B Pty Ltd Pty Ltd and Ors and Majid and Naima

[2018] FamCA 612

FAMILY COURT OF AUSTRALIA

B PTY LTD PTY LTD & ORS & MAJID & NAIMA [2018] FamCA 612

FAMILY LAW – Application for summary dismissal – what is meant by “the other party has no legal capacity to apply for the orders sought” – test for summary dismissal of application under s79A(1)(a) – application dismissed

APPLICANTS: B Pty Ltd and Mr D Aktar (as Trustees for the C Super Fund)
And
Mr E Aktar (as Trustee for the C Super Fund)
And
Mr Azzar and Mr Kalib
(as Trustees for the F Super Fund)
And
Mr Elmoud (as Trustee for the F Super Fund)

FIRST RESPONDENT: Mr Majid

SECOND RESPONDENT: Ms Naima

FILE NUMBER: MLC 3722 of 2017

DATE DELIVERED: 13 August 2018

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Bennett J

HEARING DATE: 31 July 2018

REPRESENTATION

COUNSEL FOR THE APPLICANT: Ms Ingenito

SOLICITOR FOR THE APPLICANT: Mitry Lawyers, Sydney

COUNSEL FOR THE FIRST RESPONDENT: Ms Paterson

SOLICITOR FOR THE FIRST RESPONDENT: L Lawyers

COUNSEL FOR THE SECOND RESPONDENT: No Appearance

Orders

1. The husband’s application filed 4 May 2018, in which he seeks the summary dismissal of the applicants’ initiating application filed on 14 March 2018, be and is hereby dismissed.

2. Any party who wishes to make an application for costs arising out of the failed application for summary dismissal, including reserved costs, do so by filing and serving within 21 days a written submission as to costs of not more than 3 pages in length together with a memorandum of the costs claimed drawn in accordance with the Family Law Scale. 

3. IT IS DIRECTED that any party making a costs application send a copy of their submission and memorandum of costs to my Associate by email (…) and my Associate list the matter for telephone mention for further directions. 

Note: The form of the order is subject to the entry of the order in the Court’s records.

IT IS NOTED that publication of this judgment by this Court under the pseudonym B Pty Ltd and Ors & Majid and Anor has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).

Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLC 3722  of 2017

B Pty Ltd and Mr D Aktar (as Trustees for the C Super Fund)

And

Mr E Aktar (as Trustee for the C Super Fund)

And

Mr Azzar and Mr Kalib (as Trustees for the F Super Fund)

And

Mr Elmoud (as Trustees for the F Super Fund)

Applicants

And

Mr Majid  

First Respondent

And

Ms Naima 

Second Respondent

REASONS FOR JUDGMENT

1. This matter comes to me in the judicial duty list and is the application of the husband Mr Majid for summary dismissal. His application is contained in his response to the initiating application filed 4 May 2018. He seeks that the application initiating proceedings, filed on 14 March 2018, be summarily dismissed and that the applicants to the application initiating proceedings pay his costs “on an indemnity basis.” 

2. The application in respect of which summary dismissal is sought was filed on behalf of B Pty Ltd (ACN …) as first applicant, and Mr D Aktar, and Mr E Aktar, as trustees for the C Super Fund, the second applicant, and Mr Azzar, as third applicant, and Mr Kalib and Mr Elmoud, as trustees of the F Super Fund, as fourth applicant.  The respondents are the husband and the wife. The wife has notice of the proceedings but is not participating.

3. The application initiating proceedings seeks that pursuant to section 79A(1)(a) of the Family Law Act 1975 (“the Act”) a consent order made on 13 June 2017, as between the husband and the wife (“the Order”), be set aside and the Court make another order under section 79 in substitution therefore.

4. The Order provided for the asset which was the former matrimonial home at G Street, Suburb H to be sold by public auction and after payment out of estate agent’s commission, advertising expenses and monies due under the registered encumbrance mortgage, “the net balance to be divided between the parties as to 20 per cent to the husband and 80 per cent to the wife.”  There was the catchall order for each party to retain property of which they were then possessed and superannuation to which they contributed.  There was a notation pursuant to section 81 that the parties intended the orders shall, as far as practicable, finally determine the financial relationship between them and to avoid further proceedings between them.

5. Before me, Ms Paterson of counsel appeared on behalf of the husband, who seeks the summary dismissal.  There was no appearance by or on behalf of the wife.  Ms Ingenito, of counsel, appeared on behalf of the first to fourth named applicants to resist the husband’s application for summary dismissal.

6. These proceedings are running parallel to proceedings in the Supreme Court of Victoria at Melbourne, Commercial Court, in which the four applicants are suing a company, J Pty Ltd, and the husband for damages in respect of funds invested and lost. It is alleged that J Pty Ltd made false representations with the intention that the four applicants should act on the representations and that damage was caused to the applicants in consequence of their reliance on the representations. The same facts are also pleaded as an action under Australian Consumer law in which J Pty Ltd is principal and the husband is an accessory. Unlike the common law tort of Deceit the statutory claim under consumer law does not require proof of intent on behalf of the husband and/or J Pty Ltd. The case against husband is that he was the actual maker of the representations and was involved in the contravention of the relevant statutory duties by aiding and abetting or being directly or knowingly concerned or was a party to the contraventions by J Pty Ltd. The husband’s accessorial liability will involve a determination in the Supreme Court proceedings of whether representations by him induced the making of, and the payment under, the unwritten agreements to invest, as the applicants allege. That is a highly contentious issue in the State court proceedings.

7. I have had the benefit of being able to read the reasons of the judge delivered in the Supreme Court proceedings[1].

   [1] The reasons are medium neutral citation number [2018] VSC 146

8. The next mention date of the Supreme Court proceedings are mid 2018 when, I am informed, consideration will be given to whether determination proceedings in one court should precede the determination of proceedings in the other.  

9. What follows are my reasons for dismissing the husband’s application for summary dismissal of the applicant’s claim in this court.

10. In my view it is preferable for the Supreme Court action to be determined prior to the proceedings in this Court progressing further.

11. In these reasons, a statement of fact is a finding of fact.

Background   

1. The husband and the wife commenced cohabitation in 2002.  They married in 2002 and they separated on 8 December 2015.  A decree nisi of dissolution of their marriage was granted on 17 August 2017.

2. The husband and wife had three children, X (12 years) born in 2006, Y (9 years) born in 2008 and Z (4 years) born in 2013.

3. Commencing in mid-2016, the applicants invested an aggregate of approximately $1 million with the husband and/or a company of which he is the sole director and shareholder, being J Pty Ltd (“the husband’s company”). It is agreed that there were terms of investment in writing.  It is, however, alleged by the applicants that there were further matters agreed to orally and certain representations made, either on behalf of the husband’s company and/or the husband. It is on those representations that the husband’s accessorial liability is allegedly based.

4. On 21 April 2017 the husband and wife filed an application in this Court for consent orders pursuant to rule 10.15 of the Family Law Rules 2004. The consent orders sought to deal once and for all with the final alteration of property interests between the husband and the wife. In an order of that nature, which was a final financial order, the parties are required to set out facts, some of which go to jurisdiction and some of which go to the basis upon which the court’s discretion is to be exercised. In relation to the latter, litigants have a general duty of disclosure as described in the Family Law Rules 2004 – Rule 13.01. ‘Each party to a case as a duty to the Court and to each other party to give full and frank disclosure of all information relevant to the case in a timely manner’ (my emphasis). Disclosure of financial circumstances is set out in Division 13.1.2 which is broad. The duty of disclosure “starts with the pre-action procedure for a case and continues until the case is finalised.”

5. The application for consent orders details property or maintenance which included details of employment and child support paid or received, real property, personalty, funds in banks and credit societies and liabilities.  Paragraph 45 of the application required each to detail any interest in a business, giving their best estimate of gross market value, the name of the business, that party’s percentage share of ownership in the business and the value of his or her share.  Paragraph 45 on page 10 of the application for consent orders was left blank.  Under liabilities, the husband provides details of credit cards, an unsecured bank loan and a mortgage but otherwise does not set out any other liabilities.  Notably, there is no mention of the husband’s company or assets or liabilities associated therewith.

6. That application for consent orders filed on 21 April 2017 gave rise to a requisition from Registrar K. Sudholz dated 18 May 2017 and notification of the consent orders being made for the following reasons:-

   ·The Registrar was not satisfied that the outcome is just and equitable in circumstances where the parties have said that the contributions were equal (see items 68 to70 of the application for consent orders) and where there are no section 75(2) factors (see 71 of the application for consent orders).  Accordingly, a statement of agreed facts signed by both parties must be provided addressing the basis for the adjustment of assets (inclusive of superannuation) of 80 per cent to the wife and 20 per cent to the husband.  This includes a summary of the parenting arrangements for the children of the marriage including what is intended after the wife’s proposed return to [Country K].

   ·Item 72 is not clear what the other property is in the amount of $364,231.20.  It appears to correlate to a liability owing by the husband in item 73 however there is no provision in the proposed minute of consent order for this amount to be paid to the wife.  An explanation of this matter is required together with the additional $6,000.

7. The husband and the wife were advised by Registrar Sudholz that the proposed orders were being returned pending a satisfactory response to this advice and if no response was received by 19 June 2017 the application for consent orders will be dismissed.  The correspondence was addressed to the husband’s solicitors who were L Lawyers and to the wife in person at N Street, Suburb N.

8. On 25 May 2017 the solicitors for the husband responded to the Registrar as follows:-

   We advise that we act on behalf of [Mr Majid] in his family law, property matters.  [Ms Naima], the respondent wife, is self-represented.  Ms Naima has advised our office that she does not wish to seek independent legal advice.  [Ms Naima] is a commercial and corporate lawyer in [Country K] and has read the documents and is satisfied of the contents.  She is however unemployed whilst in Australia. 

   The parties seek to finalise their property matters and have signed minutes of consent orders along with an application for consent orders which are now held by the court.  The parties have an amicable relationship and will not be seeking parenting orders as such.

   The parties married in 2002 and separated in December 2015.  The parties lived between Country K and Australia during the marriage.  There are three children of the marriage aged 13 years, 8 years and 11 years old.  The children are in good health and spend regular time with the father.

   The major asset of the marriage is a property situated at [G Street, Suburb H].  The property is valued at approximately $1.2 million.  The property is listed on the market with an auction date set for 3 June 2017.  The alleged mortgage over the property is approximately $677,000.

   Our client was a director of a successful …company which traded between [Country K] and Australia when it suffered approximately $1 million loss.  Since then our client has been residing with his brother and lives off credit cards.  He has currently commenced employment as a contractor and hopes to rebuild his business.

   [Ms Naima] is a [professional] in [Country K] and has advised that she will be returning to [Country K] with the children to continue in her profession.  It is agreed that upon [Ms Naima] returning to [Country K] our client will travel regularly to and from [Country K] to spend time with them.

   The parties have agreed to divide the asset pool 80/20 in favour of [Ms Naima].  In effect, [Ms Naima] will receive approximately $364,231.20 from the proceeds of sale.  [Ms Naima] will retain her motor vehicles and household furniture along with $4000 worth of gold.  We note that the value of the gold has been stated at $6000 in item 72 “other property” which is incorrect, and the parties seek to seek to have the figures amended. 

   This is fair and equitable in the circumstances with each party to retain their respective credit card debts, and our client will retain the business debts.  As stated above, the husband is in the process of rebuilding his business which he anticipates will become profitable in the near future.  Further, the sum that is to be received by [Ms Naima] will ensure that she can secure a property in Australia to reside in with the children until she secures employment in [Country K].

   We kindly request that you make orders in the proposed terms. 

9. The letter was apparently signed by the solicitors for the husband and by the wife in person.  Notwithstanding the various references by the solicitors for the husband to the “husband’s business”, “the business debts”, that “the husband is in the process of rebuilding his business, which he anticipates will become profitable in the near future”, there is no reference to a business or business debts in the body of the application for consent orders where there ought to have been.

10. On 24 May 2017 proceedings were commenced by the applicants - by the first to fourth applicants against the husband’s company and the husband in the Supreme Court in the proceedings to which I have referred.

11. Also on Wednesday, 24 May 2017, an email was sent by P Lawyers Barristers and Solicitors, who acted for the husband’s company to the solicitors for an unrelated entity called O Pty Ltd in relation to an unrelated matter.  It enclosed a statutory declaration by the husband. The letter said, “We are instructed that the company does not own any assets.  Please confirm whether your client is agreeable with our offer of 18 April 2017.  We are instructed that this offer remains open until COB, Friday, 26 May 2017.  We look forward to hearing from you.”  

12. The statutory declaration made by the husband on 24 May 2017 read:-

    (1)      I own a real property situated at [G Street, Suburb H].  The property is currently on the market and will be auctioned on 3 June 2017.  However, this property is subject to family law proceedings.  After all expenses and payment, I expect to receive around $100,000. 

    (2)      I also have the following liability: 

    (a) personal loan ~ $45,000; 

    (b) mortgage over the property ~ $680,000. 

    (3)      I acknowledge that this declaration is true and correct, and I make it      with the understanding and belief that a person who makes a false           declaration is liable to the penalties of perjury.

13. The significance of the statutory declaration is that the husband asserts a commonality of interested people such that notice to O Pty Ltd of his proposal, to sell the real property and pay most of the proceeds to his wife, constituted notice to the first to fourth named applicants in these proceedings before me. That was not conceded and will necessarily be a matter to be resolved by evidence.

14. On 3 June 2017 the property at Suburb H was sold at auction for $1.266 million.  A deposit was paid but completion could not occur because of the multiple caveats on the property.  The husband applied to the Registrar of Titles to remove the caveats under the statutory out of court procedure.  The caveats were removed by the Registrar of Titles on 11 October 2017 and the sale of the real property was completed on 13 October 2017.  The mortgagee was paid the sum of $692,887 and a figure of approximately $500,000 was paid to the husband’s solicitors into her trust account pending the application of the freezing order. 

15. On 8 June 2017 a further requisition issued from this Court in relation to the form of the minute of consent order which requisition was apparently cured. 

16. On 13 June 2017 a Registrar of this Court made the final property orders, by consent and described earlier in these reasons.

17. On 14 June 2017, which was the day after the consent order was made by this Court, an appearance was filed in the Supreme Court proceedings on behalf of the husband and his company.  Not long afterwards the solicitors, P Lawyers, filed a notice that they had ceased to act.  That was filed on 4 July 2017.  No defence was filed.

18. On 24 July 2017, the second, third and fourth applicants each lodged a caveat on the real property at G Street in Suburb H on the express ground of ‘an agreement’ with the husband dated 24 May 2017.  The date was the date of the writ, the only agreement alleged in the writ is an unwritten agreement to invest.

19. In mid-2017 the first to fourth named applicants obtained an interlocutory judgment in the Supreme Court against the husband and his company for damages to be assessed.  The judgment was obtained in default of a defence being filed.  The default judgment was obtained regularly and on the established procedural basis that all allegations in the statement of claim were taken to be admitted by the defaulting defendants.  It was an interlocutory judgment and the plaintiffs’ claim was for recovery of damages. 

20. In late 2017 a freezing order was made over the assets of the husband and the husband’s company under Order 37A of the Supreme Court Rules.  That order was made by Judd J on an ex parte basis and further extended until an assessment of damages.  It was subsequently extended until further order. I understand that the husband says that he found out about the injunction at the end of 2017.

21. In early 2018 the Court assessed the plaintiffs’ damage for a total $9,048,400.  This was the aggregate amount of money which the first to fourth applicants had paid over to the husband and his company to be invested in the new United States commodities market. 

22. The court recorded that, 185 days after judgment was entered or 126 days after the husband says he found out about the Court having made an order freezing his assets – calculated by me to be on Monday 19 February 2018 - the husband and his company made application to the Supreme Court to set aside the default judgment.  That application came before the court on 19 March 2018. 

23. The judge states [4]:

    The Court’s general discretion on such applications requires the Court to consider the explanation for the default, but more importantly, as the founding authority in Victoria has it (Kostokanellis & Allen [1974] VR 596 (FC)), the Court must weigh the extent to which a defendant is prejudiced by allowing a judgment - not obtained on the merits but by procedural default - to stand as against the prejudice to the plaintiff in setting it aside. In that evaluation, regard must be had primarily to the merits of a defence that the defendant wishes to put as evidenced by an affidavit in support of the application.

1. His Honour recorded that the opposition to the application to set aside the default judgment was double-barrelled.  “The plaintiff challenged the adequacy of the explanation for the default and they also contend that there is no evidence disclosing a defence to the claim as pleaded.”

2. His Honour observes at [7] “The writ including a statement of claim was filed on 24 May 2017 and served on 29 May 2017.”  He encapsulates [6]:

   On the question of an arguable defence, there were peculiarities about the case and the evidence, and the conduct of the application that has made the exercise at the court’s discretion quite difficult.  There is no dispute that [the first to fourth applicants] paid the money over.  There is no dispute that all of [their] money has been lost at the ‘husband and his company’s hand.  The assessment of damages, as a quantification exercise, was not controversial because the amounts paid by the plaintiffs are documented and not disputed.  Thus, forensically, it will be said that the focus is on the [the husband and his company] to show why the judgment should be set aside. 

   Even for present purposes where I am not determining the merits, the problem has been trying to understand the legal relationship between the parties and the rights and obligations in a situation where the [husband and his company] have been unconcerned yet to say anything about the alleged pre-investment representations because they??? point cardinally to purpose-made and signed written agreements prepared by one of the [applicants] according to which they say that the commodities trading was conducted, but those agreements have not been pleaded by the [first to fourth named applicants] at all.  The [husband and his company] say those written agreements define or govern the legal relationship, and any judgment on the merits ought be made on a trial of the matter according to the effect and operation of the written agreements.  As I remarked in argument, to an extent, the apparent dispute is like two ships passing in the night.

3. On 12 February 2018 the husband applied to set aside the freezing order and soon appointed lawyers to act for him.  For the purpose of that application the husband swore a second affidavit on 12 February 2018 in which he states that Mr D Aktar, one of the second named applicants, is his accountant and a principal of an accounting practice known as Q Accountants.  Q Accountants had given the husband’s company (J Pty Ltd) the sublease of part of its premises.  He says that the Mr Azzar (the third applicant) is a friend of Mr D Aktar and someone he, the husband, has known for more than five years.  The fourth applicant, Mr Elmoud, is an accountant working at Q Accountants.  The husband says that the unsecured loan agreement made with B Pty Ltd was prepared by Mr D Aktar. For current purposes this commentary provides the basis for the observation by his Honour that all the parties knew each other. On 19 February 2018 the husband filed a summons to set aside the default judgment.

4. Ultimately, his Honour held that there was “a case to be investigated” and was prepared to set aside the default judgment.  He held “the plaintiffs cannot point to any actual prejudice in having the judgment set aside and having it determined on its merits, certainly none that outweighs the prejudice in allowing the judgment to stand.  Accordingly, I would allow the application to set aside the default judgment.” 

5. As indicated, the next mention date of the proceedings in the Supreme Court is mid-2018.

The Law

1. Chapter 10 – Ending a Case Without a Trial – Part 10.3 – Summary Orders and Separate Decisions of the Rules makes provision for application for summary dismissal. 

2. Rule 10.12 of the Rules provides that a party may apply for summary orders after a response has been filed if the party claims, in relation to the application or response, that:

   a)the court has no jurisdiction;

   b)the other party has no legal capacity to apply for the orders sought; 

   c)it is frivolous, vexatious or an abuse of process; 

   d)there is no reasonable likelihood of success.

3. In Fraiar & Fraiar, [2011] FamCAFC 71 Finn J approved the application of the principles for summary dismissal by the judge at first instance, in particular that [8] in determining an application of this nature … the rule … is that, if a version of the facts put forward by the respondent is not inherently incredible, then in the absence of any opportunity for cross-examination it is incumbent upon the court to proceed on the basis that the respondent’s version will ultimately be accepted at the trial of the action (see Webster & Lampard [1993] 177 CLR 498 at 608).

4. The applicable test of, “no reasonable likelihood of success” was discussed (albeit in a different context) by the Victorian Court of Appeal in Lysaght Building Solutions Pty Ltd (T/A as Highline Commercial Construction) & Blanalko Pty Ltd [2013] VSCA 158. At paragraph (27) Warren CJ and Nettle JA said: “the power to award summary judgment is only to be exercised with caution and, therefore, not unless it is clear that there is no real question to be tried.” The Full Court of the Family Court in the matter of Ebner & Pappas [2014] FamCAFC 229 have subsequently adopted the comments of Warren CJ and Nettle JA in the context of Rule 10.12(d).

5. In Linden & Commonwealth of Australia (No 2) [1996] 136 ALR 251 the High Court outlined the principles to be applied when considering an application for summary dismissal as including:

   (2) … the party seeking (summary dismissal) must show that it is clear, on the face of the opponent’s documents, that the opponent lacks a reasonable cause of action or is advancing a claim which is clearly frivolous or vexatious. 

   (3) An opinion of the court that a case appears weak and such that it is unlikely to succeed is not, alone, sufficient to warrant summary termination.  Even a weak case is entitled to the time of a court.  Experience teaches that the concentration of attention, elaborated evidence and argument and extent of time for reflection will sometimes turn an apparently unpromising cause into a successful judgment. 

   (4) … if there is a serious legal question to be determined it should ordinarily be determined at a trial for the proof of facts may sometimes assist the judicial mind to understand and apply the law that is invoked and to do so in circumstances more conducive to deciding a real case involving actual litigants rather than one determined imagined or assumed facts. 

The application

1. The notation to Part 10.3 of the Rules states that an application for summary dismissal is to be made by filing an application in a case and an affidavit.  In this case, the husband filed a Response to Initiating Application (Family Law).  In my view, nothing turns on non-compliance with the requirement that such an application should have been filed as an application in a case, and I dispense with compliance with the Rules in that regard.

2. This matter was first returnable before Justice Cronin on 8 May 2018.  On that day Mr Schroeder appeared for the first to fourth named applicants, Dr Smith for the husband, and there was no appearance by or on behalf of the wife.  His Honour ordered that the matter be adjourned to the judicial duty list on 31 July 2018 and that within 28 days the applicants file and serve “contentions of fact and law particularising in detail their application to set aside the orders made on 13 June 2017 which were made by consent between the first and second respondents (the husband and the wife)”.  Within 28 days of receipt of the applicant’s contentions as to fact and law the husband and the wife respectively file and serve any contentions as to fact and law in response. 

3. Paragraph 4 of his Honour’s orders provided that “by 4 pm on 20 July 2018 the respondents or either of them elect in writing whether or not they are intending to proceed with any summary dismissal application and if they elect not to do so, the matter be placed before a Registrar for directions as soon as practicable after 31 July 2018 and the judicial duty listing on 31 July 2018 be otherwise vacated.” Otherwise, the costs of the husband were reserved to the next available return date, and a notation was entered, “The parties do not require reasons for these orders.”

4. The documents relied upon by the husband in his application for summary dismissal are:-

   ·his response to the initiating application filed 4 May 2018,

   ·his affidavit sworn or affirmed on 4 May 2018, which is actually an affidavit of only eight paragraphs to which is annexed the second affidavit sworn by the husband in the Supreme Court proceedings which runs to approximately 100 pages, including annexures.

   ·documents relied upon by the husband are??? his contentions as to fact and law sealed on 12 July 2018 at 3.40 pm.

5. The first to fourth respondents rely on the following documents:

   ·     initiating application filed 14 March 2018;

   ·     affidavit  of Mr D Aktar sworn 7 March 2018;

   ·     contentions of fact and law sealed on 6 June 2018 at 9.09 am.

Discussion

1. Counsel for the husband characterised her application for summary dismissal as confined to whether or not the applicants had standing to bring the application pursuant to section 79A, that is, pursuant to Rule 10.12 of the Family Law Rules. It was submitted that the applicants “had no legal capacity to apply for the orders sought.”

2. Counsel for the first to fourth applicants submitted that, as a matter of common sense, and without being able to refer to relevant case law, “legal capacity” within the meaning of Rule 10.12(b) relates to whether or not a person or persons have a legal capacity to sue or be sued.  As there are no issues of, for instance, mental incapacity or majority she contended that Rule 10.12(b) could not present a difficulty for her clients. On the other hand, counsel for the husband, submitted that “legal capacity” was the equivalent of legal standing.

3. I was initially attracted to legal capacity being construed consistently with the capacity to sue or be sued and that a lack of standing as a matter which would sound in Rule 10.12(d).  Rule 10.12(d) provides for summary dismissal where “there is no reasonable likelihood of success”. With further consideration, however, I regard Rule 10.12(d) as requiring the evaluation of the possibility of success in a cause of action, more so than an evaluation of a party’s status.

4. I was not taken to authorities by either counsel. It seems to me that the categories under Rule 10.12(b) and (d) need not be mutually exclusive. Incapacity includes, but is wider than, disability as used in the context of case guardians.

5. Legal capacity under Rule 10.12(b) could pertain to an applicant who has no reasonable prospect of successfully prosecuting proceedings or part of proceedings as is provided under Rule 26.01(10(a) of the Federal Court Rules 2011 as a basis upon which to obtain an early end to proceedings. An applicant’s lack of any reasonable prospect of being able to prosecute a proceeding could also include a lack of jurisdiction? For instance, an applicant for a parenting order where the child falls outside the jurisdictional provisions of Section 69E of the Act or an applicant seeking to initiate proceedings for a property or maintenance order where the other party to the relationship is already deceased.

6. In this case, counsel for the husband has not satisfied me that the applicants lack “legal capacity” to prosecute their application under s.79A.

7. In proceedings under s79A(1)(a), standing derives from the status and entitlement of the person at the time the order was made under s79.

8. Counsel for the husband contended that, if or when the first to fourth named applicants have an enforceable debt, they could seek to enforce it against the husband and/or his company.  However, at the time that the final property orders were made by the Registrar of this court (13 June 2017), they were not in that position and, therefore, they are not persons who can be described as being “affected” by the orders that were made as between the husband and the wife.

9. Section 79A(1) provides

   Where, on application by a person affected by an order made by a court under section 79 in property settlement proceedings, the court is satisfied that: -

   (a)  there has been a miscarriage of justice by reason of fraud, duress and suppression of evidence (including failure to disclose relevant information,) the giving of false evidence or any other circumstance - …

   the court may, in its discretion, vary the order or set the order aside and, if it considers appropriate, make another order under section 79 in substitution for the order so set aside.

10. As I understand Ms Patterson’s contention, it is as follows: when the final property order was made, the first to fourth applicants were required to be “a person affected by an order”.  Further, that they had no interests which were “affected” because they had not obtained the status as judgment debtors; they were merely persons who claimed to be creditors of the husband and the husband’s company.

11. I agree that the relevant time to assess the position of the applicants for relief is at the time of the making of the order sought to be set aside. Thereafter, counsel for the husband has misdirected herself.  The relevant test is not the status of the first to fourth applicants vis a vis section 79A, but pursuant to section 79 of the Act, which provides for alteration of property interests.

12. The miscarriage of justice to which s79A refers must have occurred at the time of the making of the orders, namely 13 June 2017 (Molier and Van Wyk (1980) FLC ¶90-911 at pp 75,767-75,768; Public Trustee (as executor of the estate of Gilbert) v Gilbert (1991) FLC ¶92-211 at pp 78,426-78,427, 78,428).

13. Section 79 (10) of the Act provides that, the following persons are entitled to become a party to proceedings in which an application is made for an order [for final alteration of property interests] by a party to a marriage: -

    (a)  a creditor of the party to the proceedings if the creditor may not be able to recover his or her debt if the order was made.

14. As at 13 June 2017 the first to fourth applicants could, prima facie, have intervened to oppose the final property order being made.  

15. Counsel for the husband relies on the statutory declaration which was made by the husband and sent to the solicitors for O Pty Ltd on 24 May 2017. However, whether that statutory declaration constitutes notice to the first to fourth applicants in these proceedings and whether such notice would dis-entitle them (or any of them) to set aside the final property order on the basis of -

    a miscarriage of justice by reason of fraud, duress, suppression of evidence (including failure to disclose relevant information) …

    is a matter which requires to be resolved on evidence. In particular, evidence of relationships, negotiations, commonality of interest, privilege. It is not enough to assert from the bar table or even in untested affidavit material that the same solicitors acted on behalf of all of the parties and that the first of the second named applicants, Mr D Aktar, was an accountant of the first to fourth applicants in these proceedings and also the party to whom the statutory declaration was directed, that is, O Pty Ltd.

16. Counsel for the husband asserted that Mr D Aktar is an accountant for all of the entities and that all such entities would accordingly be aware of various disputes between them and the husband. Further, because their common accountant is intimately involved with their businesses, he would have made the Family Court proceedings between the husband and the wife known to all of the parties, because he would have appreciated that it was in their interests to know. I do not exclude the possibility that could ultimately be proven to be a correct summation, but it is not a statement of fact that persuades me in the context of an application for summary dismissal. At this juncture, “if a version of the facts put forward by the respondent is not inherently incredible, then in the absence of any opportunity for cross-examination it is incumbent upon the court to proceed on the basis that the respondent’s version will ultimately be accepted at the trial of the action.” (see Webster & Lampard [1993] 177 CLR 498 at 608 as approved by Finn J and discussed earlier in these reasons). The facts relied upon by the first to fourth applicants are not “inherently improbable” and I do not propose to discount them at this stage of the proceedings.

17. In these proceedings it is common ground that the sum of approximately $1 million was paid by the first to fourth applicants to the husband and the husband’s company.  The husband denies any personal responsibility for those moneys or the loss thereof. He attributes such responsibility as there could be to his company, being the company of which he is sole director and shareholder. The proceedings in the Supreme Court will determine whether the husband has a personal liability to the first to fourth applicants such as will entitle the applicants to recover damages for consequential losses.

18. I am satisfied that this is not a case which qualifies for summary dismissal.

Costs

1. Any party wishing to make an application for costs, including the reserved costs of 8 May 2018, may do so by written submissions of not more than 3 pages in length sent to the other party and my Associate within 21 days of the date hereof, whereupon I will list the matter for directions.

2. Any costs submission should be accompanied by a memorandum of costs drawn in accordance with the Family Law Scale.  This does not preclude a party from claiming costs calculated otherwise than in accordance with the Scale but I do require costs calculated on scale.

I certify that the preceding sixty-nine (69) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Bennett delivered on 13 August 2018.

Associate:

Date:  Monday 13 August 2018