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Challenging bankruptcy in property settlement proceedings where it had been finalised in the Federal Court of Australia

Sresbodan & Sresbodan and Ors [2016] FamCAFC 88

The Full Court of the Family Court of Australia recently determined an appeal filed by Mr Sresbodan (‘the husband’) against property settlement orders made by Justice Aldridge on 6 July 2015 in the Family Court of Australia.

Justice Aldridge’s Orders provided for the proceeds of sale of the parties’ property to be distributed to Ms Sresbodan (‘the wife’), the trustees of the husband’s bankrupt estate and two other creditors including the husband’s previous legal representatives.

The Full Court, comprising of May, Strickland and Kent JJ, dismissed the husband’s appeal, saying that there were no ‘arguable grounds of appeal’. Although the appellant husband alleged that there had been a denial of justice, he did not successfully demonstrate any appealable error. For example, the husband did not make further applications to issue subpoenas when his subpoena requests were refused at first instance, despite being afforded that opportunity.

The husband’s appeal was, in effect, challenging the legality of the sequestration order made against his estate on 12 May 2009 although it had been determined adversely in the Federal Court of Australia. Therefore, the Full Court noted that ‘it was not open to the husband to attempt to re-agitate the same issues or to challenge the making of the sequestration order in the property settlement proceedings’.

The Full Court concluded that there was no merit in the husband’s appeal and that it was ‘tantamount to an abuse of process’.

Their Honours then ordered the husband to pay the costs of each respondent.

The Full Court referred to the following principles set out in the judgment of Holden CJ in Munday v Bowman (1997) FLC 92-784 in considering whether they should award indemnity costs against the husband:

  • Where it appears that an action has been commenced or continued in circumstances where a party properly advised should have known that he had no chance of success. In such cases the action must be presumed to have been commenced or continued for some ulterior motive or because of some wilful disregard of the known facts
  • Making allegations of fraud, knowing them to be false, and the making of irrelevant allegations of fraud Evidence of particular misconduct causing loss of time to the court and to other parties
  • The making of allegations which ought never to have been made or the undue prolongation of a case by groundless contentions
  • An imprudent refusal of an offer to compromise.

Although the husband had been wholly unsuccessful in his appeal and his own conduct had led to the protracted nature of the proceedings, the Full Court balanced these factors against his constrained financial circumstances. Whilst noting that ‘impecuniosity is not a complete bar to an order of costs where the circumstances overall justify an order’, the Full Court nevertheless refused to order costs on an indemnity basis as it would not be a just outcome.


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