Safi & Rafiq (No 2) [2023] – Court Partially Stays Arbitral Award Enforcement Amid Review Application

EX TEMPORE REASONS FOR JUDGMENT

CAMPTON J:

1. In proceedings between Ms Safi (“the wife”) and Mr Rafiq (“the husband”) pursuant to Pt VIII of the Family Law Act 1975 (Cth) (“the Act”), a consent order was made on 22 November 2022 pursuant to s 13E of the Act referring the totality of the proceeding including all questions as to costs to arbitration.
2. The Pt VIII proceedings were commenced in Division 2 of the Federal Circuit and Family Court of Australia upon the wife filing an Application for Final Orders on 26 January 2022. They were transferred to Division 1 and placed in the National Arbitration List on 22 November 2022.
3. The parties engaged in an arbitration hearing before an accredited arbitrator, Mr C, on 26 and 27 April 2023. The arbitrator published his award on 21 June 2023 (“the award”).
4. The wife filed an Application to Register an Arbitration Award on 30 June 2023. On 31 July 2023 the husband filed an Application in a Proceeding (which was also identified as a Response to an Application in an Arbitration) seeking that the wife’s registration application be dismissed and a review of the award pursuant to s 13J of the Act.
5. On 22 August 2023 the following orders and notations were made:
   1. Paragraph 1 of the Application in a Proceeding (also identified as a Response to an Application in an Arbitration) filed by the husband on 31 July 2023, seeking dismissal of the wife’s Application to Register Arbitration Award filed 30 June 2023, be dismissed.
   2. Pursuant to reg 67Q of the Family Law Regulations 1984 (Cth) (“the Regulations”) and s 13H of the Family Law Act 1975 (Cth) (“the Act”) the arbitral award of [Mr C] issued on 21 June 2023 (“the award”) be and is registered.

…

5. In the event the husband proposes to amend the relief sought in paragraph 2, 3 and 4 of his Application in a Proceeding filed 31 July 2023, he is to file and serve such amended document and any affidavit in support thereto on or before 30 August 2023.
6. If the husband elects to amend his relief sought pursuant to Order 5, then the wife is to file and serve any such Amended Response together with any affidavits in support thereto on or before 6 September 2023.

AND THE COURT NOTES THAT:

1. Upon its registration pursuant to Order 2, the award has effect as if it were an order of the Court (see s 13H(2) of the Act).
2. These orders operate as a notice to the parties pursuant to reg [sic] 67R of the Regulations.

6. On 19 September 2023 the husband filed an Application in an Arbitration seeking a review of the registered arbitral award identifying s 13J of the Act as the source of power for review and a stay of enforcement of all of the adjustments of property determined the registered arbitral award pending determination of the review. That application filed on 19 September 2023 records his amendments to the relief he sought in paragraphs 2, 3 and 4 of his Application in a Proceeding filed 31 July 2023 amending the terms of his review of the arbitral award pursuant to both ss 13J and 13K of the Act.
7. The application in an arbitration filed 19 September 2023 identifies by way of review, pursuant to s 13J of the Act, complaint as follows:

6.1 The Learned Arbitrator ordered that the wife transfer to the husband “any interest she has in the property [F Street, City G, Country B] (Order 6.1). The wife had no interest in that property. The said property was registered in the name of the son of the parties, [X]. The Learned Arbitrator found that the husband had the benefit and control of such property and that its value was $144,231.00

6.2 The Learned Arbitrator ordered that the wife transfer to him any interest she has in the property [H Property, Town J, Country B] (Order 6.1). The Learned Arbitrator found that the husband has or had controlling interest in the property and assessed the value at $200,000.00. he ordered that the wife transfer any legal interest in that property to the husband.

6.3 The Learned Arbitrator refused to include as an addback the legal fees paid by the wife in the sum of $129,565.00. The Learned Arbitrator refused to allow any addbacks and in doing so fell into error.

6.4 The Learned Arbitrator failed to take into account the husband’s liability to repay a loan to his brother [Mr K]. The Learned Arbitrator further failed to provide any reasoning as to why he refused to allow such claim and consequently erred in failing to allow that debt by the husband notwithstanding the clear evidence to support same.

Additionally, he seeks, pursuant to s 13K of the Act by way of review:

6.5 The Order requiring the wife to transfer her interest in [Town J] to the husband are impracticable and incapable of being put into effect without the wife being present in [Country B] for the purpose of signing a Transfer. As such, the Order transferring the wife’s interest to the husband is incapable of being put into effect.

8. The wife, by way of a Response to an Application in an Arbitration filed 18 October 2023, seeks that the husband’s Application in an Arbitration filed be dismissed and proposes to enforce the terms of the registered award as if they are orders of the court.
9. In the event his review is successful, notwithstanding seeking to discharge or amend all of the determined adjustments of property contained within the arbitral award, in reality he seeks a variation of only some of those determinations. To give context to his application for review, the terms of the arbitral award broadly provide as follows:

(a) Within two months of the date of the award, the husband is to transfer to the wife all of his right, title and interest in the property at D Street, Suburb E NSW (“the Suburb E property”). The husband, notwithstanding he seeks a stay of this part of the award determination, does not challenge or seek to vary this this adjustment of property [determination 3 in the registered award].(b) Within two months of the date of the award, the husband was to do all things to release to the wife the proceeds of sale of a property owned by the parties at L Street, Suburb M NSW (“the Suburb M property”), in the sum of $335,635.21. The husband challenges this adjustment of property [determination 5 in the registered award].

(c) Within two months of the date of the award the husband is to pay to the wife the sum of $128,498.98. In the event the husband failed to pay to the wife that sum within the prescribed period, a property owned by the husband at N Street, City P in the United Kingdom was to be sold, and the wife was to receive the primary sum of $128,498.98 together with interest thereon at the rate prescribed by the Act and the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth), calculated from a date two months from the date of the award until the date of receipt of payment. The husband challenges this adjustment of property and enforcement process [determinations 4 and 10 in the registered award].

(d) For the wife to transfer to the husband any interest she may have in a number of specified properties in Country B. The husband does not challenge the gravamen of the effect of these determinations. He complains that any such adjusting determination as to one Country B real property is in error and another is impracticable [determination 6 in the registered award].

10. These reasons determine the husband’s application for a stay pending the determination of his applications for review and provide for the husband to amend the questions of law he poses by way of the review.

THE APPLICATION FOR LEAVE TO AMEND THE APPLCIATION IN AN ARBITRATION

11. The husband concedes that it is necessary for him to identify with precision in his application in an arbitration the question or questions of law which, if decided in his favour on review, would result in an order setting aside the award and granting other relief, whether his relief be pursuant to s 13J or s 13K of the Act.
12. He concedes that his application for review as presently filed does not adequately formulate the questions of law he seeks to agitate, and that it is necessary for him to recast those questions.
13. It is trite to observe that the jurisdiction conferred by s 13J of the Act does not permit the Court to substitute its judgment or discretion for that of the arbitrator unless an error in relation to a question of law is first established.
14. It is important also to focus upon the difference between a question of law and a question of fact, noting that a contended error as to a finding of fact may not constitute a question of law, even if the reasoning whereby the arbitrator reached his conclusion of fact was demonstrably unsound (see Westport Insurance Corporation v Gordian Runoff Ltd [2011] HCA 37; (2011) 244 CLR 239 at [27]).
15. For the purposes of the hearing of the application for review as prosecuted by the husband, in circumstances where the wife accepts that the application could not be heard today, save as to costs there is little prejudice to her in a short adjournment permitting the husband to recast the question of law he poses on review.
16. Accordingly, orders will be made permitting the husband to amend for what will now be the third time his application in an arbitration seeking review.

THE STAY APPLICATION

The law

17. The principles applicable to a stay of financial proceedings where an order is made by a Court are well settled and apply to an application to stay enforcement of a registered arbitral award (see McLaughlin & McLaughlin (No 2) [2023] FedCFamC1F 516 at [51] – [54]).
18. The enquiry is directed as to whether circumstances exist to warrant the exercise of discretion to depart from the presumption that a party is entitled to the fruits of the judgment or award and to assume that such judgment or award are correct (see Jennings Construction Limited v Burgundy Royale Investments Pty Limited [1986] HCA 84; (1986) 161 CLR 681).
19. The relevant circumstances to justify a stay of an award pending an outcome of a review include the need to prevent the review from being rendered nugatory, or when there is a real risk that it will not be possible for the prospectively successful applicant on review to be restored to substantially his or her former position if the award is executed.
20. As identified during the hearing today, it is necessary to consider the prospects of the review and where the balance of convenience lies between the parties.

Consideration

21. The husband accepts that he bears the onus to establish that the circumstances warrant a departure from the general rule that the award is presumed to be correct and enforceable upon its registration.
22. He is confronted with a difficulty in that the assessment of his prospects of success on review by way of a question of law, pursuant to s 13J of the Act, are at best remote on the material that he has filed. Another view may be that his application does not cast a question of law on review and hence must fail, albeit that he seeks, for a third time, to recast the questions of law to be posed.
23. In this matter the husband concedes, and the wife agrees, that it is appropriate for any stay that he forthwith:

(a) execute a transfer document to facilitate the wife becoming the sole registered proprietor of the unencumbered Suburb E property; and(b) do all things to enable the wife to achieve the benefit of the proceeds of sale of the Suburb M property held on trust for the parties in the sum of $333,635.

Each by way of implementation of some of the determinations contained within the award.

24. As was self-evident during exchanges today that:

(a) The implementation of each of those parts of the award will not prejudice the husband such that he agrees that even irrespective as to the review, the wife ought to achieve the Suburb E real property;(b) If he is successful on review, so as for he to achieve receipt of $330,635 from the Suburb M property rather than the wife, that sum can be accessed from the wife’s unencumbered interest in the Suburb E property, the value of that property being $700,000; provided that

(c) An order is made that the wife not encumber the transferred unencumbered Suburb E property pending determination of the review. The wife confirmed she will suffer no prejudice if such order is made.

The wife therefore achieves some of the fruits of the award.

25. This achieves benefits for the wife that she ought to have received within two months of the date of the award, being on 21 August 2023.
26. The wife properly concedes that in the event the husband was required to pay $128,498.98 to her, and it was expended, that may occasion prejudice to the husband should his review be successful. It would certainly occasion prejudice to the husband if the United Kingdom property was sold, upon the husband’s default in paying that primary sum to the wife.
27. The wife, to her credit, agrees to a stay of the obligations of the husband to pay the sum of $128,498.98 and of the default process requiring him to sell the United Kingdom property pending determination of the review. Her position is somewhat protected as she is receiving the solace of interest on the outstanding sum payable from a date two months after the date of the award should the husband be unsuccessful on the review.
28. In all of the circumstances and on balance, it is appropriate to grant the husband’s stay for some parts of the determination on review, on the conditions identified.
29. In all the circumstances, I make the orders in the terms as recorded above.