Baggins and Baggins and Ors

[2016] FamCA 464

FAMILY COURT OF AUSTRALIA

BAGGINS & BAGGINS AND ORS [2016] FamCA 464

FAMILY LAW – PRACTICE AND PROCEDURE – Joinder – application by the wife for joinder of a company in liquidation through which the husband operated his business and the liquidator of the company – where the liquidator claims debts owed by the wife in relation to payments allegedly made by the company to the mortgage over the former matrimonial home – where the liquidator claims an equitable interest in the former matrimonial home – where the wife denies the existence of any debt – interim orders made for joinder

Family Law Act 1975 (Cth)
Family Law Rules 2004 (Cth), rr 6.02, 6.03, 11.10

APPLICANT: Ms Baggins

FIRST RESPONDENT: Mr Baggins

SECOND RESPONDENT: Ms Belmont

THIRD RESPONDENT: B Pty Ltd

FOURTH RESPONDENT: Mr Reeve As Liquidator of C Pty Ltd (in Liquidation)

FIFTH RESPONDENT: C Pty Ltd (In Liquidation)

INDEPENDENT CHILDREN’S LAWYER: Victoria Legal Aid

FILE NUMBER: MLC 10918 of 2014

DATE DELIVERED: 16 May 2016

PLACE DELIVERED: Melbourne

PLACE HEARD: Melbourne

JUDGMENT OF: Johns J

HEARING DATE: 16 May 2016

REPRESENTATION

COUNSEL FOR THE APPLICANT: Mr Sweeney with Ms Renwick

SOLICITOR FOR THE APPLICANT: Lander & Rogers

THE FIRST RESPONDENT: In Person

COUNSEL FOR THE SECOND 

RESPONDENT:

Mr Crofts

SOLICITOR FOR THE SECOND

RESPONDENT:

Westminster Lawyers

COUNSEL FOR THE THIRD 

RESPONDENT:

Mr Sanders

SOLICITOR FOR THE THIRD 

RESPONDENT:

Hunt & Hunt

COUNSEL FOR THE FOURTH AND

FIFTH RESPONDENTS:

Mr Watson-Jones

SOLICITOR FOR THE FOURTH AND

FIFTH RESPONDENTS:

Snowton Saje

THE INDEPENDENT

CHILDREN’S LAWYER

No appearance

Orders

1. That Mr Reeve as Liquidator of C Pty Ltd (in liquidation) and C Pty Ltd (in liquidation) be joined as fourth and fifth respondents in these proceedings.

2. That on or before 6 June 2016 the fourth and fifth respondents file and serve a statement of claim specifying the relief sought and the reasons for the relief sought including any claim for priority (“the fourth and fifth respondents’ claim”).

3. That on or before 27 June 2016 the applicant wife and second respondent file and serve a defence and/or counterclaim to the fourth and fifth respondents’ claim.

4. That on or before 14 July 2016 the fourth and fifth respondents file and serve a Response to the applicant wife and second respondent’s claim and counterclaim.

5. That leave to issue more than five subpoenas is granted.

6. That the applicant wife’s costs be reserved.

7. That all extant applications be adjourned for further mention before me at 9.30am on 8 August 2016.

AND THE COURT NOTES

A.That the parties have a continuing obligation pursuant to Part 13 of the Family Law Rules 2004 to provide financial disclosure.

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

FAMILY COURT OF AUSTRALIA AT MELBOURNE

FILE NUMBER: MLC 10918 of 2014

Ms Baggins

Applicant

And

Mr Baggins

First Respondent

And

Ms Belmont

Second Respondent

And

B Pty Ltd

Third Respondent

And

Mr Reeve As Liquidator Of C Pty Ltd (In Liquidation)

Fourth Respondent

And

C Pty Ltd (In Liquidation)

Fifth Respondent

And

Victoria Legal Aid

Independent Children’s Lawyer

REASONS FOR JUDGMENT

1. The matter of Baggins comes before me today by way of an Amended Application in a Case, filed on 29 April 2016, on behalf of the wife, Ms Baggins.  That application seeks orders that Mr Reeve as liquidator of C Pty Ltd (in liquidation), and C Pty Ltd (in liquidation) (“C”) be joined as parties to the proceedings.  That application is opposed by the proposed fourth and fifth named respondents, being the parties sought to be joined.

2. The applicant relies upon submissions filed on her behalf on 13 May 2016, and the documents identified at paragraphs 2 and 3 of those submissions.

3. The respondent relies upon submissions filed on behalf of the proposed fourth and fifth respondents on 13 May 2016, the Response to an Application in a case, and the Affidavit of Mr Reeve, both filed 13 May 2016. 

4. The background to the proceedings is as follows. 

5. The wife is aged 42 years; she is a homemaker.  The husband is aged 44 years; and works in finance.  Previously he has operated his business through C.

6. The parties married in 2005 and separated in September 2012.  There are two children of the marriage. 

7. Proceedings were commenced by the wife in this Court in December 2014.  In her Initiating Application she sought orders which included an order that she retain the former matrimonial home situated at D Street in Suburb E (“the D Street property”). 

8. On 6 July 2015 Mr Reeve was appointed as a liquidator of C.  On 3 May 2016 the husband entered into bankruptcy. 

9. In January 2016 the wife received notice of claims by the liquidator in respect of payments alleged to have been made by C in respect of the mortgage secured over the title to the D Street property.  The amount then claimed on behalf of C was approximately $487,000.  It was alleged by the liquidator that C held an equitable interest in the D Street property. A caveat was lodged by the liquidator on the D Street property on 12 January 2016.

10. The wife requested that the liquidator cause the caveat to be removed, and that request was refused. Following that refusal, the wife filed her Amended Application in a Case seeking joinder of the fourth and fifth proposed respondents, as well as an Amended Initiating Application in which she sought relief, pursuant to s 90AE of the Family Law Act1975 (Cth), that the husband be substituted for the wife in respect of any claims of the liquidator. It is the wife’s position that she denies that the liquidator has an interest in the D Street property.

11. Two potential claims have been identified by the liquidator.  The first relates to funds said to be paid by C in respect of the D Street mortgage.  It is said on behalf of the liquidator that that is a debt for which the wife should be responsible.  The second aspect of the potential claim by the liquidator relates to a loan account in the name of the husband and the wife.  Those claims have not been quantified.  In particular, I was directed to paragraph 26 of the Affidavit of Mr Reeve filed 11 May 2016, where he deposed as follows:

    I have not begun the task and am unable to form a concluded view on the nature and extent of the company and/or my claims against [Ms Baggins], other than the equitable claim against the [D Street] property.

12. When asked, the solicitor representing the liquidator conceded that he was not able to confirm whether or not the claim with respect to the loan account would be pressed by the liquidator, although for the purposes of these proceedings he maintained the position that the only claim that would be pressed was the claim relating to payments said to be made to the mortgage on the D Street property.

13. It is the wife’s position that all claims need to be determined to enable the issues with respect to matrimonial property to be finalised once and for all.  Further, the wife challenges the legitimacy of the liquidation.  She takes issue with the circumstances as to the appointment of the liquidator and the basis for that appointment.  These are factual issues that I am not in a position at this interim hearing to determine.  They are trial issues, as are all of the claims around payments to the mortgage, whether or not they are payments that can be sheeted home as the wife’s responsibility or whether it be the husband’s responsibility.  They are matters that require a testing of evidence to enable a trial judge to determine.

14. The liquidator opposes the joinder.  Notwithstanding that opposition, it was conceded on behalf of the liquidator that the issues as to the mortgage payments and the loan accounts, whether they are debts that are claimable and who should be responsible for those debts are matters that will need to be determined. 

15. The principal basis for the opposition to joinder seemed to be concern as to the potential costs of these proceedings, and perhaps the perceived inability of this Court to make appropriate interlocutory orders regarding disclosure, security for costs and the like.  It was further submitted that the liquidator should not be placed in a position where he should have to articulate his case first in time.

16. I do not accept those submissions. The law in relation to joinder is set out in the Family Law Rules 2004 (Cth) (“the Rules”), particularly r 6.02(1). It provides that:

    A person whose rights may be directly affected by an issue in a case, and whose participation as a party is necessary for the court to determine all issues in dispute in the case, must be included as a party to the case.

17. It is incumbent upon a party seeking an order against a person whose rights would be directly affected or whose participation is necessary, to join that person as a party to the proceedings.

18. Rule 6.03 of the Rules sets out the provisions for adding a party to the proceedings. As the proceedings have already had a first day, it is necessary, pursuant to r 11.10 of the Rules, for the wife to seek leave to file an amended application to join the liquidator.

19. As I have already noted, the wife has, since the filing of her original Initiating Application in December 2014, sought orders that she be permitted to retain the D Street property.  Further, she sought orders that the husband meet debts and indemnify her with respect to the liabilities of C.  In order to determine those claims, it is in my view necessary to determine the claims of the liquidator and if debts are found to be proved, to determine who should be responsible for payment of those debts. 

20. Accordingly, I am satisfied that it is necessary to join C and the liquidator as parties to the proceedings. To do otherwise would leave those claims and liability for them unresolved. The wife may finalise these proceedings and then face fresh claims traversing the same issues in another court. That approach, in my view, is contrary to the main purpose of the Rules, to ensure that each case is resolved in a just and timely manner, and at a cost to the parties and the court that is reasonable in the circumstances of the case.

21. Joinder will enable a determination of the liquidator’s claims in equity and pursuant to corporations law.  It will enable a timely finalisation of all claims, which will likely result in a reduction of costs.  The liquidator was appointed approximately 10 months ago.  In my view, it is unsatisfactory that he is unable to confirm whether or not he presses a claim against the parties, or either of them, with respect to the loan accounts.  The husband and the wife are entitled to know the claim they are required to meet.  To that end I will make orders requiring the liquidator to file a statement of claim which sets out with precision the claims made by him and the particulars of those claims. 

I certify that the preceding twenty-one (21) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Johns delivered on 16 May 2016.

Associate: 

Date:  16 May 2016