Sresbodan & Sresbodan & Ors
[2011] FamCAFC 239
•16 December 2011
FAMILY COURT OF AUSTRALIA
| SRESBODAN & SRESBODAN AND ORS | [2011] FamCAFC 239 |
| FAMILY LAW ─ APPEAL ─ Application in an appeal – Where to adjourn the husband’s application for leave to appeal would have only increased the costs of all parties, with no prospect of the application having greater utility on any later occasion – Adjournment of the application for leave to appeal refused FAMILY LAW ─ APPEAL ─ Application for leave to appeal against interlocutory order of Family Court Judge ─ Property settlement ─ Where the trial Judge made orders for the sale of a property and that on completion of the sale the proceeds be disbursed to various creditors ─ Not established that the trial Judge was seized of an application pursuant to section 116(2) of the Bankruptcy Act 1966 (Cth) (“the Bankruptcy Act”) or that his Honour erred in not applying “correctly or otherwise” the provisions of that section ─ The Court was not referred to any evidence or submissions before the trial Judge asserting that the husband’s creditors ought not to be paid out of the proceeds of the sale of a property ─ Not established that the trial Judge erroneously applied the provisions of section 58 of the Bankruptcy Act on the evidence before him in light of the competing applications which were before him ─ Application for leave to appeal dismissed FAMILY LAW ─ APPEAL ─ COURTS AND JUDGES ─ Disqualification ─ Court was not referred to any application before the trial Judge to disqualify himself ─ Not identified or demonstrated that the trial Judge denied the parties natural justice |
| Family Law Act 1975 (Cth) Part VIII Bankruptcy Act 1966 (Cth) ss 58, 116, 116(1), 116(2) |
| Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170 Spencer Bower and Handley, Res Judicata (LexisNexis Butterworths, 4th ed, 2009) |
| APPELLANT: | Mr Sresbodan |
| FIRST RESPONDENT: | Ms Sresbodan |
| SECOND RESPONDENT: | Trustees of the Bankrupt Estate of Mr Sresbodan |
| THIRD RESPONDENT: | Mr R |
| FOURTH RESPONDENT: | Mr O |
| FILE NUMBER: | SYF | 4345 | of | 2006 |
| APPEAL NUMBER: | EAA | 150 | of | 2010 |
| DATE DELIVERED: | 16 December 2011 |
| PLACE DELIVERED: | Sydney |
| PLACE HEARD: | Sydney |
| JUDGMENT OF: | Coleman, Thackray & Young JJ |
| HEARING DATE: | 1 December 2011 |
| LOWER COURT JURISDICTION: | Family Court of Australia |
| LOWER COURT JUDGMENT DATE: | 7 June 2010 |
| LOWER COURT MNC: | [2010] FamCA 494 |
REPRESENTATION
| COUNSEL FOR THE APPELLANT: | Ms Obradovic |
| SOLICITOR FOR THE APPELLANT: | Pagano Burlovich Lawyers |
| COUNSEL FOR THE 1ST RESPONDENT: | Ms Nash |
| SOLICITOR FOR THE 1ST RESPONDENT: | Adrian Twigg & Co Solicitors and Conveyancers |
| COUNSEL FOR THE 2ND RESPONDENT: | Mr Ash |
| SOLICITOR FOR THE 2ND RESPONDENT: | Watson & Watson Solicitors |
| COUNSEL FOR THE 3RD & 4TH RESPONDENT: | N/A |
| SOLICITOR FOR THE 3RD & 4TH RESPONDENT: | K Firm |
Orders
That the application for leave to appeal against the orders of the Court of 7 June 2010 is dismissed.
That the costs of all parties of and incidental to the said application are reserved.
That within 35 days submissions in support of any application for costs be filed and served.
That within 28 days thereafter submissions in response to any such submissions be filed and served.
IT IS NOTED that publication of this judgment under the pseudonym Sresbodan & Sresbodan & Ors is approved 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: EAA 150 of 2010
File Number: SYF 4345 of 2006
| Mr Sresbodan |
Appellant
And
| Ms Sresbodan |
First Respondent
And
| Trustees of the Bankrupt Estate of Mr Sresbodan |
Second Respondent
And
| Mr R |
Third Respondent
And
| Mr O |
Fourth Respondent
REASONS FOR JUDGMENT
introduction
By Amended Notice of Appeal filed 24 November 2011 Mr Sresbodan (“the husband”) filed a Notice of Appeal challenging an interlocutory order made by Watts J on 7 June 2010 in proceedings for settlement of property between the husband, Ms Sresbodan (“the wife”) and Trustees of the Bankrupt Estate of Mr Sresbodan (“the trustees”).
The order provided that the proceeds of the sale of real estate at K registered in the husband’s name be disbursed, inter alia:
5.3To the trustee the sum necessary to discharge the husband’s creditors and any fees incurred by the trustee in their capacity as acting for the husband as trustee, including all fees and charges incurred by the trustee in complying with these orders.
The husband sought that such order be set aside and that in lieu thereof the Court order “that the sum of money payable to the trustee pursuant to order 5.3 made on 7 June 2011 [sic], be held in a controlled moneys account in accordance with order 5.6 of those orders”.
Order 5.6 made by Watts J on 7 June 2010 provided that:
5.6The balance of the proceeds of the sale to be held by the solicitor for the wife in a controlled monies account in the joint names of the trustee and wife.
Other than by payment of outgoings which have not been controversial, the proceeds of sale to which the orders relate have not been disbursed.
The husband has never formally sought leave to appeal. It is not in doubt that leave to appeal is required. The wife and the trustees have not taken formal objection to the absence of a formal application for leave to appeal. Counsel for the husband, the wife and the trustees all filed comprehensive written submissions directed to the merits of the husband’s proposed appeal. It is common ground that if the husband’s challenges to Watts J’s order are found to have merit, leave to appeal would be granted and the appeal allowed. If merit is not demonstrated, the application for leave to appeal would be dismissed.
By application filed 28 November 2011, the husband sought to have his application for leave to appeal adjourned until a date in 2012. That application was opposed by Counsel for the wife and Counsel for the trustees.
The Court refused the husband’s application to adjourn the proceedings. The Court’s reasons for such refusal can briefly be stated. So can its conclusion with respect to the application for leave to appeal.
BACKGROUND
On 27 November 2006 the wife applied for orders for settlement of property pursuant to the provisions of Part VIII of the Family Law Act 1975 (Cth) (“the Act”). The husband resisted the wife’s application.
On 12 May 2009 the Federal Magistrates Court ordered that the husband’s estate be sequestrated and trustees appointed pursuant to the provisions of the Bankruptcy Act 1966 (Cth) (“the Bankruptcy Act”).
The major asset of the husband was his registered proprietorship of a property at K in the state of New South Wales. It is probable that, at the date of his bankruptcy, the husband’s assets significantly exceeded his liabilities. At present, the husband’s assets significantly exceed his liabilities.
Subsequent to the husband’s bankruptcy, the trustees became parties to the proceedings in this Court. The proceedings were set down for trial before Watts J on 17, 18 & 19 May 2010. The trial did not then proceed.
On 7 June 2010 Watts J determined a number of interlocutory issues and made procedural orders pending new dates for trial being allocated. Included in those orders were provisions for the sale of the K property and, on completion of such sale, payment of various liabilities, and the order which gives rise to the present application.
On 11 March 2011, Ainslie-Wallace J extended the time for the husband to apply for leave to appeal against order 5.3 of Watts J’s orders.
The K property was sold pursuant to Watts J’s orders of 7 June 2010. A number of liabilities, including the payment of Capital Gains Tax of $670,000 were subsequently discharged from the proceeds of the sale of the property. The proceeds of sale of the K property are currently held, pursuant to order 5.3 of the trial Judge’s orders as to approximately $1,800,000 by the trustees in bankruptcy to abide the determination of a number of disputes and completion of administration of the husband’s bankrupt estate. Approximately $3,000,000 is held pursuant to order 5.6 of the trial Judge’s orders, in a controlled money account held on behalf of the husband and wife to abide the outcome of the proceedings in this Court.
On 19 May 2011 the husband filed an application in the Federal Court of Australia (…) in which he sought, inter alia, an order in the following terms:
3....Pursuant to s116(2) Bankruptcy Act 1966 (Cth), property, which would otherwise be available to a trustee under s116(1), can be exempt. The Applicant applied compensation money to the purchase of property sequestered by order of the Court
Those proceedings will again be before the Federal Court of Australia in December 2011.
During the course of the husband’s application for an adjournment of his application for leave to appeal against Watts J’s order, a number of matters were clarified. The husband’s application to the Federal Court of 19 May 2011 raised for the first time, at least in a formal sense, a claim pursuant to section 116(2) of the Bankruptcy Act.
The husband’s contention in the Federal Court is that:
1.Compensation monies received by the Applicant/Appellant were not considered when sequestering my estate.
2.Pursuant to s116[2] Bankruptcy Act 1966 [Cth] protected monies are exempt the provisions of s116[1]
3.Compensation monies are protected monies.
The husband seeks an order from the Federal Court:
1.That the order of sequestration of the estate of [Mr A Sresbodan], also known as [Mr Sresbodan], be terminated, ab initio.
As is not in doubt, if successful, the husband’s application and/or appeal in the Federal Court would have implications for the creditors of the husband’s bankrupt estate, and, consequently, the net assets of the parties to the marriage available for division between them pursuant to Part VIII of the Act.
There is no cross-vested application by the husband before this Court for orders pursuant to section 116(2) of the Bankruptcy Act. His Counsel informed the Court that the husband does not intend to seek such relief. The determination of the husband’s application pursuant to section 116(2) of the Bankruptcy Act is clearly a prerequisite to a final determination of the pending proceedings for settlement of property in this Court. All parties to the proceedings accept that reality.
REFUSAL OF THE ADJOURNMENT APPLICATION
During the course of the adjournment application, the utility of the husband’s proposed appeal was canvassed with Counsel. Ultimately, without necessarily making formal concessions in that regard, Counsel for the husband, the wife and the trustees acknowledged that granting or refusing the application for leave to appeal and/or appeal would have no practical or legal impact upon the rights of the husband, the wife or the trustees, for a variety of reasons.
As is not in doubt, there was no application by the husband pursuant to section 116(2) of the Bankruptcy Act before Watts J on 7 June 2010. Nothing found or ordered by Watts J on 7 June 2010 could give rise to any res judicata issue estoppel with respect to section 116(2) of the Bankruptcy Act or the rights of the husband, the wife, the trustees or any creditors of the husband’s bankrupt estate (see Spencer Bower and Handley, Res Judicata (LexisNexis Butterworths, 4th ed, 2009) at page 1).
Counsel for the trustees, on their instructions, undertook to the Court that, pending further order of the Family Court or the Federal Court of Australia, the trustees would not disburse any funds currently held by them for or on behalf of the parties to the marriage. The undertaking was offered on the basis that liberty to apply to the Family Court or the Federal Court to vary or discharge such undertaking would be reserved.
As noted earlier, in lieu of order 5.3 made by the trial Judge, the husband sought, if leave to appeal were granted and his appeal upheld, that this Court make an order in virtually identical terms to the undertaking offered by the trustees, and accepted by Counsel for the husband.
In the circumstances, the utility of the application, even if successful, was problematic. Those circumstances led the Court to refuse to adjourn the husband’s application for leave to appeal. To have adjourned the appeal would have only increased the costs of all parties, with no prospect of the application having any greater utility on any later occasion.
The reasons for refusing the application to adjourn the husband’s application for leave to appeal are also relevant to the fate of the application for leave to appeal. Given the principles governing applications for leave to appeal (see Adam P Brown Male Fashions Pty Ltd v Philip Morris Inc (1981) 148 CLR 170, Bruce F McLaren Holdings Pty Ltd and Others v McLaren and Another (2000) 155 FLR 403 and Rutherford and Rutherford (1991) 105 FLR 41), and the absence of either utility in allowing the application, or detriment to any party in refusing it, we need say little about the proposed grounds of appeal although, in deference to the submissions of Counsel for the husband, we will refer briefly to them.
THE PROPOSED CHALLENGES TO THE TRIAL JUDGE’S ORDER
Ground 1, of the husband’s proposed Amended Notice of Appeal provided that:
1.His Honour erred in not applying, correctly or otherwise, the provisions of s116 of the Bankruptcy Act 1966 (cth) in circumstances where the Court had jurisdiction under that Act
Nothing to which this Court has been referred establishes that there was either an application before Watts J pursuant to section 116(2) of the Bankruptcy Act, or that his Honour had “jurisdiction under that Act” in the absence of such an application.
It is reasonably clear that the husband formed the intention to seek relief under section 116(2) of the Bankruptcy Act after Watts J dealt with the proceedings on 7 June 2010. The first reference to section 116(2) of which we are aware is in the reasons for judgment of Ainslie-Wallace J of 11 March 2011, when her Honour extended the time for the husband to make an application for leave to appeal against Watts J’s orders.
It having not been established that Watts J was seized of an application pursuant to section 116(2) of the Bankruptcy Act, we cannot accept that his Honour erred in not applying, “correctly or otherwise” the provisions of the section.
Ground 2(a) & (b), of the husband’s proposed Amended Notice of Appeal provided that:
2.His Honour erred in:
(a)Finding that the [K] property had to be disposed of so that the husband’s creditors can be satisfied; and
(b)holding that it was a just and equitable outcome to make orders requiring the [K] property to be sold and for the husband’s creditors to be discharged,
In circumstances where the evidence before the Court was such that the money used to purchase the [K] property could, at least in part, be traced back to a compensation payment to the husband and as such was at least in part protected property under the Bankruptcy Act 1966 (cth), which did not vest in the trustees and would therefore not be available to the husband’s creditors or have to be paid to the husband.
Whatever the merits of this complaint may have been, it is common ground that the K property was sold more than a year ago. Whatever his intentions might have previously been, the husband has never applied to set aside the sale of the property to third party purchasers. Counsel for the husband informed this Court that the husband now had no intention of seeking such relief. The sale of the property having been completed, it is unnecessary, and of no practical utility, to consider whether the sale order should or should not have been made.
So far as the payment to the husband’s creditors is concerned, the only basis upon which it has been asserted before this Court that the husband might not be liable to pay his creditors is in reliance upon section 116(2) of the Bankruptcy Act. As we have earlier noted, that claim has been made in the Federal Court. Given that the husband had not made an application pursuant to section 116(2) of the Bankruptcy Act before Watts J, and that we have not been referred to any evidence or submissions before Watts J asserting that his creditors ought not to be paid out of the proceeds of sale of the property, these complaints cannot have substance.
Ground 3, of the husband’s proposed Amended Notice of Appeal provided that:
3.His Honour erred in not applying, correctly or otherwise, the provisions of section 58 of the Bankruptcy Act 1966 (cth), in circumstances where the Court had jurisdiction under that Act.
As the submissions of Counsel for the husband make clear, this proposed ground is really only a re-statement of the argument the husband will apparently mount in the Federal Court in reliance upon section 116(2) of the Bankruptcy Act.
Nothing to which this Court has been referred establishes that Watts J erroneously applied the provisions of section 58 of the Bankruptcy Act on the evidence before him in the light of the competing applications which were before him.
Grounds 4 and 5, of the husband’s proposed Amended Notice of Appeal assert that:
4.His Honour erred in not disqualifying himself from the proceedings once the parties made known to him the contents of a document the subject of negotiations, being proposed Terms of Settlement, and then making orders which were not reflective of the proposed terms.
5.His Honour erred in making the orders without a hearing, or any adequate hearing, and in circumstances where the husband’s solicitor had sought and obtained leave to cease acting for the husband on the day the orders were made.
Nothing to which this Court has been referred establishes that Watts J erred in any of the ways referred to in these grounds. This Court has not been referred to any application before Watts J to disqualify himself. In what way his Honour is asserted to have denied the parties natural justice has not been identified or demonstrated.
Whilst it would ultimately be a matter for the parties and Watts J, were the matter to be listed before his Honour for final hearing, the fact that he has apparently previously been presented with draft terms or proposed orders with respect to the substantive proceedings for settlement of property may render it appropriate for Watts J to recuse himself from further hearing the proceedings. However, that is not a matter which we can or need take further.
CONCLUSION
No proposed ground of appeal having been shown to have merit, the husband’s application should be dismissed.
COSTS
The Court raised with Counsel for the parties a timetable with respect to submissions in relation to the husband’s unsuccessful application. The Court will give directions in the terms discussed with Counsel.
I certify that the preceding forty (40) paragraphs are a true copy of the reasons for judgment of the Honourable Full Court (Coleman, Thackray and Young JJ) delivered on 16 December 2011.
Associate:
Date: 16.12.2011
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