Cleary & McKenzie
[2022] FedCFamC1F 947
Federal Circuit and Family Court of Australia
(DIVISION 1)
Cleary & McKenzie [2022] FedCFamC1F 947
File number: SYC 4879 of 2022 Judgment of: HENDERSON J Date of judgment: 1 December 2022 Catchwords: FAMILY LAW – PRACTICE AND PROCEDURE – Joinder – Where the former director of a company in receivership seeks to join the proceedings – Where the company in receivership is a party to the proceedings – Where the de facto husband and wife do not oppose the joinder – Where the receiver argues the person applying does not have an interest in the proceedings – Finding the person applying has a clear interest in the proceedings and to not join him would offend all principles of procedural fairness and natural justice – Order made for the person applying to be joined to the proceedings. Legislation: Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) r 3.04. Cases cited: Carter Holt Harvey Woodproducts Australia Pty Ltd v The Commonwealth (2019) 268 CLR 524; [2019] HCA 20.
Krishna & Suk and Anor [2019] FamCA 794.
Division: Division 1 First Instance Number of paragraphs: 20 Date of hearing: 1 December 2022 Place: Sydney Solicitor Advocate for the Applicant: Mr Morris Solicitor for the Applicant: Circle Bridge Legal Counsel for the First Respondent: Mr Bateman Solicitor for the First Respondent: Mills Oakley Lawyers The Second Respondent: Litigant in person Solicitor Advocate for the Third Respondent: Mr Brown Solicitor for the Third Respondent: Etienne Lawyers ORDERS
SYC 4879 of 2022 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MR STEWART
Applicant
AND: MS CLEARY
First Respondent
MR MCKENZIE
Second Respondent
B PTY LTD
Third Respondent
order made by:
HENDERSON J
DATE OF ORDER:
1 DECEMBER 2022
THE COURT ORDERS THAT:
1.Pursuant to Rule 3.04 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth), Mr Stewart be joined as the third respondent in these proceedings.
2.The matter be listed for Case Management Hearing before His Honour Justice Schonell at 9.30 am on 22 December 2022.
3.The listing of this matter on 9 December 2022 before a Registrar be vacated.
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 Cleary & McKenzie has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
EX-TEMPORE JUDGMENT
HENDERSON J
In this matter, the applicant wife in the substantive proceedings is Ms Cleary. The first respondent is Mr McKenzie, her de facto husband. The second respondent is B Pty Ltd, who was represented by the receiver, Mr Brown, as that company has gone into receivership.
The application in a case I heard was brought by Mr Stewart seeking to intervene and be part of these proceedings. He filed an application sometime after 28/29 November 2022 supported by an affidavit seeking to be joined in the above proceedings. I read that application together with two affidavits he filed in the proceedings, being those of 1 September 2022 and 28 October 2022.
Ms Cleary, the de facto wife, was represented by Mr Bateman, the second respondent, Mr McKenzie, represented himself, Mr Brown represented the receiver of the company and Mr Morris acted for Mr Stewart the applicant.
Mr Stewart was a director of the second respondent and was also the secretary of that company, which is now in receivership. If successful in his application, Mr Stewart will become the third respondent in these proceedings. All parties save for the receiver have no objection to the joinder/intervention of Mr Stewart in these proceedings. In fact, the de facto wife welcomes it, it seems to me.
Now, the receiver of the second respondent company objects on the following grounds:
(1)The application before me is an abuse of process because the matter is before a Registrar on 10 December 2022. That is an argument without merit. It is not an abuse of process. This matter was brought to the attention of the Division 1 judges, and it was determined that it ought to be dealt with on an urgent basis by a judge of this division and not a registrar. So that argument is without merit.
(2)That Mr Stewart does not have an interest in the proceedings, he being now a mere beneficiary of the B Trust, which was the vehicle by which various properties were purchased by the second respondent. The receiver argued, consistent with the High Court decision in Carter Holt Harvey Woodproducts Australia Pty Ltd v The Commonwealth (“Carter Holt”),[1] he has no standing to intervene or be joined as a trust is not a separate legal entity and for various other reasons contained in that particular judgment.
[1] [2019] HCA 20.
The receivers’ argument is without merit. He has failed to grapple with the factors relevant to granting a party leave to intervene in proceedings and why it is clearly an imperative that this be done in this matter.
The short relevant chronology is as follows. The applicant de facto wife became aware her de facto husband had been dealing with properties with a Mr D without her knowledge, and those properties were:
(1)E Street, F Suburb;
(2)G Street, H Suburb;
(3)J Street, K Suburb;
(4)L Street, M Suburb; and
(5)N Street, O Suburb.
Now, the dealing was profound. The husband had sold these properties to the B Pty Ltd via the trustee entity B Trust. Mr Stewart was a director and secretary holding 80 shares in the company, and Mr D held 20 shares in that company. Mr Stewart says he has provided some $7.2 million to Mr McKenzie either directly or as he directed, including also in digital currency, with the last payment in digital currency being about $1,259,151.93 on about 1 August 2022 in respect of the purchase of property.
The applicant in the substantive proceedings, the de facto wife, asserts she and the first respondent were in a de facto relationship from 2005 to separation in 2021, and I do not see that there is a dispute in relation to the existence of a de facto relationship.
The applicant de facto wife became concerned, she said, in relation to the conduct of Mr D in particular and perhaps her former de facto husband. That is a matter for a later time regarding these sales of properties and dealings she was having with them about what was going to occur with these various transactions, and she moved the Court for injunctions and brought a section 106B application, which is yet to be heard, seeking to have various transactions set aside, and B Pty Ltd was joined to the proceedings at that time.
On 5 August 2022, the matter came before a Registrar, and he granted various injunctions on an interlocutory basis and on the applicant de facto wife, giving an undertaking as to damages, which she has done. The injunctions were made against the first respondent, Mr McKenzie, to prevent him dealing with property at Suburb P, the Suburb Q property and his cryptocurrency. The company was restrained from dealing with properties at:
(1)E Street, Suburb F;
(2)G Street, Suburb H;
(3)Suburb R;
(4)Suburb M;
(5)A property at Suburb P; and
(6)Any other asset they had a legal or beneficial entitlement to.
It now appears the company has gone into receivership, perhaps through actions of creditors of the company, who have lent money to the trust using the entity of the company to purchase these properties. Those finance entities are S Group, T Group and U Group. Mr Stewart has given the company a personal guarantee in respect of the finance provided by these three finances groups in respect of their financing the purchase these various properties. This seems to me to be inherently believable on the facts given that these finance groups were lending moneys to a company via a trust company to purchase property and the trust company and the company had no apparent assets or asset base, they having been created as a vehicle for the very purpose of purchasing these properties.
The properties purchased have been injuncted from being dealt with by the company, the de facto wife and the de facto husband, but not the B Trust because it has not been joined. I see no injunction against the B Trust. Helpfully, as Mr Brown for the receiver said there is no injunction on the creditor finance companies pursuant to their various loan agreements/security agreements that they had with the company and in particular Mr Stewart in respect of dealing with the properties.
In light of these facts – and I may have got some of these facts wrong, as it is early days in this matter, and I have not had sufficient time to fully analyse all aspects – to assert that Mr Stewart does not have an interest or a vested interest in these proceedings in light of the facts as I have just described is nonsensical and offends all proper principles of procedural fairness and natural justice.
Mr Stewart asserts he may lose his own properties due to the personal guarantees he has given for the purchase of what I will call the Holder properties. That he has been able to extend the loan for about six months, that he is concerned that if he is continued to be injuncted and restrained from dealing with properties he says he owns, his own assets may be taken by the creditors. That in this very complicated set of facts and circumstances, he is particularly concerned if he is not a party to the proceedings and has no say in what is to occur when the injunction is again looked at, the 106B application is dealt with and the parties have had disclosure to each other of the financial material that they require to resolve this matter he will be disadvantaged.
There are a multitude of factual disputes to be resolved, and Mr Stewart is a large part of the factual dispute. If this matter was to be heard in the absence of Mr Stewart, or his evidence or any input from him, any resulting decision would be properly set aside and would likely result in significant injustice for all of the parties. They being: the applicant, the first and second respondents, including Mr Stewart, the putative third respondent.
The High Court decision of Carter Holt has no bearing on this issue or this application before me. That matter dealt with substantive rights and interests and the legal definition of what a trust is and its standing at law. Mr Stewart is a person. He has a clear interest in these proceedings. He has a sufficient interest in the proceedings that he should be permitted to be joined. The Carter Holt matter was about substantive rights, not whether a person has an interest in litigation and where a third party seeks to protect their interests in. As Rees J said, which decision was also referred to me by the receiver, in Krishna & Suk and Anor:
8Section 92 gives no guidance as to the circumstances in which intervention should be permitted.
9The case law suggests that persons should be permitted to intervene where their interests are affected by the substantive proceedings, so that they may protect their own interests; or where their interests would be prejudiced in some way if they were not parties to the proceedings.[2]
[2] [2019] FamCA 794 at [8]–[9].
It is clear and apparent on the facts that Mr Stewart's interests have been prejudiced on a first reading of his material – I accept this has not been tested – in that injunctions have been issued against properties he said he has an interest in, and his interests will be affected by the substantive proceedings between the de facto husband and wife as their claims are in respect of the very same set of properties that each claim an interest in.
This is far from an abuse of process by Mr Stewart; rather, the Court took action of its own. It is an imperative he be joined to ensure all parties can obtain the information they need to pursue their rights and protect their interests. In those circumstances, pursuant to rule 3.04 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth), I grant Mr Stewart leave to intervene in these proceedings.
I have made arrangements with Schonell J, who says he will now judge manage this matter, and it is listed for directions before him at 9.30 am on 22 December 2022.
I certify that the preceding twenty (20) numbered paragraphs are a true copy of the ex tempore Reasons for Judgment of the Honourable Justice Henderson delivered on 1 December 2022. Associate:
Dated: 1 December 2022
0