Iphostrou and Iphostrou & Ors (No 5)

[2011] FamCA 458

FAMILY COURT OF AUSTRALIA

IPHOSTROU & IPHOSTROU AND ORS (NO 5) [2011] FamCA 458

FAMILY LAW – PRACTICE AND PROCEDURE - Discovery

Family Law Act 1975 (Cth)

APPLICANT: Ms E Iphostrou

1st RESPONDENT: Mr S Iphostrou

2nd RESPONDENT: Mr P Iphostrou

3rd RESPONDENT: Mr J Iphostrou

4th RESPONDENT: Mr V

8th RESPONDENT: J Pty Ltd

12th RESPONDENT: P Pty Ltd

REMAINING RESPONDENT: Corporate Entities (Referred to in the schedule attached to the orders)

FILE NUMBER: MLC 8731 of 2009

DATE DELIVERED: 28 April 2011

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Cronin J

HEARING DATE: 28 April 2011

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Burnside SC with Mr Edmunds

1ST RESPONDENT: No appearance

COUNSEL FOR THE 2^ND , 3^RD AND 12^TH

 RESPONDENTS:

Mr O’Dwyer

COUNSEL FOR THE 4^TH

 RESPONDENT:

No appearance

COUNSEL FOR THE 8^TH

 RESPONDENT:

No appearance

COUNSEL FOR THE REMAINING

 RESPONDENTS:

No appearance

Orders

1. That the legal practitioners for the 2^nd, 3^rd and 12^th named respondents have leave to withdraw from the proceedings without the requirement for the service and filing of a Notice of Ceasing to Act.

2. That the application of the various corporate entities filed 22 March 2011 and the response thereto filed by the wife be struck out.

3. That the response of the various corporate entities filed 24 March 2011 is struck out.

4. That all outstanding applications for final orders are adjourned to 9.30am on 20 May 2011 for mention.

5. That all respondents appear and/or attend by their legal representatives or in the case of unrepresented corporate entities, by a properly authorised director, on 20 May 2011 for the purposes of ensuring that all matters are ready to proceed for the final hearing on 14 June 2011.

6. That if any of the said respondents fails to appear on 20 May 2011, the applicant wife may then apply to proceed to have her application under s 106B of the Family Law Act 1975 (Cth), proceed as an undefended hearing as against those respondents who fail to appear.

7. That the wife serve a copy of this order as follows:

   (a)upon the Insolvency Trustee Service of Australia (Reference Ms C) by ordinary pre-paid post;

   (b)upon all other respondents other than those referred to in sub-paragraph (c) below by ordinary post to the registered office of the corporate entities and by ordinary post to the named individuals in these orders, to their last known address; and

   (c)upon J Pty Ltd and Mr V care of their recently known legal practitioners and by ordinary post to the registered office of J Pty Ltd and by ordinary post to Mr V at his home address.

8. That the wife have leave to file and serve an amended application for final orders by 4.00pm on 5 May 2011 and service of such amended application be according to the method set out in paragraph (9) hereof.

9. That there be orders in terms of the Minutes attached hereto and marked with the letter “A”

10. That all corporate entities who are respondents referred to in the application in a case filed by the wife on 22 March 2011 pay the costs of the wife in respect of that application by agreement and in default of agreement as assessed.

11. That notwithstanding paragraph (10) hereof, P Pty Ltd only be responsible for a contribution towards the wife’s costs in respect of the discovery issue determined this day.

IT IS CERTIFIED:

1. That pursuant to Order 19.50 of the Family Law Rules 2004 it was reasonable to engage counsel including senior counsel to attend and the attendance of two counsel.

2. That the reasons be transcribed and be made available to the parties.

IT IS NOTED that publication of this judgment under the pseudonym Iphostrou & Iphostrou and Ors (No 5) is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLC 8731 of 2009

Ms E Iphostrou

Applicant

And

Mr S Iphostrou and Mr V and J Pty Ltd and P Pty Ltd and Corporate entities as per schedule attached to the orders

Respondents

REASONS FOR JUDGMENT

1. This is an application that was filed on behalf of the wife on 9 March 2011 seeking the production of documents that had been sought against a variety of corporate entities who are parties to these proceedings.  The documents came to light in a list provided by the then solicitor acting for the entities dated 21 December 2010.  I have read that list, and there can be little doubt that the documents were referred to.  I propose to make the orders in relation to the production of those documents, but before doing so, I think it is important to understand the context in which what has occurred today arose.

2. This is a proceeding relating to an application by the wife under section 106B of the Family Law Act 1975 (Cth) (“the Act”) endeavouring to set aside a variety of transactions involving the husband with some corporate entities. It is the wife’s case, as I understand it, that she asserts that the husband has an interest in those various entities. The proceedings have been on foot now for the best part of two years. I have been informed this morning that the husband has now been declared a bankrupt, and there may be some orders in relation to various parties who are corporate entities in relation to receivership. The details of all of that are unclear.

3. This morning, the wife was represented, as she has been previously, by Mr Burnside of senior counsel and by Mr Edmonds.  Mr O’Dwyer is a solicitor who has acted for the second, third and 12^th named respondents.  He sought to appear this morning on the basis that he wanted to file a notice of ceasing to act because he no longer has instructions from his client.  He conceded that delaying the matter would not be of much benefit and, therefore, was content for me to formally discharge his professional obligations from the proceedings and on the basis that he confirmed that the respondents had been given notice of the proceedings, he having accepted documents previously from the wife.

4. The husband to whom I have just referred as having been declared bankrupt did not appear.  A solicitor, Ms Sohail, appeared, as she described it, as a matter of courtesy.  She indicated that the firm who had been on the record for the husband had served notice on the bankruptcy trustee, who is the Insolvency Trustee Service of Australia, and the case officer is a Ms C.  She confirmed also that the notice of ceasing to act had been provided to the husband indicating that the matter was to be listed today.

5. The other parties involve a number of corporate entities who had been represented by Ms Rompotis.  Ms Rompotis filed a notice of address for service on 14 April 2011.  She had previously been described as the in-house corporate counsel, but it seemed that she had left that position and commenced her own practice on or around 14 April.  On 15 April, she filed on behalf of each of the corporate entities for whom she was either an employee or corporate counsel indicating a notice of ceasing to act.  Each of those notices, although not having been brought to the attention of the wife, indicated that the hearing was listed before me this morning.  There are other respondents to the proceedings, and no one attended today, but that may have been because they were either not involved in the particular application or because they had other interests.

6. Needless to say, with the lawyers Mr O’Dwyer and Ms Sohail leaving, I had each of the respondents called, and there was no appearance throughout the morning.  That then left alive the application of the wife of 9 March, a response to which was filed on 24 March by Ms Rompotis on behalf of the corporate entities and then an application on 22 March 2011 by Ms Rompotis on behalf of her clients to have various corporate entities removed from the proceedings, and to that application, the wife responded on 11 April seeking that it be dismissed.  There being no attendance on behalf of the respondents to the wife’s application of 9 March, the response filed on 24 March was struck out.  There being no person appearing this morning in respect of the application of the corporate entities filed on 22 March to prosecute that, I struck that application out and also struck out the wife’s response thereto of 11 April on the basis that there was no response to defend.

7. The application, therefore, that I am dealing with this morning primarily relates to two issues. The first concerns the production of documents that I have already mentioned. The second was to allow the wife to amend her application under section 106B of the Act, because subsequent to an injunctive order that I made in 2010, the wife asserts that various actions were taken by the husband to resign his position and/or transfer entitlements to entities, and the wife wishes to include those particular transactions in her application. Having regard to the fact that the matter is listed for hearing in June, I see no prejudice to any of those parties, because the orders apply to people who have already been a party to these proceedings and, therefore, would know of the various actions involved.

8. In relation to the discovery issue, the problem is simple.  Ms Rompotis in December 2010 was acting for a variety of corporate entities, including some of the respondents for whom she later indicated she was no longer acting.  She prepared a list of documents that were in the corporate entities’ power, possession or control and provided that to the wife.  In a curious response that was filed and which I have just struck out, two objections were raised to the wife’s application.  The first related to privilege.  The second related to a complaint that the documents pursued did not relate to issues between the applicant and the respondents who had the documents.

9. Leaving aside the question of the fact that there was no one here to prosecute that argument, the privilege argument has a hollow ring about it, having regard to the fact that the documents were referred to clearly as being available.  The privilege issue had something to do with the fact that the document were provided to Ms Rompotis.  The second issue related to the question of the relevance of the documents to the issues in dispute.  The wife’s application, as I have indicated, relates to all of the entities, and she asserts that the husband has an interest in those entities notwithstanding on the face of the public record he may not.  It is her application to set aside a variety of transactions which would put various assets such as, for example, the shares of the companies back in the husband’s name.  It is clear, therefore, that there is an apparent relevance between the documents and the application before the Court.  The response, albeit now struck out, did not seem to have much merit.

10. The affidavit that the wife relies on is that of Mr G.  It links each of the documents that the wife wishes to see to the proceedings before the Court.  I have read that affidavit.  I see no reason why the documents ought not be produced.  I propose to make orders in the terms of the minute which the wife has produced.

11. Another matter which arose this morning was the question of what is to happen with the proceedings for final hearing in June.  That is not far away, and having regard to the bankruptcy of the husband and the potential receivership of some or all of the entities or even parts of the assets of the entities, it is important that the Court’s resources are not wasted.

12. The High Court in decisions such as Aon recently made the observation that the Court’s resources are limited and parties cannot simply use the Court’s resources to their own advantage to the disadvantage of others.  It seems to me that this is an important case.  It is a complex case, and as such, there is an obligation to ensure that if a litigant is going to participate, they are at least on notice that the Court is intending to proceed to use its resources properly and that those parties who wish to participate are properly prepared.  For that reason, I propose to fix a mention date and arrange for some time, albeit limited, to see what is the state of the litigation.  I propose to order that the wife serve a copy of this, the orders I propose to make, on all of the relevant parties and to order that in the event that any of the respondents fails to appear, and that includes corporate representatives in their proper role as authorised directors or through their lawyers, then the wife may then apply to have her application for substantive relief proceed on an undefended basis as against any respondent who, having properly been served, tends to ignore the court proceedings.

13. There is a dilemma here because of the bankruptcy of the husband and the potential receivership issues, and to the extent that any person in that category who is reading these reasons, I would expect them to at least have the courtesy to attend to indicate just what part they are going to play.  I propose to order that service of the various documents, including these, the amended application and this order, be by post, having regard to the fact that it is clear that there have been problems about service in the past, and there is no logical reason why the post would not bring to the attention of the various parties the existence of the order and the foreshadowed proceedings.

14. Finally, the wife seeks an order for costs. Section 117 of the Family Law Act provides that in litigation in this Court, each party shall bear its own costs unless the Court is satisfied that there are circumstances that justify departure from that rule. In this case, there can be no doubt that the parties who were to participate in the applications today were well aware of the fact that the proceedings were on. The various solicitors who have gone off the record today have indicated by their respective notices, and in the case of Mr O’Dwyer, by his submission from the bar table, that notification had been given to the various respondents of the fact that the proceedings were listed. The wife had to go to the trouble of preparing a defence to the removal of the corporate entities. That can be seen from the documents that were filed in the response filed on 11 April and the affidavit in support thereof. The wife took the proceedings seriously by having senior counsel and junior counsel properly briefed and an instructor present. On that basis, I would have expected the respondents to have done likewise. The fact that there may have been some problems associated with receivership do not matter in this case, because there is no evidence before the Court that the companies are in any sort of financial trouble. Mr Burnside simply indicated that that was what the wife had been told.

15. That is an entirely unsatisfactory position to put the wife in the position where she has to attend not knowing what sort of a day she is to have. She came properly prepared. The respondents did not. That is a justification for a departure from the rule in section 117. Section 117 goes on to provide that in making or considering making an order under section 117, the Court has to take into account a number of matters relating to the conduct of the parties and the financial circumstances. No particular provision in subsection (2A) overrides any other. No particular provision in subsection (2A) is dominant.

16. It seems to me that this is a case where I can take into account that there are corporate entities involved.  They have had senior counsel appear on previous occasions throughout the proceedings, and there is no evidence of any financial problems.  The wife’s position has been throughout that she has had difficulties in funding her lawyers;  that can be seen from the previous orders that I made in relation to the litigation funding.  It seems to me this is a case where it is appropriate to make an order for costs, including an order for the certification, for the attendance of senior counsel and the certification for two counsel.  To the extent that it is necessary for me to say so, it was appropriate to have an instructor as well.

17. Unfortunately, I am not able to make any definitive order in relation to the costs, because the details are lacking.  I will order that the parties agree on the quantum of the costs, and in the event that there is no agreement, then the costs be as assessed by the registrar.  I propose to have these orders prepared immediately, and on the basis that the solicitor for the wife emails to my associate today a copy of the minute of the proposed order, that order will be attached to the order that I make.

I certify that the preceding seventeen (17) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Cronin delivered on 28 April 2011.

Associate: 

Date:  16 June 2011