Daire & Gamer
[2021] FedCFamC1F 261
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Daire & Gamer [2021] FedCFamC1F 261
File number(s): MLC 1134 of 2021 Judgment of: BENNETT J Date of judgment: 7 December 2021 Catchwords: FAMILY LAW – FINANCIAL/THIRD PARTIES
PRACTICE & PROCEDURE- disjoinder of parties- where application joins second to fourth respondent without any statement of claim or cause of action pleaded- where joining party provided with an opportunity to provide contentions of fact an law before disjoinder or injunctive relief is further considered.Legislation: Family Law Act 1975 (Cth)
Family Law Rules 2004 (Cth)
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth)
Federal Magistrates Court Rules 2001 (Cth)
Cases cited: Wayne v Dillon and Anor [2008] FamCAFC 204 Division: Division 1 First Instance Number of paragraphs: 54 Date of hearing: 21 September 2021 Counsel for the Applicant: Mr Puckey QC Solicitor for the Applicant: Taussig Cherrie Fildes Counsel for the Respondent: Mr Dickson QC Solicitor for the Respondent: Lander & Rogers Counsel for the Second to Fourth Respondents: Mr Williams QC Solicitor for the Second to Fourth Respondents: Hartley Family Law Pty Ltd Counsel for the Intervener: Dr Ingleby Solicitor for the Intervener: Marshalls Dent Wilmoth ORDERS
MLC 1134 of 2021 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS DAIRE
Applicant
AND: MR GAMER
First Respondent
MR B GAMER
Second Respondent
MS D GAMER (and another named in the Schedule)
Third Respondent
MS C GAMER
Intervener
ORDER MADE BY:
BENNETT J
DATE OF ORDER:
7 DECEMBER 2021
THE COURT ORDERS THAT:
1.The hearing on 8 December 2021 be vacated and the matter be listed before me on 20 December 2021 at 9:00 a.m. and I reserve liberty to the parties to seek an adjournment of that date administratively, by consent.
2.By not later than 4.00 p.m. on Tuesday 14 December 2021 the wife file and serve any further amended initiating application upon which she seeks to rely and such application be supported by, and have annexed to it, the contentions of fact and law relevant to any relief sought against third parties including but not limited to the second to fourth respondents.
3.For the avoidance of doubt the wife may rely on her affidavit filed on 17 June 2021 sworn in compliance with r.3.03(3)(a) and/or r.3.03(5)(a)(ii) of the Federal Circuit and Family Court of Australia (Family Law) Rules2021 (Cth).
4.The submissions of the applicant on the joinder and injunctive relief sought against the second to fourth respondents received by email on 21 July 2021 at 11:24am and copied to the other parties be marked exhibit “W1” and I direct it remain on the court file.
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 Daire & Gamer is approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
BENNETT J:
INTRODUCTION
The Application in a Case filed 6 July 2021 by Mr B Gamer and Ms D Gamer seeking that they be disjoined as second and third named respondents in proceedings between their father, Mr Gamer, and the applicant, Ms Daire. On 12 July 2021 it was agreed, and I ordered, that the application in a case filed by the second and third respondents and the wife’s response thereto proceed by written submissions. The following submissions have been filed and served:
(a)Outline of submissions on behalf of the second, third and fourth respondents sealed 13 July 2021 (“the respondents’ submissions”);
(b)Submissions of the applicant on the joinder and injunctive relief sought against the second to fourth respondents received by email on 21 July 2021 at 11:24am and copied to the other parties and which is marked exhibit “W1” (“the applicant’s submissions”); and
(c)Reply submissions on behalf of the second, third and fourth respondents sealed 2 August 2021 (“the respondent’s reply”).
RELEVANT BACKGROUND
This de facto property settlement proceedings were commenced on 4 February 2021 following the breakdown of the relationship between the applicant, Ms Daire, and the respondent, Mr Gamer. They lived together from 1995 (on the applicant’s case) or 2002 (on the respondent’s case) until 25 November 2020 (on the applicant’s case) or 25 December 2020 (on the respondent’s case). They resided separately but under the one roof at their former family home at E Street, Suburb F. The applicant obtained an intervention order against Mr Gamer and he was required to vacate the former family home on 8 February 2021. The respondent resided temporarily in Suburb G before moving to H Street, Suburb J. Although the applicant and respondent do not agree on the duration of their relationship, it is common ground that they lived together on a genuine domestic basis within the meaning of 4AA of the Family Law Act 1975 (Cth) (“the Act”). For ease of reference, I will refer to them as “the wife” and “the husband” respectively.
The wife is 60 years old and in reasonable health. She is in long term employment in a professional services firm. She resides at the former family home at E Street, Suburb F (“Suburb F”). Suburb F is owned jointly by the husband and the wife. The wife has a daughter, Ms K, from a previous relationship. Ms K is 30 years old.
The husband is 70 years old and resides at H Street Suburb J (“Suburb J”), a property in which he and the wife lived at various times. Suburb J is registered in the name of the husband. The husband is semi-retired having previously operated a financial services firm, a small business and other investments. The husband deposes to being of average physical and mental health. He has hypertension, a pulmonary embolism, poor hearing and failing night sight. He has experienced depression and anxiety since separation. He takes daily medication for physical health issues and is treated by a psychologist. He is prescribed and continues to take Mirtazapine which is an anti-depressant. He deposes that Mirtazapine “clouds my ability for clear thinking, makes me drowsy and I have had suicidal thoughts. [He] was admitted to L Hospital on 20 April 2021 after suffering a breakdown”.
The wife’s Amended Initiating Application filed 17 June 2021 seeks an equal division of all of the property of the wife and the husband.
The husband has not responded to the wife’s Amended Initiating Application. His response to the wife’s application for final orders was filed on 31 May 2021 and is completely unspecified. He seeks a division of the parties’ property interests pursuant to s.90SM of the Family Law Act 1975 (Cth) (“the Act”) and that he be excused from specifying orders sought until such time as the Applicant has made full disclosure and all necessary valuations have been obtained. He also seeks that the applicant pay his costs of and incidental to his application.
The second respondent is Mr B Gamer. He is 33 years old and employed as a tradesperson. The third respondent is Ms D Gamer who is 30 years old and employed as a professional. Their mother is Ms C Gamer. Mr B Gamer and Ms D Gamer are second and third respondent respectively by virtue of the wife naming them as such in her Application in a Case filed on 17 June 2021.
On 7 July 2021 Ms C Gamer filed a notice of intervention by persons entitled to intervene. Margaret Neal of Marshalls & Dent & Wilmoth Lawyers act for Ms C Gamer.
Ms C Gamer is 65 years old. She and the husband commenced cohabiting in 1979 and married in 1986. They separated for about 6 months in 1988 and lived under the one roof. They separated finally in February or March 1994 when Mr B Gamer was 6 years old and Ms D Gamer was 2 years old. Ms C Gamer and the children moved into a property at M Street, Suburb J “(the M Street unit”). Ms C Gamer deposes that M Street unit was “purchased for me and the children to live in […] The purchase price was $280,000. A deposit of $28,000 was paid by [the husband] from the sale of N Street […] The property was encumbered by a mortgage with Commonwealth Bank and [the husband] paid the mortgage repayments. He also paid the rates, utilities and other living expenses such as food bills when we first separated.” Ms C Gamer’s affidavit is 13 pages and details many financial matters. The husband and Ms C Gamer are not divorced.
The wife alleges that towards the end of their relationship, in particular in the period between 2015 and 2020, the husband advanced significant sums of capital to two trusts, being the P Trust and the Q Trust.[1]
[1] Submissions of the Applicant on the Joinder and Injunctive Relief Sought against the Second to Fourth Respondents, paragraph 6.
The P Trust was established in 2015. It is a discretionary trust. The trust deed of the P Trust appears as annexure “BG-1” to the affidavit of Mr B Gamer sworn or affirmed on 6 July 2021. Mr B Gamer and Ms D Gamer are principals and primary beneficiaries of the P Trust. Pursuant to clause 23.1 the trustee may resign. Pursuant to clause 23.2 the principals have the right to remove any trustee from office without the consent or approval of any person and to appoint a replacement to any trustee who resigns or is removed or who vacates office for any reason. The husband is a secondary beneficiary of the trust. Upon settlement of The P Trust, Gamer Pty Ltd was the trustee of the Trust. It was an entity controlled by the husband. From 13 January 2021, Mr B Gamer and Ms D Gamer have been the directors of S Pty Ltd which is the trustee of the P Trust and the Q Trust.
The wife asserts that the P Trust holds assets valued at more than $5 million[2].
[2] Submissions of the Applicant on the Joinder and Injunctive Relief Sought against the Second to Fourth Respondents, paragraph 6.1.
The Q Unit Trust was established in 2020. The wife alleges that it was established by the husband, with his capital, and a corporate trustee he controlled. The Husband was made and remains the holder of all units. The wife alleges that the Q Unit Trust was used in 2020 by the Husband as a conduit to “gift” to the P Trust a sum of $1.5m raised by the Husband by way of bank loan secured by mortgage against Suburb J. The wife says that she was not informed of the Husband’s decision to transfer $1.5m of the equity in the Suburb J home to the P Trust via Q during the course of 2020. The husband agrees and deposes [7(b)] “[the] [Q] Unit Trust was the vehicle through which I made a further gift of $1,500,000 (borrowed from CBA and secured against [Suburb J]) to the P Trust in 2020.” The husband alleges that the Q Trust has no net value.
When the parties separated in November 2020, the Applicant wrote to the Husband seeking his undertaking not to deal with assets under his control. On 12 January 2021, the Applicant’s solicitors wrote to the Husband putting him on notice not to alter the structure of the trusts and other entities in which he held interests or positions of control and seeking disclosure with a view to negotiating a property settlement.
On 13 January 2021 S Pty Ltd (A.C.N. …) was incorporated.
On 13 January 2021, the second and third respondents Mr B Gamer and Ms D Gamer convened a meeting of S Pty Ltd, by telephone. Mr B Gamer deposes that they consented to the appointment of S Pty Ltd becoming trustee of the P Trust. Mr B Gamer states [18] that “[we] executed a deed of appointment and removal of the trustee on 13 January 2021, such that Gamer Pty Ltd was removed as trustee of the P Trust.”
On 14 January 2021, the Husband gave the undertaking requested by the wife not to alter the structure of the trusts and other entities in which he held interests or positions of control. He wrote:
“I confirm that I give an assurance that I will not undertake to sell, transfer, mortgage or encumber any asset that I control.”
The Applicant was not informed of the changes occurring with respect to the control of the P Trust until May 2021. Her requests for disclosure went unanswered. The Husband retracted his undertaking not to deal with his interests on 22 January and on 4 February the Applicant commenced this proceeding. On 31 May 2021 the Husband consented to injunctions to prevent further dealings and to disclosure and valuation orders.
In the wife’s affidavit filed 17 June 2021 the wife details various transactions by the husband. The husband deposes in his affidavit sealed 30 June 2021 that:
11(a)I have not provided all of the documents of the P Trust requested by Ms Daire to her as I do not consider that the assets of the P Trust form a part of the property available for division between Ms Daire and me. I consider that the P Trust belongs to my children.
11(b)I do not deny that I have made financial contributions to the P Trust nor that I managed the investments of the P Trust for their benefit. The transactions set out in Ms Daire's Affidavit relate to these transactions.
11(c)The circular transactions refer in part to my own company, Gamer Pty Ltd, the T Unit Trust and myself personally all held carried forward tax losses though share market losses. I allocated profits to secondary beneficiaries of the P Trust, which were noted as distributions in their respective tax returns. Those distributions were then forgiven and accounted for as accumulated income of the P Trust.
11(d)I agree that the transactions are confusing and that it would assist the parties for an accountant to review the transactions and provide a clear report of the net result of the funds gifted by me to my children via these various entities and transactions.
The husband resigned as a director from V1 Pty Ltd and transferred his shares to Mr U on 22 January 2021. He deposes [9(a) affidavit sealed 30 June 2021] that he no longer has a management role, and is not the accountant and has not spoken with Mr U for many months.
The husband resigned as a director from W Pty Ltd and transferred his shares to Mr X on 22 January 2021. He deposes [9(b) affidavit sealed 30 June 2021] that he no longer has a management role and is no longer the accountant. The husband deposes that Mr X and he have been acquaintances for over 40 years, and remain in periodic contact.
The husband resigned as secretary of Z Pty Ltd on 15 April 2021. He deposes [9(c) affidavit sealed 30 June 2021] that he was not aware that he remained as secretary of this entity, in which he says that he has never had an interest and from which he resigned as a director many years ago.
I am not addressed as to the significance of the husband’s departure from V1 Pty Ltd, W Pty Ltd and Z Pty Ltd. I note these occurred within a relatively short period. For someone who deposes that his medication “clouds my ability for clear thinking”, the husband was fairly active. His retirement as secretary of Z Pty Ltd on 15 April 2021 was five days prior to the husband being “admitted to L Hospital on 20 April 2021 after suffering a breakdown.”
On 31 May 2021 the Husband consented to injunctions to prevent further dealings and to disclosure and valuation orders.
The wife asserts[3] that “following limited and selective disclosure of documents in June 2021, it became apparent that the Husband had engaged in significant dealings with and within the P Trust and Q Unit Trust in the latter stages of the relationship of the parties, which had the effect of essentially shifting a significant quantum of his capital from his personal accounts and assets to the P Trust. The Husband then advanced through his Family Law solicitors the argument that the P Trust assets were no longer his property. All that is said by the Husband to remain available for adjustment between the Applicant and Husband is the equity in the two homes (approximately $500,000 each) and superannuation.”
[3] Submissions of the Applicant on the Joinder and Injunctive Relief Sought against the Second to Fourth Respondents, paragraph 10.
The wife asserts[4] that, in the absence of proper disclosure of the interests and conduct of the Husband, she was and remains unable to particularise the precise orders which will be necessary to effect a just and equitable division of all of that property between them. It is submitted that the property now held within the P Trust ought be regarded as property of the Husband and it would appear likely that a just and equitable division of property between the wife and Husband will be unable to be achieved without recourse to the property within that Trust.
[4] Submissions of the Applicant on the Joinder and Injunctive Relief Sought against the Second to Fourth Respondents, paragraph 11.
On 17 June 2021, the wife issued an Application in a Case, joining Mr B Gamer and Ms D Gamer as the Second to Fourth Respondents to the proceeding. The Application in a Case is supported by the Applicant’s Affidavit filed 17 June 2021.
The wife deposes[5] that the assets within the P Trust have always been treated by the Husband as his own, that personal funds of the Husband are regularly transferred back and forth between the Husband and the Trust [58-64], that the Financial Statements of the Trust record a history of distributions and other transactions by which the Husband or his entities consistently benefited from the income and capital of the Trust and that the Husband declared and pledged the assets of the P Trust as his own in support of applications for finance.
[5] Affidavit of Ms Daire filed 17 June 2021, paragraph 12.1.
The wife deposes[6] that the jointly held Suburb F home, in which she resides, has equity of about $550,000 on the Husband’s disclosure and the Suburb J home, in which the Husband resides has, since the $1.5m mortgage raised against it in 2020 and advanced to the P Trust via Q Unit Trust, equity of about $500,000. The Applicant further deposes, that doing the best she can from the incomplete disclosures provided by the Husband, the P Trust now holds at least $5m of what was previously the Husband’s personal capital. Each of the parties to the relationship otherwise hold superannuation interests, the Applicant having around $800,000 and the Husband declaring about $3.3m. The only other property of any substance declared by the husband is a testamentary trust of about $800,000, which he claims he holds for the Second and Third Respondents.
[6] Affidavit of Ms Daire filed 17 June 2021, paragraph 12.2.
It is submitted by the wife[7] that, “on the Husband’s case, there is about $1m equity in the two homes remaining for division between the Applicant and Respondent and at least $5m is now sequestered in the trusts and beyond the reach of the Court. It is further submitted that, whilst his position appears to be that the superannuation of the parties remains available for adjustment, his estranged wife has now intervened, apparently with his support, deposing to her intention to claim a property settlement including but not limited to the discharge of a mortgage over a home she says she holds on trust for their adult children and half of the Husband’s superannuation.”
[7] Submissions of the Applicant on the Joinder and Injunctive Relief Sought against the Second to Fourth Respondents, paragraph 13.
On 17 June 2021 the wife filed an Application in a Case which names Mr B Gamer, Ms D Gamer and S Pty Ltd as second to fourth respondents and, in sum, seeks:
(1)Within 14 days the husband file and serve an affidavit particularising transactions which fall within r.13.04(1)(g) of the Family Law Rules 2004 which is now repealed but, in substance, is replaced by r.6.06(3)(g) of the Rules.
(2)Restraints against the husband and his children and second and third respondents, Mr B Gamer and Ms D Gamer, from resigning or altering the appointor or trustee of the Q Unit Trust or P Trust.
(3)To restrain the fourth respondent, S Pty Ltd, from doing various things to lessen the value or dilute current control over the assets of the Q Unit Trust or P Trust.
(4)That the fourth respondent, S Pty Ltd provide discovery of certain documents and things in relation to the Q Unit Trust or P Trust.
By paragraph 5 of the Application in a Case, the wife seeks that “a single expert be appointed pursuant to the Family Law Rules 2004 (Cth) to:
5.1Audit the accounts of Gamer Pty Ltd, P Trust, Q Unit Trust, W Pty Ltd, V1 Pty Ltd, V2 Trust, V3 Pty Ltd, Y Trust, AA Trust, T1 Pty Ltd, T2 Superannuation Fund, T3 Superannuation Fund, T Unit Trust, BB Pty Ltd and any business or trust in which the parties or either of them have an interest (“Gamer Entities”) for the financial years ending 30 June 2018 to date and identify:
5.1.1 all transactions which altered the first respondent’s ownership or control of any of the Gamer Entities during the financial years ending 30 June 2018 to date;
5.1.2 the disposal of any property (whether by sale, transfer, assignment or gift) made by the Gamer Entities during the period 1 November 2019 to date;
5.1.3 the application of $1.5million borrowed by the first respondent from the Commonwealth Bank of Australia in February/March 2020 and purportedly gifted to Q Trust/P Trust;
5.1.4 all transactions in which the first respondent has sold, transferred, assigned, loaned or gifted property to any of the Gamer Entities for the following periods:
5.1.4.1 with respect to P Trust and Q Unit Trust, from the inception of the trusts to date;
5.1.4.2 for all other Gamer Entities, for the period 30 June 2018 to date.
5.2 Identify and value the first respondent’s legal and equitable interests in the property of the Gamer Entities at the current date.”
On 6 July 2021 the second to fourth respondents, Mr B Gamer, Ms D Gamer and S Pty Ltd, filed a response to an Application in a Case seeking:
·to summarily dismiss the wife’s application in a case filed 17 June 2021;
·remove Mr B Gamer and Ms D Gamer as second and third respondents;
·remove S Pty Ltd as a party to the proceeding; and
·costs.
That application is the application which I now determine.
Ms C Gamer swore an affidavit on 9 August 2021 in compliance with an Order made on 12 July 2021 requiring her to particularise financial support provided to her (Ms C Gamer) and either or both of her children (Mr B Gamer and Ms D Gamer) by the husband or any entity under his control and the terms of any formal or informal settlement between the husband and her (Ms C Gamer) following their separation in 1994. The wife alleges[8] that Ms C Gamer:
“has employed the same solicitor the husband engaged on his behalf in January 2021 and the husband appears to support [Ms C Gamer’s] claim to a share of his property and superannuation. [Ms C Gamer’s] claim increases the likelihood that a just and equitable division of property between the Applicant and Respondent will be unable to be effected without recourse to the Trust assets.”
[8] Submissions of the Applicant on the Joinder and Injunctive Relief Sought against the Second to Fourth Respondents, paragraph 15.
Ms C Gamer’s Response to the Amended Initiating Application of the wife filed 10 August 2021 seeks a transfer to her (Ms C Gamer) of the property at M Street, Suburb J, that he discharge the Westpac Bank mortgage encumbering the property, pay to her (Ms C Gamer) “such further monies as the Court deems appropriate and that the superannuation entitlements of the husband and herself (Ms C Gamer) the wife be divided equally between them. She also seeks that the husband pay and indemnify her (Ms C Gamer) for any claims arising out of the CC Unit Trust, make unspecified for her (Ms C Gamer’s) maintenance and that she otherwise be excused from further specifying the relief she seeks pending discovery.
The CC Unit Trust was established on 25 February 1994 with Ms C Gamer as the trustee. The trust deed is annexure “CG1” to the affidavit of Ms C Gamer affirmed 8 July 2021. The husband held all 28,000 units, 14,000 units on trust for each child. The initial sum settled was $28,000. Clause 26(d) provides that the trustee can be removed by the unit holders.
JOINDER OF THE SECOND TO FOURTH RESPONDENTS
All parties’ submissions reference the Family Law Rules 2004 (Cth). With effect from 1 September 2021 the Family Law Rules 2004 (Cth) (“the old rules”) were repealed and the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) (“the new rules”) commenced. The new rules apply to a proceeding, such as this application, which was commenced under, but not determined before, the repeal of the old rules. There has been no submission to the effect that the court should have regard to the old rules for any purpose other than context.
Relevantly, the new rules provide;
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.
Example: If a party seeks an order of a kind referred to in section 90AE or 90AF of the Family Law Act, a third party who will be bound by the order must be joined as a respondent to the proceeding.
3.03 Adding a party
(1) A party to a proceeding may include any person as a party by:
(a) naming the person as a party in the application, response or reply; and
(b) serving on the person a copy of the application, response or reply and all other relevant documents filed in the proceeding.
(2) A party may add another party after a proceeding has started by amending the application or response to add the name of the party.
(3) A party who relies on subrule (2) must:
(a) file an affidavit setting out the facts relied on to support the addition of the new party, including a statement of the new party’s relationship (if any) to the other parties; and
(b) serve on the new party:
(i) a copy of the application, amended application, response or amended response; and
(ii) the affidavit referred to in paragraph (a); and
(iii) any other relevant document filed in the proceeding; and
(c) serve on the other parties:
(i) a copy of the application, amended application, response or amended response; and
(ii) the affidavit referred to in paragraph (a).
(4) A party may only add another party after the first court date with the leave of the court.
(5) A party who relies on subrule (4) must:
(a) file:
(i) an Application in a Proceeding; and
(ii) an affidavit setting out the facts relied on to support the addition of the proposed new party, including a statement of the proposed new party’s relationship (if any) to the other parties; and
(b) serve on the proposed new party:
(i) a copy of the Application in a Proceeding; and
(ii) the affidavit referred to in subparagraph (a)(ii); and
(iii) any other relevant document filed in the proceeding; and
(c) serve on the other parties:
(i) a copy of the Application in a Proceeding; and
(ii) the affidavit referred to in subparagraph (a)(ii).
3.05 Party may apply to be removed
(1) A party to a proceeding may apply to the court to be removed as a party by filing an Application in a Proceeding.
(2) The party must file an affidavit stating:
(a) the relationship (if any) of the applicant to each other party; and
(b) the evidence in support of the application.
(3) The party must serve a copy of the application and affidavit on each other party to the proceeding.
The second and third respondents apply for the removal of themselves and their company S Pty Ltd as parties to the proceedings. The wife opposes that application. Rule 1.05 defines first court date as the first hearing or other court event after an application or appeal is filed (including a conference or procedural hearing). I construe the return of the wife’s Initiating Application on 29 June 2021 for a Case Management Hearing before Senior Judicial Registrar Sudholz as the first court date in this proceeding. Accordingly the wife requires leave to join the second to fourth respondents (r. 3.03(4)). However, whether the appropriate application is for disjoinder/removal of a party or for leave to join parties, the considerations are the same. The issue is to be resolved by determining whether the second to fourth respondents are persons whose right[s] may be directly affected by an issue in a proceeding, and whose participation as a party is necessary to determine all issues in dispute in the proceeding within the meaning of r.3.01 of the new rules.
Rules 3.03(a) (adding a party) and 3.05(a)(ii) (leave to add a party) each require the wife to file and serve an affidavit setting out the facts relied on to support the addition of the proposed new party, including a statement of the proposed new party’s relationship (if any) to the other parties. It appears that the wife’s long affidavit sworn 17 June 2021 is directed to that obligation.
It is submitted on behalf of the second and third respondents that they are not “necessary” parties. Further, insofar as their joinder is to obtain discovery, it “is tantamount to an abuse of process.”
In the matter of Wayne v Dillon and Anor [2008] FamCAFC 204 Warnick J determined an application for leave to appeal the order of a Federal Magistrate (as they were then known) giving leave to the wife to join a business partner of the husband to the proceeding. Relevantly the Federal Magistrates Court Rules 2001 (Cth) provided:
11.01 (1) Subject to any order of the Court, a person whose participation is necessary for the Court to completely and finally determine all matters in dispute in a proceeding must be included as a party in the proceeding.
…
11.02 (3)The Court may at any time order a party who has included a person as a party to file and serve on each other party in the proceeding an affidavit setting out the basis on which the person has been included.
It is similar to, but not the same as, r.3.01 of the new rules. The new rules require the person to be joined as persons whose right[s] may be directly affected by an issue in a proceeding in addition to the person being a person whose participation as a party is necessary to determine all issues in dispute in the proceeding. However, it is a distinction without a difference in this case.
In Wayne v Dillon Warnick J observed:
11. I do not wish in the circumstances to say more of the rule than is strictly necessary. It seems plain enough that under the rule joinder could be permitted even though no order was sought against a third person. A third person might be affected by an order though not directly the subject of it and/or it might be discernable that findings upon which an order is based bind a third person and so in either instance that third person should be party to the proceedings. However, neither of these situations describes the instant case.
…
13. In B Pty Ltd and Ors & K and Anor [2008] FamCAFC 113, the Full Court of the Family Court considered an appeal from orders permitting joinder of third parties. As with the Federal Magistrates Court Rules, the Family Law Rules 2004 also provide for joinder. Rule 6.02 is:
A person whose rights may be directly affected by an issue in a case, and whose participation as a party is necessary for the court to determine all issues in dispute in the case, must be included as a party to the case.
14. In the proceedings leading up to the appeal in B Pty Ltd & K (supra), because the application to amend to join the third parties was made outside the time permitting amendment as of right, leave was required. Before Morgan J, she and the parties treated the application for leave as being “of the nature of one for summary dismissal”.
15. In B Pty Ltd & K (supra), the Full Court said:
43.In the usual run of applications for alteration of property interests or parenting orders, the fact of marriage or parenthood, accompanied, in respect of the former, by a history of contribution to and acquisition of, property and, in respect of the latter, evidence that relates to any aspect of a child’s interests, is sufficient to make the existence of a “cause of action” apparent. No pleading in the traditional sense is required to identify further facts material to the cause.
44.However, the narrative or descriptive nature of evidence is often unsuited to formulate or particularise a cause of action against a third party. Something resembling a statement of claim will generally be necessary.
45.In Gould v Gould; Swire Investments Ltd (1993) FLC 92-434 Fogarty J (with Nicholson CJ and Finn J agreeing) said (at 80,451):
I conclude, consistently with Buckeridge and Barro, that the correct procedure, where an applicant in proceedings under the Family Law Act seeks relief against a person who is a stranger to the marriage or relationship, is to name that person as an additional respondent in the proceeding and set out the nature of the claim and the basis of it in the ordinary way in the application. (emphasis added)
46.Of relevance to the procedure adopted in the instant case, Fogarty J had also earlier said (at 80,448):
…good case management and fairness to the parties, in particular to a third party, suggest that in appropriate circumstances the claim against a third party, or more particularly the jurisdictional base of that claim, be determined as a preliminary issue where it is appropriate and practical to do so. …
47.Morgan J had before her no statement of claim or equivalent; only the orders which the wife wished to add and an affidavit of the wife, in which the wife said: …
…
49.In her reasons for the orders permitting amendment, Morgan J did not address the nature of the wife’s deposition, nor attempt to identify the material facts in support of the claim which the wife sought to add. It is at least unusual in respect of an application said to be of the nature of one for summary dismissal that attention is not given to the identification of facts material to the cause of action.
16. As seen, rule 11.02(3) of the Federal Magistrates Court Rules, permits the court to require a party to set out in an affidavit “the basis on which the person has been included”. It might be argued that in light of Rule 11.02(3), that when application is made to join a third party, no requirement for a statement of claim should be imposed. However, whether or not that is so, the rule that had particular application to the application before Purdon-Sully FM was Rule 11.01(1).
17. As seen, while neither that rule nor the relevant Family Law Rule refers to an applicant for leave to join having to establish a cause of action and supporting “case” which, taken at its highest, is arguable, that test was adopted by the parties before Morgan J and by her Honour. That approach was not attacked in the appeal in B Pty Ltd & K (supra). It is a test consistent with the references, in the passages quoted above from B Pty Ltd & K (supra), to the need for an applicant for joinder to set out the nature of the claim and the basis of it. As also seen, in Gould v Gould; Swire Investments Ltd (1993) FLC 92-434, Fogarty J particularly referred to the need for fairness to the third party. Any person joined to a proceeding ought, at that point, be able to take advice on whether the facts pleaded (if established) would lead to a successful claim. Joinder to litigation is a serious step with often significant financial consequences.
18. The word “necessary” in rule 11.01(1) must mean 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”. Thus, in an application such as was before the Federal Magistrate, such a question falls for consideration.
In this case no final relief is sought by the wife against the second and third respondents and no cause of action is stated in the affidavit filed in support of the application. The applicant wife’s submission addresses the failure to invoke a cause of action as follows:
19.For the reasons explained earlier in these submissions, the claim pleaded by the Applicant for an equal division of all of the property of the parties, including the assets of the P Trust, will directly affect the newly acquired interests of the Second to Fourth Respondents. Orders pursuant to s.106B and/or s.90AE & s.90AF will be required to effect a distribution of capital and/or income from the P Trust and Q Unit Trust to achieve a just and equitable division of property between the Applicant and First Respondent, let alone the Intervenor. Orders binding the Fourth Respondent, as the newly appointed Trustee of both Trusts, and Orders restraining the Second and Third Respondent in their capacity of appointor are likely to be necessary.
20. In Diem & Vho and Ors [2016] FamCA680, Foster J observed at [12] that the test laid down in B Pty Ltd and Ors & K and Anor is “not in itself dissimilar to what must be shown by the respondent to an application for an order for summary dismissal of a cause of action.” His Honour considered the often cited principles governing applications for summary dismissal in Lindon v The Commonwealth (No.2) (1996) 70 ALJR 541 at 544-545 per Kirby J. Those principles were considered by the Full Court of the Family Court in Friar & Friar [2011] FamCAFC 71 where it was observed that:
[52] “While Kirby J expressed the test as requiring the applicant for summary dismissal to demonstrate, by reference to their opponent’s documents, that “the opponent lacks a reasonable cause of action or is advancing a claim that is clearly frivolous or vexatious”, the test has also been formulated in many other ways (see General Steel Industries Inc v Commissioner for Railways (NSW) [1964] HCA 69; (1964) 112 CLR 125 at 129). However, for the purposes of an application for summary dismissal under the Act, the test is that laid down by the Rules, namely that the claim must be “frivolous, vexatious or an abuse of process” or has “no reasonable likelihood of success”.
[53] “Regardless of the formulation, “exceptional caution” must be used in applications for summary dismissal and the power should be “sparingly employed”: Barwick CJ in General Steel Industries (supra at 129).”
21. The same approach was undertaken by Berman J in Macdougal & Benson and Ors [2015] FamCA 552 in concluding at [74] that the appropriate test for releasing a third party from joinder as a party to proceedings under the Act “must be that which applies to an application for summary dismissal”.
22. Here, it cannot be said that the case pleaded by the Applicant for an adjustment of assets within the Trusts is frivolous, vexatious or an abuse of process or that it is doomed to failure or has no reasonable likelihood of success. The facts alleged by the Applicant in her Affidavit, if proven, are likely to lead to Orders which may bind the Second to Fourth Respondents and will certainly directly affect their rights.
23. To the extent that the Second to Fourth Respondents assert, in their submissions, a lack of particularity in the pleadings of the Applicant, that complaint ought be dismissed for the simple reason that it focusses on the drafting of the Application (which at this stage can’t be particularised further) and ignores the Affidavit in support, which clearly identifies the nature of the claim. It would be a nonsense to dismiss the claim now simply because, by reason of the non-disclosure of the First Respondent, the Applicant is unable to particularise the Orders she will require to effect a just and equitable division of property, only to have her file in due course an Amended Application specifying the Orders which will ultimately be required. If the Second to Fourth Respondents are seriously in doubt about the nature of the claims being pursued against them, the Applicant is in a position to file and serve an Amended Application seeking generalised Orders pursuant to s.106B and/or s.90AE and s.90AF directed to them, as identified in these submissions, but such an application would have to be further amended once disclosure and valuations are complete in any event.
It is also submitted on behalf of the wife[9] that the affidavit of Mr B Gamer filed in support of his response, “offers no explanation whatsoever of the basis for the very recent transactions which have occurred, apparently in response to the Applicant’s separation from the Husband and her solicitor’s letters seeking to prevent them, or any clue to as to what inconvenience or loss might flow from the injunctions sought. This silence is telling, particularly in light of the concessions of the Husband at paragraph 11 of his Affidavit that he or his entities were the source of the capital now held within the P Trust and that the “circular transactions” are “confusing” and require an accounting review and his consent to all of the interlocutory orders sought by the Applicant (in his Response and Orders made on 12 July 2021).” Whilst these observations are pertinent, the applicant wife cannot construct a case out of a failure to explain.
[9] Submissions of the Applicant on the Joinder and Injunctive Relief Sought against the Second to Fourth Respondents, paragraph 14.
In my opinion, it is not sufficient for the applicant wife to identify causes of action which may be brought by her after she has more information. A joined party should be entitled to know the case against them at any given time and to have the opportunity to formulate a defence in respect of that case. Given that the applicant wife’s submissions refer to her being able to file an application which identifies causes of action, I will provide her with the opportunity to do so. If the wife files an application which demonstrates that the second and third respondents are necessary parties, they will stay in. If the wife does not do so, then I will remove them as parties on the next return date. The wife’s application should be filed and served within 10 days and contain a statement of contentions of fact and law upon which she relies. Of course, the wife is not limited to the causes of action referred to in her submissions.
I have considered removing the second and third respondents now on the basis that they may be sought to be joined subsequently. However, litigation should not be a revolving door. I am satisfied that it is more cost effective and prudent to allow the wife an opportunity to rectify matters and then deal with consequential matters such as costs.
INJUNCTIVE RELIEF
The applicant wife also seeks injunctive relief against the second to fourth respondents. I have already made some injunctive orders as against the husband. I am not certain whether relief is still pressed against the second to fourth respondents. If it is, I can deal with the injunctive relief on the next occasion by which time any final applications, of which the interim relief may be said to be in aid, will be identified. Once the applicant’s contentions of fact and law are served (or not served), I anticipate that interim injunctive relief is a matter which could be easily adjusted between the parties in which case I can make orders by consent or unopposed and relieve the parties of the expense of contested interim proceedings.
COSTS
If any party seeks orders as to costs on the next date, they should provide the other parties with notice of that application and be in a position to inform me of the amount of professional costs claimed if calculated in accordance with the family law scale of costs. Come what may, it will be my strong preference to finalise costs on the next date rather than to require the parties to submit to an assessment process. Accordingly, I need to be in a position to quantify costs.
CONCLUSION
The Central Practice Direction- Family Law Case Management[10] makes it clear that proceedings must be run with regard to proportionality in relation to costs incurred by the parties and an equitable use of the court’s resources. There is a superficial attraction to requiring pleadings when third parties are involved. However, a statement of claim, can be a largely uninformative document. It is preferable to provide the applicant wife with an opportunity to regularise her case by providing contentions of facts and law to which the second to fourth respondents can respond than to strike out her application in a proceeding and have her start all over again.
[10] Federal Circuit and Family Court of Australia, Central Practice Direction- Family Law Case Management, 20 August 2021.
Given that the wife is now to prepare further documentation, the listing on 8 December 2021 does not appear necessary so I will adjourn it for another week. If the parties agree on a more convenient date, they can contact my Chambers and request an adjournment to the agreed date or something like that date when I am available.
I am satisfied that the Order is appropriate.
I certify that the preceding fifty-four (54) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Bennett. Associate:
Dated: 7 December 2021
SCHEDULE OF PARTIES
MLC 1134 of 2021 Respondents
Fourth Respondent:
S PTY LTD
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