Callas and Callas and Anor
[2016] FCCA 1247
•19 May 2016
FEDERAL CIRCUIT COURT OF AUSTRALIA
| CALLAS & CALLAS & ANOR | [2016] FCCA 1247 |
| Catchwords: FAMILY LAW – Application for alteration of property interests under the Family Law Act 1975 – where Respondent Husband is a bankrupt – where his trustee is a party to proceedings – interim issues about the distribution of sale proceeds of a property – where the Applicant Wife is representing herself and is suffering from ill health. |
| Legislation: Family Law Act 1975, s.79 |
| Cases cited: Harris & Hadfield [2014] FamCAFC 41 Macquarie Leasing Pty Limited & Culleton [2014] FCCA 1714 Re F: Litigants in Person Guidelines [2001] FamCA 348 |
| Applicant: | MS CALLAS |
| First Respondent: | MR CALLAS |
| Second Respondent: | MR POOLE IN HIS CAPACITY AS TRUSTEE OF THE BANKRUPT ESTATE OF MR CALLAS |
| File Number: | SYC 5579 of 2015 |
| Judgment of: | Judge Altobelli |
| Hearing date: | 16 May 2016 |
| Date of Last Submission: | 16 May 2016 |
| Delivered at: | Sydney |
| Delivered on: | 19 May 2016 |
REPRESENTATION
| No appearance by the Applicant |
| The First Respondent appeared in person |
| Counsel for the Second Respondent: | Mr Bennett |
| Solicitors for the Second Respondent: | Polczynski Lawyers |
ORDERS
With the exception of $25,000, the Second Respondent be granted leave to apply the net proceeds of sale of the property known as Property W (presently subject to the Orders of Judge Henderson dated 18 December 2015 in this proceeding) to the Second Respondent’s legal costs, professional costs, and/or in any other way for the benefit of the creditors of the bankrupt estate of the First Respondent.
The Applicant has leave to file an Application in a Case, supported by an Affidavit, seeking an order that she have access to the remaining $25,000 for the purposes of legal costs of continuing the present proceedings, provided she files such Application in a Case within 42 days.
If the Applicant has not filed her Application in a Case in accordance with Order 2 above, then within 14 days thereafter, the Second Respondent file and serve a proposed Minute of Order sought and any further evidence in support.
The Applicant’s Application in a Case be made returnable before Judge Altobelli on 21 July 2016 at 10:00am (Court 3D, Lionel Bowen Building, 97-99 Goulburn Street, Sydney).
The parties costs be reserved.
THE COURT NOTES THAT:
A.In the event the Applicant has not complied with Order 2 above, the matter will remain listed on 21 July 2016 for Mention to consider any further application by the Second Respondent.
IT IS NOTED that publication of this judgment under the pseudonym Callas & Callas & Anor is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYC 5579 of 2015
| MS CALLAS |
Applicant
And
| MR CALLAS |
First Respondent
| MR POOLE IN HIS CAPACITY AS TRUSTEE OF THE BANKRUPT ESTATE OF MR CALLAS |
Second Respondent
EX TEMPORE REASONS FOR JUDGMENT
These reasons for judgment explain the Orders that I have made in this matter. The Applicant Wife, by way of her Amended Application filed 24 December 2015, seeks both final and interim Orders. The First Respondent is her former husband, who is now bankrupt. The Second Respondent is her former husband’s Trustee in Bankruptcy.
The final Orders that she seeks are by way of division of matrimonial property, that is, a property settlement. The interim Orders she seeks focuses on dealing with the sale proceeds of what appears to have been the former matrimonial home in Property W. Nothing turns on whether it was or not. This property was sold at auction in November last year.
The Trustee in Bankruptcy also seeks interim Orders. In effect, he would like to use the sale proceeds to pay various expenses relating to the sale of the property as well as the administration of the bankrupt estate.
On 18 December 2015, Her Honour Judge Henderson made a number of interim Orders. The relevant order for present purposes is Order 5, which states:
Pending further order, I injunct and restrain the parties from applying the net proceeds of sale to pay the 2nd respondent’s legal and professional costs.
It would seem that what the order intended to achieve, no doubt on the application of the Wife, was to prevent the sale proceeds being used for any purpose other than meeting direct sale costs.
The matter first came before my Court on 16 March 2016. The matter was adjourned to 8 April 2016 at 2:00pm for Mention. At the request of the Applicant, the matter was then again adjourned to 16 May 2016. The adjournments on 16 March 2016 and 8 April 2016 were on each case occasioned by the Applicant. There was no appearance by the Applicant on 16 May 2016, and there is no appearance by the Applicant today as I provide these oral reasons.
Exhibit A1 is the medical certificate that was provided on behalf of the Applicant, relating to the adjournment on 16 May 2016. Exhibit A2 is the medical certificate provided on behalf of the Applicant in relation to her adjournment for 8 April 2016. As it turns out, the evidence before the Court explains that the first Mention on 16 March 2106 was, in effect, aborted as a result of the distress suffered by the Applicant whilst at Court. The medical certificates refer to the anxiety and stress the Wife is experiencing, no doubt as a result of the factual matters that brings this matter to Court.
Whilst the Applicant was not in Court on 16 May 2016, the Court did allow her former husband, the bankrupt, to speak. The Court was prepared to treat Exhibit A1 as an adjournment application on the Wife’s behalf. Nonetheless, what the Applicant’s former husband told the Court provided it with a useful insight in relation to what the Wife was seeking to achieve, at least in part.
The Court does not accept that the interests of the Applicant and the bankrupt former Husband are necessarily the same, but his comments did give the impression that there was a measure of alignment between them and certainly common interest as regards their complaints against the Trustee. In any event, much of what the bankrupt Husband told the Court on 16 May 2016 resonates with other materials to which the Court will now refer.
There was a substantial volume of material before the Court, which I will list below:
·Initiating Application, filed 25 August 2015;
·Financial Statement of Ms Callas, filed 25 August 2015;
·Affidavit of Ms Callas, sworn 25 August 2015 and filed 25 August 2015;
·Application in a Case, filed 6 November 2015;
·Affidavit of Ms Callas, sworn 4 November 2015 and filed 6 November 2015;
·Amended Initiating Application, filed 3 December 2015;
·Financial Statement of Ms Callas, filed 3 December 2015;
·Affidavit of Ms Callas, sworn 2 December 2015 and filed 3 December 2015;
·Amended Initiating Application, filed 24 December 2015;
·Affidavit of Ms N, sworn 15 March 2016 and filed 15 March 2016;
·Affidavit of Ms N, sworn 10 May 2016 and filed 10 May 2016;
·Application in a Case filed 12 May 2016;
·Affidavit of Ms N, sworn 16 May 2015 and filed in Court 16 May 2015;
·Second Respondent’s Outline of Submissions, handed up in Court on 16 May 2016;
In short, the issue for the Court to decide is whether, and if so, how to allow dealings with the net sale proceeds of the Property W property currently held in trust by the Trustee. There are far more issues in dispute between the parties than there is common ground. What is apparent from looking at the evidence and the materials on which they rely is that each makes serious allegations against the other.
The proceedings are still at an interim stage. It is not possible to make findings of fact. It is not possible to determine whether there is any substance to the serious allegations that each makes against the other. There are multiple layers of complexity in this case, not just factually but legally. Moreover, the Applicant is representing herself in a potentially complex proceeding.
The significance of the Applicant representing herself must not be underestimated. Both the Full Court of the Federal Court and the Full Court of the Family Court have spoken about the particular challenges associated with dealing with litigants in person [SZRUR & the Minister of Immigration and Border Protection [2013] FCAFC 146; Re F: Litigants in Person Guidelines [2001] FamCA 348, which is more recently discussed in Harris & Hadfield [2014] FamCAFC 41].
The Courts set out guidelines about dealing with people representing themselves in potentially complex litigation. What becomes apparent for the trial judge is that it becomes a difficult balancing exercise. In a recent decision of mine, Macquarie Leasing Pty Limited & Culleton [2014] FCCA 1714, referring to the authorities, especially the Full Court of the Federal Court’s decision, I made the following observations:
How do these principles apply to the facts of this case? The emphasis must be on providing to the litigant in person a fair hearing whilst not being unfair to the other litigant. Sometimes, as in this case, this can only be achieved by attempting to identify the litigant in person’s substantive issues or concerns notwithstanding that they may be poorly articulated, often without reference to the relevant law or legal principle.
The focus must be on substance rather than form, provided there is no prejudice to the respondent litigant, and further provided the hearing is conduct in a manner that reflects the indicia of an exercise of the judicial power of the Commonwealth.
The Court observes that in this particular case, not only is Ms Callas representing herself but there is clear evidence that she is suffering health issues as a result of the proceedings.
There is voluminous material before the Court. Certain matters are clear. The Trustee would like to be able to continue to administer the bankrupt estate of the Husband. The interim order that Judge Henderson made on 18 December 2016, perhaps inadvertently, hinders this. The Trustee accepts that the Wife has a claim under s.79 of the Family Law Act 1975 (hereafter referred to as ‘the Family Law Act’). He would like to see that claim properly particularised and the matter then proceed to a mediation with a view to settling that aspect of the claim.
The Trustee’s case, as outlined in the very useful outline of submissions prepared by Mr Bennett, the Trustee’s Counsel, is in effect, that there are adequate assets to meet the Wife’s claim, as well as to address the need to have costs to administer the estate. In any event, Mr Bennett seemed to acknowledge, pragmatically, that if there was a contest between the Wife’s statutory claim under the Family Law Act and the competing claims of creditors, as well as the costs of the administration, there is a means of reconciling those competing claims. The Wife’s claim under the Family Law Act would not be lost in all of that.
The Wife probably does not understand the comparatively strong position that she is in insofar as her claim under the Family Law Act is concerned. Litigants representing themselves in potentially complex litigation often cannot see the forest because of the trees. The Trustee wants an orderly administration of the bankrupt estate which includes the Wife’s claim under the Family Law Act which, if it cannot be settled as between the Trustee and the Wife, must ultimately be adjudicated by this Court.
Ironically, because of the Wife’s ill-health and consequent non-participation in the proceedings, her claim under the Family Law Act has not progressed. What is equally apparent from the materials before the Court is that the Wife has struggled, not just with ill-health, but with the inability to obtain what she considers to be adequate legal representation. She complains about lack of funds with which to engage lawyers. She would like access to some of the funds representing the sale proceeds of the Property W property so that she can fund proper legal representation.
The Court believes that it may be possible to meet the interests of both the Wife and the Trustee in Bankruptcy. Indeed, it is in the interests of all parties concerned, as well as in the public interest that, if possible, the Wife, who is clearly struggling with this case, has the opportunity to be put in funds so that she can obtain legal representation.
The Court believes that this can be achieved by giving her the opportunity to make an application to the Court for an interim property order which will enable her to secure funds up to $25,000 for her legal costs in this case. Based on this Court’s experience, that amount will provide her with a meaningful sum to continue this litigation through to finality. The purpose of the funds will be to strictly pursue proceedings under the Family Law Act. It is not to pursue any claims that the Wife may believe she has against the Trustee in Bankruptcy under the Bankruptcy Act 1966 (hereafter referred to as ‘the Bankruptcy Act’) or otherwise arising out of any concerns she has about the administration of the bankrupt estate. Once the Wife receives her share of property under the Family Law Act, she can use those funds for whatever purpose she desires.
It is important for the Wife to realise that what the Court will attempt to achieve through the making of the present interim Orders is to give her the opportunity to make application for interim costs. The present order is not an interim costs order, but rather, it reserves the sum for a finite period that can be used for that purpose if the Wife makes a timely application, and if such an application is duly successful. The Trustee will, of course, have input into any such application.
However, there is no basis for denying the Trustee the remaining funds so that he can administer the estate as he is bound to do under the Bankruptcy Act. Based on the evidence before the Court, it seems that there are other assets that need to be dealt with for purposes of the administration as well. Indeed, it is those other assets that might provide potentially the source of any payment for the Wife under the Family Law Act, as well as the source of payment of any other claims, including the costs of administration and creditors.
As the Wife is representing herself, it is appropriate for the Court to provide her with some guidance about this matter. She is encouraged to find an appropriately qualified and experienced family lawyer to give her advice about her property settlement. In relation to an application for interim costs, she should seriously consider retaining the services of an accredited specialist in Family Law.
The Law Society of New South Wales might be able to assist her in this regard. She might be able to find a lawyer who is prepared to act for her without being paid, in anticipation of the Court making the interim costs order, particularly if these reasons for judgment were made available to such lawyer. However, the Wife is encouraged to focus on the issues before this Court. The Court is entertaining her application for property settlement under the Family Law Act. There is no application before this Court to deal with any of the numerous complaints she appears to have about the bankruptcy administration. In any event, those concerns are irrelevant to the property settlement. She is encouraged to focus on the property settlement. If she has complaints about the Trustee, she should get advice and consider whether it is appropriate to bring a separate application under the Bankruptcy Act in that regard. It does not help her property settlement case at all if she comes to Court and complains about matters that are irrelevant to the property settlement.
As the bankrupt Husband is also representing himself, he also needs to understand that what is before the Court is his former wife’s property settlement. He has no standing in that case, except in relation to any matrimonial property that may not have vested in the Trustee in bankruptcy. If there is such non-vested property, it is not apparent to the Court from the materials before it. He needs to understand that because he has no standing, he has no right to be heard. However, as I indicated to him on 16 May 2016, I was interested to hear his views in the absence of his former wife. If he has concerns about the administration of the bankrupt estate, there may well be things that he can do, but those issues are not matters before the Court and are irrelevant.
I make the Orders that I indicated earlier.
I certify that the preceding twenty-seven (27) paragraphs are a true copy of the reasons for judgment of Judge Altobelli
Date: 25 May 2016
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