for any borrowings of the husband as contemplated by the judge; and

   -the judge failed to provide procedural fairness to the husband in making orders that require the husband to borrow against the property without inviting any evidence as to the possibility or practicality of the property as acceptable security to a lender without first setting aside the deed

   d)Failure to identify requirements to the orders made:

   -that the judge failed to identify with precision or any meaningful precision the requirements of the existence of “unusual circumstances” in which to ground the orders; and

   -that the judge erred in failing to consider or give any consideration as to the ability of the husband to satisfy the orders

   e)Incorrect exercise of discretion:

   -that the quantum of the payments to be made by the husband are so far outside the reasonable discretion afforded to at first instance as to make the orders unsafe.

4. The husband relied upon his affidavit filed 20 December 2017.

5. He asserts that in the event of his Application for Stay being successful he undertakes to file an application in an appeal seeking expedition of the appeal and to pursue his appeal as quickly as possible. He does not identify any circumstances which may give rise to any successful application for expedition. Nor had he filed such an application.

6. The husband otherwise asserts that he does not have sufficient funds to comply with the orders. That contention is at odds with the findings in the Reasons for Judgment delivered 14 November 2017 (“Reasons for Judgment”). He further asserts that there may be adverse consequences should he be the subject of enforcement proceedings including bankruptcy. Such consequences will depend on his financial circumstances. The evidence is that he owns an unencumbered Suburb T property and has other financial resources within his trust structure. Otherwise, the husband failed to adduce evidence as to his personal taxation affairs including taxation returns and assessments and provided no taxation returns for the trust and no loan accounts schedules that may have shed light on his significant loan account transactions.

7. His assertion is simply that, unsupported by appropriate objective documents.

8. He has made inquiry with the Commonwealth Bank of Australia (“CBA”) to borrow funds against the security of his Suburb T property. He blandly asserts that the Commonwealth Bank would not permit him to borrow funds against the property and annexes to his affidavit an email from a Mr FF, Private Client Manager from the Commonwealth Bank, confirming the bank’s inability to assist with any borrowing by reason of his current “declared income” being insufficient to support the proposed loan repayments and the current arrears balance on his CBA credit card.

9. Regrettably, the husband does not provide in support of his Application for Stay a copy of his application to borrow funds or details presumably provided to the CBA in support of any application for a loan to be secured against his Suburb T property.

10. The husband further asserts that the second respondent has refused to provide “his consent” to the husband borrowing any funds against the Suburb T property. The husband does not provide any reason why the second respondent would be required to consent or be in a position to object to any borrowing by the husband. Notwithstanding that the second respondent has, it is asserted, lodged a Caveat against the title to the Suburb T property his interest in the property is only as to a right of occupation pursuant to the Deed entered into between himself and the husband.

1. The husband does not assert that in the event that he may default upon any borrowing secured against the property, the property could not thereafter be sold subject to the right of the second respondent to reside therein, namely a sale of the remainder interest.

2. The husband further asserts that he has various current liabilities totalling about $568,000.00 and that his Mr Sellers Investment Trust has liabilities as at 30 November 2017 of about $3.66 million. The husband’s interest in the trust remains as yet subject to expert valuation and in the context of the primary hearing the subject of inadequate disclosure and explanation. The husband simply asserts that there is a “real risk that the only significant asset in the asset pool, being the trust, could very well be worth less than the liabilities which it owes’. No evidence is adduced to support such assertion.

3. The husband asserts that on 1 November 2017 the wife moved out of her rental property at B Street, Suburb C into a property owned and occupied by her sister at EE Street, Suburb T. This appears to be a circumstance that occurred whilst judgment was reserved in relation to the orders the subject of this Application for Stay, yet there was no application by the husband to reopen the interim financial proceedings. Nor was any reference made by the wife as to her being relieved of the obligation to pay rent in her affidavit filed in January 2018.

4. The husband asserts that he, otherwise, continues to meet his obligations under the orders made 21 April 2017 (Reasons for Judgment at [7]).

5. He says that in the event that a stay was not granted he would suffer hardship. He provides no basis for such contention.

6. It is noted that the wife’s asserted rental obligation was previously $2,256.00 per week. The wife’s needs were assessed at $3,250.00 per week (Reasons for Judgment at [137]) but such sum included an allowance of about $1,400.00 per week for rent. She no longer pays rent and lives with her sister.

7. The husband through his counsel in the primary proceedings contended that he could pay $500.00 per week by way of spousal maintenance and the wife’s rent ($2,256.00), being a total of $2,756.00, and other expenses ordered on 21 April 2017 on the basis that no lump sum payment on his behalf was ordered.

8. By reason of her change of circumstances the wife’s needs now can be seen to be $3,250.00 less $1,400.00, being $1,850.00 per week.

9. The assessment of the husband’s capacity was made more difficult by the husband’s lack of meaningful detailed disclosure of his financial arrangements. The transactions identified in the Reasons for Judgment of 14 November 2017 belie his cry of financial impecuniosity and begged a much more meaningful and fuller disclosure by the husband. He, it appears, chose not to explain his financial dealings the subject of discussion in the Reasons for Judgment.

10. The onus is on the husband to establish a proper basis for stay of the impugned orders. He asserts, as he did at the hearing, his impecuniosity.  Such argument was the subject of contrary findings. Nothing has changed save for the circumstance that the wife is no longer burdened by rental payments. 

11. The wife is entitled to the benefit of the judgment which is presumed to be correct. The husband does not propose a stay on terms but seeks to be relieved totally of the obligation to pay any funds to the wife.

12. The Application for Leave to Appeal (and if successful) the Appeal itself must be bona fide. The husband has made no application for expedition. The Application for Leave to Appeal places a further onus on the husband to establish that leave should be granted. He must show the decision is “attended by sufficient doubt” and that “substantial injustice” would result if leave were refused.

13. Whilst the Appeal grounds enumerated above are many. They may be succinctly considered as follows:

Interim Spouse Maintenance

Ground 1 asserts incorrect findings of fact not supported by the evidence. Each complaint is indeed the subject of consideration in the Reasons for Judgment of 14 November 2017 and most not the subject of any contrary submission by counsel for the husband. Indeed, the submissions of both parties were considered at length in the Reasons. The difficulty in the context of an abridged interim hearing of making precise findings is well accepted. No detailed submissions were made in support of this ground nor was the Court taken to the Reasons for Judgment. There is little merit in this ground which does not identify a relevant error of law.

Ground 2 asserts failure to give any or adequate weight to certain aspects of the evidence or that findings were made absent evidence.  Arguments as to weight are matters peculiar to the trial judge and do not warrant appellate interference. Once again, no reference was made to the Reasons for Judgment to support this contention. Again, there is no merit in this ground which does not identify a relevant error of law.

Ground 3 asserts a finding of the husband’s reasonable expenses of $9,500.00 per week “without including his obligations under existing orders of 21 April 2017”. This is a reference to [113] in the Reasons for Judgment that says no such thing. The finding as to the husband’s reasonable expenses is at [103] of the Reasons for Judgment.

Ground 4 complains of the absence of evidence as to certain conclusions. Again the Court was dealing with an interim determination where the husband’s disclosure at best could be described as obfuscating and inadequate. The conclusions impugned were clearly available on the evidence. Again there is no merit in this ground.

Ground 5 asserts an error as to the husband’s non-disclosure. In his evidence before the Court he provided no financial disclosure for the period from 17 January 2017: Reasons for Judgment at [113].

Interim Property

Ground 6 asserts findings as to the husband’s capacity to pay were not available in the absence of certain other findings and evidence. The property and financial resources of the parties, particularly as contended by the husband, were considered in the Reasons for Judgment and referred to at [49-51] and [150] and were considered in the context of the available evidence. The husband’s financial resources and the web of financial transactions left unexplained were also considered in detail. The sum of $150,000.00 was considered in the limited context of the available unencumbered asset of the husband alone: Reasons for Judgment at [155]. It represented about six per cent of the equity of that property. There was little need to consider any capacity to be able to reverse the orders in such circumstances. There is no merit in this ground.

Ground 7 asserts a failure to afford the husband and the second respondent procedural fairness. This was an issue not raised at the interim hearing. The second respondent did not seek to be heard as to the question of interim property. The second respondent had a right of occupation pursuant to a purported Deed of Arrangement that purported to preclude any application by him as against the estate of the husband’s late mother. That Deed is, it appears, to be impugned in the context of the parties’ property proceedings. If it survives challenge then the husband has, as it were, a remainder interest in the Suburb T property that is capable of valuation and the property is capable of sale if necessary on the open market at presumably a discount to the unfettered estate in fee simple value. There is no merit in this ground.

Ground 8 asserts a failure to identify the “unusual circumstances” required to ground the orders. There is no such requirement: Strahan & Strahan [2009] FamCAFC 166. There is no merit in this ground.

Ground 9 asserts that the orders made fall outside the ambit of discretion. There were no submissions made as this ground nor as to what would have been the proper ambit of discretion. There is no merit in this ground.

1. The husband does not contend that his Appeal would be rendered nugatory should he be unsuccessful in his Application for Stay. This is a financial matter waiting final hearing. If necessary orders can be made to reflect any adjustment required as a consequence of orders that may be made by the Full Court.  

2. In the circumstances as discussed above the husband’s application for stay will be dismissed save that pending further order the wife’s spouse maintenance order will be varied to the sum of $1,850.00 per week pending disposition of the Application for Leave and the Appeal.

3. Orders will be made accordingly.

4. It is appropriate that costs be reserved pending outcome of the pending Full Court applications.

I certify that the preceding thirty-nine (39) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Foster delivered on 23 February 2018.

Associate: 

Date:  23 February 2018