Becker and Vale and Ors

[2016] FCCA 3290

FEDERAL CIRCUIT COURT OF AUSTRALIA

BECKER & VALE & ORS [2016] FCCA 3290

Catchwords:
FAMILY LAW – Property – Application for Property Adjustment Orders – Application for joinder of third parties.

Legislation:

Federal Circuit Court Rule 2001, rr.11.01, 11.02

Cases cited:

A Bank & Coleiro & Anor [2011] FamCAFC 157

Wayne & Dillon & Anor [2008] FamCAFC 204

Applicant: MS BECKER

First Respondent: MR VALE

Proposed Third Parties:

MR C VALE;

(OMITTED) PTY LTD; and
(OMITTED) PTY LTD

File Number: BRC 387 of 2016

Judgment of: Judge Lapthorn

Hearing date: 27 October 2016

Date of Last Submission: 27 October 2016

Delivered at: Brisbane

Delivered on: 20 December 2016

REPRESENTATION

Counsel for the Applicant: Dr Brasch QC

Solicitors for the Applicant: Evans & Company Family Lawyers

Counsel for the First Respondent: Ms Oakley

Solicitors for the First Respondent: Quinn & Scattini

Counsel for the Proposed Third Parties: Ms McDiarmid

Solicitors for the Proposed Third Parties: Springwood Lawyers

ORDERS

1. The Application to join Mr C Vale as a party to the proceedings be dismissed.

2. The Application to join (omitted) Pty Ltd (ACN (omitted)) as a party to the proceedings be dismissed.

3. The Application to join (omitted) Pty Ltd ((omitted)) as a party to the proceedings be dismissed.

4. I certify for Counsel.

5. That the proposed third parties file written submissions in relation to costs by 4.00pm 27 January 2017.

6. That the respondent file written submissions in relation to costs by 4.00pm 3 February 2017.

7. That the applicant file written submissions in relation to costs by 4.00pm 17 February 2017.

IT IS NOTED that publication of this judgment under the pseudonym Becker & Vale & Ors is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).

FEDERAL CIRCUIT COURT
OF AUSTRALIA
AT BRISBANE

BRC 387 of 2016

MS BECKER

Applicant

And

MR VALE

First Respondent

MR C VALE;
(OMITTED) PTY LTD; and
(OMITTED) PTY LTD

Proposed Third Parties

REASONS FOR JUDGMENT

Introduction

1. By way of an Application in a Case filed 19 August 2016 the applicant, Ms Becker, sought orders, inter alia, for the joinder of Mr C Vale, (omitted) Pty Ltd (“(omitted) Pty Ltd”), and (omitted) Pty Ltd (“(omitted)”) as parties (“the proposed third parties”) to the substantive proceedings for property adjustment orders.  This application was amended on 18 October 2016.  

2. The applicant is 60 years of age and the respondent is 74.  They commenced to live together in a de facto relationship in 1995 and separated on 21 December 2015.  The substantive proceedings currently before the court were commenced by the Applicant filing an Initiating Application on 18 January 2016.

3. Mr C Vale is the son of the respondent, Mr Vale.  He is the sole director of (omitted) Pty Ltd and (business omitted).  In January 2016 the respondent appointed Mr C Vale as the (occupation omitted) for (omitted) Pty Ltd (“(omitted) Pty Ltd”).  This role was previously undertaken by the applicant.  Upon his appointment to the role, (omitted) Pty Ltd was appointed as an agent of (omitted) Pty Ltd.  (omitted) Pty Ltd (“(business omitted)”), an entity owned by the applicant had previously been appointed to that role when she was (occupation omitted).

4. (business omitted) is a company that is yet to trade.  Mr C Vale’s evidence is that he registered this company to hold the name.  He said the company has no dealings with (omitted) Pty Ltd or (omitted) Pty Ltd or any other party.

Applications and Material Relied Upon

1. The Amended Application in a Case filed 18 October 2016 sought some 13 pages of orders against the proposed third parties and the respondent.  This judgment relates solely to the issue of joinder of the proposed third parties.  Further to the application for joinder the orders sought in the application against the third parties related to interrogatories and discovery and the following order:

   (23)That Mr C Vale (sic) and/or (omitted) Pty Ltd and/or (omitted) Pty Ltd are restrained from engaging Mr Gregory Huddleston and/or Lake Law to act on their behalf in these proceedings.

2. No other orders were sought against the proposed third parties other than for costs.  This application was supported by:

   a)The applicant’s affidavits filed:

   i)19 August 2016; and

   ii)25 October 2016;

   b)The Affidavit of Mr L filed 18 October 2016.

3. I was also assisted by a Chronology prepared by Dr Brasch QC.

4. The Application in a Case filed 19 August 2016 was served on Mr C Vale on 22 August 2016.  He has not filed a Response.  When the matter came before me for hearing on 27 October 2016 I granted him leave to file:

   a)Notice of Address for Service,

   b)His Affidavit sworn or affirmed 26 October 2016;

   c)The Affidavit of Ms J affirmed 27 September 2016; and

   d)An Outline of Argument prepared by counsel for the proposed third parties.

5. The respondent was represented at the hearing by counsel and solicitor but was overseas.  I was advised he had a medical issue preventing him from flying back to Australia for the hearing.  I excused his personal attendance on the day and granted leave for him to file and rely upon the following documents:

   a)Response to an Application in a Case;

   b)His Affidavits sworn or affirmed:

   i)21 October 2016;

   ii)24 October 2016; and

   iii)24 October 2016.

6. The material to be read was voluminous and most of it was provided on the day of the hearing which occurred in a busy duty list.  Queens Counsel for the applicant, Dr Brasch was provided with the proposed third parties’ material on the day of the hearing.  In light of that she proposed the matter be adjourned upon the making of the following orders:

   1That the Applicant wife have 28 days from the date of this order to elect whether to proceed with her application to join the proposed third parties.

   2.If the applicant elects not to join any or all of the third parties, then:

   a.    within 7 days of the election, the proposed third parties be at liberty to make an application as to costs, accompanied by short written submissions, with such application to be determination on the papers by written submissions; and

   b.    the applicant have 7 days to file her submission in reply.

   3.If the applicant elects to join all or any of the third parties, the Applicant will, within 7 days of notifying of her election:

   a.    File and serve a Minute of the draft Orders sought against the third parties;

   b.    A Points of Claim setting out her contentions in relation to the third parties.

   and the matter be listed for hearing of the joinder issue on … December 2016.

7. This approach was opposed by counsel for the proposed third parties, Ms McDiarmid, arguing that her client had been put to significant expense in preparing to meet the application.  She pressed for the dismissal of the application for joinder.  Counsel for the respondent, Ms Oakley, also argued that the application should be dismissed.

Legal Approach

1. The applicant requires the court’s leave to join the proposed third parties because they were not included in the Initiating Application or joined before the first court date of the substantive proceedings.[1]  The Federal Circuit Court Rules 2001 make provision for the inclusion of parties so far as is relevant for this application as follows:

   [1] Rule 11.02(2) Federal Circuit Court Rules 2001

   Rule 11.01
   Necessary parties

   (1)Subject to any order of the Court, a person whose participation is necessary for the Court to completely and finally determine all matters in dispute in a proceeding must be included as a party in the proceeding.

   (2)     The Court may require a person to be included as a party.

   (3)A person required to be included as an applicant who does not consent to be included may be included as a respondent.

   (4)The Court may decide a proceeding even if a person is incorrectly included or not included as a party.

   Rule 11.02
   Party may include another person as a party

   (1)A party to a proceeding may include any person as a party by:

   (a)naming the person as a party in the application, response or reply; and

   (b)serving on the person a copy of the application, response or reply and all other relevant documents filed in the proceeding.

   (2)A party may not include a person as a party after the first court date without the leave of the Court.

   (3)The Court may at any time order a party who has included a person as a party to file and serve on each other party in the proceeding an affidavit setting out the basis on which the person has been included.

2. The proposed third parties rightly point out that the applicant has not disclosed the substantive orders she seeks from them.  It was conceded that she is not required to do so under the rule but it was submitted that the material in support of the application ought disclose some cause of action against the proposed third party or at the very least be capable of inference.  In Wayne & Dillon & Anor[2] Warnick J sitting as an appellate judge said:

   [11]  It seems plain enough that under the rule joinder could be permitted even though no order was sought against a third person.  A third person might be affected by an order though not directly the subject of it and/or it might be discernable that findings upon which an order is based bind a third person and so in either instance that third person should be party to the proceedings. 

   [2] [2008] FamCAFC 204

3. This approach was approved by the Full Court in A Bank & Coleiro & Anor[3].

   [3] [2011] FamCAFC 157 at [101] and [102]

4. His Honour went on to say

   [18]  The word “necessary” in rule 11.01(1) must mean 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”.

Discussion

1. The proposed third parties and the respondent argued that the applicant had not established that the participation of the proposed third parties is necessary for the court to finally determine the substantive matter.  The applicant’s case is based on concerns that the significant asset of the relationship, (omitted) Pty Ltd, may see its value diminish such that she will receive much less in any final property adjustment order or settlement.  Her concerns appear to be based on a number of factors.  The respondent had the applicant removed as a director of (omitted) Pty Ltd following separation.  The respondent then employed his son with whom he has been estranged for many years.  The applicant and Mr C Vale have also been estranged including being parties to a protection order application.  The applicant’s protestations as to the employment of Mr C Vale were ignored by the respondent.  In evidence before Magistrate Tynan in family violence proceedings between the applicant and the respondent, the respondent said that his son was no longer working for (omitted) Pty Ltd but he continues to do so.  The applicant believes that relationships between (omitted) Pty Ltd and two major customers have been compromised as a consequence of the conduct of Mr C Vale.  Mr C Vale created two business entities:  (omitted) Pty Ltd and (business omitted).  (omitted) Pty Ltd receives funds from (omitted) Pty Ltd.  A search revealed (business omitted)’s shareholders are Mr C Vale, a current and a former employee of (omitted) Pty Ltd; the registered address is the same as (omitted) Pty Ltd.  The applicant is concerned that the value of (omitted) Pty Ltd will be compromised by the conduct of Mr C Vale and the respondent and new products may be marketed through (omitted) Pty Ltd and/or (business omitted) rather than (omitted) Pty Ltd.  In other words there has been an intermingling of the businesses such that value properly belonging to (omitted) Pty Ltd has found its way into (omitted) Pty Ltd and as a consequence outside of the pool of assets available for adjustment between the applicant and respondent.

2. The proposed third parties argued that the joinder is completely unnecessary to resolve the dispute between the applicant and the respondent.  Mr C Vale denies many of the historic allegations made by the applicant.  I cannot at this stage determine these disputed factual issues.  He also denied the allegations of being responsible for damage to the customer relationships but he accused the applicant of failing to maintain adequate stock levels causing consequential customer relationship difficulties.  He denied the allegation of intermingling of the businesses.  He said (business omitted) is registered for the purpose of holding the name and does not trade nor is there any intention for it to trade at this stage.  His evidence is that (omitted) Pty Ltd is the entity established to act as the agent for (omitted) Pty Ltd just as (business omitted) does and accordingly receives funds from (omitted) Pty Ltd.

3. Dr Brasch QC argued that (omitted) Pty Ltd should be seen as a Phoenix Rising.  It was submitted that at one stage there was an offer to purchase (omitted) Pty Ltd for $16 million and even though that offer amounted to nothing I should accept at the very least that the company is a valuable one but that is now in jeopardy through conduct of the respondent and Mr C Vale in having (omitted) Pty Ltd divest of its clients and value to (omitted) Pty Ltd.  Dr B agreed that (omitted) Pty Ltd appeared on the face of it to be an entity similar to that of the applicant’s (business omitted) but with one significant difference:  (business omitted) forms part of the property pool.  It was argued that the funds paid to (omitted) Pty Ltd are matrimonial funds that now fall outside the pool. 

4. The contract between (omitted) Pty Ltd and Mr C Vale provides for him to receive at least $300,000 whether he remains working for the life of the contract which is three years or whether he leaves immediately.  Mr C Vale explained that term in the context of him giving up better paid employment and relocating to Queensland at his father’s request.  There was also an advance of $60,000 that has not been fully accounted for but which Mr C Vale said is a loan to help with relocation costs.  The applicant argued that there needs to be transparency so that which should form part of the pool of assets properly comes into the pool.

5. Ms McDiarmid argued that there was no evidence of a divesting of assets although there had been some significant changes in personnel and management.  She submitted that there was also no evidence that customer relationships were at risk and that there was in fact some evidence of increased profitability.  The issue in relation to the alleged $16 million offer to purchase (omitted) Pty Ltd was said to be in contention and no evidence was provided to support the allegation.  It was argued that the applicant’s suspicions as to the motives of the respondent and Mr C Vale alone do not justify joinder.  Further it was argued that by joining the proposed third parties it does not follow that payments made to (omitted) Pty Ltd would become part of the pool of assets.  I accept those submissions.

6. The applicant sought an adjournment of her case to give her a further 28 days to see if she would proceed with her application.  Ms Oakley argued that it is an interesting concept for an applicant to say:  “Give us time to elect if we are going to press for the application that we brought before you today.”  She argued that if there is insufficient evidence to ground an application before the court then the application should fail.  It was her submission that that is precisely the problem for the applicant here.  I also accept this submission.

7. It is understandable given the many issues raised by the applicant that she remains suspicious as to the motives of the respondent and his son.  Suspicion though is insufficient.  I am not satisfied the applicant has established that it is necessary to join the proposed third parties.  I am also not persuaded an adjournment is warranted.  Although the proposed third parties did not provide the material until the day of the hearing the applicant should have been able to argue her case when called upon to do so. 

8. For these reasons I dismiss the application in so far as it relates to the joinder applications.

I certify that the preceding twenty-three (23) paragraphs are a true copy of the reasons for judgment of Judge Lapthorn

Date:  20 December 2016