Washburn & Pacini (No 2)

[2020] FamCA 489

FAMILY COURT OF AUSTRALIA

WASHBURN & PACINI (NO. 2) [2020] FamCA 489

FAMILY LAW – STAY APPLICATION – Applicant sought stay of property orders pending outcome of an appeal – where the Applicant was ordered to pay the Respondent a sum of money – Respondent accepted that the operation of orders should be stayed pending the appeal – Respondent sought injunctions to protect position should the appeal be unsuccessful – whether the Applicant should have any funds available to him by way of an ability to further encumber real property – stay granted subject to injunctions.

APPLICANT: Mr Washburn

RESPONDENT: Ms Pacini

FILE NUMBER: MLC 8134 of 2016

DATE DELIVERED: 19 June 2020

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Hartnett J

HEARING DATE: 9 June 2020

ORDERS MADE: 12 June 2020

REPRESENTATION

SOLICITOR ACTING AS COUNSEL FOR THE APPLICANT: Ms Doyle

SOLICITOR FOR THE APPLICANT: Lander & Rogers

SOLICITOR ACTING AS COUNSEL FOR THE RESPONDENT: Mr Ross

SOLICITOR FOR THE RESPONDENT: Blackwood Family Lawyers

Orders made 12 June 2020

1. The operation of the orders made on 6 April 2020 be stayed pending the hearing and determination of the father’s appeal from those orders filed 4 May 2020 (‘the Appeal’).

2. Until further order, the father be and is hereby restrained by injunction from:-

   (a)       further encumbering the real property situate at and known as B Street C Town Victoria being the real property described in Certificate of Title Volume … Folio … (‘the C Town property’) save as provided for in sub-paragraph 2(b) below;

   (b)       increasing the National Australia Bank Flexiplus mortgage loan account #...85 secured by registered mortgage … on the title of the C Town property (‘the secured mortgage’) save the father is permitted to increase the secured mortgage by an amount of up to, but not exceeding, the sum of $200,000.

3. The mother’s application for costs filed 7 May 2020 be adjourned pending the outcome of the Appeal and thereafter be listed for hearing on a date to be fixed.

4. The father’s application in a case filed 6 May 2020 be otherwise dismissed.

Note: The form of the order is subject to the entry of the order in the Court’s records.

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

Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLC 8134  of 2016

Mr Washburn

Applicant

And

Ms Pacini

Respondent

REASONS FOR JUDGMENT

Background  

1. On 6 April 2020 the Court delivered reasons in the outstanding and competing property order applications of the parties. Those orders included an order that the Applicant pay to the Respondent the sum of $364,557.86. The Applicant was given 90 days to make the payment. The making of the orders followed a two day trial in February 2020.

2. On 4 May 2020 the Applicant filed an appeal seeking that the orders made 6 April 2020 be set aside and the proceeding remitted for rehearing. The Applicant also sought a costs order.

3. On 6 May 2020 the Applicant filed an Application in a Case for a stay of the orders of the Court pending the outcome of the appeal.

4. On 12 June 2020 the Court made orders as appear at the commencement of these reasons. These reasons support those orders. The Respondent accepted that the operation of the orders made on 6 April 2020 should be stayed pending the hearing and determination of the Applicant’s appeal. The Respondent however sought injunctions to protect the position of the Respondent in the event the appeal was unsuccessful or resulted in a sum payable to the Applicant greater than which was ordered, or in a sum which required a sale of the Applicant’s real property. Additionally, the Respondent’s solicitors submitted, the Court needed to make provision for further sums by way of a payment by the Applicant of the Respondent’s costs or part thereof, and payment of penalty interest as prescribed in the Family Law Rules 2004 (Cth).

5. The issue for the Court was thus whether the Applicant should have any funds available to him by way of an ability to further encumber his real property situate at B Street, C Town in the State of Victoria (‘the C Town property’) pending the appeal outcome. The issue was not the stay itself, and hence a consideration of matters going to the merits of the appeal; the appeal being rendered nugatory if a stay was not granted; and/or matters of prejudice was not necessary.

6. The Respondent sought injunctions such that the Applicant could not have further access to funds by the further encumbering of his real property and/or business interests.

7. The equity in the Applicant’s C Town property was, at trial, $947,611. The Applicant submitted that he required access to his equity in the C Town property to pay for further legal fees being the amount he might expend (unquantified) on his appeal. The Applicant had not paid the entirety of his legal costs owing before the filing of his appeal but he did not submit that he needed to reduce the equity in the C Town property to attend to this debt. It remains owing however. The Applicant submitted further that he could fund the payment to the Respondent ordered on 6 April 2020 out of the sale of his product under the brand name F Pty Ltd and/or that he could use the equity within his business to pay the judgment debt.

8. In support of his Application in a Case filed 6 May 2020 the Applicant filed an affidavit of evidence sworn by him on 5 May 2020.

9. The Applicant’s evidence was that he has not been able to “sell [the product] to make the payment to the Respondent” as his usual purchasers had been affected by COVID-19 and (impliedly) not purchasing his supplies.

10. The Applicant’s further evidence was that enforcement of the orders of 6 April 2020 would require him to sell the C Town property which, relevantly, he described as his “only source of income”. During the trial the Applicant deposed to an average weekly income of $195. This income was derived from share dividends and a family allowance government benefit. His average weekly expenditure he deposed to be $1,390. The Court found that there was “a large weekly shortfall in his income viewed through the prism of his expenditure which is not adequately explained by [the Applicant]”. The Applicant’s farming business, operated out of the C Town property, produced no income on the Applicant’s evidence. The Applicant is now in receipt of the JobKeeper allowance.

11. The Court was concerned to preserve the only secure asset of the Applicant to meet the judgment debt due to the Respondent together with any amount of interest and costs. This was particularly so in the context of the Court finding, as stated in its reasons for judgment, that the Applicant “has expended considerable sums since separation, not all accounted for” and finding that the Applicant sought to avoid the payment of taxation by a deliberate “diversion of income earned by his farming business…to undisclosed third party bank accounts”. That diversion of income was a matter that had to be discovered by the Respondent. The Applicant did not present as a credible witness in respect of his financial position in the instances as described in the reasons for judgment.

12. The Respondent’s costs now exceed $559,000 and have been paid to date, in almost their entirety, by borrowings obtained from the Respondent’s father. Whilst the Respondent was not able in submissions to identify those costs which went only to the property proceeding, and not the lengthy parenting orders proceeding, nor the IVO proceeding, it is clear that some part of the total now owing has been incurred in respect of the property proceeding and that such proceeding involved numerous discovery and disclosure issues, expert valuations and a two day trial.

13. The Applicant shall be permitted to access his equity in the C Town property in a limited way which is necessary to protect the position of the Respondent. The equity remaining must be comfortably sufficient to provide security for all of the sums to which the Respondent may be entitled as a result of the judgment she holds. The Applicant had already been required by the Court to pay an outstanding costs order against him which he had failed to pay. That occurred at the commencement of the trial. The security represented by the Applicant’s product sales is not sufficient in that its value cannot be held to be that which the Applicant asserts in submissions, namely $700,000. On his own evidence, in respect of the valuation of product owned by him, the Applicant has previously grossly exaggerated such value.

14. Taking into account these matters, the sum of up to $200,000 is a sum that the Court considers appropriate in quantum to be accessed by the Applicant. 

I certify that the preceding fourteen (14) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Hartnett delivered on 19 June 2020.

Associate: 

Date:  19 June 2020