Sresbodan and Sresbodan & Ors
[2016] FamCAFC 88
•27 May 2016
FAMILY COURT OF AUSTRALIA
| SRESBODAN & SRESBODAN AND ORS | [2016] FamCAFC 88 |
| FAMILY LAW – APPEAL – PROPERTY – Where the appellant is a discharged bankrupt but the estate is not finalised – Where the trustees and previous lawyers of the appellant are parties to the proceedings – Where the trial judge made orders for property settlement, with moneys to be variously distributed to the first respondent, trustees and the third and fourth respondents – Where the grounds of appeal do not identify appellable error – Where the appellant continues to challenge the bankruptcy in circumstances where it has been finalised in the Federal Court of Australia – Where the appellant asserts the trial judge did not allow him to subpoena various parties – Where the transcript reveals the appellant was afforded every opportunity to present his case – Where on appeal the appellant could not identify the evidence the subpoenas would have produced – Appeal dismissed. FAMILY LAW – COSTS – INDEMNITY – Where first respondent sought costs – Where the second, third and fourth respondents sought costs on an indemnity basis as these proceedings fell within the range of matters described in Colgate-Palmolive Company v Cussons Pty Limited (1993) 46 FCR 225 – Where the appellant has been wholly unsuccessful and did not present an arguable case – Where the appellant has constrained financial circumstances and is on a pension, but where the appellant’s own conduct has contributed to this position – Where an order for costs of each of the respondents should be made, but not on an indemnity basis – An order for costs will be made in favour of each of the respondents, of and incidental to the appeal, to be assessed. |
| Bankruptcy Act 1966 (Cth) s116 Family Law Act 1975 (Cth) ss 75(2)(o), 117 |
| Colgate-Palmolive Company v Cussons Pty Limited (1993) 46 FCR 225 |
| APPELLANT: | Mr Sresbodan |
| FIRST RESPONDENT: | Ms Sresbodan |
| SECOND RESPONDENT: | The Trustees for the Bankrupt estate of Mr Sresbodan |
| THIRD RESPONDENT: | D Attorneys |
| FOURTH RESPONDENT: | R Lawyers |
| FILE NUMBER: | SYF | 4345 | of | 2006 |
| APPEAL NUMBER: | EA | 121 | of | 2015 |
| DATE DELIVERED: | 27 May 2016 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | May, Strickland & Kent JJ |
| HEARING DATE: | 15 February 2016 5 April 2016 |
| LOWER COURT JURISDICTION: | Family Court of Australia |
| LOWER COURT JUDGMENT DATE: | 6 July 2015 |
| LOWER COURT MNC: | [2015] FamCA 515 |
REPRESENTATION
| FOR THE APPELLANT: | Mr Sresbodan (in person) |
| COUNSEL FOR THE FIRST RESPONDENT: | Mr Schonell SC |
| SOLICITOR FOR THE FIRST RESPONDENT: | Vizzone Ruggero Twigg Lawyers |
| COUNSEL FOR THE SECOND RESPONDENT: | Ms Judge |
| SOLICITOR FOR THE SECOND RESPONDENT: | Goldrick Farrell Mullan Lawyers |
| SOLICITOR FOR THE THIRD RESPONDENT: | D Attorneys |
| SOLICITOR FOR THE FOURTH RESPONDENT: | R Lawyers |
Orders
The appeal be dismissed.
The husband pay the costs of the wife, the trustees for the bankrupt estate of Mr Sresbodan, D Attorneys and R Lawyers of and incidental to the appeal, to be assessed.
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).
| THE FULL COURT OF THE FAMILY COURT OF AUSTRALIA AT SYDNEY |
Appeal Number: EA 121 of 2015
File Number: SYF 4345 of 2006
| Mr Sresbodan |
Appellant
And
| Ms Sresbodan |
First Respondent
| And The Trustees for the Bankrupt estate of Mr Sresbodan |
Second Respondent
| And D Attorneys |
Third Respondent
| And R Lawyers |
Fourth Respondent
REASONS FOR JUDGMENT
Introduction
By Notice of Appeal filed 23 July 2015, Mr Sresbodan (“the husband”) appeals property settlement orders made by Aldridge J on 6 July 2015. Those orders provide for the proceeds of sale of N Street, Suburb K (“the Suburb K property”) to be variously distributed to Ms Sresbodan (“the wife”), Mr Vanin and Mr Cox as trustees of the bankrupt estate of the husband (“the trustees”), Mr D and Mr E trading as D Attorneys (“D Attorneys”) and Mr P and Mr Q trading as R Lawyers (“R Lawyers”).
The property settlement proceedings were commenced by the wife in 2006. For reasons discussed in detail below, the husband was the subject of a sequestration order made on 12 May 2009 and was discharged from bankruptcy on 14 July 2012. The estate is not finalised, and the trustees are a party to these proceedings. D Attorneys and R Lawyers, who were previously retained by the husband as his lawyers, are also parties to these proceedings, and are seeking orders for payment of legal fees and costs from the husband.
On 30 July 2015, Aldridge J granted the husband a stay of the property settlement orders pending the appeal. On 3 November 2015 the wife filed an Application in a Case seeking a variation of the conditions of those stay orders to provide her with a payment of $250,000 to meet income tax and legal fees. The trustees sought a payment of $50,000, also for legal fees relating to the hearing of this appeal. On 27 November 2015 Aldridge J made orders granting those payments to the wife and the trustees.
On 10 November 2015, the husband was directed to file an Amended Notice of Appeal by 24 November 2015. No such amended document was filed by the husband, however he did file an Amended Summary of Argument on 13 January 2016.
The other parties complied with directions in relation to the preparation of written argument.
The Application to Adjourn the Appeal
The appeal was, unusually, heard on two separate dates. It is appropriate that this be explained in these Reasons.
On 12 February 2016, (the Friday before the date fixed for the appeal to be heard) the husband advised the Registry by telephone that he had been in an accident and would be unable to attend the hearing of the appeal on 15 February 2016. The husband was repeatedly advised by the Appeals Registry he, or a person representing him, would need to attend in person at the hearing of the appeal to seek an adjournment. A friend of the husband attended the Registry that Friday, and left a medical certificate signed by a medical practitioner, which read as follows:
THIS IS TO CERTIFY THAT
Mr [Sresbodan]
IS RECEIVING MEDICAL TREATMENT AND FOR THE PERIOD
Friday, 12 February 2016 TO Friday, 19 February 2016 INCLUSIVE
He WILL BE UNFIT TO CONTINUE his USUAL activities.
This Certificate was completed on 12/2/2016.
On 15 February 2016, at the appeal hearing, each of the respondents to this appeal appeared. They were advised of the medical certificate. All respondents resisted any adjournment and some of them expressed the view that the medical certificate may not be genuine. We decided to hear from the parties in relation to the appeal in the absence of the husband. This decision was made mindful of the costs of the other parties in preparation for the appeal and attending and the difficulties caused by any adjournment. The lawyers for the respondents relied on written submissions, were given an opportunity to expand on those submissions and were heard on the issues of costs.
The husband was telephoned, and it was explained to him by the presiding judge that he would have a transcript of the hearing at the Court’s expense, and the appeal would then be adjourned part-heard to 5 April 2016 to enable the husband to make oral submissions, limited to one hour. He was content with that course.
R Lawyers also made an oral application to adduce evidence of the progress of proceedings in the District Court of New South Wales, and this was allowed. This evidence was adduced in support of a costs application and will be referred to later in these Reasons in that context.
D Attorneys took issue with the authenticity of the husband’s medical certificate. To address these concerns, and adjourn the appeal, the Full Court made the following orders:
(1)The further hearing of the appeal is adjourned to 10.00am on 5 April 2016, or at such other time as the Appeals Registrar might direct, for a duration of one (1) hour.
(2)Each respondent be at liberty to file and serve any further affidavit in relation to the medical certificate provided by the appellant on or before 4.00pm on 21 March 2016.
(3)The appellant be provided, at the court’s expense, with a copy of the transcript of today’s appeal hearing.
(4) The costs of the appeal are reserved.
No affidavits in relation to the medical certificate were subsequently filed by any of the respondents.
On 5 April 2016, the husband appeared. The other parties represented by lawyers also appeared. The husband acknowledged that he had received the transcript of the hearing on 15 February 2016. It was explained to him that this was his opportunity to expand on his written argument, and reply to both the written and oral arguments of the other parties, including their applications for costs. It can only be said that nothing the husband said assisted his case. He continued to repeat that the F Shire Council had acted wrongfully, that he should never have been made bankrupt, and that consequently the orders of Aldridge J were improperly made.
In the course of the discussion in relation to the appeal we will refer to his arguments.
It is now useful to consider the complex background to this matter.
Background
The husband and wife were born in Country U, and immigrated to Australia in 1969. They married in 1968 and divorced in 2010. The husband is presently 71 years of age and the wife is 66 years of age. The parties have two adult sons.
The Suburb K property was purchased by the parties for $850,000 in August 1994 using proceeds from the sale of two properties previously owned by the parties.
The parties encountered some difficulty meeting the mortgage payments and on 28 October 1996 entered into an agreement with a Mr S to assist meeting the payments on the Suburb K property, in exchange for a parcel of land to be transferred to him after subdivision. As a result of a dispute between them, in 2007 Mr S commenced proceedings against the husband and wife in the District Court of New South Wales. On 12 December 2008 judgment was entered in favour of Mr S in the sum of $160,311 (see S v Sresbodan [2008] NSWDC 289).
In 2001, the F Shire Council notified the husband about issues regarding the storage of building materials and animals on the Suburb K property, asserting he was in breach of planning laws. In 2005 the F Shire Council commenced proceedings in the Land and Environment Court requiring the removal of the building materials and animals.
In February 2003 the husband and wife separated.
On 16 February 2005, the Land and Environment Court proceedings were dismissed for want of prosecution, but were later reinstated by a further order of that court. On 22 March 2005 the F Shire Council obtained a costs order against the husband. As noted in the Reasons of Aldridge J, the husband remains firmly of the view that despite his participation in the legal proceedings before the Land and Environment Court throughout 2005, no costs order should have been obtained because of the earlier dismissal of the proceedings.
In the course of litigation between the F Shire Council and the husband, a sequestration order was made by Federal Magistrate Raphael (as his Honour then was) on 12 May 2009 as a result of the costs order not being paid (The F Shire Council v Sresbodan [2009] FMCA 478).
The order made by the judge provided that the proceedings were stayed for 21 days, and it was explained to the husband that even if he paid the costs order, being a debt to the F Shire Council, he would need to return to the court to have the sequestration order annulled.
On 25 May 2009 the husband paid the moneys he owed to the F Shire Council, however other creditors emerged. For that reason the husband’s application to annul the bankruptcy did not succeed.
The wife commenced proceedings in the Family Court of Australia on 24 November 2006. The Court appointed the trustees and the wife as the trustees for sale of the Suburb K property. On 14 September 2010 the property was sold, the gross proceeds being $7,006,865.68. Of this amount, $1,858,396.16 was paid to the trustees in bankruptcy and the remaining $5,041,398.43 was placed into a controlled monies account (“CMA”) held by the wife’s solicitor. The following month, on 6 October 2010, R Lawyers filed an application seeking orders for their legal fees.
On 14 July 2012 the husband was discharged from his bankruptcy. The husband argued that his interest in the proceeds of sale from the Suburb K property should not vest in the trustees as it was protected under s 116(3) of the Bankruptcy Act 1966 (Cth) (“the Bankruptcy Act”). The trustees maintained the proceeds were not protected. The husband applied to the Federal Court of Australia. The husband was partly successful. It is necessary to set out some background and refer to the relevant section.
Between 1989 and 1991 the husband received $250,000 by way of compensation for personal injury. These funds were protected money under s 116 of the Bankruptcy Act. Under s 116(3) of the Bankruptcy Act where the whole or substantially the whole of the money paid for the purchase of a particular property is protected money, then s 116(2)(n) preserves the property from vesting in trustees upon bankruptcy. Under s 116(4), trustees must pay to the bankrupt so much of the proceeds of sale of such property as is attributable to protected money. On 6 March 2012, the trustees made a decision that no protected money formed part of the outlay for the Suburb K property so as to require any payment to the husband under s 116(4) from the proceeds of its sale.
On 3 May 2012 the husband filed an application in the Federal Court of Australia seeking an order that the decision of the trustees of 6 March 2012 be set aside and a declaration that his interest in the Suburb K property was purchased substantially with protected money and an order that the proceeds of sale of the Suburb K property do not vest in the trustees and do not constitute property divisible amongst the creditors of his bankrupt estate. The trustees filed a cross-claim in which they sought declarations as to the various entitlements to the proceeds of sale of the Suburb K property.
Emmett J on 14 December 2012 determined that of the total purchase price of $850,000 paid for the Suburb K property, $127,912.82, or 15.05 per cent of the total purchase price was attributable to the husband's compensation and made consequential orders as to the distribution of the proceeds (Sresbodan v Vanin [2012] FCA 1436).
In his Reasons for the property settlement orders of 6 July 2015, Aldridge J summarised the outcome of that application as it affected the Family Court proceedings:
12.The effect of those orders is that this court starts with the legal position that the wife owns 50 per cent of the proceeds of the [Suburb K] property, the trustees own 34.95 per cent and the husband owns 15.05 per cent. Further the half held by the trustees and the husband is burdened by a lien in favour of the trustees to secure the remuneration costs and expenses reasonably incurred by them in the preservation and realisation of the trustees’ and the husband’s 50 per cent.
13.A number of payments have been made out of the CMA over the years pursuant to orders of the court (Exhibit 20).
27 January 2011
Interim payment to the wife
$150 000
18 July 2011
Payment to ATO – CGT on sale
$670 000
18 July 2011
Interim payment to the wife
$300 000
30 March 2012
Interim payment to the husband
$150 000
17 July 2012
Interim payment to the wife
$700 000
7 February 2014
Payment to [Mr S] (a creditor of the parties’ $173 086.50) and ATO for income tax on the account ($70 603.31)
$203 689.81
14 February 2014
Balance of payment to [Mr S] and ATO
$40 000
10 February 2015
Interim payment to the husband
$20 000
14.Interest accrued on the balance held in the account, tax was withheld and bank charges paid. Suffice to say for the present, having regard to those matters it is by no means easy to determine how to divide up what remains in the CMA to give effect to the interests determined by Emmett J.
The primary judge then described the issues he was to determine:
15.In these proceedings the wife seeks the following orders:
1.That the parties do all acts and things including executing such documents to cause the monies held in the Controlled Monies Account by the Wife’s solicitors in the following manner and priority
1.1To the Wife the sum of $2,895,708.67.
1.2To the Wife a sum equal to 63% of any interest accrued on the Controlled Monies Account from 3 September 2014 to the date of this Order.
1.3The balance then remaining to the Husband, 1st, 2nd and 3rd Interveners in the proportions as determined by the Court.
2.That the Husband and the Wife be declared the sole legal and beneficial owners of all items of property including money, motor vehicles, insurances, equities, superannuation entitlements and personal effects currently in the possession or control of each of them respectively.
3.That the Husband pay the Wife’s costs of and incidental to these proceedings.
16.The trustees, by the end of the hearing, formed the view, having regard to the continuing legal costs and likely costs of appeals, that there was likely to be a shortfall in the bankruptcy. They sought an order that there be a payment to them out of the controlled monies account of an amount that would give them the balance of the 34.95 per cent of the net proceeds of the [Suburb K] property and interest. This was because the sum paid to them was not all of the 34.95 per cent of the fund to which the trustees were entitled. It was a lesser sum which was then envisaged to be sufficient to pay the creditors and expenses of the bankruptcy in full. If, of course, it transpires that there was to be a surplus in the bankruptcy, the husband would be entitled to that surplus. That appears unlikely.
17.In addition, the trustees sought orders for the retention, in the trust account or in some other account, of various sums that would otherwise be paid to the husband to be held as security for payment of existing and anticipated costs orders in their favour.
18.The [Suburb K] property was sold by the trustees and the wife who had been appointed by the court as trustees for the sale of the property. The trustees paid the expenses for that sale and thus sought reimbursement from the CMA of $165 393.43.
…
24.[D] Attorneys initially sought an order that they be paid $37 200 from the husband’s share of any property settlement and that the sum of $21 285 be retained pending further order. The first sum represents costs that the husband has been ordered to pay in proceedings in the Federal Court and have been taxed in that sum. The second sum is the costs claimed by [D] Attorneys pursuant to a costs order made against the husband in their favour on 6 September 2012.
25.By the time the proceedings had concluded, those costs had been assessed.
26.On 16 December 2011 a costs order was made in the husband’s favour against [D] Attorneys. No claim has yet been made for the husband for [D] Attorneys to pay those costs and they have not been assessed. The husband did not adduce evidence of them.
The Grounds of Appeal
The husband has three grounds of appeal (as appears in his Notice of Appeal):
1.THAT His Honour Justice Aldridge erroneously proceeded to make his Judgment by disregarding the fact that the case of the [F] Shire Council against [Mr Sresbodan] and [Ms Sresbodan], Matter No: …/2004 was not re-instated by any “further order of the court” following it being “Dismissed for want of prosecution” on 16th February 2005 and, therefore, the “Costs Order” made by Her Honour Justice Pain on 14th March 2005 iis a nullity.
2.THAT His Honour Justice Aldridge disregarded what was told to [Mr Sresbodan] by Federal Magistrate Raphael in the Federal Magistrates Court on 12th May 2009 in the case of the [F] Shire Council against [Mr Sresbodan], Matter No: SYG…/2008, that “Do you understand, [Mr Sresbodan]? You have told me you can get this money ($21,000) within a week. You’ve got 21 days. If you can get it within 21 days and you pay them you can come back….You can come back to this Court and you can seek the order dismissed. You have to do that. Do you understand that?.....If you don’t come back here within that three weeks the sequestration order will take effect……So, if you get the money from the ANZ bank and you pay ... (the [F] Shire Council) you still have to come back to this Court and ask the Court to dismiss the petition.”
3.THAT His Honour Justice Aldridge erred in many many instances in his Judgment of the 6th of July 2015 by disregarding all that I put into Affidavits in particular that he disregarded my demands that [Mr S] be subpoenaed and be brought into the Witness Box to confirm that I did earn the wages I said to be the overwhelming source of monies for the purchase of [the Suburb K property] and, therefore, I am entitled to the major share of the property division.
(errors as in original)
Reasons of the Primary Judge
After considering the complex background to this matter, including the history of the litigation between the husband, and the F Shire Council, the primary judge carefully dealt with each of the parties’ claims. After considering the evidence of the trustees at [93] – [102], the primary judge determined this evidence was not satisfactory to assist a determination of the relevant interests in the CMA. His Honour concluded that he would instead determine the issues using a “broad brush approach”.
Considerable detail was provided in the Reasons for determining the competing claims of the trustees, the wife and the third parties. It is unnecessary to refer to those findings as they are not challenged on appeal.
The primary judge concluded that by reference to the percentage owed to each party set out at [12] of his Reasons, and taking into account interim payments made and received, the wife would receive $1,607,418.89, the husband $751,747 and the trustees $282,138.84.
It was found that the amount in the CMA as at 10 April 2015 was $3,411,874.89. This was after a number of interim payments variously made since the sale of the Suburb K property in 2010. The primary judge calculated the interest component in the CMA to be $770,570, and it was determined this should be “divided between the parties in the same portion as their interest in the total of balances owing.” Further, as a result of the earlier findings regarding the trustees’ various claims, the primary judge noted the trustees would be entitled to a further payment of funds prior to the distribution of proceeds of $105,229.48. It was concluded this amount would be deducted from the husband and wife according to their percentage interest in the whole of the funds.
Therefore, the primary judge concluded that there were the following entitlements in the CMA, subject to orders under s 79 of the Family Law Act 1975 (Cth) (“the Act”):
147.…
Wife $2 023 311
Husband $955 522
Trustees $433 041
Total: $3 411 874
The primary judge then considered a number of claims against the husband by his creditors, namely by D Attorneys and R Lawyers.
D Attorneys acted for the husband prior to his bankruptcy. The husband did not pay his legal fees, and then commenced legal proceedings against them in the Federal Court of Australia. These proceedings were summarily dismissed and the husband was ordered to pay costs. An application for leave to appeal was dismissed with costs. The husband and D Attorneys were also involved in a number of proceedings before the Family Court which do not require further explanation.
The primary judge concluded that D Attorneys were creditors of the husband in the sum of $61,279.02, and found “[t]here is no doubt that the husband will not voluntarily pay this debt”.
R Lawyers sought an order that the husband pay them the sum of $93,786.81. Watts J had previously ordered that this amount be set aside until the resolution of the proceedings between the husband and R Lawyers. This dispute had not yet resolved before the primary judge and therefore no further order was made, other than to vary the order as the name of the wife’s solicitors had changed. The primary judge concluded:
157.Thus from the husband’s share of the property, subject to orders under s 79 of the Family Law Act, there be orders for the payment of $61 279.02 to [D] Attorneys and $148 078.57 to the trustees – a total of $209 357.59. As $93 786.81 will be retained pursuant to the order of Watts J the amount the husband will receive from the CMA, at least in the short term, will be reduced by $303 144.40.
It was noted by the primary judge that an order under s 79 “must not be made unless the court is satisfied in all of the circumstances, it is just and equitable to make the order.” After setting out the assets of the husband and wife at the time of the hearing at [170] of the Reasons, the primary judge noted this list was “apt to mislead” and the “better course” would be to consider the parties’ contributions, rather than dividing the assets. It was concluded that it was just and equitable to make orders altering the interests of the parties.
Contributions
Although the grounds of appeal did not directly challenge the finding in this respect, it is appropriate that there be some reference because of the complaints made by the husband in his written submissions.
The primary judge considered the contributions of the parties at [176] – [210] of his Reasons. At the commencement of the relationship, neither party had significant assets. The husband’s submission that he had made a greater financial contribution than that of the wife was expressly rejected by the primary judge at [179].
The primary judge did accept the significant contribution of the husband’s personal injury compensation which funded the purchase of an earlier property, and subsequently the Suburb K property. The primary judge noted in this regard:
180.The husband received personal injury compensation which, as Emmett J found, was applied to the purchase of [2 W Street, J Town] and subsequently the [Suburb K] property. That was a significant contribution by him. Further, Emmett J found, that in acquiring the [Suburb K] property in joint names the husband, by application of the presumption of advancement, gave to the wife half his share of those compensation monies.
The primary judge found that both parties worked hard during the relationship, with each of them contributing to the property and welfare of the family.
It was noted the husband behaved violently to the wife during the relationship, and the primary judge found this violence affected the wife’s role as homemaker and parent. The instances of this violence were recorded at [192] – [200] of the Reasons. The wife also asserted that the husband was financially controlling during the relationship, and the primary judge made such finding. It was concluded that in light of the violence and abuse, an adjustment should be made under s 75(2)(o) of the Act in favour of the wife.
The s 75(2) factors
The primary judge found that the parties were at the end of their working lives, with the wife in reasonable health. The wife had found suitable accommodation and had access to money via the CMA.
The husband was living in a van and did not have access to normal facilities. He received $800 per fortnight from Centrelink. The primary judge concluded that some adjustment should be made to afford the husband reasonable accommodation.
Ultimately, weighing all relevant matters the primary judge decided that there should be no further adjustment to the interests of the parties.
The Orders
As a result of these findings, the primary judge made the following orders:
(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 [the Suburb K property] 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].
(2)[Ms Sresbodan] and [Mr Sresbodan] are each to retain, for their own benefit, any superannuation interests held by them and are to retain all assets that are presently in their possession.
…
The Appeal
Discussion
It is apparent from the transcript of the hearing before the primary judge that the husband was obsessed with the fact of the bankruptcy and refused to address the issues at the trial despite the best efforts of Aldridge J. This obsession and refusal to address the issues arising from the trial was evident in the husband’s written argument and in the hearing of the appeal.
As previously noted, the husband failed to file an Amended Notice of Appeal, he did file an Amended Summary of Argument on 13 January 2016, but it has little connection with the grounds of appeal.
In any event it must be said that the grounds do not demonstrate any arguable grounds of appeal and the submissions of the husband provide no further clarity.
The husband’s summary of argument commences with “[the wife’s] wrecklessness [sic]” and details offensive and inappropriate comments that do not demonstrate error on the part of the primary judge. The summary simply recounts purported conversations or factual events with no reference to the appeal books. The husband variously refers to a denial of justice by not having a trial by jury. These references, among others to the Magna Carta, again fail to demonstrate any error on the part of the primary judge.
It is readily apparent that by Grounds 1 and 2 of his appeal, as expanded upon by the husband in oral argument before us, the husband seeks by his appeal, as he did in the trial before Aldridge J, to mount a collateral challenge to the legitimacy of the sequestration order made against his estate on 12 May 2009. The husband contends that the trial judge erred in not embracing this collateral challenge in the respects identified in Grounds 1 and 2.
The insurmountable difficulty for the husband in advancing these challenges was identified and articulated by the trial judge (Reasons at [10], [32], [241] to [251]). In summary, as referred to by the trial judge, these same issues have previously been agitated by the husband in various proceedings in the Federal Court of Australia and have been determined adversely to the husband by that Court. As is also referred to by the trial judge, correctly with respect, it was not open to the husband to attempt to re-agitate the same issues or to challenge the making of the sequestration order in the property settlement proceedings.
The trial judge’s Reasons contain various references to the respective determinations of each of Foster J, Emmett J and Yates J in various Federal Court of Australia proceedings related to the husband’s bankruptcy.
On 4 July 2013, Foster J in the Federal Court of Australia dismissed, inter alia, the husband’s application for an annulment of his bankruptcy and the husband’s alternative claim for damages totalling $35 million (Sresbodan v The FShire Council [2013] FCA 652).
Foster J’s Reasons for Judgment contain a detailed exposition of the proceedings in the Land and Environment Court leading to the costs order in that court which founded the creditor’s petition for the husband’s bankruptcy; as well as a detailed exposition of the bankruptcy proceedings in the then Federal Magistrates Court. Foster J’s Reasons also detail the various and multiple proceedings related to the husband’s bankruptcy pursued by him in the Federal Court of Australia.
Relevantly, Foster J’s Reasons confirm that precisely the same, or substantially the same, contentions going to the foundation for the husband’s bankruptcy as contained in either or both Grounds 1 and 2 have previously been raised by the husband, and determined adversely to him, by each of:
a)Pain J in the Land and Environment Court (F Shire Council v Sresbodan (No. 5) [2008] NSWLEC 327 delivered 19 December 2008);
b)Emmett J in the Federal Court of Australia (Sresbodan v The F Shire Council (No. 3) [2012] FCA 523 delivered 4 May 2012); and
c)Foster J in the proceedings determined by his Honour.
Further, as the Reasons for Judgment of Yates J in the Federal Court of Australia confirm (Sresbodan v The F Shire Council [2013] FCA 765 delivered 5 August 2013), Yates J rejected the husband’s contention in those proceedings that the costs order made in the Land and Environment Court founding the husband’s bankruptcy was a nullity; or that there otherwise existed grounds for the husband to be granted leave to appeal the dismissal by Foster J of the husband’s application to annul his bankruptcy.
Aldridge J, having specifically referred in his Reasons for Judgment to the respective determinations and Reasons of each of Emmett J, Foster J and Yates J in the various Federal Court proceedings as referred to, was undoubtedly correct in determining that in the property proceedings the court could not legitimately entertain any attempt by the husband to revisit the issues already determined in the Federal Court of Australia or to challenge the legitimacy of his bankruptcy.
It is not necessary to refer at length to the submissions of the respondents. Senior Counsel for the wife correctly argued that the grounds of appeal do not identify an appellable error. It was submitted that the husband alone has been responsible for the protracted nature of the property settlement proceedings and his inability “to divorce himself” from the consequences of the bankruptcy meant he could not focus on the relevant issues during the trial.
There is no merit in Grounds 1 and 2 which, in the circumstances discussed, are tantamount to an abuse of process.
In Ground 3, the husband argued that Aldridge J either ignored his requests and attempts to subpoena Mr S to give evidence, or somehow prevented him from putting that evidence before the Court. A reading of the transcript reveals that the husband’s contentions in this respect are simply incorrect.
On 25 August 2014, in the context of the husband attempting to ask for an adjournment of the hearing of the trial, the trial judge and the husband discussed whom he wished to subpoena:
HIS HONOUR: But why do you need to call Mr and Mrs [S]? What evidence are they going to give?
MR [SRESBODAN]: Well, I - I wanted to call Mr and Mrs [S] - the - the way - the way they was calling her and ask her to sign application ..... to develop property. What she promise them to do, but - and - and they took her for lunch and whatever they - they did it, and dinner, she agree ..... when she came home, that agreement mean nothing. She did not ..... your Honour. If she signed that and if she agree, the property will be today still in our hands, because council could not take advantage on - on her to go against her own will and against - to give her rights and the same time to destroy my share of - of the property.
HIS HONOUR: And why don’t you have an affidavit on from Mr and Mrs [S]?
MR [SRESBODAN]: Yes. There is affidavit there. In my affidavits, Mr [S] been mentioned and in ‑ ‑ ‑
HIS HONOUR: Why do you not have an affidavit from Mr [S]?
MR [SRESBODAN]: Well, I want to have - I want to bring him in witness box and I think he will willing to do it, to come to give evidence what - how ..... wife destroy that agreement, that he did not receive - that two villas after he was paying for 10 years on our property. And because of that, he put us in a court, which he give up her rights again. I defend that and [Mr S] and his will actually clarify how she ignore that agreement.
HIS HONOUR: All right. Now, why haven’t you got an affidavit from them before now?
MR [SRESBODAN]: I even did not know that I needed to have. I - I thought if we bring him - if we bring him in the witness box, that will be same as affidavit.
HIS HONOUR: Well, have you rung [Mr S] and asked him if he can be here tomorrow?
MR [SRESBODAN]: No, I did not ring ..... because the relationship between me and Mr - and Mr [S] went so much down because he have to put us in a court because she breach that - that contract, and that’s - saying he will only come and if I have a chance and if you - you judges give me chance before to subpoena him, I could deliver a subpoena to him and I - I’m 90 per cent right or more, that he will - and his wife will be here to - to do it, to come to give evidence.
(Transcript 25 August 2014, p 43, lines 21 – 45, p 44 lines 1 – 15)
On 26 August 2014, the primary judge and the husband returned to a discussion about the issue of subpoenas. The primary judge remarked that he had refused the husband’s requests to subpoena a number of people, including Mr [S], on 17 December 2013. The husband had legal representation at that time, and the subpoena requests were refused. The husband was invited however, to make further applications to issue subpoenas and the primary judge remarked on 26 August 2014 that the husband had not yet issued any subpoenas:
HIS HONOUR: Last year, you had a barrister, Mr Becker - - -
MR [SRESBODAN]: Yes.
HIS HONOUR: - - - acting for you, and he asked that a number of subpoenas be issued to [Ms A], [Ms Sresbodan], [Mr Vanin], [Mr Cox], [Ms L] and [Mr M], and on 17 December I refused leave to issue those subpoenas but said that the issue may be revisited in the future if there’s a further application to which you subpoenas [sic]. There has been no further application to issue subpoenas. Last, you have not previously sought to issue a subpoena to Mr and Mrs [S], … and you have an affidavit on foot on file from […] which you can read into evidence if you want to. Does ‑ ‑ ‑
MR [SRESBODAN]: I did attempt.
HIS HONOUR: Does the fact that I refused you leave to issue the subpoenas that I did last December is no explanation for you not having sought to issue subpoenas to the people that you mentioned yesterday. So I’m not presently satisfied that there’s a basis for an adjournment so you can do so, there being no adequate explanation given as to why you hadn’t done so.
MR [SRESBODAN]: I did attempt. I did attempt to treat ‑ ‑ ‑
HIS HONOUR: No, I’m – Mr [Sresbodan], that wasn’t an invitation to an argument. That was my ruling on your application for an adjournment based on the subpoenas that you made yesterday. All right.
MR [SRESBODAN]: So I’m not – you disallow me to I have any to 0 I subpoena any people that I wanted? Is that ‑ ‑ ‑
HIS HONOUR: You had the chance to do so. This is the hearing, Mr [Sresbodan]. Why should this hearing be adjourned so that you can issue subpoenas that you could have issued previously.
MR [SRESBODAN]: I did ask, but you ‑ ‑ ‑
HIS HONOUR: They weren’t – but, Mr [Sresbodan], you didn’t listen. The subpoenas that I disallowed last year were not the subpoenas that you mentioned you wanted yesterday. They’re different ones. You haven’t given ‑ ‑ ‑
(Transcript 26 August 2014, p 85, lines 3 – 42).
The husband attempted a number of times throughout the trial on 27 and 28 August 2014 to “call” Mr S, but failed each time to request a subpoena or to provide an affidavit sworn by Mr S.
When asked during the appeal hearing what evidence Mr S would have given, the husband simply replied “the truth” and then added Mr S would have told the court about the wife’s “recklessness” and how “she stole their money”. The husband still only had a vague idea of Mr S’s whereabouts, but he was firm in his belief that if he had subpoenaed him he would have attended.
Senior Counsel for the wife, again correctly, noted that the husband was afforded every opportunity by the primary judge to present his case. At the conclusion of the trial, the parties were asked to make final written submissions on the proposed orders. The husband submitted that the assets be distributed 3 per cent to the wife and 97 per cent to the husband, or in the alternative 33 per cent to the wife and 67 per cent to the husband. However, the husband gave no particulars as to how this should be achieved or why it was just and equitable.
In response to ground 3, R Lawyers submitted that Mr S had not sworn an affidavit and the husband did not issue a subpoena to compel his attendance. It was submitted that there is therefore no error on the part of the primary judge in refusing to issue a subpoena to compel Mr S’s attendance.
We agree that no error was made by the trial judge in relation to any subpoena question and consequently we agree that there is no merit in ground 3. As we have earlier observed, none of the grounds of appeal the husband advanced are arguable.
Conclusion
The appeal is entirely without merit and must be dismissed.
The effect of that order is that the stay ordered on 30 July 2015 ceases to have effect.
Costs
On the basis that the appeal would be dismissed, applications were made by each of the respondents for costs.
Section 117 of the Act governs costs applications, where the primary position is that each party bears their own costs unless there are circumstances which justify an order. It is convenient to set out part of s 117:
(1)Subject to subsection (2), subsection 70NFB(1) and sections 117AA, 117AC and 118, each party to proceedings under this Act shall bear his or her own costs.
(2)If, in proceedings under this Act, the court is of opinion that there are circumstances that justify it in doing so, the court may, subject to subsections (2A), (4), (4A) and (5) and the applicable Rules of Court, make such order as to costs and security for costs, whether by way of interlocutory order or otherwise, as the court considers just.
(2A)In considering what order (if any) should be made under subsection (2), the court shall have regard to:
(a)the financial circumstances of each of the parties to the proceedings;
(b)whether any party to the proceedings is in receipt of assistance by way of legal aid and, if so, the terms of the grant of that assistance to that party;
(c)the conduct of the parties to the proceedings in relation to the proceedings including, without limiting the generality of the foregoing, the conduct of the parties in relation to pleadings, particulars, discovery, inspection, directions to answer questions, admissions of facts, production of documents and similar matters;
(d)whether the proceedings were necessitated by the failure of a party to the proceedings to comply with previous orders of the court;
(e)whether any party to the proceedings has been wholly unsuccessful in the proceedings;
(f)whether either party to the proceedings has made an offer in writing to the other party to the proceedings to settle the proceedings and the terms of any such offer; and
(g)such other matters as the court considers relevant.
Counsel for the wife submitted that in the event the appeal fails the wife would seek an order for costs and that this matter should not attract an indemnity costs order, it not being in the exceptional range of cases.
Counsel for the trustees, D Attorneys and R Lawyers each submitted an order for indemnity costs should be made, as these proceedings, and the husband’s conduct, fall within the range of matters described by Sheppard J in Colgate-Palmolive Company v Cussons Pty Limited (1993) 46 FCR 225 (“Colgate”). It is convenient to also refer to the judgment of Holden CJ in Munday v Bowman (1997) FLC 92-784 at 84,660 which summarised the findings of Sheppard J in Colgate:
(a)Where it appears that an action has been commenced or continued in circumstances where a party properly advised should have known that he had no chance of success. In such cases the action must be presumed to have been commenced or continued for some ulterior motive or because of some wilful disregard of the known facts (see Fountain Selected Meats (Sales) Pty. Ltd. v. International Produce Merchants Pty. Ltd. [1988] 81 ALR 397.
(b)Making allegations of fraud, knowing them to be false, and the making of irrelevant allegations of fraud (see Fountain Selected Meats (Sales) Pty. Ltd. (supra).
(c)Evidence of particular misconduct causing loss of time to the court and to other parties (see Tetijo Holdings Pty. Ltd. v. Keeprite Australia Pty. Ltd (unreported, Federal Court, 3 May 1991)).
(d)The making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions (see Ragatta Developments Pty. Ltd. v. Westpac Banking Corporation (unreported, Federal Court, 5 March 1993)).
(e)An imprudent refusal of an offer to compromise.
The Full Court decision in D & D (Costs) (No. 2) (2010) FLC 93-435 contains a useful analysis of Family Court case law on indemnity costs issues, by reference to the factors in Colgate and Limousin v Limousin (Costs) [2007] 38 Fam LR 478. The Full Court explained that exceptional circumstances must be shown to justify a departure from the ordinary rule of calculating costs orders.
Counsel for the trustees made extensive oral submissions in support of an indemnity costs order by reference to factors referred to in Colgate. It was argued that the husband should have understood that the issue of his bankruptcy had been finally determined. It was also argued that in his submissions throughout the history of these proceedings the husband does not “go as far as to make allegations of fraud in his submissions, but he certainly makes some fairly offensive and questionable suggestions about courts … [t]hat’s close to an allegation of fraud.” Further, it was argued that his conduct has unduly prolonged the conduct of this matter.
The husband has been wholly unsuccessful in his appeal within the meaning of s 117(2A)(e). Moreover, relevant to conduct (subsection (c)) the husband pursued an appeal on grounds we have found to be not even arguable and, in respect of Grounds 1 and 2, tantamount to an abuse of process.
Balanced against these factors is the relative financial circumstances of the parties (s 117(2A)(a)). The husband’s financial circumstances are constrained and there is an obvious disparity when his financial circumstances are compared with those of the wife. Obviously, the other respondents are commercial third parties having a financial standing not enjoyed by the husband who currently relies upon a Centrelink pension and lives in very modest accommodation. Whether the husband will actually be left with any funds when the property settlement orders take final effect and his bankrupt estate and all associated litigation is finalised, is open to speculation.
Of course, as the wife rightly emphasises, a major reason for the husband’s now reduced financial circumstances is his own conduct in relentlessly pursuing unmeritorious litigation in various courts, and the husband’s repeated pursuit in litigation of contentions previously adjudicated upon by courts. Grounds 1 and 2 of this appeal are stark examples.
Impecuniosity is not a complete bar to an order for costs where the circumstances overall justify an order, and no party is entitled to litigate completely unmeritorious claims with a blanket immunity from all costs consequences to other parties subjected to such litigation.
Balancing the competing considerations we are satisfied that there are circumstances that justify orders that the husband pay the party/party costs of each respondent of and incidental to this appeal and we will so order. Weighed in that balance, we consider that the husband's constrained financial circumstances, despite his own contribution to them by his conduct earlier referred to, renders the conclusion that it would not be just, within the meaning of s 117(2), to order costs on an indemnity basis.
I certify that the preceding eighty-six (86) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court (May, Strickland & Kent JJ) delivered on 27 May 2016.
Associate:
Date: 27 May 2016
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