Anand & Chaudhary (No 3)

Case [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…

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Details
AGLC
Anand & Chaudhary (No 3) [2022] FedCFamC1F 903
Case
[2022] FedCFamC1F 903
Decision Date

CaseChat Overview and Summary

Anand and Chaudhary (No 3) involved a dispute between the parties regarding the ownership of shares and units in certain companies following their separation and divorce. The husband had transferred various shares and units in contravention of prior court orders. The wife applied for the husband's former business partner, Mr F, to be joined as a party to the proceeding to determine the current ownership of the shares and units in question. The court granted the wife's application and ordered that Mr F be joined as a party to the proceeding. The court found that the husband had transferred shares and units to Mr F in breach of prior court orders. Joining Mr F as a party was necessary to determine the current ownership of the disputed shares and units. The court made procedural orders to allow Mr F an opportunity to file a response and seek any orders he deemed appropriate. The matter is scheduled to proceed to trial on 30 January 2023.

The main legal issue before the court was whether Mr F should be joined as a party to the proceeding to determine the current ownership of shares and units transferred by the husband in breach of prior court orders. The wife argued that joining Mr F was necessary to resolve the dispute over the ownership of the shares and units. The husband opposed the wife's application. The court found that joining Mr F was appropriate as he held shares and units transferred by the husband, and his inclusion was necessary to determine the current ownership in accordance with the law. The court granted the wife's application and ordered that Mr F be joined as a party to the proceeding.

Orders

Orders of the court

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Background

Background to the litigation

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. ….

Evidence

Evidence Before The Court

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Decision

Reasons for decision

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.

Ratio Decidendi

Legal Principle Established

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