Galante & Galante and Ors
[2019] FamCA 756
•18 October 2019
FAMILY COURT OF AUSTRALIA
| GALANTE & GALANTE AND ORS | [2019] FamCA 756 |
| FAMILY LAW – PRACTICE AND PROCEDURE – Joinder – Disjoinder application – Where the wife seeks to join third parties (the husband’s partner, the husband’s father and the husband’s brother) to the application in respect of property settlement – Where the third parties oppose joinder and seek disjoinder – Where no orders are sought against the third parties – Where the wife concedes that the purpose of joinder is to pursue the production of documents that she contends have been sought from the husband, are in his control and that he has refused to provide – Orders. |
| Family Law Rules 2004 (Cth) rr 1.09, 6.01(1), 6.04 |
| B Pty Ltd and Ors v K and Anor (2008) FLC 93-380 Dowling v The Colonial Mutual Life Society (1915) 20 CLR 509 Friar & Friar [2011] FamCAFC 71 Goldsmith v Sperrings Ltd and Ors [1977] 1 WLR 478 Hankinson & De Vries & Ors [2013] FamCA 455 Lindon v The Commonwealth (No. 2) [1996] HCA 14 MacDougal & Benson and Ors [2015] FamCA 552 |
| APPLICANT: | Ms Galante |
| 1st RESPONDENT: | Mr Galante |
| 2nd RESPONDENT: | Ms Dains |
| 3RD RESPONDENT: | Mr B Galante |
| 4TH RESPONDENT: | Mr C Galante |
| FILE NUMBER: | ADC | 3454 | of | 2017 |
| DATE DELIVERED: | 18 October 2019 |
| PLACE DELIVERED: | Adelaide |
| PLACE HEARD: | Adelaide |
| JUDGMENT OF: | Berman J |
| HEARING DATE: | 4 October 2019 |
REPRESENTATION
| COUNSEL FOR THE APPLICANT: | Ms Morosini |
| SOLICITOR FOR THE APPLICANT: | Di Morosini & Co |
| COUNSEL FOR THE 1ST RESPONDENT: | Mr Livesey QC with Mr Jordan |
| SOLICITOR FOR THE 1ST RESPONDENT: | Jordan & Fowler Family Lawyers |
| COUNSEL FOR THE 2ND RESPONDENT: | Mr Matta by telephone |
| SOLICITOR FOR THE 2ND RESPONDENT: | Gadens Lawyers |
| COUNSEL FOR THE 3RD RESPONDENT: | Mr Hoffman QC |
| SOLICITOR FOR THE 3RD RESPONDENT: | Charlton Rowley |
| COUNSEL FOR THE 4TH RESPONDENT: | Mr Hoffman QC |
| SOLICITOR FOR THE 4TH RESPONDENT: | Charlton Rowley |
Orders
That the second, third and fourth respondents be disjoined.
Note: The form of the order is subject to the entry of the order in the Court’s records.
IT IS NOTED that publication of this judgment by this Court under the pseudonym Galante & Galante has been approved by the Chief Justice pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
Note: This copy of the Court’s Reasons for Judgment may be subject to review to remedy minor typographical or grammatical errors (r 17.02A(b) of the Family Law Rules 2004 (Cth)), or to record a variation to the order pursuant to r 17.02 Family Law Rules 2004 (Cth).
| FAMILY COURT OF AUSTRALIA AT ADELAIDE |
FILE NUMBER: ADC 3454 of 2017
| Ms Galante |
Applicant
And
| Mr Galante |
Respondent
And
Ms Dains
Second Respondent
And
Mr B Galante
Third Respondent
And
Mr C Galante
Fourth Respondent
REASONS FOR JUDGMENT
Introduction
By Amended Initiating Application filed 30 August 2019 Ms Galante (“the wife”) seeks orders for property settlement against Mr Galante (“the husband”). Prior to the amendment to the wife’s initiating application, she sought a general order in the following terms:-
(1)That the Court determine the amount (including add-backs to apply) and split the matrimonial asset pool for the purpose of matrimonial property settlement between the parties.
The amendments to the application provided better detail and particularity of the orders sought by way of settlement of property and in addition named Ms Dains as the second respondent and Mr B Galante and Mr C Galante as third and fourth respondents in their capacity as trustees for the B Galante Family Trust (“BGFT”).
The orders that underpin the joinder of the second respondent seek a declaration that the second respondent holds beneficially on either constructive trust and/or resulting trust for the husband either the entirety and/or a portion of her legal interest in properties situate at:-
·J Street, Suburb K in the State of Victoria (“the Suburb K property”); and
·L Street, Suburb M in the State of South Australia (“the Suburb M property”).
The orders that underpin the joinder of the third and fourth respondents seek a declaration pursuant to s 78 of the Family Law Act 1975 (Cth) (“the Act”) and such orders pursuant to ss 85A and 90AE of the Act as are required to implement “the above” including but without being limited to:-
(a)Declarations that (save for the loan accounts owed to the wife and the adult children) the assets or a portion of the assets of the BGFT are held on trust for the respondent husband;
(b)Declarations that BGFT is the alter-ego of the husband;
(c)Declarations that (save for the loan accounts owed) the assets or a portion of the assets of the BGFT are the property of the husband;
(d)Declarations that the assets of the Galante Investment Trust (“GIT”) are held on trust for the husband and the wife;
(e)Declarations that the GIT is the alter-ego of the husband;
(f)Declarations that the assets of the GIT are property of the husband and wife;
(g)Orders pursuant to s 90AE of the Act that the husband, third and fourth respondents do all acts and sign all documents as are required to implement the above orders and declarations;
(h)Orders pursuant to ss 114 and 90AF of the Act, that pending the implementation of the orders and the declarations above, the respondent husband and the third and fourth respondents be restrained from doing any act which reduces the value of the assets of the GIT and BGFT.
The second, third and fourth respondents had not previously been joined to the proceedings.
By Application filed 25 September 2019 the husband seeks an order that the second, third and fourth respondents be disjoined.
By Response filed 4 October 2019 the second respondent sought to be removed as a party to the proceedings and asked the Court to dismiss both final and interim relief sought by the wife.
By Response filed 4 October 2019 the third and fourth respondents also sought to be removed as parties to the proceedings.
The wife opposes the disjoinder applications.
By orders made 5 April 2019 all applications for final orders were listed for hearing to commence 9 December 2019.
Trial direction orders were made that provided for the wife to file and serve her trial documents including any amended application, affidavits of evidence in chief and financial statement by 4.00 pm on 14 June 2019 and for the husband to file his trial material by 4.00 pm on 30 August 2019.
The wife did not comply with the trial directions and filed her documents on 30 August 2019.
There is no application to vacate the trial and the husband seeks only that he be given an extension of time to 14 October 2019 to file and serve his trial material.
The wife’s application for joinder of the second, third and fourth respondents and their applications for disjoinder was heard on 4 October 2019. Judgment was reserved.
It was noted that the wife was represented at the hearing by a solicitor. The husband was represented by Queens Counsel, the second respondent by Counsel and the third and fourth respondents by Queens Counsel.
I received Summaries of Argument from the second, third and fourth respondents.
Background
The wife is currently 57 years of age and the husband 59 years of age. They commenced a relationship in 1990 and were married in 1993. There are two adult children of the marriage.
The parties separated in 2009 and an Order of Divorce was made in December 2017.
The wife commenced proceedings for property settlement on 30 October 2017. The husband filed his Response on 7 December 2017.
It appears that the parties hold legal and equitable interest in property of significant value together with substantial superannuation entitlements both in public superannuation funds, but also in the parties’ self-managed superannuation fund.
The wife contends that the property of the BGFT and the GIT is the property of the husband and should be brought to account as property of the parties.
The BGFT is a discretionary family trust which was settled on 7 March 1985 and amended on 26 August 2011. The husband’s father Mr B Galante, the husband and his brother Mr C Galante are the trustees. The husband’s father is the appointor.
Of particular focus for the wife is the purported capital contribution by the husband’s father and mother in the 2010 financial year in the sum of $678,294 and in 2018/19 of $238,896. The wife is also concerned to explore investments purportedly made by BGFT in recent years.
Whilst not stated in the wife’s trial affidavit, the submissions of her counsel are that the wife believes that the capital contribution made by the husband’s parents, whilst from their account, had been provided to them by the husband.
The second respondent purchased the Suburb K property in 2012. The husband and the second respondent are joint borrowers for a substantial home loan secured over the property. The second respondent provided the deposit.
The equity in the Suburb K property is likely to be in the vicinity of $700,000.
In 2019 the second respondent purchased the Suburb M property for about $950,000 by obtaining a joint loan with the husband for $900,000 secured over the property.
There is little or no equity in the Suburb M property.
Rule 6.04 of the Family Law Rules 2004 (Cth) provide that a party may apply to be removed as a party to a case. The rules are silent as to the basis upon which a determination should be made.
Under the Act the wife does not need to seek leave to join a party to proceedings. The naming of a person on the application is all that is required. It could be argued that there is a lacuna in the rules. To that extent r 1.09 of the Rules provides:-
If the court is satisfied that:-
(a)a legislative provision does not provide a practice or procedure; or
(b)a difficulty arises, or doubt exists, in relation to a matter of practice or procedure;
it may make such orders as it considers necessary.
The test to determine the utility of an application for joinder is set out by the Full Court in B Pty Ltd and Ors v K and Anor (2008) FLC 93-380 where the Full Court held at [52]:-
We do not accept that it is proper to allow a 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 did not provide a document similar to a pleading which set out a statement of contentions of fact and law. In the ordinary course an applicant seeking joinder should set out the following:-
(a)To confirm or otherwise specify the relief they seek by way of final orders;
(b)To specify the material facts upon which they rely;
(c)To identify the statutory law and/or legal principles which they contend justify and entitle them to the relief they seek.
There is no such document or pleading and accordingly the focus must be upon the affidavit material and in particular, the wife’s recently filed trial affidavit.
Rule 6.02(1) provides:-
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.
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.
The critical consideration is that a party can only be considered a necessary party if an order is sought against them.
The argument put in opposition to the joinder of the second, third and fourth respondents is that no order is sought against them and given the size of the asset pool as conceded by the husband, even if successful in her claim against the second, third and fourth respondents, the property of the parties is sufficient to satisfy the wife’s claim.
No substantive relief is sought against the second, third and fourth respondents and as such there is no utility in their joinder.
A further contention is that the focus of the joinder is not for principal relief but rather as a strategy to seek discovery from the respondents in circumstances where the wife complains that the husband has been recalcitrant in satisfying his obligation to make full and frank discovery.
If the purpose of the wife in joining the second, third and fourth respondents is to pursue discovery and not seek any substantive relief, then their joinder may well be for an improper purpose and represent an abuse of process.
In Friar & Friar [2011] FamCAFC 71 the Full Court considered the summary dismissal application in Lindon v The Commonwealth (No. 2) [1996] HCA 14 and the principles outlined by Kirby J and said:-
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 (N.S.W.) [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”.
Counsel helpfully referred me to my own decision in MacDougal & Benson and Ors [2015] FamCA 552 where I held that the relevant consideration was that the proceedings or claim must be either “doomed to failure” or “obviously futile”.
It is axiomatic that if no orders are sought against the second, third and fourth respondents then it follows that the wife’s claim would be “obviously futile”.
At [143] to [157] of the wife’s trial affidavit she sets out the evidence in relation to the Suburb K and Suburb M properties. It could not be said that the matters raised in the affidavit are evidence but rather is argument, opinion and supposition. The following appears at [154]:-
I contend that [the husband] contributed the entirety of the required equity for the purchase of the Suburb K property at the time of its purchase.
There is no evidence that supports that contention.
The claim in respect of the Suburb M property does no more than repeat the husband’s contention that there is no equity in the Suburb M property.
The wife relied upon her Affidavit filed 2 October 2019 in support of the retention of the second, third and fourth respondents in the proceedings.
She asserts that the husband has “disclosed several inconsistent, incompatible versions of his defacto’s (sic) source of funding for the purchase of the Suburb K property”[1] and complains that the husband should have made full and frank disclosure if it is his contention that he has no equitable interest in the property.
[1] Wife’s affidavit filed 2 October 2019 [18].
The orders sought by the wife in relation to the second respondent is that there be a declaration that the Suburb K and Suburb M properties are held on either a constructive trust or a resulting trust for the husband. There is no evidence in the wife’s trial affidavit which would support such a contention and in any event there is no order sought against the properties directly.
The wife does not seek to interfere with the legal interest of the second respondent and in submissions, the wife’s counsel conceded that no order would be sought against the properties given that even if correct in her assertion, the property that exists for division between the parties would be sufficient to satisfy the wife’s claim.
Simply put, the value that could be attributed to the husband’s equitable interest (if the wife is successful in her claim) would form part of the assets of the parties with the properties not being required to give effect to the orders that the wife seeks.
Similar considerations apply to the wife’s claim in respect of BGFT. The wife seeks declarations pursuant to s 78 and orders pursuant to ss 85A and 90AE of the Act. The evidence that the wife relies upon is set out in [137] to [142] of her trial affidavit. The wife asserts the following at [138]:-
There have been significant capital contributions to the trust from [the husband’s] parents … who are now aged 91 and 88 years old, including:
138.1A capital contribution of $678,294 in the year ending June 2010, approximately one year after [the husband] and I separated …;
138.3A capital contribution totalling $238,896 for the years ending 30 June 2018 and 2019…
The gravamen of the wife’s claim is set out at [141] where she opines that as self-funded retirees it would have been beyond the financial wherewithal of the husband’s parents to make the capital contributions as alleged and by necessary implication, the wife considers that the funds were originally provided by the husband.
Again, no direct orders are sought against the property of BGFT as being required to effect a settlement.
Even if the wife establishes that BGFT is the alter ego of the husband it is conceded by the wife’s counsel that no order is sought against the corpus of the trust.
The wife’s Affidavit filed 2 October 2019 does not advance the matters raised by the wife in her trial affidavit and does no more than expand upon her previous allegations that the husband should not be believed in his contention that he has contributed no funds and that the contributions made by his parents were not in any way promoted, influenced or sourced from him.
The wife seeks orders pursuant to s 106B of the Act that refer to a restoration of any diminution in the loan accounts of the wife and/or the adult children in respect of the trust.
The wife seeks the following order:-
(5)That consequential to paragraph 4 [of the orders sought pursuant to section 106B] the Husband, Third and Fourth respondents forthwith do all such acts and things to pay the wife the entirety of the balance of the loan accounts of the WIFE and the adult children held by the BGFT.
It may well be that what the wife seeks by way of final relief are orders that will enable the restored loan accounts to be paid.
Again, there is no evidence as to those matters and nothing to suggest that whatever the sum might be it could not be adjusted against the property of the parties.
The wife refers to the husband’s opposition to the joinder of the second, third and fourth respondents as being unnecessary in circumstances where he intends that the joined parties will be called.
The following appears at [56] to [58] of the wife’s affidavit filed 2 October 2019:-
56.At paragraph 38 the Husband names the parties available to be cross-examined at the trial. However, I require full and frank disclosure well prior to the trial hearing of documents for the forensic accounting investigation and analysis that the Husband is seeking to avoid. Cross-examination is not disclosure upon a timely basis – which the Husband has failed to provide throughout the proceedings.
57.The parties sought to be joined are required as part of these proceedings for the purpose of imposing disclosure obligations upon them, and also to obtain documents that the Husband has failed to disclose and/or avoided disclosing as being third party documents.
58.Further, Orders can be made against the third parties or otherwise be unenforceable.
The wife sets out with some clarity that the purpose of joinder is to pursue the production of documents that she contends have been sought from the husband, are in his control and that he has refused to provide.
The wife does not support the retention of the second, third and fourth respondents as parties to the proceedings by setting out the particulars of the orders that she seeks.
The Court is reminded that at the case management hearing on 5 April 2019 the wife’s counsel agreed that the second respondent was not a third party to the proceedings.
The application for disjoinder of the second, third and fourth respondents succeeds on the basis that the joined parties are not necessary parties in the sense that their rights are not directly affected by an issue in the proceedings given that the wife does not seek any effective order against them. The respondents are not necessary to determine issues in dispute and the husband in any event intends that they be called.
The concession by the wife in her affidavit repeated by her counsel’s submission that the purpose of the joinder was to compel the respondents to make discovery is an improper purpose.
In Goldsmith v Sperrings Ltd and Ors [1977] 1 WLR 478 at 498 – 499 the Court held that:-
[T]he defendants have to show that the plaintiff has an ulterior motive, seeks a collateral advantage for himself beyond what the law offers, is reaching out ‘to effect an object not within the scope of the process’… In a phrase, the plaintiff’s purpose has to be shown to be not that which the law by granting a remedy offers to fulfil, but one which the law does not recognise as a legitimate use of the remedy sought…
In Dowling v The Colonial Mutual Life Society (1915) 20 CLR 509 at 521-522, Isaacs J distinguished between the use of a process and its abuse as follows:-
If the object sought to be effected by the process is within the lawful scope of the process, it is a use of the process within the meaning of the law, though it may be malicious, or even fraudulent, and in the circumstances the fraud may be an answer; if, however, the object sought to be effected by means of the process is outside the lawful scope of the process and is fraudulent, then – both circumstances concurring – it is a case of abuse of that process and the Court will neither enforce nor allow it to afford any protection, and will interpose, if necessary, to prevent its process being made the instrument of abuse.
Conclusion
Whilst I do not go so far as to find that the joinder of the second, third and fourth respondents would amount to an abuse of process, their joinder is of no utility and I propose to order that they be disjoined.
I make orders as appear at the commencement of these reasons.
I certify that the preceding seventy one (71) paragraphs are a true copy of the reasons for judgment of the Honourable Justice Berman delivered on 18 October 2019.
Associate:
Date: 18 October 2019
6
5
1