New South Wales Court of Appeal CITATION : Damberg v Damberg (No 2) [2001] NSWCA 433 FILE NUMBER(S) : CA 40636/99 HEARING DATE(S) : Decided on written submissions JUDGMENT DATE : 29 November 2001 Wilfried Robert Damberg (Appellant) PARTIES : Bruenhild Damberg (First Respondent) Oliver Damberg (Second Respondent) Nicole Damberg (Third Respodnent) JUDGMENT OF : Spigelman CJ at 1; Sheller JA at 2; Heydon JA at 3 LOWER COURT JURISDICTION : Family Court of Australia LOWER COURT PA 4703/98 FILE NUMBER(S) : LOWER COURT Purdy J JUDICIAL OFFICER : COUNSEL : Campbell Paton & Taylor (Appellant) SOLICITORS : Wilson Fardell & Moore (First Respondent) Garden & Montgomerie (Second and Third Respondents) DECISION : See paragraph 27 THE SUPREME COURT OF NEW SOUTH WALES COURT OF APPEAL CA 40636/99 PA 4703/98 SPIGELMAN CJ SHELLER JA HEYDON JA 29 November 2001 DAMBERG v DAMBERG & Ors (No 2) JUDGMENT 1 SPIGELMAN CJ: I agree with Heydon JA. 2 SHELLER JA: I agree with Heydon JA. 3 HEYDON JA: The Appellant was the husband of the First Respondent and is the father of the Second Respondent and the Third Respondent, these children being respectively the son and the daughter of the marriage between the Appellant and the First Respondent. At trial the Family Court of Australia (Purdy J) ordered the Appellant and the First Respondent to pay monies to the Second Respondent and to the Third Respondent. The basis of the orders was largely that loans had been made by the children to their parents but not repaid. Reasons for judgment in this appeal were published on 25 May 2001. In essence it was decided that the appeal should be allowed. Seven orders were made. By Order 7, the Appellant and the Second and Third Respondents were ordered to file in the Registry within seven days consent orders for the repayment by the Second Respondent or the Third Respondent to the Appellant of any part of the sums ordered by Orders 1 and 2 of Purdy J to be paid. In default of agreement, the Appellant and the Second and Third Respondents were to file within fourteen days written submissions setting out the orders for repayment contended for and why they should be made. No agreement was reached pursuant to the first part of the order. Written submissions were received pursuant to the second part of the order. Those of the Second and Third Respondents were dated 8 June 2001. Those of the Appellant were dated 14 June 2001. These submissions went beyond the issue of repayment, and it is convenient to deal first with the topics which are separate from that issue. Suitors' Fund Act Certificate 4 First, the Second and Third Respondents sought orders in the following form: "That the Court grant to the Second Respondent an Indemnity Certificate pursuant to Section 6 of the Suitors' Fund Act 1951 in respect of the Appeal by the Appellant against order number 1 made by Purdy J in the Family Court of Australia on the 4th June 1999. That the Court grant to the Third Respondent an Indemnity Certificate pursuant to Section 6 of the Suitors Fund Act 1951 in respect of the Appeal by the Appellant against order number 1 made by Purdy J in the Family Court of Australia on the 4th June 1999." 5 The Appellant did not wish to be heard in opposition to those orders, and orders to that effect should be made. In the order relating to the Third Respondent, the relevant order by Purdy J was not Order 1 but Order 2. Accordingly, the following orders should be made additionally to those made on 25 May 2001: 8. That the Second Respondent have a certificate pursuant to s 6 of the Suitors' Fund Act 1951 in respect of the appeal by the Appellant against Order 1 made by Purdy J. 9. That the Third Respondent have a certificate pursuant to s 6 of the Suitors' Fund Act 1951 in respect of the appeal by the Appellant against Order 2 made by Purdy J. Variation of Order 6 6 Secondly, the Second and Third Respondents applied for Order 6 made on 25 May 2001 to be varied. Order 6 was: "That the Second and Third Respondents pay the Appellant's costs of the appeal, of the application for leave to appeal, and of Common Law Division proceedings No 12244 of 1999." The substituted order which the Second and Third Respondents desired was: "(a) That the Second Respondent pay the Appellant's costs of the Appeal brought by the Appellant against the Second Respondent. (b) That the Third Respondent pay the Appellant's costs of the Appeal brought by the Appellant against the Third Respondent." 7 The only argument advanced in support of the change was: "In the Family Court of Australia at Parramatta The Second Respondent and the Third Respondent each commenced separate proceedings against the Appellant and the First Respondent. Each pleaded separate causes of action details of which are contained in: (a) the Further Amended Statement of Claim filed by the Second Respondent on the 23rd April 1999 (Red Appeal Book Pages 8-10) (b) the Statement of Claim filed by the Third Respondent on the 23rd April 1999 (Red Appeal Book pages 8-10). Purdy J heard three separate causes of action in the hearing at the Family Court of Australia at Parramatta in May 1999: (a) Bruenhild Damberg (First Respondent) v Wilfried Damberg (Appellant) Application for Property Settlement pursuant to Section 79 of Family Law Act. (b) Second Respondent v Appellant & First Respondent. (c) Third Respondent v Appellant & First Respondent." 8 The Appellant opposed this on the following ground: "The Second Respondent and the Third Respondent have been jointly represented, and have at all times acted together in the proceedings. It would be practically impossible to distinguish the costs attributable to the appeal against one from those attributable to the appeal against the other. The only significant distinction between the two was the additional (but in the scope of things very small) issue in respect of the Second Respondent, pertaining to the Management Agreement. No reason for reopening the order already made is established." Each of the Appellant's propositions has force. In particular, no sufficient reason for altering Order 6 has been established. In later submissions the Second and Third Respondents abandoned their submission about Order 6. Accordingly it will stand. Costs of the trial 9 Thirdly, the Appellant asked for its costs of the proceedings in respect of the Second and Third Respondents before Purdy J, but only if the court was minded to re-open the costs orders made on 25 May 2001. Since they are not to be re-opened, the Appellant's request does not arise and need not be dealt with. Repayment of judgment sums: the initial arguments 10 The background is that Order 1 made by Purdy J on 4 June 1999 was: "That in relation to the Further Amended Statement of Claim filed by the Second Respondent on 20 May 1999, there be judgment for the Second Respondent against the Husband and Wife in the sum of $640,066 together with interest from 10 May 1999 to 4 June 1999 in the sum of $3,836." Those sums total $643,902. Order 2 was: "That in relation to the Statement of Claim of the Third Respondent filed 23 April 1999, there be judgment for the Third Respondent against the Husband and Wife in the sum of $149,615 together with interest from 2 April 1999 to 4 June 1999 in the sum of $1,721." Those sums total $151,336. 11 The orders sought by the Second and Third Respondents, and the reasons advanced for them, were as follows. "That the Second Respondent pay to the Appellant on or before 25th November 2001 the following sums: (a) $340,526.07 (b) $ 42,003.03 (interest at 9.55% on $321,950.00 from 11th January 2000 to 25th May 2001 - 500 days) (c) Plus interest @ $84.00 per day until payment. That the Third Respondent pay to the Appellant on or before the 25th November 2001 the following sums: (a) $79,970.97 (b) $ 9,82.90 [sic] (interest at 9.55% on $75,675.00 from 11th January 2000 to 25th May 2001 - 500 days) (c) Plus interest @ $19.75 per day until payment. WHY ORDERS SHOULD BE MADE To provide for the orderly sale of livestock, agricultural plant and/or farming land and refinancing if possible." 12 The Appellant, on the other hand, proposed different orders: "That the Second Respondent repay to the First Respondent the sum of $681,052.13 (together with interest at the rates prescribed by the rules of court for interest on unpaid judgment debts from 13 January 2000 to the date of the order). That the Third Respondent repay to the First Respondent the sum of $159,941.94 (together with interest at the rates prescribed by the rules of court for interest on unpaid judgment debts from 11 January 2000 to the date of the order)." 13 The reasons advanced for the orders proposed by the Appellant were as follows: "In the Family Court proceedings, pursuant to the orders of the Full Court made on 7 December 1999 [annexure 'A'], the First Respondent (Wife) was to pay the Appellant (Husband) by 6 February 2000 the sum of $757,020 [order 3.1], upon which the Appellant was to transfer to the First Respondent all his right, title and interest in 'Manacumble', 'Springside' and 'Brymedura', together with all livestock, equipment, furniture, fittings and grain [order 3.2], each party was to indemnify the other as to one half of all payments made by the other to Oliver Damberg and/or Nicole Damberg in satisfaction of the judgments obtained by either or both of them against the said parties [order 6]. After the Appellant had filed this appeal, and after the First Respondent's appeal to the Full Court of the Family Court had been in substance dismissed, the First Respondent (Wife):- 1. on or about 13 January 2000, paid to the Second Respondent the sum of $681,052.13 'in full and final settlement' of the judgment given by Purdy J in favour of the Second Respondent against the Appellant and First Respondent; 2. on or about 11 January 2000, paid to the Third Respondent the sum of $159,941.94 'in full and final settlement' of the judgment given by Purdy J in favour of the Third Respondent against the Appellant and the First Respondent; 3. on 17 January 2000, issued out of the Family Court of Australia at Sydney an enforcement summons against the Appellant claiming indemnity in respect of one half of the amount so paid, pursuant to order 6 made by the Full Court on 7 December 1999 [annexure 'B']. The enforcement summons was resolved on its return date, 25 January 2000, by consent orders [annexure 'C'] which relevantly:- 1. provided that order 3.1 made by the Full Court on 7 December 1999 would be satisfied by the Wife paying to the Husband the sum of $336,523.00, and providing to him a first mortgage over Manacumble securing the sum of $420,497.00 plus interest, such mortgage providing relevantly that the principal would be payable by the Wife in the event that the Husband's appeal to the Court of Appeal succeeded so that the judgment was set aside, within a period of 28 days of the Court of Appeal's judgment (subject to an exception in the event of an application for special leave) [orders 1, 3.1]; and 2. noted that the Husband accepted that compliance with the above order 1 would satisfy the Wife's obligations under [order] 3.1 made by the Full Court and would thereupon comply with his obligations under the orders [notation 9], to the intent that if the Husband succeeded in his appeal to the Court of Appeal, the Wife will have failed to pay the full amount she was obliged to pay of $757,020, and the balance of $420,497 together with interest would be payable to the Husband and secured by the mortgage [notation 10]. Such a mortgage was subsequently settled and executed [annexure 'D']. It follows that:- 1. the judgment debts have been satisfied, by the First Respondent, and the Second and Third Respondents are liable to reimburse the First Respondent; 2. the Appellant's rights be relevantly against the First Respondent, and are regulated by the orders of the Family Court. No reason for deferring repayment, as suggested in the submissions made for the Second and Third Respondents is made out. There is no power to do so, save by way of a stay, for which no application has been made. If the submissions be treated as such an application, the necessary evidence to be considered on a stay application is not before the Court." 14 Notation 10 to the Family Court orders of 25 January 2000 was in the following terms: "The purpose and intention of these orders is that if the husband succeeds in his appeal to the Court of Appeal from the judgement that the husband and wife pay to the judgement creditors (the children of the parties:- · Oliver, $643,902.00 · Nicole, $151,336.00 together with interest, then the wife will have failed to pay to the husband the full amount she was obliged to pay to the husband on or before 6 February 2000 of $757,020.00, and the balance of $420,497.00, together with interest from 6 February 2000 will be payable to the husband, which the mortgage is to secure." Interest 15 It is convenient first to deal with the dispute about the relevant interest rate. It is not clear why the Second and Third Respondents have selected an interest rate of 9.55% up to 25 May 2001, or the daily figures indicated thereafter. The rate on judgments for the payment of money was 9.5% until 29 February 2000, and has been higher since then: Supreme Court Act 1970, s 95; Supreme Court Rules Pt 40 r 7 and Schedule J. The Second and Third Respondents have not advanced any submission as to why the Schedule J rates should not apply, and the Appellant's contention that that rate should apply to the date of the order is accordingly to be accepted. Schedule J rates will operate from the date of the order. Directions for further argument 16 The substance of the Appellant's submissions raised the following difficulties, which caused the court on 19 June 2001 to make further directions. (a) The Appellant's proposed orders require the Second Respondent and the Third Respondent to pay the First Respondent, whom they do not wish to pay, though they do wish to pay the Appellant a lesser sum. The First Respondent was not represented on the hearing of the appeal and took no part in it. She may have been wholly ignorant of its outcome and ignorant of the contents of the June written submissions. (b) The argument for the Appellant's proposed orders rests on a complex regime arrived at in litigation in the Family Court (the appeal from the Family Law Act aspects of Purdy J's decision and the enforcement summons) to which the Second and Third Respondents were not parties. It was not clear whether or not the Second and Third Respondents were wholly ignorant of that regime. (c) Since the payments to the Second and Third Respondents were apparently made by the First Respondent and not the Appellant, though no doubt prima facie repayment should be to the First Respondent, the First Respondent had an entitlement to be heard at least on questions of interest. (d) The Appellant's written submissions in answer to the written submissions of the Second and Third Respondents raised fresh factual matters which the Second and Third Respondents ought to have an opportunity, if so advised, to put submissions about. 17 Accordingly on 19 June 2001 directions were made as follows. The Second and Third Respondents were directed to file written submissions in answer to those of the Appellant by 3 July; they did so on 4 July. The Appellant and the Second and Third Respondents were directed to serve the First Respondent with the judgment of 25 May 2001 together with their June written submissions by 17 July 2001. No evidence has been filed indicating whether or not that has been done. The First Respondent was directed to file and serve any written submissions by 31 July 2001. No written submissions were received from the First Respondent. On 16 November 2001 the court inquired of a solicitor acting for the First Respondent whether it was proposed to file any. That solicitor informed the court on 19 November 2001 that the First Respondent did not intend to file any submissions pursuant to the direction affecting her. The Second and Third Respondents' further argument 18 The Second and Third Respondents put the following submissions: "The Second and Third Respondents oppose the orders sought by the Appellant at paragraph 2 of the submissions dated 14th June 2001. They have not been paid any of the monies sought as restitution by the Appellant. They received those monies from the First Respondent and there is no payment to make to the Appellant necessary to restore him to his former position. The dealing between the parties are recorded in the documents annexed to the Appellant's submissions dated 14th June 2001. In summary: On the 7th December 1999, the Full Court ordered the First Respondent to pay to the Appellant on or before the 6th February 2000, $757,020, and upon payment, the husband to transfer Manacumble, Springside and Brymedura plus livestock, equipment, furniture, fittings and grain both harvested and unharvested to her (pars 3.1 and 3.2). The Full Court also ordered that each party indemnify the other as to one half of the amounts payable to the second and third respondents under the judgments in their favour (par 6). On the 11th January 2000, the First Respondent paid the Third Respondent $159,941.94 in settlement of the judgment she then had against her parents. On the 13th January 2000, the First Respondent paid the Second Respondent $681,052.13 in settlement of the judgment he then had against his parents. On the 25th January 2000, the Family Court ordered, by consent, that in satisfaction of order 3.1 made by the Full Court, the First Respondent pay to the Appellant $336,523.00, and give the Appellant a mortgage securing the payment of $420,497.00 plus interest if applicable. The mortgage was to provide (and did provide) that if the Appeal to this Court succeeded so that the judgment was set aside, the First Respondent was to pay the sum secured to the Appellant. The consent orders noted that the 'purpose and intention of these orders is that if the husband succeeds in his Appeal to the Court of Appeal … the wife will have failed to pay to the Husband the full amount she was obliged to pay to the Husband on or before 6th February 2000, and the balance of $420,497 together with interest from the 6th February 2000 will be payable to the Husband, which the mortgage is to secure" (par 10). The Second and Third Respondents concede that if the First Respondent requires it, they will be obliged to repay to her the amounts received by them pursuant to Purdy J's judgment. However, the First Respondent has made no claim or demand against them nor has she commenced proceeding against either of them for the reimbursement of these amounts. In these circumstances, they submit that the Court should make no order requiring them to do so." The arguments considered 19 The thinking underlying the contention of the Second and Third Respondents appears to be this. Purdy J's orders in favour of the Second Respondent and the Third Respondent required the Appellant and the First Respondent (the Respondents before him) to pay the Second Respondent $643,902 and to pay the Third Respondent $151,336. By 13 January 2000 the sum of $643,902 had risen, with interest, to $681,052.13. By 11 January 2000 the sum of $151,336 had risen, with interest, to $159,941.94. Those sums were paid respectively to the Second Respondent and to the Third Respondent on those days. Since the Appellant was, as between himself and the First Respondent, liable for half the payments, his success in this Court in having Purdy J's orders set aside entitled him to recovery of half the payments. His wife is entitled to recovery of the other half of the payments. Half the Second Respondent's payment of $681,0523.13 is $340,526.07. Half the Third Respondent's payment of $159,941.94 is $79,970.97. 20 That thinking of the Second Respondent and the Third Respondent is undercut, however, by one aspect of the argument advanced by them in support of their proposed orders. The person entitled to the restitution of judgment monies paid before a successful appeal is the person who paid the monies: see Mason and Carter, Restitution Law in Australia, para [706]. The Second Respondent and the Third Respondent make the point that the Appellant did not pay to them any of the monies which the Appellant now requires them to pay by way of restitution. Rather, they received their monies from the First Respondent. 21 If that were a complete answer to the present problem, it would mean that the Second Respondent and the Third Respondent had no present duty to pay anything. They had no duty to pay the Appellant, because he had not paid them. And they had no duty to pay the First Respondent, because though she had paid them, she had not demanded repayment from them. Despite this, the Second Respondent and the Third Respondent conceded a preparedness to pay to the Appellant half of what the First Respondent paid them, with interest. Since it was the First Respondent who paid the monies, she is entitled to demand the whole of them back; but she has not done so. If the First Respondent was seeking the orders which the Appellant says should be made, she would be entitled to them. But she is not seeking those orders. 22 The proposed orders of the Second Respondent and the Third Respondent are thus a compromise between the orders to which they are, on their argument, strictly entitled (i.e. no restitution orders), and the orders to which the First Respondent would be entitled if she applied for them. 23 There is a certain rough justice in the orders proposed by the Second Respondent and the Third Respondent. They propose the payment to the Appellant of about $420,000 plus interest from 11 January 2000. That is about half the $840,000 plus interest from about that date which the Appellant says should be paid to the First Respondent. According to the Appellant's submissions, and particularly his reliance on notation 10 to the Family Court orders of 25 January 2000, the First Respondent owes the Appellant about $420,000 plus interest from 6 February 2000 in the event that the appeal to this Court succeeded, as it has. Since the First Respondent was, as between herself and the Appellant, only liable to pay half the judgment sums ordered by Purdy J to be paid, the practical result of the proposal by the Second Respondent and the Third Respondent will be to leave the Appellant in the same position as that which his proposed orders would achieve. 24 Neither the Appellant nor the Second and Third Respondents explained why each of them has chosen to arrive at what appears to be substantially the same practical outcome by radically different means. Unlike those proposed by the Appellant, the orders proposed by the Second Respondent and the Third Respondent do not involve the First Respondent in a course to which she has not consented, and they do not rest on consent orders in Family Court proceedings to which the Second Respondent and the Third Respondent were not parties. In the circumstances there is no reason not to accept the concession which the Second Respondent and the Third Respondent make against their strict interests, and no compelling reason not to make the orders proposed by them. 25 On the other hand, the merits of the Appellant's proposed orders are that they bring about the reimbursement of the First Respondent, who actually paid the judgment debts, and they appear to conform to what was contemplated by the Family Court orders of 25 January 2000, namely that the judgment monies be repaid to the First Respondent and that she pay the Appellant. The fact that the First Respondent did not ask for repayment from the Second and Third Respondents does not matter in view of the fact that she had notice of the Appellant's proposed orders but has chosen to make no submission about them. The contest is a finely balanced one, but the Appellant's proposal appears preferable. Orders 26 In view of the failure of the contentions of the Second Respondent and the Third Respondent about the rate at which interest should run from 11 and 13 January 2000, it is necessary that fresh interest calculations be made. It is proposed that the Appellant and the Second Respondent and the Third Respondent be directed to bring in agreed short minutes of order in relation to the amount which the Second Respondent and the Third Respondent are to pay the Appellant conformably with the above reasons within seven days. In view of the time which has passed since 25 May 2001, there is no occasion for staying the order, nor any evidence to support such a stay. No order as to the costs of the argument on the matters discussed above should be made. 27 The following further orders are proposed. 8. That the Second Respondent have a certificate pursuant to s 6 of the Suitors' Fund Act 1951 in respect of the appeal by the Appellant against Order 1 made by Purdy J. 9. That the Third Respondent have a certificate pursuant to s 6 of the Suitors' Fund Act 1951 in respect of the appeal by the Appellant against Order 2 made by Purdy J. 10. That the Appellant and the Second Respondent and the Third Respondent file within seven days agreed short minutes of order in relation to the amounts which the Second Respondent and the Third Respondent are respectively obliged to pay to the First Respondent conformably with the above reasons for judgment. 11. It is noted that no order as to the costs of the argument leading to the above orders is made. *********** DISCLAIMER - Every effort has been made to comply with suppression orders or statutory provisions prohibiting publication that may apply to this judgment or decision. The onus remains on any person using material in the judgment or decision to ensure that the intended use of that material does not breach any such order or provision. Further enquiries may be directed to the Registry of the Court or Tribunal in which it was generated.