Clifton & Aspen (No 2)
[2023] FedCFamC1F 594
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Clifton & Aspen (No 2) [2023] FedCFamC1F 594
File number(s): SYC 760 of 2021 Judgment of: ALDRIDGE J Date of judgment: 19 July 2023 Catchwords: FAMILY LAW – PROPERTY – Interim hearing – Application by the wife to amend her Points of Claim and Initiating Application – Where the relevant transaction is sought to be set aside pursuant to s 106B of the Family Law Act 1975 (Cth) – Where the respondents have brought an application to strike out significant parts of the documents on the grounds that the amendments went beyond the leave which was granted – Where some paragraphs of the amended Points of Claim and Initiating Application are stuck out – Applications are otherwise dismissed. Legislation: Family Law Act 1975 (Cth) s 106B Cases cited: Clifton & Aspen [2023] FedCFamC1F 376 Division: Division 1 First Instance Number of paragraphs: 50 Date of hearing: 11 July 2023 Place: Sydney Counsel for the Applicant: Mr Sirtes SC with Mr Auld Solicitor for the Applicant: Delaney Lawyers Counsel for the First Respondent: Mr Hollo Solicitor for the First Respondent: Pearson Emerson Counsel for the Second and Third Respondents: Mr Sulan SC with Ms Jeliba Solicitor for the Second and Third Respondents: Barkus Doolan Winning ORDERS
SYC 760 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS CLIFTON
Applicant
AND: MR B ASPEN
First Respondent
D PTY LTD
Second Respondent
MR C ASPEN
Third Respondent
ORDER MADE BY:
ALDRIDGE J
DATE OF ORDER:
19 JULY 2023
THE COURT ORDERS THAT:
1.Paragraphs 82, 86–111 inclusive of the Second Further Amended Points of Claim filed on 25 June 2023 are struck out.
2.The amendments to paragraph 14 of the Second Further Amended Initiating Application filed on 25 June 2023 are struck out.
3.The applicant’s Application in Proceeding filed 8 July 2023, the second respondent’s Application in a Proceeding filed 3 July 2023, the third respondent’s Application in a Proceeding filed 3 July 2023 and the first respondent’s Application in a Proceeding filed 4 July 2023 are otherwise 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 Clifton & Aspen has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
ALDRIDGE J:
This is a further application by the applicant wife in these proceedings to amend her Points of Claim and Initiating Application.
The application comes about in this way. On 15 May 2023, in Clifton & Aspen [2023] FedCFamC1F 376, I gave leave to the wife to file a Second Further Amended Points of Claim, so as to include a contention that in 2017, K Pty Ltd disposed of its equitable interest in land to or in favour of V1 Pty Ltd.
K Pty Ltd is a company owned and controlled by the husband and V1 Pty Ltd is a company which is jointly owned by Mr T and, at that time, interests associated with the husband’s mother. That transaction was sought to be set aside pursuant to s 106B of the Family Law Act 1975 (Cth) (“the Act”).
In due course, the Second Further Amended Initiating Application and Second Further Amended Points of Claim were filed. This led to the respondents bringing an application to strike out significant parts of both documents on the grounds that there were amendments which went beyond the grant of leave. Ultimately, the wife accepted that such was the case.
Paragraphs 115–118 inclusive of the Second Further Amended Points of Claim and paragraphs 15A–15B of the Second Further Amended Initiating Application were abandoned and on 11 July 2023 orders were made by consent striking them out.
As to the balance of the amendments which exceeded the leave, the wife sought to rely on them and to that end brought an application for leave to amend accordingly. This is the resolution of that application.
I rely on and incorporate the reasons of my earlier judgment of 15 May 2023 and will not repeat here what was there said.
The allegations against the husband relate to land at the EE Property. The amendment that was permitted by the earlier reasons alleged that K Pty Ltd disposed of its interest:
81.…in that part of the Lot [EE1] and [EE2] Land now known as Lot […40]/DP[…73], to or in favour of [V1 Pty Ltd], or further or in the alternative, to [EE Pty Ltd] on condition or in the expectation that it be transferred in turn to [V1 Pty Ltd].
(Wife’s Second Further Amended Points of Claim filed on 25 June 2023, paragraph 81)
There are three new proposed claims.
The first is that on a date unknown, K Pty Ltd disposed of that part of its land in Lots EE1 and EE2 known as Lot …41/DP…50 (“Lot …41”) and Lot …42/DP…50 (“Lot …42”) in favour of V3 Pty Ltd. V3 Pty Ltd was incorporated in 2019. Lots …41 and …42 were created by a registration of a subdivision plan in 2022.
The second claim is that, on a date unknown, K Pty Ltd disposed of its interests in that part of Lots EE1 and EE2 which can be conveniently be described as Lots 3, 4 and 5/DP…20 in favour of KK3 Pty Ltd, KK4 Pty Ltd and KK5 Pty Ltd, respectively. Each of those companies was incorporated in 2019. Lots 3, 4 and 5 were created by registration of the subdivision plan of 2020.
The proposed pleadings then go on to contend that the benefit of the land or the “put and call” options in relation to the land (the three lots), in favour of the three companies, was disposed of directly or indirectly to the D Pty Ltd. That company is the trustee of the D Trust. The husband is a beneficiary of the trust but is neither a trustee nor the appointor.
The third claim relates to that part of Lots EE1 and EE2, now known as Lots 1, 2, 3, 4 and 5/DP…14, which were created by registration of a subdivision plan in 2021. Again, it is asserted that K Pty Ltd had an equitable interest in Lots EE1 and EE2, which were disposed of by, at the least, acquiescing in EE Pty Ltd selling them to third parties.
Speaking generally, the wife asserts that the husband acquired an equitable interest in the entirety of Lots EE1 and EE2 in the Suburb J development. These were large blocks of land. Since their acquisition, those blocks have been subdivided and those subdivided blocks of land have been sold. It follows that, the wife contends, in order for those subdivisions and sales to go ahead with entities other than K Pty Ltd receiving the entire benefits of the subdivision and sale, that K Pty Ltd must have disposed of its equitable interest, thereby giving rise to a claim under s 106B.
The grant of leave on 15 May 2023 covered just one of those blocks of land excised from Lots EE1 and EE2 which can conveniently be described as the land upon which the V4 Facility now stands, Lot …40/DP…73.
It is true that the wife has been hampered by not being provided with documents by the husband in a timely way and that she has been responding to inadequate disclosure and the finding of relevant documents only in the documents of third parties obtained on subpoena. Indeed, that, at its heart, was the basis for the grant of leave given previously.
Notwithstanding the submissions of senior counsel for the wife, the Court requires rigorous compliance with the parties’ duties of disclosure. It can have serious consequences for the outcomes of property proceedings, in particular. If late or inadequate disclosure has the effect that the fundamental nature of a case changes, then it is not for the recipient to bear the brunt and the burden of that inadequate disclosure. That however, does not mean that poor, late or inadequate disclosure gives the other party a licence to amend its pleading if and when they wish.
To put that last comment in more concrete terms, if it can be seen that the circumstances that gave rise to the proposed pleadings arose after the grant of leave was made, then a strong case for amendment would be established. If however the matters were known to the wife at the time the application for amendment was made in May 2023, different considerations apply.
In my earlier reasons, I referred to two Agreements for Lease and a Deed of Covenant. It has emerged in the evidence on this application that there were in fact three such Agreements for Lease. This time attention focused on the description of land and premises in each of those documents.
The first Agreement for Lease is between K Pty Ltd and LL Pty Ltd and others. At Recital A under the heading “Background” the following appears:
AThe landlord has or will have the entitlement to grant or procure the grant of a lease of the Premises from the registered proprietor of the Land.
(Affidavit of Ms MM filed on 8 July 2023, Exhibit “MMM4”, p.75)
K Pty Ltd is the landlord.
In the Reference Schedule, the land is described as “[a]ll of the land contained in Lot […] in Deposited Plan […] located at corner of [U Street] and [AA Street, Suburb J]” (Affidavit of Ms MM filed on 8 July 2023, Exhibit “MMM4”, p.97). The reference to the “Lot” and “Deposited Plan” is obviously wrong as they relate to land in City NN.
The premises is described as “Shop 1, […] being part of the ground floor …of the […] Facility and identified in the Landlord’s Works Plans” (Affidavit of Ms MM filed on 8 July 2023, Exhibit “MMM4”, p.97).
The next agreement is between K Pty Ltd and PP Pty Ltd. Recital A of the background is in the same terms as the earlier agreement. The description of the land in the Reference Schedule is “[a]ll of the land contained in Lot […] in Deposited Plan […] and Lot […] in Deposited Plan […] located at corner of [U Street] and [AA Street, Suburb J]” (Affidavit of Ms MM filed on 8 July 2023, Exhibit “MMM4”, p.228). The premises is described as “Suite 1, Level 1 (approximately [200] square metres), [EE Property], Cnr [U Street] and [AA Street, Suburb J]” (Affidavit of Ms MM filed on 8 July 2023, Exhibit “MMM4”, p.228).
The third agreement is between K Pty Ltd and QQ Pty Ltd. Again, Recital A of the background is as earlier described. The land is given the same description as the PP Pty Ltd agreement. The premises are described as “[…] Hub #1” being part of the ground floor (approximately [600] square metres) of the […] Facility and identified in the Landlord’s Works Plans” (Affidavit of Ms MM filed on 8 July 2023, Exhibit “MMM4”, p.125).
The two Deeds of Covenant (which effectively remove K Pty Ltd as landlord under the matching Agreements for Lease and insert V1 Pty Ltd in that capacity) contain a definition of property as “the property known as certificate of title […40]/[…73] at [AA Street, Suburb BB] NSW […]” (Affidavit of Ms MM filed on 8 July 2023, Exhibit “MMM4”, p.232 and p.244). However, the terms of the Deed refer to “land” in the context of the Agreement for Lease (see the definition of Tenancy Document) and not “property”.
In any event, despite the infelicities in the documents and the frank error, it is clear enough what the premises are to be, taking into account the obvious point that the development was still underway with subdivisions possibly to occur. The question immediately raised by these documents, which the wife had in early March 2023, is whether the asserted equitable interest of K Pty Ltd was limited to the excised portions described as “premises” or extended to the larger lots as a whole described as the “land”. I have difficulty in accepting that this was a consideration that only became apparent on the inspection of the late discovered letter from the lawyers for K Pty Ltd dated 23 February 2016, to be discussed shortly.
In the amending pleading, about which there is no contest, the wife pleads that the inference should be drawn that K Pty Ltd had a beneficial interest in the premises, which were the subject of the Agreements for Lease. It relies upon the PP Pty Ltd and the LL Pty Ltd Agreements for Lease. It asserts that K Pty Ltd has an interest in that part of Lots EE1 and EE2 that later became the land in Lot …40/DP…73.
The proposed amendments are based on the proposition noted earlier that K Pty Ltd had an equitable interest in the entirety of Lots EE1 and EE2.
As I understand the wife’s contentions on the application to amend, three documents of relevance were disclosed after May 2023. Many other documents were referred to but they do not directly refer to interests in land but demonstrate continuing efforts to conclude agreements between K Pty Ltd and the proposed tenants. They do not assist on the present issue.
The first is a retail shop disclosure statement between K Pty Ltd and LL Pty Ltd. In that document, as was submitted by senior counsel for the wife, K Pty Ltd clearly nails its colours to the mast as the lessor/landlord. It does not assist the wife on this application because the document is not executed and there is no evidence that it was ever executed. More importantly, it relates only to the shop premises in the EE Property, which is the subject of the amendment, to which no objection is taken.
The remaining two documents consist of correspondence between lawyers acting for K Pty Ltd and the proposed tenant (apparently the proposed pharmacy). Queries arose about the terms of the proposed lease and whether K Pty Ltd was itself to be a lessee who was granting a sublease. However, on 14 January 2016, K Pty Ltd’s lawyers wrote to the tenant and said:
…My client’s entity will be acquiring the property. A contract hasn’t been entered into yet, but now that development consent for the land subdivision has been obtained, this will progress.
(Affidavit of Ms MM filed on 8 July 2023, Exhibit “MMM4”, p.364)
Again, this is consistent with the claim already existing that the husband would acquire an interest in that part of the property (that would later constitute the retail shop).
Further discussions ensued and on 23 February 2016 the husband’s lawyers forwarded to the tenant a number of documents, one of which was an updated table with a column containing the landlord’s responses to queries raised by the tenant. In response to the questions:
Please provide relevant property and title details. Please advise on what basis the landlord is purporting to enter this arrangement?
(Affidavit of Ms MM filed on 8 July 2023, Exhibit “MMM4”, p.376)
The landlord’s response was:
The current title details are folio identifiers: [Lot EE2] and [Lot EE1].
Our client has an equitable interest in the property and [K Pty Ltd] or one of its related bodies corporate will take a transfer of the land once the lots are created.
(Affidavit of Ms MM filed on 8 July 2023, Exhibit “MMM4”, p.376)
The wife takes the above comment to be a statement on behalf of K Pty Ltd that it has an equitable interest in the entirety of Lots EE1 and EE2. I am not convinced that this is so.
The first statement is an accurate statement of fact, because reading the comment as a whole, the relevant lots that will be created by the subdivision are yet to be created and the current title is being identified. The second sentence states that once the lots are created, the husband will have an equitable interest. The more natural reading of those comments, taken together, is that the husband will have equitable interests in the lots once created, the lots being the property the subject of the Agreement for Lease.
If that is so, the premise of the wife’s claim to amend is not made out. However, I readily accept that on a preliminary procedural application such as this, final findings should not be made. I therefore proceed on the basis that it is reasonably arguable that the comment by the lawyer is an acknowledgment that K Pty Ltd had an equitable interest in the entirety of Lots EE1 and EE2.
The question then arises whether this late disclosed document is now sufficient to justify the proposed amendments in relation to land that was split off from Lots EE1 and EE2 in 2019 and 2020.
There is no suggestion that in May 2023 that the wife was not aware that Lots EE1 and EE2 had been subdivided on a number of occasions. She was aware from the Agreements for the Lease and Deeds of Covenant that there was representations that K Pty Ltd was or would become the registered proprietor of specific land that had been carved out of those lots. No similar document exists in relation to the 2019 and 2020 sales of the subdivided portions of those blocks. They are significant and binding commercial agreements which attract weight.
The basis of the new claim is the statement of a lawyer made in the course of negotiations as to the terms of an Agreement for Lease of the proposed pharmacy. Whilst, on the reading of the wife, the statement of the lawyer is not so limited, the context cannot be ignored.
Even beneficially read, the statement by the lawyer, on its own, is too slight a document to support a claim that the husband continued to have a beneficial interest in those portions of Lots EE1 and EE2 which were excised from them and disposed of or relinquished in 2019 and 2020. If further documents come to light the issue can be revisited.
The extent of any interest of K Pty Ltd in the land at Suburb J was an issue that should have been apparent to the wife in March 2023. Whilst the 23 February 2016 letter may be relevant to that consideration it cannot be regarded as raising that issue for the first time.
In my earlier reasons, I referred to the unsatisfactory procedural conduct of the proceedings by the wife to that time. Whilst some of those difficulties arose from inadequate and late disclosure, not all did. Even so, the response of the wife has caused delay and expense. For example, the issue of sham was pressed in evidence and in final submissions, then abandoned, then sought to be reinstated, then abandoned again.
Taking into account the general proposition that late disclosure of relevant documents should not unfairly prejudice the recipient of the disclosure, the nature of the document now disclosed (reading it beneficially to the wife as I indicated earlier), the nature of the claim sought to be pleaded and the procedural history of the matter on both sides, I am not persuaded that it is in the interests of justice to permit the amendments as to 2019 and 2020 transactions to go ahead.
There remains two further paragraphs to be considered.
Proposed paragraph 82 is as follows:
82.Further, or in the alternative to 81, on a date unknown, orally and/or by an instrument unknown and not disclosed, the Husband caused [K Pty Ltd] to dispose or relinquish its interest, in whole or in part, in that part of the Lot [EE1] and [EE2] Land now known as lot […40]/DP[…73], to or in favour of [M Pty Ltd] ATF the [D Super Fund], or further or in the alternative, to [EE Pty Ltd] on condition or in the expectation that it be transferred in turn to [M Pty Ltd] ATF the [D Super Fund], who in turn disposed or relinquished its interest, in whole or in part, to [V1 Pty Ltd], or further or in the alternative, to [EE Pty Ltd] on condition or in the expectation that it be transferred in turn to [V1 Pty Ltd] (“the Alternative [V1 Pty Ltd] Disposition”).
(Wife’s Second Further Amended Points of Claim filed on 25 June 2023, paragraph 82)
It deals with the V4 Facility and is a pleading in the alternative. It consists, in my view, of mere speculation as to how V1 Pty Ltd became the owner of the land. However, it is unnecessary to form a concluded view about that, because, I consider that the pleading in paragraph 81, which pleads that K Pty Ltd disposed of or relinquished its interests in the relevant land to V1 Pty Ltd, identifies the transaction as a whole and includes whatever intermediate step may have been necessary for that transaction to be completed. In other words, I read the disposition referred to in that paragraph as being direct or indirect.
Paragraph 82 is otiose and the amendment will not be permitted.
Finally, it remains to deal with paragraph 113, which asserts that in 2016, the husband commenced or otherwise pursued an extramarital affair. Particulars are then given, only one of which is said to be a newly discovered fact. I accept that this issue was relevant to the sham case and indeed has already been the subject of cross-examination, and that both those considerations speak against permitting an amendment. However, s 106B talks of dispositions made to defeat an existing or anticipated order in property proceedings, or which, “irrespective of intention” is likely to defeat such an order. Thus, intention can be directly relevant to a claim under s 106B, as opposed to merely being part of a matrix of facts for a sham argument.
On balance, I consider that the amendment should be allowed.
As the Second Further Amended Points of Claim have already been filed, the appropriate way to deal with the application is to make an order striking out paragraphs 82, 86–111 inclusive of the Second Further Amended Points of Claim.
The amendments to paragraph 14 of the Second Further Amended Initiating Application are struck out.
The Applications in a Proceeding filed by the applicant on 8 July 2023, by the second respondent on 3 July 2023, by the third respondent on 3 July 2023 and by the first respondent on 4 July 2023 are otherwise dismissed.
I certify that the preceding fifty (50) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Aldridge. Associate:
Dated: 19 July 2023