Yildirim And Anor and Bazouni And Anor

[2019] FamCA 35

FAMILY COURT OF AUSTRALIA

YILDIRIM AND ANOR & BAZOUNI AND ANOR [2019] FamCA 35

FAMILY LAW – JURISDICTION – Section 79A application – where final property consent orders were made as between the husband and wife ‑ where the Applicants claim to be a creditor of the husband – where the Court finds the Applicants are not a creditor of the husband as defined nor are the Applicants “affected” by the orders made between the husband and wife – application dismissed.

Family Law Act 1975 (Cth) ss 79, 79A

DCT v Spanjich (1988) FLC 91-974

FIRST APPLICANT: Mr Yildirim

SECOND APPLICANT: Ms Yildirim

FIRST RESPONDENT: Mr A Bazouni

SECOND RESPONDENT: Ms B Bazouni

FILE NUMBER: SYC 8070 of 2017

DATE DELIVERED: 31 January 2019

PLACE DELIVERED: Brisbane

PLACE HEARD: Sydney

JUDGMENT OF: Baumann J

HEARING DATE: 17 August 2018

REPRESENTATION

COUNSEL FOR THE FIRST & SECOND APPLICANT: Mr A Rogers

SOLICITOR FOR THE FIRST & SECOND APPLICANT: Legal One Services

COUNSEL FOR THE FIRST RESPONDENT: Mr S Milanovic

SOLICITOR FOR THE FIRST RESPONDENT: Prestige Solicitors & Associates

COUNSEL FOR THE SECOND RESPONDENT: Mr C Othen

SOLICITOR FOR THE SECOND RESPONDENT: Francis Legal Pty Ltd

Orders

1. That the Application filed 28 March 2018 is dismissed.

2. That all previous orders are discharged, particularly the restraining order made 30 April 2018.

3. That if either of the Respondents seek to pursue an application for costs as against the Applicants, such applications shall be considered and determined, unless otherwise ordered, in chambers on the written submissions filed and served in accordance with the following directions:

   (a)Either (or both) Respondents shall file and serve within thirty (30) days of the date of this Order their written submissions on the other parties; and

   (b)The Applicant shall file and serve within sixty (60) days of the date of this Order their written submissions in response.

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

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

Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).

FAMILY COURT OF AUSTRALIA AT BRISBANE

FILE NUMBER: SYC 8070 of 2017

Mr Yildirim

First Applicant

And

Ms Yildirim

Second Applicant

And

Mr A Bazouni

First Respondent

And

Ms B Bazouni

Second Respondent

REASONS FOR JUDGMENT

Introduction

1. By Application for Consent Orders filed 5 December 2017, Ms B Bazouni (“the wife”) and Mr A Bazouni (“the husband”) jointly sought final property orders.  The Application had been signed by the husband on 22 November 2017 and the wife on 2 December 2017.

2. A Registrar of this Court on 19 December 2017 made final consent property orders which are attached to these Reasons and marked Appendix One (“the said final consent property orders”).

3. The Applicants in these proceedings, Mr Yildirim and Ms Yildirim (“the Applicants”) are Defendants in an action commenced in the Supreme Court of New South Wales by the Plaintiff “The Owners – Strata Plan …” (Case Number …).  The Plaintiff’s Technology and Construction List Statement from 2014 claims “This is a building claim where the plaintiff says that the defendant has carried out defective building work at its property at… [Suburb C], NSW” and says they claim for repairs and rectification “a total cost of either $1,076,736.78 or $955,934.74 in relation to this defective work depending on the ultimate findings of the experts and or the Court”.  On 28 November 2014, the Applicants (as Defendants) filed a Response in which they clearly deny any work was defective and further asserts “that some at least of the matters alleged against the Defendant are statute-barred”.

4. The Applicants thereafter in late 2016 filed in the Supreme Court of New South Wales a claim against the husband seeking damages asserting that works performed by the husband were defective as not being completed in a proper and workman like manner.  The husband has caused a Response to be filed on 11 April 2017 which contends that the alleged “cause of action did not accrue within the limitation period before the commencement of this action and the plaintiff’s cause of action is therefore statute barred”.  Furthermore, the husband (as Defendant) denies any liability.

5. This history is important to record, as no determination of the Supreme Court proceedings either against the Applicants as Defendants or the husband as the Defendant has occurred.

The Application to this Court

1. The Applicants claim to be a “creditor” of the First Respondent husband, and as such on 28 March 2018, filed an Application for the following final orders:

   1. Order pursuant to section 79A (1) (a) of the Family Law Act 1975 (“the Act”) setting aside Family Court Orders dated 19 December 2017 in file no. SYC 8070/2017 between First and Second Respondents (“the Orders”)

   2. In the alternative to Order 1, order pursuant to section 79A (1) of the Act varying the Orders.

   3.        Costs.

2. Both the husband and wife, who are separately legally represented, seek that the Application be dismissed with costs.

3. When the matter came before a Registrar on 30 April 2018, an injunction was ordered restraining the wife from dealing with the property now registered in her name at D Street, Suburb E.  Under Order 3 of the said final consent property orders, the husband’s interest in the Suburb E property was to be transferred to the wife.  A transfer effecting such assignment of interest to the wife was executed by the husband on 22 December 2017 and subsequently registered.  At the time of hearing of the Application before me on 17 August 2018, the wife was the sole registered proprietor of the Suburb E property, subject to a mortgage registered over the title.

Do the Applicants have standing to bring the current application?

1. Section 79A of the Family Law Act 1975 (“the Act”) provides that the Court may in certain circumstances prescribed by the section, in its discretion, vary or set aside an order made under s 79 in property settlement proceedings. This power can be invoked by an application “by a person affected by an order made”. The said final consent property orders are s 79 property settlement orders, but the question for initial determination is whether or not the Applicants are persons “affected by the order”. It is this issue which was dealt with as a preliminary issue during written and oral submissions. Section 79A(4) specifically relates to a person who claims, as the Applicants do in their application, to be a creditor of the husband. It is common ground that the Applicants cannot be a creditor of the wife as the wife is not a defendant in the Supreme Court proceedings.

2. The Applicants bear the onus of establishing they are a person “affected by the order”.  In this respect, the Applicants’ Counsel Mr Rogers was opposed by Mr Milanovic (for the husband) and Mr Othen of Counsel (for the wife).  If I do not refer to every submission made by the advocates for each party, that should not be construed as a failure to consider that particular submission.

Discussion as to standing

1. The following points arise from the submissions:

   a)The Applicants say, and I accept, they had no notice of the proceedings under s 79 of the Act between the husband and wife, instituted by way of the Application for Consent Orders. As a result, it is asserted they could not exercise their right to become a party to the s 79 proceedings;

   b)However their right to become a party required them to be, at the time of the proceedings commenced by the husband and wife either:

   (a)      a creditor of a party to the proceedings if the creditor may not be able to recover his or her debt if the order were made;

   (aa)     …

   (ab)     …

   any other person whose interests would be affected by the making of the order

   (see s 79(10) of the Act).

   Consistent with the arguments advanced, the Applicants say they fall within the categories identified.

   c)At paragraph 5.29 of the Applicants’ submissions it is contended that s 79A must be read in context, in particular the entitlement to become a party in s.79 proceedings because it would be an “unacceptable state of affairs… if a party who is otherwise entitled to be joined to proceedings is not able to move to set aside orders when not placed on notice of them.” I do not accept that the entitlement to seek to be a party in s 79 proceedings is the same as seeking to set aside property orders. The legislation specifically identifies when a “creditor of a party” is taken to be a person “whose interests are affected by the order” (s 79A(4)) and clearly the “creditor” must be a creditor at the time of the order;

   d)The wife contends, persuasively in my view, that at the time the consent orders were made “the applicants had an unquantified claim against the first respondent husband, itself conditional upon the applicants being jointly liable to pay damages in different proceedings.”  The husband adopts this submission and contends the Applicants have not established they had (at the relevant time) nor have a “debt capable of being recovered”;

   e)In response, the Applicants contend that even if not a “creditor” then they are still persons “affected by an order made by a Court under section 79” because the effect of the order in so reducing the property of the husband, and means recovery of any award of damages is unlikely.  In this respect, the Applicant relies on DCT v Spanjich (1988) FLC 91-974 where the Full Court (Barblett DCJ, Simpson and Connor JJ) allowed an appeal against the decision of a trial judge dealing with whether the DCT was a person affected by an order made, that was “based on the fact that if a person’s rights at law are not affected by the order of a Court then that person cannot be ‘affected by’ the orders…"  In finding that “the ‘affect’ may have relation to something more than strict legal rights and include the practical effect of the order on the recovery of monies due and owing in the circumstances of this case” (underlining added), the Full Court remitted the matter;

   f)In the circumstances of this case, the Applicants have exercised their legal right to claim against the husband, but they do not have a debt that is due and owing – either at the critical time of when the orders were made on 19 December 2017 or even at the time they commenced their Application in this Court.  At best they are a contingent unsecured creditor of the husband, contingent at least (on their own proceedings) upon:

   i)the action of Strata Plan … arising from building works completed in 2006, not being statute based; and

   ii)the Applicants being found to be liable for damages; and

   iii)the husband being found to be liable to the Applicant for damages.

   In this context, the unliquidated claim of the Applicants is not even sufficient to allow them to be regarded as an “unsecured creditor”.

Conclusion as to standing

1. I find that the Applicants are not a creditor of the husband as defined nor are the Applicants “affected” by the orders.  It might be that if they are unsuccessful in establishing no liability to the Strata owners and if they can establish a liability by the husband they may at that time find it difficult to recover their damages.

2. However, this is no different than any other litigant who takes risks in engaging in legitimate business activities which go wrong.

3. I will dismiss the Application filed 28 March 2018.  I will make directions for the filing of submissions as to costs – noting at least the wife contends for costs to be assessed on an indemnity basis.  The interim restraining order will also be discharged.

4. For completeness, I record that having found that the Applicants have no standing to bring this s 79A application, it is not necessary to consider, if they had standing, whether the husband in particular by failing to disclose the existence of the litigation against him and the highly contingent potential liability, caused a miscarriage of justice within the meaning of s 79A(1). Mr Rogers did not, understandably, engage in a discussion on this topic as the Court made it clear it would only deal with the jurisdictional issue. However, noting no submissions in response have been provided by the Applicants, the submissions of the wife (at paragraphs 19 to 21) do have some force. As the Applicants themselves concede (at paragraph 5.30 of their submissions), even if the Applicants had standing the Court might not set aside the orders made between the husband and wife.

I certify that the preceding fifteen (15) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Baumann delivered on 31 January 2019.

Associate: 

Date:  31 January 2019

APPENDIX ONE

1. That the wife pay the husband the sum of NINETY THOUSAND DOLLARS ($90,000.00) (“the payment amount”) within SIX (6) MONTHS of the date of these Orders (“the payment date”).

2. That the wife refinance and discharge any mortgage (“the mortgage”) secured against the property at D Street, Suburb E being Folio Identifier … (“the Suburb E property”) and that the wife indemnify the husband in relation to the mortgage.

3. That simultaneously with the payment referred to in Order 1 and the discharge of the mortgage referred to in Order 2 the husband do all acts and things necessary to transfer the whole of his right, title and interest in the Suburb E property to the wife.

4. That if the wife is able to discharge the mortgage and pay the payment amount prior to the payment date then the husband must transfer his interest in the Suburb E property to the wife at any earlier date requested by the wife.

5. That if the wife fails to make the payment sum and fails to discharge the mortgage by the payment date then the parties must do all acts and things necessary to immediately list the Suburb E property for sale at a reserve selling price agreed upon between the parties and failing agreement at a reserve selling price determined by a licensed member of the New South Wales division of The Australian Institute of Valuers or its successors appointed by the wife.  The proceeds of sale are to be applied as follows:

   a)In payment of the mortgage;

   b)In payment of Agent’s commission;

   c)In payment of legal costs and fees;

   d)Adjustment of waters rates and taxes;

   e)In payment of all other expenses which are reasonably incurred in respect to the sale; and

   f)The sum of NINETY THOUSAND DOLLARS ($90,000.00) to the respondent husband;

   g)The balance to the applicant wife.

6. For the purposes of sale of the Suburb E property each party shall within seven (7) days of a making of an Order in terms of paragraph 4, subject to the determination of the reserve selling price, list the property with an Agent selected by the wife in the area where the Suburb E property is situated.

7. That the applicant wife be declared the sole owner of and the respondent husband has no interest in:

   a)the wife’s … motor vehicle;

   b)the wife’s interest in any superannuation entitlement; and

   c)the wife’s savings in any bank account.

8. That the respondent husband be declared the sole owner of the respondent wife has no interest in:

   a)the husband’s … motor vehicle;

   b)the husband’s business trading as F Pty Ltd; and

   c)the husband’s interest in any superannuation entitlement; and

   d)all the furniture and chattels located in the Suburb E property.

9. That if either party refuses or neglects to execute (within fourteen (14) days of a written request to do so) any Deed or documents necessary to give effect to these Orders, pursuant to Section 106(A) of the Family Law Act 1975 (Cth), the Registrar of the Family Court of Australia is appointed to execute all Deeds and any such documents on behalf of the defaulting party and so all acts and things necessary to give validity and operation to all such Deeds and documents. The party who refused or neglected to execute the documents will pay the other party’s legal costs in relation to any Application under Section 106(A) of the Family Law Act 1975 (Cth).

10. Other than specifically provided herein the remaining debts and liabilities owing by each of the applicant husband and respondent wife are the sole and absolute debts and liabilities of the parties whose debt or liabilities they are and each of the applicant husband and respondent wife indemnify the other and agrees to indemnify the other in respect of such liabilities and/or debts by that party respectively.

11. That pursuant to Section 81 of the Family Law Act the parties intend that these orders shall finally determine the financial relationship between them and avoid any further proceedings between them, subject to these Orders.