Warin & Warin (No 4)

[2022] FedCFamC1F 160

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA

(DIVISION 1)

Warin & Warin (No 4) [2022] FedCFamC1F 160

File number(s):

MLC 7368 of 2020

Judgment of:

WILSON J

Date of judgment:

18 March 2022

Catchwords:

FAMILY LAW – STANDING – whether the first respondent as an undischarged bankrupt has standing – held – no standing.

Legislation:

Family Law Act1975 (Cth) ss 79(12) and 79(13)

Bankruptcy Act1966 (Cth) ss 5(1) and 58(1)(a)

Cases cited:

1           Glover & Webster [2021] FedCFamC1F 69

2           Pacelli & Hopkinson & Anor [2010] FMCAFam 1248

Warin & Warin [2021] FedCFamC1F 269

Division:

Division 1 First Instance

Number of paragraphs:

11

Place:

Melbourne

Solicitor for the Applicant:

Vadarlis & Associates

Solicitor for the First Respondent:

Sebastian Rubera & Associates

Solicitor for the Second and Third Respondents:

Maddocks Lawyers

ORDERS

MLC 7368 of 2020

FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)

BETWEEN:

MS WARIN

Applicant

AND:

MR WARIN

First Respondent

MR STANTON & MR BASFIELD IN THEIR CAPACITY AS TRUSTEES IN BANKRUPTCY OF THE BANKRUPT ESTATE OF THE RESPONDENT HUSBAND

Second Respondent

MS INSTON

Third Respondent

ORDER MADE BY:	WILSON J
DATE OF ORDER:	18 MARCH 2022

THE COURT ORDERS THAT:

1.The bankrupt has no standing in this litigation otherwise than in relation to the private superannuation fund.

2.On or before noon on 24 March 2022, the parties must bring a minute of orders that give effect to these reasons.

Note:   The form of the order is subject to the entry in the Court’s records.

Note: This copy of the Court’s Reasons for judgment may be subject to review to remedy minor typographical or grammatical errors (r 10.14(b) Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)), or to record a variation to the order pursuant to r 10.13 Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth).

Section 121 of the Family Law Act 1975 (Cth) makes it an offence, except in very limited circumstances, to publish proceedings that identify persons, associated persons, or witnesses involved in family law proceedings.

IT IS NOTED that publication of this judgment by this Court under the  pseudonym Warin & Warin is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

REASONS FOR JUDGMENT

WILSON J

1. These reasons address the standing of the first respondent, as an undischarged bankrupt to participate in this litigation, separately and independent of his trustees-in-bankruptcy ("the trustees").

2. The trustees and the wife oppose the grant of standing in favour of the bankrupt.

3. In my reasons for judgment handed down on 10 December 2021 in Warin & Warin[1] I said the following –

   Curiously, in his defence the bankrupt acknowledged he had no standing.  However, that position must be confined to the bankrupt’s vested assets (whatever those may be) yet not to the bankrupt’s non-vested assets including his interests in the parties’ self-managed superannuation fund, known as the R Superannuation Fund.

   [1] [2021] FedCFamC1F 269.

4. The trustees contended that pursuant to s 58(1)(a) of the Bankruptcy Act, property of the bankrupt as defined in s 5(1) of the Bankruptcy Act vests in the trustees.  The trustees contended that the bankrupt conceded that he had no standing.  They called in aid the decision in Glover & Webster.[2]

   [2] [2021] FedCFamC1F 69.

5. The first and third respondent’s written submissions addressed s 79(12) and s 79(13) of the Family Law Act, which, in essence, prohibit (in the absence of leave) a bankrupt from making submissions to the court in relation to vested property.

6. A threshold issue is the identification of vested property.  The bankrupt argued that the trustees bear the burden of disclosing the property that is said to vest in the trustees.[3]  The bankrupt argued that a Magistrates’ Court decision[4] on point was somehow applicable.  I do not follow a magistrate’s decision for the simple reason that this court is not bound by the decisions of that court.

   [3] Written submissions of the bankrupt and of Ms Inston dated 24 November 2021.

   [4]  Pacelli & Hopkinson & Anor [2010] FMCAFam 1248.

7. In her written submissions dated 2 December 2021, the wife accepted that the bankrupt’s interest in the private superannuation fund styled R Superannuation Fund has not vested the trustees.[5]  The wife advanced a collection of other submissions as follows –

   (a)the bankrupt presented his own petition within four days after he was served with her initiating application;

   (b)the husband divested himself of monies in the days immediately preceding the petition (see paragraphs 29 to 36 wife’s statement of allegations, exhibit “MSW-A” to her affidavit 28 May 2021, that is only what is known so far);

   (c)he could easily have paid his debts instead of declaring bankruptcy;

   (d)shortly post separation, he has purchased, through the third respondent the B Street property for almost $2.5m in circumstances where the third respondent had no capacity to purchase such property using her own income and resources;

   (e)the third respondent and the husband’s friends and associates are warehousing assets for him, assets which form part of the matrimonial pool;

   (f)his business interests, work and lifestyle post-bankruptcy have continued unabated; and

   (g)his post-bankruptcy circumstances appear to be no different from those pre-bankruptcy.

   [5] Written submissions of the bankrupt and of Ms Inston dated 2 December 2021 (at [36]).

8. Whether the wife is able to successfully demonstrate that the bankrupt is warehousing assets remains to be seen.

9. Having regard to the trustees' submissions, I agree that the bankrupt has no standing to separately and independently participate in this litigation otherwise than in relation to R Superannuation Fund. The bankrupt’s interest in relation to vested property are advanced by the trustees. The combined operation of s 58(1)(a) of the Bankruptcy Act as well as s 79(12) and s 79(13) of the Family Law Act mean that the bankrupt has no standing in this litigation otherwise than in relation to the private superannuation fund.

10. I direct the parties to bring in a minute by noon 24 March 2022 that give effect to these reasons.

I certify that the preceding ten (10) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Wilson.

Associate:

Dated:       18 March 2022