Kubica v Hussein
[2013] FCCA 1957
•19 November 2013
FEDERAL CIRCUIT COURT OF AUSTRALIA
| KUBICA v HUSSEIN | [2013] FCCA 1957 |
| Catchwords: PRACTICE AND PROCEDURE – Application for an adjournment – where respondent claimed pending application before Family Court of Australia under s.79 of the Family Law Act1975 (Cth) – where respondent had successfully pursued claims under s.79 on two prior occasions – whether claim based on genuine and arguable grounds – where outstanding application for special leave to appeal to High Court in relation to costs order – where order subject of appeal to Full Bench of the Family Court – whether genuine dispute with real prospects of success – where respondent claimed petitioning creditor indebted to him – where debt not disputed, but not sufficient to reduce respondent’s indebtedness to below the statutory minimum – whether to grant adjournment. |
| Legislation: Family Law Act 1975 (Cth), s.79A Federal Circuit Court Rules 2001, Part 15 Rule 15.01(b) |
| Ahearn v Deputy Commissioner of Taxation (1987) 76 ALR 137 Re Schmidt; Ex parte Anglewood Pty. Ltd. (1968) 13 FLR 111 Re James Ex p: Carter Holt Harvey (1994) 51 FCR 14 In the Marriage of Arpas (1989) 30 Fam LR 314 In the Marriage of Holland (1982) 8 Fam LR 233 In the Marriage of JA & LJ Sommerville [1999] FamCA 958; 27 Fam LR 233 DCT v Cummins (2008) 70 ATR 855 Westpac Banking Corporation v Carver [2003] 126 FCR 113 |
| Applicant: | HALINA BARBARA KUBICA |
| Respondent: | MOHAMED HUSSEIN |
| File Number: | SYG 1876 of 2013 |
| Judgment of: | Judge Raphael |
| Hearing date: | 19 November 2013 |
| Date of Last Submission: | 19 November 2013 |
| Delivered at: | Sydney |
| Delivered on: | 19 November 2013 |
REPRESENTATION
| For the Applicant: | In person |
| Counsel for the Respondent: | Mr S White SC |
| Solicitors for the Respondent: | Colin Daley Quinn |
ORDERS
Application for adjournment declined.
Notices of opposition dismissed.
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT SYDNEY |
SYG 1876 of 2013
| HALINA BARBARA KUBICA |
Applicant
And
| MOHAMED HUSSEIN |
Respondent
REASONS FOR JUDGMENT
The court has before it an application for a sequestration order against the estate of Mohamed Hussein. A creditor’s petition was issued on 12 August 2013. The underlying debt was in respect of costs ordered by the Family Court of Australia that had been assessed and transformed into judgments totalling the sum of $77,445.85. The petitioning creditor is the former wife of the debtor. On 9 September 2013 Mr Hussein filed a notice of opposition to the petition and another notice of opposition was served on 22 October 2013. Also on 9 September 2013 Mr Hussein filed an application for an adjournment of the creditor’s petition.
The basis for Mr Hussein’s request for an adjournment and really the point behind his notice of objection was threefold. First he said that he had an application pending in the Family Court of Australia under s.79A of the Family Law Act 1975[1]. Secondly, he had an outstanding application for special leave to the High Court appealing against the decision of the Judge of the Family Court who awarded the costs against him. Thirdly, he claimed that the petitioning creditor owed him the sum of $35,000.00.
[1] “Act”
The court made interlocutory orders for the case management of the matter which came before it for final hearing on 19 November 2013. Mr Hussein is self represented but he did produce an extensive affidavit as well as submissions. Ms Kubica, the petitioning creditor, was represented by Mr White SC.
The court took pains to explain to Mr Hussein that it was not hearing the s.79A application. Its decision would be based upon whether or not he could establish to the court’s satisfaction that he had a claim based on, at the very least, genuine and arguable grounds; Ahearn v Deputy Commissioner of Taxation (1987) 76 ALR 137 at [148]. Perhaps the most succinct expression of the test is found in the decision of Gibbs J in Re Schmidt; Ex parte Anglewood Pty. Ltd. (1968) 13 FLR 111 at [116] helpfully extracted in the creditor’s written submissions where his Honour stated:
“As a general rule this court is not an appropriate forum to decide such a claim and is limited to forming a view upon whether there is sufficient validity in the debtor's claim to justify a dismissal or adjournment of the petition…I ought to consider this evidence [dealing with the asserted claim] for the purpose of deciding only whether it is probable that the debtor has against the petitioning creditor a claim which is likely to succeed…in many cases it would be more convenient, assuming that the debtor showed that he had a real claim to litigate, to adjourn the proceedings to enable his claim to be tried.”
His Honour’s reasoning was followed by Olney J in Re James Ex p: Carter Holt Harvey (1994) 51 FCR 14. These two cases have been followed and approved ever since.
It should be noted at the outset that this is not the first application under s.79A that Mr Hussein has made. It is the third. The original orders for the division of the parties’ property were made in July 2009. In late 2009 Mr Hussein commenced the first s.79A proceedings alleging that his former wife had not been completely open with him as to her financial position. Those proceedings were settled in his favour by consent orders made on 12 August 2010 that also had the effect of dismissing the proceedings. In July 2011 Mr Hussein commenced a second s.79A proceeding asserting non-disclosure. As part of those proceedings he demanded access to documents relating to his wife’s financial affairs and in particular to documents relating to a business which his wife had run at all material times, a travel agency known as “Greece and Mediterranean Travel Centre Pty Limited”. It seems clear to the court, in particular from a letter sent by Ms Kubica’s first solicitors to Mr Hussein’s solicitors dated 9 March 2012 that there were a very large number of documents that might not have been available to Mr Hussein in the original proceedings. However, these were made available to him in that month and they were the subject of another detailed letter this time from his solicitors to his former wife’s setting out what was then considered to be the inconsistency between financial statements filed on her behalf previously and the information that had come to light by the production of those documents. This letter was written on 30 March 2012.
On 17 May 2012, the parties, both of whom were represented by senior counsel and solicitors, came to an agreement consenting to the dismissal of the s.79A application which agreement was reduced to Orders of Murphy J which recorded inter alia that:
“All applications in respect to financial matters filed by the Applicant Husband since 12 August 2010 be withdrawn and dismissed, including but not limited to … initiating application filed 2 March 2011 seeking orders under s.79A.”
[The other orders required by Mr Hussein appear to have related to the children].
Notwithstanding those orders Mr Hussein, this time unrepresented, seeks to re-agitate by way of application under s.79A the financial arrangements between himself and his wife. Section 79A of the Act is relevantly in the following form:
“Setting aside of orders altering property interests
(1) Where, on application by a person affected by an order made by a court under section 79 in property settlement proceedings, the court is satisfied that:
(a) there has been a miscarriage of justice by reason of fraud, duress, suppression of evidence (including failure to disclose relevant information), the giving of false evidence or any other circumstance; or”
In the Marriage of Arpas (1989) 30 Fam LR 314 Mullane J opined in relation to s.79A:
“It has been held that:
The phrase “any other circumstances will embrace any situation which sufficiently indicates that the decree or order was obtained contrary to the justice of the case” per Allen J in McKenna v McKenna (1971) 18 FLR 15 at 18…
The expression extends to relevant facts which were not disclosed to the court in an undefended hearing but which were not the subject of suppression because they were not known to the party providing the evidence.”
At [320] his Honour considered a miscarriage of justice noting that the concept did not equate with a wrong decision or “a different result to what should have been”. He endorsed the view of Viscount Dunedin in Robins v National Trust Company (1927) AC 515 at [518] that miscarriage of justice “means such departure from the rules which permeate all judicial procedure as to make that which happened not in the proper use of the word judicial procedure at all”. In the Family Law arena the Full Court of the Family Court In the Marriage of Holland (1982) 8 Fam LR 233 at [236] stated:
“The term ‘miscarriage of justice’ was not limited to vitiating elements in the procedure followed in the court but extended to any situation ‘which sufficiently indicates that the decree or order was obtained contrary to the justice of the case.’”
These sentiments were followed by Nicholson J in In the Marriage of JA & LJ Sommerville [1999] FamCA 958; 27 Fam LR 233. I take from these authorities that the Family Court, being anxious to ensure that persons appearing before it do provide the fullest disclosure, adopts a pragmatic approach to the notion of miscarriage of justice depending upon the evidence provided in each case. For this reason, if I was to be satisfied by Mr Hussein that matters had not been disclosed to him at the time he entered into the agreement evidenced by the consent orders of Murphy J, there would be reasonable prospects that the court would entertain a further application from him.
I asked Mr Hussein to tell me where he believed there had been non-disclosure on the part of his wife. He provided me with several instances with which I shall now deal. The first instance related to retained profits in the business of approximately $624,938.00. These retained profits were paid out to the wife as a dividend post the financial agreements between the parties. The payment increased her taxable income considerably. Mr Hussein complained that her income as disclosed in the financial statements she was obliged to provide to the Family Court made no reference to these matters. He also asserted that the valuations of the business which were central to the division of assets did not make reference to these retained profits. The actual position is not quite so simple. True it is that in the financial reports delivered to the court Ms Kubica’s income was understated. But by the time the matter came to be agitated for the second time in the Family Court, Mr Hussein or his solicitors would have been well aware of the true position. Ms Kubica produced to the court as Exhibit 1 a bundle of documents known as the “Tender Bundle” containing some 133 pages of documents which were made available to Mr Hussein either through supboenae that had been issued or elsewhere in the correspondence passing between the solicitors that I have previously referred to. These documents were in the hands of Mr Hussein or his legal advisors not less than a month before the s.79A hearing was due to commence. They include detailed financial statements of the company which clearly indicate that by 2010, which is the relevant date of these proceedings, there were accumulated profits of $549,938.00. The documentation also indicates that reference to these retained profits was made by the Valuers, Merrill Associates Pty Limited, whose report of 4 August 2010 is produced by Mr Hussein himself. As Mr Hussein correctly points out any valuation of the business would not take into account the retained profits, it would be based upon the year on year profit and tangible assets and so the figures of between $600,000.00 odd produced by Ms Kubica and $800,000.00 odd produced by Mr Hussein were probably correct.
The second complaint made by Mr Hussein was that Ms Kubica had severely underestimated her income from the business excluding the payment of dividends out of retained profits. This is prima facie correct insofar as Ms Kubica provided information to the Family Court that indicated an income of approximately $75,000.00 a year when in fact her income was approximately $150,000.00. But again this information was known to Mr Hussein because in the documents found in Exhibit 1 there are her tax returns for the relevant years which clearly indicate what her actual income was.
The third complaint of Mr Hussein was that his wife had redrawn approximately $97,000.00 from the mortgage account which they held with Westpac and placed that money in an account in her own name. As a result, when the property came to be divided the liabilities against the house were $97,000.00 more than they should have been and Ms Kubica had $97,000.00 in assets. Mr Hussein accepts that he was aware of this transfer of funds by the time of the second s.79A application. He said that his wife swore an affidavit indicating that the money belonged to her mother and should have been returned to her. He says that the money was not returned. An examination of the documents does reveal that Ms Kubica indicated that she had an obligation to return those funds to her mother, it does not reveal whether the money has been returned. But even if it has not been returned to date, if the obligation remains then Mr Hussein’s position has not been adversely affected. It is a matter that could have been raised in any negotiations leading to the abandonment of the s.79A proceeding. Whether or not it was the court is unaware, but that is not to the point.
Another concern of Mr Hussein’s revolved around an insurance policy that Ms Kubica had taken out. It seems to have been an insurance policy associated with superannuation. The evidence reveals it as being a whole of life policy which had no surrender value and was not available to Ms Kubica unless she died. The superannuation account with which it was linked had no money in it and the court would hazard a guess that this is merely a tax effective way of securing life cover. During the course of the hearing Mr Hussein accepted that he was aware that the policy had no value but he referred to the declaration made by Ms Kubica as to her earnings when she took the policy out. It does not seem that he had a copy of this document in May 2012 but the income that she declared is in the general range of her actual income as indicated on her tax returns. The court has no reason to believe that her actual income was anything other than as declared and so it matters not what figure she might have put to the insurance company. Mr Hussein had those income tax returns at all material times.
Mr Hussein also made reference to a superannuation account with ING. The existence of this policy was recorded in an asset statement given to the Family Court on 30 July 2010.
Mr Hussein filed an affidavit sworn on 14 November 2013 in which at [131] and [133] he acknowledges discovering the transfer of $97,000.00 to Ms Kubica’s account and sets out the salary that Ms Kubica paid herself from the business between 2005 and 2010 noting that the information had come to him from his solicitors.
The court pointed out to Mr Hussein the difficulty that he had, given his knowledge of all these matters prior to the acceptance of the consent orders in May 2012. His response was understandable. The proceedings were fraught, he was under considerable pressure. He had little money of his own. Matters were not adequately explained to him. However sympathetic a court might be these reasons do not overcome the existence of knowledge and the fact of legal representation. If there was some fault in that representation Mr Hussein can pursue it through other avenues. Why should his former wife be exposed to further costs when she clearly was acting in good faith by the time the matter came to be negotiated and settled whatever may have been the situation prior.
In the final paragraph of his submissions Mr White says of the s.79A application:
“In conclusion the application for an adjournment of the petition must be seen in the context of the Respondent since February 2009, when the Family Court proceedings were commenced, having filed 27 applications, 30 affidavits and 29 subpoenas (see affidavit of Applicant sworn 2 September 2013 being Annexure A to her affidavit sworn 9 October 2013) including three s79A proceedings. The Applicant contents the third s79A proceedings is yet another futile application which has no prospects of success (noting that the onus rests on the Respondent to satisfy the court that the third s79A proceedings are likely to succeed). There is therefore no basis to adjourn the petition which should be heard directly.”
It will be clear from the findings made that this is a sentiment which the court should endorse.
The second ground for opposing the petition relates to the application for special leave to the High Court in regard to the order for costs. The order was made by a Judge of the Family Court and was the subject of an appeal to a Full Bench. Mr Hussein would be required to satisfy me that there was a genuine dispute that had real prospects of success if I was to further adjourn the matter to await the special leave application. See DCT v Cummins (2008) 70 ATR 855 at [18]; Westpac Banking Corporation v Carver [2003] 126 FCR 113 at [17-18]. Mr Hussein has not addressed the court in any detail as to why he is likely to succeed in this appeal and the court finds it difficult to obtain the degree of satisfaction required that the High Court would entertain an appeal against a costs order of a single Judge that had already been considered by a Full Bench.
The third matter relates to an agreement between the parties that Mr Hussein would be paid $20,000.00 in order to relocate from the family home. He says that that payment was not made. He also says that there was a further $15,000.00 owing to him when he gave up his right to property within the home. It is not seriously disputed that the $20,000.00 has not been paid and the court will assume for the purposes of this decision that all of the money is owed in full. However, this will not avail Mr Hussein. Whilst it may reduce the amount of the claimed indebtedness in the petition that amount is still in excess of $5,000.00 and Ms Kubica still maintains a prima facie right to the relief which she seeks. The court would not be minded to exercise its discretion to grant an adjournment for that reason.
At the commencement of the proceedings the court exercised its power given by under Part 15 Rule 15.01(b) of the Federal Circuit Court Rules 2001 and s.55 of the Federal Circuit Court Act 1999 to limit the time for Mr Hussein to make his submissions. The court limited the time to one hour. The limitation was made because of the length of Mr Hussein’s affidavits and his disposition to utilise the court process to reargue his disputes with his wife. In the event Mr Hussein finished his submissions within 45 minutes. They were put coherently and with reference to the tendered evidence.
The court will not exercise its discretion to grant Mr Hussein an adjournment. It will also dismiss the notices of opposition.
I certify that the preceding twenty two (22) paragraphs are a true copy of the reasons for judgment of Judge Raphael
Associate:
Date: 22 November 2013
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