Colby & Coppola and Ors (No. 2)

[2020] FamCA 1067

FAMILY COURT OF AUSTRALIA

Colby & Coppola and Ors (No. 2) [2020] FamCA 1067

File number(s):

MLC 3489 of 2015

Judgment of:

BAUMANN J

Date of judgment:

14 December 2020

Catchwords:

FAMILY LAW – PRACTICE AND PROCEDURE – application for summary dismissal by the Second and Third Respondents – where there is no prospect of success of the wife’s claim as against the Second and Third Respondents – application allowed.

Legislation:

Family Law Act 1975 (Cth), s 106B

Cases cited:

Colby & Coppola [2019] FamCA 629

Colby & Coppola and Ors [2020] FamCA 358

Karlsson & Karlsson [2020] FamCAFC 207

Number of paragraphs:

20

Date of hearing:

27 November 2020

Place:

Brisbane

Counsel for the Applicant:

Self-represented

Counsel for the First Respondent:

Self-represented

Counsel for the Second Respondent:

Mr Smith

Counsel for the Third Respondent:

Mr Smith

ORDERS

MLC 3489 of 2015

BETWEEN:

MS COLBY

Applicant

AND:

MR COPPOLA

First Respondent

MR D COPPOLA

Second Respondent

L PTY LTD

Third Respondent

ORDER MADE BY:	BAUMANN J
DATE OF ORDER:	14 DECEMBER 2020

THE COURT ORDERS:

1.That the application for orders sought by the Applicant against the Second Respondent and the Third Respondent shall be summarily dismissed.

2.That the Second and Third Respondents shall be removed as parties to these proceedings.

3.That the substantive proceedings shall be listed for Case Management Hearing at which trial directions will be made, at 9.30am (Queensland time) on 10 February 2021 in the Family Court of Australia at Brisbane.

4.That both parties have leave to appear by telephone on 10 February 2021 by using the “AAPT GlobalMeet” telephone conferencing system as follows:

(a)They shall each telephone … (within Australia only) (toll free) by 9.25am (Queensland time) on 10 February 2021;

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

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

(d)Not place the call on hold.

5.That any application for costs that the Second and Third Respondents wish to pursue shall be dealt with by written submissions as follows:

(a)The Respondents shall file and serve by 31 January 2021, written submissions with particularised quantification as to costs sought;

(b)The Applicant shall file and serve by 28 February 2021, any written submissions in response;

(c)The Respondents shall file and serve by 15 March 2021 any written submissions in reply; and

(d)Unless otherwise ordered, the application for costs shall be determined on the papers in chambers.

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 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to 17.02 Family Law Rules 2004 (Cth).

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).

REASONS FOR JUDGMENT

BAUMANN J:

1. In this case the parties to a de facto relationship, which came to an end in January 2015, have undertaken a tortuous pathway through both the Federal Circuit Court of Australia and now the Family Court of Australia.  I adopt, but do not repeat, some of the history set out in the Reasons for Judgment of Hogan J (Colby & Coppola [2019] FamCA 629) and my Reasons for Judgment for dismissing an earlier application by Mr D Coppola and L Pty Ltd that they be removed as parties to this case (see Colby & Coppola and Ors [2020] FamCA 358). By an amended Initiating Application first filed on 30 September 2019 and, curiously, re-filed on 11 October 2019, the unrepresented Applicant (who for the purpose of these Reasons I shall describe as “the wife”) sought orders as follows:

   (a)“That the Second and Third Respondents pay any shortfall in assets available to the Frist [sic] Respondent, to pay the Applicant in total [f]our hundred and sixty-two thousand dollars ($462,000)”;

   And then:

   (b)“That the Second and Third Respondents pay any shortfall in assets available to the First Respondent, to pay the Applicant’s cost of and incidental to this application”.

2. It is apparent that at the core of this Application against the Second and Third Respondents is the primary relief that the wife seeks from her former partner, Mr Coppola (who for the purpose of these Reasons I shall call “the husband”), that he pay to the wife the sum of $462,000.  The qualification of that sum appears to represent funds which the wife asserts she has lost during the relationship through the dishonest, at times, and inappropriate at all times, conduct of Mr Coppola, a claim which he, as an unrepresented litigant, disputes strenuously.  He himself makes claims against the wife of conduct by her inconsistent with Court Orders and which he says has caused there to be no actual funds available or property available to adjust.

3. In this regard it is not in dispute that, when the relationship between these parties commenced in or about August 2008, the wife brought into the relationship an unencumbered property in V Town in Queensland.  It is not disputed that during the course of the relationship funds were borrowed using the wife’s property as security to, inter alia, to establish or develop a business that was operated through a Trust, during the course of the parties’ relationship.  There were other investments made, including in shares, which are the subject of other allegations of fraud and dishonesty.  Nonetheless, after the relationship broke down there is a transaction that took place whereby items of machinery previously on the books of the Trust were acquired by the company L Pty Ltd, which is the company operated and controlled by Mr D Coppola.

4. Mr D Coppola is the son of Mr Coppola from an earlier relationship.  L Pty Ltd was incorporated on 12 April 2016 and it is reasonable on the evidence to find that it was created for the sole purpose of operating a construction business.  Mr D Coppola says as much and acknowledges that he had not previously had any prior experience or involvement in a business of that nature.  His father had.  There is evidence before the Court that between April 2016 and 23 June 2016, Mr D Coppola and/or L Pty Ltd acquired various items of machinery and in so doing relied upon a valuation dated 15 April 2016 by R Pty Ltd.

5. Although the wife has challenged the value of the equipment and identity of machinery involved in that transaction, in the Affidavit she relies upon in this Application she acknowledges that there is no utility in seeking to have equipment at this stage valued and, for the purposes of these proceedings, does not dispute the evidence of Mr S.  The core positions of the Respondents is that Mr D Coppola and his company, who were represented at the summary dismissal hearing by Mr Smith of Counsel by telephone from Victoria, assert that there is no reasonable prospect of the relief being sought by the wife against Mr D Coppola and/or L Pty Ltd being granted and so, in accordance with established legal principles, the claim should be dismissed and Mr D Coppola and L Pty Ltd should be relieved from further participation as parties in these proceedings.

6. It should be acknowledged for the benefit of the unrepresented litigants, of course, that, even if not a party, that would not prevent them giving evidence either voluntarily or, if required to do so, by subpoena.  The wife says repeatedly that she has established that the “business” was transferred to Mr D Coppola so as to divest the matrimonial pool of a valuable asset, although no specific relief under s 106B has been sought by the wife, save for alluding to it in a sense at paragraph 52 of her Affidavit where she says she seeks to “reverse the sham”.  I refer to this issue towards the end of these Reasons.

7. In respect of these proceedings, the applicant, Mr D Coppola and his company, (who I will collectively call “the Applicants” for these Reasons) rely upon the Application in a Case filed 22 September 2020 and the Affidavit sworn 17 September 2020 and annexures.

8. Mr Smith also referred to, as already recorded, the amended Initiating Application of the wife.  The wife relies upon her Response to an Application in a Case filed 13 November 2020, supported by her Affidavit of that date.  Although she seeks other relief which was not before the Court for determination when the submissions were heard on 27 November 2020, it is apparent from order 15 sought that she seeks that the Application for summary dismissal be dismissed.

   LEGAL PRINCIPLES

9. The legal principles associated with an Application for summary dismissal, which is how I construe the Application made by the Applicants, have succinctly been recorded in a recent judgment of Ainslie-Wallace J (sitting as a Full Court) in Karlsson & Karlsson [2020] FamCAFC 207 at paragraphs 38 to 41:

   38.The power to summarily dismiss an action must be rarely and sparingly used (see Pelerman v Pelerman (2000) FLC 93-037). The Full Court discussed the power of the court to summarily dismiss proceedings in Bigg v Suzi (1998) FLC 92-799 at 84,974–84,975 and adopted the articulation of the principles of Kirby J in Lindon v The Commonwealth (No 2) (1996) 70 ALJR 541 (“Lindon”) at 544–545, which may conveniently be summarised thus:

   ·it is a serious matter to deprive a party of access to the courts and the power to do so should be rarely and sparingly used;

   ·the party seeking summary dismissal must show that it is clear on the face of the other party’s documents that the other party lacks a reasonable cause of action or is advancing a claim that is clearly frivolous or vexatious;

   ·that a case appears weak and unlikely to succeed is of itself not sufficient to satisfy summary dismissal;

   ·if there is a serious legal question to be tried, then it should ordinarily be determined at a trial of the issues;

   ·where, notwithstanding a defect in the pleadings, if it appears that a party may have a reasonable cause of action which has not been put in proper form, a court will ordinarily allow that party to reframe the pleadings; and

   ·the “guiding principle” is doing what is “just”.  In Lindon, Kirby J said at [545]:

   If it is clear that proceedings within the concept of the pleading under scrutiny are doomed to fail, the Court should dismiss the action to protect the defendant from being further troubled, to save the plaintiff from further costs and disappointment and to relieve the Court of the burden of further wasted time which could be devoted to the determination of claims which have legal merit.

   39.Her Honour proceeded to consider the question of summary dismissal pursuant to s 45A of the Act and noted that the court may order summary dismissal where it is satisfied that the claim has “no reasonable likelihood of success”.

   40.Indeed, recent authority has preferred to apply the test of “no reasonable likelihood of success” rather than “doomed to fail” (see Spencer v Commonwealth of Australia (2010) 241 CLR 118 where the High Court discussed the “bound to fail” test and Bretton & Bondai [2013] FamCAFC 168 at [59]–[60]).

   41.That is not to say that the power should not, as Lindon said, be exercised sparingly and rarely, but that it will be exercised where it is clear that there is no real question to be tried (see Lysaght Building Solutions Pty Ltd (t/as Highline Commercial Construction) v Blanalko Pty Ltd (2013) 42 VR 27 at [35]).

10. It is consistent with authority that, in circumstances where the wife contests the Application for summary dismissal, her evidence should be taken at its highest.  In that regard, I shall consider the wife’s Affidavit and her submissions and then analyse whether, on the basis of that evidence, the position the Applicants adopt that there is no reasonable prospect of success is maintainable.

    THE WIFE’S RESPONSE

11. It is a sad reality of this case, as is reflected by many appearances in both Courts for some years now, that there is no level of trust or respect between the husband and wife.  Both make serious allegations against the other, including fraud.  I accept that, as Mr Smith submitted, where such a serious allegation is made it should be clearly particularised.  To the extent that the wife says there has been fraud and false statements, there is no particularisation of the asserted fraud sufficient to meet the standards required and, as I sought to explain to her, her allegations of false statements are a matter for trial between the husband and wife which will inevitably take place next year.  A Court would be very reluctant on an interlocutory basis, where the evidence has not been tested and, in many ways, has not been corroborated, to boldly assert, as the wife asks me to do, that the husband has been guilty of fraudulent behaviour.

12. Similarly, the husband at times in this proceedings makes a similar assertion, mostly associated with what he asserts are forged documents created by the wife.  Before turning to the wife’s evidence, it is a further necessary context, in my view, that the wife’s clear motivation in this case is to get justice in circumstances where she says that her property that she brought into the relationship, but is now encumbered by a mortgage that she has no reasonable capacity to repay and is currently in arrears and where there has been no contribution to repayments by the husband, has left her in an impoverished position.  However, I agree with the general submission of Mr Smith of Counsel for the Applicants that the wife’s Affidavit is “mostly speculation and argumentative”.

13. He says that the joinder of the Applicants was for an improper purpose and that, as is identified in the Application in a Case yet to be dealt with, she is on a “fishing” exercise to try to see if there is anything that she can find to secure what she regards as the losses she has incurred in the relationship, to property not only of the Applicants, but now more recently against the husband’s current de facto partner, Ms T.  I deal with aspects of the wife’s Affidavit in the following summary:

    (c)At paragraph 1, the Applicant states that her purpose “is to discover family assets that have been deliberately and secretively entwined with the Second and Third Respondent for over four years.  The discovery needs to extend to assets that have been transferred to other persons through [the] company or directly from the First Respondent”;

    (d)At paragraph 2, the Applicant asserts assets are “missing from the family pool under the control” of the husband, being:

    (i)the business, which the husband at one stage, on the financial statement dated 24 April 2015, indicated as a lay opinion to have a value of $144,000;

    (ii)the equipment; and

    (iii)cash totalling $347,914 “that was removed from the Trust” (being the P Trust registered on 25 June 2009) by the husband, which the wife says he has not properly accounted for;

    (e)At paragraph 7, under the heading “Deceitful parties”, the wife asserts, without any evidence at all, that husband “may have influenced his son to do his bidding for no reward.  There is no other logical reason why the Second Respondent would buy and continue to hold a high-risk business that significantly spends more than the revenue every year!  This is no reward for a businessman or entrepreneur”.  Mr D Coppola responds to that allegation by saying in his own Affidavit that he made a decision in April 2016 to commence L Pty Ltd as a plant and construction work business and he purchased various plant and equipment from his father to operate the business.  He acknowledges in his Affidavit that the business has not been profitable.  Whilst the wife has established that Mr Coppola is paid an income from the business operated by his son, which is revealed in the material, that is not the same, as the wife would assert, as establishing that he is operating the business on behalf of his father – the effective sham that she seeks to establish.  Her assertion that it makes no sense for the son, Mr D Coppola, to take the actions he did is not evidence of improper purpose, as she asserts;

    (f)At paragraph 13, the wife makes the point that there had not been proper and timely disclosure by the husband as to the sale of the equipment to Mr D Coppola and L Pty Ltd.  She says that the husband first stated he had sold the business in Court on 13 October 2016 and that he was no longer working.  She says, and I accept, that it was only through a process of significant agitation by her that the full extent of the transaction became apparent.  I accept that this has raised her concerns and suspicions, but that alone is not evidence of an improper purpose or, as the wife would ask the Court to find on her evidence, an example of significant other assets being hidden by Mr D Coppola for his father.  Whilst the creation of L Pty Ltd was for a particular purpose, I do not agree, as the wife asserts at paragraph 17, that it was “too coincidental” and can only have been for one purpose, namely “to hide assets”;

    (g)At paragraph 22, the wife refers to a true copy of a screenshot and photographs of the husband’s partner, Ms T, in Court on 31 January 2020.  Although it is not a matter for me today, Mr Smith, on behalf of the Applicants, draws the Court’s attention to what may be a breach of the law by the wife in taking photographs in Court in this way.  It does, however, identify the focus that the wife has in this case;

    (h)At paragraph 24, for reasons which seem highly irrelevant, the wife gives evidence about attempted service of material upon the husband as some example of the improper purpose which she continues to assert in relation to Mr D Coppola and his company.  It seems, in respect of this issue, totally irrelevant;

    (i)At paragraph 26, the wife, relying on documents produced in answer to the Applicants’ Affidavit, refers to the fact that income from the business is being paid to the husband and/or split with his current partner, Ms T.  There is nothing that suspicious about the fact that Mr D Coppola, without any experience in construction, has engaged his father to operate machinery, as the father and Mr D Coppola say is occurring, and to the extent that there is income flowing from the operation of the business to Ms T that is neither surprising nor evidence of any improper purpose.   Clearly, Ms Colby takes the view that this is an example of Ms T, the current de facto partner of the husband, getting a benefit to which Ms Colby ought be entitled;

    (j)To make the point as to the wife’s motivation, at paragraph 27, she asks the Court “to place an injunction to prohibit the sale of all family business equipment and assets in possession of all Respondents and Ms T.  It is probable the Respondents and Ms T would transfer assets rather than disclose them as they act above the law”.  This is a serious allegation, for which no real evidence is identified;

    (k)It is a theme of paragraphs 28 to 42 of the evidence offered to the Court by the wife that the husband “still has control and all of the benefits of the family business.  The Second and Third Respondents have facilitated this at the expense and impoverishment of the Applicant”.  In particular, to support her view that the business (including the equipment) has been taken over by L Pty Ltd in 2016, she points to the fact that the business has done some work for a customer (she knows well from 2010 to 2013).  It is quite possible that the reputation the husband may have had in the plant & equipment industry has attracted former customers to the new entity created by Mr D Coppola and his company, the Applicants.  That does not mean the business has been transferred if, in fact, there was any business to transfer;

    (l)The wife attacks the evidence provided by Mr D Coppola in his Affidavit as to how he funded the purchase of equipment.  Mr D Coppola, in his Affidavit at paragraph 7, says that the purchase of equipment between 17 June 2016 and 23 June 2016, totalling $49,145, is evidenced by the documents at “C-3”.  That same document sets out and better particularises at paragraph 8 where the funds came from.  It is a theme of the wife’s case that what has effectively occurred is that Mr Coppola has removed income, capital or benefits from the business prior to the transaction, provided them to his son and in a circular way Ben returned them to his father.  The Court accepts that, until the Affidavit of Mr D Coppola sworn 17 September 2020 was filed, that it was not clear that Mr D Coppola had, as he now asserts, the benefit of a loan of $19,500 from Mr Coppola (as to $10,500) and Ms T (of $9000).  Whilst I agree that this transaction had not been properly identified earlier in material filed by Mr D Coppola (acting on his own behalf), he has made full discovery now by reference to his annexures “C5” and “C6” as to how he says L Pty Ltd repaid the loans.  To the extent that the wife asserts that a credit $2,726.07, said to have been paid on 12 February 2018 for “[p]urchase of motor vehicle accessories for Mr Coppola”, is an absolutely false statement because Mr Coppola did not have a motor vehicle at the time, that is an issue that she may take up with Mr Coppola at the trial, however, that is the evidence of Mr D Coppola and there is no basis upon which, in my view, it should not be accepted.  It can certainly be a set-off against a loan and the fact that there is no loan agreement is not surprising in such a small inter-family transaction;

    (m)The wife, who is an intelligent lady and used to financial matters from her training and experience, draws the Court’s attention at paragraph 43 of her Affidavit that the asserted loans by Mr Coppola and Ms T made in June 2016 do not appear in the tax returns and financial statements (in particular, as I understand it, the balance sheet where they would normally be expected to be found) produced by the Applicants.  Mr Smith, on behalf of the Applicants, says that irrespective of what the financial statements say and, even if that was an omission or oversight, nonetheless the bank statements reveal it was a loan and the Court has no evidence to suggest that it was not repaid as Mr D Coppola suggests.

    (n)At paragraph 46 of the Affidavit of the wife she baldly asserts that “the Applicant claims the First Respondent and Ms T are living off the business account according to the payment of motor vehicle accessories and transfers of lump sums to them.  This can be construed as additional income not disclosed to the Court.  The company may have bought the First Respondent another motor vehicle”.  This is all speculative and, again, not related to the actual cause of action and relief the wife seeks to bring against the Applicants; and

    (o)The wife continues to assert in her Affidavit as a general theme false statements going as far as to say at paragraph 51 that she “emphatically states the evidence from the Second Respondent [sic –Respondent’s] affidavit filed on 18 September reasonably supports that either no money was paid for the business or at best the rounded figure lump sums in a recycle of family money”.  I do not agree with the assertion.

1. Although the wife did not provide to the Court any further submissions, at paragraph 63 to 78 of her Affidavit, she sets out what she calls the “Conclusive facts” and those paragraphs of her Affidavit are incorporated in these Reasons as follows:

   63.L Pty Ltd was deliberately formed to defeat the Applicant’s claim and any application for financial relief.

   64.The business and the equipment are a continuation of the family business and equipment.

   65.The Second Respondent did not pay for the equipment from his personal resources.

   66.The Third Respondent is effectively splitting one wage, earned by one person, between the First Respondent and his de facto; transferring lump sums to the same; and paying for some of their personal items.

   67.The First Respondent controls the business and uses it like it is his own.  He effectively controls the second and third defendants to act above the law.  He is the puppeteer.

   68.The Applicant is truly justified to ask the Court to allow her to identify the deceit and removes disguises to find every piece of assets to help the Court to understand the true financial position of the First Defendant.

   69.The significant amount of cash missing, the significant burden of debt, the deceitful actions, the false statement raise the probability there are other assets hidden from the Applicant and the Court.

   70.Because the sham has been going on for four years it is probable money has been transferred into assets that constructively belong to the family pool.  This will require significant discovery between all Respondents and possibly subpoenas as last resort.

   71.The Applicant needs to pursue full and frank disclosure with the Respondents to gather records, and only use as a last resort.

   72.The financial information provided by the First Respondent was clearly false when presented to the Judge at the hearing for the Applicant seeking financial relief.

   73.The true income for the First Applicant must include the wages paid to his defacto used to disguise business profit/income.

   74.The excessive deductible expenses and the depreciation are te only reasons the Third Respondent is realising losses.  It also means the Third Defendant will pay no tax.

   75.The excessive deductible expenses will include the wages paid to the First Respondent and Ms T.

   76.It is probable the lumps sum transfers made by the Third Respondent to the First Respondent and Ms T have been disguised as a deductable expense.  This will be better explained in the company Profit and Loss statements which have not been disclosed.

   77.The Applicant craves the Court acknowledge the true income of the First Defendant to at least order him to pay the repayments for the loan … that bears his name.

   78.The Applicant will greatly appreciate the financial relief provided if she only bears the repayments for one of the Family loans being the loan account number …69

   CONCLUSION ON THIS APPLICATION

2. It is a sad fact that as between the husband and the wife that there are few assets of any value that are divisible or for which interests could be altered other than for the property, which the wife retains and is heavily encumbered by loans created, I am satisfied, during the course of the relationship and for the purpose of establishing the business in the P Trust.  There are a number of issues that will occupy many days of trial between these unrepresented litigants.  I have come to the conclusion, however, that the claim that the wife seeks to assert against the Applicants has no reasonable prospects of success.

3. Whilst the transaction that took place can be examined as between the husband, who actually perfected the transaction, and the wife at the trial and whilst the wife continues to assert, and with some foundation, that the husband’s actions may have been a breach of the terms of the trust, nonetheless to continue to drag Mr D Coppola and his company through this case on the evidence put forward by the wife in her recent Affidavit is, in my view, not proper; is likely to cause substantial costs and delays in the proceedings to be endured and in the end result it is not appropriate for that action as against the Applicants to continue where there is no reasonable prospects of the relief sought being granted.

4. Lest it be thought that I had not considered the relief tangentially referred to by the wife in her Affidavit at paragraph 52, which seems to at least suggest some claim under s 106B(1) of the Family Law Act 1975 (Cth), in my view the wife after all this time, should not be permitted to mount a non-pleaded claim for relief. It is a sad reality that the wife asserts that there was a business of significant value, but there is no evidence to establish that Mr D Coppola and his company took over anything other than his company acquired at market value equipment (being second hand construction equipment) through the transactions in April to June 2016.

5. For these reasons, the relief sought against the Second and Third Respondents shall be summarily dismissed and they shall be removed as parties in these proceedings.

   COSTS

6. There are cross-applications for costs here, which will be the subject of directions if they are sought to be pursued by the Applicants.

7. I shall otherwise list the other Applications such as are continuing, for further directions in early 2021, so that now the trial between the husband and the wife can be listed for trial and proceed.  The parties need finality and the Court’s duty will be to provide the opportunity for that to occur.

I certify that the preceding twenty (20) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Baumann.

Associate:  

Dated:       14 December 2020