Zabik and Zabik (No.2)
[2017] FCCA 684
•9 March 2017
FEDERAL CIRCUIT COURT OF AUSTRALIA
| ZABIK & ZABIK (No.2) | [2017] FCCA 684 |
| Catchwords: FAMILY LAW – PRACTICE AND PROCEDURE – Application to set aside orders – applicant undischarged bankrupt – application dismissed. |
| Legislation: Federal Circuit Court Rules 2001, r. 16.05 |
| Autodesk v Dyason [No 2](1993) 176 CLR 300 Wentworth v Woolhara Municipal Council (1982) 149 CLR 672 |
| Applicant: | MR ZABIK |
| Respondent: | MS ZABIK |
| File Number: | ADC 748 of 2012 |
| Judgment of: | Judge Young |
| Hearing date: | 9 March 2017 |
| Date of Last Submission: | 9 March 2017 |
| Delivered at: | Adelaide |
| Delivered on: | 9 March 2017 |
REPRESENTATION
| The Applicant: | In Person |
| Solicitor for the Respondent: | Mr Jordan of Jordan & Fowler Barristers & Solicitors |
ORDERS
That the Application in a Case filed by the husband on 2 December 2016 is dismissed.
That until further order the husband and his servants or agents are restrained from dealing with in any way his superannuation interest in (omitted) (formerly rolled out of (omitted) Super Fund).
That the husband do provide to the wife’s solicitors by 12.00pm on 10 March 2017 full particulars of his (omitted) Superannuation interest including all documents recording the rollover of that interest from (omitted) to (omitted) such documents to be provided by email to (omitted).
That the husband pay the wife’s costs of and incidental to the said Application in a Case fixed in the sum of Two Thousand Five Hundred Dollars ($2,500).
IT IS NOTED that publication of this judgment under the pseudonym Zabik & Zabik (No.2) is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT ADELAIDE |
ADC 748 of 2012
| MR ZABIK |
Applicant
And
| MS ZABIK |
Respondent
REASONS FOR JUDGMENT
Ex tempore
These reasons for judgement were delivered orally. They have been corrected from the transcript. Grammatical errors have been corrected and an attempt has been made to render the orally delivered reasons amenable to being read.
This is an application by the respondent husband (I will call him that even though the parties are no longer married because it is convenient to refer to the parties as husband and wife) to set aside a property order made by me on 1 December 2016. I made an order on that day in the absence of the husband after the matter had been set down for trial in the presence of the husband on 12 August 2016. When I say “presence” I mean he appeared in person on that day. I take it that the application is made pursuant to rule 16.05 (2)(a) of the Federal Circuit Court Rules 2001 which refers to the Court’s power to set aside an order on various grounds, including if the order is made in the absence of a party. The order I made on 1 December was made in the absence of the husband.
The power to set aside and rehear is to be exercised cautiously. I was referred by counsel for the wife to the High Court case of Autodesk v Dyason[No 2](1993) 176 CLR 300. I have given a copy of that to Mr Zabik. That decision, and I refer particularly to the judgment of Mason CJ at pp 301-302, says that circumstances for setting aside a judgment or an order are not limited to cases where the applicant can show that by accident and without fault he has not been heard. Mason CJ said that the statements in cases such as Wentworth v Woolhara Municipal Council (1982) 149 CLR 672 and others mentioned suggest that the jurisdiction to reopen is not excluded where a judgment has miscarried for other reasons, and there is some matter calling for review. The point of all of that is the power to reopen is not simply limited to a case where there is an accident and the party has not been heard through no fault of their own. So I take into account that and also refer to a decision of Judge Jarrett in this Court in Wint v Medimobile Pty Ltd [2016] FCCA 102 where Judge Jarrett said that the factors that would usually be relevant to consideration of an application to set aside under rule 16.05 are:
(a) a reasonable explanation for the party’s absence;
(b) material arguments that might lead to a different order;
(c) no prejudice that is not able to be adequately addressed by the court.
It appears to me that those are not the only factors having regard to the comments of Mason CJ in Autodesk v Dyason. Nevertheless, those appear to be factors that are relevant in the circumstances of this case, and I propose to follow the framework approach set out by Judge Jarrett in Wint v Medimobile Pty Ltd. First, dealing with the question of whether or not there is a reasonable explanation for the husband’s failure to appear. He has said in an affidavit and repeated in oral submissions to me that he was feeling unwell and distraught on 12 August and failed to correctly note the adjourned date in his notes in court. I might say that the matter was set down for trial on that day and not reached due to the other matters proceeding. He says in addition that he has a medical condition and he attached to his affidavit some medical notes from 2013 saying that on a date in 2013, some three years before the relevant date, that he had had an acute attack of vestibulitis which caused vertigo. The medical material is clearly out of date and frankly unconvincing. It is not impossible, of course, that the husband was feeling distraught on the day but the material he put forward was really of no assistance to me.
The other issue that arose was whether or not the husband had received a copy of the order made following the adjourned trial date on 12 August 2016. In response to questioning and cross-examination about whether he had received a copy of the order notifying him of the new date on 1 December 2016, as the standard court practice is to send copies of orders to a notice of address for service once they have been settled or taken out, it appeared that the notice of address for service of the husband is not his residential address but the office address of a friend of his, Mr B. The husband said that he checked with Mr B and Mr B assured him that he had not received a copy of the order. There is no affidavit from Mr B and in ordinary circumstances one might have expected that.
The explanation given by the husband is far from persuasive although I suppose it is quite possible that he was unaware and made a genuine mistake. It was urged on me by Mr Jordan, counsel for the wife, that I should approach the husband’s claims in this regard circumspectly because there are earlier occasions when the husband had not appeared. Clearly, there were some occasions but I do not draw any inference from that. While I am suspicious about the husband’s explanation it is not one that I can simply dismiss out of hand.
The second issue addressed by Judge Jarrett was whether or not there are material arguments that might lead to different orders. The result of the order I made on 1 December 2016 resulted in approximately a 70/30 split of the assets and superannuation interests of the parties. It was a very small pool. I took into account that there had been machinery sold by the husband, according to the wife about $85,000 worth, something not challenged by the husband today, and approximately $160,000 worth of superannuation in the husband’s name. In other words, a net pool of about $245,000 of which the husband, by virtue of having sold the equipment for about $85,000 had already received a significant amount. If there was a 70/30 split, that would have effectively seen all of the superannuation being transferred to the wife by way of a splitting order.
Today there was further evidence about the husband’s present circumstances. The husband is employed. He has deposed to that, and as I observed in the earlier judgment, the wife is not working and there does not appear to be a particularly strong prospect that she is likely to work again. The husband was last year, and is now, an undischarged bankrupt. It is clear to me that he used the company that was operated by the parties in the past, a company called (omitted business) (I do not know what its corporate name was, perhaps (omitted business)), as a (omitted) company. It has been reconstituted as a company called (omitted). The present company, (omitted), is owned entirely by the husband’s present wife, Ms K. She is the only director and the only shareholder. It was apparent from answers to questions I put to the husband that Ms K has had no previous experience in running a company such as (omitted) which is a (omitted) company carrying out (omitted business).
The husband further said that his son and his son’s wife were “really responsible” for the day-to-day operations of the business. The husband’s affidavit in support of his application to set aside is very cautious about disclosing any information about this company. In cross-examination it was revealed that the equipment of the previous company, (omitted business), was purchased at a liquidator’s sale by the husband’s friend, Mr B, who I have already mentioned, who then made it available to (omitted business) pursuant to some arrangement. The husband said it was a lease.
This business seems to be a significant one and it appears to provide a living to Ms K, the husband’s son and the son’s wife. I also strongly suspect that it provides a living to the husband as well, particularly as he said his working arrangements are to work for a company called (omitted) which at the moment has as its sole customer (omitted) and his sole source of work is as, he says, a subcontractor. He works side by side with his son and the son’s wife doing (duties omitted). It is clear that this arrangement has many of the characteristics of a sham and is directed towards disguising the true nature of the husband’s interests, disguising it from, possibly, his trustee in bankruptcy, although I do not make any findings about that and disguising its true nature from the wife in these proceedings. I make a positive finding about that.
I think in all the circumstances I am entitled to conclude that (omitted business) is a valuable asset and the husband has some kind of interest in that business.
There is, I am satisfied, material non-disclosure by the husband about his present circumstances. I consider it highly unlikely that any different order would be made on re-hearing.
In relation to the third issue of prejudice, the wife has incurred significant costs since 1 December 2016. If I were to set aside the order today there would be costs thrown away. Those costs thrown away would consist of the costs incurred by the wife in instructing a solicitor and having counsel appear on 1 December 2016 and also the cost of instructing a solicitor and having counsel appear on the argument to set aside today.
Mr Jordan, as counsel for the wife, gave an estimate that he thought the costs thrown away on that basis would be in the region of $7,500 including GST. I see no reason to disagree with that estimate.
I asked the husband if he was in a position to satisfy a costs order in that amount. And he said that he could borrow up to $10,000, I think he said from his son. It is my understanding that borrowing by an undischarged bankrupt requires approval of the bankrupt’s trustee otherwise it is an offence.
I have no reason to believe that the approval from the trustee in bankruptcy would be forthcoming. This court received a letter from the trustee in bankruptcy in response to an inquiry about whether it was interested in joining these proceedings saying that it was not interested in joining the proceedings. The letter also observed that the husband had been unco-operative with the trustee.
Whether or not he was, in fact, unco-operative, I do not know. It was not the subject of evidence and whether or not he was unco-operative is not something I take into account. Nevertheless, I do take into account that any borrowing would be an offence without approval of the trustee. In those circumstances, I am satisfied that there is likely to be prejudice to the wife if I set aside the orders that could not be remedied by an order for costs.
There is another aspect to the matter that is relevant. Following the order made on 1 December 2016 the husband contacted his superannuation trustees and arranged to roll over the fund in the account to another superannuation fund. He did so knowing the terms of the order that had been made and knowing that there had been an order that the superannuation fund be split 100 per cent to the wife.
He did so knowing that in practical terms, if not legal terms, his interest in the fund had come to an end. I found his explanation for his conduct, that is, his present wife, Ms K had suggested he do that, redolent of the lack of frankness that I have commented on earlier in these reasons.
I am satisfied that any hearing would be made more difficult by the husband’s attempts to circumvent the processes of this court and, very likely, to disguise his real interests. That is likely to add unnecessarily to the costs that the wife will incur.
I decline to set aside the order and I dismiss the application.
I am satisfied that Mr Zabik, who has now left the courtroom, heard Mr Jordan announce that he was seeking an order for costs.
I certify that the preceding twenty two (22) paragraphs are a true copy of the reasons for judgment of Judge Young
Date: 5 April 2017