COLBY & COPPOLA

[2019] FamCA 629

FAMILY COURT OF AUSTRALIA

COLBY & COPPOLA [2019] FamCA 629

FAMILY LAW – PROPERTY – Where the parties established a plant and equipment business which they ran through a trust – Where interim orders were previously made requiring the Applicant to sell shares held within the trust and for the proceeds to be applied to debt outstanding on two loan accounts, but to be met by the parties in respect of one account each until this occurred – Where the proceedings were dismissed as neither party complied with these orders – Where the Applicant is seeking that the Respondent pay amounts each month, as well as arrears, in respect of the loan accounts – Where this is opposed by the Respondent who seeks alternative orders – Where the injunctive orders sought are not made as it was not established that the Respondent has the capacity to make the payments sought to be made.

FAMILY LAW – PRACTICE AND PROCEDURE – Subpoenas – Where the Applicant makes an oral application for leave to issue a number of subpoena in circumstances where she asserts the Respondent has failed to comply with his disclosure obligations – Where the Respondent asserts he has complied with his disclosure obligations – Where leave is granted in respect of certain subpoena but not others.

Family Law Act 1975 (Cth)
Family Law Rules 2004 (Cth)

M & DB (2006) FLC 93-293

APPLICANT: Ms Colby

RESPONDENT: Mr Coppola

FILE NUMBER: MLC 3489 of 2015

DATE DELIVERED: 6 September 2019

PLACE DELIVERED: Brisbane

PLACE HEARD: Brisbane

JUDGMENT OF: Hogan J

HEARING DATE: 23 August 2019

REPRESENTATION

APPLICANT: In person

RESPONDENT: In person

Orders

IT IS ORDERED UNTIL FURTHER ORDER THAT

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.

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

1. By Application in a Case filed 10 May 2019 and as amended on 30 July 2019, Ms Colby seeks orders that Mr Coppola:

   a)pay the sum of $1,548.00 on the 14^th day of each month to credit the Westpac Rocket Loan BSB:  … Account Number: …28; and

   b)pay, within 14 days, all arrears belonging to the Westpac Rocket Loan BSB: … Account Number: …28; and

   c)pay the sum of $1,259.00 on the 5^th day of each month to credit the Westpac Rocket Loan BSB: … Account Number: …69; and

   d)pay, within 14 days, all arrears belonging to the Westpac Rocket Loan BSB: … Account Number …69. 

2. Ms Colby also seeks that orders be made to the effect that, should Mr Coppola fail to pay the monies ordered to be paid, any such failure be “held as contempt of the Court”. In addition, Ms Colby made an oral application that she be granted leave to issue subpoena directed to Mr F (an accountant she said was involved in undertaking accountancy work for L Pty Ltd – an entity which it is alleged is controlled by Mr D Coppola (Mr Coppola’s son) and which bought equipment from Mr Coppola); B Company; M Bank; Westpac Bank; Commonwealth Bank of Australia; National Australia Bank; Mr D Coppola and N Company.

3. Mr Coppola resists the making of any such orders. He unsuccessfully applied for the proceedings to be transferred to the Melbourne Registry of this Court. After that application was dismissed by me on 23 August 2019, Mr Coppola sought that orders be made as relevantly sought in the Further Amended Response filed 21 August 2019:

   a)the Amended Application in a Case filed 30 July 2019 be dismissed; and

   b)the consent order made by Judge O’Sullivan on 13 October 2016 be reinstated; and

   c)Ms Colby comply with the order made by Judge O’Sullivan and replace all the P Trust shares for the purpose of extinguishing the outstanding Westpac Joint Loan Account Number …28; and

   d)Ms Colby make full and frank disclosure in respect of documents relating to Q Company and C Company from 2013 to date.

4. As I explained to the parties during the hearing on 23 August 2019, the relief sought by Mr Coppola as summarised in paragraphs 3(b) and (c) above is in the nature of relief sought on a final basis and not amenable to orders made following this interim hearing.

5. As I understood it, Ms Colby disputed the assertion that she had not made full and frank disclosure in respect of documents relating to Q Company and C Company from 2013 to date.

Broad overview of relevant circumstances

1. It is clear that Ms Colby and Mr Coppola are in significant dispute about the terms of orders which are just and equitable in the context of their prior relationship. They are in dispute about whether each has complied properly with the ongoing obligation of disclosure imposed by the Family Law Rules 2004 (Cth) on parties to proceedings in this court. They are also in dispute over a number of significant factual matters, which makes resolution of their competing proposal for interim relief more difficult.

2. The final relief sought by each of Ms Colby and Mr Coppola appears to have changed over time; in a Response filed in the Federal Circuit Court on 21 July 2015, Ms Colby proposed that assets/shares held by the P Trust be sold, that Mr Coppola be paid $60,000.00 from the nett sale proceeds of the same and the balance be applied to repaying debt secured over real property she owns at K Street, Town G and that the parties otherwise each retain the property each owned then. Her current proposal for final orders may be broadly summarized to be that Mr Coppola pay her the sum of $462,000.00, indemnify her in respect of any potential liabilities arising from the operation of the affairs of the P Trust and resign from the same. In contrast, Mr Coppola seeks, in a Response filed on 27 April 2018, that, broadly summarised, Ms Colby be required to return various shares he alleges she “removed” from the trust in about June 2016 (at which time he asserts the same had a value of about $300,000.00) and that the sales proceeds received following the sale of the same be applied to repay outstanding debt.

3. A very broad overview of the context in which the competing proposals need to be regarded for the purpose of determining the competing interim applications is as follows.

4. It appears that Ms Colby and Mr Coppola commenced their cohabitation in about August 2008 and separated on 25 February 2013 (according to Ms Colby) or in 2015 (according to Mr Coppola); it also appears that, during whatever period their relationship persisted, it was attended by various periods of separation. Doing the best that I can, it appears that their relationship was one of no more than about four and a half years (on Ms Colby’s case) or no more than about seven years (on Mr Coppola’s case).

5. Ms Colby asserts that, when the parties commenced their cohabitation, her financial position was significantly superior to that of Mr Coppola. He appears to suggest that, during the relationship, Ms Colby was the person responsible for the financial management of their affairs and that he worked in the plant and equipment business they established within the P Trust and she traded publicly listed shares within the Trust.

6. On 13 October 2016, Judge O’Sullivan of the Federal Circuit Court (in Melbourne) declared, by consent, that a de facto relationship had existed between the parties. His Honour made a series of interim orders which appear to me to have been designed to facilitate the discharge of certain particularised liabilities, the preparation of tax returns for the P Trust (which had been declared, it seems, in December 2008 and through which, as I have noted, Ms Colby invested in equities) and the preparation of a valuation for the same.

7. In addition, his Honour ordered that Ms Colby sell the shares held within the P Trust and that the nett sale proceeds from the same be applied to meet the debt owing pursuant to Loan Account number …69 and the debt owing pursuant to Loan Account Number …28; until this occurred, Ms Colby was to be responsible for meeting the loan repayments referable to Loan Account number …69 (being a loan in her name only) until that was discharged, whilst Mr Coppola was first to meet the payments referable to Loan Account number …28 (a joint loan); further, once Loan Account number …69 was repaid, the parties were to be equally responsible for any remaining loan repayments referable to the joint loan.

8. Both of these loans are secured over real property owned only by Ms Colby.

9. The proceedings were then adjourned by his Honour to 4 December 2017 for final hearing.

10. However, when the parties appeared before Judge O’Sullivan on 4 December 2017, he made orders dismissing the proceedings on the basis that neither party had complied with the terms of the interim order made in October 2016: that is, Ms Colby had not sold the shares held in the P Trust, the borrowed funds had not been repaid and Mr Coppola had not contributed to the repayments payable in respect of the same.

11. After new proceedings were commenced in the Federal Circuit Court, Judge Jarrett ordered that they be transferred to this Court given what was said to be the complex nature of the property issues.

12. Ms Colby and Mr Coppola are in dispute about whom should be considered responsible for the fact that the shares held in the P Trust were not sold in accordance with the terms of the October 2016 order; further, it seems that Mr Coppola did not comply with his obligation to make the repayments Judge O’Sullivan ordered that he make – he advances that this was because Ms Colby did not sell the shares so that the sale proceeds could be applied to extinguish at least some of the borrowings; further, when Ms Colby subsequently sold some of the shares held in the Trust, Mr Coppola alleges that she did so after forging his signature on certain documents necessary to effect the sale – a contention which Ms Colby rejects; whatever may ultimately be found to be the position in so far as that allegation is concerned, Ms Colby asserts that, having sold shares held in the Trust, she used the sale proceeds of the same toward meeting loan repayments and her own living expenses; as I appreciate her case, she advances that this was the case because she needed to use the sale proceeds, at least in part, to meet her living expenses, whilst Mr Coppola advances that, given her qualifications as a financial advisor, Ms Colby could have earned funds to meet her necessary living expenses.

Overview of the basis on which Ms Colby seeks the relief that she does

1. Ms Colby seeks orders that would compel Mr Coppola to make the payments specified above on the basis that real property she owns was used to provide security for:

   a)the joint borrowings in an amount of $236,815.45 obtained from the bank (Loan Account number …28) in respect of which the repayments is currently $1,548.00/month and in respect of which there are currently arrears in an amount of $2,088.85; and

   b)borrowings in her name only in an amount of $196,107.79 (Loan Account number …69) in respect of which the repayment is currently $1,259.00/month and in respect of which there are currently arrears in the amount of $1,259.00.

2. She says – and I did not understand this really to be the subject of contention by Mr Coppola – that the borrowed funds were used, at least in part, to buy equipment which Mr Coppola retained after their separation. Her case is that, despite retaining the use of this plant and equipment, Mr Coppola has made no contribution to repaying the funds borrowed to fund the purchase of the same and, instead, has applied the funds earned by him from the use of this equipment for his sole purposes. She also alleges that Mr Coppola perpetrated domestic violence against her, which caused her to flee interstate, and that, following their separation, he took over the plant and equipment business operated using the plant and equipment acquired using the borrowed funds secured against her real property. Ms Colby also alleges that Mr Coppola drew the loan accounts to their respective limits and removed an amount of $347,914.00 from the business account (between about 25 February 2013 and 4 August 2015: that is, after the date on which she asserts their relationship ended but during the currency of the same on Mr Coppola’s case) and applied these funds for his own purposes.

3. Ms Colby says that she cannot afford to continue to pay the repayments on the two loans because her other financial obligations include the requirement that she make repayments amounting to about $3,040.00/month in respect of other borrowings. Ms Colby also says that, whilst there are 260,000 OBJ shares remaining held in the P Trust, each of these shares has a current price of .17/cent such that the total value of the same is about $442.00.

4. She asks that the Court order Mr Coppola to meet the loan obligations until the trial of these proceedings so as to avoid the possibility that the bank will exercise its rights and foreclose on her property.

5. In refuting Mr Coppola’s contention that he cannot afford to make any contribution to the loan repayments, Ms Colby relies on the difference between the contents of Financial Statements filed by Mr Coppola in these proceedings: she notes that, in that which was filed on 27 April 2018, Mr Coppola, a concreter, swore that he was employed by L Pty Ltd and that he owned no property; she advances that such assertion contradicts that contained in his Financial Statement filed on 24 April 2015, in which he said that he operated a business under the name of C Company (which she had helped him to create and operate, through the trust, prior to their separation); she also relies on the existence of photographs which she says were taken 30 November 2015, 14 October 2016 and 2 February 2018 as the basis for her contention that, despite his assertions, Mr Coppola continues to control the equipment previously owned by C Company; she says these images establish that he has continued to undertake earthmoving and concrete construction work. Her case includes the contention that Mr Coppola stopped banking business payments in the agreed manner on 4 August 2015 and the C Company business thereafter “disappeared” from her view.

6. Ms Colby also relies on the contents of an ASIC search to establish that Mr Coppola’s son (Mr D Coppola) registered L Pty Ltd on 12 April 2016 and is its sole director and shareholder; her evidence is that Mr D Coppola previously worked in Allied Health, before undertaking work to optimise online marketing for clients: her point is that, despite his control of L Pty Ltd, it is unlikely that he works in any business operated through that entity – she advances that it does not make sense for Mr D Coppola to own and operate the business and employ Mr Coppola in the same, nor for Mr Coppola to work for Mr D Coppola because Mr Coppola does not need his son’s assistance to operate the business; as I apprehend her case, it is that L Pty Ltd is, in fact, really under Mr Coppola’s control and not the control of Mr D Coppola.

7. This is relevant to appreciate because, as I understand it, it is uncontentious that Mr Coppola sold the plant and equipment he retained at separation to L Pty Ltd; he says that he used the funds he received to meet his living expenses and that he is employed by that company but does not have any interest in it. In addition to the case she advances about L Pty Ltd and Mr Coppola’s role in its operation, Ms Colby also asserts that Mr Coppola did not have the power to cause the Trust to sell the plant and equipment to it and that the company could not acquire title to the plant and equipment without her agreement.

8. Given these contentions, Ms Colby asserts that she needs to be placed in a position of being able to receive information about L Pty Ltd’s financial position, its distribution of money and its purchase of assets.

Overview of the basis on which Mr Coppola resists the relief sought by Ms Colby and pursues the relief he seeks

1. In a sense, Mr Coppola corroborates Ms Colby’s contention that C Company (an earthwork and concrete construction business) “disappeared from view” in about August 2015 because he says that the business closed in June 2015; his evidence is that he sold the business’ equipment  to L Pty Ltd (an entity in respect of which he agrees he is neither a shareholder nor a director) for $49,145.00; his evidence is that he was paid this sum between 17 June 2016 and 23 June 2016 and has applied the same to meet his living expenses. Mr Coppola says that he has had to sell everything to survive financially; his case involves the assertion that, during their relationship between 2008 to 2015, Ms Colby (a financial planner) was in full control of their personal and business finances: he alleges that, whilst he was the primary income provider, he did not in fact receive funds but, rather, Ms Colby applied the same to “playing” the stock market, an occupation which he said resulted in a significant loss of funds.

2. Mr Coppola also submitted that his current income was $40,000.00 per annum (gross); that he no longer owned any property as the motor vehicle he had been paying off was sold and that his current nett asset position is “zero”.

3. As well as saying that he simply does not have the financial resources to make any payments toward the loan repayments, Mr Coppola advances that the continued existence of those debts is the consequence of Ms Colby’s determination not to sell the shares held in the P Trust as required by the October 2016 order; he contends that, had Ms Colby complied with the terms of the October 2016 order to sell the Trust’s shares then and then apply the sale proceeds from the same toward repaying the borrowed funds, the loans would have been nearly all repaid or the amounts now outstanding would be significantly less. Mr Coppola says that the loans are still fully drawn because Ms Colby did not comply with the order to sell the shares registered in the parties names and then her name following what he asserts was a fraudulent transfer of the same into her sole name: in making the latter accusation, he relies on a preliminary opinion of Mr H (from J Company) to the effect that there are indications that the questioned signatures appearing on transfer forms for specified ASX stock are not genuine but are the product of a simulation process.

4. Mr Coppola contends, in a nutshell, that Ms Colby is the author of her own fate and that it is unjust that he be called on to make any payment to the loans in such circumstances.

1. Whilst Ms Colby said that she had considered that she could not sell the shares without any commitment by Mr Coppola that he would pay the loan repayment he was required to pay by the October 2016 order as she was worried that she would be left to pay both loan repayments without liquidity, the failure to dispose of the shares in the manner ordered seems, on a prima facie basis, to have had the result that the level of indebtedness was not then reduced by the application of a then available source of funds.

Further discussion

1. The Court may grant an injunction where it appears to be appropriate or just and convenient to do so.[1] Each case must be determined by an overall assessment of a number of factors so as to arrive at the “just or convenient” result.[2]

   [1]Family Law Act1975 (Cth) ss 34(1) and 114(3).

   [2]M & DB (2006) FLC 93-293 at [43(b)].

2. Given that the Court is empowered to grant an injunction “in any case in which it is just or convenient to do so”, it is necessary to have regard to the balance of convenience, competing matters of hardship or prejudice and the overall desirability of preserving property (where injunction would preserve it pending the finalisation of property adjustment proceedings) in determining if it is “just or convenient” to grant the interim injunction/s sought and any terms on which it should be granted. It is uncontentious that an applicant for injunctive relief must persuade of the basis on which such orders should be made.

3. In the present case, Ms Colby seeks relief in the nature of a mandatory injunction to compel Mr Coppola to do something (that is make repayments and discharge outstanding arrears) in order to avoid the potential loss of real property she alone owns: that is, she seeks to use the Court’s injunctive power to preserve real property she owns pending resolution of the parties’ property settlement proceedings.

4. As raised with Ms Colby during the hearing of her application, the significant difficulty she faces is that it does not seem to me that she has established an evidentiary basis upon which I can be persuaded that Mr Coppola has the capacity to make the payments she seeks that he be ordered to make.

5. Given this, I am not persuaded that it is appropriate and just and convenient to make the injunctive orders sought by Ms Colby. Whilst I appreciate that that may have consequences in terms of the bank taking that action which is likely to be available to it under the terms on which the funds were provided and secured by mortgages, I am not persuaded on the evidence before me that Mr Coppola has a source from which he can make any contribution to the payment of the required repayments. Consequently, I am not persuaded that the balance of convenience favours the making of orders in terms sought by Ms Colby.

6. At this stage, neither L Pty Ltd nor Mr D Coppola are parties to the proceedings. Any proposed order for the setting aside of the sale of the plant and equipment previously used to operate the C Company business to L Pty Ltd (which seems to me to be adverted to in Ms Colby’s affidavit) would obviously be attended by the potential for adverse consequences for both the company and Mr D Coppola. It is for that reason that I intend to make an order that, in the event that Ms Colby seeks to prosecute a claim for the setting aside of the sale of the plant and equipment by Mr Coppola to L Pty Ltd, she particularise the relief she seeks against L Pty Ltd and/or Mr D Coppola personally (if relief is sought against him in that capacity) and outline the same in an Amended Initiating Application to be filed and served as provided for in the order.

Ms Colby’s oral application for leave to issue subpoena

1. Ms Colby also sought that she be granted leave to issue a number of subpoenas; she says that this is necessary because Mr Coppola has failed to comply fully with his ongoing obligation for disclosure – an assertion with which Mr Coppola takes issue; he submitted that he had disclosed those documents which were within his power and control; he said, in essence, that as he does not have an interest in L Pty Ltd, he is not in a position to provide Ms Colby with any documents relating to it or its operations. Mr Coppola also submitted that Ms Colby was welcome to subpoena the banks in her attempts to locate funds which he simply submitted did not exist: he described Ms Colby’s submissions that he had funds as being “a fantasy” and said that he was virtually on the street.

2. Given that there exists a dispute between the parties about the extent of Mr Coppola’s financial position, I am persuaded that it is appropriate that Ms Colby be afforded the opportunity to seek the issue of subpoena directed to M Bank, Westpac Banking Corporation, the Commonwealth Bank of Australia and the National Australia Bank in relation to accounts held by Mr Coppola with those institutions. Given the dispute about Mr Coppola’s disposition of plant and equipment to L Pty Ltd and his receipt of the sale proceeds of the same, I also consider it appropriate that Ms Colby be permitted 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.

3. At this stage and on the basis of the evidence before me, I decline to grant Ms Colby permission to seek the issue of subpoena directed to Mr F (whom was described as an accountant for L Pty Ltd), B Company, Mr D Coppola or N Company.

I certify that the preceding thirty-nine (39) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Hogan delivered on 6 September 2019.

Associate: 

Date:              6 September 2019