Hussein v Kubica

Background 4 The procedural and factual history of the dispute to which these proceedings relate is set out below insofar as relevant. 5 Mr Hussein and Ms Kubica were formerly married. On 17 July 2009, in proceedings which are not the subject of this appeal or the extension application, the Federal Magistrates Court of Australia made consent orders for a property settlement between Mr Hussein and Ms Kubica (the Family Law proceedings). Later that year, Mr Hussein filed an application under s 79A of the Family Law Act 1975 (Cth) (Family Law Act) seeking to have the property settlement orders set aside on the basis of non-disclosure of certain matters by Ms Kubica during the settlement negotiations. The s 79A application was resolved by the making of consent orders on 12 August 2010 (the 2010 consent orders). 6 On 2 March 2011, Mr Hussein filed a second s 79A application in respect of the property settlement orders, this time in the Family Court of Australia (Family Court). In the same proceeding, Mr Hussein also sought orders pursuant to s 109A of the Family Law Act for the enforcement of the 2010 consent orders. In May 2012, the Family Court dismissed the second s 79A application by consent. However, Mr Hussein pressed his s 109A application, which was heard and summarily dismissed with costs ordered against Mr Hussein as agreed or assessed on an indemnity basis. On appeal, the Full Court of the Family Court upheld the indemnity costs order. It is from this and another costs order in the Family Court proceedings that the bankruptcy notice arose. 7 In April 2013, Ms Kubica caused a bankruptcy notice to be served upon Mr Hussein in respect of the unsatisfied costs orders (which had been fixed as a judgment debt, by then amounting to $77,445.85 including interest). On 12 August 2013, Ms Kubica commenced the sequestration proceeding by way of creditor's petition founded upon the bankruptcy notice. 8 Between service of the bankruptcy notice upon Mr Hussein and commencement of the sequestration proceeding, Mr Hussein filed a third application under s 79A of the Family Law Act (the third s 79A application). As with his previous applications, Mr Hussein asserted non-disclosure by Ms Kubica in relation to the property settlement and subsequent consent orders. The third s 79A application was transferred to the Family Court where it is presently pending. 9 On 9 September 2013, Mr Hussein filed his opposition to the creditor's petition. He also sought an adjournment of the sequestration proceeding until the third s 79A application had been dealt with by the Family Court. 10 On 12 September 2013, Mr Hussein filed an application in the High Court of Australia for special leave to appeal, among other things, the Full Court's decision to uphold the Family Court costs order. 11 On 2 October 2013, Mr Hussein commenced a second FCC proceeding (to which the application for an extension of time to file a notice of appeal relates) seeking to set aside or extend time for compliance with the bankruptcy notice. 12 On 29 October 2013, the FCC dismissed the application to set aside the bankruptcy notice on the basis that it lacked jurisdiction, Mr Hussein having failed to bring his application within the time for compliance with the bankruptcy notice. 13 On 19 November 2013, the primary judge heard Mr Hussein's adjournment application and, after hearing from Mr Hussein, decided not to grant the adjournment and instead to allow the creditor's petition. The primary judge characterised Mr Hussein's case both in respect of the adjournment application and his opposition to the creditor's petition as being based on three grounds: - (a) the third s 79A application pending in the Family Court, (b) the pending special leave application in the High Court, and (c) that Ms Kubica owed Mr Hussein $35,000. 14 In respect of the first ground, the primary judge said ([2013] FCCA 1957): [5] It should be noted at the outset that this is not the first application under s.79A that Mr Hussein has made. It is the third. … In July 2011 Mr Hussein commenced a second s.79A proceeding asserting non-disclosure. As part of those proceedings he demanded access to documents relating to his wife's financial affairs and in particular to documents relating to a business which his wife had run at all material times, a travel agency known as "Greece and Mediterranean Travel Centre Pty Limited". It seems clear to the court, in particular from a letter sent by Ms Kubica's first solicitors to Mr Hussein's solicitors dated 9 March 2012 that there were a very large number of documents that might not have been available to Mr Hussein in the original proceedings. However, these were made available to him in that month and they were the subject of another detailed letter this time from his solicitors to his former wife's setting out what was then considered to be the inconsistency between financial statements filed on her behalf previously and the information that had come to light by the production of those documents. … [6] On 17 May 2012, the parties, both of whom were represented by senior counsel and solicitors, came to an agreement consenting to the dismissal of the s.79A application which agreement was reduced to Orders of Murphy J which recorded inter alia that:◦ "All applications in respect to financial matters filed by the Applicant Husband since 12 August 2010 be withdrawn and dismissed, including but not limited to ... initiating application filed 2 March 2011 seeking orders under s.79A." … [7] Notwithstanding those orders Mr Hussein, this time unrepresented, seeks to re-agitate by way of application under s.79A the financial arrangements between himself and his wife. … 15 The primary judge referred to a number of decisions in respect of s 79A and continued (at [10]): I take from these authorities that the Family Court, being anxious to ensure that persons appearing before it do provide the fullest disclosure, adopts a pragmatic approach to the notion of miscarriage of justice depending upon the evidence provided in each case. For this reason, if I was to be satisfied by Mr Hussein that matters had not been disclosed to him at the time he entered into the agreement evidenced by the consent orders of Murphy J, there would be reasonable prospects that the court would entertain a further application from him. 16 The primary judge's reasons then set out the matters which Mr Hussein had asserted to be the basis for his third s 79A application, all instances of alleged non-disclosure in relation to the Family Court proceedings, which may be summarised as follows: - (i) when disclosing her income, Ms Kubica included retained profits of approximately $624,938 in her travel agency business which were paid out to her as a dividend after the financial agreements between the parties and which increased her taxable income considerably; (ii) Ms Kubica failed to disclose the retained profits of the travel agency in her valuation of the business; (iii) Ms Kubica severely underestimated her income from the travel agency, even leaving aside the issue of payment of dividends from retained profits; (iv) Ms Kubica redrew $97,000 from a mortgage account jointly held by her and Mr Hussein which she then placed in an account in her own name so that, at the time the property was divided, the liabilities against the matrimonial house were $97,000 more than they should have been and Ms Kubica's assets correspondingly higher; (v) non-disclosure of or in relation to an insurance policy taken out by Ms Kubica; and (vi) non-disclosure of a superannuation account with ING. 17 In respect of (i) and (ii), the primary judge said (at [11]): True it is that in the financial reports delivered to the court Ms Kubica's income was understated. But by the time the matter came to be agitated for the second time in the Family Court, Mr Hussein or his solicitors would have been well aware of the true position. Ms Kubica produced to the court as Exhibit 1 a bundle of documents known as the "Tender Bundle" containing some 133 pages of documents which were made available to Mr Hussein either through subpoenae that had been issued or elsewhere in the correspondence passing between the solicitors that I have previously referred to. These documents were in the hands of Mr Hussein or his legal advisors not less than a month before the s.79A hearing was due to commence. They include detailed financial statements of the company which clearly indicate that by 2010, which is the relevant date of these proceedings, there were accumulated profits of $549,938.00. The documentation also indicates that reference to these retained profits was made by the Valuers, Merrill Associates Pty Limited, whose report of 4 August 2010 is produced by Mr Hussein himself. As Mr Hussein correctly points out any valuation of the business would not take into account the retained profits, it would be based upon the year on year profit and tangible assets and so the figures of between $600,000.00 odd produced by Ms Kubica and $800,000.00 odd produced by Mr Hussein were probably correct. 18 In respect of (iii), the primary judge similarly found that the information was known to Mr Hussein because the documents which were made available to Mr Hussein prior to the making of the second s 79A included tax returns for the relevant years clearly stating Ms Kubica's income. In respect of (iv), the primary judge noted that Mr Hussein accepted that he was aware of the transfer of $97,000 by the time of the second s 79A application and, accordingly, this matter could have been raised during the negotiations which led to the withdrawal of that application by consent. In respect of (v), the primary judge noted that the insurance policy had no surrender value and was only available upon Ms Kubica's death and the superannuation account linked to the policy had no funds in it. Further, Mr Hussein conceded that he was aware that the policy had no value. As to a collateral point raised by Mr Hussein that the declaration made by Ms Kubica as to her earnings when she took out the policy, the primary judge said (at [14]): It does not seem that he had a copy of this document in May 2012 but the income that she declared is in the general range of her actual income as indicated on her tax returns. The court has no reason to believe that her actual income was anything other than as declared and so it matters not what figure she might have put to the insurance company. Mr Hussein had those income tax returns at all material times. 19 In respect of (vi), the primary judge noted that the existence of the superannuation account was recorded in an asset statement given to the Family Court on 30 July 2010. Accordingly, the primary judge found that the third s 79A application had no prospects of success. 20 As to the second ground, relating to the special leave application, the primary judge said (at [19]): Mr Hussein has not addressed the court in any detail as to why he is likely to succeed in this appeal and the court finds it difficult to obtain the degree of satisfaction required that the High Court would entertain an appeal against a costs order of a single Judge that had already been considered by a Full Bench. 21 In respect of Mr Hussein's third ground, the primary judge noted that Mr Hussein's claim was at a maximum $35,000, while the petition was for more than $70,000. Thus, even if Mr Hussein's claim was made out, the balance of the debt underlying the creditor's petition still exceeded $5,000, so that there was no reasonable prospect of Mr Hussein resisting the petition on this basis. 22 In respect of the creditor's petition itself, the primary judge found that he was satisfied that Mr Hussein committed the act of bankruptcy alleged in the creditor's petition and was satisfied as to proof of the other matters required by s 52 of the Bankruptcy Act 1966 (Cth), and accordingly that the order should be made.