Taouk v El Khoury (No 2)
[2016] ACTSC 113
•9 June 2016
SUPREME COURT OF THE AUSTRALIAN CAPITAL TERRITORY
Case Title: | Taouk v El Khoury (No 2) |
Citation: | [2016] ACTSC 113 |
Hearing Date: | 25 May 2016 |
DecisionDate: | 9 June 2016 |
Before: | Murrell CJ |
Decision: | Injunction to stay enforcement proceedings continued. |
Catchwords: | PRACTICE AND PROCEDURE – Applications – application seeking stay of enforcement proceedings – separate proceedings on foot in the Federal Circuit Court – stay order continued |
Legislation cited: | Family Law Act 1975 (Cth) s 79 Service and Execution of Process Act 1992 (Cth) s 105 Court Procedures Rules 2006 (ACT) rr 2013, 2015 |
Cases cited: | State Bank of Victoria v Parry [1989] WAR 240 |
Parties: | Jackline El Khoury (Applicant) Joseph Taouk (Enforcement Creditor) Dany El Khoury (Enforcement Debtor) |
Representation: | Counsel Mr G Stretton SC (Applicant) Mr F Corsaro SC and Mr M Auld (Enforcement Creditor) Mr F Gutierrez (Enforcement Debtor) |
| Solicitors Farrar Gesini Dunn (Applicant) Gardner Ekes Lawyers (Enforcement Creditor) Avondale Lawyers (Enforcement Debtor) | |
File Number: | SC 390 of 2015 |
MURRELL CJ:
The applicant is the former wife of the enforcement debtor, Mr El Khoury. The enforcement creditor, Mr Taouk, is a relative of Mr El Khoury. The applicant seeks an order under r 2013 of the Court Procedures Rules 2006 (ACT) (CPR) that actions by Mr Taouk, as enforcement creditor, against Mr El Khoury as enforcement debtor, be stayed pending the determination of proceedings between herself and Mr El Khoury in the Federal Circuit Court under the Family Law Act 1975 (Cth) (Family Law Act).
The applicant and Mr El Khoury are awaiting the allocation of a date for the hearing of the family law proceedings, which have a five-day estimate. It is likely that the allocated date will be in April/May 2017.
The El Khourys married in 1999 and separated on 10 March 2015. They own houses at Crace and Kaleen as joint tenants. The house at Crace is occupied by the applicant and the couple’s three children. The house at Kaleen is occupied by Mr El Khoury. A joint loan from the National Australia Bank in the sum of $460,000 is secured by mortgages over each property.
The couple’s three children are aged between about 11 and 15 years. One child has a severe intellectual disability. He requires full-time supervision and assistance with all aspects of daily living, including feeding, bathing, toileting and navigating stairs. He suffers from seizures and is frequently ill. The applicant provides most of the necessary assistance. She does so to a high level, facilitating the child to develop to the extent of his capacity. Another child suffers from dyslexia, anxiety and insomnia. The third child is affected by insomnia and has a language disability, for which he receives speech therapy.
The applicant herself experiences anxiety and depression, for which she receives counselling and medication. She is undertaking a part-time diploma in beauty therapy. She receives Centrelink benefits. She pays the children’s school fees and healthcare expenses. She struggles financially. The applicant claims that Mr El Khoury chose to relinquish a reasonably lucrative business income in order to avoid child-support obligations.
On 5 May 2008, Mr Taouk and Mr El Khoury entered into a deed whereby Mr Taouk advanced the sum of $50,000 to Mr El Khoury for a period of two years to enable Mr El Khoury to construct a building in Lebanon. The deed states that interest on the loan and any further advance is to be calculated at a rate of at least 30% per annum, compounded monthly. On 8 and 16 May 2008, Mr Taouk gave Mr El Khoury sums of $26,000 and $26,200 respectively.
Mr Taouk says that, in early April 2009, Mr El Khoury asked for a further advance for the purpose of completing the Lebanon property and Mr Taouk agreed to advance $50,000. On 2 April 2009, a second deed was entered. On 2 or 3 June 2009, Mr Taouk provided the sum of $50,000 to Mr El Khoury. The terms of the second deed are virtually identical to those of the first.
In these proceedings, the applicant has not contested the fact that her former husband obtained loans to construct a building in Lebanon. She does say that she was unaware of the existence or terms of the 2008 and 2009 loan agreements. She questions the bona fides of the loan agreements, particularly in relation to the payment of interest. She acknowledges that she was aware of the existence of a property in Lebanon, although the date when she became aware of the Lebanon property is unclear. She believes that Mr El Khoury sold a property in Lebanon for approximately USD$650,000.
On about 2 December 2014, Mr El Khoury entered into an agreement with Mr Edmond El Khoury (a solicitor) as “lender”, who was said to be “representing” Mr Taouk as “funder”. The agreement refers to three loans made by the “lender” to Mr El Khoury in 2008 and 2009 for the total sum of $102,200. Under this agreement, Mr El Khoury agreed to pay interest at the rate of 30% from the time that each loan was made (not from the date of the agreement).
On 27 May 2015, Mr Taouk and Mr Edmond El Khoury registered caveats over the Crace property. In connection with proceedings to prevent the caveats from lapsing, Mr El Khoury signed an affidavit asserting that the applicant had known about the loans. Ultimately, the proceedings were not pursued and the caveats lapsed.
The agreement of 2 December 2014 and the caveat proceedings are of no direct relevance to these proceedings, but they do add to the disquiet otherwise associated with the dealings between Mr Taouk and Mr El Khoury.
Enforcement proceedings
On 29 September 2015, relying on the 2008 and 2009 loan agreements, Mr Taouk obtained an enforceable money order from the District Court of NSW against Mr El Khoury for the sum of $746,904.48, most of which was interest.
Mr Taouk applied to have the money order registered in this Court under s 105 of the Service and Execution of Process Act 1992 (Cth) (SEPA). On 20 October 2015, the money order was registered. Upon registration, the money order took effect as a judgment of this Court: s 105(2) of the SEPA.
On 28 October 2015, Mr Taouk served the money order on Mr El Khoury in accordance with r 2015(2) of the CPR.
Nothing has been paid towards the debt owed to Mr Taouk.
On 18 February 2016, the Court made a seizure and sale order for the sum of $774,165.39. The order stated that Mr El Khoury’s known property was the Crace property. It did not refer to the Kaleen property. On 17 March 2016, this order was served on Mr El Khoury.
It would appear that the property dispute between the El Khourys primarily concerns the division of the net proceeds of the sale of the Crace and Kaleen properties. The Court was advised that, on 29 March 2016, the applicant filed a further amended initiating application in the Federal Circuit Court in which she claimed orders that the Crace and Kaleen properties be sold and, after the payment of expenses and discharge of mortgage to the National Australia Bank, 80% of the proceeds be paid to the applicant and the balance to Mr El Khoury.
The Court has no reliable evidence about the value of the Crace and Kaleen properties, but there is general agreement that the Crace property is more valuable than the Kaleen property and that the net proceeds from the sale of the Kaleen property alone will not satisfy the debt owed to Mr Taouk. Mr Taouk estimated the value of the Crace property to be $1.2–1.3 million.
On 30 March 2016, the applicant applied to stay the enforcement proceedings by Mr Taouk and, on 1 April 2016, the matter came before the Court on an urgent basis. The applicant gave an undertaking as to damages. The Court ordered that all orders, proceedings, suits and other actions by the judgment creditor against the judgment debtor be stayed pending the determination of the family law proceedings or further order of the Court.
On 1 April 2016, the Court was informed that, in the family law proceedings, the applicant would allege that, pursuant to s 79(10) of the Family Law Act liability for the interest component, and perhaps for the entire sum owed to Mr Taouk, should rest with Mr El Khoury and be deducted from what would otherwise be his portion of the joint matrimonial assets.
When the matter came before the Court on 25 May 2016, no application had been made under s 79 of the Family Law Act. The applicant consented to a variation of the injunction made on 1 April to exclude the Kaleen property, and the injunction was varied accordingly.
Stay application
Both pursuant to r 2013 of the CPR and in its inherent jurisdiction, the Court has power to grant a stay of an enforcement order. However, the starting point is that a judgment creditor is entitled to have a judgment enforced without delay: State Bank of Victoria v Parry [1989] WAR 240 at 244.
At this stage, Mr Taouk does not seek to disturb the applicant’s claim to 80% of the net proceeds of the sale of the properties. He seeks to enforce the judgment debt against the 20% of net proceeds that is not the subject of the applicant’s family law claim. He proposes that the surplus net proceeds be held pending final determination of the family law proceedings.
Despite having had the opportunity to do so, to date the applicant has neither sought relief against Mr Taouk nor challenged the enforceability of the money order. Mr Taouk has not been joined as a party to the family law proceedings under s 79(10) of the Family Law Act, and the applicant has not sought to challenge the agreements in the family law proceedings.
Consequently, the Court must proceed on the basis that the debt and interest that are the subject of the money order are due and payable by Mr El Khoury to Mr Taouk. Mr Taouk is entitled to enforce the order against such assets of Mr El Khoury as are available to satisfy the amount outstanding.
Liability for interest is multiplying at an alarming rate. If both properties are sold and 20% of the net proceeds is applied to reduce Mr Taouk’s claim against Mr El Khoury, then the debt (including the interest component) will, at least, be reduced.
On the other hand, if the Crace property is sold, the applicant and her three children will be without a stable long-term home and without the means to acquire one until the family law proceedings are resolved and the applicant’s financial position is clarified. The applicant will have to find rental accommodation that is suitable for a severely disabled child and which meets the basic needs of her other children, both of whom are struggling. Once the family law proceedings are decided, the applicant and her children will move, for a second time, to more permanent accommodation.
The resolution of this matter is considerably hampered by the absence of reliable information concerning the value of the properties and the likely net proceeds from the sale of each property. This makes it difficult to appreciate the extent of the detriment to Mr Taouk if the injunction is continued. However, on the basis of the limited information that is available, following sale of the Kaleen property and discharge of the mortgage to the National Australia Bank, Mr Taouk may recover a sum that is sufficient to cover the amount of the original advances, i.e. $102,000. If the Crace property is sold (and assuming that the bank mortgage has already been discharged from the proceeds of sale of the Kaleen property), the net proceeds may exceed $1 million, of which a sum of possibly $200,000 (20% of the matrimonial real property, assuming that the Kaleen sale yielded no significant net amount) would be immediately available to Mr Taouk, but the judgment would remain largely unsatisfied.
This is not a matter of weighing competing detriments, but of deciding whether the detriment that the applicant would suffer if the injunction was removed is sufficiently serious to displace Mr Taouk’s entitlement to enforce the money order without delay. In my view, it is. If the injunction remains in place, Mr Taouk may well recover the amount of the original advances, but must wait for about 12 months to discover the extent to which he can recover the interest component of the loans. On the other hand, removal of the injunction may well be catastrophic for the applicant and her vulnerable family.
The injunction (as varied on 25 May 2016) is continued.
| I certify that the preceding thirty [30] numbered paragraphs are a true copy of the Reasons for Judgment of her Honour Chief Justice Murrell Associate: Date: 9 June 2016 |
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