Judgment - EX TEMPORE
Revised and reissued 24 July 2019
This is an application consequential upon the judgment which I delivered in June: Nguyen v Corbett (No 4) [2019] NSWSC 712. The parties to the proceedings and the nature of the dispute are set out in that judgment and in the three earlier judgments in these proceedings. What follows assumes familiarity with (and uses the terminology used) those judgments.
My fourth judgment concerned a cross‑claim brought in the proceedings by Mrs Corbett. I had earlier in my first three judgments determined the claim made by the plaintiff against Mr and Mrs Corbett as first and second defendants. In those principal proceedings I concluded that the plaintiff was entitled to an order requiring Mrs Corbett to make the Baulkham Hills property available to meet Mr Corbett's creditors. I have referred to that order in earlier judgments as the "make-available" order. The order was formally pronounced in my second judgment in the proceedings which I delivered in April 2018.
In aid of that order I made orders appointing a receiver to the property to identify the claims of Mr Corbett's creditors and to sell the property so as to satisfy those creditors. As events have transpired, the only creditors are those represented by the plaintiff. I made the order appointing a receiver after having given Mrs Corbett an opportunity to take some other steps such as raising finance which would have enabled her to avoid a forced sale. She declined to take up that opportunity. The receivership orders were formally pronounced when I delivered my third judgment in these proceedings in June 2018.
The make-available order and the consequential receivership orders were the subject of a stay application which I dealt with in my third judgment. I concluded that Mrs Corbett should be given a further short opportunity to file and to pursue her cross-claim and that a stay should be granted up until late July 2018. Subsequently it was agreed between the parties that the stay should be extended up until I decided Mrs Corbett's cross‑claim. As a result of the conclusions I reached in my fourth judgment I determined that the cross‑claim should be dismissed. The stay is thus liable to be discharged.
In effect, the current application seeks to have the stay continued pending an appeal from my fourth judgment to the Full Court of the Family Court (although that is not, strictly speaking, the way Mrs Corbett's Notice of Motion is framed).
In support of the application an affidavit from Gabrielle Parra, who is a Senior Associate in the firm representing Mrs Corbett, was read. That affidavit shows that a notice of appeal has been filed in the Full Court of the Family Court. The Notice of Appeal is itself in evidence in this application. There is no evidence of any application to have the appeal expedited nor is there any evidence as to when the appeal would in the ordinary course be heard.
The application before me follows an application made by way of an earlier notice of motion at the time that I delivered my judgment. That affidavit was supported by an affidavit of Mrs Corbett sworn on 24 June 2018. The application sought an interim stay up until mid‑July for the purpose of obtaining a second opinion as to the prospects of success of appealing against my fourth judgment. The second opinion was to be obtained from counsel other than Mr Coleman SC who appeared at the hearing before me.
Today's application has been conducted by Mr Reynolds of junior counsel who informed me that Mr Herzfeld has now been retained to act for Mrs Corbett in the appeal. Mr Herzfeld had previously acted for Mr Corbett in the main proceedings. There is no evidence before me about what steps, if any, were taken towards obtaining the second opinion which was foreshadowed when the earlier application was made.
Counsel for Mrs Corbett only read part of her affidavit on the application. The evidence recounted Mrs Corbett's age and major medical problems. Mrs Corbett has been living at the Baulkham Hills property since Mr Corbett bought the property in 1997. Her son, Mark, lives there and his daughter, Mrs Corbett's granddaughter, visits and stays there part time. These matters were recounted in my fourth judgment. Mrs Corbett's affidavit also stated (and this also was recorded in my fourth judgment) that she receives the age pension of $850 per fortnight and has no other income.
Counsel for Mrs Corbett addressed the application under three headings. The first was the need on Mrs Corbett's part for the stay, or to put it another way, the prejudice that she would suffer if a stay is refused. The second was the prejudice to the cross-defendant, Mr Nguyen, from any stay. The third was the prospects of success on the appeal. Counsel for Mr Nguyen briefly addressed a fourth topic, namely discretionary factors. I will deal with those four matters in turn.
[2]
Effect on Mrs Corbett from refusing the stay
Counsel for Mrs Corbett emphasised her personal circumstances as a divorced 71 year old woman living on the pension who wishes to continue to live in what has been her home for over 20 years and is also a home for her son and, at least for part of the time, her granddaughter. This, however, is not the full picture. The evidence before me in the fourth judgment showed that Mrs Corbett is being supported financially, at least in part, by members of her family.
The arrangements under which this support is provided are opaque on the evidence before the Court. But it seems that, at least in part, the support derives from a company called Aardwolf Vietnam Ltd. It is a company incorporated in the British Virgin Islands which acts as the holding company for a Vietnamese entity which conducts a family business founded by Mr Corbett. The precise ownership of, and control over, the assets of the business are unclear but the evidence did suggest that the money to fund Mrs Corbett's legal costs was being provided, directly or indirectly, from the business.
The evidence which is recounted in my fourth judgment also showed that Mr Corbett has some assets in Vietnam. But, as I described in more detail in my judgment, no real effort was made for the purposes of the cross-claim to identify what those assets were and what they were worth.
When I asked counsel for Mrs Corbett on this application how she would be able to fund the appeal, counsel told me he had no instructions on the issue. The implication, as I understood it, was that I would infer that the appeal would be funded by members of Mrs Corbett's family as the conduct of the cross-claim itself appears to have been.
In the circumstances, I must assume that there are other financial resources which could be made available to Mrs Corbett, although I do not know how extensive those financial resources are. Having referred to this issue in my fourth judgment, those advising Mrs Corbett have had ample opportunity, if I had somehow misconceived the position, to put on correcting evidence, and, if there is some limit to the financial resources, of identifying what that limit is. They have chosen not to do so.
Counsel for Mrs Corbett made it clear that her case on appeal will be that she is entitled, pursuant to the exercise of the Court's powers under s 79 of the Family Law Act 1975 (Cth), to receive the whole of the Baulkham Hills property as against Mr Corbett, and that the debt to the Nguyens must fall on Mr Corbett alone (leaving it to the Nguyens to enforce it against him if they can).
Counsel submitted that this is a case where unless a stay is granted, the right of appeal will be rendered useless. In my view, this is a considerable overstatement. If a stay is refused, Mrs Corbett will have to vacate the property to allow it to be sold. In the nature of things, that is not something which will have to happen immediately, but I expect it would happen within a period of weeks, and, as I have noted, there is no evidence to suggest that an appeal to the Full Court could be dealt with within that time. But even if Mrs Corbett has to vacate, that would not prevent her from conducting the appeal and if successful recovering whatever share of the property the Court ultimately determines she might be entitled to under s 79 above and beyond that which she will retain under the make-available order.
I accept that if Mrs Corbett succeeds in the appeal to the extent of obtaining an order which would give her 100% of the Baulkham Hills property, then, on the face of it, that would give her a practical entitlement to continue to live at the property which would be lost if the stay is refused. But that is not at all the same thing as saying that her right of appeal would be rendered nugatory by the refusal of a stay. It will not.
In fact, on the evidence it is not even clear that if a stay is granted Mrs Corbett will necessarily be able to continue to live at the property, even if the appeal succeeds. There is in fact no evidence before me, that Mrs Corbett's family have sufficient resources to fund the appeal, although, given the track record in the litigation, that may be a reasonable assumption.
More importantly I have already made a costs order against Mrs Corbett in the main proceedings. That order reflects the fact that Mrs Corbett failed on the issues ventilated in the main claim under s 79A of the Family Law Act and s 37 of the Conveyancing Act 1919 (NSW). Those issues were distinct from the cross-claim and on appeal against my fourth judgment, even if wholly successful, would not affect Mrs Corbett's costs liability in the principal proceedings.
At the time I delivered my third judgment, I had been informed that an appeal had been brought against my decision in the principal proceedings. In this application counsel informed me that an application was to be made to have that appeal transferred to the Full Court of the Family Court. But at the time I was told about the appeal, counsel then conducting Mrs Corbett's case indicated that it was really in the nature of a holding appeal, and the real grounds, if any, for pursuing the appeal needed to be identified and articulated.
On the evidence before me that has not happened. Counsel for Mrs Corbett on this application was unable to tell me whether the costs order which I made in the principal proceedings was challenged, or, at least, if it is to be challenged, what the grounds of that challenge are.
It follows that on the evidence before me I cannot be satisfied that even if the stay is granted and the appeal against my fourth judgment succeeds, the costs order made in the principal proceedings will be displaced. If that costs order is not displaced then unless moneys are made available to Mrs Corbett by her family to meet the costs liability (and there is no evidence at all about that) the Baulkham Hills property will have to be sold in any event.
[3]
Prejudice to the Nguyens
As I have already mentioned, Mr Nguyen's legal representatives were prepared to agree to the stay of the make-available order and the consequent receivership orders (which originally was to last only until July 2018) to be extended until the hearing of the cross-claim and then the delivery of my judgment. Mr Nguyen's legal representatives also accepted the stay for a month or so, which I granted in June. Counsel for Mrs Corbett emphasised this and submitted that there would be no real prejudice to the Nguyens from a continuation of the stay.
On the evidence before me the property may be worth between $950,000 and $1.1 million, although as I pointed out in my fourth judgment the evidence on this subject was not entirely satisfactory. No further evidence on the value of the property was presented on this application. If the property is worth approximately $1 million, then the amount owing to the Nguyens is a bit less than half the value of the property, and at the rate of accrual of interest, there would appear to be a sufficient equity in the property to meet the debts to the Nguyens.
But the force of this was somewhat undercut by an argument developed by counsel. I will refer to the argument in more detail below, but as I understood the argument, it involved the proposition that Mrs Corbett should on no view receive less than 50% of the value of the property.
The argument was that my judgment was incorrect because there was a possibility on the evidence of the property being sold and Mrs Corbett receiving something less than 50% of the net proceeds. The argument was that on any view this would be too little.
It seems to me that if this argument is pursued then there may be some potential of prejudice to the Nguyens. There is no formal valuation evidence which would fix the value of the property with reasonable confidence. With further accrued interest up to the date on which any appeal is heard and decided, the amount required to satisfy the Nguyens' debt may become uncomfortably close to the 50% figure which is the point of departure for the argument to which I have referred.
[4]
Prospects of success on appeal
The grounds of appeal as stated in the Notice of Appeal filed with the Full Court of the Family Court are broad but counsel for Mrs Corbett helpfully articulated them for me in more precise and narrowed terms.
One ground for the cross‑claim was a claim in equity based on a common intention constructive trust (see my fourth judgment at [97] and following). I rejected that claim and it is not going to be pursued in the Full Court. The claim to 100% of the Baulkham Hills property is based solely on the Family Law Act, s 79.
Counsel also indicated that there was no challenge to my findings of fact. Rather the appeal would attack my reasoning and my conclusions from the facts that I found on the evidence.
There were two aspects to my decision. I first concluded that the debt to the Nguyens should be treated as a liability of the parties of the marriage and any division under s 79 should take place on a net basis (see my fourth judgment at [120]-[124], [130]). This would have left it open to Mrs Corbett to pursue a claim against Mr Corbett by reference to offshore assets but she had not done so, and accordingly, her claim should be dismissed.
Secondly, and alternatively, I considered that even if the debt to the Nguyens should properly be allocated against Mr Corbett's share of the matrimonial assets, there was no justification for awarding Mrs Corbett more than 50% of those assets. Since Mrs Corbett already held 100% of the Baulkham Hills property, subject to the make-available order, and the Nguyens' debt was less than 50% of the value of the property, her claim in any event had to fail (see [130]-[131]). In order for Mrs Corbett's appeal to succeed and for her to recover 100% of the Baulkham Hills property, she must successfully overcome both of those conclusions.
I dealt with the question of whether Mr Corbett's liability to the Nguyens should be excluded from the s 79 analysis in my fourth judgment (at [112]-[124]). I referred there to Full Court authority on the question of whether a liability incurred by one party to the marriage should be left out of account for the purposes of s 79. It was not suggested that any of the decisions to which I referred were not authoritative. Counsel submitted, however, that I may have been too rigid in my view.
Counsel submitted in particular that I had failed to take account of the possibility that the court might treat part only of an external liability as a liability of the marriage for the purposes of s 79. Counsel also suggested that on the circumstances of this case, it was arguable that the debt came too late and should really be seen as a debt of Mr Corbett's alone.
In an application such as this, it is not for me to attempt to determine whether the appeal from my decision will necessarily succeed. I am only determining, in a necessarily impressionistic way, whether the prospects of success are sufficient to justify the interference in the Nguyens' prima facie rights created by my judgment. But I think it is worth observing that the second submission to which I have referred was one that was put squarely by counsel then representing Mrs Corbett and was specifically dealt with on the facts in my judgment. As I have said, counsel did not suggest that anything I had said in that regard was factually incorrect or even arguably so.
As to counsel's first point, I struggle to see how it can be of any assistance to Mrs Corbett for the purposes of this application. To succeed in this application, Mrs Corbett must first establish an arguable entitlement to receive the whole of the property under s 79. She must therefore succeed on this part of the argument in establishing that the whole of the debt owed to the Nguyens should be treated as a non‑matrimonial liability, not merely part of it.
To my mind, the other difficulty with the argument on this aspect of the case lies in what happened when the debt on the Baulkham Hills property was refinanced with Westpac in August 2013. Mr Corbett made strenuous efforts to pay off the debt as quickly as possible. By that stage, he was aware of the costs order against him. It is quite clear that, rather than pay the Nguyens, he instead diverted funds otherwise available to him in order to pay off the Baulkham Hills property. He evidently did so for the benefit, as he thought, of Mrs Corbett, and no doubt in a broader sense, for the benefit of other members of his family.
Had Mr Corbett not paid the Westpac debt off, it would have been a hopeless task to seek to persuade the Court that the debt should be excluded as being merely a debt of Mr Corbett. When I asked counsel for Mrs Corbett why Mr Corbett's actions in paying off the debt should make any difference, he was unable to answer.
I appreciate that this particular point concerns only the $100,000 which was paid off after August 2013, but I repeat that on this application Mrs Corbett must show an arguable case of entitlement to 100% of the property. I find it difficult to see how she can do so having regard to the $100,000 repayment to Westpac.
But this is not all. Mrs Corbett must also demonstrate an arguable basis for success on the second, and alternative, basis for my judgment, namely, that she was not entitled to more than 50% of the value of the property.
Counsel argued that in my judgment I had focused too heavily (indeed almost exclusively) on financial contributions to the property. Again, it is not for me to decide whether or not this argument will succeed, but I do point out that the evidence before me on financial contributions, although inadequate, made it clear that Mrs Corbett's financial contribution to the property on any view was far less than 50%. That is so, even giving Mrs Corbett some credit for interest which was paid during the period from 1998 until 2003, and on making some allowance for improvements which Mrs Corbett said that she had made. I refer in this regard to my fourth judgment (at [71]-[73]). This did not involve denying that she had made a non‑financial contribution to the marriage. I simply considered that awarding Mrs Corbett more than 50% of the property would be disproportionate overall, given her lack of financial contribution (see [110]).
I think there is a more fundamental difficulty in any event. As I recorded in my fourth judgment (at [10]), counsel for Mrs Corbett who appeared at the hearing of the cross‑claim submitted that her proper entitlement under s 79 was not 100%, but at most 75% of the property. This was an express concession made by senior counsel who has extensive experience in matters of this kind.
It is elementary that a party is bound by the conduct of his or her case and will not be permitted on appeal to depart from that case, except in very rare circumstances: University of Wollongong v Metwally (No 2) [1985] HCA 28 at [7].
Counsel for Mrs Corbett did not suggest that any such circumstances were present in this case. The impression I have is that those now representing Mrs Corbett simply wish to propound a different case on appeal from that which was expressly, and one must assume advisedly, pursued at trial.
I have earlier referred to a further argument under this head which suggested that any judgment which saw Mrs Corbett receive less than 50% of the net proceeds of the property must be unfair or erroneous. I hope I have done that submission justice but I find it difficult to see how it can matter. As I have now said more than once: Mrs Corbett's case, for the purposes of this application, must be shown to be an arguable case of a 100% entitlement to the Baulkham Hills property.
Counsel referred to factors under s 79 which may give a party to the marriage some call on the matrimonial assets on account of needs, but s 79 remains a power which is to be exercised in accordance with justice and equity. The proposition is that one party who has made a minor financial contribution to the only asset identified in the evidence must receive 100% of that asset so as to maintain the lifestyle which she has enjoyed, and any lesser award is manifestly unjust and not reasonably open (I use the language of the Notice of Appeal in this case). This proposition only has to be stated for the difficulties in it to be obvious.
In summary, I am not persuaded that there is any realistic prospect of Mrs Corbett obtaining on appeal an award of 100% of the net proceeds of the Baulkham Hills property; but if that contention is arguable at all, it is in my judgment a very weak one.
[5]
Discretionary factors
Counsel for Mr Nguyen pointed to the history of the cross‑claim proceedings as a factor which should incline the Court not to grant the relief sought by Mrs Corbett. Counsel pointed out that the cross‑claim was not begun until after I had decided the principal proceedings. Counsel also referred to the delay which took place in filing the cross‑claim between April and June 2018.
As to the first matter, I have earlier pointed out that the facts of this case illustrate how undesirable it is for a s 79A application to be heard and determined before a consequential fresh application is made under s 79. But I do not think that Mrs Corbett should be blamed for this and certainly not at this stage of the proceedings. From what I can see, all of the parties concerned were content to proceed on that basis; unsatisfactory as it has now been demonstrated to have been.
As to the delay in filing the cross‑claim, I dealt with this in my third judgment (at [14]‑[16]). The delay was unfortunate but it resulted from a mistake made by those advising Mrs Corbett and I do not think it should be held against her for the purpose of this application.
But this leaves one discretionary matter which I should mention. It seems clear enough that Mrs Corbett's family collectively stand behind her in this litigation. That at least includes her children, and it appears also to include the business. It may also directly or indirectly still involve Mr Corbett.
These proceedings have been protracted and difficult and they will no doubt have been expensive. I suspect that the money which has been spent on resisting Mr Nguyen's claim now exceeds the claim itself. Those behind Mrs Corbett have not only been prepared to underwrite her costs of the cross‑claim but were also prepared (see my fourth judgment at [84]) to put up approximately 25% of the value of the property. They also funded earlier preliminary discovery proceedings that were made against Mrs Corbett, including an adverse costs order. I find myself wondering why, since Mrs Corbett's backers apparently have ample funds, they do not simply pay the debt owing to the Nguyens, which on any view is a just debt and is undisputable, rather than continue the litigious process for yet a further step.
Ultimately, of course, it is a matter for them whether the cost of further proceedings justifies the risk of further costs. They are amply entitled if they wish to contest my judgment, but they are not entitled as of right to have the day of reckoning postponed indefinitely. And in particular, they are not entitled simply by pointing to Mrs Corbett's individual financial circumstances, to a continued stay of the orders which follow from the conclusions which the Court has reached following what have now been two contested trial hearings.
In my opinion, the evidence presented in support of this stay application is insufficient to justify the further continuation of the stay which has been already extended for more than a year. Accordingly the application fails and must be dismissed.
I was asked, if I dismissed the application, nevertheless to grant a stay for a further limited period to allow an application to be made to the Full Court. I decline to do so. As I have said, the practical reality is that Mrs Corbett will not have to leave the house tomorrow. She will have a period of time in which to do so. While I am not encouraging it, if she wishes to contest the view that I have formed based on the evidence on this application then she is at liberty to do so. But I do not think that there is any prospect of action being taken to her prejudice which is sufficiently serious to require a further stay of the orders which I consider justice demands must now be put into motion.
The orders of the Court are:
Order that the cross-claimant's Notice of Motion filed 19 July 2019 be dismissed;
Order that the cross-claimant pay the cross-defendant's costs of that Notice of Motion and of the cross-claimant's earlier Notice of Motion filed 24 June 2019.
[6]
Amendments
16 August 2019 - amend small typographical errors
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Decision last updated: 16 August 2019