Betro & Grima (No 3)
[2023] FedCFamC1F 727
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Betro & Grima (No 3) [2023] FedCFamC1F 727
File number(s): SYC 1826 of 2021 Judgment of: SCHONELL J Date of judgment: 24 August 2023 Catchwords: FAMILY LAW – PRACTICE AND PROCEDURE – Joinder – Where the wife sought to join the husband’s brother and two companies owned and controlled by him – Where the wife also sought injunctions against the husband’s brother and the two companies – Where the joinder was opposed – Where the wife did not establish that there was an arguable case – Wife’s application for joinder dismissed. Legislation: Family Law Act 1975 (Cth) ss 69W, 78, 79, 90AE, 90AK
Family Law Rules 2004 (Cth)
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) rr 3.01, 3.03
Cases cited: B Pty Ltd and Ors & K and Anor (2008) FLC 93-380; [2008] FamCAFC 113
Hancock Family Memorial Foundation Ltd v Fieldhouse (No 3) [2010] WASC 223
Riemann & Riemann and Ors (No. 3) [2017] FamCA 911
Victoria v Sutton (1998) 195 CLR 291; [1998] HCA 56
Wayne v Dillon (2008) 40 Fam LR 543; [2008] FamCAFC 204
Division: Division 1 First Instance Number of paragraphs: 88 Date of hearing: 17 August 2023 Place: Sydney Counsel for the Applicant: Mr Ford Solicitor for the Applicant: Lionheart Lawyers Counsel for the Respondent: Mr Richardson Solicitor for the Respondent: Holmes Donnelly & Co Solicitors Counsel for the Prospective Respondents: Mr Richardson SC Solicitor for the Prospective Respondents: Dimocks Family Lawyers Solicitor for the Independent Children's Lawyer: Phillip A Wilkins & Associates (Did not participate) ORDERS
SYC 1826 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS GRIMA
Applicant
AND: MR BETRO
Respondent
MR T
First Prospective Respondent
X1 PTY LTD (and another named in the Schedule)
Second Prospective Respondent
INDEPENDENT CHILDREN'S LAWYER
ORDER MADE BY:
SCHONELL J
DATE OF ORDER:
24 AUGUST 2023
THE COURT ORDERS THAT:
1.The Application in a Proceeding filed 22 June 2023 in so far as it seeks orders for joinder and injunctions against the prospective respondents 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 Betro & Grima has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
SCHONELL J:
By Application in a Proceeding filed 22 June 2023, the applicant wife (“the wife”) seeks a suite of orders including parenting orders, joinder of three parties, injunctions and disclosure against the prospective joinder parties and the respondent husband (“the husband”), orders that she be appointed trustee for sale, restraints in relation to various bank accounts and an order for litigation funding pursuant to s 117 of the Family Law Act 1975 (Cth) (“the Act”).
For his part, the husband sought orders for parentage testing pursuant to s 69W, a reduction in his time with the child, disclosure and the sale of properties. He otherwise sought a dismissal of the wife’s application.
The joinder application was opposed by the prospective joinder parties, being the husband’s brother and the companies X1 Pty Ltd and X2 Pty Ltd.
Agreement was reached between the husband and the wife in relation to all interlocutory applications as between them with the exception of the application for litigation funding. In that respect, the parties reached agreement as to a timetable for the filing of further evidence and written submissions, with the application for litigation funding to be determined thereafter on the papers.
There remained for determination the application for joinder and consequential injunctive relief as against the prospective joinder parties. Counsel for the wife conceded that in the event that joinder was unsuccessful, then the proposed injunctive orders must by necessity fall away.
The wife relied upon the following documents:
(1)Application in a Proceeding filed 22 June 2023;
(2)Affidavit of wife filed 22 June 2023;
(3)Financial Statement filed 3 November 2022; and
(4)Case Outline document.
The husband relied upon the following documents:
(1)Response to Application in a Proceeding filed 31 July 2023
(2)Affidavit of husband filed 31 July 2023; and
(3)Case Outline document.
The prospective joinder parties relied upon the following documents:
(1)Response to Application in a Proceeding filed 2 August 2023;
(2)Affidavit of Mr T (being the husband’s brother) filed 2 August 2023;
(3)Affidavit of Mr DD filed 2 August 2023; and
(4)Case Outline document.
In addition, various documents were tendered.
BACKGROUND
The wife was born in 1970 and is currently 53 years of age.
The husband was born in 1971 and is currently 52 years of age.
The parties commenced cohabitation in 2010 and separated on a final basis on 12 March 2021.
They have one child, X, who is 7 years of age.
The husband operates and/or has an interest in a number of entities. These include:
(1)B Pty Ltd registered in 2014 in which the husband is the sole director, secretary and shareholder of the company. B Pty Ltd is the corporate trustee of the B Unit Trust and as trustee owns a property at Suburb M (“the Suburb M property”).
(2)C Pty Ltd registered in 2014 in which the husband is the sole director, secretary and shareholder of the company. C Pty Ltd is the corporate trustee for C Unit Trust and holds all the units in the B Unit Trust.
(3)K Pty Ltd registered in 2004 in which the husband is the sole director and secretary of the company. The husband contended that this company ceased trading in around 2018 or 2019.
(4)K Capital Pty Ltd registered in 2022 in which the husband is the sole director, secretary and shareholder. The husband contended that this company does not trade, hold any assets or operate any bank accounts.
(5)J Pty Ltd registered in 2009 in which the husband is the sole director, secretary and shareholder. The husband contended that this company ceased trading in 2022.
The husband commenced proceedings in this Court on 15 March 2021.
There have been a significant number of applications and consequentially orders for the regulation of the management of the husband’s companies and in relation to disclosure. The wife contended that the husband has failed to comply with many of the orders that have been made.
It does not seem in dispute that the parties’ financial position is precarious. No balance sheet was relied upon by either party nor tendered to provide some outline of the financial position of the parties.
That said, the wife adopted the contents of her Financial Statement which disclosed that, as far as her own financial position was concerned, the total value of property owned by her was less than $3.9 million and subject to debts in excess of $10.8 million.
The husband in his affidavit identified that his indebtedness is in excess of $24 million. The husband’s affidavit identified that the value of the Suburb M property is central to the issue of whether there is going to be any net property against which the parties can agitate their competing s 79 relief.
The husband’s evidence is that the development application lodged for the Suburb M property has been rejected by the council and will require amendment. A further development application will require expenditure of $150,000 to $200,000 and will take a further 14 to 18 months. The husband has listed the Suburb M property for sale by way of expressions of interest. The husband’s affidavit captured the parties’ financial position in the following terms:
66. I have previously deposed to the possibilities available pending determination of the [Suburb M] DA. These are as follows:
66.1. If the [Suburb M] DA fails, subject to either mortgagee pursuing [Ms Grima’s] collateral guarantee of the existing mortgages, the marital pool available for division will (at best) be her 1/6 interest in a property she owns at [Suburb D] with her parents and family members, chattels, and other matters of a minor nature. I believe our entire marital pool will not exceed $700,000. I assert that her 1/6 interest in that property is worth approximately $600,000 and she believes, as I understand it from her last Financial Statement from a year ago, that her interest in the property is worth about $433,333. Before [the] Judicial Registrar […] on 22 July 2022, an Order was made for the [Suburb D] property to be valued. The valuation is not yet to hand.
66.2. If the [Suburb M] DA is approved, the current mortgagee has agreed to finance the construction loan and the expected net profit upon completion of the project will be some millions, sufficient to discharge all mortgages, including on the former matrimonial home. Doing the best, I can, subject to construction costs and other future events, I believe our martial pool will be in the vicinity of $2,000,000 to $3,000,000 net if the [Suburb M] project occurs.
67. I wish to continue to try and refinance the [Suburb M property], however, have only just received an offer for funding so I need to confirm the details of that offer for finance. I have not received any formal offers for finance, only the indicative terms sheet, despite my ongoing efforts. In the event that I am unable to secure finance in the next 6 to 8 weeks, then the [Suburb M property] will need to be sold, notwithstanding the price we can obtain.
On one view, there is no available net property only debt.
The wife, however, contended that the property of the party is more extensive than that contended for by the husband.
The wife seeks to join to the proceedings the husband’s brother and the two companies X1 Pty Ltd and X2 Pty Ltd “in [their] corporate capacity and as [t]rustee” of two trusts, respectively being the X1 Unit Trust and the X2 Family Trust (wife’s Application in a Proceeding). The brother is the sole director and shareholder of the companies and appointor of the family trust. The units are held for the Family Trust.
The wife contended these companies, which on their face are owned and controlled by the husband’s brother, are in reality shams and are in fact the husband’s property, are the alter ego of the husband, or held by constructive trust for the husband or alternatively by constructive trust for the husband and wife.
The wife contended that the brother and these companies are the owners and developers of two properties at W Street and EE Street Suburb D.
APPLICABLE LAW - JOINDER
Section 79(10)(b) of the Act provides that any other person whose interests would be affected by the making of an order is entitled to be joined to the proceedings.
The Act reflects what McHugh J observed in Victoria v Sutton (1998) 195 CLR 291 that:
77.The rules of natural justice require that, before a court makes an order that may affect the rights or interests of a person, that person should be given an opportunity to contest the making of that order. Because that is so, it is the invariable practice of the courts to require such a person to be joined as a party if there is an arguable possibility that he or she may be affected by the making of the order. …
(Footnote omitted)
Rule 3.01 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) (“the Rules”) provides:
3.01 Necessary parties
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.
While r 3.03(4) provides that a party who seeks to join someone to the proceedings after the first Court date must seek leave to do so.
In Wayne v Dillon (2008) 40 Fam LR 543, Warnick J observed in respect of the old Family Law Rules 2004 (Cth) that “necessary” meant:
18. … 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”.
19. 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”. …
The Full Court in B Pty Ltd and Ors & K and Anor (2008) FLC 93-380 held as follows:
52. We do not accept that it is proper to allow joinder of third parties merely upon the formulation of a paragraph in, or to be added to, an application, on the basis that at trial facts to support the application may be asserted and proved. Sufficient facts must be asserted to demonstrate that, if proved, the law arguably provides the relief sought.
In Riemann & Riemann and Ors (No. 3) [2017] FamCA 911 at [37], McClelland J (as he then was) cited with approval the judgment of Le Miere J in Hancock Family Memorial Foundation Ltd v Fieldhouse (No 3) [2010] WASC 223 where Le Miere J observed as follows:
27.The applicant on a joinder application must show that there is an arguable case sufficient to resist the entry of summary judgment by the parties sought to be joined: Universal Music Australia Pty Ltd v Cooper [2004] FCA 78 [6] (Tamberlin J). The test is that stated by Barwick CJ at 128 - 129 in General Steel Industries Inc v Commissioner for Railways (NSW) [1964] HCA 69; (1964) 112 CLR 125: Universal Music Australia Pty Ltd v Cooper [7] (Tamberlin J); Review Australia Pty Ltd v Red Berry Enterprises Pty Ltd [2003] FCA 1009 [5] (Heerey J). It would be futile to order that a person be joined as a defendant if the material before the court disclosed that if the person, having been joined as a defendant, applied for summary judgment the application would succeed.
DISCUSSION
In support of the application the wife relied upon a substantial part, but not all, of her affidavit. Not all of the identified paragraphs featured in her counsel’s submissions. Nevertheless, I have read all of the paragraphs relied upon, listened carefully to the submissions and had regard to the Case Outline.
Significant parts of the wife’s affidavit related to assertions that the husband has breached various orders and had failed to comply with his obligations of full and frank disclosure. As egregious as these matters may be, the asserted poor conduct or non-compliance of the husband does not (short of establishing complicity on the part of the brother in those activities) impugn the character of the husband’s brother.
By combination of her affidavit and proposed Amended Response to Initiating Application (wife’s affidavit, Annexure Z), the wife contended that the husband’s brother is “acting as an alter ego to [the husband]” (wife’s affidavit, page 18). She seeks a declaration pursuant to s 78 of the Act that the trustee companies are shams or alternatively, that pursuant to s 78 of the Act the shares in the trustee companies are held on a constructive trust for the husband or in the alternative for the husband and wife. The wife also seeks orders in the alternative pursuant to s 90AE seeking that she be appointed trustee for sale of the W Street and EE Street properties with the balance of the net sale proceeds after discharge of identified mortgages and costs of sale to be paid to her.
To determine if there is an arguable case, one needs to examine the relief sought by the wife in her proposed Amended Response to Initiating Application as against the factual contentions she contended supports such relief. In doing so, I recognise that she is not required to establish her case on the balance of probabilities as she would at a final hearing. She merely needs to establish an arguable case for that which she presently seeks.
An immediate problem facing the wife is the power of the Court to make a declaration pursuant to s 78 that something is a sham. I was not taken to any power to make such a declaration nor to an authority that is supportive of the existence of such a power. Section 78 permits the Court to declare the title or rights that a party has in property. It is not a power to declare otherwise.
At the commencement of the hearing, I addressed with counsel for the wife the proposed s 90AE orders and whether such relief would require the joinder of another party. Counsel for the wife confidently contended it did not. I am not satisfied for the reasons given below of the certainty of that proposition.
Annexed to the husband’s brother’s affidavit is a Loan and Deed of Agreement dated 22 May 2022 between X1 Pty Ltd, X2 Pty Ltd, the brother, a company called FF Pty Ltd and Mr DD. It is not in issue that Mr DD controls FF Pty Ltd.
The Deed provides for the purchase and development of the W Street property. It records that Mr DD is a 55 per cent shareholder and the brother is a 45 per cent shareholder. According to Mr DD’s affidavit, upon a sale of the W Street property, he is to be repaid the funds he has loaned with interest and 55 per cent of the proceeds of sale. Such Deed invites the obvious conclusion that the appointment of the wife as trustee for sale of the W Street property and the receipt by her of the proceeds of sale without accounting to Mr DD for his profit share would affect the rights of Mr DD and his company.
The EE Street property is owned by GG Pty Ltd. Mr DD and the husband’s brother are equal shareholders. In those circumstances, the appointment of the wife as trustee for sale of the EE Street property and the receipt by her of the proceeds of sale would affect the rights of Mr DD.
Senior Counsel for the prospective joinder parties submitted the wife’s relief as currently cast in the alternative pursuant to s 90AE would affect the rights of persons who are not currently parties to the proceedings and would offend s 90AK of the Act. Section 90AK is expressed in the following mandatory terms, namely:
(1)The court must not make an order or grant an injunction in accordance with this Part if the order or injunction would:
(a)result in the acquisition of property from a person otherwise than on just terms; …
…
Cast in those terms and absent a further joinder application, the wife’s alternative relief under s 90AE cannot succeed.
The wife’s counsel frankly conceded that some of the orders in the Proposed Amended Response to Initiating Application could be refined with more precision. However, he also made it clear that he was not presently instructed to join further parties. That said, I can only determine whether the wife has an arguable case for the relief that she seeks on the basis of that as currently drawn. To do otherwise is to stray into the realms of speculation.
In no particular order, the factual foundation for the wife’s assertions for joinder were identified as follows.
(a) Similarity in names
There is a similarity in name between the proposed joinder companies (being X1 Pty Ltd and X2 Pty Ltd) and associated trusts (which I presume is said to not be coincidental) and the name of the parties’ daughter and entities conducted by the parties such as X Management Pty Ltd, X3 Pty Ltd, X2 Pty Ltd and X3 Pty Ltd. The wife said that the commonality of the name X forms part of the factual foundation for what she contended to be an arguable case in relation to alter ego.
In his affidavit, the husband’s brother said that in the case of X1 Pty Ltd, he needed a company and the husband offered that he use one of his shelf companies that he did not need.
(b) Registration of principal place of business
The wife referred to the fact that the companies and trusts ostensibly owned and controlled by the husband’s brother disclosed at the time of their registration that the principal place of business was the former matrimonial home of the parties and thereafter an apartment in a building that is the husband’s place of residence.
The wife contended that the husband’s brother has never lived in those properties and resides in a different area of Sydney
The mere fact that a company at a particular point in time disclosed as its principal place of business an address which is not the residence of the director or shareholder is not consistent with control or ownership of the company by the person who resides at that address. The disclosed address may be explained by any number of matters.
The husband’s brother provided an explanation in the following terms:
12. I also read [Ms Grima’s] Affidavit where she suggests that the address of both [X1 Pty Ltd] and [X2 Pty Ltd] according to then ASIC records, did not list my place of residence. I cannot answer for my accountant but do note that my brother and I use the same Accountant. I am the sole director, shareholder, and secretary of both Companies and am authorised to provide my accountant with instructions in relation to the change of address. I am unsure as to why [Y Street] was then listed as the place of business and was not changed to reflect my address at the time the Companies were transferred to me. In any event, I did not concern myself with such details and left this work to my Accountant. It did not impact how I operated my business. In any event, when I was made aware of the business address at the time of the Subpoena hearing, I instructed my Accountants to update the ASIC records to correctly reflect my address as the principal place of business. Annexed hereto and marked with the letter “C” is a true copy of an up-to-date ASIC search in relation to [X1 Pty Ltd], [X2 Pty Ltd], and a title search in relation to my property situate at [W Street, Suburb N].
(c) Mail received by the wife at her home
The wife also contended that she has received mail at her home that relates to what are said by the husband and his brother to be the companies of the brother. The wife invites the Court to conclude as part of her arguable case that the correspondence is sent to her home because the husband has an interest in these entities.
(d) Deed of Settlement dated 17 May 2022
The wife relied upon a Deed of Settlement dated 17 May 2022 between the husband’s company B Pty Ltd and the husband’s brother. This Deed was said to be supportive of the alter ego contention. In her affidavit, the wife gave the following evidence in relation to this Deed:
138. On 30 June 2022, [Mr Betro’s] lawyers disclosed a Deed of Settlement purportedly made between [B Pty Ltd] and [Mr T]. The Deed contemplates a payment to [Mr T] from the business, in the sum of $1,300,000, alleging that they are monies owed for his employment. …
139. To the best of my knowledge, during my time as the sole Director and Shareholder of [B Pty Ltd] in the period between […] 2014 to […] 2021, [Mr T] was not an employee of [B Pty Ltd]. I was not aware of any agreement to pay [Mr T] any funds.
140. I deny that there was any agreement between [B Pty Ltd] and [Mr T] to pay bonuses owing to [Mr T], and that [B Pty Ltd] owed any money to [Mr T].
141. Prior to the Deed, I was not aware of any legal dispute with [Mr T], and I am not aware of any proceedings on foot. To date, I have not received an explanation about this Deed nor the dispute it refers to.
142. By consent on 2 September 2022, [Mr Betro] agreed that he be restrained from paying any funds to [Mr T] pending further order from the Court.
Notwithstanding those assertions, the wife through her counsel asserted from the Bar table that the husband had paid to his brother the $1.3 million. Nowhere in the wife’s affidavit does she assert the monies have been paid. An assertion from the Bar table is not evidence. The wife’s counsel conceded that there was no evidence to support the assertion that the monies had been paid. The husband’s brother’s evidence was that the monies remain owed.
(e) Funding of the W Street property
In support of the contention that in some fashion or other the property at W Street is in fact the property of the husband (whether by trust, sham or alter ego), the wife’s counsel submitted twofold, firstly, that the husband’s brother has not established how he funded the purchase and secondly, that the purchase was funded from the $1.3 million paid by the husband to the brother under the Deed referred to earlier.
Support for such a proposition was said to arise from what the wife said in her affidavit as follows:
163. Among other things, [Mr T] produced a 1-page transaction listing setting out funds received and used by [X1 Pty Ltd] in the relevant period. I noticed that this statement did not actually show how [X1 Pty Ltd] paid for the balance of the purchase price of [W Street] Property, being $1,063,000. The documents produced merely showed that the fund was paid towards settlement from the trust account of [X1 Pty Ltd’s] lawyers, [Q Legal Services] (who are incidentally also [Mr Betro’s] lawyers who he has used for conveyancing matters - for instance, the sale of units of the [X] Building).
This paragraph does not actually assert that the husband paid the balance of the proceeds of sale. At its highest, it is an assertion that the wife has not seen any documents that establish how it was paid. This proposition suffers from the same difficulty that the earlier submission suffered from, namely that there is no evidence of a payment by the husband to his brother of $1.3 million.
The wife’s submission ignores the evidence of the brother to the following effect:
14. In relation to my business dealings with [Mr DD], he provides the funding for the purchase and building costs of [properties]. I manage the construction of those buildings. In relation to [W Street], [Mr DD] transferred $500,000 into [X1 Pty Ltd] by way of deposit and settled the remainder of funds of $1,063,000 prior to settlement into a PEXA Source Account. He continues to fund [X1 Pty Ltd] for the development of the property in conjunction with a construction loan that [X1 Pty Ltd] is to receive from [HH Finance]. Annexed hereto and marked with the letter “E” is a true copy of the loan facility documentation, a copy of that Loan and Deed of Agreement, a copy of my bank statement produced undercover of Subpoena for [X1 Pty Ltd] evidencing the funds used for the acquisition of [W Street], PEXA settlement statement, and bank documentation I sourced from [Mr DD] in relation to the $1,063,000 deposited by him into the PEXA source account (as per sub-paragraph 13.5 above).
It also ignores the evidence of Mr DD to the following effect:
5. I understand that [W Street, Suburb N] was purchased for [over $3,000,000] plus stamp duty, in the name of [Mr T’s] Company, [X1 Pty Ltd]. I have never owned shares in [X1 Pty Ltd]. On 10 May 2022 I transferred $500,000 to [X1 Pty Ltd] by way of deposit. Prior to settlement I transferred the further sum of $1,063,000 into a PEXA Source Account. Annexed hereto and marked with the letter “B” is a true copy of the PEXA Settlement Adjustment Sheet and a copy of the banking transaction records.
At no time did the wife’s counsel seek to engage with the conflict between the wife’s speculation and conjecture absent evidential foundation and the precise factual contentions supported by documentary evidence provided by the husband’s brother and Mr DD.
(f) Email Communications from K Pty Ltd
The wife also sought to rely upon a number of email communications from the husband’s company K Pty Ltd, which the wife contended demonstrated a connection between the husband and the W Street property.
They included emails from an employee of the husband’s company regarding work, a waste management plan identifying the husband’s company as the client, a levy receipt (albeit that the receipt clearly identified the husband’s brother was the applicant for the development application) as well as letters from the husband’s company notifying residents and the council that works were to commence on the W Street property.
In support of the connection between this and the W Street property, the wife’s counsel curiously referred to the husband’s affidavit which recorded in relation to K Pty Ltd that the “company does currently not trade, hold any assets or operate any bank accounts” (at paragraph 46). It is difficult to envisage how then this company could be undertaking any work in those circumstances. The wife adduced no evidence that K Pty Ltd has actually been engaged to provide any service or has actually undertaken any work on behalf of the W Street property
The use of K Pty Ltd to undertake various actions on behalf of the W Street property does not establish of itself or in combination with the other contentions even an arguable case for some interest in the property.
The brother responded to the wife’s contentions as follows:
13.6. In relation to paragraphs 169:
13.6.1. a) [Mr JJ] is the project manager on my [properties].
13.6.2b) my brother from time to time has assisted me when I required help in arranging certain tasks on the [W Street] property. His assistance has never and continues not to be that of financial assistance. Given he also has experience m building developments, he has assisted me in arranging some trades and arranging for plans to be prepared on my projects. As stated above, for the [W Street] property I used the services of [Mr KK] for the development at [W Street].
13.6.3c) [Mr JJ] sent a letter notifying neighbours of the development using the [K Pty Ltd] letterhead. The letter sent does not indicate that [Mr Betro] is the Construction Manager for [W Street, Suburb N], it reads “we list below also the persons of contact for [K Pty Ltd]”
13.6.4e) as stated on [Ms Grima’s] Affidavit at page 222, I am listed on the Development Application, not my brother. I am of the view that [Ms Grima] is choosing the information that supports her allegations despite documentation suggesting that [Mr Betro] is not financially involved in my business dealings.
(g) Payment of $1.6 million to the husband’s brother
The wife also placed much weight in her submissions on a payment made by the husband to his brother in the amount of $1.6 million. This payment is made it is said in breach of an order.
The wife in her affidavit referred to a number of payments made to the husband by Mr DD between 29 September 2022 and 20 February 2023 totalling in excess of $2.9 million. That sum includes the sum of $1.6 million that was paid days later to the husband’s brother.
In respect of the $1.6 million payment, the husband gave evidence to the following effect:
110. On or about 20 February 2023, I received from [Mr DD], the sum of $1,480,000. Prior to this, [Mr DD] and I had a conversation as follows:
[MR DD]: “I am going to transfer you some money for [Mr T]. He told me he doesn’t have his account details and to transfer the money to you which you will then transfer to him”.
[Mr Betro]: “Can you give it to him directly”
[Mr DD]: “it’s ok, just transfer it on and make sure the total amount transferred to him is $1,600,000 including some of the money I lent you last week. My accountant will sort the loans internally.”
[Mr Betro]: “okay I will liaise with [Mr T] and transfer the money once [he] provides his account.”
111. I then spoke to [Mr T], and we had a conversation as follows:
[Mr Betro]: “[Mr T], I have just spoken to [Mr DD], and he has transferred me $1,480,000. He said to transfer you $1,600,000 for [GG Pty Ltd] and [X1 Pty Ltd] once you have your account details.”
[Mr T]: “Yep I will get you the details and you can transfer it to me.”
112. On 22 February 2023, I transferred the sum of $1,600,000 to [Mr T], as instructed by [Mr DD] as funds received by him from [Mr DD]. These are not funds that I held in any capacity other than as the intermediatory between [Mr DD] and [Mr T].
The evidence of Mr DD who provided the funds for the EE Street Property is to the following effect:
14. After establishing [GG Pty Ltd], the Company purchased the [EE Street] property for $2,500,000. The purchase settled [in mid-2023]. I transferred the total sum of $1,930,000 on 14 and 20 February 2023 ($450,000 on 14 February and $1,480,000 on 20 February) to an account operated by [Mr Betro]. Some of the monies were for [Mr Betro] with respect to business dealings I have with him and his company [B Pty Ltd]. $120,000 of the first transaction was for [Mr T] and the remaining $1,480,000 was also for [Mr T] for the purchase and development of [EE Street]. I understand that [Mr Betro] subsequently transferred the sum of $1,600,000 to an Account operated by [Mr T] on 22 February 2023.
15. The property was purchased with an existing approved Development Application for the construction of three [dwellings]. Annexed hereto and marked with the letter “F” is a true copy of the PEXA Statement, and Development Application.
The evidence even on the wife’s case is that the money has come from Mr DD not the husband. There is no evidence showing the husband providing any money for these properties from his own resources.
There are also documents that identify further advances of funds by way of loans from third parties for each of the developments, which include references to personal guarantees having been given by Mr DD and the husband’s brother. None of the documents identify any connection with the husband.
(h) Deed dated 22 September 2016
The wife also sought to rely upon a document described as a Deed dated 22 September 2016 between the husband’s company B Pty Ltd and Mr DD’s company U Pty Ltd. The Deed recorded that in the event that the Roads and Maritime Services purchased a property at LL Street, Suburb D, then Mr DD’s company would pay the husband’s company a certain percentage of the proceeds of sale.
The wife did not point to any evidence identifying when such sale had occurred or what the sale price was other than her counsel’s assertion from the Bar table that it had occurred. The wife did not submit that the payments made between September 2022 and February 2023 were referable to the 2016 Deed.
The point of the submission on this Deed remains opaque. The Deed is confirmation of there being a long-standing financial relationship between the husband and Mr DD including the provision of funds by one to the other. Beyond that, the wife did not identify how it supported any of the relief sought in her application.
(i) Deed of Appointment of Appointor
The wife in the course of her submissions tendered a Deed of Appointment of Appointor in relation to the X2 Family Trust (Exhibit 1). This Deed changed the appointor of the trust from the husband to his brother. The document had a handwritten date which coincided with the date of settlement of the trust in 2021. This Deed was produced by the brother in answer to a subpoena.
The submission at the time was that the Deed evidenced in part the wife’s overall submission of sham, alter ego or constructive trust. Despite such submission, there was no relief sought pursuant to s 106B of the Act, albeit it was obliquely suggested that such relief maybe sought at some later date.
Near the close of his submissions, the wife’s counsel tendered a bundle of documents that had just been produced on subpoena. Included in the documents were various emails and a Deed of Appointment of Appointor in the same terms as Exhibit 1. This Deed was unsigned. The emails record instructions about the preparation of the Deed. The emails are dated 17 November 2022.
These documents (Exhibit 7) would on their face (subject to some alternate explanation) suggest that the date that appears on Exhibit 1 does not reconcile with the instructions given some 13 months later for its creation. It was submitted by the wife’s counsel that the earlier deed had been backdated.
The wife’s counsel did not take the matter much further than to repeat the earlier submission and to suggest that it added to the wife’s overall submission that she had an arguable case for the relief she sought (albeit no relief was actually sought under s 106B).
The husband and his brother were not physically present in Court. The brother was present by video link. No explanation was provided by the husband’s counsel or senior counsel for the prospective joinder parties explaining the apparent inconsistency.
That said, senior counsel for the prospective joinder parties submitted that even assuming that the document had been backdated, the wife’s case could not succeed under s 106B as there was no evidence that the husband had provided any funds to the trust even supposing that he was the appointor.
Consistent with the approach I have adopted in this application as articulated above, I am only dealing with whether the wife has an arguable case as presented through the relief sought in her draft proposed Amended Response to Initiating Application. I am not considering other forms of presently unarticulated relief.
In circumstances where the documents in Exhibit 7 had only just been produced and where there was no relief sought under s 106B, I do not propose to have regard to these documents in determining whether the wife has an arguable case. The proper time for consideration of these documents and any submission in regard to them is if and when the wife actually files an Amended Response supported by Points of Claim, which clearly articulate the basis on which the relief is sought.
CONCLUSION
Almost the entirety of the wife’s contentions amount at best to mere suspicion or conjecture. For some, there is no evidence beyond assertions from the Bar table. For others, there are alternative plausible explanations. In relation to each of the developments, the evidence supported by documents explains how the acquisition and subsequent property has been funded.
Beyond the deposit of $1.6 million into a bank account of the husband and days later the transfer into a bank account of the brother, the wife could not point to any evidence of the husband or any of his companies providing any monies to the acquisition or development of the properties, or undertaking any works that would establish an arguable case for the relief that she presently seeks. Whilst the deposit perhaps justifiably raises a suspicion, it is without more no more than that. Even on the wife’s case, the monies come into the account from Mr DD. The wife does not provide a foundation for an arguable case that the provision by Mr DD of money to the husband which is then provided by the husband to the brother supports the relief she seeks even at the low threshold she is required to meet to establish joinder.
For the reasons I have given in relation to each of the wife’s contentions, I am not satisfied that the wife has established an arguable case. Nor am I satisfied when taken as a whole that the contentions establish an arguable case.
The wife bears the onus of establishing that she has at the least an arguable case. On the relief as currently sought, I am not satisfied that she has discharged that obligation. Consistent with the concession by the wife’s counsel, there is therefore no necessity to consider the injunctions sought by the wife.
Accordingly, I will dismiss those parts of the wife’s Application in a Proceeding seeking joinder and injunctions against the prospective joinder parties.
I certify that the preceding eighty-eight (88) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Schonell.
Associate:
Dated: 24 August 2023
SCHEDULE OF PARTIES
SYC 1826 of 2021 Respondents
Third Prospective Respondent:
X2 PTY LTD
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