Vadisanis and Vadisanis and Ors

[2013] FamCA 290

FAMILY COURT OF AUSTRALIA

VADISANIS & VADISANIS AND ORS [2013] FamCA 290

FAMILY LAW – APPLICATION FOR STAY – Where the wife seeks a stay in respect of Orders made in final proceedings for property settlement between the husband and wife to a marriage – Where the husband’s mother was an intervenor in the primary proceedings – Whether failure to grant a stay would render the wife’s appeal nugatory – Whether the parties are likely to suffer hardship in the event a stay is granted
FAMILY LAW – PRACTICE AND PROCEDURE – Application by the husband and the intervenor to remove the Trustees of funds held in a controlled monies account – Where the Trustees oppose the application to be removed as Trustees

Family Law Act 1975 (Cth)
Limitation Act 1969 (NSW)

Ogilvie and Adams [1981] VR 1041

APPLICANT: Ms I Vadisanis

RESPONDENT: Mr Vadisanis

INTERVENOR: Ms J Vadisanis

SECOND RESPONDENTS: VS Law Firm

FILE NUMBER: SYC 6377 of 2008

DATE DELIVERED: 19 April 2013

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Fowler J

HEARING DATE: 10 April 2013

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Alexander

SOLICITOR FOR THE APPLICANT: Campbell Paton & Taylor

COUNSEL FOR THE RESPONDENT: Mr Johnston

SOLICITOR FOR THE RESPONDENT: Johnston Vaughan Solicitors

COUNSEL FOR THE INTERVENOR: Mr Farmakidis

SOLICITOR FOR THE INTERVENOR: JSM Lawyers

SOLICITOR FOR THE 2^ND RESPONDENT: Mr Boyd

SOLICITORS FOR THE 2^ND RESPONDENT: Prichard Lawyers

Orders

1. The Application in a Case filed by Ms I Vadisanis (“the wife”) on

   
   

   22 February 2013 seeking a stay of the operation of Orders made on 22 January 2013 is dismissed.

2. The Amended Application in a Case filed by Mr Vadisanis (“the husband”) and Ms J Vadisanis (“the intervenor”) on 7 March 2013 seeking the removal of the Trustees of the controlled monies account and the appointment of new Trustees is dismissed.

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

FAMILY COURT OF AUSTRALIA AT

FILE NUMBER:

Ms I Vadisanis

Applicant

And

Mr Vadisanis

Respondent

And

Ms J Vadisanis

Intervenor

And

VS Law Firm

Second Respondents

REASONS FOR JUDGMENT

Introduction

1. Before the Court are two applications in respect of final property proceedings (“the primary proceedings”) between Ms I Vadisanis (“the wife”),

   
   

   Mr Vadisanis (“the husband”) and Ms J Vadisanis (“the intervenor”). Orders were made and a judgment delivered in the primary proceedings on 22 January 2013.

2. In the primary proceedings, the wife and the husband sought orders as to the alteration of their property interests following the breakdown of their marriage. The intervenor, who is also a party to the proximate proceedings, intervened in the primary proceedings and claimed an entitlement to monies lent by her to the benefit of the husband and wife during their marriage.

3. The judgment in the primary proceedings should be read in conjunction with this judgment.

4. The first application before the Court was brought by the wife who, having filed an Amended Notice of Appeal on 6 March 2013, seeks a stay of the Orders made as a consequence of the judgment delivered in the primary proceedings.

5. The second application before the Court was brought by the husband and the intervenor who, by an Amended Application in a Case filed on 7 March 2013, seek orders that the Trustees of funds held in a controlled monies account be removed as Trustees and that new Trustees be appointed.

The Application for a Stay

1. The matters which of necessity the Court must consider in relation to the wife’s application for a stay of the Orders made on 22 January 2013 are as follows:

   a)whether the wife’s appeal was brought in a timely fashion. There is no dispute on this issue between the parties and the Court finds that it was.

   b)whether the wife’s appeal was brought bona fide. There is no dispute between the parties on this issue and the Court finds that it is.

   c)whether the wife’s appeal is likely to succeed. On this issue, the arguments of the husband and the intervenor are that the appeal is unlikely to succeed. The husband’s arguments to this end, set out in his case outline document received by the Court on 8 April 2013, are as follows:

   d. the merits of the appeal;

   ix.In summary, the Amended Notice of Appeal seeks to attack the entirety of your Honour’s findings in relation to the Intervenor’s Claims, an attack upon the lack of weight given by your Honour to the wife’s post separation contributions, an attack upon your Honour’s section 75(2) adjustment in favour of the wife and a complaint that you [sic] Honour failed to give adequate reasons as to the s.75(2) assessment;

   x.the Appellant relies on errors of law to ground the appeal with respect to the award in favour of the Intervenor. The complaints are a rehash of the submissions made by the wife at trial which your Honour considered and rejected.

   xi.there are discretionary grounds relating to weight and credit which are inherently problematic for an Appellant and at this time they should not influence your Honour’s consideration as to the merit of the Appeal;

xii.finally there is a complaint as to the lack of adequate reasons given by your Honour as to the assessment of section 75(2) factors. At paragraphs 333 to 350 of your Honour’s Reasons for Judgment careful consideration was given to this topic. Your Honour dealt with the age and income earning capacity of the parties; the wife’s parental responsibilities; child support issues; re-partnering; waste; the wife’s separate liabilities; after which your Honour weighted the matters in favour of the wife by an adjustment of 15% in her favour. With respect, this complaint is completely without merit.

xiii.On the whole, the Grounds of Appeal do not demonstrate appealable error on their face.

1. The wife suggests that she has a strong possibility of success in diminishing the amount payable by the husband and the wife to the intervenor by at least $232,000.

2. The amount owing to the intervenor arose from a finding in the primary proceedings that the husband and wife were indebted to her in the sum of $329,397.63, that sum being the aggregate of monies owing under loans described as the “Award Monies”, the “[O] Street Loan” and a loan made in 1997 under the terms of a mortgage document for the principal sum of $65,000 plus interest (“the Loan”).

3. With respect to the Loan, under the terms of the 1997 mortgage document, the husband and the wife were obliged to repay to the intervenor the principal sum of $65,000 plus interest at 10 per centum per annum, repayable at the expiration of a period of three months’ notice being given by the intervenor.

4. It is asserted by the wife that the amount due under the Loan, if due, was statue barred from recovery by the operation of the Limitation Act 1969 (NSW). The Court considered this issue in the primary judgment and, following reference to a judgment given in the case of Ogilvie and Adams [1981] VR 1041, held that the limitation period ran from the date upon which notice was served by the intervenor.

5. The Court cannot, having regard to the fact that the judgment whose reasoning was adopted is a District Court judgment, say that the appeal has no chance of success. However, the Court notes that in the event that the wife’s appeal were successful, it would be necessary as a matter of justice to allocate to the husband an additional amount of contribution to the acquisition of assets, with a consequential effect, one would imagine, on the result based on contributions finally arrived at as between the husband and wife.

1. The Court has to consider whether, if the stay were not granted, the appeal would be rendered nugatory. It is clear that a party to litigation is entitled to receive the fruits of the litigation and it seems to the Court that it is obliged to take into account, in addition to the issue of rendering an appeal nugatory, the comparative issues of hardship and prejudice, and whether those issues can be addressed in the event of a grant or refusal of a stay.

2. It is asserted by Counsel for the wife that she seeks a stay because the wife wishes to purchase the property at W Street in Town E, New South Wales (“the W Street property”) in which she resides and which, by Order (2) made on 22 January 2013, was to be sold. The wife has no funds and it is asserted that unless the stay is granted and the appeal allowed she will be unable to purchase the W Street property.

3. Notwithstanding the assertion by the Counsel for the wife, the wife’s

   
   

   Amended Notice of Appeal does not seek any order as to the acquisition of the W Street property. It seeks a variation in the amount payable to the wife to the intervenor, but otherwise does not challenge the sale of the property. This was drawn to Mr Alexander’s attention and he argued it was not necessary to contain such a claim in the Notice of Appeal.

4. It is the Court’s view that, to answer the question of whether the failure to grant a stay would render an appeal nugatory, it has to consider what the Full Court is being asked to do in the appeal.

5. In this case, there has been a Notice of Appeal and an Amended Notice of Appeal filed by the wife, neither of which prays for a transfer of the property. In the circumstances, the Court cannot find on the basis of the documents that a failure to grant a stay would render the appeal nugatory.

6. In relation to the balance of the hardship likely to be suffered by the various parties, the Court notes as follows:

   a)the wife will have to find alternate accommodation to her present accommodation but, having regard to the Amended Notice of Appeal, she would have to do so in the event that the appeal succeeded

   b)the wife in any event has an entitlement to funds the extent of which will not be known until the sale of the property is realised. There will be obligations no doubt borne by her in relation to some costs of the proceedings

   c)the intervenor would be disadvantaged by the absence of her entitlement under the judgment. It is true that the intervenor would receive, in due course, interest on the sum at a significant rate, as her entitlement to interest appears is in excess of $22,000 per year on the sum found to be due to her in the judgment. The intervenor has made it clear, however, that she wishes a return of capital to her not a continuation of the payment of interest

   d)even if the quantum of the repayment to the intervenor was partly disturbed on appeal, the intervenor would still be entitled to interest on the sum to which she was entitled

   e)each of the husband and the wife would suffer hardship in the requirement to continue paying interest at significant rates including rates set under the loan agreement and rates set under the Family Law Act 1975 (Cth)

   f)it is asserted that the wife and the children will be required to leave the home in which they live. That would be a consequence of the wife’s orders sought on appeal in any event

   g)

   even if the wife were offered the opportunity of purchasing the

   
   

   W Street property, on the evidence before the Court it seems highly unlikely that she could raise the necessary money to do so. Certainly on her application for a stay, the wife produced no evidence of her ability to acquire a loan of an amount which would enable her to do so

   h)it is noted that there are outstanding applications for costs against the wife.

1. There is no evidence before the Court as to the likely delay in the determination of an appeal. It was suggested at the hearing that to procure a judgment on appeal might take two years. The Court is unable to say that this is not correct.

2. The wife says that she intends to file an application for expedition however to the Court’s knowledge she has not as yet done so and there is no grant of expedition. The wife has been informed that this Court cannot grant such expedition and that expedition is a matter for the Full Court.

3. If such a lengthy delay as is suggested were to occur and in the event that the appeal was unsuccessful, the delay would result in the accrual of significant costs by way of interest and make perhaps less money available to the wife, the husband and the children.

4. The Court should consider the protection of the property and its value for the benefit of the parties as an element in considering a stay of proceedings. This is a matter in which the property available to the parties is not great. It seems to the Court that the grant of a stay would likely cause further erosion in the value of the property that was available to the parties.

5. Taking all the above matters into account, the Court is of the view that the application for a stay should fail and, accordingly, it proposes to dismiss the application.

The Application for Removal of the Trustees

1. Following delivery of Orders and judgment in the primary proceedings, the parties came to the Court and by consent sought orders that would vary the Orders of 22 January 2013 such that each of the parties’ solicitors could be paid the sum of $50,000 from funds in the controlled monies account held on trust by Ms VL and Mr VJ (“the Trustees”).

2. On 18 February 2013 the orders sought by the parties (“the consent orders”) were made in the following terms:

   1.That the Husband, the Wife and the Intervenor forthwith authorize [VS Law Firm] to release from controlled monies held by them the following sums:

   a.       The sum of $50,000.00 to Mssrs Johnston Vaughan;

   b.      The sum of $50,000.00 to Campbell Payton & Taylor; and

   c.      The sum of $50,000.00 to JSM Lawyers.

   2.That the sums referred to in Order 1 above be deducted from funds payable to the Husband, the Wife and the Intervenor respectively pursuant to the Orders of the Court made 22 January 2013.

1. The consent orders required the parties to instruct the Trustees to make the payments as set out above. The Court is informed that this instruction was given to the Trustees but not complied with.

2. The present application seeks orders, inter alia, that the Trustees of the funds in the controlled monies account be removed and that new Trustees be appointed. At the hearing the application generated some heat and also a little light.

3. It appears that cheques had been drawn by the Trustees on the trust fund for payment to wife and to the intervenor, but a cheque payable to the husband was deposited into the trust account of the law firm of the Trustees, who are former solicitors of the husband.

4. It was asserted by the Trustees that, as part of the proceeds of the litigation to which the husband was entitled, the sum was subject to a lien in favour of the Trustees in their capacity as his former solicitors for the payment of unpaid costs.

5. It was acknowledged by those appearing in the interests of the Trustees and their predecessors as solicitors for the husband that the existence of a lien did not entitle them to other than retain the funds pending an order made by a court of competent jurisdiction as to their disposal, or a satisfaction of the lien.

6. It was put to the Court that the Court has jurisdiction to make orders as to the appointment of new trustees in aid of the consent orders referred to above. The relevant order, however, does no more than require the parties to instruct the Trustees as to how they should disburse the funds. It does not bind the Trustees.

7. On the hearing before the Court, the Trustees provided bank cheques payable to the solicitors for the wife and to the solicitors for the intervenor but did not provide any such distribution payable to the solicitors for the husband. The Court was informed that the Trustees were bound to honour their lien and those of their predecessors as solicitors for the husband.

8. It seems clear on the evidence that the lien exists. The lien does not entitle the Trustees to apply the sum to any claim for costs but merely to hold the property comprised in the funds pending discharge of the lien either by agreement or pursuant to an order of the court.

9. The determination of the entitlements of the solicitors and the validity of their security is a matter for other courts. This Court does not exercise rights of determination in relation to the costs obligations between solicitor and client absent some basis on which the jurisdiction can be accrued to this Court.

10. The determination of those rights is not in this case an issue the determination of which is necessary for the exercise of the Court’s federal jurisdiction; nor is it necessary for the purpose of enforcing an order, the order having been made was only that the parties not the Trustees do something.

11. Whilst the communications between parties and their solicitors are surrounded by conflict and excessive pejorative statements, the fact is that the conduct of the Trustees was understandable and in accordance with what appears to be a reasonable interpretation of the effect of the lien with which the husband’s benefits in the litigation are charged. The Court does not find that they acted in a way which was improper and which warrants or requires their removal.

12. It is unfortunate that the light only shone on these issues during the hearing. Solicitors in this jurisdiction should pay more attention in the Court’s view to dealing with the substance of the issue rather than the pursuit of the best exercise of histrionics.

13. It is the Court’s view and it is given to understand that, should they be so requested, the sum presently held by the Trustees and subject to the lien will be invested if required by the husband into a controlled monies account of which they are the trustee rather than their trust account.

14. The Court expresses its confidence that that indication given to the Court by Counsel for the Trustees will be honoured.

15. On that basis the application for the removal of the Trustees is dismissed.

I certify that the preceding thirty-nine (39) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Fowler delivered on 19 April 2013.

Associate: 

Date:  19 April 2013