Darcy & Darcy
[2023] FedCFamC1F 208
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Darcy & Darcy [2023] FedCFamC1F 208
File number(s): SYC 7201 of 2020 Judgment of: SCHONELL J Date of judgment: 29 March 2023 Catchwords: FAMILY LAW – PRACTICE AND PROCEDURE – Joinder – Where the wife sought to join the husband’s mother and the estate of his late father – Where no orders are sought against them – Orders made for an amended response to be filed – Non-disclosure – Where both parties assert that the other party has not provided full and frank disclosure – Orders made for the parties to file affidavits setting out details of disclosure that has and has not been provided. Legislation: Family Law Act 1975 (Cth) s 79
Family Law Rules 2004 (Cth)
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) rr 3.01, 3.03
Cases cited: B Pty Ltd and Ors & K and Anor (2008) FLC 93-380; [2008] FamCAFC 113
Galante & Galante and Ors [2019] FamCA 756
Kannis & Kannis (2003) FLC 93-135; [2002] FamCA 1150
Oriolo & Oriolo (1985) FLC 91-65; [1985] FamCA 54
State of Victoria v Sutton (1998) 195 CLR 291; [1998] HCA 56
Wayne v Dillon and Another (2008) 40 Fam LR 543; [2008] FamCAFC 204
Weir & Weir (1993) FLC 92-338; [1992] FamCA 69
Division: Division 1 First Instance Number of paragraphs: 48 Date of hearing: 24 March 2023 Place: Heard in Sydney, delivered in Melbourne Counsel for the Applicant: Mr Bell Solicitor for the Applicant: Horowitz & Bilinsky Counsel for the Respondent: Mr Batey Solicitor for the Respondent: Holmes Donnelly & Co Solicitors Counsel for Ms B Darcy and the Estate of the late Mr C Darcy: Ms Bailey Solicitor for Ms B Darcy and the Estate of the late Mr C Darcy: HWL Ebsworth Lawyers ORDERS
SYC 7201 of 2020 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS DARCY
Applicant
AND: MR DARCY
Respondent
MS B DARCY
Other
ESTATE OF MR C DARCY
Other
order made by:
SCHONELL J
DATE OF ORDER:
29 MARCH 2023
THE COURT ORDERS THAT:
1.Within 14 days, the applicant wife (“the wife”) file an Amended Application setting out:
(a)The final and interim property orders she seeks; and
(b)The orders, if any, sought against Ms B Darcy.
2.Within 14 days, the wife file a Points of Claim in respect of any orders sought against Ms B Darcy.
3.Within 28 days, the respondent husband (“the husband”) file any Response to any Amended Application filed by the wife pursuant to Order 1.
4.Within 28 days, Ms B Darcy file any Response and Reply to the Points of Claim should the wife seek any orders against her.
THE COURT ORDERS BY CONSENT THAT:
5.Order 20 made on 1 December 2020 be discharged to the extent of a further draw down in an amount of “75,000” to be placed in the husband’s solicitors trust account for the purposes of meeting the costs of the Arbitration, providing that:
(a)The Arbitration occurs before 24 September 2023
(b)The draw down not to take place until 24 August 2023
THE COURT FURTHER ORDERS THAT:
6.The wife within 7 days file and serve an affidavit as to the documents to which she has previously sought disclosure identifying with precision when disclosure was requested and attesting that the documents have not been provided.
7.The husband within 14 days thereafter respond to the wife’s affidavit attesting to when disclosure was made in relation to the documents sought and in relation to documents that have not been disclosed an explanation as to why not and when disclosure will be made.
8.The husband within 7 days file and serve an affidavit as to the documents to which he has previously sought disclosure identifying with precision when disclosure was requested and attesting that the documents have not been provided.
9.The wife within 14 days thereafter respond to the husband’s affidavit attesting to when disclosure was made in relation to the documents sought and in relation to documents that have not been disclosed an explanation as to why not and when disclosure will be made.
10.Both parties file and serve within 3 days an Undertaking as to Disclosure.
11.The Amended Application in a Proceeding filed 14 March 2023 and the Amended Response filed 22 March 2023 are dismissed.
THE COURT NOTES BY CONSENT THAT:
A.The account to which Order 20 of 1 December 2020 and Order 5 herein is the “Equity Manage Account” being Account …39 which as at the date of these Orders has an available draw down of $215,276.82
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 Darcy & Darcy has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
SCHONELL J:
By Amended Application in a Proceeding filed 14 March 2023, the applicant wife (“the wife”) seeks orders that she be granted leave to add two parties to the current proceedings between herself and the respondent husband (“the husband”), orders staying an arbitration, costs in support of the arbitration, and various orders by way of disclosure including asking specific questions.
The wife’s application in relation to joinder is opposed by the husband and he seeks orders that the parties do all acts and things necessary to undertake an arbitration within 21 days. In that respect, he proposes that the parties equally meet the costs of the arbitrator.
Ms Bailey of counsel appeared for the putative parties the subject of the joinder application.
The wife relied upon the following documents:
(1)Amended Application in a Proceeding filed 14 March 2023;
(2)Affidavit of wife filed 14 February 2023; and
(3)Case Outline document.
The husband relied upon the following documents:
(1)Amended Response to Application in a Proceeding filed 22 March 2023;
(2)Affidavit of husband filed 22 March 2023;
(3)Financial Statement filed 22 March 2023; and
(4)Case Outline document.
According to the husband, the parties commenced cohabitation in about 2006, married in mid-2010 and separated on a final basis on 4 August 2020. The wife does not appear to take issue with these dates other than in respect of separation which she says occurred in May 2020.
There are two children of the parties’ relationship who are currently aged 13 and 10 years. The current application relates to financial matters and thus issues in relation to the children are not relevant to the current dispute before the Court.
The husband contends that the asset pool of the parties comprises of a property owned by him at Suburb F having a value, he contends, of approximately $4,000,000. He says that the property is subject to a mortgage to the ANZ bank of approximately $585,000 and subject to various loan agreements and an unregistered mortgage to his mother totalling approximately $1,500,000. In addition, the husband has a superannuation entitlement of approximately $578,000 and some items of movable property.
The wife seems to contend that the pool of assets of the parties is greater than that contended for by the husband. As best I can divine from her affidavit and her counsel’s submissions, she contends that the husband has some interest in his parents company, albeit the extent of that interest and what it is was I found difficult to ascertain.
She asserts in her affidavit in support of the application for joinder as follows:
3. The proposed Second Respondent in this Application in a Proceeding is [Mr Darcy’s] mother [Ms B Darcy] (“[Ms B Darcy]”) of [E Street, Suburb F]. She was born in 1948 now 74 years. The proposed Third Respondent is the estate of [Mr Darcy’s] father the late [Mr C Darcy] (“[Mr C Darcy]”). The proposed joinder may be affected by what if any disclosure is made about the estate.. [Ms B Darcy] and [Mr C Darcy] are purported lenders in a transaction I submit is a sham referred to for the first time in [Mr Darcy's] Financial Statement. Supporting documents or particulars including when and how any money was provided have not been disclosed. It may have been an idea that came up after our marriage counselling in 2015 as that year and the previous were difficult for us but I cannot be certain how the assertion arose.
The wife also contends that the husband has been remiss in his disclosure obligations, making reference to various vehicles that she contends have been sold and asserting that there has been a failure to disclose generally.
The husband denies the wife’s allegations in relation to non-disclosure. He also contends that the wife has failed to disclose.
On 1 August 2022, I made orders by consent referring the parties’ dispute to arbitration.
The orders provided that the parties would attend an arbitration within twelve weeks of the date of the making of the order. It is clear from events that have transpired that the date and indeed even the readiness of the parties to attend arbitration was at best aspirational. The issue of joinder was well known to the wife at the time I was invited to make the orders. It was not disclosed to me at the time I was invited to make the orders that this was an extant issue. Still, nearly eight months later, the wife is in no position to attend arbitration and indeed her counsel indicated that she would not be ready to attend arbitration for a further twelve weeks which assumes that the issue of joinder and the disclosure obligations are complied with.
JOINDER
Section 79(10)(b) of the Family Law Act 1975 (Cth) (“the Act”) provides that any other person whose interests would be affected by the making of an order is entitled to be joined to the proceedings.
The Act reflects what McHugh J observed in State of Victoria v Sutton (1998) 195 CLR 291 that:
77.The rules of natural justice require that, before a court makes an order that may affect the rights or interests of a person, that person should be given an opportunity to contest the making of that order. Because that is so, it is the invariable practice of the courts to require such a person to be joined as a party if there is an arguable possibility that he or she may be affected by the making of the order. …
(Footnote omitted)
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.
While r 3.03(4) provides that a party who seeks to join someone to proceedings after the first court date must seek leave to do so.
In Wayne v Dillon and Another (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”. …
The wife seeks to join the husband’s mother Ms B Darcy and what is described as the estate of the late Mr C Darcy, being a reference to the husband’s late father. The basis of the application for joinder is presumably what I have referred to earlier in the wife’s affidavit.
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.
The wife in this application has not provided a document similar to a pleading setting out a statement of contentions of fact and/or law that would give rise to the relief that she seeks. Indeed, with the greatest of respect to the wife, the nature of the relief is in anything approaching precise form.
In Galante & Galante and Ors [2019] FamCA 756, Berman J observed as follows:
35.In Hankinson & De Vries & Ors [2013] FamCA 455 Kent J considered that r 6.02 merely reflected that a person or party who may be affected by proceedings should be afforded procedural fairness. That is, there should be some level of formality in respect of notice concerning the relief sought.
36.The critical consideration is that a party can only be considered a necessary party if an order is sought against them.
With the greatest of respect to his Honour, I adopt his Honour’s reasoning.
No order is at present sought against the putative joinder parties.
The parties subsequently prepared a Minute of Order which Ms Bailey indicated that she did not have instructions to consent to but if orders were made to that effect she would be in a position to meet. Those orders were as follows:
Within 14 days the wife file an amended Application setting out:
1) The Final and Interim Property Orders she seeks
2) The Orders if any sought against [Ms B Darcy]
3) A Points of Claim in respect of Any Orders sought against [Ms B Darcy]
4)That the Husband file any response to any amended Application filed by the wife pursuant to Order 1 within 28 days
5)That should the wife seek any Order against [Ms B Darcy] that [Ms B Darcy] file any Response within 28 days
(Exhibit 1)
I propose to make orders in the terms of that document as this matter has now been around for over two years and the costs are becoming increasingly prohibitive. It seems to me that this is the only way in which this matter will ever approach being ready for an arbitration.
COSTS OF ARBITRATION
The wife sought orders that the husband pay a sum of money that would enable the parties to attend an arbitration. Ultimately agreement was reached between the husband and the wife that the parties attend an arbitration to occur before 24 September 2023. In that respect, Orders 6 and 7 of the Minute of Order were to the following effect:
6)That Order 20 made on the 1/12 be discharged to the extent of a further draw down in an amount of “75,000” to be placed in the husbands solicitors trust account for the purpose of meeting the costs of the Arbitration, providing that
a) The Arbitration occurs before 24 September 2023
b) The draw down not to take place until 24 August 2023
7)That it be noted that the account to which Order 20 of 1/12/20 and Order 6 herein is the “Equity Manage Account being Account […39] which as at the date of these Orders has an available draw down of $215,276.82
(As per the original)
(Exhibit 1)
Ms Bailey indicated that in the event that her clients were joined to the proceedings, they would be able to meet an arbitration to occur on or about 24 September 2023.
Accordingly, I propose to make orders that deal with those provisions.
NON-DISCLOSURE
The remaining parts of the wife’s application related to disclosure. In that respect, she sought the following orders:
7 Order the Husband to provide within 14 days full and proper disclosure including without limiting same disclosure of any interest in any corporate entity or benefits received therefrom directly or indirectly and such disclosure as sought by the wife through her solicitors; or relating to any claim by his parents including any participation by himself in the lodgment of the caveat or the advance of any claim ; Or the source or dispersal of any funds for the acquisition or sale of any property identified by the parties any finance refinance or Application for finance; Or otherwise sought by the Wife through her Solicitors; Provided that if he is unable or opposes doing so then his written explanation
…
9. Order that within 14 days or such time as the Court shall think fit; and pursuant to Rule 6.02 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021"Family Law Rules" the parties file Undertakings as to Disclosure.
10. Order that within 14 days or such time as the Court shall think fit; the Husband provide full and frank disclosure of all information relevant to proceedings including but not only disclosure sought in correspondence to his solicitors including by letter dated 09 March 2023 and letter dated 14 March 2023 and time to time previously or thereafter.
11.Order that within 14 days or such time as the Court shall think fit; without limiting relief sought above the Husband provide full and frank disclosure of his role (in any capacity) and benefits or entitlements including but not only from use of credit debit or other cards; purchases from store supplier or other accounts including loyalty or frequent flyer points whether or not such cards or accounts be in his name (solely or jointly) or any business including [D Pty Ltd]; "[D Pty Ltd]" or [D1 Pty Ltd], "[D1 Pty Ltd]" or the entity described as "[G Company]".
12. Order that within 14 days or such time as the Court shall think fit the Husband shall provide to the Wife (by their Solicitors) an Authority directed to th ird parties including but not only banks or credit providers; authorising them to provide financial information about him and his role in the above businesses (whether in his individual capacity or as servant director or officer of any business including [D Pty Ltd] and [D1 Pty Ltd] or “[G Company]”; such Authority in a form agreed by their Solicitors in writing or in a form and on such conditions as determined by the Court.
13. Order that within 14 days or such time as the Court shall think fit and pursuant to Part 6.3 of the Family Law Rules the Wife be permitted to serve Specific Questions and the Husband reply thereto within 14 days or such time as the Court shall think fit.
(As per the original)
The orders sought do not express a period of time to which the documents relate. When enquiry was made of the wife’s counsel as to the period covered, he indicated that it was 10 years.
The wife in her affidavit identified what she contended was a systematic failure by the husband to provide disclosure of documents and, in particular, identified that a mortgage that the husband was a party to and is referenced in his Financial Statement has not been disclosed by the husband. The husband’s counsel indicated that it was not within his client’s possession, custody or control.
I further understand from the wife’s counsel that requests for a copy of the unregistered mortgage from the solicitors for the putative joinder parties has not resulted in the document being produced. Of course, they do not have an obligation to produce documents until such time as orders are sought against them. However, once they are parties to the proceedings, which it is envisaged they will be by the terms of the orders I have referred to earlier, then the obligation of disclosure falls upon them relevant to the issues in the proceedings.
The husband’s response to the issue of disclosure is that the parties each file undertakings as to disclosure and that will thereafter fix a line in the sand. The wife submitted that the only way forward is the orders that she seeks.
I regard Orders 7, 11 and 12 in the form in which they are drawn by the wife to be too wide and unreasonable in length where they call for documents spanning ten years. I note in relation to Order 11 that the husband’s counsel indicated that the husband does not have a personal credit card but does have some frequent flyer points. In the event that the wife re-drew these orders into a more reasonable and targeted form, then there may well be less opposition to them.
Both parties to the litigation have an obligation of disclosure.
The authorities make plain that a party to financial proceedings is required to make full and frank disclosure of their financial position (see Oriolo & Oriolo (1985) FLC 91-653; Weir & Weir (1993) FLC 92-338 (“Weir”)). That case law is reinforced by the Rules. The duty of disclosure is absolute. It is a continuing obligation throughout the litigation and until the point of judgment. It does not relate simply to documents but includes information relating to all relevant and material facts.
In Kannis & Kannis (2003) FLC 93-135, the Full Court underscored the relevance and consequence of a failure to disclose:
51.Whether the non-disclosure is wilful or accidental, is a result of misfeasance, or malfeasance or nonfeasance, is beside the point. The duty to disclose is absolute. Where the Court is satisfied the whole truth has not come out it might readily conclude the asset pool is greater than demonstrated. In those circumstances it may be appropriate to err on the side of generosity to the party who might be otherwise be seen to be disadvantaged by the lack of complete candour. …
Assertions as to non-disclosure are in many respects the bane of the Court and parties. All too often, much of the litigation and the costs attached to it becomes consumed by pursuing the issue of disclosure sometimes to no or little effect.
In the course of interlocutory proceedings, the Court is unable to make findings on disputed facts. As a consequence of the submissions, it became apparent that there was a dispute between the parties as to whether or not documents had in fact been disclosed.
Neither party’s proposal adequately addresses the problem. A pragmatic solution is required.
The only way to resolve this issue is to require the parties to give sworn evidence about this issue. In that way, at the final hearing, the parties can be tested on the assertions of non-disclosure and the Court can determine who is telling the truth.
The jurisprudence on this issue is well settled. In Weir, the Full Court stated at 79,593 that:
It seems to us that once it has been established that there has been a deliberate non-disclosure, which follows from his Honour's findings in this case, then the Court should not be unduly cautious about making findings in favour of the innocent party. To do otherwise might be thought to provide a charter for fraud in proceedings of this nature.
Deficiencies in disclosure permit the Court to adopt a robust approach in determination of the s 79 application.
I will therefore require the wife to file an affidavit within 7 days in relation to her contentions that the husband has not disclosed various documents. She is to identify with precision when and what documents have been requested. I will direct that the husband file an affidavit in reply within 14 days, identifying by reference to each particular category of documents asserted by the wife, what has been disclosed, when those documents have been disclosed, and if a document has not been disclosed why not.
I will similarly direct the husband to file an affidavit within 7 days in relation to his contentions that the wife has not disclosed various documents. He is to identify with precision when and what documents have been requested. I will direct that the wife file an affidavit in reply within 14 days, identifying by reference to each particular category of documents asserted by the husband, what has been disclosed, when those documents have been disclosed, and if a document has not been disclosed why not.
I will also direct the husband and wife file to file within 3 days undertakings as to disclosure.
The parties can thereafter pursue these matters at a final hearing in relation to disclosure to date. It may well be that a party’s credit will become a significant issue in the proceedings and that may have of itself consequences including orders for costs.
At this stage I do not propose to accede to an order that the wife be permitted to serve specific questions. Until such time as the ambit of the dispute is made clear by the terms of the parties’ orders in respect of the joinder application and more specific disclosure requests are sought, at this stage, an order in relation to specific questions is premature.
I certify that the preceding forty-eight (48) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Schonell. Associate:
Dated: 29 March 2023
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