PEMBER & BRYSON

[2016] FamCA 618

FAMILY COURT OF AUSTRALIA

PEMBER & BRYSON [2016] FamCA 618

FAMILY LAW – PROPERTY – ENFORCEMENT – where the Applicant seeks enforcement of property orders – where the payment of monies pursuant to the order sought to be enforced was contingent upon the parties being successful in proceedings in the Supreme Court – whether, having agreed to settle those proceedings, the parties were successful such that the Applicant is entitled to payment.

Family Law Act 1975 (Cth)

APPLICANT: Mr Pember

RESPONDENT: Ms Bryson

FILE NUMBER: BRC 8546 of 2010

DATE DELIVERED: 29 July 2016

PLACE DELIVERED: Brisbane

PLACE HEARD: Brisbane

JUDGMENT OF: Hogan J

HEARING DATE: 28 October 2015, 27 May 2016 and 22 July 2016

REPRESENTATION

THE APPLICANT: In person

COUNSEL FOR THE RESPONDENT: Ms Hempling

SOLICITOR FOR THE RESPONDENT: The Law Shack

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 Pember & Bryson 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: BRC 8546 of 2010

Mr Pember

Applicant

And

Ms Bryson

Respondent

REASONS FOR JUDGMENT

1. By Amended Initiating Application filed 17 August 2015, Mr Pember sought, by way of what is described as ‘enforcement’ of Clause 7.2 of an Order made by consent on 13 February 2014 (as amended by a further Order made by consent on 17 December 2014), that the Court make orders that, from dividends otherwise payable to the parties[1] by the Liquidator of C Pty Ltd (in liquidation), he be paid:

   a)$225,415.00: said to represent 150 per cent of all the legal and accounting costs he paid in proceedings[2] in the Supreme Court of Queensland; and

   b)$271,150.00:  said to represent 150 per cent of the costs of $180,767.00 payable by him to particularised persons as a consequence of the resolution of those same proceedings.

   [1]          Either immediately or from the next dividends payable.

   [2]          BS 8597 of 2013 and BS 3919 of 2014.

2. In order to appreciate the current Application, it is necessary to have regard to the relevant terms of the February 2014 Order (by which the parties resolved their property settlement proceedings) and, briefly, to some of the circumstances which attended that time.

3. By way of broad summary, when the February 2014 Order was made, Mr Pember had either commenced proceedings or was contemplating commencing proceedings in the Supreme Court to seek to increase the amount payable to the parties by C Pty Ltd (in liquidation).

4. Those clauses of the February 2014 Order relevant to the determination of the current Application reflect the parties’ agreement about what was to happen in the event he was successful in the Supreme Court proceedings - they are as follows:

   7.That in respect of any dividends payable to either [Ms Bryson] or [Mr Pember] pursuant to the Assignment of the Respondent’s[3] rights as a creditor of [C Pty Ltd] from [C Pty Ltd] (in liquidation):-

   [3]           Ms Bryson.

   7.1 Any further dividend payable from any source at the percentage calculated on the basis of the current accepted Proof of Debt is to be paid, and these Orders are an irrevocable authority to the Liquidator of [C Pty Ltd] (in liquidation) to pay the dividend as follows: -

   7.1.1 To the Applicant[4] – 50 per cent thereof; and

   [4]           Mr Pember.

   7.1.2 To the Respondent – 50 per cent thereof.

   7.2 Should the Applicant be successful in the Supreme Court proceedings under file number … in the Queensland Supreme Court and as a result thereof, the percentage payable to [Mr Pember] as a creditor of [C Pty Ltd] (in liquidation) is increased, then any such dividend is to be paid, and these Orders are an irrevocable authority to the Liquidator of [C Pty Ltd] to pay the dividend as follows:-

   7.2.1From the first dividend payable: -

   (a) to the Applicant an amount agreed to represent 150 per cent of the legal costs and agreed fees paid to accountants paid by the Applicant in respect of the Supreme Court proceedings under file number … in the Queensland Supreme Court;

   (b)        any balance thereafter remaining:-

   (i) to the Applicant – 50 per cent thereof;

   (ii)      To the Respondent – 50 per cent thereof;

   (c)        any further dividends payable: -

   (i) To the Applicant – 50 per cent thereof;

   (ii)To the Respondent - 50 per cent thereof.

5. The parties subsequently agreed the terms of an Order made by consent in December 2014.  This Order discharged Clause 7.2 of the February 2014 Order and replaced it with the following:

   1.1Should [Mr Pember] or his servant or agent be successful in any Court proceedings under any file number with the Liquidator of [C Pty Ltd] (in liquidation) and as a result of any such Court proceedings the percentage or amount payable to [Mr Pember] or his servant or agent is increased, then any such dividend is to be paid and these Orders are irrevocable authority to the Liquidator of [C Pty Ltd] to pay the dividend as follows:-

   1.1.1  From the first dividend payable:-

   (a)to [Mr Pember] an amount agreed to represent 150 per cent of the legal costs and agreed fees paid to accountants paid by [Mr Pember] in respect of the proceeding with the Liquidator of [C Pty Ltd] (in liquidation);

   (b)any balance thereafter remaining: -

   (i)to [Mr Pember] – 50 per cent thereof;

   (ii)to [Ms Bryson] – 50 per cent thereof.

   (c) any further dividends payable: -

   (i)to [Mr Pember] – 50 per cent thereof;

   (ii)to [Ms Bryson] – 50 per cent thereof.

6. The difference between the terms of Clause 7.2 of the February 2014 Order and the clause of the December 2014 Order which replaced it is that Mr Pember is no longer required to receive the “percentage payable” as a “creditor” of the entity in liquidation;  instead, he needed to be successful in the Supreme Court proceedings and, as a result of the Court proceeding, either the percentage or the amount payable to him or his servant or agent needed to be increased so as to trigger the operation of the clause.

The proceedings in the Supreme Court with the Liquidator of C Pty Ltd (in liquidation)

1. On 4 March 2015, Mr Pember and Ms Bryson resolved proceedings Mr Pember had commenced in the Supreme Court of Queensland against the Liquidator of C Pty Ltd (in liquidation) on terms outlined in a Deed of Settlement dated that day.

2. Clause 3 of the Deed of Settlement provides:

   3.1 [Mr Pember] shall, forthwith upon the execution of this deed, consent with [the liquidator] and the Company to the following orders:

   (a) that the First Proceeding[5] be dismissed with [Mr Pember] paying the costs of [the liquidator] and the Company on the standard basis (in addition to and separate from the order for costs made by the Supreme Court of Queensland in the First Proceeding on 28 February 2014) in the form set out in Annexure A hereto;

   (b) that the Second Proceeding[6] shall be dismissed with [Mr Pember] paying the costs of and the Company on the standard basis in the form set out in Annexure B hereto.

   3.2 [Ms Bryson], as a second respondent in the First Proceeding and the Second Proceeding, despite having taken no part in each proceeding, will consent to the orders described Clause 3.1 herein.

   [5]          BS8597 of 2013.

   [6]          BS3919 of 2014.

3. It is clearly established, therefore, that Ms Bryson knew that the compromise of the proceedings commenced by Mr Pember in the Supreme Court had a consequence that he would pay the Liquidator’s costs of the same in the manner outlined in the Deed.

Evidence from the Liquidator

1. An extract from a report by the Liquidator exhibited to Mr Pember’s affidavit establishes the following:

   a)Ms Bryson’s proof of debt in an amount of $6,098,464.00 was originally accepted in full by the Liquidator;[7] and

   [7]           on 15 August 2013.

   b)proceedings commenced by Mr Pember in relation to a purported assignment of the proof of debt were disposed of at a hearing on 24 February 2014, following which Judgment was given in the Liquidator’s favour and an order made requiring Mr Pember to pay the Liquidator’s costs, in an amount later assessed[8] at $51,539.06: this amount has been paid by Mr Pember by way of set-off of funds he was entitled to receive as a consequence of the Liquidator’s declaration of a dividend; and

   [8]           on 5 December 2014.

   c)Mr Pember sought the Liquidator increase Ms Bryson’s proof of debt to $21,867,538.00; and

   d)the Liquidator refused to increase Ms Bryson’s proof of debt in the manner sought and provided reasons for this decision[9]; and

   [9]           on 7 April 2014.

   e)Mr Pember commenced proceedings in the Supreme Court on 28 April 2014, seeking to:

   i.      challenge the Liquidator’s ruling and to increase the proof of debt to $21,867,538.00[10]; and

   [10]Whilst he later asserted a claim of $44,000,000.00, Mr Pember did not amend the Application to seek this amount.

   ii.     to validate Ms Bryson’s assignment of the proof of debt to him to enable him to be a creditor personally;[11]  and

   [11]         He lodged a new proof of debt on 4 March 2014.

   f)these proceedings were set to proceed to trial on 16 March 2015; and

   g)both Mr Pember and the Liquidator engaged experts to determine the proper amount of Ms Bryson’s loan account but, as reported by the Liquidator to creditors, this task was almost impossible because of a lack of records and the complexity of transactions; and

   h)the Liquidator’s ‘last’[12] expert report outlined that the value of Ms Bryson’s loan account was $8,336,100.00 and, consequently, the Liquidator increased Ms Bryson’s proof of debt to $8,336,100.00 (clearly increasing the amount previously accepted by the Liquidator): but only in respect of future dividends and on the basis that the then current withheld dividend could not be disturbed; and

   i)the proceedings commenced by Mr Pember in the Supreme Court were compromised on the following agreed bases:

   i.      the September 2013 proceedings were dismissed, with Mr Pember to pay the Liquidator’s costs in a further amount of $32,529.33;  and

   ii.     the April 2014 proceedings were dismissed, with Mr Pember to pay the Liquidator’s costs: the amount then claimed was $233,699.73; and

   iii.    the then current withheld dividend would be paid to admitted creditors, with the payment to Ms Bryson being made on the basis of the original proof of debt asserted ($6,098,464.00 ); and

   iv.     future dividends would be paid to Ms Bryson’s family law solicitors to be paid out by them in accordance with the terms of the December 2014 Order; and

   v.      the Liquidator consented to Mr Pember withdrawing the proof of debt dated 4 March 2014; and

   vi.     both Mr Pember and Ms Bryson agreed not to lodge any further proof of debt in the litigation involving the company and Mr Pember conceded he was not a creditor of that company.

   [12]Being that obtained prior to executing the Deed of Settlement by which the parties compromised the Supreme Court proceedings.

2. Mr Pember’s evidence establishes that, as a consequence of the agreement reached between himself, the Liquidator and Ms Bryson (as recorded in the terms of the Deed), the proof of debt now accepted by the Liquidator has increased from $6,098,000.00 to $8,366,000.00: consequently, the percentage payment has increased from 28.27 per cent to 35.1 per cent.

Mr Pember’s Submissions

1. Mr Pember submits[13] that orders should be made in the terms he sought because he succeeded in his action/s against the Liquidator in the Supreme Court in that the Deed of Settlement entered into by the parties and the Liquidator in March 2015 (by which those proceedings were compromised) saw the Liquidator increase the quantum of the previously accepted proof of debt. 

   [13]         In the Case Outline document filed 20 October 2015.

2. He says, therefore, that he has satisfied the necessary pre-conditions contained within the operative clause of the December 2014 Order and, consequently, is entitled to be paid those costs determined in accordance with it.

3. Mr Pember submitted that a proper interpretation of the relevant clause of the December 2014 Order would persuade the Court that the costs covered by it include all costs he subsequently agreed to pay the Liquidator. He submitted Ms Bryson knew he agreed to pay these costs because she signed the Deed by which his obligation to pay the same to the Liquidator arises.

4. Mr Pember submits the order does not require Ms Bryson to consent to or approve the incurrence of legal costs.  He says there is no limitation on the recovery of all legal costs and that that all legal costs - being those paid by him to solicitors he engaged and those payable by him to the Liquidator to meet the Liquidator’s legal expenses - are covered by the Order. He further submits he is entitled to be repaid accountancy fees he incurred in the course of the proceedings.

5. Mr Pember submits that the December 2014 Order covers the Liquidator’s legal costs because:

   a)they are legal costs in relation to the proceedings;  and

   b)applicants in proceedings such as those he commenced in the Supreme Court “usually” pay a Liquidator’s costs; and

   c)the proceedings arose as a consequence of Ms Bryson’s negligence, mistake or carelessness; and

   d)given that the Deed post-dated the Order, reference in the former to his obligation to pay the Liquidator’s costs is covered by terms of the 2014 Consent Order:  namely, that “legal costs” includes those payable by him to his lawyers and also those payable to any lawyers, including those employed by the Liquidator, in respect of which he is liable given the terms of the Deed and subsequent consent orders.

Ms Bryson’s Submissions

1. Ms Bryson does not accept Mr Pember’s interpretation of the December 2014 Order. I proceed on the basis that she does not accept he was successful in the Supreme Court proceedings because a term of the Deed which recorded the compromise of the proceedings there required he pay the Liquidator’s costs of the same. It is further submitted on her behalf that the Order clearly refers to costs which had been paid by Mr Pember in litigation and not to those which are  payable by him as a consequence of orders agreed to in the Supreme Court litigation.

2. Additionally, Ms Bryson submitted that any costs should exclude those payable by Mr Pember to the Liquidator as a consequence of the terms of the Deed and subsequent consent orders in the Supreme Court because these do not represent the legal costs and/or accounting costs incurred by Mr Pember in prosecuting the proceedings in the Supreme Court.  Further, it was submitted that the quantum of costs and/or accounting fees had to be agreed by Ms Bryson as representing 150 per cent of legal costs and agreed fees paid to accountants by Mr Pember before Mr Pember was entitled to be paid the same. 

Discussion

1. As I have already discussed with the parties at an earlier appearance in this matter, I have concluded that the terms of the December 2014 Order require Mr Pember be paid the costs he incurred in the Supreme Court litigation from the first dividend payable and that these include those costs he is required to pay to the Liquidator as a consequence of the compromise of the proceedings agreed and documented in the Deed referred to earlier. The terms of the December 2014 Order do not restrict in any way those costs to only costs paid by Mr Pember to his own solicitors; nor is there any requirement that Ms Bryson agree to the quantum of solicitors’ costs incurred by Mr Pember in prosecuting the Supreme Court litigation before he is entitled to seek to have those costs paid in the manner outlined in the operative clause.

Future Conduct

1. As already outlined to the parties when I mentioned this matter to inform them about conclusion I had reached, I considered that Ms Bryson’s challenge to Mr Pember’s Application had focused only upon the dispute about the proper interpretation of the operative clause of the December 2014 Order and that, whilst some submissions had been made in relation to the quantification of the amount to be paid to Mr Pember as a result, she had not properly been heard in relation to that issue. 

2. This aspect of the proceedings has now been the subject of further directions (after the parties’ failed attempts to reach negotiation) and will be heard by me on 2 September 2016.

I certify that the preceding twenty-one (21) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Hogan delivered on 29 July 2016.

Associate:                 

Date:    29 July 2016