Woodhurst and Rubbens (No 2)

[2016] FamCA 786

FAMILY COURT OF AUSTRALIA

WOODHURST & RUBBENS (NO 2) [2016] FamCA 786

FAMILY LAW – STAY APPLICATION – Where the wife seeks a stay of orders requiring the interim distribution of an equal sum of money to each party from an account pending her appeal against such order – Where the wife’s appeal would not be rendered nugatory by dismissal of her stay application – Where at final trial the wife seeks to prove her entitlement to more money than that to be disbursed – Where the husband currently has exclusive legal interest in that money – Where the husband sought a Thirty Party Debt Notice enforcing payment out of the money – Where the Registrar could instead sign instructions on the wife’s behalf under s 106A of the Act – Ordered Wife’s stay application dismissed – Ordered Registrar empowered under s 106A for the purposes of implementing the order

Family Law Act 1975 (Cth), Part VIII
Family Law Rules 2004 (Cth), rr 20.31, 20.32 , 20.33

Australian Coal & Shale Employees’ Federation v The Commonwealth (1956) 94 CLR 621
Federal Commissioner of Taxation v Myer Emporium (No. 1) (1986) 160 CLR 220
Jennings Constructions Limited v Burgundy Royale Investments Pty Limited (No. 1) (1986) 161 CLR 681

Johnson v Johnson (2000) 201 CLR 488
Marriage of Bevan (1994) 19 Fam LR 35
Stanford v Stanford (2012) 247 CLR 108

APPLICANT: Ms Woodhurst

RESPONDENT: Mr Rubbens

FILE NUMBER: SYC 471 of 2016

DATE DELIVERED: 9 September 2016

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Austin J

HEARING DATE: 9 September 2016

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Knox SC

SOLICITOR FOR THE APPLICANT: Rebekah Dorter Family Law

COUNSEL FOR THE RESPONDENT: Mr Campton SC

SOLICITOR FOR THE RESPONDENT: Mills Oakley Lawyers

Orders

1. The Application in a Case filed by the wife on 7 September 2016 is dismissed.

1. The husband’s application for the issue of a Third Party Debt Notice is dismissed and the Third Party Debt Notice filed on 2 September 2016 is discharged.

1. The Application in a Case filed by the wife on 2 September 2016 is dismissed.

1. For the purposes of implementation of Order 2 made on 11 August 2016 (as amended on 29 August 2016) the Registrar of the Family Court of Australia (Sydney Registry) is empowered to execute all necessary documents on behalf of the wife pursuant to s 106A of the Family Law Act 1975 (Cth).

1. The wife shall pay the husband’s costs of and incidental to the interim hearing conducted today on a party/party basis in the sum agreed or assessed, payment of which is suspended until the final trial of the parties’ respective applications for property settlement pursuant to Part VIII under the Family Law Act 1975 (Cth).

NOTATION

(A)The parties do not require the publication of reasons for Order 5 hereof.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Woodhurst & Rubbens (No 2) 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 SYDNEY

FILE NUMBER: SYC 471 of 2016

Ms Woodhurst

Applicant

And

Mr Rubbens

Respondent

EX-TEMPORE

REASONS FOR JUDGMENT

Introduction

1. Proceedings between these parties pursuant to Part VIII of the Family Law Act 1975 (Cth) (“the Act”) were commenced in January 2016. Since then, the parties have engaged in a number of interlocutory skirmishes.

2. Of relevance to today’s dispute is the interlocutory hearing conducted before me on 11 August 2016, at the conclusion of which I made orders requiring the husband to pay to the wife the sum of $500 per week by way of spousal maintenance, and further, requiring the sum of $100,000 to be released to each of the parties from a fund of money presently held in an account pending the ultimate determination of the substantive proceedings. An ancillary order was made restraining the parties from withdrawing any more capital from that common fund.

3. The wife was dissatisfied with the interim orders made and, as a consequence, filed her Notice of Appeal against such orders within time on 7 September 2016. An Amended Notice of Appeal was filed today, 9 September 2016. 

4. There were a number of applications that occupied the Court today, variously filed by the wife and the husband. In essence, the wife seeks a stay of some of the orders made on 11 August 2016 and the husband seeks to enforce them.

Applications

1. The wife prosecuted her Application in a Case filed on 7 September 2016, in which she sought that Orders 2 and 4 made on 11 August 2016 be stayed. In addition, she sought variation of the spousal maintenance orders, requiring the husband to pay to her alternate amounts of money in excess of the amount ordered on 11 August 2016. 

2. On 2 September 2016, the husband filed a Third Party Debt Notice pursuant to Part 20.4 of the Family Law Rules 2004 (Cth) (“the Rules”). He expected the Court would issue the Third Party Debt Notice, enabling him to serve the Notice on the bank where the funds I have already mentioned remain on deposit, so as to enforce the payment out to him of the sum of $100,000 pursuant to Order 2(b) made on 11 August 2016.

3. The third pending application is an Application in a Case filed by the wife on 2 September 2016, in which she effectively sought the dismissal of the husband’s application for the issue of the Third Party Debt Notice.

Evidence

1. In support of her stay application, the wife relied upon her affidavit filed on 7 September 2016. 

2. In support of his application for the issue of the Third Party Debt Notice, the husband relied upon the affidavit of his solicitor filed on 2 September 2016. 

3. To prosecute her Application in a Case filed on 2 September 2016, to discharge the proposed Third Party Debt Notice, the wife relied upon the affidavit filed on 2 September 2016 by an employee of her solicitor.

Stay Application

1. The discretion to stay the operation of orders should only be exercised where special circumstances exist which justify departure from the ordinary rule that a successful litigant is entitled to the fruits of his litigation pending the determination of any appeal.  Such special circumstances justifying a stay will exist where it is necessary to prevent the appeal from being nugatory or for whatever other reason there is a real risk it will not be possible for a successful appellant to be restored substantially to his former position if the judgment against him is executed (see Federal Commissioner of Taxation v Myer Emporium Limited (No. 1) (1986) 160 CLR 220 at 222-223). The Court should also consider the prospects of the appeal and where the balance of convenience lies (see Jennings Constructions Limited v Burgundy Royale Pty Ltd (No. 1) (1986) 161 CLR 681 at 685). Those common law principles apply equally to judgments delivered in this jurisdiction.

2. This Court is entitled to assume that the decision which is the subject of the appeal is correct. Indeed, the Full Court must subsequently approach the appeal on the basis of a strong presumption that the decision is correct (see Australian Coal and Shale Employees’ Federation v The Commonwealth (1956) 94 CLR 621 at 627).

3. As I mentioned, the original grounds of appeal have already been amended. It is necessary to advert briefly to those amended grounds of appeal because the prospects of the appeal influence the determination of whether a stay ought be granted. In respect of those grounds I make the following observations. 

4. Ground 1 asserts that I pre-judged the wife’s application for spousal maintenance, but I accept the submission put by senior counsel for the husband that did not occur. At the interim hearing in August 2016, various possible outcomes were mooted between the bench and bar table during the course of the hearing, but no concluded views were expressed until the hearing was complete. Judges need not sit, silent and inscrutable, until the moment of pronouncement of judgment (see Johnson v Johnson (2000) 201 CLR 488 at 493, 504-505). That is particularly so in interlocutory hearings. Certainly, no suggestion was made by the wife at the hearing that the issue in dispute had been pre-judged by me and no application for my disqualification was made at any point during that hearing.

5. Ground 2 asserts that an error was made by me in determining the wife’s application for spousal maintenance by adopting “as a preliminary or starting point” that money held in the account would be distributed. It is true that, at the commencement of the interim hearing, the possibility of the equal distribution of those funds to the parties was discussed on the then erroneous assumption that the parties enjoyed equal legal entitlement to those funds. That misconception was, however, cured when both parties confirmed that the funds were the proceeds of sale of a real property owned by the husband, in which the wife had no legal or equitable interest. The husband’s legal ownership of the funds was not changed merely because the parties agreed the funds should be held in a jointly controlled bank account for the time being. The wife’s application in the substantive proceedings for entitlement to those funds (or any part of them) hinges upon her ability to demonstrate entitlement pursuant to s 79 of the Act. I find it difficult to accept as correct that, from that point on, the hearing was conducted on the premise that those moneys ought be distributed. My clear recollection of the case is that the hearing then proceeded to determine the capacity of the husband to pay spousal maintenance by reference to his regular income and any other source of funds available to him. The order for release of capital was merely supplementary.

6. Grounds 3 and 6 appear to assume that there was, at the time of the interim hearing in August 2016, an order for the recurrent payment of spousal maintenance, but there was no such order. A consent order was made by the Registrar on 23 May 2016 requiring the husband to make a single lump sum payment of $11,000 to the wife by 2 June 2016, by way of both spousal maintenance and child support. That order was apparently made pending determination of the live interlocutory dispute, which I then heard on 11 August 2016. At the time of the hearing, there was no order requiring the husband to pay periodic spousal maintenance to the wife. Those grounds of appeal seem misconceived.

7. Grounds 4, 5, 7, 8, 9, 10, 11, 12 and 13 all appear directed to a complaint about how the orders required the release of some capital to each of the parties in addition to the husband’s payment of periodic spousal maintenance to the wife. The various assertions of error contained within those grounds of appeal appear, on their face, to either overlook or disregard the common ground that existed between the parties at the interim hearing. In particular, it was uncontroversial that:

   (a)the wife could not support herself; 

   (b)the wife’s need for maintenance computed to about $2000 per week, or $100,000 per annum; 

   (c)the real issue for determination was the husband’s capacity to pay; 

   (d)the husband could only derive money from two sources, upon which his capacity to pay would be calculated – first, his income, which was an agreed amount of about $120,000 net per annum, and secondly, money he could syphon from the company in one form or other; 

   (e)the husband could only derive money from the company in two ways – by either increasing his debit loan account or by withdrawing dividends from the company’s coffers;

   (f)regardless of the manner in which the husband took money from the company, there was a limit to the amount he could withdraw (the parties agreed the gross annual profit of the company was about $400,000+, which would likely continue into the future, and allowing for taxation, the annual net profit would be about $300,000); and

   (g)above and beyond any payments by the husband to the wife pursuant to spousal maintenance orders, the husband undertook to continue his voluntary payments to the wife for the benefit of both her and the children (it being agreed such amounts totalled approximately $98,000 per annum). 

8. The mathematics were not in dispute, as far as I am aware, and yielded a conclusion that the husband had the capacity to pay periodic spousal maintenance of $500 per week, as explained in the reasons for judgment published by me on 11 August 2016. 

9. It was clear that spousal maintenance of $500 per week was not sufficient to meet the wife’s professed need of $2000 a week – hence the additional order for the release of equal amounts of capital to both parties. 

10. I acknowledge, as the wife has submitted, that the law does not require the depletion of meagre capital in order to avoid or minimise the quantum of spousal maintenance that might be paid by a husband to the wife (see Marriage of Bevan (1994) 19 Fam LR 35). However, that is not what happened here. The husband’s capacity to pay periodic spousal maintenance was exhausted by the order requiring him to pay $500 per week before the order was made for the release of capital to the parties.

11. There is seemingly a complaint now made by the wife about a finding being made in respect of the husband’s income earning capacity (Ground 10). The “finding” was consistent with submissions made by both parties at the interim hearing but, of course, that evidence was untested and, as a consequence, no issue estoppel arises. The wife is free to contest the asserted facts at final trial.

12. Ground 14 asserts an error of principle in relation to application of the principles falling from the High Court in Stanford v Stanford (2012) 247 CLR 108. Learned senior counsel for the wife did not address that ground of appeal separately in submissions, but I am presently unable to understand the import of that ground of appeal, given the orders under appeal were made on an interim basis on largely uncontroversial facts and the issue at hand was the parties’ subsistence until final trial. The applications I determined at the interim hearing were the wife’s application for the payment of periodic spousal maintenance and the husband’s application for the release to him of a much greater sum from the controlled moneys account. To the extent that capital was released to the parties pursuant to Order 2, it was released “by way of interim property settlement and/or spousal maintenance” because the wife’s undisputed need amounted to $2000 per week and the husband’s capacity to pay was only $500 per week. Axiomatically, unless the wife could moderate her expenditure, she required further money from some source to sustain herself and the only other source readily available was the capital in that account. She is not obliged to spend it. She can preserve it if she wishes.

13. As will be apparent from these reasons, I am not satisfied that the grounds of appeal as set out in the Amended Notice of Appeal manifest much merit, though I accept their bona fides. 

14. The wife understands that her appeal is against interlocutory orders and, as a consequence, she will need to secure from the Full Court the grant of leave to prosecute the appeal. In the knowledge of that fact, Ground 15 of the Amended Notice of Appeal is headed “Substantial Injustice”, which I impute is directed to the assertion that leave to appeal ought be granted on the basis she will suffer substantial injustice if she is denied such leave and the interim orders stand.

15. There is some degree of uncertainty in the law, as it presently stands, about precisely what is required to demonstrate entitlement to leave to appeal against interlocutory orders, but to the extent the wife asserts “substantial injustice” I have difficulty understanding how that contention is made good.  Albeit perhaps simplistic, the order for her payment of some capital will enable her to immediately receive money to which she asserts her ultimate entitlement. Although the orders also provide for payment out of $100,000 to the husband, one cannot lose sight of the fact that the funds are those in which he presently has exclusive legal interest. 

16. The applicant seeks a stay of only Orders 2 and 4 made on 11 August 2016, but there is some uncertainty about the decrees against which the wife appeals.  The Notice of Appeal she filed on 7 September 2016 indicated her intention to appeal against only Orders 1 and 2, but the Amended Notice of Appeal she filed today indicates her intention to appeal against Orders 1, 2 and 4.  The time for appeal expired yesterday and so the amended appeal filed today, insofar as it is now freshly directed to Order 4, will require leave from the Full Court to prosecute out of time.

17. Order 4 was an omnibus order that dismissed all extant applications that did not merge in Orders 1, 2 and 3. The reason for the appeal against Order 4 is not readily apparent to me and I see no reason for why Order 4 should be stayed.  Certainly, no explanation for why was advanced.

18. Order 2 pertains to the distribution of $100,000 to each of the parties from the common fund of $694,000. With no disrespect intended, it does seem to me a novel idea for the wife to object to her immediate receipt of $100,000 on the basis that she expects to eventually prove her entitlement to that amount and more at final trial. 

19. As for the $100,000 payable to the husband under Order 2(b), it should not escape attention that the money is his. He can use it as he sees fit unless restrained. Order 3 already restrains his use of any more money than the $100,000 stipulated. The wife’s hope or expectation that she will eventually establish entitlement under s 79 of the Act to 100 per cent of the parties’ assets (or something like that) is too fragile a basis upon which to expect the Court to presently restrain the husband’s use of any of his own money. It was not suggested by the wife that the husband will waste the money; merely that he will use it. Mere use of money in the ordinary conduct of his life is quite unexceptional. On the positions adopted by the parties at the interim hearing, the $100,000 payable to the husband amounts to about only six per cent of the combined value of the husband’s shareholding in the company and the funds held in the common account (which are the two largest assets amenable to orders under Part VIII of the Act). The husband sought the release of more funds from the account, but no injunction was sought by the wife at all. The Court imposed the injunction to restrain withdrawal of any more funds than the $100,000 payable to each. I do not accept the proposition that the wife’s appeal would be rendered nugatory by allowing the husband to use only six per cent of the capital which will be available for distribution between the parties under Part VIII of the Act at final trial.

20. For those reasons, the first proposed order of the wife’s application will be dismissed. The second proposed order of her application will also be dismissed, since there is no warrant to consider the issue of spousal maintenance afresh.  Either the orders made on 11 August 2016 are stayed (either unconditionally or on terms) or they are not. Increasing the amount of spousal maintenance payable by the husband to the wife, as she proposed, could hardly amount to a conditional stay of the existing order. It would be a new order altogether. This was not an opportunity for the wife to re-run the interim hearing.  

Third Party Debt Notice

1. The provisions of Order 2 made on 11 August 2016 require the parties to forthwith do all acts and things necessary to result in their respective payment of $100,000 from the money held for them in an account. 

1. It appears there was an underlying factual error made during the interim hearing. Those funds are not, in fact, held on trust by the wife’s solicitors.  Rather, the funds are held by the parties in a controlled moneys account at the ANZ Bank and their joint signatures are required for the release of any of those funds. 

2. Rule 20.31 of the Rules provides that money deposited in an account with a financial institution, payable either on call or on notice, is a debt due by the financial institution to the payer. I understand that rule to be merely reflective of the common law. Given that the sum of approximately $694,000 resides in the account held jointly by the parties, the bank owes the money to the parties on their call.

3. In apparent reliance upon rule 20.32(1) of the Rules, the husband filed a Third Party Debt Notice with the Court for the purposes of his application enabling the Notice to be issued and served upon the ANZ Bank to enforce the payment out to him of the $100,000 due pursuant to Order 2(b). The Rules do not explicitly say so, but the application is inferentially granted by the Court sealing the Third Party Debt Notice and returning sealed copies to the applicant for service upon the third party pursuant to rule 20.33 of the Rules.

4. Applications under Part 20 of the Rules to enforce Court orders invoke the coercive powers of the Court. In a proper case, the Court should not baulk at implementing its full armoury of power to ensure compliance with its orders, but if there is a more benign way to achieve the same outcome it should be the remedy of first choice. The payment of $100,000 to the husband pursuant to Order 2(b) can just as readily be achieved by authorising the Registrar, under s 106A of the Act, to sign instructions and/or authorities on behalf of the wife. The husband can then use such signed instructions and/or authorities, in conjunction with those executed by him, to obtain release of the funds from the ANZ Bank pursuant to Order 2.

5. I will therefore dismiss the application for the Third Party Debt Notice and discharge the Third Party Debt Notice filed on 2 September 2016.  Consequentially, the Application in a Case filed by the wife on 2 September 2016 to achieve that outcome will succeed. 

6. For those reasons I make the following orders. 

I certify that the preceding thirty-seven (37) paragraphs are a true copy of the ex-tempore reasons for judgment of the Honourable Justice Austin delivered on 9 September 2016.

Associate

Date:  16 September 2016