Anand & Chaudhary (No 3)
[2022] FedCFamC1F 903
Federal Circuit and Family Court of Australia
(DIVISION 1)
Anand & Chaudhary (No 3) [2022] FedCFamC1F 903
File number(s): MLC 13409 of 2019 Judgment of: HARTNETT J Date of judgment: 17 November 2022 Catchwords: FAMILY LAW – PRACTICE AND PROCEDURE – Where the wife sought joinder of a third respondent to whom the husband transferred shares and units being assets of the husband and wife as claimed by the wife – Where transfer in part in breach of Court order as claimed by the wife – Where substituted service effected on the proposed joinder respondent – Where joinder ordered. Legislation: Federal Circuit and Family Court of Australia (Family Law) Rules 2021 rr 3.01, 3.03(4)
Federal Magistrates Court Rules 2001 r 11.01
Cases cited: Anand & Chaudhary [2022] FedCFamC1F 701
Wayne & Dillon & Anor [2008] FamCAFC 204
Division: Division 1 First Instance Number of paragraphs: 20 Date of hearing: 15 November 2022 Place: Melbourne Counsel for the Applicant: Dr Ingleby Solicitor for the Applicant: Aitken Partners Pty Ltd Counsel for the First Respondent: Mr Mellas Solicitor for the First Respondent: Shapra Lawyers Solicitor for the Second Respondent: Asher Freeman Lawyers The Proposed Third Respondent: No Appearance ORDERS
MLC 13409 of 2019 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS ANAND
Applicant
AND: MR CHAUDHARY
First Respondent
MS SARAI
Second Respondent
MR F
Proposed Third Respondent
order made by:
HARTNETT J
DATE OF ORDER:
15 November 2022
THE COURT ORDERS THAT:
1.Pursuant to Rule 3.03 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 Mr F be joined to these proceedings.
2.Until further order Mr F be and is hereby restrained from injunction from:
(a)resigning as an officeholder of any company/corporate entity;
(b)directing, authorising or causing any other person to deal with, sell, transfer, encumber, further encumber or assign the parties’ interest in any company/corporate entity;
(c)dealing, selling, transferring, encumbering, further encumbering or assigning the parties’ shareholding or interest in any company/corporate entity; or
(d)directing, authorising or causing the issue of any shares in a company/corporate entity in which the parties’ have an interest, and which may reduce or dilute the Respondent’s and/or the Applicant’s interest in such company
save by written agreement between the parties or by Order of the Court
3.Service of these orders upon the joined party, Mr F, be effected by the solicitors for the applicant, who shall effect such service within 48 hours of this date to the email address as specified in Order 2 of the orders made 27 October 2022.
4.The joined party, Mr F, as a respondent to the proceeding, comply with Order 3 of the trial orders made this day, namely that by 4.00pm on 16 January 2023 he file and serve upon all other parties a Response, a trial affidavit, any affidavit of evidence in chief of all witnesses relied upon, and a Financial Statement.
5.Otherwise, the Application in a Proceeding filed 12 October 2022 is dismissed.
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 Anand &Chaudhary has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
HARTNETT J
Preliminary
Before the Court on 15 November 2022 was an Application in a Proceeding filed by the applicant on 12 October 2022 (and sealed 18 October 2022) wherein the applicant sought paragraph 3 and 5 of the orders sought. Those orders were made by the Court on 15 November 2022. These reasons support the making of those orders.
The applicant relied upon the following material:
(1)Application in a Proceeding filed 12 October 2022;
(2)her affidavit in support filed 12 October 2022;
(3)my reasons for judgment delivered 15 September 2022;
(4)an affidavit of service filed 28 October 2022; and
(5)written submissions filed 28 October 2022. I note these submissions were relied upon by the applicant when the matter was last before me in respect of the proposed joinder of other parties at a hearing on 27 October 2022.
The Court had earlier made an order for substituted service of the Application in a Proceeding and supporting material upon the proposed joinder party. That order was made on 27 October 2022 and was as follows:
2.On or before 12.00pm on 28 October 2022 the Applicant effect substituted service on [Mr F] by way of serving the Application in a Proceeding filed 18 October 2022, in particular in respect of Orders numbered 3 and 5 therein which are to proceed on the adjourned date, together with all affidavits filed in support, and those as relied upon by the Applicant, by:
(a) email at …@...; and
(b)otherwise the Application in a Proceeding filed 18 October 2022 be listed for interim hearing as to Orders number 3 and 5 as sought therein on Tuesday 15 November 2022 at 9.15am.
(Emphasis in original)
On 27 October 2022, Mr F was served by way of substituted service by electronic communication.[1]
[1] Affidavit of service filed 28 October 2022.
The matter proceeded on 15 November 2022. On that date, the Independent Children’s Lawyer (“ICL”) was excused from attendance as the Application in a Proceeding pertained to property orders only. The first respondent husband did not oppose the making of the orders as sought by the applicant but did not consent to the making of those orders. The second respondent consented to the orders as sought by the applicant.
The matter proceeded undefended to the extent that the served proposed joinder party did not appear at the hearing and filed no material in response and/or opposition to the orders as sought. I determined that the application should succeed for the reasons set out below.
Legal Principles
The Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) (“the Rules”) sets out the procedure for the joinder of a party to the proceeding. Rule 3.01 states that:
A person whose rights may be directly affected by an issue in a proceeding, and whose participation as a party is necessary for the court to determine all issues in dispute in the proceeding, must be included as a party to the proceeding.
The word “necessary” was described by Warnick J in Wayne & Dillon & Anor [2008] FamCAFC 204, (I note in reference to the then Federal Magistrates Court Rules 2001, rule 11.01, which was similar to the current rule), as meaning:1
...something more than “useful” or “expeditious”. In my view, if there are available alternative means to joinder to the substantive proceedings, of obtaining from a third person or someone already a party what is needed to allow an applicant for joinder to establish an identified “case”, joinder is unlikely to be “necessary”.
However, if a cause of action, recognisable at law, against a “third person” is particularised, then it is at least highly likely that joinder will be “necessary for the court to completely and finally determine all matters in dispute.”
Pursuant to r 3.03(4) of the Rules, a party who seeks to add another party to the proceeding, after the first court date, may only do so with the leave of the Court. Leave was granted by order made on 27 October 2022.
Relevant background
The background of this matter is as described in the reasons for judgment delivered 15 September 2022 and is relevantly summarised hereafter.
The parties were married in 2014 and separated on 12 July 2019.
At the time of separation, the husband owned 99 per cent of the shares in C Pty Ltd, being the trustee of C Trust, and D Pty Ltd owned 99 units in the C Trust. The husband was the sole director and sole shareholder of D Pty Ltd. The remaining one per cent of the shares in C Pty Ltd and the remaining one unit in C Trust were owned, respectively, by Mr H and P Pty Ltd as trustee for the Q Trust.
C Pty Ltd was set up for the purposes of securing National Disability Insurance Scheme (“NDIS”) registration to house disabled people and purchased the former matrimonial home, being the real property situated at E Street, Suburb G, in its capacity as trustee of the C Trust. As set out in my reasons for judgment delivered 15 September 2022, the non-payment of the mortgage of that property by the husband and/or the wife (by virtue of rental payments to the owner of the E Street, Suburb G which were applied to the mortgage repayments) has been ongoing since the orders of 4 April 2022 and the likelihood of a mortgagee sale is real.
Following the making of orders on 21 January 2021 by a Registrar, which retrained the husband “from dealing [with] or selling real estate or shares in his name and control”, the wife asserted that the husband proceed to deal with and/or sell the following:
(a)100 shares in B Pty Ltd, which the husband transferred to Ms Sarai (on 12 February 2021);
(b)his remaining 59 units in the C Trust, which he transferred to Mr F (on 11 April 2021);
(c)the remaining 59 per cent of his shareholding in C Pty Ltd, which the husband transferred to Mr F (on 15 April 2021); and
(d)50 per cent of his shareholding in D Pty Ltd, which the husband transferred to Ms Sarai (on 27 August 2021).
The wife further asserted that prior to the making of the above orders, 40 units in C Trust and 40 per cent shareholding in C Pty Ltd were transferred to Ms Sarai. It is not in evidence whether the remaining 1 unit in C Trust continues to be held by P Pty Ltd as trustee for the Q Trust, or whether the 1 per cent shareholding in C Pty Ltd continues to be held by Mr H as per [12].
The husband’s evidence in relation to [14(b)] and [14(c)] was as follows:
34.……The husband…agreed he made the transfer in (b) above, claiming he was asked by [C Pty Ltd] to give up his units. In relation to (c), the husband contends [C Pty Ltd] took over his shares and the directors and shareholders of [C Pty Ltd] determined [Mr F] was to receive them. The husband contends he had debt owing to [Mr F] and further that he still owes [Mr F] $140,000. ….
On 15 September 2022, Ms Anand was joined to the proceeding as the second respondent with the Court noting in the reasons for judgment that:
57To effect any return of the shareholdings and unit holdings transferred to [Ms Sarai] by the husband, it is necessary to join her to the proceedings.
58I note it is conceded by the husband that he made transfers of shareholdings and units to [Ms Sarai] post the making of restraining orders on 21 January 2021. [Ms Sarai] is a relevant person necessary to determine the dispute between the parties as to share and unit ownership, and accordingly will be joined as a party to the proceeding.
Conclusion
It is accepted by the Court and as the husband concedes, that shares in C Pty Ltd and units in C Trust were transferred by the husband to Mr F in breach of the orders made on 21 January 2022. To effect any return of the shareholdings and unit holdings transferred to Mr F by the husband, it is necessary to join him to the proceeding. Mr F is a relevant person necessary to determine the dispute between the parties as to share and unit ownership, and accordingly the wife’s application succeeds and Mr F will be joined as a party to the proceeding.
I note that prior to hearing the Application in a Proceeding on 15 November 2022, I made procedural orders by consent of the applicant, first and second respondents, and the ICL. Those orders provided for a new timetabling for the filing of material for the matter to proceed to trial on 30 January 2023.
The joinder of Mr F results in the need for procedural orders in respect his joinder. Mr F will be given an opportunity to file any Response containing any orders he may seek. Accordingly, Order 3 of the consent orders made earlier on 15 November 2022, as applicable to the first and second respondents, will equally apply to Mr F.
I certify that the preceding twenty (20) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Hartnett. Associate:
Dated: 17 November 2022
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