Sarina and Sarina & Ors
[2011] FamCA 826
•25 October 2011
FAMILY COURT OF AUSTRALIA
| SARINA & SARINA AND ORS | [2011] FamCA 826 |
| FAMILY LAW – PRACTICE AND PROCEDURE – Pleadings |
| Gilchrist & Gilchrist and Anor [2009] FamCAFC 199 Thomas & Ors v SMP (International) Pty Ltd & Ors [2010] NSWSC 822 |
| APPLICANT: | Ms Sarina |
| RESPONDENT: | Mr Sarina |
| SECOND RESPONDENT: | B Pty Ltd |
| THIRD RESPONDENT: | C Pty Ltd |
| FOURTH RESPONDENT: | D Pty Ltd |
| FILE NUMBER: | BRC | 226 | of | 2008 |
| DATE DELIVERED: | 25 October 2011 |
| PLACE DELIVERED: | Brisbane |
| PLACE HEARD: | Brisbane |
| JUDGMENT OF: | Bell J |
| HEARING DATE: | 16 May 2011 |
REPRESENTATION
| SOLICITOR FOR THE APPLICANT: | Browns Lawyers |
| COUNSEL FOR THE RESPONDENT: | Mr Erskine of Counsel |
| SOLICITOR FOR THE RESPONDENT: | Q5 Law |
COUNSEL FOR THE SECOND RESPONDENT: | Mr Hackett of Counsel |
| SOLICITOR FOR THE SECOND RESPONDENT: | Tucker & Cowen Solicitors |
COUNSEL FOR THE THIRD RESPONDENT: | Mr Alexander of Counsel |
SOLICITOR FOR THE THIRD RESPONDENT: | Compass Legal Solutions |
COUNSEL FOR THE FOURTH RESPONDENT: | Mr Hackett of Counsel |
| SOLICITOR FOR THE FOURTH RESPONDENT: | Tucker & Cowen Solicitors |
Orders
That the following paragraphs of the Further Amended Statement of Claim filed 13 May 2011 be struck out:
(a) Paragraph 40LL;
(b) Paragraph 41.
Insofar as Paragraph 1(a) of the Prayer for Relief, that this be restricted to the period prior to 11 February 2010.
That the Application in a Case filed 13 April 2011 by the Second and Fourth Respondents be otherwise dismissed.
Costs of and incidental to this Application be reserved to trial.
IT IS NOTED that publication of this judgment under the pseudonym Sarina & Sarina is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
| FAMILY COURT OF AUSTRALIA AT BRISBANE |
FILE NUMBER: BRC 226 of 2008
| Ms Sarina |
Applicant
And
| Mr Sarina |
Respondent
And
| B Pty Ltd |
Second Respondent
And
| C Pty Ltd |
Third Respondent
And
| D Pty Ltd |
Fourth Respondent
REASONS FOR JUDGMENT
This is an Application in a Case filed 13 April 2011 by the Second and Fourth Respondents. Those parties initially sought the Applicant Wife’s Statement of Claim filed 15 March 2011 be struck out, the Wife’s application as against the Second and Fourth Respondents be dismissed and that the Wife bear the costs of this Application on an indemnity basis.
This matter came before me previously on 6 December 2010 in relation to an Application in a Case of the Second and Fourth Respondents filed
28 September 2010, which was couched in almost identical terms to that of the Application before me today. At that hearing in December there was also an Application of the Third Respondent, again in virtually identical terms to this most recent application. In relation to those applications before me in December, I made Orders and published Reasons for Judgment on 22 February 2011 acceding to the orders sought to strike out the Wife’s Statement of Claim. The Wife was also granted leave to file a fresh Statement of Claim within 21 days.
Since this matter was before me last, as Counsel for the Second and Fourth Respondents informs me and as I so read, there have been four subsequent variations of the Statement of Claim filed by Ms Sarina. Yet Counsel for the Respondent Husband submits none of these variations address the concerns enunciated in my Reasons of 6 December 2010, nor do they go anyway toward illuminating the requisite cause of action.
This is a complex matter with a long litigious history, not aided on its path toward determination by the manner in which these parties have insisted upon parading an array of lengthy and superfluous material before me. That said, it has become apparent that this will be a matter which, if it reaches trial, will turn upon the facts and I am conscious where possible to expedite proceedings towards conclusion.
During the course of today’s submissions it became evident that the Orders now sought by the Second and Fourth Respondent are slight variations of those articulated in their Application in a Case of 13 April 2011. Firstly, the succession of re-pleadings by the Wife means the Statement of Claim now called to be struck out is that which was filed on 13 May 2011. Additionally, it is not a summary dismissal which is sought by the Second and Fourth Respondent but rather that certain paragraphs of the Wife’s Statement of Claim ought be struck out, extinguishing the Wife application against them since it discloses no cause of action. In relation to costs, the Second and Fourth Respondents seek the Wife bear their costs on the scale basis.
Counsel appeared for the receivers and managers of the Second Respondent, B Pty Ltd (receivers and managers appointed) (in liquidation) as trustee for the E Trust (hereafter “E”), and the Fourth Respondent, D Pty Ltd. The Second Respondent is in both receivership and liquidation, however only the receivers and managers are represented in these proceedings. The receivers and managers of the Second Respondent were appointed by the Fourth Respondent, hence the appearance of Mr Hackett of Counsel to represent their joint interests.
The Third Respondent, C Pty Ltd, has not filed an Application in a Case in support of the Second and Fourth Respondents Application, nor placed any written submissions before me. However Counsel for the Third Respondent, Mr Alexander, orally submits that the written submissions of Mr Hackett adequately address the concerns of the Third Respondent.
Counsel for the Respondent Husband handed up brief written submissions, therein stating that he also adopts and relies upon the submissions of the Second and Fourth Respondent.
The overarching assertion of the Wife throughout her material is that the Husband directed and controlled a number of entities, an act designed, so the Wife’s Counsel submits, to minimise any claim of hers to property settlement. Astonishingly, despite the number of parties already joined to proceedings, the Wife has not seen fit to join all these other entities against whom she makes such allegations. I note here that J Investments was deregistered on or about 16 November 2008.
The Wife asserts at paragraph 42 of her most recent Statement of Claim that the Second Respondent holds the following property:
a)A property situated at and known as F Street, Suburb G, Queensland (“the Suburb G ”property);
b)A property situated at and known as 1 H Street, Suburb I, Queensland;
c)A property situated at and known as 2 H Street, Suburb I, Queensland;
d)A property situated at and known as 3 H Street, Suburb I, Queensland; and
e)A boat.
As I stated in my Reasons of 22 February 2011, the Wife’s original Statement of Claim was lengthy and “confusing in the extreme”. I regret to conclude that the fresh Statement of Claim before me today has little addressed the flaws of its predecessor, notwithstanding the fact the document is some 65 pages in length. The Second, Third and Fourth Respondents also raised specific paragraphs within the Statement of Claim they seek to strike out.
Firstly, Mr Hackett of Counsel raises issue with paragraphs 40D, 40H, 40L, 4OO, 40U, 40X, 40AA, 40EE, 40II, 40LL, 40PP, 40TT, 40XX, 40BBB, 40FFF, 40JJJ and 41 of the Statement of Claim, in so far as the Wife pleads the Husband has retained net sale proceeds of numerous properties to the exclusion of the wife, without pleading the actual value of such proceeds.
The Wife will have the opportunity at trial to adduce evidence to prove these values.
Counsel for the Second and Fourth Respondents also orally submits that the Wife does not particularise how the Husband retained the sale proceeds of those properties purported to be sold by the Husband “through” another entity. This appears to me to be irrelevant to the application being considered.
At paragraph 6A of her prayer for relief, the Wife seeks Orders in relation to those 17 properties particularised at paragraphs 40 to 41 of her Statement of Claim, seeking “that an account be taken of the payment of and/or the receipt by the Husband or the Husband’s entities of the proceeds of sale and income of the…properties”. Of the 17 properties in relation to which the Wife seeks Orders, Mr Hackett submits to defective pleadings in 16 of them.
Hesitant as I am to engage in a summary of the facts as expressed in the Wife’s Statement of Claim, it is, I feel, necessary to determining whether these are in fact defective pleadings in relation to the husband’s asserted “direction and control” of certain entities.
The Wife submits that one such entity under the direction and control of the Husband was J Investments Pty Ltd (“J Investments”). J Investments was a company incorporated on 28 June 2001 which acted as trustee for the Sarina Family Trust from 1 July 2001 and was deregistered on or about 16 November 2008.
In the most recent Statement of Claim, the Wife pleads at paragraph 39H(b) that the Husband was the primary beneficiary of the Sarina Family Trust. The Wife and the children, grandchildren and parents of the parties were the general beneficiaries of the trust.
At paragraph 39A of the Wife’s Statement of Claim, the Wife pleads the officeholders of J Investments. The Wife herself was director and secretary from 1 October 2007 until 16 November 2008. The Wife does not plead to the Husband being an officeholder of that company.
Prior to 1 July 2001, the trustee of the Sarina Family Trust was K Pty Ltd (“K Pty Ltd”). K Pty Ltd was a company duly incorporated on 1 October 1991. At paragraph 39M of her Statement of Claim, the Wife states the officeholders of K Pty Ltd to include the Husband as director and secretary from 5 May 1992 until 23 April 2003. The Wife was also director from 28 February 1994 until 9 May 2001. The Husband and Wife were the only shareholders of K Pty Ltd.
In relation to paragraphs 40L, 4OO, 40AA, 40EE, 40II, 40PP, 40TT and 40FFF which refer to transfer of property by the Husband through K Pty Ltd, it is evident these transactions could have occurred under the Husband’s direction and control within the timeframe he acted as director and secretary of K Pty Ltd (from 5 May 1992 to 23 April 2003). Additionally, at paragraphs 79B the Wife pleads to the Husband’s control of K Pty Ltd. However the Wife will again be required at trial to bring evidence of the purchase price she alleges has been retained to her exclusion.
Paragraphs 40H and 40X are the only paragraphs which appear to relate to property only of the Husband (not any other entity) and accordingly may well be moneys withheld from the Wife.
Paragraphs 40U, 40XX and 40BB of the Statement of Claim refer to the Husband purchasing property “through the wife” and retaining those proceeds to her exclusion. I will allow these paragraphs to provide for evidence to be elicited at trial in relation to this point.
In relation to 40LL, I cannot determine how the Husband purchased property through J Investments in 1998 for no other reason than the fact the Wife had earlier stated J Investments came into existence on 28 June 2001. I will strike this paragraph out accordingly.
In paragraphs 40D and 40JJJ, the Wife pleads to the Husband purchasing property “through” J Investments. The Wife pleads at paragraph 79A to the Husband’s Control of J Investments. Accordingly, I will allow the inclusion of these paragraphs in anticipation of further evidence to be lead at trial.
I will accede to the application to strike out paragraph 41 of the Wife’s Statement of claim as I simply find it to be unintelligible.
Secondly, Mr Hackett submits to a defect in pleading at paragraph 1(a) of the Wife’s prayer for relief, whereby she states that the Husband has at all material times had control of the Second Respondent company. By Mr Hackett’s submission, this pleading includes the time following appointment of receivers and managers on 11 February 2010 and accordingly Counsel for the Second and Fourth Respondents seeks to limit that statement to the period prior to that appointment. I will so order.
The third submission of Counsel for the Second and Fourth Respondent is in relation to defects in pleading in paragraph 7 of the prayer for relief, regarding the Suburb G property only. That paragraph states:
7. That in the event the receivers and managers of the second respondent have not yet effected the sale thereof, that the receivers and managers of the second respondent, and the fourth respondent do all acts and sign all necessary documents to effect the sale of the Suburb G property…upon the following terms…
and so it continues on to state the terms the Wife wishes the Suburb G and Suburb I properties to be sold.
Counsel for the Second and Fourth Respondent submits the Wife also pleads at paragraph 63 of her Statement of Claim to the intention of the Husband in directing the transfer of the Suburb G property.
Counsel for the Third Respondent raises a further defect in pleadings in relation to the Suburb G property at paragraph 42, whereby the Wife states:
42. To the present knowledge of the Wife the property owned by the second respondent [B Pty Ltd] and the [E Trust] are as follows:
(a) A property situated at and known as [F Street, Suburb G] in the State of Queensland…(“the [Suburb G] property”);”
Exhibit 1 to these proceedings is the transfer for sale of the Suburb G property from the Second Respondent to the Third Respondent, dated 21 September 2009. Receivers and managers were appointed for the Second Respondent on 11 February 2010, a date some six months after the transfer of the Suburb G property.
As the Wife refers to this transfer elsewhere throughout her Statement of Claim and prayer for relief, I assume paragraph 7 was inserted in support of the oral submissions of the Wife this was not a bona fide transfer between the Second and Third Respondents, despite the prima facie bona fide transfer and the mortgage she asserts to exist, and in fact set aside.
At paragraphs 55 to 63 of the Statement of Claim, the Wife pleads to the Husband directing Mr L on or about September 2009 to sign a transfer on behalf of the Second Respondent, affecting a transfer of the Suburb G property. The Wife pleads at paragraph 14(b) that Mr L was the secretary of the Second Respondent from 11 September 2008 to 21 October 2009.
The Wife seeks orders under s 106B(1) against that transfer, at paragraphs 3(d)(i) of the prayer for relief in relation to setting aside the mortgage over the Suburb G property, and at 3(f) in relation to setting aside the transfer. Certainly the collusion she pleads as fact at paragraphs 55 to 63 may support a claim under s 106B, if the opportunity was awarded to adduce evidence to prove these facts.
In relation to her relief sought in the alternative at paragraph 7, I look to paragraph 63 of her Statement of Claim that the Third Respondent has paid no monies to the Second Respondent in respect of the Suburb G property. In his written submissions, Mr Hackett of Counsel submits that this pleading is contrary to the evidence before me which indicates this transfer was in fact at arms length. I note that in relation to this topic I did state in my Reasons for Judgment delivered 22 February 2011 at paragraph 18 that:
There is no material in the Statement of Claim that suggests that the transfer of the property was other than bona fide and for value and consequently it would be impossible for the Court on the Statement of Claim to come to the conclusion that there is any claim against the third respondent for those orders…
If I may, the Statement of Claim was then that filed 24 August 2010. This Statement of Claim expressed the facts in relation to the Suburb G property in seven paragraphs (at 78 to 84 of that document) and failed to even cursorily consider of any actual cause of action.
As I stated above, the current Statement of Claim elucidates the Wife’s assertions in relation to the transfer and particularises same at paragraphs 55 to 63. There is no place for evidence in a Statement of Claim. All that is required is pleading of the material facts and I am satisfied that the Wife has asserted such.
I wish to note that my determinations of these primary issues as to pleadings are of course in no way indicative of my having made any final conclusions or hardened views. I merely wish to afford both parties an opportunity to prove their assertions within the realms of evidence.
The Wife seeks orders at paragraph 3(g) of the prayer for relief that the deed of appointment of receivers and managers for the Second Respondent be set aside, as Counsel for the Wife submits to some kind of collusion on the basis the appointment was made one day prior to the Supreme Court’s order to wind the company up.
I note here the inclusion in the Wife’s prayer for relief that she be granted leave under s 471B of the Corporations Act 2001 (Cth).It appears that by way of ex parte application Federal Magistrate Burnett granted leave on 1 June 2010 for the B Pty Ltd (receiver and managers appointed) to be joined as respondents to proceedings.
The Wife pleads at paragraphs 80-83 as to the chronology of the Second Respondent’s winding up. The Wife had commenced proceedings to wind up the Second Respondent on the grounds of insolvency, on the basis that the company had not paid the Wife costs as ordered by the Magistrate’s Court on 12 August 2009.
Pleadings in the Family Court
I am cogent of the time and expense which will have no doubt been borne by the parties involved in this matter. However I am also conscious of the decisions of the Full Court which prescribe the obvious importance of pleadings in introducing issues for final determination: Gilchrist & Gilchrist and Anor [2009] FamCAFC 199.
Justice Pembroke of the New South Wales Supreme Court warned in his decision of Thomas & Ors v SMP (International) Pty Ltd & Ors [2010] NSWSC 822 at 11 that “it is common for some litigants to want to use their evidence as an opportunity to unburden themselves in unmanageable detail of many facts which have preoccupied them in the years preceding the hearing of their case”. Officers of the court have a duty “to restrain the enthusiasms of the client and to confine their evidence to what is legally necessary”: Thomas & Ors v SMP (International) Pty Ltd & Ors [2010] NSWSC 822 at 22.
Written submissions handed up today by the Applicant Wife purport to give a summary of the latest Statement of Claim. Why, one might ask, is a summary needed to explain a court document which by its very nature exists to briefly and succinctly particularise the claim sought by the applicant? One might argue that by its very inclusion the Wife’s solicitors have conceded the criticisms levelled at their own drafting.
Causes of Action
In an endeavour to précis the above, I say as follows: a Statement of Claim is a document which should allege the material facts upon which a claim is to be substantiated. While I have no doubt been critical of the drafting of this Statement of Claim, I must also concede the intricacy and minutiae litigants sometimes find themselves navigating in legal proceedings.
It may well be that these are those sorts of proceedings and that a 63 page Statement of Claim was in fact necessary to canvass all relevant and material facts.
Insofar as this Application relates to the Second and Fourth Respondents, the causes of action can be articulated as follows:
o The Wife seeks declarations that some ten entities were “at all material times” the alter ego of the Husband. Those entities about which such declarations are sought include the Second and Fourth Respondents.
o In relation to setting aside instruments and dispositions, the Wife seeks the following instruments and dispositions be set aside pursuant to s 106B:
o A fixed and floating charge deed dated 7 October 2005 between the Second Respondent as charger and the Fourth Respondent as chargee;
o A loan agreement dated 7 October 2005 between the Second Respondent as borrower and the Fourth Respondent as lender;
o A deed of variation of loan dated 14 May 2008 between the Second Respondent as borrower and the Fourth Respondent as lender;
o A mortgage dated 14 May 2008 between the Second Respondent as mortgagor and the Fourth Respondent as mortgagee, in relation to:
§ the Suburb G Property;
§ 1 H Street, Suburb I;
§ 2 H Street, Suburb I;
§ 3 H Street, Suburb I.
o A bill of sale dated 14 May 2008 between the Second Respondent as grantee and the Fourth Respondent as Grantor;
o The transfer of the Suburb G property dated 17 September 2009 between the Second Respondent as Transferor and the Third Respondent as transferee (note transfer date of Exhibit 1 as 21 September 2009);
o The deed of appointment of receiver and Manager of the Second Respondent between the Fourth Respondent as appointer and Mr M and Ms N as Receivers and Managers
o In relation to property settlement, the Wife seeks the court take into account the assets, financial resources and liabilities of not only the Husband but the Husband’s entities, as above.
o In the event the receivers and managers of the Second Respondent have not yet effected the sale of the Suburb G property, the Wife seeks the sale of same, with the proceeds to be applied as follows:
o To the commission and legal costs of the real estate agent;
o To discharge the St George Bank mortgage;
o The balance to be distributed to the Husband and the Wife in equal shares.
o In the event the receivers and managers of the Second Respondent have not yet effected the sale of the three Suburb I properties, the Wife seeks the sale of same, with the proceeds to be applied as follows:
o To the commission and legal costs of the real estate agent;
o The balance to be distributed to the Husband and the Wife in equal shares.
o In the event the receivers and managers of the Second Respondent have not yet effected the sale of the vessel, the Wife seeks the sale of same, with the proceeds to be applied as follows:
o To the commission and legal costs of the boat sales agent;
o The balance to be distributed to the Husband and the Wife in equal shares.
o Insofar as findings are made in relation to the above, the Wife seeks that the Orders made bind the Husband’s entities and the Second, Third and Fourth Respondents, including the officeholders, agents and servants of those parties and the receivers and managers of the Second Respondent.
Costs
The Second and Fourth Respondents seek the Applicant Wife bear the costs of this Application.
Mr Hackett of Counsel submits that his client, the Fourth Respondent, is owed a vast amount of money, millions of dollars on his submission, by the Second Respondent. The receivers and managers of the Second Respondent have been appointed to sell the last remaining assets, on Mr Hackett’s submission some four real properties and a vessel. Mr Hackett submits that even if these assets are sold at market value, the proceeds of sale would not be sufficient to extinguish the debt owed to the Fourth Respondent.
The Respondent Husband is an undischarged bankrupt, declared bankrupt by Sequestration Order of 8 February 2008.
Counsel for the Wife submits that on a “best case scenario”, the entirety of the assets would be worth approximately $3 million.
It appears to me the only reasonable course of action in such proceedings is to reserve costs to trial, where evidence will be brought before me in an attempt to prove those matters discussed above. I will order accordingly.
Finally, I find it quite astonishing that despite the apparent complexity and accompanying forays into interim proceedings, no application for security for costs has been brought before me. It seems to me that particularly in matters such as these, where half the parties seek to deny their involvement and the other half lack the funds to prove it, some kind of security is required for all those involved.
I certify that the preceding fifty-three (53) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Bell delivered on 25 October 2011.
Associate:
Date: 25 October 2011
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