VILMAR and GROOBER

[2017] FCWA 16

JURISDICTION : FAMILY COURT OF WESTERN AUSTRALIA

ACT: FAMILY COURT ACT 1997

LOCATION: PERTH

CITATION: VILMAR and GROOBER [2017] FCWA 16

CORAM: O'BRIEN J

HEARD: 8 NOVEMBER 2016

DELIVERED : 13 FEBRUARY 2017

FILE NO/S: PTW 3678 of 2014

BETWEEN: MR VILMAR

Applicant

AND

MS GROOBER
Respondent

Catchwords:

LEAVE TO APPEAL - interlocutory order of Family Law Magistrate - test to be applied - application dismissed.

Legislation:

Family Court Act 1997 (WA)
Family Court Rules 1998 (WA)
Family Law Act 1975 (Cth)
Family Law Rules 2004 (Cth)

Category: Not Reportable

Representation:

Counsel:

Applicant: Mr F Robertson

Respondent: Mr M Berry SC

Solicitors:

Applicant: Lewis Blyth & Hooper

Respondent: Western Legal

Case(s) referred to in judgment(s):

Adam P Brown Male Fashions Pty Ltd v Phillip Morris Inc (1981) 148 CLR 170

Huntingdale Village Pty Ltd (Receivers and Managers appointed) v Korda [2015] WASCA

101

Jess v Jess (2014) FLC 93-620

Kuan v Toh (2016) FLC 93-717

Medlow v Medlow (2016) FLC 93-692

Niemann v Electronics Industries Ltd [1978] VR 431

Rutherford and Rutherford (1991) FLC 92-255

Silbert v Steinberg [2010] WASCA 113

WORDS IN SQUARE BRACKETS REPLACE WORDS USED IN THE ORIGINAL JUDGMENT - PARTIES’ NAMES AND IDENTIFYING DETAILS HAVE BEEN CHANGED

1[Mr Vilmar] (“the applicant”) seeks to appeal orders made by Magistrate Kaeser on 20 May 2016, dismissing an application for enforcement of orders made by the court on 28 October 2015. [Ms Groober] (“the respondent”) opposes the application.

2The parties were not married and the orders made by Magistrate Kaeser were interlocutory. An appeal accordingly lies to this Court, but leave to appeal is required.

Background

3The parties were in a de facto relationship. Following their separation, proceedings were commenced in relation to the alteration of property interests between them. An agreement for the resolution of those proceedings was reached and final orders were made by a Registrar in Chambers on 28 October 2015 (“the consent orders”).

4At the time the consent orders were made, the parties were the joint registered proprietors of [Property A] (“Property A”) and the applicant operated a business known as [Business A] (“the business”). Broadly, the agreement of the parties contemplated that the applicant would retain the business and responsibility for its associated liabilities and the respondent would retain Property A and responsibility for the debt secured by mortgage against it. The parties would otherwise each retain their own property and responsibility for their own liabilities.

5The consent orders were made in terms of a minute executed by the parties, who were both represented. The orders contained in that minute were in the following terms (errors are as they appear in the original):

1.That within 60 days of the date these orders are published:

(a)the Applicant shall do all things necessary and execute all such documents as are necessary to transfer to the Respondent all his interest in [Property A] in the State of Western Australia and being more particularly described as Lot [XXX] on Deposited Plan [XXXXX ] being the whole of the land described in Certificate of Title Volume [XXXX] Folio [XXX].

(b)the Respondent shall do all things necessary and execute all such documents as are necessary to refinance mortgage number [XXXXX XX] in favour of the [Bank A] registered against [Property A], in the State of Western Australia into her sole name.

(c)the Applicant shall do all things necessary and execute all such documents as are necessary to refinance the business equity loan in favour of [Bank A], Account number [XX-XXXX] registered against [Property A], in the State of Western Australia, into his sole name.

(d)the parties shall do all thing necessary and execute of such documents as are necessary to release the respondent from any guarantee in relating to the business, CAN [XXX XXX XXX], ABN [XX XXX XXX XXX].

2.The Applicant shall fully indemnify the Respondent in relation to any debts, liabilities or monies owing on behalf of [the business], ACN [XXX XXX XXX], ABN [XX XXX XXX XXX].

3.The Applicant and Respondent shall otherwise each retain any and all assets and liabilities registered in their sole names.

4.Each party bear their own costs.

5.All applications be dismissed.

6At the time the parties reached their agreement, the proceedings had been on foot for over 12 months. A trial had been listed for two days commencing in October 2015. The trial dates were vacated by consent on 21 October 2015 as agreement had been reached. As will become apparent, and even allowing for the time pressures associated with an impending trial, it is unfortunate that the parties and those advising them did not pay closer attention to the drafting of the orders required to give effect to their agreement.

7On 30 March 2016, the applicant filed a Form 2 application seeking to enforce the consent orders (“the enforcement application”). The enforcement application was accompanied by an affidavit setting out the correspondence between the solicitors for the parties subsequent to the making of the consent orders. In short, the applicant complained that the respondent had not taken the necessary steps to refinance the debt secured by mortgage against Property A.

8The enforcement application sought orders in the following terms (errors are as they appear in the original):

1.If the refinancing of [Property A], in the State of Western Australia being more particularly described in Certificate of Title Volume [XXXX] Folio [XXX] (“the Property”) does not occur within 14 days, this property be listed for sale.

2.The parties appoint an agent for the sale of the Property.

3.The agent be authorised to advertise or offer the Property for sale at a price recommended by them and to present the parties all offers.

4.If the Property is sold, the proceeds of sale be applied in the following manner and priority:

a.the costs, expenses and commission associated with the sale of the home including any council and water rates and maintenance levies outstanding;

b.in discharging all monies owed to [Bank A] secured by mortgage number [XXXXX XX]; and

c.payment of the balance to the Respondent.

5)If the home has not been sold after 90 days, the parties have liberty to apply to the Court with respect to the terms and conditions of the sale of the home and the manner for sale of the Property.

9The respondent filed a Form 2A response on 12 May 2016. That response sought the dismissal of the enforcement application and an order for costs. No other relief was sought.

10The affidavit filed in support of that response set out the efforts the respondent said she had made to obtain finance, and further correspondence between the solicitors for the parties. The respondent contended that the enforcement application, in so far as it sought a sale of the home, was “defective” as the orders fell “outside of the orders the Honourable Court can make” and that no orders for a sale of Property A were “contemplated within the final orders of 28 October 2015”.

11The enforcement application came on for hearing before Magistrate Kaeser on 20 May 2016. The matter proceeded for determination on the papers; neither party sought the opportunity to cross-examine on the affidavits which had been filed.

12His Honour delivered judgment on 30 May 2016. Having noted the difficulties which arise when orders are drafted without a “default provision” to specify what is to occur in the event that a party cannot meet the obligations imposed, His Honour identified what he described as two “significant issues” to be considered by the court. His Honour described those issues in the following terms:

1)Does the court have the power to order a sale of the real estate? [Ms Groober] submits the answer is “no” to that question and says that by doing so the court is changing the nature of the orders made and improperly converting a transfer into a sale where such a sale was not contemplated by the parties.

2)The extent to which [Ms Groober] has done “all things necessary” to refinance the joint mortgage. The result may well be different between a situation where [Ms Groober] has “sat on her hands” to one where she has acted properly and sought to refinance the mortgage.

13In support of the proposition that the court had the power to order a sale of Property A in the context of an enforcement application, His Honour was referred by counsel to ch 20 of the Family Law Rules 2004 (Cth) (“the Rules”) and in particular to r 20.01. The relevant provisions of the Rules are adopted without amendment by the Family Court Rules 1998 (WA).

14Counsel for the applicant argued that the respondent’s obligation to do all things necessary to refinance the debt secured by mortgage against Property A entailed an “obligation to pay money” for the purposes of r 20.01 and that accordingly an order for sale of the property was available as a remedy for her failure to do so. That argument was based on the premise that to “refinance the mortgage”, adopting the expression used in the orders, it was necessary for the respondent to first make any payment required to discharge the existing debt secured by that mortgage.

15Counsel for the respondent initially submitted that the respondent’s obligation to do all things necessary to refinance the debt did not entail an “obligation to pay money”. In the course of dialogue with His Honour, counsel retreated from that position and conceded that there was a relevant obligation to pay money, but argued that the obligations imposed on the respondent by the consent orders went well beyond that. He submitted that accordingly the court did not have the power to order a sale of the property. His secondary submission was that, if the court concluded that it did have the power to order a sale of the property, it should in the exercise of its discretion decline to enforce the orders as there were other more appropriate remedies available to the applicant.

16Neither counsel made any submissions which would address the issues that might be thought to arise upon a reading of rr 20.05 and 20.06, nor issues arising by virtue of the property in question being owned jointly by the parties.

17His Honour concluded that the answer to what he described as the “jurisdictional issue” was that the applicant was “able to seek the sale of Property A as Ms Groober has defaulted in her obligation to discharge the mortgage” and that it was “open to the court to enforce the orders by way of a sale because the obligation on Ms Groober is partly an obligation to pay money”.

18His Honour then turned to consider whether, having determined that he had the power to enforce the orders, he should exercise his discretion to do so. He described the question of whether the respondent had “done enough to reasonably comply with her obligations pursuant to the orders” as “the most important factor”.

19Having reviewed the evidence, His Honour concluded:

I accept that [Ms Groober] has done all that she could to comply with the orders. She was unable to meet the conditions imposed by the prospective lender and therefore despite her best efforts was unable to secure the necessary loan.

In all those circumstances I accept that she has done “all things necessary” to obtain refinance.

I therefore accept that it would not be a proper exercise [of] the court’s discretion to enforce the orders by providing for a sale of the home in which she resides. In computer terms a “reboot” is required, that is, that the parties should now contemplate a fresh solution to their respective claims. It appears that any potential remedy lies in Section 205ZH.

20His Honour dismissed the enforcement application. The applicant seeks leave to appeal that decision.

The law – leave to appeal

21The discretion given by s 211 of the Family Court Act 1997 (WA) (“the Act”) is unfettered. The section does not set out the matters to be taken into account in deciding whether to grant leave.

22Both counsel made submissions as to the appropriate test. Both referred to decisions of the Full Court of the Family Court of Australia in proceedings under the Family Law Act 1975 (Cth). While the decisions of the Full Court referred to by both counsel were in relation to the issue of a grant of leave to appeal pursuant to s 94AA of the Family Law Act 1975 (Cth), the principles espoused are equally applicable to the present application.

23Counsel for the appellant contended that:

If leave is to be granted, it is necessary for the Appellant to demonstrate either an error of principle or substantial injustice.

24He referred in support of that submission to the decision of the High Court in Adam P Brown Male Fashions Pty Ltd v Phillip Morris Inc (1981) 148 CLR 170 at p 177 (“Adam P Brown”) and the decision of the Full Court in Rutherford and Rutherford (1991) FLC 92-255 at p 78,715 (“Rutherford”).

25Counsel for the respondent contended that:

In order for leave to appeal to be granted, the appellant must satisfy the Court of two requirements. The first requirement is that the decision in question is attended with sufficient doubt to warrant the grant of leave. The second requirement is that a substantial injustice will result from a refusal of leave to appeal.

26He referred in support of that contention to the decision of the Full Court in Jess v Jess (2014) FLC 93-620 (“Jess”) as affirmed in Medlow v Medlow (2016) FLC 93-692 (“Medlow”), and to Kuan v Toh (2016) FLC 93-717.

27The distinction between the disjunctive test proposed by counsel for the applicant and the conjunctive test proposed by counsel for the respondent is significant. It is necessary, therefore, to first determine which is the appropriate test.

28In Medlow, the Full Court considered the authorities referred to by counsel for the applicant, noting that both the High Court in Adam P Brown and the Full Court in Rutherford had left open the question of whether the test applied in those cases was conjunctive or disjunctive. The assertion on behalf of the applicant that a disjunctive test was established by those decisions was, with respect, inaccurate.

29The Full Court in Medlow noted that it had for many years applied what might be described as the Rutherford test. It referred to the observations of a differently constituted Full Court in Jess, which had expressed an inclination to depart from the Rutherford test, in favour of the test applied in the Federal Court, which in turn emanated from Niemann v Electronics Industries Ltd [1978] VR 431 (“Niemann”).

30In Jess at [59] to [63] the Full Court relevantly said:

We are attracted to the formulation of the test used in the Full Court of the Federal Court for four primary reasons.

First, it has not been suggested there is anything in the legislative framework to suggest there is any logical basis for different approaches to be applied in the two courts. In our view, it is desirable there should be a uniform approach in federal intermediate appellate courts.

Secondly, there are many cases where a judge may have expressed himself or herself in a way which constitutes an “error of principle”, but nevertheless has arrived at a result which itself is not attended by “sufficient doubt” as to warrant a full blown appeal on an interlocutory issue.

Thirdly, the two “integers” are applied conjunctively, whereas the question of whether the test used in the Family Court is conjunctive or disjunctive has been left open: Fitzpatrick & Fitzpatrick [2005] FamCA 497 at [28] and [29]. The conjunctive approach raises the bar and, in our view, supports the policy considerations which led French J (as he then was) to say that “[t]he time and resources of the Court and the parties should not lightly be taken up with appeals about decisions in connection with proceedings which do not finally determine the rights of the parties”: Johnson Tiles Pty Ltd v Esso Australia Pty Ltd at 583 [42]. This is an increasingly important consideration as the Court attempts to deal with the large number of appeals coming before it.

Fourthly, ensuring the first limb of the test is directed to the outcome at first instance, rather than to the path by which that outcome was reached, will keep the focus firmly fixed on the real issue — i.e. whether there is a realistic prospect of the decision being reversed if the appeal proceeds.

31The Full Court in Medlow saw merit in the Niemann test and adopted it subject only to the caveat that it is a litmus test to be applied in the general run of cases in the context of the unfettered discretion, and in appropriate cases will give way to the particular interests of justice in that case. The same caveat, of course, applied to the previously favoured Rutherford test.

32It will be noted that one of the reasons advanced by the Full Court in Jess for its attraction to the Niemann test was the desirability of a uniform approach in Federal intermediate appellate courts. The Family Court of Western Australia, of course, is not such a Court.

33That distinction does not, in my view, matter. Subject only to any relevant legislative differences, a uniform approach to applications for leave as between this Court and the Family Court of Australia is no less desirable than uniformity between that Court and the Federal Court. Even if that were not the case, the other reasons identified by the Full Court for the adoption of the Niemann test are compelling.

34I note also that the Niemann test is consistent with that applied by the Supreme Court of Western Australia in determining applications for leave to appeal against interlocutory decisions. In Huntingdale Village Pty Ltd (Receivers and Managers appointed) v Korda [2015] WASCA 101, the Court cited with approval a passage from Silbert v Steinberg [2010] WASCA 113 at [5]:

While there is a general discretion to grant leave to appeal… it must be shown that the decision in respect of which leave is sought is wrong, or at least attended with sufficient doubt to justify the grant of leave, and, in addition, that substantial injustice would be done by leaving the decision unreversed…

35Bearing in mind the appellate pathway in proceedings under the Act, it is similarly desirable that there be a uniform approach between this Court and the Supreme Court.

36It follows that in my view the test to be applied in the present case is as contended by the respondent, noting the caveat referred to by the Full Court in Medlow.

37That in turn means that it is appropriate to ensure that the “first limb of the test is directed to the outcome at first instance, rather than to the path by which that outcome was reached” thereby keeping “the focus firmly fixed on the real issue – i.e. whether there is a realistic prospect of the decision being reversed if the appeal proceeds”: Jess at [63].

38Against that background it is appropriate to turn to a consideration of the proposed grounds of appeal.

The proposed grounds of appeal

39The proposed grounds of appeal are in the following terms (errors are as they appear in the original):

1)The learned magistrate erred in fact or in law in finding that [Ms Groober] had done enough to reasonably comply with her obligations pursuant to the order (Reasons 20 – 21).

2)The learned magistrate erred in law by applying the wrong test, namely by deciding the application by reference to whether [Ms Groober] had done “all things necessary” to refinance the joint mortgage, rather than applying the correct test of whether it would be inequitable for the court to enforce the original order (Reasons 5(2)).

3)The learned magistrate erred in law in failing to give any, or adequate, consideration to the prejudice to [Mr Vilmar] if the Court did not enforce the orders.

4)The learned magistrate erred in law by taking into account an irrelevant consideration, by making the finding that ‘a “reboot” is required’ and that the parties should contemplate Section 205ZH as a more alternative remedy (Reasons 22).

5)The learned magistrate erred in law by failing to enforce the orders of the Court made on 28 October 2015 in circumstances where it was unreasonable or plainly unjust for the orders not to be enforced.

Ground one

40The learned Magistrate had before him an affidavit affirmed by the respondent on 12 May 2016 which set out the efforts she had made to obtain finance from two separate financiers. A significant volume of documents was annexed to that affidavit, including numerous email exchanges between the respondent, the proposed lenders and the mortgage broker. The documents reveal that the respondent faced significant obstacles in obtaining finance, for a variety of reasons.

41The documents also show that at certain stages in the process the respondent sought finance not only to meet her obligations pursuant to the consent orders, but sought additional finance so as to be able to complete renovations on the home and discharge a variety of other debts. That said, the documents reveal also that the respondent was unsuccessful in obtaining finance even when she limited her application to the amount required to strictly comply with the consent orders.

42The applicant points to the fact that the respondent applied for finance jointly with her new partner, who himself had difficulties with his credit history. The applicant asserts that accordingly the respondent did not comply with her obligations under the orders.

43The difficulty with that proposition is this; the documents which were in evidence before the learned Magistrate show that the respondent herself had a troublesome credit history, that there were difficulties with the refinancing application from the outset, that there were concerns on the part of the proposed financiers about the respondent’s capacity to service the proposed new borrowings, and that the respondent’s new partner brought to the application for finance an ongoing income significantly greater than that of the respondent.

44The documents also show that the respondent’s efforts to obtain finance were timely and persistent and that she endeavoured to address the issues raised at different times by the proposed financiers.

45As noted, the respondent’s evidence in that regard was not challenged at the hearing before His Honour, nor was any request made for an opportunity to cross-examine the respondent.

46It was, in my view, open to His Honour to conclude on the evidence that the respondent had, in the words used in the proposed ground of appeal, “done enough to reasonably comply with her obligations pursuant to the order”.

Grounds two, three and five

47These grounds by their nature highlight the difficulty faced by His Honour in dealing with the application as it was presented to him.

48The application was presented to His Honour as an application for orders to enforce the consent orders. Implicit in any such application is the proposition that the respondent has failed to comply with his or her obligations pursuant to the primary orders.

49Having found as he did that there was no such failure on the part of the respondent it is difficult to see what His Honour could have done other than to dismiss the application.

50His Honour having made that finding, the issue of an exercise of discretion did not arise. Similarly, the associated issues of whether or not His Honour applied the “correct test” in the exercise of such discretion, or failed to have adequate regard to any prejudice to the applicant, did not arise. It cannot be said that a failure to enforce the order was unreasonable or plainly unjust against the background of His Honour’s primary finding of fact.

51To the extent His Honour’s reasons for decision follow a different path (His Honour having considered it necessary to exercise his discretion notwithstanding his primary finding) in my respectful view His Honour was in error in that regard. Similarly, some confusion may have arisen by virtue of what might be considered to be inconsistency between His Honour’s finding in relation to what he described as the “jurisdictional issue” and his primary finding that the respondent had “done all things necessary” to refinance the debt.

52Such error as His Honour may have made, however, does not in turn mean that leave should be granted. As the Full Court observed in Jess, in considering an application for leave the Court’s attention is directed to the outcome at first instance rather than the path by which that outcome was reached.

53That observation leads conveniently to a consideration of the remaining ground of appeal.

Ground four

54By this ground, the applicant contends that the learned Magistrate “erred in law by taking into account an irrelevant consideration, by making the finding that ‘a “reboot” is required’ and that the parties should contemplate s 205ZH as a more alternative (sic) remedy”.

55A number of observations may be made in relation to this proposed ground of appeal.

56Firstly, His Honour’s judgment does not suggest that he made a “finding” as the applicant complains. Rather, against the background of having made his primary finding that the respondent had done what was required of her to comply with her obligations under the orders, and having concluded both that he had the power to make the orders sought by the applicant and that in the exercise of his discretion he should not do so, His Honour said:

In computer terms a “reboot” is required, that is, that the parties should now contemplate a fresh solution to their respective claims. It appears that any potential remedy lies in Section 205ZH.

57It is clear that His Honour’s observation in that regard was no more than that, an observation made as to the likely forward path of the litigation, his decision on the application before him having been made, and the reasons for that decision having been stated.

58Furthermore, and notwithstanding the way in which the application was framed and the matter was argued, His Honour’s observation was in my view accurate.

59As already noted, the orders sought by the applicant in his Form 2 application filed on 30 March 2016 were not couched in terms contemplated in ch 20 of the Rules. No attention was paid to the requirements of the Rules in relation to enforcement proceedings; rather, orders were sought in terms which broadly reflected provisions which ought prudently to have been included in the primary orders, which were made on the joint application of the parties in terms of a minute of consent orders at a time when they were both represented by their present solicitors.

Conclusion

60For the reasons set out above, I conclude that the applicant has failed to establish that the primary decision is attended with sufficient doubt to warrant the grant of leave.

61Even were that not the case, it would remain for the applicant to demonstrate that a substantial injustice would result from a refusal of leave to appeal.

62In short, he has not done so. The refusal of leave to appeal does not in any way inhibit the applicant’s ability to bring an appropriate application pursuant to s 205ZH or such other application as he may be advised. He is not in any sense left without a remedy. Indeed, what he might on reflection consider to have always been the most appropriate remedy remains open.

63The application for leave to appeal will be dismissed.

I certify that the preceding [63] paragraphs are a true copy of the reasons for
judgment delivered by this Honourable Court

Associate
13/02/2017