Genesalio & Genesalio
[2023] FedCFamC1F 160
FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA
(DIVISION 1)
Genesalio & Genesalio [2023] FedCFamC1F 160
File number(s): MLC 7657 of 2018 Judgment of: JOHNS J Date of judgment: 26 April 2023 Catchwords: FAMILY LAW – PRACTICE AND PROCEDURE – joinder – application by the wife for joinder of the husband’s brother – application by the wife for joinder of a company of which the husband is the current director – where the wife claims the husband and his brother acted in partnership – where the wife claims the husband holds an interest in properties in which legal title is vested in his brother – where the wife claims the husband and his brother have acquired property for their mutual benefit throughout the parties’ marriage – where the wife seeks valuation of a number of items of property registered in the name of the husband’s brother – where a significant factual dispute exists between the parties – where that factual dispute requires determination at a final hearing – where the husband has failed to provide full and frank disclosure – where the husband concedes he is a specified beneficiary of a Trust which holds a number of items of property sought to be valued by the wife – where the husband’s brother should be joined to the proceedings Legislation: Administration and Probate Act 1958 (Vic) Part IV
Family Law Act 1975 (Cth) ss 44(6), 79(10)(b)
Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) Rules 3.01, 3.03
Cases cited: AC and Ors & VC and Anor [2013] FamCAFC 60
B Pty Ltd and Ors & K and Anor (2008) FLC 93-380
Bianchi & Bianchi [2022] FedCFamC2F 25
Chen & Chen & Ors (No.2) [2017] FamCA 285
Daire & Gamer [2021] FedCFamC1F 261
Galante & Galante and Ors [2019] FamCA 756
King & King [2021] FamCA 603
Lin & Ruan [2021] FamCAFC 90
Mansfield & Mansfield [2017] FCCA 13
Milligan & Milligan and Anor [2017] FamCAFC 218
Palermo v Palermo [2015] WASCA49
Rigby & Kingston & Anors (2020) FamCA 415
Shipman & Shipman [2021] FamCA 584
Simmons and Anor & Simmons [2008] FamCA 1088
Skelton & Lindop [2022] FedCFamC1A 47
Wayne & Dillon & Anor [2008] FamCAFC 204
Division: Division 1 First Instance Number of paragraphs: 114 Date of hearing: 21 November 2022 Place: Melbourne Counsel for the Applicant: Mr Dinelli SC & Ms Frederico Solicitor for the Applicant: Mazzeo Lawyers Counsel for the First Respondent: Ms Vohra SC Solicitor for the First Respondent: Matthew Oldham Barrister & Solicitor Proposed Second Respondent: In Person (Self-Represented Litigant) Counsel for the Proposed Third Respondent: Ms Dwyer Solicitor for the Proposed Third Respondent: Franzese & Associates Lawyers & Consultants ORDERS
MLC 7657 of 2018 FEDERAL CIRCUIT AND FAMILY COURT OF AUSTRALIA (DIVISION 1)
BETWEEN: MS GENESALIO
Applicant
AND: MR GENESALIO
First Respondent
MR M GENESALIO
Proposed Second Respondent
B PTY LTD
Proposed Third Respondent
order made by:
JOHNS J
DATE OF ORDER:
26 April 2023
THE COURT ORDERS THAT:
1.That Mr M Genesalio (“second named Respondent”), brother of the respondent husband (“first named Respondent”), be joined to these proceedings as a second named respondent.
2.That the first named Respondent and second named Respondent personally and/or in their capacity as directors, shareholders and/or trustees of any relevant entity cooperate with, facilitate, and provide access to any premises necessary to enable the valuation of the following properties, motor vehicles and number plates by a single expert:
(a)1 D Street, Suburb C in the State of Victoria (Volume … Folio …), owned by E Pty Ltd (“E Pty Ltd”) allegedly on trust for the E Trust Fund;
(b)F Street, Suburb C in the State of Victoria (Volume … Folio …), owned by E Pty Ltd allegedly on trust for the E Trust Fund;
(c)1 G Street, Suburb C in the State of Victoria (Volume … Folio …), allegedly owned by the second named Respondent;
(d)H Street, Suburb J in the State of Victoria (Volume … Folio …), owned by B Pty Ltd allegedly as trustee for the K Unit Trust and all units in the K Unit Trust are allegedly owned by E Pty Ltd allegedly as trustee for the E Trust Fund;
(e)L Street, Suburb C in the State of Victoria (Volume … Folio …), owned by N Pty Ltd allegedly as trustee for the N Trust; and
(f)2 G Street, Suburb C in the State of Victoria (Volume … Folio …), owned by the first named Respondent,
(g)(the properties referred to in 2(a) to 2(f) inclusive, are hereinafter referred to as the “alleged partnership properties”),
(h)All motor vehicles owned by the first named Respondent and/or the second named Respondent personally, and/or in their capacity as directors, shareholders and/or trustees of any relevant entity inter alia AA Pty Ltd as trustee for the AA Trust, including but not limited to:
(i)Motor Vehicle 1;
(ii)Motor Vehicle 2;
(iii)Motor Vehicle 3;
(iv)Motor Vehicle 4;
(v)Motor Vehicle 5;
(vi)Motor Vehicle 6;
(vii)Motor Vehicle 7;
(viii)Motor Vehicle 8;
(ix)Motor Vehicle 9;
(x)Motor Vehicle 10;
(xi)Motor Vehicle 11;
(xii)Motor Vehicle 12;
(xiii)Motor Vehicle 13;
(xiv)Motor Vehicle 14;
(xv)Motor Vehicle 15;
(xvi)Motor Vehicle 16;
(xvii)Motor Vehicle 17;
(xviii)Motor Vehicle 18 with number plates …; and
(xix)Motor Vehicle 19 …,
(the cars referred to in 2(h)(i) to 2(h)(xviii) (specified and unspecified), are hereinafter referred to as the “motor vehicles”),
(i)Number plates owned by the first named Respondent and/or the second named Respondent personally, and/or in their capacity as directors, shareholders and/or trustees of any relevant entity including but not limited to:
(i)…;
(ii)…; and
(iii)…,
(the number plates referred to in 2(i)(i) to 2(i)(iii) inclusive, are hereinafter referred to as the “rare number plates”).
3.That the first named Respondent and second named Respondent be restrained from interfering with the valuation process or communicating with the expert unless as agreed by the Applicant in writing.
4.For the purposes of the valuation if there is no agreement as to the value of the property the subject of the proceedings by 10 May 2023 the parties do all acts and things necessary to appoint and instruct such single expert as may be agreed by 24 May 2023 ("the date") and in default of agreement, within seven days of the date the applicant serve on the respondent a list of three suitably qualified valuers and within 14 days of receipt of the said list, the first respondent nominate a single expert from that list and failing agreement the applicant nominate the valuer from that list, such single expert to value the property identified in paragraph 2 hereof.
5.That the single expert or experts engaged pursuant to order 4 hereof value the following properties:-
(a)The alleged partnership properties;
(b)The motor vehicles;
(c)The rare number plates;
(d)1 G Street, Suburb C;
(e)2 G Street, Suburb C;
(f)1 O Street, Suburb P;
(g)2 O Street, Suburb P;
(h)3 O Street, Suburb P;
(i)Q Street, Suburb P;
(j)4 O Street, Suburb P;
(k)5 O Street, Suburb P;
(l)6 O Street, Suburb P;
(m)R Street, Suburb DD; and
(n)7 O Street, Suburb P.
6.The costs of any valuation is to be paid in equal shares by the parties.
7.That any party seeking costs of and incidental to the wife’s application for joinder of the husband’s brother file and serve any written submission in support of such application within 14 days.
8.That the respondents to any costs application made pursuant to order 7 hereof file and serve any written submission upon which they seek to rely within 28 days.
9.That paragraphs 1 to 8 inclusive of the wife’s Further Amended Application in a Proceeding filed 19 August 2022 be otherwise dismissed.
10.That paragraphs 9 to 14 inclusive of the wife’s Further Amended Application in a Proceeding filed 19 August 2022 be listed for hearing before Justice Johns at 10.00 a.m. on 2 June 2023.
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 Genesalio & Genesalio has been approved pursuant to s 121(9)(g) of the Family Law Act 1975 (Cth).
REASONS FOR JUDGMENT
INTRODUCTION
The applicant wife, Ms Genesalio and the respondent husband, Mr Genesalio were married for approximately 26 years. They divorced in 2020. Both now seek an adjustment of their property interests pursuant to s 79 of the Family Law Act 1975 (Cth) (“the Act”).
Over the course of the marriage, the parties have acquired interests in real property and superannuation which the wife contends is valued in excess of $5 million. In addition, the wife admits that she has financial resources arising from her inheritance from her parents’ estates, in which she is one of seven beneficiaries. She proposes that the properties held by her parents’ estate, which she estimates to be valued at in excess of $12 million, be valued for the purposes of these proceedings.
In addition to those interests, the wife contends that in order to determine the parties’ competing property claims, it is necessary that the husband’s brother, Mr M Genesalio, and an entity of which the husband is the sole director and shareholder, B Pty Ltd be joined as parties to the proceedings as their rights may be directly affected.
The wife alleges that the husband and his brother acted in partnership to invest and generate wealth for their mutual benefit during the parties’ 26 year marriage. It is the wife’s case that the husband holds an equitable interest in a number of items of real property, motor vehicles and rare number plates of significant value, all of which were acquired by the alleged partnership and are held by the husband’s brother or entities controlled by him.
By her Further Amended Application for Final Orders filed 11 May 2022, the wife seeks that the property at H Street, Suburb J (“H Street”), which is registered in the name of B Pty Ltd, be transferred to her. The husband asserts that B Pty Ltd holds its interest in that property as trustee for the K Unit Trust, the sole unitholder of which is E Pty Ltd as trustee for the E Trust Fund. The husband is a specified beneficiary and his brother, the proposed second respondent, is the sole appointor of the E Trust Fund. In addition to the transfer of the H Street property, the wife also seeks the transfer to her of a rare number plate held by the husband and/or his brother and their entities.
Accordingly, it is contended by the wife that the husband’s brother is a necessary party to the proceedings as his rights may be directly affected by them.
The wife also seeks orders that a single expert valuer be appointed to value properties held by the proposed second and third named respondents. It was conceded by the parties that were I to make orders joining the husband’s brother, it would necessarily follow that orders be made for the valuation of the identified property.
The application for joinder is opposed by the husband and his brother.
The issue of joinder of B Pty Ltd was resolved by consent on the basis of undertakings given by the husband, who is a director and shareholder of that entity, not to divest himself of his interests in the entity or to enable it to resign as trustee of the K Unit Trust, which holds property the subject of dispute between the parties.
For the reasons that follow, I am satisfied that the husband’s brother is a person whose rights may be directly affected by the proceedings and as such, his participation in the proceedings is necessary.
THE PARTIES & PROPOSED PARTIES
The wife is aged 62 years and is currently employed as an educator.
The husband is aged 67 years. The husband is a tradesperson and was employed as a manager for S Pty Ltd, a business conducted by an entity controlled by his brother.
The husband has suffered from ill health since around 2010 and has not worked since that time.
The husband and wife married in 1994 and separated under the one roof in August 2017.
In November 2018 orders were made for the wife to have sole use and occupation of the former matrimonial home at 1 G Street, Suburb C. Since that time, the husband has resided with his brother, the proposed second respondent, Mr M Genesalio, at the home of their late parents at F Street, Suburb C.
The parties divorced in early 2020. There are three adult children of their relationship.
The proposed second respondent, Mr M Genesalio, is the husband’s brother. Mr M Genesalio is a financial professional and operated his own business until about 2005. The husband deposes that at present, he is heavily reliant upon his brother’s support, both financially and as his physical carer due to the husband’s ongoing ill health.
BACKGROUND
The issue of joinder was first raised by the wife in her Application in a Proceeding filed 14 April 2022. The wife sought orders that the husband’s brother be joined to the proceedings and for the valuation of a number of items of real property.
Pursuant to his Amended Response to Application in a Proceeding filed 26 April 2022, the husband sought that the wife’s application be dismissed and that she properly particularise the precise factual and legal matters which she claims support her assertion that the brothers had acted in partnership.
The husband’s brother filed a Notice of Address for Service on 5 May 2022. At that time, he was represented by a legal practitioner. That representation ceased on 15 June 2022.
The husband’s brother filed a Response to Application in a Proceeding on 11 July 2022. In that Response, he sought that the wife’s application be dismissed and that she pay his costs.
The hearing of the wife’s application for joinder was originally listed to proceed before me on 12 July 2022. That day, all parties were represented by Counsel. It became apparent upon hearing from Counsel for each of the husband, wife and the husband’s brother that further precision was required with respect to the wife’s claim. On that basis, the wife’s application for joinder was adjourned and I made orders requiring her to file and serve a Statement of Claim, setting out the legal and factual basis of her claim with respect to the purported partnership and husband’s interest in property held by his brother. I also made orders requiring both the husband and his brother to file and serve a Defence to that Statement of Claim.
The hearing proceeded before me on 21 November 2022. That day, the wife and the husband were represented by Senior Counsel and the proposed second respondent represented himself.
MATERIAL RELIED UPON
The applicant wife relied upon the following documents:-
·Further Amended Application in a Proceeding filed 19 August 2022;
·Statement of Claim filed 19 August 2022;
·Affidavit of the Applicant filed 22 February 2022;
·Affidavit of the Applicant filed 14 April 2022;
·Affidavit of the Applicant filed 7 June 2022;
·Affidavit of Mr T filed 17 March 2022; and
·Affidavit of Mr U filed 22 February 2022.
The respondent husband relied upon the following documents:-
·Outline of Case Document (Interim Hearing) filed 18 November 2022;
·Defence to Statement of Claim filed 10 October 2022;
·Response to Amended Application in a Proceeding filed 8 July 2022;
·Affidavit of the Respondent filed 26 April 2022;
·Amended Response to Application in a Proceeding filed 29 April 2022;
·Notice of Objection to wife’s trial affidavit and affidavit of Mr T filed 20 April 2022;
·Affidavit of the Respondent filed 19 April 2022; and
·Document tendered during the course of the hearing, being Exhibit H-1.
The proposed second respondent relied upon the following documents:-
·Outline of Case Document (Interim Hearing) filed 11 November 2022;
·Defence to Statement of Claim filed 4 November 2022;
·Affidavit of the proposed second Respondent filed 8 November 2022;
·Affidavit of the Respondent filed 19 April 2022;
·Affidavit of the Applicant filed 6 July 2018;
·Affidavit of the Applicant filed 22 February 2022;
·Affidavit in Reply of the Applicant filed 7 June 2022;
·Affidavit of the Applicant filed 14 April 2022; and
·Document tendered during the course of hearing, being Exhibit MG-1.
ORDERS SOUGHT
The orders sought by the applicant wife are set out in her Further Amended Application in a Proceeding, filed 19 August 2022 and confirmed at Part E of her Outline of Case Document filed 10 November 2022. The orders sought by the wife include that:-
·Mr M Genesalio be joined as the Second Respondent;
·B Pty Ltd be joined as the Third Respondent;
·The husband and other respondents personally and/or in their capacity as directors, shareholders and/or trustees of any relevant entity facilitate the valuation of a number of items of real property, motor vehicles and number plates by a single expert;
·Injunctions be made restraining the husband and proposed Second Respondent from interfering with the valuation process or communicating with the valuer unless agreed with the applicant in writing;
·The parties appoint a single expert to value the specified real properties;
·The parties jointly instruct a valuer to value the motor vehicles and number plates in the power, possession or control of the husband and/or proposed Second Respondent, personally or in their capacity as directors, shareholders and/or trustees of any relevant entity;
·Within thirty (30) days, the proposed Second Respondent provide disclosure with respect to specific documents including his personal tax returns and notices of assessment and banking records;
·In relation to the specified trusts, copies of the Trust Deed, any documents relating to any amendments to the Trust Deed, taxation returns, financial statements and records of distributions to any beneficiaries under the trusts;
·Statements for any superannuation held in the proposed Second Respondent’s name or on his behalf or in the name of any company or trust in which he holds an interest;
·The proposed Second Respondent provide an account of the proceeds of sale of specified properties and of loans obtained by him or his entities; and
·The husband and proposed Second Respondent be restrained from encumbering or further encumbering, selling or disposing of any property under their control (either personally or via any corporation or trust in their control) without the prior written consent of the wife or further order of this Court, save in the ordinary course of business provided that they provide 21 days’ written notice to the wife.
The orders sought by the husband are set out in his Outline of Case (Interim Hearing) Document filed 18 November 2022 and are in substantially the same terms as the orders sought in his Amended Response to Application in a Proceeding filed 8 July 2022. He seeks orders that the wife’s application be dismissed. He consents to orders appointing single expert valuers to value the properties at:-
·H Street, Suburb J in the State of Victoria (“the Suburb J real property”); and
·2 G Street, Suburb C in the State of Victoria (“the Suburb C real property”).
In his Outline of Case (Interim Hearing) Document filed 11 November 2022, the proposed second respondent seeks orders in the following terms:-
(1) Dismiss the Application in a proceeding
(2)Costs wasted on the application filed on 14 April 2022 on an indemnity basis or other basis at the discretion of the Court
(3)Costs in relation to Amended Application and Further Amended Application on the indemnity basis (or other basis at the discretion of the Honourable Court) given that if the Wife had been properly advised she would not have commenced an Application in the Case based on alleged historical facts 4 years after the commencement of the proceeding and the Further Amended Application with no prospects of success by mounting a joinder application for a the collateral purpose of seeking discovery from a third party in the absence of sufficient facts to establish the Husband’s equitable interest in third party property to make a case for joinder.
(4) Such further orders or other orders at the discretion of the Honourable Court.
THE ISSUES
Given the parties’ agreement to orders which would remove the necessity for the proposed third respondent to be joined to the proceedings, the principal issue remaining for determination is the question of whether the husband’s brother should be joined to the proceedings.
Although there was some doubt at the commencement of the hearing as to whether the husband’s brother sought to challenge this Court’s jurisdiction to determine the wife’s property claim, it was conceded by him at the commencement of the hearing that there was no such challenge, it being common ground that as a result of the Court’s accrued jurisdiction, it is able to determine those issues, they clearly arising from a common substratum of facts.
THE HEARING
The interim hearing proceeded before me on 21 November 2022. The applicant, respondent and proposed third respondent were all represented by Counsel, with the proposed second respondent electing to represent himself.
At the commencement of the hearing, I informed the parties of the process at an interim hearing, including the order in which the parties were to make submissions and the need for those submissions to address matters of fact and law.
The matter was conducted on the papers. Each party relied upon the material identified above and made brief oral submissions. Given the nature of the hearing, contentious facts cannot be determined without evidence being properly tested. Accordingly, in determining the matter, I have relied upon those facts which are agreed or not in issue.
The proposed second respondent sought to rely upon a number of reported decisions in support of his case that the wife’s application ought be dismissed. That list was provided to Senior Counsel for the wife and the husband and tendered by the proposed second respondent during the course of his oral submissions.[1] Given the late notice of the proposed second respondent as to the authorities relied upon by him, it was agreed that both the wife and the husband should have the opportunity to file and serve any written submissions relied upon in relation to those authorities. I made orders that those submissions be filed by 28 November 2022. Neither the husband nor the wife filed any submissions pursuant to that order.
[1] Exhibit MG-1.
However, although no orders were made permitting the proposed second respondent to file written submissions, on 28 November 2022 he filed a 19 page document entitled “Submissions as to cases by prposed (sic) Second Respondent”. In circumstances where that document has been filed without leave of the Court and where the wife, who is the applicant in the proceeding, has not been afforded the opportunity to reply to it, I will not grant leave for the proposed second respondent to rely upon it. The proposed second respondent had sufficient opportunity to make oral submissions at the hearing and did so; after a break in the proceedings, during which he conferred with the husband, the proposed second respondent elected to tender the list of authorities upon which he relied to enable the matter to be completed that day. I am satisfied that the husband’s brother had ample opportunity to put his case. To permit him to file and rely upon further written submissions, to which the other parties have not been afforded the opportunity to respond would, in my view, be unfair and is an approach that I will not allow.
LEGAL PRINCIPLES
Section 79(10)(b) of the Family Law Act 1975 (Cth) states that “any other person whose interests would be affected by the making of the order”, as sought by the parties, are entitled to be joined as a party to the proceeding.
Rule 3.01 of the Federal Circuit and Family Court of Australia (Family Law) Rules 2021 (Cth) (“the Rules”) prescribes the procedure for joining a party to proceedings. That Rule provides as follows:-
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.
In Wayne & Dillon & Anor [2008] FamCAFC 204, Warnick J, in considering the definition of the word “necessary”, stated that it:-
[18]…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”…
As to the process of joining a party, Rule 3.03 of the Rules provides as follows:-
(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 proceedings; 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).
The wife relies upon Rule 3.03(4), it being the case that she is seeking leave to add another party to the proceedings after the first Court date.
In order to determine that application, in accordance with the principles established in Rule 3.01, I must consider:-
(a)Is the person sought to be joined a person whose rights may be directly affected by an issue in the proceeding; and
(b)Is the participation of that person as a party necessary for the Court to determine all issues in dispute in the proceeding?
The Wife’s Submissions
The wife contends that the husband and his brother have agreed to conduct businesses and make investments by way of a partnership and that the husband has an interest in, or entitlement to, the assets acquired by that partnership and otherwise held by his brother or entities associated with him.
In her Statement of Claim filed 19 August 2022, the wife contends as follows:-
(5)Since around [mid] 1985, the Husband and [Mr M Genesalio] have agreed to conduct businesses and make investments by way of a partnership (the [Genesalio] Partnership Agreement), referred to herein as the “[Genesalio] Partnership”.
Particulars
The [Genesalio] Partnership Agreement is to be inferred from:
(a)paragraphs 30, 51-54, 59, 65-66, 70-72 and 103-178 of the Wife’s affidavit dated 20 February 2022 (the Wife’s February Affidavit), including:
i.the Husband’s representations to the Wife as to the existence of a partnership between the Husband and [Mr M Genesalio];
ii.the Husband’s maintenance of various properties owned by him, [Mr M Genesalio] and/or companies associated with him;
iii.the Husband’s representations to the Wife as to the purchase of the matrimonial home with her and [1 G Street] with [Mr M Genesalio];
iv.the Husband’s representations to the Wife as to the development of, amongst other properties, the properties owned by [E Pty Ltd] in [1 D Street];
v.the Husband’s representations to the Wife about his ability to use various properties owned by him, [Mr M Genesalio] and/or companies associated with him as security for the matrimonial home;
vi.the Husband’s dealings with third parties, including the [V Company] and the Wife’s brothers (in relation to [1 D Street], [Suburb C]);
(b)the affidavits of [Mr U] and [Mr T] dated 22 February 2022 and 17 March 2022, respectively;
(c)the dealings between the Husband and [Mr M Genesalio] whereby shares in various companies, including [E Pty Ltd], were transferred for no consideration;
(d)the use of properties owned by the Husband and [Mr M Genesalio] and companies associated with them as security for businesses and investments;
(e)the sale of [W Street] in early 2017 for $1,280,000 and the direction of $554,151 of those funds to [Z Pty Ltd], a company the shares of which are owned by [Mr M Genesalio];
(f) the matters set out at paragraphs 7-12 below; and
(g) further particulars will be provided before trial.
(6) There were terms of the [Genesalio] Partnership Agreement that:
(a)the Husband and [Mr M Genesalio] would conduct businesses and make investments in their own names and/or through companies controlled by them;
(b)the Husband and [Mr M Genesalio] would each contribute their respective skills, labour, efforts and resources to the acquisition, conservation, maintenance and improvement of the businesses and investments; and
(c)the Husband and [Mr M Genesalio] would each benefit from the conduct of, and share in the wealth generated by, such businesses and investments in equal parts.
The wife alleges that the following properties are assets of the alleged partnership:-
·2 D Street, Suburb C;
·1 D Street, Suburb C;
·F Street, Suburb C;
·1 G Street, Suburb C;
·2 G Street, Suburb C;
·L Street, Suburb C;
·H Street, Suburb J;
·Collection of identified motor vehicles; and
·Collection of identified rare number plates.
In her Statement of Claim, the wife seeks the following relief against the husband and his brother:-
A.A declaration that the properties and other assets, and/or the proceeds thereof, set out in paragraphs 7-12 above are held pursuant to the terms of the [Genesalio] Partnership Agreement.
B. Costs.
C. Such further relief as the Court sees fit.
In her Further Amended Application for Final Orders, filed 11 May 2022, the wife seeks final orders in the following terms against the proposed second respondent:-
…
2.That within 30 days from the date of these orders and to the extent possible, simultaneously:
(a)The first named Respondent and the second named Respondent, personally and/or in their capacity as directors, shareholders and/or trustees of any relevant entity do all such acts and things and sign all such documents as may be required to transfer to the Applicant, at the Applicant’s expense (save for the first named Respondent’s and second named Respondent’s legal fees), all of their right, title and interest in the real property situate at and known as [H Street], [Suburb J] in the State of Victoria (“[H Street]”) on an unencumbered basis; and
(b)The first named Respondent and second named Respondent shall discharge the mortgage secured against [H Street] and pay all taxes and expenses associated with transferring the property to the Applicant and otherwise indemnify the Applicant against all payments and liability pursuant to the mortgage, and all rates, taxes, and outgoings of, or with respect to, [H Street] of whatsoever nature and kind, up until the date of transfer.
3.That within 30 days from the date of these orders and to the extent possible, simultaneously:
(a)The first named Respondent and second named Respondent, personally and/or in their capacity as directors, shareholders and/or trustees of any relevant entity do all such acts and things and sign all such documents as may be required to transfer to the Applicant all of their right, title and interest in the rare Victorian number plate “[…]” on an unencumbered basis or if previously transferred to a bona fide purchaser, the cash sale price or value of same as determined by the Court.
(b)In the event there are any taxes or expenses associated with the transfer, the first named Respondent and second named Respondent will be responsible for such expenses and indemnify the Applicant against all such expenses of whatsoever nature and kind.
…
6.That the second named Respondent do all such acts and things and sign all necessary documents to return and transfer to the first named Respondent all property, shares, property interests, and trust entitlements in respect to property, the Court finds is joint matrimonial property in these proceedings.
7.In default of order 6 or in the alternative, upon the Court finding there is joint property in the name, power or control of the first named Respondent and second named Respondent, the first Respondent and second named Respondent do all such acts and things to sell such property to facilitate the payment to be made to the Applicant in these proceedings as determined by the Court.
8.That the first named Respondent and second named Respondent be responsible for all GST charges and taxation liabilities of whatsoever nature arising from the operation of Orders 6 and 7 hereof and indemnify the Applicant in respect to the same.
It was submitted on behalf of the wife that the existence of the alleged partnership is made on a proper basis and its existence, or otherwise, is a matter to be determined at the final hearing. Further, it was submitted that if there are deficiencies in the wife’s pleadings with respect to the existence of the alleged partnership, which she does not admit, this is so as a result of the fact that she was ‘kept in the dark’ by the husband and his brother as to the operation of that partnership during the course of the marriage.
In her Statement of Claim, the wife contends that since about mid-1985, the husband and his brother agreed to conduct businesses and make investments by way of a partnership, described by her as the Genesalio Partnership Agreement. She alleges that the husband and his brother commenced operation of a number of entities through which the alleged partnership conducted its business and investments. The entities which form part of the alleged partnership are N Pty Ltd, E Pty Ltd, AA Pty Ltd and Z Pty Ltd.
The wife contends that the husband and his brother incorporated E Pty Ltd in mid-1985 to facilitate investments by the alleged partnership. At the time of commencement of E Pty Ltd, it is common ground that the husband and his brother were both appointed directors and equal shareholders of that entity. In 2009 the husband resigned his office and transferred his shares in E Pty Ltd to his brother for no consideration.
The husband concedes that the E Pty Ltd is trustee for the E Trust Fund. In his trial affidavit, filed 19 April 2022, the husband deposes that:-
·He is one of the specified beneficiaries of the E Trust Fund;
·The husband’s brother is the appointor and guardian of the E Trust Fund; and
·The husband has never been the appointor or trustee of the E Trust Fund.[2]
[2] Trial Affidavit of Mr Genesalio filed 19 April 2022, [211].
In 1988, at a time when the husband was an officeholder and shareholder in E Pty Ltd, it purchased properties at and 1 D Street, Suburb C.
E Pty Ltd sold the property at 2 D Street, Suburb C in 2021, the net proceeds of sale being approximately $7,596,750. It continues to hold the property at 1 D Street, Suburb C.
1 D Street is held by E Pty Ltd as trustee for the E Trust Fund.
The wife contends that evidence of the existence of the alleged partnership, and therefore, the husband’s interest in 1 D Street, includes that the husband:-
·Assisted with the maintenance of 1 D Street, including purchasing a tractor to maintain the grass;
·Informed her of his hope to establish a commercial storage facility on site;
·Offered to transfer 1 D Street to her on the basis that she agree to secure a mortgage over the title of the parties’ former matrimonial home; and
·Discussed with her brothers the possibility of them purchasing a parcel of land at 1 D Street.
The wife also contends that the property at 2 G Street, Suburb C purchased by the husband in 1982, and registered in his name, is an asset of the alleged partnership. The husband alleges that that land was purchased by him as trustee for the Genesalio Family Unit Trust (“the Genesalio Family Unit Trust”). At the time of its purchase the husband alleges that the unitholders of the Genesalio Family Unit Trust were he, his parents and his brother. Upon the death of his father in 2018, the units held by his parents in the Genesalio Family Unit Trust were transferred to the E Pty Ltd as trustee for the E Trust Fund. The husband maintains that his interest in that property is limited to 11.23 per centum. The wife challenges that assertion.
Between 1983 and 1984 a commercial property was constructed on the land at 2 G Street with funds borrowed from the husband, his brother and their parents through their trust structures. The husband conducted his business from that property.
In 2019, the F Street property held by husband’s late father was transferred to the E Pty Ltd as trustee for the E Trust Fund, pursuant to his will. The E Pty Ltd, as trustee for the E Trust Fund, continues to hold the F Street property.
Neither the husband nor his brother, who are the only children of the husband’s late father, made any claim pursuant to Part IV of the Administration and Probate Act 1958 (Vic) in respect of F Street or the units held by him in the Genesalio Family Unit Trust. Both the husband and his brother currently reside at F Street.
The wife contends that the properties at 1 D Street and F Street and the proceeds of sale of 2 D Street have been used for the benefit of the husband, his brother and their companies, and that both the husband and his brother have contributed to the acquisition, conservation and improvement of those assets for their common benefit.
The wife also asserts that the alleged partnership has an interest in the property at 1 G Street, Suburb C, which was purchased by the husband’s brother in 1994. The wife asserts that that property has been used for the benefit of the husband, his brother and companies associated with them for the storage of motor vehicles and other items of value owned by them. Further, the wife deposes that the husband has undertaken maintenance of the property (which neighbours and is accessed via the former matrimonial home), and that upon separation the collection of motor vehicles stored there was relocated by the husband and his brother. She maintains that both the husband and his brother contributed their skills, labour and effort to the acquisition, conservation, maintenance and improvement of that property.
In addition to the properties acquired by the alleged partnership, the wife contends that the husband has offered properties registered in his own name as security for significant sums, borrowed for the benefit of the alleged partnership that have been applied to the acquisition of other properties.
The wife deposes as to a series of private loans obtained by the husband and his brother between 2016 and 2019, which had a combined value totalling in excess of $3.9 million and included:-
·In 2016, the sum of $600,000 borrowed and secured against the title to W Street, Suburb C, a property registered in the husband’s name; and
·In 2019, the sum of $637,334 borrowed and secured against the title to 2 G Street, Suburb C, a property registered in the husband’s name.[3]
[3] Affidavit of Ms Genesalio filed 22 February 2022, [129].
The wife deposes that the husband has failed to disclose how the funds borrowed were applied by he and his brother.
In his affidavit filed 19 April 2022, the husband admits that he acted as guarantor in relation to a loan taken out by E Pty Ltd as trustee for the E Trust Fund from an arms-length lender, V Company, in the sum of $490,000. In addition, the husband admits that he provided security for that loan in the form of a mortgage secured against the title to 2 G Street, Suburb C, a property registered in his name.[4]
[4] Affidavit of Mr Genesalio filed 19 April 2022, [215].
In addition, the husband deposes that in February 2019, in his capacity as trustee for the Genesalio Family Unit Trust, the husband borrowed the sum of $660,000 from private lenders that he deposes was then “on-loaned” to the E Trust Fund. That loan was also secured against the title to 2 G Street and the husband deposes that the funds were applied towards the discharge of the V Company loan. [5]
[5] Affidavit of Mr Genesalio filed 19 April 2022, [223].
Otherwise, the husband does not directly respond to the wife’s allegations regarding the loans, maintaining that:-
I do not service any loans.[6]
[6] Ibid, page 63.
The wife alleges that the husband and his brother have failed to make full and frank disclosure with respect to the nature and extent of their financial relationship. She contends that the fact they do so in the face of her specific allegations that the husband has acted in partnership with his brother serves only to lend weight to the wife’s allegations as to its existence, particularly in circumstances where, at or about the time significant funds are borrowed, the property at L Street, Suburb C was purchased by the N Pty Ltd, an entity of which the husband’s brother is the sole director and shareholder.
Having regard to the husband’s admission that he is a specified beneficiary of the E Trust Fund, I am satisfied that even were the wife’s allegations as to the existence of the alleged partnership to fail, the E Trust Fund is a financial resource to be taken into account in the determination of the parties’ competing property claims. As such, in my view it is appropriate that the assets of the E Trust Fund (which includes 1 D Street), should be valued for the purposes of these proceedings.
The wife also claims an interest in, and seeks a transfer of, H Street to her. At the commencement of the parties’ marriage, the wife held a one half interest in H Street, the other half being held by her brother, Mr BB. In 1998 both the wife and her brother transferred their interests in H Street to B Pty Ltd. The wife’s evidence is that no consideration was paid to her for the transfer of her interest in H Street and accordingly, it is her claim that her half interest is held by B Pty Ltd on resulting trust for her.
There is a factual dispute as to whether consideration was paid and whether the wife was placed under duress to transfer H Street to B Pty Ltd.
The evidence of the husband and his brother is that B Pty Ltd holds its interest in H Street as trustee for the K Unit Trust. The unitholder of the units in the K Unit Trust is E Pty Ltd as trustee of the E Trust Fund, of which the husband’s brother is the appointor and guardian. Given his role in the K Unit Trust through the E Trust Fund, I am satisfied that the husband’s brother is a person affected by and a necessary party to the proceedings.
In addition to real property held by the alleged partnership, in her affidavit filed 22 February 2022, the wife deposes as to her observations of the husband and his brother buying and selling motor vehicles, as well as collecting rare number plates and other memorabilia.
The wife also deposes as to the husband and his brother securing mortgages against various real properties, which funds she believes were applied to the purchase of motor vehicles, rare number plates and memorabilia.
In the same affidavit, the wife deposes as to the husband describing his relationship with his brother as a partnership; the husband being responsible for the ‘hands-on physical and technical work’ whilst the husband’s brother attended to accounting, legal and marketing matters for their various enterprises.[7] The wife further deposes as follows:-
In describing their joint commercial and financial endeavours as a partnership, I did not understand [Mr Genesalio] to mean a legal partnership, per se. Rather, I understood him to mean that the two brothers worked together, albeit in different capacities, on their various projects and would share equally the profit of their projects, notwithstanding that one or the other of them might be the legal titleholder to any particular asset or controller of any particularly (sic) entity utilised by them from time to time.[8]
[7] Affidavit of Ms Genesalio filed 22 February 2022, [27].
[8] Ibid, [28].
The wife identifies the following interests acquired by the husband in partnership with his brother:-
·F Street, Suburb C (held by E Pty Ltd as trustee for the E Trust Fund) which has an estimated value of $1 million;
·L Street, Suburb C registered in the name of N Pty Ltd (an entity of which the husband’s brother is the sole director and shareholder), which has an estimated value of $3 million;
·1 D Street, Suburb C which is registered in the name of E Pty Ltd, value unknown;
·1 G Street, Suburb C being a property registered in the name of the husband’s brother, which has an estimated value of $1,250,000;
·Numerous motor vehicles, value unknown;
·Number plate collection which the wife estimates has a value of not less than $1,200,000; and
·Collection of memorabilia, value unknown.[9]
[9] Affidavit of Ms Genesalio filed 22 February 2022, [32].
The wife’s evidence is that throughout the relationship, she was not informed as to the transactions entered into by the husband and his brother. Further, she deposed that when she questioned transactions, such as the registration of the mortgages secured against the former matrimonial home, she was met with vague or non-responsive answers.
It is also the wife’s case that since the commencement of these proceedings, the husband has failed to make full and frank disclosure in relation to such transactions. For example, she deposes that in 1998 the husband obtained a second mortgage secured against the property at H Street (held by B Pty Ltd). The wife alleges that the husband has not disclosed in these proceedings the purpose for which the monies obtained in that transaction were applied.
The wife also relies upon the affidavits of her brothers Mr U and Mr T who depose as to conversations they had with the husband during the course of the parties’ relationship, which it is said support the wife’s contention that the husband and his brother have acted in partnership to acquire property.
It was put on behalf of the wife that there is a plain factual dispute between the wife and her witnesses and the husband and his brother in relation to these matters that will ultimately require determination at the final hearing. It was submitted on behalf of the wife that the matters pleaded in her Statement of Claim demonstrate that she has an arguable case that will ultimately be determined upon the resolution of those factual disputes.
In support of her position, the wife relied upon the decision of the Western Australian Supreme Court of Appeal in Palermo v Palermo [2015] WASCA 49. That case related to the question of whether two brothers who had engaged in business activities over a period of some 35 years in property development, share dealing, consulting, farming and an accounting practice had in fact conducted those arrangements on the basis of a partnership in which they would share equally the overall after-tax profit. Those ventures were conducted by corporate and trust structures. At first instance, the trial judge held that the determination of the parties’ entitlements ought be directed to the consideration of the separate companies and trust structures which operated and held the various interests. However, on appeal, the Court of Appeal concluded that there is and can be an overarching partnership that can hold within it corporate and trust structures. Newnes J stated:-
[159]It was, in my opinion, clearly open to the parties to agree, as the appellant alleged it was to be inferred that they had agreed, that, as between themselves, the shareholdings in the companies, the beneficial interests in the trusts, and the rights to capital and income (or the burden of losses) of the various entities, under their individual or collective control, were to be dealt with so that the total wealth generated by all of the businesses, to which either or both of them would otherwise be entitled, would be shared equally by the appellant and the respondent; what has conveniently been described by the appellant as an “overarching agreement”.
The wife in these proceedings seeks to establish that a similar arrangement operates between the husband and the proposed second respondent.
As to the contention of the husband and his brother that the wife’s Statement of Claim does not establish the merits of, nor adequately particularise her claim, the wife relies upon the decision of Macmillan J in Chen & Chen & Ors (No.2) [2017] FamCA 285 (“Chen”), where Her Honour observed:-
[16]Whilst the submissions are focussed primarily upon the merits of the wife’s claim (submissions which may ultimately be determined to have merit), in so far as it is submitted that the [statement of facts and contentions] does not sufficiently identify the necessary integers of a resulting trust, I accept as submitted by the wife that this is likely a result of the deficiencies in the wife’s knowledge of the husband’s conduct and the financial arrangements during the marriage, rather than a deficiency in the SFC. Nor in these circumstances would any deficiency, even if I accepted that the SFC was deficient, be cured by the wife being required to file a Statement of Claim in accordance with the Rules of the Supreme Court of Victoria. She would almost inevitably be in exactly the same uninformed position as she was when the SFC was filed.
It was submitted that in this matter, the wife is in a like position to the wife in Chen insofar as she has particularised her claim to the best of her ability in circumstances where she alleges that disclosure has been deficient.
Submissions of the Husband and Mr M Genesalio
The husband’s opposition to the joinder of his brother is founded on the proposition that the wife’s Statement of Claim does not establish a cause of action or triable claim in respect of the husband’s brother. It was submitted that merely making the assertion that a claim exists is not a cause of action or a triable claim. Further, it was submitted that joining a third party for the sake of getting discovery from that party to establish whether a triable claim or cause of action exists is not a basis for joinder of a third party.
The husband’s position is that the assets sought to be brought into account by the wife are assets owned and controlled by his brother and are not subject to discovery; any documents relevant to those assets are not within the possession or control of the husband. The husband relied upon the decision of Warnick J in Wayne & Dillon & Dillon [2008] FamCAFC 204 in support of that submission.
It was conceded on behalf of the husband that there is a factual dispute as to whether or not he has ever made representations to the wife or her brothers as to the existence of a partnership between he and his brother; it is his strong contention that no such representations were ever made. It is further submitted that other than the factual dispute as to those alleged representations, the wife adduces no other evidence to support the existence of the alleged partnership. In those circumstances, it is submitted on behalf of the husband that the wife’s allegations alone do not justify the joinder of his brother as a respondent to the proceedings.
The husband’s brother echoes those submissions, stating that the wife has not made a case or adduced any evidence that would support his joinder in the proceedings. He submits that the wife’s assertions are speculative, unsubstantiated and predicated on a lack of candour in the representation of the facts. Further, the husband’s brother asserts that it is in fact the wife who has not made full and frank disclosure in relation to her assertions, rather than he.
The husband’s brother asserted in the strongest of terms that the wife’s application that he be joined to the proceedings is an abuse of process.
The husband’s brother also confirmed during his oral submissions that he agrees with the position set out by the husband in his Defence to the wife’s Statement of Claim.
During his submissions, the husband’s brother sought to highlight the fact that there is no evidence to support the wife’s contention that the husband has received any financial benefit from interests held by the proposed second respondent or his entities. He made detailed submissions in relation to the documents annexed to his affidavit, which included the Minutes of Resolution for the E Trust ,[10] the correspondence regarding his purchase of the property at L Street,[11] and his correspondence regarding the sale of one of the motor vehicles,[12] which he submits demonstrate that the husband has had no interest or involvement in the acquisition or maintenance of those interests.
[10] Affidavit of Mr M Genesalio filed 8 November 2022, Annexure Mr M Genesalio-1.
[11] Ibid, Annexure Mr M Genesalio-4.
[12] Ibid, Annexure Mr M Genesalio-5.
The husband’s brother also relied upon his Will executed on 23 December 1995 in which he bequeathed the entirety of his estate to his parents. The husband was not named as a beneficiary of his brother’s estate in that document. It was submitted that the omission of the husband is evidence of the fact that he has no interest in or entitlement to assets held by the proposed second respondent. During his oral submissions, the husband’s brother acknowledged that the Will to which he referred was not his current Will, it being the case that the named beneficiaries in that Will (his parents) have predeceased him. The husband’s brother has not disclosed his current Will.
The husband’s brother places heavy reliance upon the decision of the Full Court in B Pty Ltd and Ors & K and Anor (2008) FLC 93-380, it being his contention that the wife seeks his joinder as an aid to discovery. In that case the Full Court 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 husband’s brother also relied upon a number of single instance judgments that apply the principles articulated in B Pty Ltd and Ors & K and Anor. Each of those cases considers the question of whether the proposed joined party is affected by an issue in the proceedings and is a person whose participation is necessary for the Court to determine that dispute. I have regard to those decisions each of which turn on their own unique facts. Many of the decisions to which I have been referred are distinguishable from this matter, as they relate to instances where no Statement of Claim has been provided by the party seeking joinder; as a result the Court found it could not be satisfied that the proposed joined party was affected by an issue in the proceedings (Rigby & Kingston & Anors (2020) FamCA 415; Daire & Gamer [2021] FedCFamC1F 261; King & King [2021] FamCA 603; Galante & Galante and Ors [2019] FamCA 756; Bianchi & Bianchi [2022] FedCFamC2F 25).
The husband’s brother also referred to a number of authorities that do not relate to the question of whether a third party ought be joined in the proceedings. For example, the decision of Simmons and Anor & Simmons [2008] FamCA 1088, relates to an application by a third party for summary dismissal of the wife’s claims against it. That application was refused on the basis that there was a connection between the husband and the trust assets held by the third party, the husband having lent the trust funds on “very favourable” terms.
Similarly, the decision of Shipman & Shipman [2021] FamCA 584 relates to the Court’s consideration of an application for injunctive relief against and joinder of a third party who had been named as second respondent in the proceedings. That decision considers the application of s 90AF of the Act and does not assist the determination of this dispute.
The husband’s brother also sought to rely upon the decisions of Milligan & Milligan and Anor [2017] FamCAFC 218 (which is an appeal against the dismissal of a claim pursuant to s 106B of the Act), Mansfield & Mansfield [2017] FCCA 13 (dealing with objections to subpoena), AC and Ors & VC and Anor [2013] FamCAFC 60 (relating to an appeal against orders bringing forward the vesting date of a trust and subsequent payments from the trust pursuant to s 90AF of the Act), and Lin & Ruan [2021] FamCAFC 90 (an appeal against orders for the conditional sale of the third party’s property to ensure the husband’s payment of a mortgage). Those decisions are of little assistance as they consider matters that are not relevant to the current dispute.
The husband’s brother also relied upon the decision of Austin J in Skelton & Lindop [2022] FedCFamC1A 47 wherein His Honour considered an appeal against the refusal of an Application for Leave pursuant to s 44(6) of the Act. In considering whether an applicant has a “prima facie” case in an interlocutory application, His Honour confirmed at [21] that the applicant for leave “did not have to prove it was more probable than not” that her claim would succeed. Similarly, in this application, it is not incumbent on the wife to establish that it was more probable than not that her claims against the proposed second respondent would succeed.
Whilst I have not referred to all of the decisions contained in the List of Authorities relied upon by the husband’s brother (Exhibit MG-1) I have had regard to them in determining this matter. Those cases are, in my view, distinguishable from the facts in this matter and in many instances, relate to legal principles that do not arise in this case.
The husband’s brother confirmed that he adopted and relied upon the submissions made by Senior Counsel for the husband.
Discussion
Having regard to the wife’s Statement of Claim and the evidence filed by her in support of her claim and Application for Final Orders, I do not accept the submission that she has failed to particularise her claim. The wife has identified the property against which claim is made and actions taken by the husband and his brother which she says establish her claims; for example, the transfer of her interest in H Street, and the borrowing of funds from private lenders secured against properties for the benefit of the E Trust, a trust asserted to be that of the husband’s brother.
Further, I do not accept the contention that the wife has fabricated the claim with respect to the alleged partnership.
There is a clear factual dispute between the parties as to the circumstances of the acquisition of property by them or entities controlled by them during the course of the relationship. In my view, whether the matters alleged by the wife are proven is a matter for determination following the testing of evidence at a final hearing. I am not in a position to make any findings of fact at this interlocutory hearing.
The husband submitted that joinder cannot be made for the collateral purpose of discovery. I accept that proposition. However, whilst the wife seeks orders for discovery, I do not accept that she has brought her application for joinder for that collateral purpose. In her Statement of Claim the wife seeks declarations with respect to property held by the husband’s brother or his entities. Further, she alleges that B Pty Ltd holds its interest in the H Street property on resulting trust for her. Given that B Pty Ltd is the trustee of the K Unit Trust and the unitholder of that trust is the E Trust Fund, which is controlled by the husband’s brother in his capacity as appointor of that trust, I am satisfied that the husband’s brother is a person who may be affected by the proceedings, thereby necessitating his joinder as a party.
The wife seeks orders for discovery of the proposed second respondent’s personal financial affairs. In circumstances where none of the parties made submissions with respect to the orders for discovery sought by the wife, I will list that part of the wife’s application for further hearing to ensure that all parties are heard with respect to those matters prior to determination.
The difficulty with the positions maintained by both the husband and his brother is their failure to directly respond to specific allegations made by the wife as to the husband’s participation in:-
·Acting as guarantor for loans of his brother or entities controlled by him;
·Obtaining loans with his brother or his entities; and
·Offering property in which he has an interest as security for loans obtained by his brother or his entity.
These matters were put to Senior Counsel for the husband; she did not directly respond to the contention of the wife that the husband had obtained borrowings in concert with his brother. Rather, she maintained the husband’s position that he did not service those loans.
It is the wife’s position that the husband has acted as a borrower, guarantor and offered property as security for loans obtained by his brother or his brother’s entities of significant value; there has been an intermingling of the brothers’ financial interests for the benefit of what she asserts is the overarching partnership. The husband offers no explanation for his role in those transactions. The wife submits that the husband’s silence with respect to those matters lends weight to her contention that he has done so in pursuit of the interests of the alleged partnership, and in particular the acquisition of identified property by the partnership. There is much force in that submission.
Further, it is the wife’s position that the husband is a specified beneficiary of the E Trust fund, and as such the assets of that entity are a financial resource of the husband. It is submitted that those matters support the joinder of the husband’s brother, who is appointor of that trust, and further, the valuation of the trust’s interests.
The reality is that the wife has filed a Statement of Claim which sets out the relief sought by her and the basis for such relief. I am satisfied that she has established a triable cause of action. For the reasons articulated earlier, I am satisfied that the husband’s brother is a person affected by that claim and that his participation in the proceedings is necessary to determine the claim.
I do not accept the submissions made by the proposed second respondent as to the wife’s application being an abuse of process. Those submissions were made without foundation and were not supported by the evidence.
Having regard to all of those circumstances, I am satisfied that it is necessary to join the husband’s brother to the proceedings to determine the wife’s claim that the husband has an equitable interest in the properties and other assets acquired by the alleged partnership.
As to the outcome of the wife’s claim, that will turn upon the testing of evidence at a final hearing. It is evident from the material filed by the parties that underpinning the wife’s claim is a complex factual matrix, involving a number of entities in which the husband and his brother have held or continue to hold office, and of which in relation to one of those entities, the husband is a specified beneficiary.
Having regard to all of those factors, I am satisfied that the husband’s brother should be joined to the proceedings, and further that the identified properties should be valued for the purpose of the proceedings.
I certify that the preceding one hundred and fourteen (114) numbered paragraphs are a true copy of the Reasons for Judgment of the Honourable Justice Johns. Associate:
Dated: 26 April 2023
4
12
0