Cleary & McKenzie (No 3)
[2023] FedCFamC1F 1102
•18 December 2023
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Cleary & McKenzie (No 3) [2023] FedCFamC1F 1102
File number: SYC 4879 of 2022 Judgment of: SCHONELL J Date of judgment: 18 December 2023 Catchwords: FAMILY LAW – PRACTICE AND PROCEDURE – Joinder – Where the wife sought to join the husband’s son to the proceedings – Where part of the final relief sought by the wife includes an order for the sale of a property that is registered in the name of the husband’s son – Where the evidence appears to be that funds of the husband and wife were applied to the property – Where it is necessary that the husband’s son be joined to the proceedings to resolve the issues in dispute – Order made joining the husband’s son to the proceedings Cases cited: Cleary & McKenzie (No 2) [2023] FedCFamC1F 1009
Wayne v Dillon (2008) 40 Fam LR 543; [2008] FamCAFC 204
Division: Division 1 First Instance Number of paragraphs: 16 Date of hearing: 14 December 2023 Place: Sydney The Applicant: Litigant in person The First Respondent: Litigant in person The Second Respondent: Did not participate The Putative Third Respondent: Litigant in person The Fourth Respondent: Litigant in person ORDERS
SYC 4879 of 2022 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS CLEARY
Applicant
AND: MR MCKENZIE
First Respondent
MR STEWART
Second Respondent
MR V MCKENZIE (and another named in the Schedule)
Putative Third Respondent
ORDER MADE BY:
SCHONELL J
DATE OF ORDER:
18 DECEMBER 2023
THE COURT ORDERS THAT:
1.Mr V McKenzie be joined to the proceedings as the third respondent.
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).
REASONS FOR JUDGMENT
SCHONELL J:
By way of Further Further Amended Initiating Application filed 5 December 2023, the applicant de facto wife (“the wife”) sought to join the first respondent de facto husband’s (“the husband’s”) sister (“the fourth respondent”) and son (“the putative third respondent”) to the current proceedings.
Directions were made for all parties to file their affidavits including those of the putative joinder parties.
On the hearing, the fourth respondent, Ms Gallagher, consented to joinder and orders were made accordingly. The question for determination therefore remained whether the putative third respondent, Mr V McKenzie, should be joined to the proceedings.
I have already dealt with one application for joinder and thus, to understand the context of the current application, some regard must be had to my reasons delivered in Cleary & McKenzie (No 2) [2023] FedCFamC1F 1009 (“Cleary & McKenzie (No 2)”). A reading of that judgment provides some context to the current application.
The wife relied upon her Further Further Amended Initiating Application filed 5 December 2023 and affidavit filed 5 December 2023. The husband relied upon an affidavit filed 13 December 2023 and the putative third respondent relied upon an affidavit filed the same date. Both the husband and the putative third respondent opposed the joinder. Each of the parties made short submissions before me and the thrust of the submissions of the husband seemed to acknowledge the inevitability of the joinder of his son. That said, however, I acknowledge that the putative third respondent opposed the joinder.
The factual context that gives rise to the joinder application are set out in my earlier reasons and in that respect, I recorded as follows in my judgment of Cleary & McKenzie (No 2):
14.The wife contended that the husband obtained a loan to purchase the [Suburb W] property which was secured against a property in [Town X] that is in her name. She said that in […] 2007, she discovered that the [Suburb W] property was actually registered in the putative third respondent’s name and not the husband’s. She deposed that both the husband and the putative third respondent told her that the property was being held on trust for husband. The wife also contended that she and the husband made mortgage repayments and rate payments totalling approximately $90,000, and that the husband received rent from a business operating from a building on the property.
15.The putative third respondent denied the wife’s contentions, contending that he purchased the [Suburb W] property for his own benefit.
I also note the evidence of the evidence of the wife contained in her affidavit of 5 December 2023 to the following effect:
11.[In] 2006, [the husband] called me while I was in [Region Y] getting supplies for the [Suburb P] Guest House. I was taken aback by what he asked me during the conversation to words to the effect:
[The husband]: “I want to borrow some money to buy [Suburb W] ([Z Street, Suburb W]) otherwise there’s a chance [Mr AA] (refer to my ex-husband [Mr AA]) will lose the business he has built up; do you think you could help me out?
I said:“How can I help, I don’t any money to buy [Suburb W]”
[The husband]: “You’ve got [Town X]”
I said:“what do you mean?”
[The husband]: “You could take out a mortgage”
I said:“I don’t even know how to do that, and I promised mum, that I would never mortgage [Town X].”
[The husband]: “look, it will only be for a short period of time, max 6 months, which will give me enough time to re-mortgage [Suburb F], (meaning [E Street, Suburb F]) and I will pay the money back.
I said:“I’m nervous, I’ve never done anything like this, and I don’t even know what to do”?
[The husband]: “Don’t worry, I’ll arrange everything, I’ll talk to a bank and find the best deal and all you have to do is talk to the bank when they ring and agree to the terms.”
I said:“ok, I guess, but the money will need to be paid back quickly.”
[The husband]: “Not a problem, I find a good deal to re-mortgage [Suburb F], I’ll probably pay it back quicker.”
…
13.As a consequence of the above conversation, [the husband] spoke to a bank and arranged the relevant documents to be drawn up and a mortgage for the sum of $288,000.00 from [BB Finance] against the property [CC Street, Town X] in my name was taken out which I was under the firm belief, and informed by [the husband] that these funds were intended for the [Suburb W] property, specifically [Z Street, Suburb W].
…
16. In or around late 2014, whilst living at the former matrimonial home at [E Street, Suburb F], I noticed some documents pertaining to [Suburb W] mortgage and could see that the amount of this mortgage was reduced considerably. I became annoyed with this knowledge as, not only is the property in [the third putative respondent’s] name, but actually, being paid down quicker and [the husband] had made no attempt to pay the [Town X] money loaned back to me. I promptly confronted [the husband] and had a conversation with him to words of the effect:
I said:“Why is [Suburb W] mortgage getting paid down and you still haven’t paid me back for [Town X]?”
[The husband]: “What are you talking about”?
I said: “I read a statement in your office”
[The husband]: “Stay out of my office, there is no reason for you to be in my office.”
I said:“I was trying to tidy up and they were sitting on the top of a pile of paper.”
[The husband]: “Just stay out of my office.”
I said:“Just answer the question; why is [Suburb W] getting paid down and nothing off [Town X], you said you’d pay me back in 6 months”?
[The husband]: “Well things haven’t gone to plan, have they?” “Don’t worry about it, you’ll get paid, the [Suburb W] mortgage has got a high interest rate so, it’s best we pay it down.”
I said:I don’t trust [the putative third respondent] to do the right thing and certainly, I don’t trust his wife.” “I hate being in this situation, it makes me feel sick.”
[The husband]: “Will you shut up” “my head is pounding, I don’t need this pressure, just back-off, it will be ok.”
I said:“You always use the excuse your head is pounding when I want to talk about [Suburb W] and [Town X] mortgage just to shut me up and we never up speaking about it. Well, I’m sick of it, start making plans to get my money back.”
[The husband]: “I’m on the verge of doing something and [Town X] will be paid back as soon as I secure this deal.”
…
18. During our conversation, [the putative third respondent’s] phone rang, and he quickly hushed me, revealing that it was [Ms DD] calling. I listened in silence as he spoke to her, but was surprised when he lied about his whereabouts, claiming he was not at [Suburb F]. Once the call ended, we resumed our discussion with words to the following effect:
I said “Doesn’t [Ms DD] know your over here (meaning [Suburb F])?” [The putative third respondent] said: “No, are you serious”? “She would go berserk if she knew I was over here, working for dad.” I said: “Why”? [The putative third respondent] said: “She knows dad never pays, we have huge arguments about it all the time, so its best, she doesn’t know.” “We had a big blow-up over [Suburb W], just the other night and I reckon she would kick me out, if she knew I was here working for dad.” I Said: “What about [Suburb W]?” [The putative third respondent] said: “She doesn’t understand why [Suburb W’s] in my name, went it’s dads, - well yours and dads.” “The payments are always late, and the bank chases me up and [Ms DD] says it’s affecting my credit history.” I Said: “I don’t understand why it’s in your name either.” “Why isn’t it in my name as well?” “You know he’s used my money from [Town X], don’t you?” [The putative third respondent] said: “Yes, I know that, look dad knows what he’s doing and I’m like dad’s right arm.” “Look at [EE Street], (referring to a property in [Suburb FF] owned by [the husband] but put into his adult sons’ names [the putative third respondent] and [Mr GG] in trust for [the husband].” I Said: “What about [EE Street]?” [The putative third respondent] said: “He put that in mine and [Mr GG’s] name, but it was his and he made all the dealings and paid the mortgage.” “So, [Suburb W], is the same deal but only in my name because he doesn’t trust [Mr GG] and besides, I’m he’s favourite child.” I said: “Why doesn’t he just sell [Suburb W]?” [The putative third respondent] said: “I think he’s trying and he’s talking to a guy who was interested in it, but dad won’t take anything less than a Mill (meaning a Million dollars).” I said: “Can you push him on it, he won’t listen to me, and I need [Town X] money back.” [The putative third respondent] said: “I’ll try, but you know dad, he stubborn.” I Said: “Yes, I know, it’s painful”
…
21.[The husband] and I have made mortgage and rates payments against the [Suburb W] property totalling $89,792.00. Out of this amount, I have personally paid $58,672.00 from my [HH Bank] Account No. […] …
(As per the original)
The husband and putative third respondent denied the contentions contained in the evidence advanced on behalf of the wife. In particular, the putative third respondent denied the assertions advanced by the wife and contended that he purchased the property at Suburb W a year prior to the date upon which the wife contended funds were advanced.
However, the putative third respondent made the following assertion in his affidavit:
13.… Our family relationship is, and always has been, one where we each assist each other whenever the need arises; it all balances out in the end. …
…
14.I have not made an accounting of payments made towards the [Suburb W] property out of the mingled funds of my father and [the wife]. Nor have I made an accounting of the huge amount of work I have carried out, and materials belonging to me that I have supplied, on their properties … for which I received no payment. …
APPLICABLE LAW – JOINDER
In my earlier judgment of Cleary & McKenzie (No 2), I set out the applicable law in relation to matters of joinder. In that respect, I incorporate the following paragraphs into these reasons:
20.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.
21.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.
22.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”. …
23.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.
24.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.
The wife seeks orders for the sale of the Suburb W property and for the proceeds to be divided equally. Such order cannot be made in circumstances where the putative third respondent is the registered owner of the property. The evidence clearly articulates an issue that requires resolution, namely the financial contributions of the wife and/or husband to the acquisition, conservation, and improvement of the Suburb W property.
The evidence does not seem (and I say that reservedly) to put in issue that funds belonging to the wife and husband were applied to the Suburb W property. The issue becomes whose funds, what funds, for what purpose the funds were used and whether it gives rise to an equitable interest.
The resolution of those factual assertions is an issue in the proceedings. The putative third respondent is a necessary party to enable the Court to resolve those issues.
On this application, I am not determining the final hearing nor making findings that the wife has discharged the onus of proof that falls upon her to establish her case. I am merely ascertaining whether she, on the material before me, has articulated an arguable case sufficient to establish joinder.
I am satisfied, notwithstanding the conflicting evidence on the issue, that joinder is necessary to “completely and finally determine all matters in dispute” (see Wayne v Dillon (2008) 40 Fam LR 543 at [19]). In the event that the wife does not make good her case against the putative third respondent, then it is not beyond the realm of imagination to anticipate that costs will become a significant issue.
CONCLUSION
For the above reasons, I am satisfied that an order for joinder should be made as sought by the wife.
I certify that the preceding sixteen (16) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Schonell. Associate:
Dated: 18 December 2023
SCHEDULE OF PARTIES
SYC 4879 of 2022 Respondents
Fourth Respondent:
MS GALLAGHER
0
6
0