Cannell and Cannell and Anor
[2020] FCCA 874
•24 April 2020
FEDERAL CIRCUIT COURT OF AUSTRALIA
| CANNELL & CANNELL & ANOR | [2020] FCCA 874 |
| Catchwords: FAMILY LAW – Property – Whether the Applicant has an equitable title in the property – whether the Applicant’s initiating application should be summarily dismissed. |
| Legislation: Superannuation Industry (Supervision) Act 1993 (Cth), ss.62, 65, 166 |
| Cases cited: Aldred and Aldred; Westpac Banking Corp (1986) FLC 91-753 Bigg & Suzi (1998) 22 FamLR 700 |
| Applicant: | MS CANNELL |
| First Respondent: | MR CANNELL |
| Second Respondent: | A PTY LTD |
| File Number: | BRC 7817 of 2019 |
| Judgment of: | Judge Middleton |
| Hearing date: | 19 February 2020 |
| Date of Last Submission: | 12 March 2020 |
| Delivered at: | Brisbane |
| Delivered on: | 24 April 2020 |
REPRESENTATION
| Counsel for the Applicant: | Mr Neves |
| Solicitors for the Applicant: | McNamara law |
| Counsel for the First Respondent: | Mr Wilson |
| Solicitors for the First Respondent: | Australian Property Lawyers |
| Counsel for the Second Respondent: | Mr Wilson |
| Solicitors for the Second Respondent: | Australian Property Lawyers |
ORDERS
That the statement of claim filed by the Applicant with the amended initiating application on 21 August 2019 be struck out.
That the proceedings against the Second Respondent be dismissed.
That the Second Respondent file written submissions relating to the issue of costs within 21 days of today’s date.
That the Applicant file written submissions relating to the issue of costs within 28 days of today’s date.
IT IS NOTED that publication of this judgment under the pseudonym Cannell & Cannell & Anor is approved pursuant to s.121(9)(g) of the Family Law Act 1975 (Cth).
| FEDERAL CIRCUIT COURT OF AUSTRALIA AT BRISBANE |
BRC 7817 of 2019
| MS CANNELL |
Applicant
And
| MR CANNELL |
First Respondent
And
| A PTY LTD |
Second Respondent
REASONS FOR JUDGMENT
BACKGROUND
The Applicant commenced proceedings on 9 July 2019 against the First and Second Respondent’s seeking on an interim basis a declaration that she held an equitable interest in a property situated at B Street, Suburb C in the State of Queensland, more particularly described as Lot … on Crown Plan …, title reference … (“the B Street, Suburb C property”) and thereafter a property adjustment by way of final order.
The matter was first listed before the court on 17 July 2019 and on that date neither the First or Second Respondent had filed a response.
The parties entered into consent orders requiring the First and Second Respondent to file the response and for the Applicant to file pleadings as to its case against the Second Respondent.
On 27 September 2019 the Second Respondent filed its response. The Second Respondent sought an order that the proceedings against the Second Respondent be dismissed and that the Applicant deliver up vacant possession to the B Street, Suburb C property.
On 14 October 2019 the Second Respondent filed an application in a case seeking orders that the amended initiating application filed on 21 August 2019 be struck out and that the proceedings against the Second Respondent be dismissed.
This judgment relates to the Second Respondent’s application for summary dismissal.
The Applicant opposes the order for summary dismissal.
THE MATERIAL
The Second Respondent relies upon the material as outlined in the written submissions handed to the court on the day of hearing.
The Applicant relies upon the material as set out in the written submissions filed with this court on 4 March 2020.
THE LAW
This application is brought pursuant to Federal Circuit Court Rules 2001 Rule 13.10 (no reasonable prospect of successfully prosecuting). This rule is not materially different to Family Law Rules 2004 Rule 10.12 (no reasonable likelihood of success). I am satisfied that the same test is applicable to both Rules.
In Aldred and Aldred; Westpac Banking Corp, Nygh J said:
“The inherent jurisdiction of the court is not confined to the dismissal of frivolous and vexatious proceedings in the strictest sense, but extends to the dismissal of actions which must fail or which the plaintiff cannot prove and which is without a solid basis.”[1]
[1] (1986) FLC 91-753 at p 75,491.
Justice Nygh regarded the test as being whether the “case for relief” on the “pleadings and assuming that all facts alleged are true, is such that it cannot possibly succeed”[2].
[2] Ibid, at p 75,492.
The principles relating to summary dismissal are:
a)The power for summary dismissal is a discretionary one;
b)Relief is “rarely and sparingly provided”;
c)The parties seeking summary dismissal must show that the application is “doomed to fail” or has been otherwise described “that the opponent lacks a reasonable cause of action or is advancing a claim that is clearly frivolous or vexatious”;
d)A weak case or one that is unlikely to succeed is not “sufficient to warrant a termination”;
e)“If there is a serious legal question to be determined, it should ordinarily be determined at trial”;
f)“If notwithstanding the defects of pleadings, it appears that a party may have a reasonable cause of action which has failed to put in proper form, a court will ordinarily allow that party to reframe its pleadings”[3].
[3] Bigg & Suzi (1998) 22 FamLR 700; Pelerman & Pelerman (2000) 26 FamLR 505; Lindon v The Commonwealth (No.2) [1996] HCA 14.
The application must be determined on the basis of the material put forward by the respondent to the application for dismissal (in this case Ms Cannell).[4]
[4] Lindon v The Commonwealth(No.2) [1996] HCA 14 per Kirby J.
Having considered the authorities and in particular the Federal Circuit Court Rules I am of the view that the test is whether I am satisfied on the evidence and pleadings of Ms Cannell alone whether she has a reasonable prospect of successfully prosecuting her claim for relief against the Second Respondent.
DISCUSSION
The relief being sought against the Second Respondent is set out in the amended initiating application filed on 24 December 2019 as follows:
a)A declaration that the Applicant in the First Respondent have an equitable interest in the property situated at B Street, Suburb C;
b)A declaration that the Second Respondent holds the B Street, Suburb C property wholly on trust in favour of the Applicant and the First Respondent;
c)The Second Respondent account for the value of the profit/benefit obtained from the B Street, Suburb C property.
As ordered a statement of claim was filed and attached to the amended initiating application filed on 21 August 2019.
The relevant allegations are as follows:
a)At paragraph 16, that the Second Respondent is the legal owner of the property at B Street, Suburb C (the B Street, Suburb C Property);
b)At paragraph 18, that in 2006 the Applicant and First Respondent resided at D Street, Suburb E;
c)At paragraph 19, D Street, Suburb E was owned by the First Respondent, his parents and brothers as trustees under instrument …;
d)At paragraph 21, that at or about the time of the engagement of the Applicant and the First Respondent, the Second Respondent gifted D Street, Suburb E to the Applicant and the First Respondent;
e)It is alleged that the gift was made by Mr F as director or agent of the Second Respondent, saying “this is now yours”;
f)At paragraph 24, in early 2008 the Applicant and First Respondent orally agreed with the Second Respondent to exchange their interest in D Street, Suburb E for title to the B Street, Suburb C property;
g)At paragraph 25 an agreement, made orally or by conduct, is alleged;
h)Paragraph 25h, it is alleged that a term of the agreement was that the Applicant and First Respondent would pay the rent from the First Respondent’s property at D Street, Suburb E against the mortgage for the B Street, Suburb C property;
i)At paragraph 26, that the Applicant, First Respondent and Second Respondent formed a common intention that the Applicant and the First Respondent should have an equal beneficial interest in the B Street, Suburb C property to the exclusion of the Second Respondent;
j)At paragraph 28, that the Applicant and the First Respondent relied on the Second Respondent’s representations to them that they would have an equal beneficial interest in the B Street, Suburb C property to the exclusion of the Second Respondent upon contemporaneous transfer of the beneficial interest in the D Street, Suburb E property to the Second Respondent.
The Second Respondent’s Submissions
It is submitted on behalf of the Second Respondent that there were at least three fundamental flaws in the case as originally pleaded.
It is submitted that the first flaw is that it was not pleaded and indeed it is not the fact, that at the time the alleged gift was made, the Second Respondent had any legal or equitable interest in D Street, Suburb E.
That submission is then further developed to point out that if the Second Respondent had no interest it could not make any gift and furthermore that if that were the case it removes the first integral part of the scenario advanced by the applicant, which is that there was an exchange of properties.
The second flaw, it is submitted, is that the First Respondent did not own D Street, Suburb E, the rent from which was to defray part of the mortgage secured against B Street, Suburb C property.
It was also submitted that it was not pleaded that there had been a transfer as required by paragraph 28 of the statement of claim.
The Second Respondent raised those matters with the Applicant’s solicitor in late September 2019. As a result an amended statement of claim was filed and served on 24 December 2019.
It is submitted on behalf the Second Respondent that the amended pleading continues to suffer from the same fundamental flaws as the original pleading in that:
a)The amendment to paragraph 19 makes it clear that the property at D Street, Suburb E was owned by four individuals as trustees for a superannuation fund. The Second Respondent had no interest in the property.
b)At paragraph 21 it continues to be alleged that Mr F gifted the property. The authority of Mr F to make the gift is not pleaded. It is pleaded at paragraph 21C that Mr F acted as the director of the entity that owned D Street, Suburb E. The property was not owned by a company. It is pleaded that Mr F acted as a director and/or agent. The first alternative fails for the reason that the property was not owned by a company. This then leaves the allegation that Mr F acted as agent of the four trustees of the superannuation fund.
c)The language used to allegedly make the gift is equivocal.
d)It is alleged that there was to be a transfer of an interest in land, but there is no written note or memorandum of that contract to obviate the operation of the statute of frauds.[5]
[5] Property Law Act 1974 (Qld) s.59.
e)The property at D Street, Suburb E was owned by a superannuation fund. It is the duty of the trustees of the fund to ensure that the fund is maintained solely for the purposes set out in s62 of the Superannuation Industry (supervision) Act 1993 (“SIS Act”) (the sole purpose test).
f)A trustee of a regulated superannuation fund must not give financial assistance using the resources of the fund to a member of the fund or a relative of a member of the fund: (s65 SIS Act).
g)It is not pleaded that the First Respondent was a member of the superannuation fund.
h)It is not pleaded how Mr F had authority to act illegally on behalf of the other trustees of the superannuation fund.
i)The evidence of the Applicant at paragraph 24 of her affidavit sworn 8 July 2019 does not assist.
j)The same flaws appear in paragraph 24 of the pleading.
k)Paragraph 24 is pleaded as an agreement. If there is a contract there is no need for equity to intervene.
l)However, the alleged agreement must fail. The Applicant and the First Respondent did not have any interest in D Street, Suburb E, and there is no written note or memorandum of that contract to obviate the operation of the statute of frauds.[6]
m)The consideration alleged in paragraph 25b postdates the contract.
n)The ultimate claim for a common intention constructive trust falls at the first hurdle, as the Applicant and the First Respondent have no interest in the property at D Street, Suburb E.
o)The second alternate claim at paragraph 26 and 28 of the amended statement of claim suffers from an imprecision that is fatal.
p)The evidence of the Applicant in her affidavit of 8 July 2019 makes no reference to the Applicant and the First Respondent having an interest in B Street, Suburb C.
[6] Ibid.
The Applicant’s (Ms Cannell) Submissions
The Applicant accepts that the Second Respondent did not own D Street, Suburb E.[7]
[7] Paragraph 6 of the written submissions filed on behalf of the applicant on 4 March 2020.
The Applicant in her submissions submits that once the reference to the Second Respondent had been amended to refer to Mr F no issues in relation to the alleged gift arises.
The Applicant’s submissions thereafter refer to rule 16 of the Federal Court Rules as being applicable. It is submitted that this is so as there is no applicable rule in relation to pleadings within the Federal Circuit Court Rules.
Rule 16 of the Federal Court Rules relates to pleadings. The submission in relation to the Applicant’s pleadings can be summarised as, any defect in the pleading cannot be a basis for summary dismissal.
I accept that submission provided it appears that the Applicant may have a reasonable cause of action but has not put it in proper form.
It is further submitted by the Applicant “while it may be submitted by the Second Respondent that the Applicant’s case appears weak, it is submitted that with disclosure, and on the hearing of evidence of the parties, it is open that the case will be strengthened, and in the premises deserves the time of the court.”[8]
[8]Paragraph 23 of the written submissions.
The submission is developed further in paragraph 24 as follows “having regard to the affidavit of the Applicant, and her pleadings, it is apparent that she, and the First Respondent, contributed to the property the subject of the Second Respondent in varying ways….”
CONCLUSION
The Applicant’s case is that she has an equitable interest in the B Street, Suburb C property, such interest having been established upon the alleged gift of D Street, Suburb E by Mr F.
The equitable interest is not otherwise particularised and at law the alleged gift of D Street, Suburb E to the Applicant and First Respondent was illegal as a result of the operation of s65 of the SIS Act.
Section 166 of the SIS Act imposes an administrative penalty for a contravention of s65 of 60 penalty units.
Furthermore there is no pleading as to the authority Mr F had to illegally gift a property he did not own.
There is no evidence in writing of the alleged gift and as a result the statute of frauds applies.[9] That is, no action can be brought unless the contract upon which such action is brought, or some memorandum or note of the contract, is in writing, and signed by the party to be charged, or by some person by the party lawfully authorised.
[9] Property Law Act 1974 (Qld) s 59.
The whole premise of the Applicant’s case revolves around the gift of D Street, Suburb E. If that gift is either unlawful, made without authority or no action can be brought with respect to that gift because there is no evidence in writing the Applicant’s case as against the Second Respondent must fail.
There is no evidence or pleading from the Applicant to suggest that there is a memorandum or note relating to the alleged gift. There is no evidence or pleading as to the authority Mr F had to make an unlawful gift. In those circumstances no amount of discovery will assist the Applicant.
I accept that the Applicant and the First Respondent had no interest in D Street, Suburb E and having found that fact they had nothing to bargain with in the alleged exchange of properties.
Even accepting the Applicant’s evidence at its highest, that is, that a conversation took place with Mr F, the conversation amounted to nought because there was no interest in D Street, Suburb E at that time or at all.
It is an undisputed fact that the Applicant and First Respondent lived at the B Street, Suburb C property. The mere fact that they lived on the property does not amount to any interest in the land.
In circumstances where the Applicant cannot particularise any equitable interest it may be open for me to find that the Applicant relies upon a common intention constructive trust however that trust cannot be sustained in circumstances where the Applicant and First Respondent have no interest in the property at D Street, Suburb E.
It is a relevant fact that the Second Respondent has been seeking proper particularisation of the alleged equitable claim since 26 September 2018.[10]
[10] Affidavit of Mr G filed 16 July 2019.
The Applicant has had ample time to provide those particulars and indeed has made two attempts in this court since filing her initial application on 9 July 2019. Despite the Applicant’s efforts she has been unable to provide particulars that could satisfy a claim.
A further alternate claim is that there was an agreement between the Applicant, First Respondent and Second Respondent for the exchange and transfer of the properties. If there is a contract then equity need not intervene.
However, with respect to that claim the Applicant has the same difficulty with any alleged contract, that is, it must fail as she and the First Respondent had nothing to bargain with as they held no interest in the D Street, Suburb E property and the statute of frauds applies.
In those circumstances I am satisfied that the Applicant has no reasonable prospect of successfully prosecuting her proceeding having assessed her evidence and pleadings at their highest. I accept that the overriding principle is that I must do what is just.[11]
[11] Lindon v The Commonwealth(No.2) [1996] HCA 14
In circumstances where I cannot find a claim sustained at law I am satisfied it is just to dismiss the Applicant’s claim against the Second Respondent summarily.
I certify that the preceding forty-nine (49) paragraphs are a true copy of the reasons for judgment of Judge Middleton
Date: 24 April 2020
Key Legal Topics
Areas of Law
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Civil Procedure
Legal Concepts
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Abuse of Process
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Costs
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Summary Judgment
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