Zhai & Niu
[2015] FamCA 639
•28 July 2015
FAMILY COURT OF AUSTRALIA
| ZHAI & NIU | [2015] FamCA 639 |
| FAMILY LAW – PRACTICE & PROCEDURE – Stay Application – Where the husband filed a Notice of Appeal in relation to certain interim orders that were previously made – Where one of those orders restrained the husband from disposing, encumbering or further encumbering any asset of numerous corporations and trusts, other than in the ordinary course of business – Order made conditionally staying that order, to the extent that it precluded the husband from causing or permitting use of the assets of the corporations and trusts in a way that would enable his compliance with a spousal maintenance order – All other applications dismissed – Both parties to bear their own costs of the interim hearing |
| Family Law Act 1975 (Cth), ss 94AA, 117 Family Law Regulations 1984 (Cth), reg 15A Family Law Rules 2004 (Cth), rr 19.04 |
| Adam P Brown Male Fashions Proprietary Limited v Philip Morris Inc (1981) 148 CLR 170 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 Marriage of Rutherford (1991) FLC 92-255 Strahan & Strahan (interim property orders) (2009) 42 Fam LR 203 |
| APPLICANT: | Mr Zhai |
| RESPONDENT: | Ms Niu |
| FILE NUMBER: | SYC | 8031 | of | 2014 |
| DATE DELIVERED: | 28 July 2015 |
| PLACE DELIVERED: | Newcastle |
| PLACE HEARD: | Newcastle |
| JUDGMENT OF: | Austin J |
| HEARING DATE: | 28 July 2015 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Mr Campton SC |
| SOLICITOR FOR THE APPLICANT: | Kells The Lawyers |
| COUNSEL FOR THE RESPONDENT: | Mr Richardson SC |
| SOLICITOR FOR THE RESPONDENT: | Barkus Doolan |
Orders
Order 14(b)(vi) made on 16 July 2015 is stayed to the extent only that it precludes the Husband from causing or permitting the use of assets of the corporations and trusts referred to in Order 14(a) in a way that would enable his compliance with Order 12.
The parties shall pay his or her own costs of, and incidental to, the interim hearing conducted today.
Otherwise:
a.The Application in a Case filed on 22 July 2015 is dismissed;
b.The Response to the Application in a Case filed on 27 July 2015 is dismissed; and
c.Any and all outstanding interim applications are dismissed.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Zhai & Nui 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 NEWCASTLE |
FILE NUMBER: SYC 8031 of 2014
| Mr Zhai |
Applicant
And
| Ms Niu |
Respondent
EX TEMPORE
REASONS FOR JUDGMENT
On 16 July 2015, I determined an interim dispute between the parties in respect of orders sought under both Parts VII and VIII of the Family Law Act 1975 (Cth) (“the Act”).
On 22 July 2015, the husband filed a Notice of Appeal in respect of the orders made pursuant to Part VIII of the Act; specifically Orders 11 to 14 inclusive.
The application now requiring determination is the husband’s application for stay of those interim orders, pending the hearing of his appeal and his anterior application for leave to appeal.
The husband moved on his Application in a Case filed on 22 July 2015, in support of which he read his affidavit filed on 22 July 2015.
The wife opposed the proposed stay of orders. She moved on her Response to an Application in a Case filed on 27 July 2015, in support of which she read her affidavit filed on 27 July 2015.
Legal principles
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 or her 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 rendered 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 or her former position if the judgment against him or her is executed (see Federal Commissioner of Taxation v Myer Emporium (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 Investments Pty Limited (No. 1) (1986) 161 CLR 681 at 685). Those common law principles apply equally to judgments delivered in this jurisdiction.
The 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 at first instance is correct (see Australian Coal & Shale Employees’ Federation v The Commonwealth (1956) 94 CLR 621 at 627).
Of course, the orders under appeal in these proceedings are interim in nature. In such circumstances, the husband must obtain leave in order to prosecute the appeal (see s 94AA of the Act; reg 15A of the Family Law Regulations 1984 (Cth)). A party seeking leave to appeal against an interim order must demonstrate that there has been an error of principle and/or a substantial injustice in order to secure a grant of leave (see Adam P Brown Male Fashions Proprietary Limited v Philip Morris Inc (1981) 148 CLR 170 at 177; Marriage of Rutherford (1991) FLC 92-255 at 78,715).
Inquiries made by me reveal that the husband’s appeal and his application for leave to appeal will not likely be heard for some 18 months hence, absent the husband persuading the Full Court to afford his case expedition. Although the husband foreshadowed his intended application to seek expedition of the appeal, seeking it and getting it are two quite different things. The parties face a wait of many months irrespective. A stay of the orders would leave the wife destitute and probably unrepresented. Refusal to stay the orders may make the husband displeased and frustrated, but it is unlikely to force him into penury. Whatever the outcome, the husband is unlikely to be disadvantaged procedurally. If the husband is self-represented through an inability to pay for legal representation as the case proceeds, it is overwhelmingly probable that so will the wife.
Order 11: interim property settlement
The principal ground of appeal raised by the husband in respect of this Order was his asserted denial of natural justice. The husband asserted he was prevented from being able to argue against the merit of such an order at first instance, in its guise as an interim property settlement order, because the order was not posited on that basis by the wife.
As I set out in my reasons for the orders, the nature of the order proposed by the wife in respect of the motor vehicle was unclear. The way in which she posited the order required her to have exclusive use of the motor vehicle, but for the husband to continue paying all outgoings related to the car. It was discussed during submissions at first instance as to whether an order of that sort could be framed as an order for spousal maintenance, an injunctive order, or an order by way of interim property settlement. Ultimately, I concluded the most efficacious way of dealing with the application was to make an order in the form of an interim property settlement order.
Given the parties’ senior counsel were both given the opportunity to address me on that specific issue, I do not now accept that the husband was denied natural justice or procedural fairness.
True it is that Order 11(b) was certainly not debated during submissions, but that Order was framed in such a way as to be a salve for the husband only. The husband deposed at first instance that the subject motor vehicle was worth in excess of $60,000. Order 11(b) permitted him, at his unilateral election, to pay to the wife only $30,000 and for him to retain ownership and possession of the car, which money the wife would have been obliged to expend on the purchase of a motor vehicle. There was no procedural unfairness to the husband caused by Order 11(b) when it could only possibly have worked to his advantage.
The husband complained on this application that he would not be able to claw the car back from the wife if his appeal against the order was successful and/or the wife’s claim for property settlement was ultimately unsuccessful. He contended that his appeal against Order 11 would therefore be rendered nugatory unless the operation of Order 11 was stayed.
That complaint, in my view, was adequately answered by the evidence adduced by the wife on this application. She deposed in her affidavit thus:
In the event that the husband transfers the [German] motor vehicle to me, I undertake not to dispose of or encumber the [German] motor vehicle until such time as either this honourable Court makes a determination of my pending property proceedings or unless otherwise agreed between the husband and me.
The husband also complained of my error in failing to correctly apply the principles applicable to interim property settlement orders espoused by the Full Court in Strahan & Strahan (Interim property orders) (2009) 42 Fam LR 203.
I do not accept that the husband’s appeal is on strong grounds on that point, since there was express advertence to the Strahan principles, insofar as they related to Order 11 and the subject motor vehicle, at paragraphs 63 and 64 of my reasons at first instance.
These were interim proceedings covering many issues in relation to which an abundance of evidence was read and tendered. It is not possible for the Court, in ex tempore reasons, to embark upon a treatise of legal principles in relation to each and every issue in each and every interim hearing. The issue would probably have been given more comprehensive treatment in a reserved judgment, but the brevity of discussion of such principles in ex tempore reasons is hardly unusual.
I am not persuaded Order 11 manifests error of principle or renders substantial injustice to the husband and so I decline to stay that order. It seems to me that the husband could easily comply with Order 11 on an interim basis.
Order 12: spousal maintenance
The order for spousal maintenance was made on the basis of the husband’s capacity to pay, inferred from three sources: first, the ongoing substantial financial support from his parents; second, the husband’s unexploited earning capacity; and third, the financial resources available to the husband through his substantial interests in numerous corporations and trusts.
The husband’s submissions on this present application were directed to the prejudice caused to him by the spousal maintenance order, principally for two reasons: first, the financial support from his parents has now allegedly ceased; and second, the injunctions within Order 14 preclude him from using his corporate and trust interests to raise money to meet the spousal maintenance order. I shall deal with each of those arguments sequentially.
In his affidavit, the husband deposed relevantly as follows:
[10] After being served with a copy of the orders … at about midday on Wednesday, 15 July 2015, my father … said to me “If the order the wife is seeking for costs is made, I will not be paying any more legal fees in your matter for the court proceedings. I am not going to let her use my money to get bullets to fire at you”.
[11] Since receiving a copy of the orders made on 16 July 2015, my father has again said to me “I will not be paying you any more money. I am not going to be giving her anything to use to shoot at us”.
The husband asserted in these proceedings that evidence meant the financial support he has previously enjoyed from his parents has now ceased entirely. I do not accept that interpretation of the evidence, even though he did depose:
[9] …My parents have ceased depositing any moneys into my bank account.
It is much more likely the husband’s parents simply refuse to pay the husband’s legal costs if, pursuant to Order 13, one-half of that amount becomes payable to the wife’s solicitors to enable the wife to contest this litigation with the husband. That seems to me to be the more likely inference from the comments recently made by the husband’s father to the husband.
Even if the husband’s parents have temporarily ceased financial support of the husband, it is highly unlikely to be a permanent cessation. There is a long-standing history of the husband’s financial support by his parents over many years. The current cessation of their financial support of the husband correlates with, and seems to be an impulsive reaction to, the interim orders made on 16 July 2015. It is highly unlikely the husband’s parents will henceforth provide no financial support at all to the husband and the parties’ three children, of whom the husband is the primary carer.
As to the intersection between Orders 12 and 14, it is true that Order 14(b)(vi) has the unintended effect of preventing the husband from resorting to his financial interests in the corporations and trusts to meet his obligation under the spousal maintenance order. The best way to address that is by conditional stay of the inconsistent part of the injunctive order, not by unconditional stay of the spousal maintenance order.
Of course, any money paid by the husband to the wife by way of spousal maintenance pursuant to Order 12, if that order is not stayed, will be lost. But that is the very nature of spousal maintenance. The money is needed by the wife to support herself. That reality is not a persuasive reason for stay of the order. I am not persuaded Order 12 manifests error of principle or renders substantial injustice to the husband and so I decline to stay that order.
Order 13: litigation funding
The husband sought to re-agitate his argument at first instance about how there was no power to make such an order as Order 13 to be found within s 117(2) of the Act. If I understood his argument correctly, he maintained that such a litigation funding order, unconfined as to either time and/or amount, deprived it of validity.
Of course, re-running the failed argument on the interim hearing does not advance the husband’s stay application in any meaningful way. Order 13 sought to replicate the wife’s proposed order, which she in turn purloined from orders made in earlier first instance decisions by other trial judges. I referred to one such decision at paragraph 92 of my reasons.
The Full Court will have to adjudicate the husband’s argument on appeal about the lack of power to make such an order. I do not intend to reverse my decision, nor do I intend to stay the order, on the basis that I am now persuaded my original decision was wrong, which I am not.
The relevant question for present purposes is how the husband is prejudiced by compliance with Order 13?
The husband contented the order was ambiguous, but I do not accept that to be so. On its face, the Order catches all future payments by the husband to his lawyers in respect of costs and disbursements, whether or not those costs and disbursements were incurred in the past or are yet to be incurred in the future in these proceedings. The order expressly exempts the payments of disbursements in the form of single expert fees, for which the husband is liable under pre-existing procedural orders.
It may be the husband’s parents are no longer prepared to pay any of the husband’s legal costs because they do not want half of those payments given to the wife so she can “fire bullets” back at them. That would mean either the husband’s solicitors will maintain their representation of him in these proceedings, in expectation of future payment at the conclusion of the proceedings, or they will cease his representation and the husband will be self-represented. Either way, the wife will likely be in the same boat. The wife will either have lawyers funded to the same extent as the husband’s lawyers or she too will probably be self-represented, unless she can cajole her lawyers to represent her in the hope or expectation of future payment.
If, unexpectedly, the wife is able to fund her own lawyers in the future while the husband is self-represented, he would probably be motivated to seek a discharge of Order 13 in such circumstances. Whether the wife’s lawyers are paid or unpaid would be easily revealed by the husband’s insistence on the wife’s compliance with Rule 19.04 or, if he thinks necessary, his resort to Part 13.3 of the Family Law Rules 2004 (Cth) (“the Rules”).
No aspect of the husband’s submissions satisfied me that Order 13 should be stayed. There was no demonstrated error of principle or substantial injustice to the husband.
Order 14: injunctions
It is true, as the husband contended, that Order 14 is not framed consistently with the wife’s proposal, but that of itself is unpersuasive. When asked how, if at all, the husband was prejudiced by the operation of Order 14, other than in one respect I shall shortly address, the husband conceded he suffered no prejudice.
For reasons explained at paragraphs 98 to 101 inclusive of my earlier judgment, the injunctions bind only the husband and only to the extent of his own power. The need for the wife’s protection by injunctive orders was evident from the late revelation of the intention of the husband’s parents, with the husband’s apparent acquiescence, to re-structure the affairs of the named corporations and trusts in a way that would dilute the husband’s power or diminish the value of his property interests in those entities.
However, Order 14(b)(vi) restrains any conduct by the husband that would result in disposal, encumbrance, or further encumbrance, of assets of the named corporations and trusts for purposes other than the ordinary course of business of those corporations and trusts. An order in those terms impedes the husband’s compliance with Order 12, requiring his payment of spousal maintenance, and is thereby liable to cause him substantial injustice. Order 14(b)(vi) will therefore be stayed on a conditional basis. It will not bind the husband in a way that precludes his compliance with Order 12.
Conclusion
For those reasons I make the following orders.
ORDERS DELIVERED
I make the following orders, for which I will give reasons momentarily.
ORDERS DELIVERED
My reasons for orders 2 and 3 are as follows.
In the Application in a Case filed by the husband on 22 July 2015, he sought costs against the wife. The order he proposed was in the following terms:
That the wife pay the costs of this application in the event that she opposed any order for a stay of orders 11, 12, 13 or 14 made by Austin J on 16 July 2015.
Following upon the delivery of reasons, the husband abandoned that application and instead made an oral application for the reservation of both parties’ costs until such time as the husband’s appeal was heard and determined.
On the other hand, the wife filed her Response to an Application in a Case on 27 July 2015, in which she also sought an order for costs against the husband. Her proposed order was in the following terms:
The husband pay the wife’s costs of and incidental to these proceedings.
That application was pressed by the wife at the conclusion of these interim proceedings.
Dealing firstly with the husband’s application to reserve costs, I state immediately that I am disinclined to do so. Reservation of the parties’ costs to another date would simply mean that another judge would need to adjudicate the unresolved costs applications of the parties on another date long into the future when that judge will not be familiar with the circumstances of this interim hearing. In my view, there is no good reason to defer the decisions about costs, other than to avoid having to deal with the issue now. Any determination about costs should be made immediately.
As for the wife’s application for the husband to pay her costs of and incidental to this interim hearing, the solicitors who appeared for the parties to receive judgment properly drew the Court’s attention to the provisions of s 117 of the Act. It was uncontroversial that s 117(1) of the Act imports an orthodoxy that each party pay his and her own costs in relation to proceedings under the Act, though that orthodoxy may not apply and a costs order may be made in the circumstances of the case. If that be so, the Court is mandated by s 117(2A) of the Act to consider various features of the litigation, and my attention has been drawn variously by the parties’ solicitors to a number of those criteria. It is only my intention to address those which were salient, and in particular, those that were addressed by the parties’ solicitors.
I accept the husband’s submission that the wife’s rebuttal of his stay application was not wholly successful. The wife was largely successful, but not wholly successful, because one of the orders was stayed conditionally.
It was contended on behalf of the wife that her financial circumstances are far inferior to those enjoyed by the husband. I accept that the husband’s financial circumstances are superior to the wife’s, but at this point in the proceedings, after an elapse of some six months since the proceedings were commenced, very little clarity surrounds the parties’ financial circumstances. There is an underlying dispute in these proceedings as to whether the husband has significant property interests or whether in fact he is almost wholly supported by his parents. I am not satisfied the wife’s financial circumstances warrant the payment of her costs, particularly in circumstances where Order 13 made only two weeks ago requires the dollar-for-dollar payment of her legal costs by the husband.
The last aspect of the costs application addressed by the solicitor for the wife was as to the conduct of the proceedings by the husband. It was firstly submitted the husband was derelict by failing to try and negotiate a settlement of this interim dispute by way of correspondence before leaping to the filing of an Application in a Case. I reject that argument. The interim orders were made on 16 July 2015. The husband filed his appeal against those orders on 22 July 2015, and he filed his stay application on the same date. It was incumbent upon him to act with some haste and he did. I do not regard his prompt action in accordance with the Rules to constitute misconduct, or alternatively, conduct that reflects adversely upon him.
The second aspect about the conduct of the proceedings advanced by the wife was that the husband has so far failed to comply with at least Orders 11 and 12 made on 16 July 2015; in that he has not yet transferred either the motor vehicle or $30,000 of cash to her; nor has he commenced paying her weekly spousal maintenance payments. True it is he should have by now complied with those Orders, but I suspect his non-compliance to this point was motivated by the knowledge of his pending stay application and his concern he would have needed to claw back that property and cash from the wife in the event his stay application was successful. I do not impute any derelict conduct by the husband by reason of him not implementing the orders whilst his stay application remained live.
For those reasons, I proceed to determine the parties’ application for costs. The only party who made an application for costs at this point in time was the wife, and I dismiss her application. As a consequence, both parties will bear their own costs of and incidental to the hearing conducted before me today.
I certify that the preceding fifty two (52) paragraphs are a true copy of the ex tempore reasons for judgment of the Honourable Justice Austin delivered on 28 July 2015.
Associate:
Date: 4 August 2015
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