Colby and Coppola & Ors

[2020] FamCA 358

FAMILY COURT OF AUSTRALIA

COLBY & COPPOLA AND ORS [2020] FamCA 358

FAMILY LAW – PRACTICE AND PROCEDURE – where the Second and Third Respondents seek to be discharged from the de facto property proceedings –application dismissed

Family Law Rules 2004, rr. 6.03, 6.04, 5.01

Kelly & Lomax & Anor [2013] FamCA 496
Cavill & Caneva [2019] FamCA 629

APPLICANT: Ms Colby

FIRST RESPONDENT: Mr Coppola

SECOND RESPONDENT: Mr D Coppola

THIRD RESPONDENT: L Pty Ltd

FILE NUMBER: MLC 3489 of 2015

DATE DELIVERED: 19 May 2020

PLACE DELIVERED: Brisbane

PLACE HEARD: Brisbane

JUDGMENT OF: Baumann J

HEARING DATE: 31 January 2020

REPRESENTATION

THE APPLICANT: Self-represented

THE FIRST RESPONDENT: Self-represented

THE SECOND RESPONDENT: Self-represented

THE THIRD RESPONDENT: Self-represented

Orders

1. That the Application in a Case filed 4 December 2019 by Mr D Coppola and

   
   

   L Pty Ltd, for an order removing them as parties to this case, be dismissed.

2. That the proceedings be listed for a Case Management Hearing by telephone at 9.30am on 3 June 2020.

3. That all parties have leave to appear by telephone on 3 June 2020 by using the “AAPT GlobalMeet” telephone conferencing system as follows:

   (a)They shall each telephone … (within Australia only) (toll free) by 9.25am on 3 June 2020;

   (b)       They shall each then enter the pass code …; and

   (c)Hold the line until the Court is ready to connect and proceed with the matter.

Note: The form of the order is subject to the entry of the order in the Court’s records.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Colby & Coppola has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).

FAMILY COURT OF AUSTRALIA AT BRISBANE

FILE NUMBER: MLC 3489 of 2015

Ms Colby

Applicant

And

Mr Coppola

Respondent

REASONS FOR JUDGMENT

Introduction

1. The parties in these proceedings, the Applicant Ms Colby and the Respondent Mr Coppola were in a de facto relationship for over six years before they separated in January 2015.

2. Mr Coppola initially commenced proceedings in the Federal Circuit Court of Australia in Melbourne in April 2015 for property settlement however those proceedings were dismissed (after numerous Court appearances) in December 2017 by a Federal Circuit Court Judge as a result of non-compliance with directions and Orders.

3. Subsequently in March 2018, Ms Colby recommenced proceedings seeking, amongst other orders, that Mr Coppola pay her $462,000.  Because by that time, the application had not been filed within the standard application period of two years post separation, leave to commence proceedings was also sought.

4. In November 2018 a Judge of Federal Circuit Court of Australia ordered that leave be granted to seek property settlement under s 90SM of the Family Law Act 1975 (“the Act”) and then transferred the proceedings to this Court.

5. Since the matter first came before a Registrar of this Court on 6 February 2019, there have been numerous events and applications filed accompanied by voluminous material.  It is fair to observe that the highly adversarial conduct of these unrepresented parties is fuelled by the toxic relationship that now exists between them and allegations made of conduct (bordering on fraud) levelled one against the other.

6. A Judge of this Court dealt with a number of interlocutory applications and refused the application of Mr Coppola to transfer the case to the Federal Circuit Court of Australia in Melbourne, and further on 6 September 2019, made the following orders:

   “1.The Application in a Case filed 10 May 2019 and the Application in a Case filed 21 June 2019 and the Further Amended Application in a Case filed 30 July 2019 and the Response to Application in a Case filed 17 June 2019 and the Response to Application in a Case filed 13 August 2019 and the Response to Application in a Case filed 21 August 2019 are dismissed.

   2.In the event that Ms Colby seeks to join L Pty Ltd and/or Mr D Coppola to these proceedings, she file and serve a Further Amended Initiating Application (in which she particularises the orders sought against L Pty Ltd and/or Mr D Coppola personally) by 4.00 pm on 4 October 2019.

   3.Ms Colby has leave to seek the issue of subpoena directed to M Bank, Westpac Banking Corporation, the Commonwealth Bank of Australia and National Australia Bank in relation to accounts held by Mr Coppola with those institutions.

   4.Ms Colby has leave to seek the issue of a subpoena directed to L Pty Ltd for the production by it of all documents associated with its purchase of plant and equipment from Mr Coppola.”

7. In accordance with those Orders, on 30 September 2019 Ms Colby filed an amended Initiating Application in which she named Mr D Coppola as a Second Respondent and L Pty Ltd as the Third Respondent. By Rule 6.03 of the Family Law Rules 2004 (“the Rules”), and with the authority of the Orders made by Hogan J, the two parties Mr D Coppola and L Pty Ltd became parties to these proceedings.

8. By an amended Response filed by Mr Coppola on 17 October 2019, he sought orders that “all & any request of 3^rd party involvement by the applicant to be struck out”.

9. In the said amended Initiating Application (further amended on 11 October 2019) Ms Colby sought the following final orders, namely:

   “1.That [the] First Respondents pay in total to the Applicant Four hundred and sixty-two thousand dollars ($462,000).

   2.That the Second and Third Respondents pay any shortfall in assets available to the First Respondent, to pay the Applicant in total Four hundred and sixty-two thousand dollars ($462,000).

10. By Application in a Case filed 4 December 2019, Mr D Coppola and his company L Pty Ltd sought orders that they be removed from the proceedings – and that Application is opposed by Ms Colby, as her Response filed 30 January 2020 makes clear.

11. The Application to be removed came before me for determination on 31 January 2020, and after hearing all parties I directed Mr D Coppola to produce further evidence and on 11 February 2020 Mr D Coppola filed a further Affidavit which he says provides the further bank statements requested.

Application to remove a party

1. Rule 6.04 of the Rules allows a party to seek to be removed as a party to a case, and Rule 5.01 sets out the procedure which has been followed by Mr D Coppola.

2. There are few authorities that appear to exist interpreting the test to be applied when a party seeks to be removed as a party, however as Tree J noted in Kelly & Lomax and Anor [2013] FamCA 496 at [35], the test is, in a sense, the inverse of the test which applies to Rule 6.03 about joining a party – essentially as set out in Rule 6.02 that a person “whose rights may be directly affected by an issue in a case, and whose participation as a party is necessary for the court to determine all issues in dispute in the case must be included as a party to the case.”

Discussion

1. Accepting that, as all parties are currently unrepresented, some of the legal principles they seek to apply are more shaped by what they claim is their case from their individual perspective, doing the best I can, the assertions include:

   a)Ms Colby and Mr Coppola intermingled their financial interests during their relationship of over six years (although the length of their relationship is disputed).  This included the operation of a plant and equipment business (which comprised a number of pieces of equipment) through an entity knows as the “P Trust” and trading in publicly listed shares;

   b)during the course of the relationship, funds were borrowed by Ms Colby on the security of real property owned by her solely and which she had owned prior to the relationship commencing.  The reasons of Hogan J published 6 September 2019 (see Cavill & Caneva [2019] FamCA 629) at paragraphs 18 to 30 set out what I adopt as the positions each party asserts to the liability for the loans secured against the property of Ms Colby and the bona fides of the “sale” or “transfer” of various assets in the earth moving business from the Trust to the company L Pty Ltd controlled and operated by Mr D Coppola.  There are also serious allegations made by Mr Coppola that Ms Colby forged documents relating to various share transfers;

   c)In circumstances where Mr Coppola says he now has no property or assets to meet any of the claims Ms Colby has launched against him, at any trial of the substantive proceedings – leaving aside disputed financial and non-financial contributions – the major issue is what now constitutes the divisible pool of interests the parties hold and:

   i)the transactions relating to the purchase and disposal of shares in publicly listed companies is a significant issue, not the least because on 13 October 2016, a Judge of the Federal Circuit Court of Australia made Orders that Ms Colby sell the shares held within the P Trust and that the nett proceeds be applied towards the debts of the Trust secured over the property owned by Ms Colby.  The shares were not immediately sold and when sold Ms Colby says some of the proceeds were used for her living expenses not debt reduction;

   ii)Ms Colby asserts that the loans were drawn down by Mr Coppola to an amount of approximately $347,914 between February 2013 and August 2015 and that he applied the funds for his own purposes.  This is denied by Mr Coppola, who says he operated the plant and equipment business effectively until June 2015 when it closed;

   iii)importantly, for the purposes of the Application by Mr D Coppola to be removed from the case involving his father and Ms Colby, Mr Coppola says he had the authority to sell equipment owned by the Trust after the business ceased operation.  He says he sold the equipment to L Pty Ltd at market value and relies upon a valuation dated 15 April 2016 by R Pty Ltd where the valuer opined the equipment had a value (based on auction realisation) of $50,045.  The valuation is untested evidence and will be an issue to be considered at trial, as Ms Colby says that the equipment was acquired for $191,957 and Mr Coppola sold the equipment under value;

   iv)Ms Colby asserts that Mr D Coppola’s company L Pty Ltd (which was incorporated) on 12 April 2016, was created for the sole purpose of taking over the assets and business of the Trust – diverting the pool of assets available for distribution and that thereafter Mr Coppola operated the business and received income for doing so;

   v)Mr D Coppola disputes, by Affidavit, these allegations and says:

   (i)he made a business decision to begin a plant and equipment business – a business or industry in which he does not allege he had prior experience or involvement; and

   (ii)he regarded the valuation of the equipment as fair and has produced bank statements for L Pty Ltd revealing payments between April 2016 and 23 June 2016 totalling $49,145 which he says were for the equipment.  He says his company has not been profitable in the plant and equipment business.

   vi)Mr Coppola concedes he received the proceeds of sale of the equipment and used it for his own living expenses; and

   vii)Mr D Coppola claims that the funds utilised to establish L Pty Ltd and to purchase the equipment were provided from his own sources – unrelated to his father.  Ms Colby disputes that assertion.

Conclusion

1. Sadly the conflict between Ms Colby and Mr Coppola has now engulfed Mr D Coppola.  The creation of a fresh company just weeks before equipment is purchased to run a plant and equipment business raises some legitimate suspicions in the mind of Ms Colby.

2. With the history of the alleged dubious dealings that Ms Colby asserts against Mr Coppola and Mr Coppola asserts against Ms Colby, it is open to question the transaction involving the sale of equipment.

3. However, the Court is mindful that there may be an element of tactical pressure behind the claim against Mr D Coppola which she mounts.  Mr Coppola joins his son in seeking the Court remove Mr D Coppola and/or L Pty Ltd as a party.

4. L Pty Ltd is clearly the alter ego of Mr D Coppola.  Although removing Mr D Coppola (but not L Pty Ltd) as a party has some initial attraction – so that Mr D Coppola does not need to be further troubled with the litigation – it would be wrong in these circumstances to distinguish between the interests of Mr D Coppola and L Pty Ltd.

5. As currently raised, seeking an indemnity in sorts from Mr D Coppola and/or L Pty Ltd for all the losses Ms Colby claims to have incurred (totalling $462,000) is doomed to fail.  At best, properly pleaded, the best that Ms Colby could seek to recover is the value of the equipment IF it is not established that Mr D Coppola’s funds were in fact the source of the purchase monies for that equipment.  If the business has not been profitable, it is hard to quantify any loss of profits flowing to the Trust.

6. However, in the exercise of my discretion, I dismiss the application by Mr D Coppola (on his behalf and that of the company L Pty Ltd) to be removed as a party but in so doing, I make it clear to Ms Colby that as a continuing party, Mr D Coppola’s involvement should be limited to the transaction where he purchased the equipment and his subsequent use of the equipment.

7. It is not necessary when considering that transaction, likely to be within the context of a properly instituted claim under s 106B of the Family Law Act 1975, to expose Mr D Coppola to the type of broad personal financial discovery that applies to the parties to the relationship.

8. Accordingly, in respect of directions which now need to be made to progress this matter to a Final Hearing, the Court is likely to limit the discovery Mr D Coppola and/or L Pty Ltd is required to make.

9. I make the orders which appear at the commencement of these Reasons.

I certify that the preceding twenty-three (23) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Baumann delivered on

19 May 2020.

Associate: 

Date: 19 May 2020