Stark & Stark

[2011] FamCAFC 43

FAMILY COURT OF AUSTRALIA

STARK & STARK & ANOR [2011] FamCAFC 43

FAMILY LAW - APPEAL – Stay of orders – Error in substantive decision conceded by the respondent – Appeal allowed

Family Law Act 1975 (Cth)

APPELLANT: Mr Stark

FIRST RESPONDENT: Ms K Stark

SECOND RESPONDENT: Ms T Stark

FILE NUMBER: PTW 6318 of 2006

APPEAL NUMBER: WA 21 of 2009

DATE DELIVERED: 8 March 2011

PLACE DELIVERED: Perth

PLACE HEARD: Perth

JUDGMENT OF: Finn, Thackray & Crisford JJ

HEARING DATE: 10 December 2009

LOWER COURT JURISDICTION: Family Court of Western Australia

LOWER COURT JUDGMENT DATE: 28 August 2009

LOWER COURT MNC: [2009] FCWA 113

REPRESENTATION

COUNSEL FOR THE APPELLANT: Appellant in person

SOLICITOR FOR THE APPELLANT: Self represented litigant

COUNSEL FOR THE FIRST RESPONDENT: Ms Anderson

SOLICITOR FOR THE FIRST RESPONDENT: Self represented litigant

COUNSEL FOR THE SECOND RESPONDENT: Mr Mather

SOLICITOR FOR THE SECOND RESPONDENT: Clairs Keeley

Orders made 10 December 2009

1. The appeal be allowed.

1. The orders made on 28 August 2009 be set aside.

1. Pending determination of Appeal WA18 of 2009, the operation of paragraphs 1 and 6 of the orders made on 3 July 2009 be stayed.

1. The application of the second first respondent filed 23 November 2009 (concerning further evidence) and the response filed by the appellant on 9 December 2009 be dismissed.  (Note: corrected by application of slip rule.)

1. The appellant’s application for costs of the appeal be reserved for determination at the time of publication of reasons in the substantive appeal.

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

THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT PERTH

Appeal Number: WA 21 of 2009
File Number: PTW 6318 of 2006

Mr Stark  

Appellant

And

Ms K Stark  

First Respondent

And

Ms T Stark

Second Respondent

REASONS FOR JUDGMENT

Introduction

1. On 10 December 2009 we heard an appeal against orders made by the Honourable Justice Penny dismissing the appellant’s application for a stay of orders pending the hearing of his substantive appeal. 

2. At the conclusion of argument, we made orders in the form set out above allowing the appeal.  We indicated we would give our reasons later.  Subsequently, we were informed that the entire dispute had settled. 

3. Notwithstanding that the matter has settled, we have been advised that one of the parties still wishes this Court to give reasons for its decision.   

Background

1. The appellant (“the husband”) and the first respondent (“the wife”) were parties to property settlement proceedings in the Family Court of Western Australia.     

2. On 3 July 2009, Penny J delivered judgment in the property settlement proceedings (the “substantive decision”).  Having found the asset pool to be worth $7,072,954, her Honour ordered the husband to pay $2,862,118 to the wife within 30 days (Order 1) and she further ordered the husband to pay the wife’s costs incurred after 9 May 2007 (Order 6).   

3. The husband appealed against these orders (the “substantive appeal”) and applied for a stay of her Honour’s orders pending determination of that appeal.

4. The husband’s application for a stay came before Penny J on 19 August 2009. Although this was a matter of contention in this appeal, her Honour found that the husband had conceded that the appeal would not be rendered nugatory if the stay was refused.  She found that the husband’s contention was that he would suffer hardship if the order was not stayed, since he would be required to liquidate a number of assets to comply with the judgment.

5. The assets about which the husband expressed particular concern were his home in Perth, the apartment in which he lives when he is in overseas and certain shares.  Although the husband did not wish to sell these assets, he said he was able to make a payment to the wife of $720,000 almost immediately. 

6. The wife opposed the stay application, arguing that she should be entitled to the fruits of the judgment.  She also expressed concern about the likelihood of the husband speculating with the shares pending the hearing of the appeal, although ultimately no finding was made on that contention. 

7. Penny J delivered judgment on 28 August 2009.  She dismissed the husband’s application for a stay and ordered him to pay the wife’s costs.  On 25 September 2009 the husband filed an appeal against these orders.  It is this appeal which is the subject of these reasons. 

The basis on which the stay was refused 

1. Penny J recorded in her judgment in the stay application that she had found in the substantive decision that it was likely the husband’s mother would, in the future, advance significant funds to the husband “either to prop up [his mining company] or for his personal use”.  She went on to express the view that if the stay application was refused, the husband’s mother would make funds available to him, at least in the short term, to meet the debt.  Her Honour therefore concluded that the husband would not have to sell his home, the apartment overseas or the shares in order to satisfy the judgment. 

2. In reaching her decision to dismiss the application for a stay, her Honour also took into account the wife’s “need” to obtain permanent accommodation for herself and the children before the new school year, which she found would commence before the outcome of the appeal was known.

The Grounds of Appeal

1. The husband’s grounds in the stay appeal are set out below:

   1. The Learned Trial Judge (“LTJ”) erred in the exercise of her discretion in refusing to grant a stay or even a partial stay as follows:

   (a) The LTJ failed to consider or take into account the possible outcome of the appeal in determining whether it would be possible or practical to restore the husband’s position;

   (b) The LTJ erred in concluding that the husband conceded that the appeal would not be rendered nugatory if a stay was not granted (paras 7 and 19 RFJ);

   (c)The LTJ failed to consider and/or gave insufficient weight to the husband’s submissions and evidence in relation to the inability to restore his position after:

   (i) The sale of his home in [H] and/or apartment [overseas];

   (ii) The sale of the [C] shares (in the event that, against the evidence, such shares could be sold).

   (d) The LTJ erred in taking into account and/or finding that the husband’s mother would assist the husband (para 18 RFJ) to pay the wife.

   (e)The LTJ erred in taking into account and/or gave too much weight to the wife’s submission that the husband is likely to continue to invest in speculative mining stock (para 20 RFJ);

   (f)The LTJ erred in that she gave too much weight to the wife’s submissions and evidence regarding the hardship caused to the wife in relation to purchasing a residence (paras 21 and 22 RFJ).

   2.The LTJ erred in the exercise of her discretion in refusing to grant a stay or even a partial stay in relation to the order for costs by:

   (a)failing to provide reasons for the decision.;

   (b)failing to take into account the costs that both parties will incur in relation to a dispute, relating to costs, in the preparation of an itemised bill of costs and notice disputing costs and that such costs would be rendered nugatory in the event the appeal is successful; and

   (c)The LTJ failed to take into account the delay involved in resolving a dispute in relation to costs and comparing that to the likely conclusion of the appeal.

Concession relating to the calculation of the asset pool

1. In her substantive decision, Penny J relied on a schedule which she attached to her reasons for judgment. The husband claimed in Ground 1(c) of the substantive appeal that there was an error in the schedule in that $180,000 had been added rather than subtracted from the asset pool, thereby inflating the asset pool by $360,000. The wife conceded the error in her summary of argument filed on 2 December 2009 for the stay appeal.  Ground 1(c) was therefore made out.

2. The husband’s notice of appeal relating to the substantive decision was handed to Penny J at the hearing of the application for a stay.  Although the error in the schedule was not raised directly with her Honour, she did reserve her decision and therefore had an opportunity to consider the proposed grounds of appeal.  In her reasons, under the heading “Merits of the appeal”, her Honour said:

   23.In relation to the grounds of appeal and the likelihood of success, it is always difficult to make an assessment of these matters when one has been the trial Judge. I am satisfied, however, that it could not be said that the appeal was vexatious or mal fides [sic].

Discussion

1. Although Penny J would no doubt have benefitted from submissions on the point, consideration of the grounds of appeal would have shown that not only was the appeal not “vexatious or mal fides”, but also that Ground 1(c) had undeniable merit.  No request was made to her Honour to correct the error by application of the slip rule, and indeed, given the magnitude of the error, we are not convinced that the matter would have been as simple as noting the error and making consequential adjustments to the quantum of the settlement.   

2. The magnitude of the error was such that it could have been anticipated that the Full Court would allow the appeal and re-determine the matter.  In doing so, the Full Court might well decide that the husband should pay a significantly lesser sum than had been ordered.  In those circumstances, we consider her Honour should have stayed the substantive order, at least in part, pending a determination of the amount the husband would ultimately be required to pay.  This, in turn, might have had an impact on costs issues; however, her Honour gave no reasons for dismissing the application for a stay against the costs order.

3. Her Honour’s failure to grant even a partial stay in light of a significant error in the substantive decision constituted appellable error, and on that basis alone we determined the appeal should be allowed.  On a redetermination, we accepted there were other aspects of the husband’s substantive appeal which prima facie had substantial merit, particularly the way in which Penny J dealt with the significant funds advanced by the husband’s mother.  Even if her Honour was right to have decided not to take those advances into account as loans, it is difficult to see why they were not then taken into account as contributions on behalf of the husband.  We accepted that the husband’s submissions on this issue had merit.

4. We also considered there was merit in the husband’s complaints about the finding in the stay decision that he would not have to sell property in order to meet the judgment debt because his mother would provide the funds.  Her Honour did not explain how a finding, in the substantive decision, that the husband’s mother was “likely” to advance “significant funds” to the husband to help prop up his mining company or for his personal use was expanded, in the stay decision, to a finding that the mother would advance funds to assist him to meet a $2.8 million judgment debt that was the subject of an appeal.    

5. We also found merit in at least some of the husband’s submissions about the hardship he would suffer in the event he was required to dispose of assets pending the appeal.  Given that the entire proceedings have since settled, we do not consider it necessary to go into detail why we consider some of those submissions were meritorious.    

6. We were also satisfied there was merit in the husband’s submission that Penny J erred in recording that he had conceded the appeal would not be rendered nugatory if the stay was not granted.  No such concession was made by counsel for the husband.  On the contrary it was submitted that the appeal would be rendered nugatory to the extent that there was no reasonable prospect the husband would be able to repurchase the real estate he said he would have to sell in order to meet the judgment debt (Transcript 19 August 2009, page 3).

7. Finally, her Honour erred in finding in her stay judgment (at paragraph 12) that an allowance could be made for capital gains tax on the sale of shares after the shares were sold.  Although counsel for the wife did not concede there would necessarily be any capital gains tax payable, she properly conceded that her Honour was functus officio and therefore could not make any substantive amendment to the orders she had already made.    

The outcome

1. We determined that it was appropriate we stay Order 1 entirely, rather than granting a partial stay.  We formed this view because we considered there was a real prospect that the settlement would be very substantially reduced.  We also stayed Order 6, since the costs outcome could be significantly different in the event the substantive settlement was significantly reduced. 

Leave to appeal

1. As the order the subject of this appeal was interlocutory, leave to appeal was required.  The application for leave and the appeal itself were argued together.  Although we did not formally grant leave at the time we made our orders, it is implicit in those orders that leave had been granted, since we considered there had been a substantial injustice to the husband. 

The application for further evidence

1. The wife made an application to introduce further evidence on 23 November 2009.  The husband filed a response to this application on 9 December 2009 in which he indicated he would consent to the application filed by the wife provided he was permitted to rely on further evidence. 

2. When we made orders allowing the appeal we also made an order dismissing the application of 23 November 2009 and the response of 9 December 2009.  In doing so we described the application as having been made by “the second respondent”.  The wife was the second respondent in the substantive proceedings, but she was the first respondent in this appeal.  We have therefore amended Order 4 by application of the slip rule.    

3. Given that the entire proceedings have been settled we do not propose to give reasons for having dismissed the application and response concerning further evidence, other than to say that even had the evidence been introduced it would have made no difference to the outcome.

Costs

1. There is no need for us to consider costs issues.  The parties have agreed there will be no order as to costs and an order to that effect was made on 21 January 2010.  

I certify that the preceding twenty eight (28) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court (Finn, Thackray & Crisford JJ) delivered on 8 March 2011.  

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