Sresbodan and Sresbodan and Ors (No 3)

[2015] FamCA 1206

FAMILY COURT OF AUSTRALIA

SRESBODAN & SRESBODAN AND ORS (NO 3) [2015] FamCA 1206

FAMILY LAW – APPLICATION IN A CASE – Where there has been a stay of final property orders pending an appeal – Where the wife sought a variation of the stay orders for payment of money to various creditors and to pay for legal costs – Where the husband also seeks a variation of the stay orders – Where the husband does not have any legal costs of the impending appeal – Where the wife provided an undertaking to the court not to deal with her property until the determination of the appeal – Where the wife’s application is allowed.

Family Law Act 1975 (Cth)
APPLICANT:	Ms Sresbodan

RESPONDENT: Mr Sresbodan

FIRST INTERVENER: Trustees of the Bankrupt Estate of Mr Sresbodan

SECOND INTERVENERS: Mr D & Mr E

FILE NUMBER: SYF 4345 of 2006

DATE DELIVERED: 27 November 2015

PLACE DELIVERED: Sydney

PLACE HEARD: Sydney

JUDGMENT OF: Aldridge J

HEARING DATE: 23 & 27 November 2015

REPRESENTATION

SOLICITOR FOR THE APPLICANT: Vizzone Ruggero Twigg Lawyers

SOLICITOR FOR THE RESPONDENT: Emanuel Refenes Solicitor

SOLICITOR FOR THE FIRST 

INTERVENER:

Vizzone Ruggero Twigg Lawyers

SOLICITOR FOR THE SECOND

INTERVENER:

Emanuel Refenes Solicitor

Goldrick Farrell Mullan

D Attorneys

Orders

1. That pending further order of the Court the orders made on 30 July 2015 are varied so as to permit the following payments:

   (a)on account of the entitlement of Ms Sresbodan, a payment of $250,000 to be paid forthwith to Vizzone Ruggero Twigg Lawyers for the payment of the wife’s income tax debt and legal fees;

   (b)on account of the entitlement of Mr Vanin and Mr Cox as Trustees of the Bankrupt Estate of Mr Sresbodan, a payment of $50,000 to them to be used for legal fees;

   (c)on account of the entitlement of Mr Sresbodan, such funds as are needed by him to prepare the Appeal Books and to obtain the transcript for the appeal. Upon the production to the holder of the controlled money account of an invoice or written quotation for that preparation or the transcripts, a payment may be made to the producer of the services directly, or paid to the husband.

2. In the event that the orders for preparation of the Appeal Books are amended by the Appeals Registrar, and the wife is directed to prepare the Appeal Books, a payment to Vizzone Ruggero Twigg Lawyers for the costs of preparing and serving the Appeal Books in accordance with their Costs Disclosure dated 20 February 2015 filed herein and that such payments are to be on the account of Mr Sresbodan.

1. That if any issues arise in relation to the payments sought by the husband or

   in the event that the husband engages lawyers, any Application in a Case regarding payment out of the funds held in the controlled money account may be listed before me on 2 days’ notice.

1. That the costs of this application are reserved.

1. The Court notes the undertaking of the wife that she will not sell, transfer, encumber or otherwise deal with the property known as and situate at B Street, Suburb H until the determination of the appeal.

IT IS NOTED that publication of this judgment by this Court under the pseudonym Sresbodan & Sresbodan and Ors has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

FAMILY COURT OF AUSTRALIA AT SYDNEY

FILE NUMBER: SYF 4345 of 2006

Ms Sresbodan

Applicant

And

Mr Sresbodan

Respondent

And

Trustees of the Bankrupt Estate of Mr Sresbodan
First Intervener

And

Mr D & Mr E
Second Interveners

EX TEMPORE REASONS FOR JUDGMENT

1.On 3 November 2015, Ms Sresbodan (“the wife”) filed an Application in a Case seeking to have stay orders made by me on 30 July 2015 varied so as to provide a payment of $250 000 to her.  She proposes to use that money to pay the balance of the sum owing to her lawyers for the hearing before me and to pay the lawyers for the impending appeal, which is fixed for hearing on 15 February 2016, repair her house and to pay for a holiday. 

2.In response to her application, the trustees for the husband’s bankrupt estate (“the trustees”) filed a response, seeking a payment of $50 000 to assist them with their legal fees for the appeal. 

3.On 6 November 2015 a lawyer acting for Mr Sresbodan (“the husband”) filed a Notice of Appearance but no response to the wife’s application has yet been filed on behalf of the husband.  The lawyers have not appeared before the Court either on Monday, when the matter was first before the Court, or today.  They have apparently forwarded an email to the Court dealing with their non-appearance.  I have not read it and it has been returned unread. 

4.This is obviously a most unsatisfactory position in that the solicitors who are currently on the record for the husband have not appeared and seem to have taken no steps to remove themselves from the record.  They have gone on the record in circumstances where a great deal of work needs to be done over the next few days to prepare the appeal books.  The husband informs me that difficulties have arisen between him and his lawyers. His lawyers have apparently told the wife’s solicitors that they will be ceasing to act. 

5.The husband informed me that he opposed the wife’s application.  He made an oral application for payment of $250 000 out of the controlled monies account in order to enable him to prosecute the appeal. 

6.Also appearing in the matter are D Attorneys and R Lawyers - each is a creditor of the husband.  Their debts arose after the bankruptcy and are therefore not provable debts. They remain owing by the husband.  The circumstances leading to their interest are set out in the primary judgment. 

7.In response to the husband’s oral application, the trustees, D Attorneys and R Lawyers each sought an adjournment to deal with it.  I do not see any benefit in the adjournment and the application is refused. 

8.The wife, the trustees, D Attorneys and R Lawyers all opposed the husband’s application.  The trustees, D Attorneys and R Lawyers neither consented to nor opposed the wife’s application. 

9.The substantive proceedings are complicated and I will not attempt to summarise them here.  Rather, I will merely refer to the primary judgment as part of these reasons. 

10.The proceedings concerned a sum of money held in a controlled monies account which at, or shortly before the final hearing, comprised some $3 411 874.  It was to be distributed as follows:

(1) After 28 days from the date of judgment or maturity of the term deposit, whichever occurs later, the funds held in the controlled monies account holding the proceeds of sale of [N Street, Suburb K] be distributed as follows:

(a) $433 041 to [Mr Vanin] and [Mr Cox] as  trustees of the bankrupt estate of [Mr Sresbodan].

(b)      $2 023 311 to [Ms Sresbodan].

(c) $955 522 to the account of [Mr Sresbodan] and distributed as follows:

(i) $61 279.02 to [Mr D] and [Mr E] trading as [D Attorneys];

(ii) $148 078.57 to [Mr Vanin] and [Mr Cox] as trustees of the bankrupt estate of [Mr Sresbodan];

(iii) Subject to further order of this Court and pending determination of the proceedings between [R Lawyers] and [Mr Sresbodan], $93 786.81 to [R Lawyers] to be held by them subject to the orders of Watts J made on 4 April 2011;

(iv)$1984 to [Ms Sresbodan];

(v)$1984 to [Mr Vanin and [Mr Cox] as trustees of the bankrupt estate of [Mr Sresbodan];

(vi)$1984 to [D Attorneys]; and

(vii)$646 425.60 to [Mr Sresbodan].

(d) Any balance then remaining in the account is to be distributed by paying:

(i)60.8 per cent to [Ms Sresbodan];

(ii)28.5 per cent to [Mr Vanin] and [Mr Cox] as trustees of the bankrupt estate of [Mr Sresbodan]; and

(iii)10.7 per cent to [Mr Sresbodan].

1. The upshot is that as things presently stand, the husband is entitled to a payment of $646 425 from the controlled monies account.  The wife is entitled to $2 023 311 and the trustees are entitled to a distribution of $433 041 together with a further payment from the husband’s share of $148 078.  There are some other minor payments to be taken into account, as is evident from those reasons.  The orders made by me on 30 July 2015 state any distribution from the fund are stayed pending determination of the husband’s appeal.  A cross appeal by the wife has been discontinued. 

2. It is necessary to refer to some events that have occurred since the stay was granted.  The husband’s appeal has been expedited and was fixed for hearing on 15 February 2016.  He has been directed to file his appeal books by 4 December 2015.  The husband is optimistic that he will be able to meet that order, despite having to prepare the books himself since his lawyers appear not to be acting.  I am informed today that the husband attended the registry yesterday and he tells me that he now has copies of all of the documents necessary to prepare the appeal books. 

3. As readers of the primary judgment will be aware, the genesis of the husband’s complaints about the appointment of his trustees from bankruptcy is a judgment of Pain J given in the Land and Environment Court on 14 March 2005.  This was the costs order that ultimately led to the husband’s bankruptcy. 

4. The husband belatedly sought leave to appeal from that decision.  That application came before the Court of Appeal on 9 September 2015 in proceedings …, the Court of Appeal said the costs order followed from the proceedings in the Land and Environment Court had been reinstated by Lloyd J after having been earlier dismissed for want of prosecution.   The Court noted there was no order in evidence before it recording a reinstatement of the proceedings but that there is no reason to doubt that such an order was made as Pain J had referred to it. 

5. Further, the Court considered that the orders of the Land and Environment Court and, in particular, those made by Pain J are not a nullity because there is some prior step which should have been taken but which has not.  They are orders of a superior Court of the record, that is, the Land and Environment Court, and are effective and binding on the parties until set aside.  This led their Honours to conclude that there was no basis for believing that no reinstatement order was made. 

6. On that basis, the application was dismissed because the Court regarded the basis for the application as unarguable, leaving aside the extraordinary lapse of time.  It is to be noted that this judgment is yet another judgment dealing with, and rejecting, the husband’s assertion as to the validity of the costs order and his bankruptcy. 

7. As a result of that decision, the husband commenced proceedings in the Supreme Court of New South Wales against the State of New South Wales and the Land and Environment Court.  In those proceedings, he seeks orders to the effect that the proceedings before Pain J, which had been dismissed but then reinstated by her Honour, were not in fact reinstated.  As part of those proceedings, the husband issued a Notice to Produce.  The documents, the production of which were sought, included a copy of the sealed judgment with written reasons showing that the proceedings between the Suburb F Shire Council and him had been reinstated. 

8. The husband tells me today that no such document has been produced in answer to his Notice to Produce.  However, as the reasons of the Court of Appeal make plain, even in the absence of such a document, there is no reason to doubt that an order as to reinstatement was made.  Further, as their Honours point out, even if such an order was not made, that failure would not nullify the orders subsequently made by the Court.  However, the steps taken by the husband in the Court of Appeal and the Supreme Court indicate that the husband is likely to pursue his view of the matter relentlessly. 

9. I turn now to the wife’s application.  At the hearing I found her to own a home unit valued at $600 000, which had been purchased pursuant to interim orders for payment of funds from the controlled monies account. She currently has savings of some $80 000.  She has a number of expenses that she needs to make.  She currently receives a pension payment of $500 per week from her superannuation funds.  This is not enough to meet her outgoings and the balance of her outgoings are met from her savings. 

10. The wife has an outstanding bill for legal fees owning to Vizzone Ruggero Twigg Lawyers and counsel from the primary hearing of $160 806.60.  She also has a liability to the Australian Taxation Office, the sum of $14 872.06 for income tax on interest accruing on her share of the monies in the controlled monies account. 

11. As is obvious, the wife could use her savings to pay some part of these debts.  However, as I have said, her evidence is she needs to use those savings to meet the gap between her living expenses and her pension, and that she wishes to retain that sum as a buffer in the event things do not go well in the appeal.  In the circumstances, I think that is a reasonable and cautious position to adopt. 

12. As to the income tax, orders for the payment of income tax incurred by the wife on the interest accruing on her share of the controlled monies account have previously been made so as to avoid the wife incurring penalties for not paying it.  There is no reason why another order should not be made to that effect.

13. As to the existing legal expenses, again there is no reason why those expenses should not be paid if there is a sufficient fund available to enable that to be done.  The wife’s solicitor estimates that the costs of this application to be some $12 000, and her expenses on the appeal of some $10 000.  To this must be added senior counsel’s costs of the appeal.  As senior counsel has not yet seen the appeal books, he is not in a position to provide an estimate of how much his fees will be.  Once again, provided that funds are available of a sufficient sum, so as to ensure that the husband will not be prejudiced if his appeal was successful, there is no reason why there should not be a provision out of the account for those costs. 

14. I bear in the mind that the wife has a present entitlement to a sum of over $2 million.  It is difficult to see how that sum would be reduced even on a successful appeal to such a sum that could not be taken into account on a reassessment in due course.  That is to say, I do not see that the payment of this sum will adversely affect any entitlement to a sum the husband might be awarded on a rehearing.  In coming to this view I bear in mind that the wife has proposed an undertaking that she will not sell, transfer or encumber, or deal with her unit until the determination of the appeal.

15. In other words, even if the husband is successful on his appeal, he will not be prejudiced by a payment to the wife in the long run.  I also bear in mind that the Court has determined that the controlled monies account is to be divided up between all three parties seeking payment, in a precise way.  As things presently stand, therefore, there are their funds in that sum and that will only be altered if and when there was a successful appeal.  The parties are, in effect, seeking access to their own funds.

16. As I have said, there was no estimate given of senior counsel’s fees.  It was a long trial and the appeal books will be substantial.  Doing the best I can, I will allow the sum of $50 000 for senior counsel’s fees on the appeal.  I do not propose to make any allowance for the repairs to the house or holidays given the proximity of the appeal, savings presently held by the wife, and the fact that funds were only being released to each of the parties for legal fees in respect of the proceedings and the appeal.

17. If one allows the wife payments of $14 872.06, $160 806.60, $12 000, $10 000 and $50 000, this comes to a total of $247 678.66.  I will make an order in due course for payment out of controlled monies account on account of the wife’s share of $250 000 to be applied by her to her income tax bill, her existing and further legal expenses. 

18. The trustee seeks $50 000 from their share of the controlled monies account to enable them to defend their appeal.  Their position is that the Estate is running short of funds and they may not be in a position to defend the appeal.  The trustee’s present entitlement from the fund is $433 041 together with $148 078 to be paid to them from the husband’s share.

19. It is true that if the husband’s appeal was successful in challenging the validity of their appointment, these sums will not be paid to the trustees.  Given the recent decision of the Court of Appeal, which was to the same effect as the decision given by me in the primary judgment, it is most unlikely that the husband will succeed on the appeal.  Taking that into account, I propose to permit the payment. 

20. The husband adduced no evidence to support his claim for a payment of $250 000.  He was unable to say how much it would cost him to prepare the appeal books, notwithstanding they would need to be filed next week.  He was unable to say how much it would cost to obtain the transcript.

21. The husband has been ordered to take these steps, and he presently does not have the funds to do so.  Given that he has a present entitlement to funds in the controlled monies account of nearly $650 000, even allowing for payments to others to be made under those orders, there is no reason why, in the ordinary case, he should not have access to some of those funds to prepare for the appeal.

22. I note the concerns of D Attorneys and R Lawyers who are post-sequestration creditors.  They are concerned that any spending of those funds may prejudice their position as post-sequestration creditors, even though funds of money have been set aside for them.  The trustee also has claims for outstanding costs.

23. This is not an ordinary case.  The husband has commenced new proceedings in the Supreme Court, notwithstanding the findings of the Court of Appeal.  He said he wishes to engage lawyers for that.  He says that he owes Mr II $150 000 as evidenced by an affidavit sworn by Mr II.  No such affidavit could be found on the Court file and the husband hasn’t adduced any evidence of that debt.  I am not satisfied that the husband would spend $250 000 if released to him.  In a way, that would ensure that the appeal would proceed.  Indeed, there is no need now because his lawyers are no longer acting for him and he will no longer incur legal costs. 

24. The husband’s needs to prosecute the appeal include the need to pay for the cost of printing the appeal books and the cost of the transcript.  There is no reason why, consistently with what I have said in relation to the other parties, those funds should not come out of the husband’s share of the monies held in the controlled monies account.  The holder of that fund is presently the wife’s solicitors and it would be easy enough for orders to be made to release funds to the husband to enable him to pay for those things.

25. I am not prepared to make any orders for funds out of the account to be paid for lawyers acting for the husband unless and until there are lawyers acting for the husband who are prepared to come to Court and are prepared to indicate that they will act for him on the appeal.

26. Any application by the husband can be reconsidered if and when he engages such lawyers.  In the event, however, that the husband falls into difficulties in preparing the appeal books, the solicitor for the wife has indicated that she would be prepared to prepare the appeal books and obtain the transcript, provided she would be entitled to charge for her reasonable expenses for doing so.  The Court has before it a copy of the costs agreement between her and the wife and she says that she would be prepared to act on the same basis.  The funds, of course, for that preparation would come from the husband’s share of the controlled monies account and not the wife’s.

1. As a backup order, I propose to make an order that in the event that the Appeals Registrar directs the wife to prepare the appeal books, that preparation will be paid for in the manner I have just described.  However, the primary position is that the husband is preparing the appeal books and I propose to make an order that there be released to him funds to enable the books to be prepared and the transcript to be obtained upon him providing to Ms Ruggero an invoice or a quotation for that work.  The husband has informed me that he may have some difficulty obtaining the transcript because of an outstanding debt between him and Auscript.  In that case, the solicitor for the wife has indicated she will obtain the transcript as long as it is paid for out of the husband’s share.

I certify that the preceding thirty-seven (37) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Aldridge delivered on 27 November 2015.

Associate: 

Date:  10 February 2016