Sinkler & Rouhani (No 2)
[2023] FedCFamC1F 103
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Sinkler & Rouhani (No 2) [2023] FedCFamC1F 103
File number(s): MLC 4068 of 2020 Judgment of: MCNAB J Date of judgment: 22 February 2023 Catchwords: FAMILY LAW – PROPERTY – Application for Stay pending appeal – Application for stay dismissed – Grounds of appeal have no reasonably arguable – Where there is no evidence that the applicant is able to comply with the orders Legislation: Family Law Act 1975 (Cth) s 79A
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) 13.12
Cases cited: Aldridge v Keaton (Stay Appeal) [2009] FamCAFC 106
In the Marriage of Bray (1988) FLC 91-968
Division: Division 1 First Instance Number of paragraphs: 33 Date of hearing: 22 February 2023 Place: Melbourne Counsel for the Applicant: Mr Wilson KC Solicitor for the Applicant: Mills Oakley Counsel for the Respondent: Dr Matta Solicitor for the Respondent: Coote Family Lawyers ORDERS
MLC 4068 of 2020 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MR ROUHANI
Applicant
AND: MS SINKLER
Respondent
order made by:
MCNAB J
DATE OF ORDER:
22 FEBRUARY 2023
THE COURT ORDERS THAT:
1.The Applicant husband’s Application in a Proceeding filed 17 February 2023 be dismissed.
2.The Applicant pay the Respondent’s costs fixed in the sum of $6980.44.
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Sinkler & Rouhani has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
McNab J:
This is an Application for a Stay of Orders of Enforcement made on 24 January 2023 pursuant to Rule 13.12 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) (“the Rules”). The application was filed by the husband on 17 February 2023.
There is an urgent pending appeal in relation to the enforcement orders made on 24 January 2023. I was advised that the matter is listed for an appeal procedural hearing on 6 March 2023.
The husband, via his appeal, seeks that
(1)The orders of 24 January 2023 be set aside; and
(2)In lieu, paragraph 1 of final orders of 19 October 2022 be varied to the effect that the appellant do all acts and things and sign all documents, and make all payments as are necessary, to expedite, facilitate and obtain the consent of Westpac to re-finance all monies owing to Westpac in respect of the property at R Street, Suburb Q so as to obtain a discharge of all mortgages secured in favour of Westpac over the Suburb Q property, by no later than 30 April 2023.
The orders the husband seeks to stay are as follows:
1. The husband and the following entities shall be jointly and severally liable for the outstanding obligations arising from the Final Orders dated 19 October 2022 (“the Final Orders”):
a. [B Pty Ltd];
b. [The C Group Trust];
c. [C Group];
d. [D Pty Ltd];
e. [The C Group Investment Trust];
f. [E Pty Ltd];
g. [F Pty Ltd];
h. [H Pty Ltd]
i. [G Pty Ltd];
j. [J Pty Ltd (J Pty Ltd)]; and
k. [K Pty Ltd (K Pty Ltd)];
("the Entities");
2. In the event of non-compliance by the Respondent with the Final Orders by 4.00pm on 2 February 2023, the Respondent do all such acts and things and sign all necessary documents to transfer to the Applicant on trust for sale the following:
a. The real property known as and situate at [L Street, City M] more particularly described in Certificate of Title Volume […] Folio […] ([City M]);
b. The real property known as and situate at [N Street, Suburb O] more particularly described in Certificate of Title Volume […] Folios […] ([Suburb O]); and
c. The real property known as and situate at [P Street, Suburb Q] more particularly described in Certificate of Title Volume […] Folio […] ([P Street]);
d. The [Motor Vehicle 1] motor vehicle registration “[…]” ([Motor Vehicle 1]), to be forthwith sold on such terms and conditions as determined by the Applicant (the Sales).
3. The proceeds of Sales distributed as follows:
a. In payment of the costs of and incidental to the Sales;
b. To discharge each of the registered mortgages to Westpac Bank in respect of:
i. [City M] registered mortgage numbered […];
ii. [Suburb O] registered mortgage numbered […];
iii. [P Street] registered mortgage numbered […];
c. To discharge the registered mortgages to Westpac Bank in respect of [R Street, Suburb Q] more particularly described in Certificate of Title Volume […] Folio […] ([Suburb Q]):
i. Registered mortgage numbered […]; and
ii. Registered mortgage numbered […].
d. To the Applicant, such sum then outstanding to the Applicant pursuant to the Orders of 19 October 2022 plus interest pursuant to the rate prescribed by the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Family Law Rules);
e. To the Applicant, such sum then outstanding to the Applicant pursuant to the Orders of 8 April 2022 plus interest pursuant to the rate prescribed by the Family Law Rules;
f. To the Applicant, the legal and associated costs of the delayed settlement of the sale of [R Street, Suburb Q]; and
g. To the Applicant, the legal and associated costs of this Application for Enforcement on an indemnity basis.
4. In the event the proceeds of Sales are insufficient to meet the entirety of the Respondent’s obligations pursuant to paragraph 2, the Respondent pay to the Applicant the sum of $20,000 per calendar month on the first of each month until the obligations are met in full.
5. The Respondent pay the Applicant’s costs of this Application fixed in the sum of $12,506.
6. Within 7 days of the date of this order, the Respondent do all acts and things necessary to convert and transfer 2,000,000 [Credit card 1] points to the Applicant's [S Pty Ltd] (member number […]) and […] (member number […]) frequent flyer accounts.
7. In the event of the Respondent’s non-compliance with Order 6, a Registrar of the Federal Circuit and Family Court of Australia, Melbourne Registry is hereby appointed pursuant to s 106A of the Family Law Act 1975 (Cth) to do all acts and things including executing documents in the name of the Respondent to effect the transfer of [Credit card 1] points pursuant to Order 6.
The husband seeks to rely on his affidavit filed in support on 17 January 2023.
The Hearing on 24 January 2023
The hearing on 24 January 2023 related to an application for enforcement of final property orders made by consent on 19 October 2022 filed by the wife on 1 December 2022. The husband opposed the wife’s application for enforcement and sought to vary final orders on the basis that they were not practical. The husband also sought to have the matter adjourned until 1 March 2023 to allow for time to file material and find new solicitors in circumstances where he was no longer represented at the hearing of 24 January 2023.
I made orders in circumstances where the husband had filed no material and informed the court he had dismissed or no longer asked to retain his solicitors.
I noted in my reasons on 24 January 2023 that the husband was a professional who was represented by Senior Counsel and very experienced solicitors at the final hearing. Further he had provided no sufficient explanation for delays in complying with the final orders. The wife’s affidavit in support of her enforcement application set out that the husband did not approach Westpac Bank to give effect to the final orders until 3 November 2022, which did not allow enough time to meet the timeframe set out in order 1.
Application for Stay
The husband has filed an affidavit in support of his application for a stay.
In his affidavit, he provides an explanation for his consenting to final property orders on 19 November 2022 in circumstances where he now realises that the obligation imposed under the orders was impractical:
Westpac Bank held first mortgage security over the property at [R Street, Suburb Q] ("the [Suburb Q] Property") with $1,180,000 owing in respect to the [Suburb Q] Property and $260,000 ("the [Suburb O] Property stamp duty"), cross-collateralised in respect of the property [N Street, Suburb O] ("the [Suburb O] Property").
Westpac Bank also held first mortgage security over the [Suburb O] Property securing at the time of the Final Hearing, a balance owing of approximately $1,200,000 The [Suburb O] Property had been originally valued, for Westpac Bank's purposes, at $1,950,000 plus CST.
Westpac Bank also held first mortgage security over my property at [P Street, Suburb Q] ("the [P Street] Property"), valued at approximately $2,370,000 at the time of the acquisition in [late] 2019. The [P Street] Property is listed as my primary residence and will physically become so next week. I am presently residing at [U Street, Suburb V] ("the [Suburb V] Property") which is the property referred to at paragraph 4 of the Final Orders.
At the Final Hearing, Single Expert Valuations were provided for the [Suburb O] Property at $3,450,000 and for the [P Street] Property at $2,800,000.
I had at all times serviced the borrowings on all of my properties, including the [Suburb O] Property and the [P Street] Property, and had at all times paid to Westpac Bank the relevant principal and interest payments that were required to be made.
I was therefore of the view that I would have been able to finalise my re-finance application with Westpac Bank in a comparatively short period of time and provide them with the requisite additional information they needed to complete the re-finance application, together with the fact that the [Suburb O] Property and the [P Street] Property had increased significantly in value.
He gives evidence that his solicitors contacted Westpac on 9, 17 and 18 November 2022 to express the urgency of refinancing the Suburb Q property. He submits that there was a problem with refinancing due to his debt to the ATO of $351,000 and he had not lodged tax returns for the years 2020 – 2022 which he estimates would increase his liability by $100,000. At the time of filing his affidavit, the returns still have not been lodged.
The husband submits that if the stay is not granted, his appeal will be rendered nugatory.
The husbands grounds of appeal are as follows:
(1)The Learned Justice unreasonably refused the husband’s request for an adjournment
(2)The Learned Justice refused to give the husband an opportunity to depose to relevant facts and matters by affidavit
(3)The Learned Justice fixed an unreasonably short time in order 2 to comply with the final orders made by consent on 19 October 2022
(4)The Learned Justice failed to afford the husband procedural fairness
The husband via his notice of appeal provides the following facts relied on in support of the appeal:
(1)The court, of its own motion, brought forward the respondent’s application for enforcement from 1 March 2023 to 24 January 2023 on three business days’ notice.
(2)In the circumstances, the appellant was unable to raise funds in the time available to pay his legal representatives to expedite the steps that he required to be taken on the understanding that the same were to be done by 1 March 2023.
(3)In the period between the notification of the application for enforcement being brought forward, the appellant was a sole practicing health professional, was engaged in responding to critical investigations by industry authorities, arising as a result of a standard audit.
(4)I unreasonably refused the appellant’s request for an adjournment and to be able to set out relevant matters on affidavit. The refusal meant the appellant could not show the court that the only order he was in substantial breach of was order 1 of the final orders, in circumstances where compliance with that order was impracticable and/or impossible.
(5)Order 6 of the orders made 24 January 2023 was otiose and unnecessary, as the appellant had already transferred the respondent’s frequent flyer accounts, the equivalent of, in effect 2,400,000 Credit card 1 points in late 2022 and the respondent owes the appellant a refund of 200,000 frequent flyer points.
Submissions of the Husband
In oral submissions, Mr Wilson KC was at pains to emphasise that order 4(a) of the final orders (which required the husband to pay the wife $1,000,000 by 19 April 2023 or on settlement of the sale of the property at U Street, Suburb V, whichever occurs first) had been complied with by the husband. He also submitted that the husband was seeking to comply with the orders regarding superannuation. Senior Counsel’s submissions became more spirited as they developed in relation to the enforcement order made requiring the husband to transfer 2,000,000 Credit card 1 points to the wife.
The wife’s affidavit in support of an enforcement application sworn 1 December 2022 deposed at [19] that this order had not been complied with.
The husband gave evidence by his affidavit in this application that the Credit card 1 points had been transferred in December 2022. His counsel advised the court that the transfer occurred on 5 December 2022 by virtue of a transfer of 600,000 T Pty Ltd points, and 600,000 S Pty Ltd points. Initially, Senior Counsel referred to this as a “technical matter” but as the submissions developed, he accused the wife (via her counsel) of breaching his obligation to tell the court that the points had been transferred and that any order seeking to enforce the requirement to transfer the shares was unnecessary and based on an error. He said as to this point that the appeal was a “lay down misère – we have to win on the [Credit card 1] Points in whole or in part”.
He then submitted that if the stay was not granted and the wife sort to enforce order 1, she would effectively be in a worse position because of the difficulties in dealing with the properties referred to in order 1 of the final orders, in particular the Suburb O street property. Senior Counsel noted that this is a property configured as a facility for a health service and is subject to a 30 year lease at $50,000 per annum to the husband (reduced from a previous rent of $150,000). It was submitted that the wife would be placed in a position of trying to sell the property subject to a long uncommercial lease, and it was unlikely that she would be able to achieve its true value, whereas if the husband maintained control of that property, the result would be better for the wife.
Senior Counsel conceded that there had been no s 79A application foreshadowed or made prior to or subsequent to the time for compliance with order 1 of the final orders.
It was also accepted that the final consent order was regularly made in the sense that it was not alleged that it was induced by or affected by fraud or misrepresentation. At one point, Senior Counsel submitted that the appeal in this case is “effectively like a s 79A (1)(b) application in a different guise”. It was also submitted that, if he gets the stay and the appeal goes on, the only thing the husband is effectively seeking in the appeal is an extension of time to comply with order 1.
Senior Counsel also submitted that order 2 of the enforcement orders had effectively extended time with compliance with the final orders until 2 February and that extension of time was unreasonably short given the matters the husband had raised with the court on 24 January 2023. It was accepted that that order gave 7 days before the enforcement orders were activated, but that did not mean that the husband was not in breach of the final orders as at 24 January 2023, although it was also submitted by Senior Counsel that making order 2 of the enforcement order was effectively an extension of time under the final orders. For reasons that follow, I think that this ground has poor prospects of success.
Otherwise it was submitted that the husband as an unrepresented litigant was given three business days to prepare for the enforcement application, and during that time he was occupied dealing with a regulator, and that the enforcement orders gave him minimal time to comply with the final order.
Submissions of the Wife
Counsel for the respondent wife submitted in relation to the point raised hat the husband had only three business days to prepare for the enforcement application hearing is entirely without merit. He referred to the chronology set out in the wife’s affidavit of 1 December 2022 at [10] and following that the husband’s solicitors were reminded by correspondence by the wife’s solicitors on 3 November 2022 of the obligations under order 1 of the final orders. On 9 November 2022, the husband’s solicitors advised the wife’s solicitors that the husband would be in default of order 1 of the final orders, and a request was made to vary the final orders. On 15 November 2022, the husband’s proposal to vary the final orders was rejected.
The enforcement application was filed and served on 13 December 2022. Pursuant to rule 2.18(2) of the Rules, the husband had 28 days to file and serve his responses and any supporting affidavit to the enforcement application. The time to file that material expired on 11 January 2023, at which time the applicant’s solicitors were still on the record.
The husband’s solicitors sought to come off the record on 20 January 2023. Counsel for the wife submitted that the husband had been given an opportunity to file a response to the application while he was represented, that he had been heard, and his application for an adjournment had been considered on 24 January 2023. Otherwise, he said that by reason of what had been submitted by Senior Counsel for the husband, that the appeal was being used as a mechanism to extend the husband’s time to comply with the orders, and thus was an abuse of process.
Counsel for the wife also submitted that the husband had not identified what species of unreasonableness had affected the appealed decision or what aspect of the conduct of the hearing or decision was affected by unreasonableness (of whatever kind).
CONSIDERATION
The court refers to the relevant principles to be applied as referred to in Aldridge v Keaton (Stay Appeal) [2009] FamCAFC 106 (omitting references to parenting applications), these being:
(1)The onus to establish a proper basis for the stay is on the applicant. However, it is not necessary for the applicant to demonstrate any “special” or “exceptional” circumstances;
(2)A person who has obtained a judgment is entitled to the benefit of that judgment;
(3)A person who has obtained a judgment is entitled to presume the judgment is correct;
(4)The mere filing of an appeal is insufficient to grant a stay;
(5)The bona fides of the applicant;
(6)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;
(7)A weighing of the risk that the appeal may be rendered nugatory if a stay is not granted. This is the substantial factor in determining whether it will be appropriate to grant a stay; and
(8)Some preliminary assessment of the strength of the proposed appeal, whether the appellant has an arguable case, the period of time in which the appeal can be heard, and whether existing satisfactory arrangements may support the granting of a stay for a short period of time.
The husband has not established a proper basis for a stay. The orders that were subject to an enforcement application and subsequent orders were orders made by consent. No application was brought before the court to apply to vary those orders before the time for compliance with had expired. The husband was on notice that the wife was pressing for compliance with the orders, and at the time the enforcement application was filed and served, the husband was represented and had the opportunity to file whatever responding material he believed was appropriate in the time provided by the Rules. That did not occur.
Turning to the consideration of whether the grounds of appeal are reasonably arguable:
(1)Ground 1 – unreasonable refusal to grant the appellant an adjournment.
This ground is not reasonably arguable. At the time that the application for an adjournment was refused, the husband was already in breach of order 1 of the final orders. No evidence was placed before the court that the husband had any capacity to comply with order 1 of the final orders in a timely way. This species of unreasonableness has not been identified in the statement of facts relied upon, or in submissions before the court.
(2)Ground 2 – unreasonable refusal to give the applicant an opportunity to depose to relevant facts and matters by affidavit.
The applicant had been on notice of the application when he was represented by solicitors and had the opportunity afforded by the rules to file responding evidence or make any responding application, and had not done so. This ground is not reasonably arguable.
(3)Ground 3 – fixed an unreasonably short time in order 2 for the appellant to comply with the final orders made 19 October 2022.
This ground misunderstands the effect of order 2. On 24 January 2023, the husband was in breach of the final orders, and the rights accruing to the wife under the default provisions of the final orders (paragraph 5) had accrued to her. The effect of order 2 is to effectively stay the operation of the enforcement order, and to give the husband the opportunity to remedy the default until 2 February 2023. This ground is not reasonably arguable. There is real doubt as to whether the court can grant the relief sought by the husband to vary the final order: see In the Marriage of Bray (1988) FLC 91-968.
The orders do not purport to vary the final order. There was no evidence before the court and nothing was said by the husband which could comfortably persuade the court to grant a longer stay on the operation of the enforcement orders. Further, the species of unreasonableness referred to in this ground is not identified, either in the terms of the notice of appeal or in the submissions that were made to the court.
(4)Ground 4 – failure to afford the appellant procedural fairness.
No particular failure to afford the husband procedural fairness was pointed to. The husband appeared before the court on 24 January 2023 in circumstances where he advised the court that he no longer intended to retain his solicitors. He was given the opportunity to make submissions, and those submissions were heard and considered prior to the making of the orders.
Other Matters
Bona fides of the Applicant
Given the submissions of Senior Counsel for the husband that this appeal is effectively a mechanism to extend the husband’s time to comply with the orders, there is a bona fide challenge to the exercise of discretion exercised by the court in refusing the adjournment application made on 24 January 2023. If it is simply a mechanism by which to achieve an extension of time to comply with the final orders, it would appear to be an abuse of process.
Prejudice to the Wife
The parties conceded that the husband is no longer paying the mortgages on the properties which are subject to the final orders, and this failure to pay the mortgages will prejudice the wife. Given the indications given by Senior Counsel in relation to the husband’s difficulties with regulators and being able to comply with the orders that he agreed to, there is real doubt as to the husband’s capacity to remedy any prejudice to the wife. This mitigates against the grant of a stay.
Orders in Relation to the Credit card 1 Points
No ground of appeal was drawn to specifically address this point. If the husband has discharged his obligations under the order, the order is a spent order and he cannot be required to comply with the order twice. At the time of the hearing of 24 January 2023, there was a question as to whether he had complied. I do not regard this as a basis of a potential ground of appeal sufficient to warrant the stay of the final orders.
CONCLUSION
For these reasons, the court dismisses the husband’s application for a stay of the orders of 24 January 2023.
I certify that the preceding thirty-three (33) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice McNab. Associate:
Dated: 22 February 2023
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