Allbeck & Fielders
[2024] FedCFamC1F 769
•15 February 2024
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Allbeck & Fielders [2024] FedCFamC1F 769
File number: PAC 4152 of 2018 Judgment of: MCNAB J Date of judgment: 15 February 2024 Catchwords: FAMILY LAW – PROCEDURAL – Where an issue estoppel operates to bind the first respondent but not the second respondent to findings made in District Court proceedings brought by the applicant – Where no issue estoppel arises against either the first or second respondent in relation to the second set of orders and reasons in the District Court and where s 91 of the Evidence Act 1995 (Cth) applies. Legislation: Bankruptcy Act 1966 (Cth) ss 120, 121
Evidence Act 1995 (Cth) s 91
Family Law Act 1975 (Cth) s 79
Conveyancing Act 1919 (NSW) s 37A
Cases cited: Ainsworth v Burden [2005] NSWCA 174
Attorney-General (New South Wales) & Martin [2015] NSWSC 1372
Cirillo & Cirillo [2021] FedCFamC1A 45
Jones v Dunkel (1959) 101 CLR 298
Kayler-Thomson v Colonial First State Investments (No. 3) [2023] FCA 606
Kennon & Kennon [1997] FamCA 27
Kuligowski v Metrobus [2004] HCA 34
Ramsay v Pigram (1968) 118 CLR 271
Revill & John Holland Group Proprietary Limited [2022] FCAFC 178
Tomlinson v Ramsey Food Processing Pty Limited [2015] HCA 28
Division: Division 1 First Instance Number of paragraphs: 29 Date of hearing: 13–15 February 2024 Place: Parramatta Counsel for the Applicant: Mr Simpson Solicitor for the Applicant: Penhall & Co Lawyers Counsel for the First Respondent: Ms Bromberger Solicitor for the First Respondent: Holmes Donnelly & Co Solicitors Counsel for the Second Respondent: Mr Lethbridge SC with Mr Havenstein Solicitor for the Second Respondent: James & Jaramillo Legal Pty Ltd Counsel for the Third Respondent: The Third Respondent did not appear ORDERS
PAC 4152 of 2018 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS ALLBECK
Applicant
AND: MR FIELDERS
First Respondent
MS KAZEM
Second Respondent
MR VORONIN (AS BANKRUPTCY TRUSTEE FOR MR FIELDERS)
Third Respondent
ORDER MADE BY:
NO ORDERS MADE
DATE OF ORDER:
NO ORDERS MADE
NO ORDERS MADE
Note: The form of the order is subject to the entry in the Court’s records.
Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).
Part XIVB of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish an account of proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Allbeck & Fielders has been approved pursuant to subsection 114Q(2) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
DELIVERED EX-TEMPORE
(Revised from Transcript)MCNAB J
The issue to be determined in this voir dire is whether an issue estoppel operates to bind the first and second respondents to findings made in the District Court proceedings brought by the applicant and the first respondent. The District Court made two sets of orders. The first was in 2021 in relation to liability of the first respondent to damages as a result of sexual assaults committed on the applicant. The second was in 2022 in relation to an application by the first respondent to be released from a freezing order which had been made in the District Court.
The applicant submits that the respondents are bound by the findings in the first decision, in particular that the first respondent raped the applicant, that the assaults and rapes caused PTSD and that the applicant was awarded damages.
The applicant contends that the respondents are bound by the second judgment, in particular, by the findings of that judgment in relation to the conduct of the first respondent in paying funds to the second respondent from a period from about 2020 to 2021.
At [62] of the applicant’s Points of Claim filed 1 December 2023, it is pleaded that the finding of the District Court in the second judgment has affected an issue estoppel as to part of the divested amounts, which constitutes at least $1 million. That sum is not formulated in the pleading. A paragraph of the second judgment makes findings of fact:
[Quote omitted to comply with Part XIVB of the Family Law Act 1975 (Cth)]
The applicant contends that the second respondent is affected by issue estoppel by reason of her being a privy of the first respondent. This is said to arise because:
(a)of her close involvement in the financial affairs of the first respondent;
(b)that although she was not a party, she was actively involved in the legal proceedings in the District Court by attending conferences with legal advisors to the first respondent; and
(c)it is asserted she has a legal interest in the outcome of those proceedings, because she holds the funds transferred to her on trust from the first respondent, and that this is said to arise from a constructive express trust, outlined at [42] of the applicant’s Points of Claim:
42.Having regard to the Divested Amount held by [Ms Kazem] upon trust for [Mr Fielders], the Alleged Loan Agreement and the Alleged Second Mortgage are both "shams".
Particulars
(a) [Ms Kazem] was lending to [Mr Fielders] his own money.
(b)In any event, the only relevant transaction is a payment of $218,593.95 made by [Ms Kazem] to [E Lawyers] [in] 2021 pursuant to the Alleged Loan Agreement dated […] 2021 and not the sum of $300,000.00.
(c)The payment of $218,593.95 was a payment to [E Lawyers] for the legal costs of [Mr Fielders] in the District Court Proceedings and it was his own money comprising part of the Divested Amount which was used to effect that payment.
The applicant relies on extracts of the transcript of evidence of the first respondent given at the first hearing which it is said confirms the second respondent’s evidence in this proceeding which is that she had managed his financial and legal matters:[1]
105.Accordingly, by agreement between me and [Mr Fielders], I managed all matters relating to legal, employment and financial matters for him. This was time consuming, but it was important because [Mr Fielders] and I both knew that his career would be short-lived, which meant that the opportunities to make financial investments and decisions impacting his (and therefore our) future would be limited to the next several years.
[1] Second respondent’s affidavit filed 15 January 2024 at [105].
The applicant also relies on submissions made by then counsel for the first respondent made in the second hearing and has tendered transcript where that counsel made submissions regarding the transactions and the operation of sections 120 and 121 of the Bankruptcy Act 1966 (Cth). A note provided by counsel for the applicant in this proceeding seeks to identify the second respondent’s legal interests in the outcome of the second proceeding. That note provides:
…
2.In short, the legal interest that the First Respondent had in the outcome of [the District Court proceedings] directly related to the mortgage/security interest that she had in the property located at [F Street], [Suburb G], NSW or that she could otherwise have had in [H Street] [Suburb J] NSW
3.If an order was made to permit the First Respondent to further encumber his assets, those assets were limited to [Suburb G and Suburb J].
4.An order increasing available funds to $150,000 (plus GST) would have permitted the Second Respondent to undertake one of the following three things relevant to the exercise of a proprietary/security interest over assets that would not otherwise have been available but for a variation of the freezing order by the Court:
a.one, the creation of a further advance on the mortgage already registered over [Suburb G];
b.two, the granting of a
second# third mortgage over [Suburb G] in the name of the Second Respondent;c.three, the granting a mortgage over [Suburb J].
5.Similarly, given the Second Respondent was identified as the proposed lender, so long as security was provided, a variation to the order also had the potential to cloak the advance as a secured loan that was otherwise the return of the First Respondent's money that he deposed to when cross-examined.[2]
[2]Exhibit A11.
The respondents oppose the Court making findings that an issue estoppel arises from the findings of fact in both judgments. The first respondent submits that in order for an issue estoppel to arise, four elements must be present, and in that regard, makes reference to [90] of Tomlinson v Ramsey Food Processing Pty Limited [2015] HCA 28 (“Tomlinson”) per Nettle J, where his Honour said:
90.In Kuligowski v Metrobus, this Court adopted Lord Guest's formulation of the elements of issue estoppel in Carl Zeiss Stiftung v Rayner & Keeler Ltd (No 2). That was as follows:
(1) that the same question has been decided; (2) that the judicial decision which is said to create the estoppel was final; and, (3) that the parties to the judicial decision or their privies were the same persons as the parties to the proceedings in which the estoppel is raised or their privies.
In Kuligowski v Metrobus [2004] HCA 34, which was referred to by Nettle J, Gleeson CJ, McHugh, Gummow, Kirby, Hayne, Callinan and Heydon JJ at [25] stated:
25.… A "final" decision, then, is one which is not of an interlocutory character, but is completely effective unless and until rescinded, altered or amended. The fact that an appeal lies from a decision does not make it any less final. It must be "final and conclusive on the merits": "the cause of action must be extinguished by the decision which is said to create the estoppel".
It was submitted that the second decision was not a final order, and therefore issue estoppel does not arise from the findings in that decision. It was also submitted in circumstances where the applicant is not relying on a Kennon & Kennon [1997] FamCA 27 claim in these proceedings arising from the conduct of the first respondent which was the subject of the findings of the first judgment, the first judgment is largely irrelevant to the matters the Court has to consider in this case. Otherwise, the first respondent submits that s 91 of the Evidence Act 1995 (Cth) (“the Evidence Act”) applies to exclude that evidence of the decisions and the findings of fact in the two proceedings as they are not admissible to prove the existence of facts in this proceeding.
The second respondent submits that the decisions and orders of the District Court are concerning matters which are quite separate from what must be determined by the Court in this proceeding, both as to the treatment of assets by the respondents and as to any conclusions that must be made and considerations under section 79(2) and (4) of the Family Law Act 1975 (Cth). It is said that the second decision is interlocutory and not a final order, and, therefore, issue estoppel does arise from its operation. It is submitted that no claim was made by the second respondent under or through the first respondent, and there was no useful order that the second respondent could have sought in the second proceeding, and, therefore, the findings of the District Court judge in the second judgment cannot bind this Court.
CONSIDERATION
The first judgment, which determined the issue of whether the applicant was raped, whether she suffered PTSD, the damages arising from that, and the quantum of those damages, finally determined those issues. The first respondent is bound by an issue estoppel in respect of that judgment and those orders. The second respondent does not seek to challenge those findings, but she is not subject to issue estoppel in respect of that judgment.
The second judgment arises from an interlocutory application by the first respondent to vary the term of a penal notice under a freezing order which had been made by the District Court to allow him to encumber assets to borrow funds for legal fees to fund an appeal.
The second judgment records the defendant sought to further encumber remaining assets, and he alleged that it was necessary for him to provide security to his former partner, the second respondent, in order for her to release $165,000 so as to fund the appeal. In the judgment, a chronology prepared by the plaintiff records events, including the transfer of funds from the first respondent to the second respondent from 2020. That chronology includes commentary from the plaintiff which was not the subject of findings in the judgment; that is, particularly in regard to whether about $600,000 that was paid to the second respondent pursuant to what was described as a separation agreement in 2021 was bona fide.
Further, the chronology is framed in terms of phrases such as, ‘The defendant claims to have separated from the second respondent’. The judgment does not purport to make any finding about whether that occurred or not. The learned District Court judge made the findings which I have referred to earlier and understandably, there was no concluded determination in the judgment as to whether the payment of about $600,000 was said to form part of the separation agreement given the nature of the application before the Court. There was no particular analysis of each of the payments made by the first respondent to the second respondent.
For instance, there is no detailed consideration of whether money paid by the first respondent to the second respondent in 2020 was a payment made to avoid satisfying the judgment made in favour of the applicant. This was in circumstances where no proceeding had been issued in the District Court, and there was no judgment. There is no specific finding that payment was made to defeat any claim made pursuant to the Family Law Act1975 (Cth). A finding refers to the judgment made in favour of the defendant, which judgment was delivered in 2021, and not to any judgment that may be made in favour of the plaintiff or a prospective judgment.
I do not raise these matters as a criticism of the District Court judge. I raise them because the Court there did not have before it an application for orders pursuant to section 37A of the Conveyancing Act 1919 (NSW). His Honour was making findings as part of a determination of whether to release the second respondent from the terms of a penal notice so that he could further encumber property. That was an interlocutory hearing on that issue. He did not purport to consider evidence in relation to each of the transactions. There was no notice given to the second respondent that findings might be made which may affect her, and the findings that were made were made without considering evidence or receiving submissions from her. That is not unexpected in an interlocutory application of the kind that was being made by the first respondent.
It is notable that the applicant now wishes the Court to make findings that the separation agreement is a sham notwithstanding that the reasons given by the District Court judge suggest that the money paid pursuant to that agreement was perhaps not made in order to dissipate or minimise the defendant’s (first respondent’s) assets. There is no finding on the quantum of what was actually paid under this separation agreement, as it is referred to in the judgment. At one paragraph, the sum is “over 600,000”, at another, it is $630,000, at a third, it is about $620,000. The applicant’s position begs the question as to what part or parts of the judgment are said to bind this Court. A further confusion arises because, in a bank statement in an account held by the second respondent, Exhibit A9, which was tendered by the applicant, shows a deposit into that account in 2021 in the sum of $1,020,000. There is some doubt as to the quantum of the payment made by the first respondent pursuant to that separation agreement and the extent to which it is affected by any findings made in the second District Court decision.
I raise these matters as there is significant doubt as to the factual findings which are said to give rise to issue estoppel the respondent in this proceeding and bind this Court. It raises a real difficulty in determining how s 91 of the Evidence Act is said to operate in this case.
In Attorney-General (New South Wales) & Martin [2015] NSWSC 1372 at [13], it was stated:
13.…Whether s 91 operates to exclude the use of any of the decisions and judgments will depend upon an analysis of three things - (i) what facts were in issue in those proceedings; (ii) what facts were found in the decisions; and (iii) the use to which the Attorney General seeks to put those judgments - that is, what facts she seeks to prove by their use.
The position taken by the applicant creates a real difficulty to determine precisely what facts were found and how they are to be used in this proceeding.
Second, as noted above, an issue estoppel arises on the rendering of a final judgment (Tomlinson at [90]). Upon the delivery of a final judgment, the rights and obligations in controversy or between the parties subject to the judgment cease to have independent existence.[3] The application to vary the freezing order was an interlocutory application. A further application could have been brought by the first respondent in relation to the matter. In Kayler-Thomson v Colonial First State Investments (No. 3) [2023] FCA 606, Colvin J stated at [46] and [49] stated:
46The application brought by Mr Kayler-Thomson was interlocutory. It did not result in a final decision. Orders which are made to operate with finality so as to quell a controversy by extinguishing a cause of action operate in a different manner to interlocutory orders: Kuligowski v Metrobus [2004] HCA 34; (2004) 220 CLR 363 at [25]. Interlocutory orders are made until further order and a Court remains in control of its interlocutory orders: Hogan v Australian Crime Commission [2010] HCA 21; (2010) 240 CLR 651 at [29].
…
49Generally, the Court will refuse to entertain a second interlocutory application made by the same party to revisit the same interlocutory issue in the same proceedings unless there has been a material change in circumstances or there is reliance upon material that was not available upon reasonable inquiry at the time of the earlier application. Nominal Defendant & Manning (2000) 50 NSWLR 139 at [11] – [17]. Nevertheless, it may be accepted that the concerns that inform the principles of issue estoppel and Anshun estoppel may be brought to bear by a Court in declining to entertain a second interlocutory application as to the same subject matter…
[3]Tomlinson v Ramsey Food Processing Pty Limited [2015] HCA 28 at [20].
In relation to the status of interlocutory judgments, I also refer to Revill & John Holland Group Proprietary Limited [2022] FCAFC 178 at [117]. The second judgment is not a final judgment, and therefore issue estoppel does not arise in relation to it. Counsel for the applicant raised that the decision could be appealed from, however, the fact that it could be appealed from is not decisive, and I note that the second respondent had no standing to appeal that decision in any case.
The applicant asserted that the second respondent was a privy of the first respondent in respect of the second proceedings and bound by the findings of the Court and subject to issue estoppel by reason of that. In order to be a privy, the person said to be affected by the estoppel must claim under or through a person of whom he is said to be a privy (Ramsay v Pigram (1968) 118 CLR 271 cited in Tomlinson at [13]). At [35] of Tomlinson it provides guidance on the form of the interest in the proceedings that a privy must have:
35.Subsequent applications of the principle in Ramsay v Pigram have for the most part correctly emphasised that the interest of the privy must in each case be a legal interest: an economic or other interest on the part of A in the outcome of the earlier proceeding is insufficient. Those applications have also correctly emphasised that, absent a legal interest, such influence as A might have over the conduct of the earlier proceeding is irrelevant even if that influence amounted to control. Thus, directors of a company, who also held shares in its parent company, were held not to be estopped from pursuing a later action to recover damages to compensate for a loss on their own account in circumstances where they had stood to gain financially from an earlier action by the company claiming damages for loss on the company’s account. That was despite the directors having been found to have exercised effective control over the company’s conduct of that earlier action…
The second respondent has made no claim under or through the first respondent in the District Court proceeding and there are no orders that the second respondent could sensibly have sought in the application. Further, as she had no standing to appeal the orders made, I do not accept the matters identified by the applicant, being that the applicant may have lent money to the second respondent and secured that lending against properties of the first respondent as establishing a legal interest in the application. In order to be affected by the estoppel, it must be established that the parties have the same legal interest, and in that regard, I refer to [106] of Tomlinson, where Nettle J stated:
106.Equally, to establish that a party has an interest in a putative privy’s claim, it is not enough to establish that the party and putative privy have different legal interests productive of a unity of outcome. It is necessary that they share the same legal interest.
The first and second respondents did not share the same legal interest in the second proceeding, either in its conduct or its outcome. The evidence does not support a finding that the second respondent controlled the proceeding. She was not a party to the proceeding; she did not give evidence and her management of the finances of the first respondent does not necessarily amount to control.
I do not accept the submission made by the applicant that the second respondent was bound by submissions made by counsel for the first respondent before the District Court judge in the second application. That counsel was not representing her. Nor is she bound by evidence given by the first respondent. In relation to a submission that a Jones v Dunkel (1959) 101 CLR 298 inference should be drawn against each of the respondents because the second respondent did not give evidence in the District Court proceeding, I do not understand how that inference can be drawn against the second respondent, as she was not a party.
I do bear in mind what was said in Tomlinson at [39] of that decision of the plurality:
39.The justice of binding to an estoppel a person whose legal interest stood to benefit from the making or defending of a claim by someone else in an earlier proceeding will often also be apparent. With the benefit of the claim or defence also comes the detriment of the estoppel. That, at least, is the underlying theory, but it is a theory which has limitations. It would be quite unjust for such a person to be precluded from asserting what the person claims to be the truth if the person did not have an opportunity to exercise control over the presentation of evidence and the making of arguments in the earlier proceedings and if the potential detriment to the person from creating such an estoppel was not fairly taken into account in the decision to make or defend the claim in the earlier proceeding or in the conduct of the earlier proceeding.
In these circumstances, I find that an issue estoppel arises from the first judgment as against the first respondent in respect of the finding that the first respondent assaulted and raped the applicant; the assaults and rapes caused the applicant to suffer PTSD; the applicant was awarded damages arising from the injury suffered, but not against the second respondent. As to the second orders and reasons, no issue estoppel arises against either respondent and s 91 of the Evidence Act applies. As to the application of s 91 of the Evidence Act, I note the decision of the Full Court of the Family Court in Cirillo & Cirillo [2021] FedCFamC1A 45 at [36], which notes that s 91 is not a prohibition on the admission into evidence in other proceedings of findings, citing Ainsworth v Burden [2005] NSWCA 174.
I reserve the question of costs of the voir dire hearing.
I certify that the preceding twenty-nine (29) numbered paragraphs are a true copy of the ex-tempore Reasons for Judgment of the Honourable Justice McNab. Associate:
Dated: 22 November 2024
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