Worth and Worth (No 2)

[2017] FamCA 360

FAMILY COURT OF AUSTRALIA

WORTH & WORTH (NO 2) [2017] FamCA 360

FAMILY LAW – PROPERTY – Stay – Where the husband has applied for a stay of certain orders pending appeal – Where the husband’s appeal would be rendered nugatory if the stay was refused – Conditional stay granted.

Family Law Act 1975 (Cth)

Aldridge & Keaton (Stay Appeal) [2009] FamCAFC 106

APPLICANT: Mr Worth

RESPONDENT: Ms Worth

INDEPENDENT CHILDREN’S LAWYER:	Janelle Osborne
FILE NUMBER:	BRC	1771	of		2014

DATE DELIVERED: 26 May 2017

PLACE DELIVERED: Brisbane

PLACE HEARD: Brisbane

JUDGMENT OF: Forrest J

HEARING DATE: 24 May 2017

REPRESENTATION

THE APPLICANT: In Person (by telephone)

SOLICITOR FOR THE RESPONDENT:

Mr Rosen

Rosen Lawyers

SOLICITOR FOR THE INDEPENDENT CHILDREN’S LAWYER:

Ms Osborne

Legal Aid Queensland

Orders

1. That Orders 48, 49 and 50 of the Orders made by Justice Forrest on 17 April 2017 in this matter be stayed pending determination of the husband’s Appeal No. NA 16 of 2017 against those Orders, conditional upon:

   (i)$70,000 of the money held in MM Lawyers Trust account on behalf of the husband and the wife being paid to the husband at his direction notwithstanding the stay order just made; and

   (ii)the balance of the funds held in that account being transferred to an interest bearing investment account in the name of the wife’s solicitor, Mr Warren Rosen, to be held by him on trust for the husband and the wife pending determination of the husband’s said appeal. 

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 Worth & Worth 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 BRISBANE

FILE NUMBER: BRC 1771 of 2014

Mr Worth

Applicant

And

Ms Worth

Respondent

REASONS FOR JUDGMENT

1. On 13 April 2017, I pronounced parenting and property adjustment Orders and delivered reasons for judgment consequent to a seven day trial that I had presided over in the month before.

2. On 3 May 2017, the husband filed a Notice of Appeal against some of the Orders made by me on 13 April 2017.

3. On 9 May 2017, the husband filed an Application in a Case in which he seeks a number of Orders, including, in particular, a stay of Orders 48, 49 and 50 pending the hearing of his appeal.

4. In his Application in a Case, he also seeks Orders pursuant to “the slip rule”. Those include that he receive the sum of $137,400 from funds held in trust for the parties that were dealt with in my Orders under appeal, that the balance of the funds held in trust that were dealt with in those Orders be transferred to an interest bearing account described by him as an “all to operate account” and for the time provided for him to communicate with his children in my parenting Orders to be changed.

5. With respect to the husband, as I told him at the hearing of his Application in a Case, the ‘slip rule’ does not apply in the circumstances. He clearly misunderstood its application in seeking to rely upon it. None of the Orders he seeks can be made under the ‘slip rule’.

6. In any event, it quickly became clear at the hearing of the husband’s Application in a Case that the wife and the Independent Children’s Lawyer consented to the variation proposed to be made to the communication times in the parenting Orders and I immediately pronounced an Order, with their consent, that varied that particular Order.

7. I heard the husband’s application for the stay and the other orders he seeks, which I treated as applications in respect to the particular terms upon which a stay should be granted. As at the trial, the husband appeared without legal representation. As he had returned to the United Kingdom soon after the trial, I heard his submissions by telephone connection with him speaking to the Court from the UK. The wife was represented by her solicitor, Mr Warren Rosen, and the ICL appeared.

8. After I pronounced the variation to the parenting Orders, I excused the ICL from the proceedings as there was nothing else to be decided, upon which she needed to be heard.

The Orders appealed against that the Husband seeks to be stayed

1. Relevantly, Orders 48, 49 and 50 of the Orders of 13 April 2017 are as follows:

   48.By way of property adjustment and further adjustment in compliance with the previous Order, the mother and the father shall take all steps necessary to jointly authorise the solicitors currently holding the net proceeds of sale of their former jointly owned real property on trust for them to pay to the mother or at her direction the sum of $194,009.31 plus 65 per cent of any interest earned on the principal sum invested since it was invested and to pay the balance of the principal sum invested and any interest earned to the father or at his direction.

   49.Pursuant to s 90MT(1)(a) of the Act, whenever a splittable payment becomes payable in respect of the father’s ([Mr Worth]) interest in the Sunsuper Superannuation Fund, the mother ([Ms Worth]) shall be entitled to be paid an amount calculated in accordance with Part 6 of the Family Law (Superannuation) Regulations 2001, using a base amount in the sum of $36,586.06 (thirty six thousand five hundred and eighty six dollars and six cents) and that there be a corresponding reduction to the entitlement the father would have had in the Sunsuper Superannuation Fund but for this Order.

   50.Paragraph 49 binds the Trustee of the Sunsuper Superannuation Fund and that Order takes effect from the operative time being the fourth business day after the date of service of a sealed copy of these Orders upon the Trustee of the Fund.

2. It was common ground that the balance of the money held on trust for the parties, after payment to the wife of the sum of $194,009.31 pursuant to Order 48 would be $137,400. Under Order 48, that is payable to the husband. It is common ground also that the husband has refused to authorise the solicitors who hold the total of those funds on trust for the husband and the wife to pay any of those funds to either the husband or the wife in accordance with Order 48.

3. By his Notice of Appeal, in the event of the success of his appeal against my property adjustment Orders, the husband seeks to have Orders 48 and 49 of my Orders varied so that the wife is paid nothing from the money currently held in trust and so that she receives nothing by way of a super-splitting Order.

4. The husband formally sought the ‘stay’ pursuant to Rule 13.14(b) of the Family Law Rules 2004. With respect to the husband, he was again misguided in his reliance on that Rule as a proper source of power for the Court to stay its Orders in the circumstances of this case. I explained that to him and read to him the well-established principles by which applications for the discretionary determination of stays of orders pending the determination of an appeal against those orders are to be determined. I then called upon him to make his submissions to me having regard to those principles.

Those Principles

1. The Full Court of this Court, in Aldridge & Keaton (Stay Appeal) [2009] FamCAFC 106 set out the general principles to be applied in the discretionary determination of an application for a stay pending appeal. This is set out at paragraph 18 of the decision where their Honours Bryant CJ, Boland and Crisford JJ stated:

   The principles to be applied in determining an application for a stay of orders both in the general law and in respect of parenting proceedings are also well known (see The Commissioner of Taxation of the Commonwealth of Australia v Myer Emporium Limited [No.1] (1986) 160 CLR 220 at 222; Alexander v Cambridge Credit Corporation (1985) 2 NSW LR 685; Jennings Construction Limited v Burgundy Royale Investments Pty Limited (1986) 161 CLR 681; Clemett & Clemett (1981) FLC 91-013; JRN & KEN v IEG & BLG (1998) 72 ALJR 1329 at 1332). The authorities stress the discretionary nature of the application which should be determined on its merits. Principles relevant to this matter include the following:

   ·the onus to establish a proper basis for the stay is on the applicant for the stay.  However it is not necessary for the applicant to demonstrate any “special” or “exceptional” circumstances;

   ·a person who has obtained a judgment is entitled to the benefit of that judgment;

   ·a person who has obtained a judgment is entitled to presume the judgment is correct;

   ·the mere filing of an appeal is insufficient to grant a stay;

   ·the bona fides of the applicant;

   ·a stay may be granted on terms that are fair to all parties - this may involve a court weighing the balance of convenience and the competing rights of the parties;

   ·a weighing of the risk that an appeal may be rendered nugatory if a stay is  not granted – this will be a substantial factor in determining whether it will be appropriate to grant a stay;

   ·some preliminary assessment of the strength of the proposed appeal – whether the appellant has an arguable case;

   ·the desirability of limiting the frequency of any change in a child’s living arrangements;

   ·the period of time in which the appeal can be heard and whether existing satisfactory arrangements may support the granting of the stay for a short period of time; and

   ·the best interests of the child the subject of the proceedings are a significant consideration.

2. I listened to the husband’s submissions, having already read the affidavits upon which he relied. I discussed the issues as I saw them with him. As at the trial, the husband confidently and articulately pressed his points home. Nevertheless, he is not a lawyer, as I reminded him during his submissions on points of law that he clearly had wrong.

3. Although I am concerned that the husband has become obsessed with the role the wife’s solicitor, Mr Rosen, has played in his legal disputes with the wife since they began, and that he probably does harbour some mala fides towards Mr Rosen despite his fervent denials of same, I am quite satisfied that he genuinely considers that I erred in making the Orders that I did and that he is bona fide in bringing the appeal.

4. I am quite conscious of the fact that much of the $194,000 payable to the wife pursuant to my property adjustment Orders would need to be paid by her to Mr Rosen for his legal fees and outlays, including the fees he owes Mr George of counsel for representing the wife at the seven day trial. As I observed in my reasons for judgment, the disclosure of Mr Rosen’s costs notice at the trial revealed that he expected to be rendering a bill to the wife after the trial for around $100,000 for the costs and outlays incurred in running the seven day trial for her. Therefore, it is quite reasonable to assume that the wife is expecting to pay those fees from the $194,000 she is to receive pursuant to my Orders. Email communications between her and the husband adduced into evidence on this application by her support such a finding and Mr Rosen did not make any submission to the contrary.

5. Things that the husband said during the exchange between him and the Court, things he said in those email communications adduced by the wife, and things he said in his affidavit made it patently clear that he does not relish the prospect of Mr Rosen receiving any of the money, though, as I told him during the hearing, that is a matter properly between his former wife and Mr Rosen.

6. That said, I am nevertheless satisfied that his appeal is principally motivated by a committed belief that I made errors of law and errors of fact that he believes will be corrected by the Full Court and that the Full Court will determine that the wife is entitled to none of the money or superannuation that I ordered she receive.

7. I pointed out to the husband and Mr Rosen that a refusal to grant the stay that the husband seeks would, without doubt, render his appeal nugatory as the money that would be paid to the wife would probably all be spent by the time the appeal is heard and the wife would be unlikely then to be in a position of being able to repay it to the husband if the Full Court upheld his appeal and varied my Orders in the way that he seeks. Quite reasonably, Mr Rosen conceded this point. This is, according to principle, one of the most substantial matters for consideration in the exercise of the discretion to grant the stay or not.

8. The wife opposed the stay being granted and her solicitor, Mr Rosen, concentrated his submissions around the assessment of the strength of the proposed appeal and the nature of terms upon which a stay, if granted, might be considered as fair to all parties.

9. He submitted that the husband’s prospects of success on appeal were not strong and that even if he was successful, it would be most unlikely that the wife would not be entitled to be paid at least $100,000 from the money still held in trust for the parties. Mr Rosen submitted that it would be fair for each of them to receive $100,000 in the circumstances and for the balance of around $131,000 to be retained in trust pending the determination of the appeal. Unsurprisingly, that amount that Mr Rosen submits it would be fair for the wife to receive now approximates the amount that the wife currently owes Mr Rosen. With respect, no further submissions as to how I might determine that it is likely the Full Court would leave the wife with at least that much money even if the husband is successful on his appeal were made.

10. If solicitors enter into contracts with their clients for payment of their legal costs and outlays to be deferred until the conclusion of property adjustment proceedings, it goes without saying that such contracts carry the risk of payment being delayed by appeals against first instance judgments and, in some cases, the risk of not being paid at all if Orders after trial or appeal provide for a client not to receive any money at all.

11. I have made some enquiries as to the likely hearing date of the husband’s appeal. I am informed that it might be heard in the sittings to be held in Brisbane in November, but if not, then in February, 2018. I do not consider that an unacceptable length of time to hold the wife out of her money, particularly if it is invested and earning interest in the meantime.

12. Of course, the wife in this matter already has the benefit of my Orders and my judgment at first instance and she is entitled to presume the judgment is correct. However, it would be inappropriate of me, even if I do not consider that the husband has great prospects of success on appeal, to arbitrarily determine that the wife can have sufficient funds to pay the legal costs she has already incurred but preserve the balance pending the appeal where even that payment to her would render the husband’s appeal nugatory or substantially nugatory. That is, of course, unless I am satisfied that the husband has absolutely no prospects of success on appeal at all.

13. I am not satisfied of that in this case. I do have to say, having read the husband’s Notice of Appeal and the affidavit he filed in support of this stay application, and having heard his oral submissions in support of his application, that I am reasonably satisfied that some of his grounds of appeal have no prospects of success and are doomed to fail. Nevertheless, he was able to articulate some arguments about the merits or otherwise of the way in which I have notionally added back amounts to the pool of property and superannuation interests, the way I have treated the insurance policy that he and his wife took over from the wife’s father in my assessment of  contributions and the incorrectness of some of my findings of fact which I was satisfied at least amount to arguable propositions that might, notwithstanding my determinations, find favour with the Full Court.

14. Given that refusal of the stay he seeks, or even conditional granting of it in respect of how much the wife receives now, would render his appeal nugatory or significantly nugatory, the fact that I accept that some of his grounds of appeal are “arguable”, causes me to consider, with respect to the wife and her solicitor, that staying the payment to the wife pending determination of the appeal is appropriate.

15. That said, I consider though that there are some terms upon which the stay should be granted to ensure fairness to all parties. Firstly, I consider that the funds that are going to be preserved by the stay pending the determination of the husband’s appeal should be invested in an interest bearing account and held on trust for the husband and the wife during that time. That the money was not earning interest for the parties was something I expressed dismay about during the trial.

16. Although the husband objected to an order being made that the balance funds to be preserved by any stay granted be held on trust for the parties by the wife’s solicitor, Mr Rosen, he did not articulate any reason why that would not be appropriate, or at least none that persuaded me. I will make an order that the stay I will grant will be conditioned upon Mr Rosen holding the balance funds in an interest bearing account on trust for the husband and the wife. The husband’s proposal that the money be invested in a joint ING account “all to operate” did not appeal to me. I consider that the professional obligations carried by Mr Rosen, including his duty to this Court, make it more appropriate to have him hold the money as trustee for the parties pending the determination of the husband’s appeal.

17. The husband submitted that he should be entitled to receive all of the $137,400 that Order 48 of my Orders entitles him to whilst the wife should receive none of the $194,000 that the same Order entitles her to receive. He asserted, without having adduced any evidence in his affidavits upon which he relied, that he needs all of the $137,400 in order to relocate back to Australia as soon as possible to begin spending time with the children pursuant to the parenting Orders he made (which he has also appealed against).

18. After he had returned to the UK, approximately fifteen months before the trial, the father had brought an interim application for the payment to him of $70,000 from the money then held in trust in order to be able to relocate back to Australia. At the end of the trial, the husband asserted he needed all of the money held in trust in order to be able to relocate back to Australia to begin spending time with the children.

19. There was discussion at the end of the trial, when final submissions were being made, about an interim distribution of funds to the husband so that he could relocate back to Australia, pending delivery of the final judgment. Counsel for the wife proposed that an interim distribution of $70,000 be made to each of the husband and the wife to be treated by me as a partial property entitlement already received by each of them in my final judgment. Counsel for the wife made it clear that it was being proposed by the wife on the basis that she also received as much as the husband in that way.

20. Having previously, some months before, asked for $70,000 to be able to relocate back to Australia, the husband opposed the wife’s proposal at this time, saying he needed more than $70,000 to relocate back to Australia and asserting that the wife should not receive any money. Having now read the transcript of the exchange on the final day of trial, I accept that anything I said to the contrary at the hearing of the stay application was incorrect and I withdraw it. I thought the husband had again said that he only required $70,000 to be able to relocate back here. He did not. In any event, I made no interim distribution at the end of the trial but handed down my final judgment as quickly as I could, conscious of the husband’s expressed intention of quickly returning to Australia if he received sufficient funds to be able to do so.

1. Although the wife has not cross-appealed, I am acutely conscious of the prospect that the husband’s appeal may not succeed. Indeed, whilst I have accepted that he has demonstrated that he has some arguable grounds, I do not consider that his prospects of success are great. It is the fact that his appeal against my property Orders would be rendered nugatory or significantly nugatory if I do not stay the Order for payment of the $194,000 to the wife that has principally caused me to grant the stay. Of course, if his appeal is unsuccessful he will most likely be ordered to pay the wife’s costs of the appeal. I reminded the husband of that and he acknowledged, albeit reluctantly, that prospect. When I suggested that the wife’s costs of the appeal might be around $30,000, a suggestion that was confirmed by Mr Rosen, the husband was particularly troubled.

2. When I raised with him my concern that if I let him have all of the funds ordered to be paid to him and he spends it that he would not have any means of paying a costs order made against him, he asserted that he would be getting a job on his return to Australia and would pay any such costs order from his income.

3. On this point, Mr Rosen informed the Court that he expected to be instructed to apply to the Full Court in the future for an order for security for the wife’s costs of the appeal to be paid by the husband. Such an application would, in itself, cost her more money. In the circumstances, particularly having regard to the fact that the husband did at one stage apply to the Court for $70,000 to be paid to him to allow him to relocate back to Australia and I am reasonably satisfied, in the absence of other evidence from him, that would be enough to facilitate his relocation, as well as my concern for the likelihood that unless funds are preserved, the husband will not have the means of meeting a costs order made against him on an unsuccessful appeal, I will make the stay order also conditional upon only $70,000 of the money currently in trust being paid to the husband, with the balance to be preserved, along with the money that would be the wife’s pursuant to my April Orders, pending determination of the husband’s appeal.

4. At the end of the hearing, I called for submissions in respect of the issue of costs of the application in the event that I dismissed it. As I have determined not to dismiss it, but rather to grant a stay on terms, and the husband was not legally represented, I do not consider it necessary to consider the question of the costs of the application any further.

5. I will make the Orders set out at the commencement of these written reasons.

I certify that the preceding thirty-seven (37) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Forrest delivered on 26 May 2017.

Associate: 

Date:  26 May 2017