Sutton and Lasko and Ors (No.2)

[2019] FCCA 2684

FEDERAL CIRCUIT COURT OF AUSTRALIA

SUTTON & LASKO & ORS (No.2) [2019] FCCA 2684

Catchwords:
FAMILY LAW – Application in a Case – no prospect of success – indemnity costs.

Legislation:

Family Law Act 1975 (Cth), ss.106B

Cases cited:

Ad Astra Institute Proprietary Limited v Australian Skills Quality Authority [2019] AATA 2514

Colgate Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 255

In the Marriage of Heath (No 2) (1984) 9 Fam LR 642

Applicant: MR SUTTON

First Respondent: MS LASKO

Second Respondent: MS THOMPSON

Third Respondent: MR FINCH

Fourth Respondent: COMPANY C PTY LTD

File Number: MLC 9211 of 2017

Judgment of: Judge McNab

Hearing date: 23 August 2019

Date of Last Submission: 23 August 2019

Delivered at: Melbourne

Delivered on: 23 August 2019

REPRESENTATION

Counsel for the Applicant: Ms Vohra SC

Solicitors for the Applicant: Marshalls + Dent + Wilmoth

Counsel for the First Respondent: Dr Ingleby

Solicitors for the First Respondent: Berger Kordos Lawyers

Counsel for the Second Respondent: Mr Wilson QC

Solicitors for the Second Respondent: PCL Lawyers

Counsel for the Third and Fourth Respondents: Ms Fisken

Solicitors for the Third and Fourth Respondents: Lampe Family Lawyers

ORDERS

1. The Second Respondent pay costs forthwith fixed in the sum of:

   (a)$29,400 to the First Respondent; and

   (b)$63,400 to the Third and Fourth Respondents.

2. The funds held by PCL lawyers pursuant to the undertaking given to the Court and recorded in the Court Orders of 20 June 2019 be released to pay the costs ordered in Order 1.

3. The costs of the Applicant be reserved.

4. The Application in a Case filed 19 June 2019 and the amended Application in a Case filed 28 June 2019 by the Second Respondent be dismissed.

5. Order 2 of the Minute of Orders in the Interim Orders of 20 June 2019 and Order 2 of the Interim Orders of 12 July 2019 be discharged.

6. The Third and Fourth Respondents be removed as parties to these proceedings pursuant to rule 11.04(1) of the Federal Circuit Court Rules 2011 (Cth).

7. The matter be adjourned with priority to the Federal Circuit Court of Australia in Melbourne on 2 March 2020 at 10am for Final Hearing, with an estimated hearing time of 5 days.

8. The party responsible for the payment of any fee including a setting down or hearing fee do pay or cause to be paid such of the Fees as shall be payable by that party in accordance with, and within the time specified in, the Family Law (Fees) Regulation 2012.

9. The further hearing of the Application in a Case filed by the First Respondent on 21 August 2019 be adjourned to the Federal Circuit Court of Australia in Melbourne on 16 September 2019 at 11am.

10. On or before 12 September 2019 the Husband file and serve an affidavit:

    (a)in specific response to the third sentence of paragraph 72(e) of and Annexure -36 to the affidavit of Mr A sworn 2 August 2019;

BY CONSENT THAT:

(b)deposing to all knowledge as to any bank account held by him in Bank B and in particular whether he has ever held an account with Bank B ending …;

(c)an updated Financial Statement; and

(d)any affidavit(s) upon which the Husband relies in response to the Application in a Case filed by the First Respondent Wife on 21 August 2019.

1. On or before 12 September 2019, the Second Respondent file and serve any affidavit(s) upon which she relies in response to the Application in a Case filed by the First Respondent on 21 August 2019.

IT IS NOTED that publication of this judgment under the pseudonym Sutton & Lasko & Ors (No.2) is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT MELBOURNE

MLC 9211 of 2017

MR SUTTON

Applicant

And

MS LASKO

First Respondent

MS THOMPSON

Second Respondent

MR FINCH

Third Respondent

COMPANY C PTY LTD

Fourth Respondent

REASONS FOR JUDGMENT

(DELIVERED EX-TEMPORE – REVISED FROM TRANSCRIPT)

Introduction

1. The Second Respondent has announced via Counsel that she is withdrawing the application made pursuant to section 106B of the Family Law Act 1975 (Cth) filed on 19 June 2019 (‘the Application’). The Second Respondent is the applicant in the Application, but I shall refer to the parties by their position in the substantive application.

2. The Second Respondent’s withdrawal of the application arose following submissions made by Counsel for the Third and Fourth Respondents. Counsel for the Third and Fourth Respondents raised evidence given by the Second Respondent to the Administrative Appeals Tribunal (‘AAT’) in the proceeding Ad Astra Institute Proprietary Limited v Australian Skills Quality Authority [2019] AATA 2514 delivered on 13 August 2019. Counsel for the Third and Fourth Respondents noted particular evidence extracted in that decision at [63] and following. That evidence was certainly to the effect that there was an intact relationship between Mr Sutton (the Applicant) and the Second Respondent. At [63] of that decision record, the Second Respondent gave evidence that if the AAT made orders cancelling the registration of the company subject to the review, that eight people would be left homeless (including her and the Applicant). This evidence was signed 3 July 2019.

3. The evidence before the AAT referred to at [63] of the decision was directly at odds with evidence given before this Court as to the date of separation. In particular, the Second Respondent has given evidence in this proceeding that she separated from the Applicant on a final basis in February 2019. She stated that the Applicant remains living in a rental property in D Street with their children. The Second Respondent says that after she separated from the Applicant, she vacated the D Street property and commenced residing with her friend, Ms E. I refer to [9] and [53] of her affidavit filed 24 April 2019.

4. The Second Respondent’s decision to withdraw the s 106B application was her own and taken on advice from Senior Counsel. The issue whether there was a final separation in February 2019 is an issue to be determined at final hearing.

The Application in a Case filed 19 June 2019

1. The Second Respondent relied upon an affidavit which she swore on 19 June 2019 in support of her Application in a Case filed 19 June 2019.

2. I refer to [17] through to [26] of that affidavit sworn 19 June 2019 in respect of the contributions that she said that she made to Company C Pty Ltd (‘Company C’) and associated companies. At [19] she says that:

   I would say that throughout our relationship I transferred approximately $2.2 million to Mr Sutton for the Farm. I estimate that the company is worth approximately $4 million.

3. The Second Respondent relied on that affidavit in support of the Application for a freezing order to be made ex-parte preventing the Third and Fourth Respondents from dealing with the assets and property associated with Company C. The evidence which is now before the Court and which was accepted by Counsel for the Second Respondent, is that the high point of her case is that her contribution was about $177,000. That is contested by the First, Third and Fourth Respondents who say that, at best, the Second Respondent’s evidence supports an argument that her contribution is about $10,000.

Order of indemnity costs

1. The Second Respondent was cavalier in her approach to evidence of matters which were within her knowledge in order to obtain an order of the Court which had significant impacts on the Third and Fourth Respondents. In particular, it affected their ability to deal with property and subjected them to the processes of the Courts, including subpoenas being served in respect of financial records which post-dated the date of the transaction which was impugned by the Application. I note that freezing orders were obtained ex-parte by the Second Respondents. The claims regarding the extent of the scope of the Second Respondent’s contributions were unsustainable.

2. The conduct of the Second Respondent in this proceeding is such as to invoke the Court’s power to award indemnity costs. I refer to the principles in Colgate Palmolive Co v Cussons Pty Ltd (1993) 46 FCR 255. I will not extract those principles because they are well-known.

3. The Court has been misled by the Second Respondent in relation to the making of freezing orders. This finding does not reflect on Counsel who were acting on instructions.

4. The affected parties have been put to significant expense in dealing with a case which the Second Respondent was on notice of, certainly from 5 August 2019 if not before, that there were serious issues with the case. Indeed, it was raised that there were no reasonable prospects of the application succeeding.

5. In particular, there is an issue as to whether the Third and Fourth Respondents were ever aware that there was a claim or an anticipated claim within the meaning of section 106B of the Act. There is no evidence that the Third and Fourth Respondents were aware at the time of making the disposition that the disposition would be likely to defeat any claim of the Second Respondent because:

   a)there was no claim on foot at the time of the impugned disposition; and

   b)otherwise, there was no evidence that the Third and Fourth Respondents were not bona-fide purchasers.

   In that regard I refer to In the Marriage of Heath (No 2) (1984) 9 Fam LR 642 at 647.

6. In those circumstances, it is appropriate that the Court order indemnity costs in favour of the First, Third and Fourth Respondent. These parties, in particular the Third and Fourth Respondents, have been required to deal with and respond to very lengthy and detailed material filed by the Second Respondent while also dealing with matters which are largely outside their knowledge.

7. The Second Respondent points to costs orders that have been previously paid as a result of orders of the Court. I take those amounts into account.

8. It is also submitted that any costs of dealing with or preparing an affidavit of Mr A which was sworn on 2 August 2019 should be discounted because of what is said to be the plethora of objectionable material within that affidavit. Whilst there is objectionable material within that affidavit, at its heart, it is an affidavit which goes to matters which were within his knowledge. Whether that was knowledge gained as an employee or otherwise, it contained a body of relevant evidence. Mr A was able to give evidence about the documents, and the costs incurred in preparing the affidavit are not wasted or thrown away.

I certify that the preceding fifteen (15) paragraphs are a true copy of the reasons for judgment of Judge McNab

Date: 23 September 2019